Peoples Ice & Fuel Co. v. Dickey Oil Co.

65 P.2d 319, 145 Kan. 351, 1937 Kan. LEXIS 322
CourtSupreme Court of Kansas
DecidedMarch 6, 1937
DocketNo. 33,214
StatusPublished
Cited by3 cases

This text of 65 P.2d 319 (Peoples Ice & Fuel Co. v. Dickey Oil Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Peoples Ice & Fuel Co. v. Dickey Oil Co., 65 P.2d 319, 145 Kan. 351, 1937 Kan. LEXIS 322 (kan 1937).

Opinion

The opinion of the court was delivered by

Thiele, J.:

This was an action by the plaintiff to enjoin defendant from violating the provisions of a claimed contract under which plaintiff was purchasing all the natural gas from a lease owned by defendant, and from a judgment for plaintiff the defendant appeals.

Appellant contends the evidence was insufficient to prove the contract and that .the claimed contract, if otherwise proved, was so indefinite, uncertain and inequitable it was unenforceable. In connection, the question of admissibility of evidence as to customs prevailing, and the sufficiency of such evidence, is presented. A final contention is that irreparable injury and lack of adequate- remedy at law were not shown.

In order that intelligent consideration may be given appellant’s contention, it is necessary that we briefly review the pleadings.

Plaintiff alleged it was engaged in the purchase of natural gas and maintaining a market for all gas wells in the gas field in McPherson county, and was collecting, distributing and selling it to another company which supplied 110 cities in Kansas, its requirements being from thirty-five to one hundred and six million cubic feet per day; that in its operations it has purchased the entire output of said wells and takes its needs from said wells proportionately; that it is impossible to purchase gas on the open market. That the history -of gas wells in McPherson county is that production is not [353]*353permanent, the life of a well is limited and can be prolonged and the gas conserved by taking only a portion of the open flow each day, and that it had been the intent and purpose of plaintiff to conserve the gas so that customers would be assured of an adequate supply as long as possible.

“And it has been the custom and practice of the plaintiff and all producers of gas with which it has contracts of purchase to take as much gas from each producer as is possible each day, and to treat each producer on the same basis; that is, to prorate the requirements of the plaintiff with the producers and take from each producer a proportion of said gas on the basis of the production of each producing well.”

It was further alleged that plaintiff had purchased gas in the field for six years from about 150 wells; that 50 wells had ceased to produce, and in order to have an adequate supply it was constantly acquiring additional production; that defendant is a gas producer and has sold plaintiff gas; that in its various purchases it had established and used a uniform contract with which defendant was familiar; that defendant owned a certain leasehold, and prior to January 4, 1935, had commenced to drill a well hereafter designated as Tull No. 1; that the well was completed on January 4, 1935, and produced both oil and gas, and on that day plaintiff and defendant by their respective officers and agents entered into an oral contract whereby plaintiff purchased and defendant sold the entire supply of merchantable gas produced from the lease at the rate of six cents per thousand cubic feet, all according to the terms of the uniform contract, the agreement being the plaintiff was to receive the gas in accordance with the approved practice, etc. That plaintiff immediately constructed a pipe line to transport the gas from defendant’s well to plaintiff’s transportation lines; that on January 6, 1935, defendant notified plaintiff the well was ready and it would like to have it connected so as not to waste the gas. Gas was turned into plaintiff’s lines on January 12, 1935, and thereafter plaintiff took from the well its proportionate requirements in proportion to the size of the well. It was further alleged the defendant ratified the contract by letter on February 7, 1935. Briefly stated, this letter accompanied abstracts of title covering the lease and stated if plaintiff had any requirements to advise defendant, who would give them immediate attention. Allegations as to capacity of the well will not be set out. It was then alleged that defendant had entered, or was threatening to enter, into a contract with third parties for the sale [354]*354of the gas produced from the lease, and would, unless restrained, break its contract with plaintiff, and would not be able to perform the contract with plaintiff; that plaintiff had no adequate remedy at law and unless defendant was restrained plaintiff would suffer irreparable loss which cannot be compensated in damages. The prayer was for injunction restraining defendant from violating the contract, and for equitable relief.

Defendant’s answer alleged the completion of its combination oil and gas Tull No. 1 well and its then capacity; that under the then existing rules and regulations, in order to produce its allowable amount of oil, it had to produce and find a market for approximately fourteen million cubic feet of gas per day; that the gas had a considerable gasoline content which defendant deemed advisable should be extracted. It then alleged its version of the dealings with plaintiff, that plaintiff would not agree to take any specified amount of gas per day, and that defendant had informed plaintiff it would sell gas to others than plaintiff in order that it might produce its allowable amount of oil; that it intended to take the gas from its wells to its extracting plant, and to use gas and to sell gas for drilling operations ; that under such circumstances plaintiff took gas. It was further alleged that the agreement referred only to Tull No. 1 well and there was no mention as to other wells that might be drilled on the leasehold. It was further alleged that defendant had had dealings with plaintiff and allied companies, but in them the purchaser took all gas up to where the allowable of oil could be produced without wastage of natural gas, but in the case of Tull No. 1 well, plaintiff and its agents refused to agree to take such amount, or any amount, of gas; that subsequent to January 10,1935, defendant had been selling gas from the lease to the Dickey Refinery and other users known to plaintiff, during all the time plaintiff had been taking gas; that plaintiff had a pipe-line connection, with gas reserves in Texas and had an adequate supply without taking any gas from the Tull lease so that it would not suffer irreparable injury if it should take no gas from the Tull lease.

At the trial, the testimony showed that in the various negotiations plaintiff was represented principally by its vice-president, Brock, and by one Smith, and that defendant was represented principally by its president, Dickey, and one Ballard, vice-president of the Dickey Refinery Company. As abstracted, there are 88 pages of testimony dealing largely with the oral negotiations tending to show [355]*355that a contract as contended for was or was not made, as well as tending to show uses and customs obtaining in the McPherson county oil and gas fields with reference to the sale of gas. Space forbids a detailed statement or even much of a summary of the testimony, but so far as is necessary it will be mentioned later. As a result of the trial, findings of fact and conclusions of law were made by the trial court. Because of a motion of defendant to modify them, certain portions of the findings are in italics.

“Findings of Fact
“1. The plaintiff is a Kansas corporation organized for the purpose, among other things, of purchasing and gathering gas from gas-producing wells in McPherson county gas fields and transporting it to its customers. C. E.

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Cite This Page — Counsel Stack

Bluebook (online)
65 P.2d 319, 145 Kan. 351, 1937 Kan. LEXIS 322, Counsel Stack Legal Research, https://law.counselstack.com/opinion/peoples-ice-fuel-co-v-dickey-oil-co-kan-1937.