Mattocks v. Great Northern Railway Co.

162 P. 19, 94 Wash. 44
Washington Supreme Court·Decided December 29, 1916·No. No. 13268·Published·Cited by 7 cases

Opinion

Fullerton, J. —

On August 15, 1912, the defendant P. Gibbons entered into a verbal agreement with the Great Northern Railway Company by the terms of which he agreed to procure oil leases on certain lands in Skagit county and sink a well, at some place thereon to be selected by himself, for the purpose of exploring for oil, the railway company agreeing to furnish the machinery and other equipment necessary for driving the well and to furnish $600 in money to be expended for labor in the prosecution of the work. In consideration therefor, the railway company was to have an assignment from Gibbons of a one-half interest in the leases, in case oil should be discovered on any part of the lands. In October, 1912, certain well drilling machinery owned by the railway company and then situated in North Dakota was shipped to Skagit county and placed in charge of Gibbons for operating purposes. Drilling began December 1, 1912, and continued under this oral agreement until February 25, [46]*461913, when P. Gibbons and wife, as parties of the first part, entered into a written contract with the railway company, as party of the second part, which contract' contained the following provisions:

“Whereas, party of the second part has already advanced to first party the sum of eight hundred eighty 75-100 dollars, and has furnished the use of a drill, all for the purpose of exploring for oil upon some of the lands above referred to, and said second party has agreed, and does hereby agree, to advance to first party the further sum of six hundred nineteen no-100 dollars, and to permit further use of said drill by first party until said sum to be advanced as aforesaid shall have been expended in the prosecution of said oil explorations;
“Now, Therefore, in consideration of the foregoing premises, party of the first part covenants and agrees with party of the second part as follows:
“(1) That said party of the first part will'prosecute the work of exploring for oil upon some of the lands above referred to, and will employ all necessary labor and furnish all necessary materials in such manner and in such places as he shall deem most expedient, until he has expended in an efficient and economical manner, in the prosecution of said work, at least the sums advanced and to be advanced by party of the second part as aforesaid. Said labor and materials to be procured, and said work to be prosecuted upon the sole responsibility of party of the first part, and party of the second part to have no interest in, nor direction of, said work, except as hereinafter stated, and to incur no obligation, except as above stated, and party of the first part agrees to exonerate and save harmless party of the second part from any further obligations or expenses in connection with said operations.
“(2) Party of the first part further agrees that in case any oil, gas or other minerals shall be discovered in paying quantities in- any of the properties covered by any of said leases procured or to be procured by party of the first part as aforesaid, he will thereupon and thereafter hold all of the leases above referred to, procured or to be procured as aforesaid, in tx’ust for the joint use and benefit of himself and party of the second part, and will upon demand by party of the second part, assign to party of the second part, its sue[47] cessors or assigns, an undivided one-half of all of the interest of party of the first part in and to any and all of said leases, and that party of the second part shall be entitled to one-half of the interest of party of the first part in any deposits of gas, oil or other minerals discovered in any of said properties.
“(3) The agreement of party of the second part to furnish the use of a drill as above provided shall be construed to include all necessary pipes and equipment to be used in connection with said drill, and it is understood that after party of the first part shall have expended the total sum of fourteen hundred ninety-nine and seventy-five one-hundredths ($1,499.75) dollars, advanced and to be advanced by party of the second part, as aforesaid, he shall be under no further obligation to prosecute the work of exploration or development at his own expense, but that if he should voluntarily choose to incur further obligations in said work the same shall be discharged by himself and not by party of the second part. The advancing of any further sums by party of the second part shall be at the option of party of the second part, and if advanced by party of the second part, shall be expended by party of the first part under the terms of this agreement.
“(4) In case the sums advanced as herein provided for, and any additional sums which party of the second part shall choose to advance for said work, shall have been expended without striking gas, oil or other minerals in paying quantities, and in case party of the second part shall decide not to advance any further sums to carry on said work, party of the first part shall have the right to advance further sums himself or to secure the advancement of further sums from other parties and to proceed with the expenditure of such further sums in the said work of exploration, and if thereafter oil, gas or other minerals shall be discovered in paying quantities, the rights and interests hereinabove created and provided for in favor of party of the second part shall be divided between party of the second part, its successors and assigns, and the party or parties advancing such further sums in proportion to the amounts theretofore advanced by party of the second part, and such other party or parties respectively and actually expended in said work of exploration and development.”

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Mattocks v. Great Northern Railway Co., 162 P. 19, 94 Wash. 44 (Wash. 1916).

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