Edwards v. O'Neal

28 S.W.2d 569
Court of Appeals of Texas·Decided January 25, 1930·No. No. 12255.·Published·Cited by 7 cases

Opinion

DUNKLIN, J.

Joseph Edwards instituted this suit against John O’Neal to recover damages, on alleged breach of the defendant’s contract to drill an oil well, and from a judgment denying him a recovery he has prosecuted this appeal.

The contract made the basis of the plaintiff’s suit is as follows:

“This contract and agreement made and entered into this the 14th day of July A. D. 1927, by and between Joseph Edwards, hereinafter called first Party and John O’Neal hereinafter called Second Party.
“Witnesseth: The first [party] represents that he has up in escrow a certain oil and gas lease upon lands out of the Thomas Scott Survey, Cooke County, Texas, upon which he desires to have a well drilled for the discovery of oil or gas, and the second party has agreed to drill said well on the following terms and conditions.
*570 “Second party agrees to furnish the derrick, rig, dig the slush pit, furnish all labor, fuel oil, water, tools, repairs and all other items of expense incident to the drilling of said well at his own expense, and is to drill said well to a total depth of 1,800 feet or oil or gas in paying quantities at a lesser depth; it being understood in this connection that in the event the' Elenberger lime is encountered before the 1,800 foot depth is reached that the second party will be permitted to cease drilling and this contract will be considered completed at that depth.
“Said well is to be spudded in on or before the 15th day of August, 1927, and is to be drilled at a location to be agreed upon between the two parties hereto ■ on the Southeast 40 acres of Block 2, J. Backer Band, Thomas Scott Survey, in Cooke County, Texas.
“As a consideration for the drilling of said well as above outlined, the first party binds and obligates himself, when said well is actually spudded in, to execute and deliver to the second party assignments of valid oil and gas leases upon the following described property, to wit:
“First Tract: An assignment to an undivided three-fourths interest in and to the remaining 1¾0 interest of an oil and gas lease on the Southeast 40 acres of the J. Backer land, Block 2, Thomas Scott Survey, Cooke County, Tex.
“Second Tract: An assignment to an undivided one-half interest in and to the remaining i%4 interest in and to an oil and gas lease on the Northwest 20 acres of the East one-half of Block 11, A. G. Ilseng land, Thomas Scott Survey, Cooke County, Texas.
“As a further consideration for the drilling of said well, the first party binds and obligates himself to deliver to the second party, a purchase letter from H. H. Martin of Wichita Falls, Texas, in the amount of $2500.00, and in this connection the first party binds and obligates himself at his own expense to make any necessary corrections to the title to be delivered under said purchase letter so .that when the well is completed said purchase letter will be due and payable.
“It is understood that the second party is to furnish the casing to test sands and that in the event the well is a producer the first party will pay his one-fourth of the cost of same laid down at the well.
“Should a producing well be discovered, then the second party shall have the management and operation said 40 acre tract first described above; second party shall also have the option of drilling any additional wells at the prevailing prices for the same kind and class of work in that vicinity. Second party shall also keep the books and generally manage said wells and shall submit at least monthly itemized bills of all operation and maintenance expense to the first party and the first party agrees to promptly pay his pro-rata part of such expense. In this connection it is also agreed that the second party shall charge as a supervision and overhead expense an amount equal to 5% of the operating and development expense.
“It is further agreed that in the event either party hereto wishes to sell his interest in the above described leases that he will first give to -the other party hereto the option to purchase the same at the price offered by a bona fide purchaser.
“It is also further agreed that this well will be drilled and the lease operated as a joint ownership by John O’Neal and Joseph Edwards; but in no wise shall this constitute a partnership.
“This contract shall extend to and be binding upon the parties hereto, their respective heirs and assigns.
“Witness the hands of the parties hereto at Wichita Falls, Texas, on the 15th day of July A. D: 1927.
“[Signed] J. W. Edwards
“Party of the First Part.
“[Signed] John O’Neil
“Party of the Second Part.”

According to allegations in plaintiff’s petition, by consent of the parties, the time in which to begin the drilling of the well was extended until September 21,1927. Plaintiff alleged that he performed or offered to perform all the obligations imposed on him by the-terms of the contract, but. that the defendant failed and refused to drill the well or to spud in the same and thereby breached his contract, and thereby became liable to the plaintiff for the reasonable cost of drilling the well in accordance with the terms of the contract, which was the sum of $10,000; and a judgment was sought for such damages.

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Edwards v. O'Neal, 28 S.W.2d 569 (Tex. Ct. App. 1930).

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