Lemm v. Sparks

321 S.W.2d 388, 230 Ark. 105, 10 Oil & Gas Rep. 483, 1959 Ark. LEXIS 582
CourtSupreme Court of Arkansas
DecidedFebruary 23, 1959
Docket5-1662
StatusPublished
Cited by11 cases

This text of 321 S.W.2d 388 (Lemm v. Sparks) is published on Counsel Stack Legal Research, covering Supreme Court of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lemm v. Sparks, 321 S.W.2d 388, 230 Ark. 105, 10 Oil & Gas Rep. 483, 1959 Ark. LEXIS 582 (Ark. 1959).

Opinion

Ed. F. MoFaddin, Associate Justice.

The appellees (plaintiffs), J. W. Sparks and Herbert Hunter (doing business as Gregg Oil Company, a partnership), filed action against the appellants (defendants), George P. Lemm and Jerry Maiatico, to recover a claimed balance of $15,798.89 for labor and services alleged to be due under both written and oral contracts. In addition to a general denial, the defendants denied any oral contract, claimed that plaintiffs had not fully performed the written contract, and denied owing any amount to the plaintiffs. The jury’s verdict was for the plaintiffs for $6,000.00; and defendants bring this appeal, assigning 25 errors. Most of these relate to instructions; and we group and dispose of the twenty-five points in suitable topic headings.

I. The Alleged Oral Contract. In 1956 John H. Hall acquired oil and gas leases on more than twelve thousand acres of land in the western part of Arkansas County, and was desirous of finding someone who would finance the drilling of exploratory wells. The territory was entirely “wildcat.” Hall met the plaintiff, Hunter, who was anxious to do the actual drilling, if someone would finance the operations. Hunter’s partner, Sparks, knew a Mr. Kibler in Washington, D. C., who, in turn, knew parties ithat might be induced to provide the finances. So Sparks and Hall went to Washington and were introduced to the defendants, Lemm (an attorney) and Maiatico (a building contractor). Hall sold Lemm and Maiatico leases covering ten thousand acres.

Lemm and Maiatico entered into a drilling contract with the Gregg Oil Company by which they agreed to pay Gregg Oil Company $18,000.00 for drilling the first well and $17,000.00 for drilling the second well. The location of each well was stated. Gregg Oil Company agreed, inter alia, to drill each well to a depth of 4200 feet “. . . unless oil and gas in paying quantities is encountered at a lesser depth,” or unless it became impossible to drill because of the formation encountered. Also, Gregg Oil Company agreed, inter alia, to take three drill stem tests in each well and to “. . . take up to twenty side well cores.” 1

The plaintiffs claimed that immediately after the signing of the drilling contract, Sparks told the defendants, Lemm and Maiatico, that if a showing of oil should be encountered in either of the wells covered by the contract, then considerable additional expenses would be entailed, such as casing, cementing, delay time, etc.; and plaintiffs claimed that an oral contract was made between the parties as to such additional items of expense. 2 The first well provided for in the contract was duly commenced within the time and at the location stated in the contract. John H. Hall was at the drilling location during most of the time. When the well reached a depth of about 1600 feet there was a slight showing of oil. The driller obtained cuttings and showed them to Hall, 3 thinking that he was representing Lemm and Maiatico. Here is Hunter’s testimony as to the occurrence:

“We were drilling in an unproven area and we didn’t know what we might run into at any depth so when that cutting came to the surface oil was on top of the pit — not in large quantities but a good large scum. Dr. Hall was there ... We looked that over and then we carefully looked at the next hundred feet that we drilled just a little at a time ... we would circulate out and watch it, . . . and it looked like it was possible that we might have something worth keeping at that point. We had the samples and we put them in individual bags and numbered the depth that they came from and turned them over to them, and Dr. Hall recommended to set up pipe at that depth; and I said you get in touch with the people in Washington but we have a contract to keep here, to go deeper than this unless we do get orders to set pipe; ... I am going to continue to make hole until I get orders to stop, so we continued drilling . . .”

When Mr. Lemm came down from Washington the well was at a depth of 3917 feet. Lemm decided to set casing and test the horizons 4 between 1600 and 1700 feet. At all events, beginning on August 31st and continuing until the second well was abandoned 5 oilthe plaintiffs spent thousands of dollars for easing, cementing, shut-down time, etc.; so that the written contract calling for $35,000.00 for two wells grew (with the disputed oral contract) into expenditures totalling in excess of $100,000.00. The defendants do not deny that they have paid the plaintiffs a total of $96,500.00 on the two wells; and the plaintiffs claim that there remains due a balance of $15,798.89.

Thus, we come to the matter of the oral contract for casing, cementing, shut-down time, etc. It is well recognized that when the written contract is plain and unambiguous and complete in its terms, then parol contemporaneous evidence is inadmissible to contradict or vary the terms of the valid written instrument. (Outcault Adv. Co. v. Bradley, 105 Ark. 50, 150 S. W. 148; Anderson v. Wainwright, 67 Ark. 62, 53 S. W. 566; and Cox v. Smith, 99 Ark. 218, 138 S. W. 978.) But, here, it is not a matter of a contemporaneous oral contract varying the terms of a written contract; rather, this is a case of an oral contract being in addition to the written contract. As such, the evidence was admissible concerning the oral contract. (Burgie v. Bailey, 91 Ark. 383, 121 S. W. 266, 18 Ann. Cas. 389.) In Cox v. Smith, 99 Ark. 218, 138 S. W. 978, Mr. Justice Frauenthal stated the rule: “. . . a separate verbal agreement relating to a matter not embraced in the written contract may be proved by parol testimony.”

Certainly the parties had some sort of understanding in addition to the written contract heretofore copied, because it only required the defendants to pay a total of $35,000.00, and yet they do not deny having paid the plaintiffs a total of $96,950.00. Some explanation was proper as to the payments; and the evidence established that labor, services and materials were furnished under an oral contract in addition to the written contract. So the Court was correct in allowing evidence to be heard concerning the oral contract.

II. Plaintiffs’ Instruction No. 1. Over the defendants’ objection, the Court instructed the jury:

“If you find from a preponderance of the evidence, that the plaintiffs and defendants entered into a contract in writing for the plaintiffs to drill on behalf of the defendants two oil wells in Arkansas County, Arkansas, and that after that contract in writing the plaintiffs and defendants entered into one or more additional agreements orally, and if you find that the plaintiffs have completed all their obligations under these contracts, and if yon further find that there is a balance remaining unpaid under these contracts when considered together, then yon shall find for the plaintiffs in the amount remaining unpaid, if any.” 6

Much of what we have said in Topic I, supra, applies to this instruction.

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Bluebook (online)
321 S.W.2d 388, 230 Ark. 105, 10 Oil & Gas Rep. 483, 1959 Ark. LEXIS 582, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lemm-v-sparks-ark-1959.