Opinion
No. 5055.
August 23, 1933.
Appeal from the District Court of the United States for the Western District of Pennsylvania; Frederic P. Schoonmaker, Judge.
Suit by the Pen-O-Tex Oil Leasehold Company against the Pittsburgh Western Oil Company and another. A default judgment having been entered against defendant named, the case came on before the court with a jury to assess plaintiff's damages, and, the court having directed a verdict for defendant named and denied plaintiff's motion for a new trial, plaintiff appeals.
Affirmed.
The opinion of the trial court denying the motion for a new trial was as follows:
The Big Four Oil Gas Company, one of the defendants, filed a statutory demurrer to the plaintiff's statement of claim. This court, Gibson, J., sustained that demurrer, and entered judgment thereon for the defendant. The Circuit Court of Appeals affirmed that judgment. The Pittsburgh Western Oil Company did not appear and answer; a default judgment was entered against that company in favor of the plaintiff and liquidated on a statement filed by the plaintiff with the clerk. Thereupon, the Pittsburgh Western Oil Company appeared and moved to open the judgment and set aside the liquidation of the judgment. On June 8, 1931, this court, Schoonmaker, J., refused to open the default judgment, but did strike from the record the liquidation of the judgment in the sum of $160,800, as improperly assessed, without prejudice to the plaintiff's right to proceed to assess its damages according to law. The case was then listed on the trial list and came on before the court with a jury to assess such damages. At the conclusion of the case, the court, being of the opinion that no damages were shown, directed a verdict in favor of the defendant. The plaintiff now moves for a new trial.
The suit arises over a Texas oil and gas lease. One Charles Downie, on January 2, 1920, leased 140,000 acres of land in Texas to T.R. Kuykendall for oil and gas purposes. A well was to be commenced on the premises on or before January 2, 1921. On April 21, 1920, Kuykendall assigned 21,000 acres of this leasehold to T.S. Cranston, and on the same day Cranston agreed in writing to drill a test well on these premises. On May 5, 1920, Cranston assigned the leasehold estate to the plaintiff, together with the drilling contract which Cranston had made. On December 27, 1920, the plaintiff entered into a written agreement with one W.M. Fairchild, by the terms of which Fairchild was to drill the required test well.
On February 25, 1921, the plaintiff assigned eighteen of the thirty-three sections of its leasehold to the defendant Pittsburgh Western Oil Company, and, by the terms of this assignment, this defendant agreed to assume all the obligations of the plaintiff in the well drilling contracts.
No well was drilled, as required by the original contract. On January 9, 1923, the district court of Terrell county, Tex., at No. 1651 of 1923, entered a judgment terminating the original lease on which the test well was to have been drilled, and holding it to be null and void for failure to pay the consideration provided for in the original lease agreement.
With this original lease declared null and void, all the underlying drilling agreements would naturally fall with the lease; but we are past that phase of the case, by reason of the default judgment entered in the case. The only question at issue is whether the plaintiff has offered any proofs upon which an assessment of damages against the defendant could be made. It would appear to us that the proper measure of damage for failure to drill an oil well would be the cost to the plaintiff to have drilled the well, had it actually gone on and completed the work. But that was not done. Fairchild, the drilling contractor, actually started the well, drilled it to some 1,200 feet, but failed to complete it to the required 3,500 feet, becoming involved with the defendant in litigation over the drilling contract. There was no evidence offered by the plaintiff from which an assessment of the damages could properly be made. The well was not drilled in by plaintiff. There was no evidence offered as to the cost of drilling it. The plaintiff offered to show the cost of acquiring leases on this 21,000 acres; the cost of the derrick, casing, and pipes used in rigging up and starting the well, and all moneys paid by the plaintiff to help complete the well; counsel fees and tax fees of the plaintiff company by the state under which plaintiff was incorporated; a bank account of $6,400 turned over by the plaintiff to defendant in the sum of $6,400 to secure the drilling of this well. These items are obviously not elements that could be properly used in computing the plaintiff's damages, which certainly must be the cost of completing the well.
The defendant paid to the plaintiff $10,000 in cash, and issued to plaintiff $25,000 par value of its capital at the time the contract was made, assigning to defendant eighteen of the thirty-three sections of land covered by leases assigned by Cranston to plaintiff.
There was no evidence offered at the trial as to the value of the oil leaseholds lost by the failure to drill the well in question. There was no evidence offered as to whether or not these leaseholds were, in fact, of oil and gas bearing lands. The plaintiff offered to show that, from the date the contract was made with the plaintiff for this 21,000 acres until the time it sold the eighteen sections to the defendant, it sold 4,100 acres of this leasehold estate at $10 per acre. This obviously was no proper element of damage if one were to attempt to determine the loss in value of the remaining lands in the leasehold. The 4,100 acres sold might have been oil-bearing lands; the eighteen sections assigned to the defendant might have been barren lands.
On the whole evidence we cannot find a single element that could be properly used in assessing any damage to the plaintiff. Its motion for a new trial will therefore be denied.
Wm. T. Tredway, of Pittsburgh, Pa., for appellant.
Wm. B. Paul and Norman A. Allen, both of Pittsburgh, Pa., for appellee.
Before BUFFINGTON, WOOLLEY, and THOMPSON, Circuit Judges.
In this case, a suit to recover alleged damages caused by the defendant not drilling a well on premises leased for gas and oil, the court, refusing a new trial, entered judgment for reasons stated in its opinion printed above for the defendant. Whereupon the plaintiff took this appeal.
The facts in the case, the pertinent writings, and the questions involved are set forth in detail in such opinion. After a study of the record, we find ourselves in accord with the holdings of the trial judge, and we avoid needless repetition by adopting his opinion as the opinion of this court.
The judgment of the court below is therefore affirmed.