La Edwards v. R. Lachman

1977 OK 175, 567 P.2d 73, 59 Oil & Gas Rep. 509, 1977 Okla. LEXIS 704
CourtSupreme Court of Oklahoma
DecidedOctober 4, 1977
Docket48883
StatusPublished
Cited by2 cases

This text of 1977 OK 175 (La Edwards v. R. Lachman) is published on Counsel Stack Legal Research, covering Supreme Court of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
La Edwards v. R. Lachman, 1977 OK 175, 567 P.2d 73, 59 Oil & Gas Rep. 509, 1977 Okla. LEXIS 704 (Okla. 1977).

Opinion

BERRY, Justice:

This case involves determination of benefits conferred on owners by trespassing oil well. We have decided question of liability for the trespass. Edwards v. Lachman, Okl., 534 P.2d 670. We remanded the case and directed district court to measure benefit defendants’ oil well conferred on plaintiffs. After trial court revised judgment case was again appealed; it was assigned to Court of Appeals, Division 2. We granted certiorari to review decision of Court of Appeals.

Prior to events of this case some plaintiffs had been engaged in oil and gas exploration in Stephens County. They drilled several oil wells along a trend play or step out pattern which lay in a line generally southeast to northwest. They acquired leases covering Graham tract, the realty directly involved in this litigation. Plaintiffs, appellees, are owners and lessees of Graham tract.

Material defendants, appellants, owners and lessees of Fuqua tract, drilled Fuqua oil well on that tract. Fuqua tract is south of plaintiffs’ Graham tract. Defendants’ well bottomed under Graham tract and all hydrocarbons produced by defendants’ well were produced from plaintiffs’ tract. Defendants’ well produced oil from Dornick Hills formation and Springer formation. The well began producing on September 1, 1966, and trial court found by October 31, 1966, defendants had paid reasonable drilling and completing costs.

In April 1967, defendants obtained directional survey which confirmed well bottomed under plaintiffs’ tract. Defendants did not reveal encroachment and continued to produce well.

Plaintiffs drilled east of defendants’ well prior to being informed of facts about Fu-qua well. Plaintiffs completed McQueen No. 4 well on a tract not directly involved in this litigation. McQueen No. 4 also produced from Dornick Hills and Springer.

Plaintiffs then drilled the Graham well on Graham tract north of defendants’ well, again prior to receiving information about trespass. Graham was a Dornick Hills producer, and did not descend to Springer.

In first appeal we recognized plaintiffs’ well had not penetrated Springer; held it *76 was error for trial court to decide defendants’ drilling activities conferred no benefit upon plaintiffs; and held it was error for trial court to decide plaintiffs’ well was sufficient to produce all hydrocarbons from under Graham tract. We remanded cause for determination of benefit conferred upon plaintiffs by defendants, and instructed trial court to measure benefit by benefit conferred upon plaintiffs or their property, prior to April, 1967, when defendants obtained the directional survey . We noted drilling expenses were all incurred prior to that time. For assistance in determining what court should consider in measuring benefit we cited Carter Oil Co. v. McCasland, 10th Cir., 190 F.2d 887.

On remand trial court found Graham well was sufficient to drain all hydrocarbons from Dornick Hills under plaintiffs’ tract and awarded defendants no credit for the cost of drilling Fuqua well from surface to Dornick Hills, at 8077 feet. Trial court found defendants benefitted plaintiffs by drilling from Dornick Hills, at 8077 feet, to bottom of Springer, at 9430 feet. Trial court found defendants’ drilling from Springer, at 9430 feet, to total depth of 11,200 feet conferred no benefit upon plaintiffs.

Court of Appeals reversed and allowed defendants credit against judgment for cost of drilling from surface to producing Springer. This in effect required plaintiffs to pay for two wells into Dornick Hills [Graham well on their tract and defendants’ Fuqua well to comparable depth].

Court of Appeals has misconstrued our opinion [534 P.2d 670] in its statement that “. . . Graham well has no effect upon the credit due defendants . . . (because) it did not come into existence until after defendants became willful converters . ” Court of Appeals says our original opinion encourages that conclusion “. . .by underscoring the fact that if-defendants were innocent when they drilled Fuqua, their subsequent knowledge did not transform them into bad faith trespassers ab initio . . . ”

We recognized this state of the facts in our opinion that the cause be “. . . remanded ... to determine the extent that defendants’ well and the operation thereof conferred benefits upon plaintiffs or their property, measured ... by the benefits conferred upon plaintiffs or their property prior to April, 1967, when defendants obtained the directional survey . ” [Edwards v. Lachman, supra, at 678].

Edwards v. Lachman, supra, is controlling. Court of Appeals has decided a question of substance in a way “. . . probably not in accord with . . . ” that decision. We granted certiorari. 12 O.S.Supp. 1976, Ch. 15 App. 3, Rule 3.13A(2).

On this review there is one issue: did trial court commit reversible error in determination of benefit conferred upon plaintiffs by defendants’ drilling Fuqua well?

We have thoroughly examined the record and transcripts. We conclude trial court committed reversible error on remand only as to question of tender, which we will address later.

In measuring benefit conferred by defendants’ well trial court found plaintiffs were benefitted to the extent defendants’ well produced from Springer. Trial court awarded defendants $51,702.00 credit against judgment, amount defendants testified it cost them to drill from Dornick Hills to Springer.

Defendants argue trial court stopped short of fully compensating them for benefit conferred upon plaintiffs. They argue they should have cost of drilling from Dornick Hills to original depth of their Fu-qua well because they conferred benefit upon plaintiffs by further drilling.

Defendants cite Champlin Refining Company v. Aladdin Petroleum Company, 205 Okl. 524, 238 P.2d 827, in support of claim to credit for drilling Fuqua well to total depth. In that case there was no question of benefit conferred by trespasser upon true owner of property on which drilling occurred. In this case, as a result of our *77 prior decision, central question on remand was extent of benefit defendants conferred upon plaintiffs.

The law of the case, as announced in our previous opinion, is defendants are to have credit against judgment only to extent their efforts conferred benefit upon plaintiffs.

If trial court had determined drilling Fu-qua well from Springer to total depth had conferred benefit upon plaintiffs Champlin would apply and defendants would be entitled to credit for their efforts. However, trial court determined drilling from Springer to total depth of Fuqua well conferred no benefit upon plaintiffs and finding is supported by the evidence. Champlin case does not apply in this fact situation.

Defendants further rationale for proposition they are entitled to cost of drilling to bottom of Fuqua well grounds on a Kentucky case [Joyce v. Zachary, 434 S.W.2d 659]. Defendants maintain:

“. . .we are dealing here with the allowance of equitable credit

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Bluebook (online)
1977 OK 175, 567 P.2d 73, 59 Oil & Gas Rep. 509, 1977 Okla. LEXIS 704, Counsel Stack Legal Research, https://law.counselstack.com/opinion/la-edwards-v-r-lachman-okla-1977.