Pray v. Kidd Williams Drilling Corporation

1960 OK 64, 352 P.2d 380, 13 Oil & Gas Rep. 1022, 1960 Okla. LEXIS 372

• Court: Supreme Court of Oklahoma
• Decided: March 8, 1960
• Docket: 37979
• Status: Published

Opinions

JACKSON, Justice.

This is an appeal by defendant, Max Pray, from judgment on directed verdict for plaintiff, Kidd Williams Drilling Corporation, in the amount of $24,128.07, as balance due under terms of a certain written contract. In accordance with said contract, plaintiff drilled a well on a leasehold in Garvin County, Oklahoma, owned by defendant (⅜⅜hs), Kenneth Ellison (⅛⅛), and Redlands Oil Company (%ths). The contract recited that defendant was to be the operator of the well when completed, and defendant was the only one of the lease owners who was a party to or who signed the contract. Upon completion of the well, plaintiff, as previously requested by defendant, billed each of the lease owners for their pro rata part of the contract amount, according to their ownership interest. Defendant and Kenneth Ellison paid their respective parts, but Redlands did not. After trying unsuccessfully for several months to collect from Redlands, plaintiff brought action against defendant to recover the balance due plaintiff under the contract, resulting in the judgment appealed from.

Defendant’s answer admitted the execution of the written contract, but alleged that the said contract was in fact negotiated by Redlands; that plaintiff mailed the contract to defendant while he was in Florida, and that prior to executing same defendant informed plaintiff that defendant owned only a -%ths interest in the lease, and would pay that portion of the contract amount, but that plaintiff should bill the other owners for the balance, according to their respective interests; that the written contract sued on was not the true contract between the parties, defendant having refused to execute the written contract until plaintiff had agreed to the modification thereof, which amounted to a new oral agreement under which plaintiff agreed to hold defendant liable for only three-eighths of the contract amount.

The salient provisions of the written contract, which was introduced by plaintiff, are, as follows:

“Drilling Contract.

“This Agreement, made and entered into this 14th day of March, 1956, by and between Max Pray, Suite 300, Palmolive Building, Chicago, Illinois, hereinafter called ‘Company’ and Kidd Williams Drilling Corporation, a Delaware Corporation, hereinafter called ‘Contractor’.

“Witnesseth”

“That the parties hereto, in consideration of their mutual covenants hereby agree as follows :

“Contractor agrees to drill a well for Company for the purpose of obtaining oil and gas. Said well shall be known as Pray-Redlands #2, Freeman and located in the NE/4 SW/4 of Section 17-4N-4W, Garvin County, Oklahoma.

“When said well has been completed in accordance with the terms and conditions herein set forth, Company agrees to pay Contractor as follows :

“(1) $4.50 per foot for each lineal foot of hole actually drilled above the contract depth. The depth of the hole shall be measured from the surface of the ground.

“(2) Company shall pay Contractor for work commonly known as ‘Day Work’ at the following rates per 24-hour day:

“Rotary — With Drill Pipe $850.00

“Rotary — Without Drill Pipe $750.00.

***********

“In Witness Whereof, the parties hereto have executed this agreement the day and year first above written.

“/s/ Max Pray “/t/ Max Pray

“Attest: /s/ John T. Lenoir (Seal) Kidd Williams Drilling Corp.

“By /s/ O. D. Williams President.

“Sec’y-Tres.”

Plaintiff’s letter transmitting the contract to defendant for execution, Defendant’s Exhibit No. 1, is, as follows:

“Kidd Williams Drilling Corporation

“206 Kennedy Building

“Tulsa 3, Okla.

“March 14, 1956.

“Mr. Max Pray

“700 North Lakeway

“Palm Beach, Florida

“Dear Mr. Pray:

“As per instructions of Mr. W. Y. Pickering of Redlands Oil Company, we are enclosing-an original and three copies of the Drilling Contract for the Pray-Redlands #2 Freeman located in the NE/4 SW/4 of Section 17-T4N-R4W, Garvin County, Oklahoma. All copies have been executed on behalf of Kidd Williams Drilling Corporation.

“Mr. Pray, if you will execute all copies, keeping the original for yourself, and mailing the three copies back to us, we will keep one copy, mail one to the Redlands Oil Company and the other to Mr. Kenneth Ellison.

“Trusting that this arrangement meets with your approval, and sincerely hoping that you rapidly recover from your recent illness, I remain,

“Very truly yours,

“Kidd Williams Drilling Corporation

“By /s/ O. D. Williams “/t/ O. D. Williams”

Defendant testified that he received the above letter on March 15th or 16th, and that on the 18th or 19th he had a telephone conversation with a representative of plaintiff, as follows:

“Q. What was said in that conversation with reference to this contract and your executing the contract?

“A. They were making up and, in fact, I think they had actually started drilling and they had no signed contract on this well and they wanted a signed contract. So I agreed to execute the contract which wasn’t along the lines we originally talked about, I agreed to execute it, providing they would bill, charge, and collect everybody involved which they had knowledge of, charge each one of us our pro rata share as our interest in the lease appeared and that was agreeable.”

Defendant further testified that he signed and mailed the contract to plaintiff by air mail from Florida on March 19th, and that on the same day he dictated a letter to plaintiff by telephone to defendant’s Chicago office which was signed and mailed to plaintiff by his secretary, as follows:

(Defendant’s Exhibit No. 2)

“March 19, 1956

“Mr. O. D. Williams “Kidd Williams Drilling Corp.

“205 Kennedy Building “Tulsa, Oklahoma

“Dear Mr. Williams:

“I am dictating this letter on the phone to my office in Chicago. I mailed the copies of the drilling contract to your office from Florida.

“As Redlands Oil Company, Kenneth Ellison and myself are involved in this operation, it would be much simpler for us if you would bill each of us direct for our pro rata share of the drilling costs.

“You should bill Redlands Oil Company for ½, Kenneth Ellison for ⅛ and me for ⅜.

“You can just make your regular statement and break down our pro rata share at the end of the statement, sending each of us a copy.

“If this meets with your approval, please let me know.

“Very truly yours,

“MP :djh

“cc: Redlands Oil Company

“Kenneth Ellison”

Plaintiff’s reply to defendant’s letter of March 19th, appears as Defendant’s Exhibit No. 3, as follows:

“Kidd Williams Drilling Corporation

“206 Kennedy Building

“Tulsa 3, Okla.

“March 20, 1956

“Mr. Max Pray

“700 North Lakeway

“Palm Beach, Florida

“Dear Mr. Pray:

“I am in receipt of your letter, on March 19, 1956, in which you enclosed the drilling contracts.

“It meets with our approval, for us to bill each of you direct for your pro rata share of the drilling costs. We will make your regular statement and break down your pro rata share at the end of the statement, sending each of you a copy. We will bill Redlands Oil Company for ½, Kenneth Ellison for ⅛, and you for ⅜.

“Hoping this is satisfactory with you, and if we can be of any other service to you, please let us know.

“Very truly yours,

“Kidd Williams Drilling Corporation

“By /s/ O. D. Williams “/t/ O. D. Williams’7'

Defendant’s first contention is that his requirement that plaintiff bill, charge and collect from each of the lease owners, pro rata, was a condition precedent to defendant’s execution and delivery of the contract, and that the contract did not become effective until plaintiff agreed to that condition.

We are cognizant of the rule which permits the introduction of parol evidence to prove a separate agreement which constitutes a condition precedent to the taking effect of a written contract; however, the cases cited by defendant in support of this contention, are, we think, distinguishable on the facts from the instant case. In Colonial Jewelry Co. v. Brown, 1913, 38 Okl. 44, 131 P. 1077, plaintiff jewelry company sued defendant on a jewelry order, and defendant was permitted to prove a separate parol agreement that the order was not to become effective until five days after its execution. In Yeager v. Jackson, 1933, 162 Okl. 207, 19 P.2d 970, defendant was allowed to introduce parol evidence that a written realty purchase contract was not to become effective unless the seller should give possession by a certain date. The written contract did not contain any provision for transfer of possession to the buyer. In Gamble v. Riley, 39 Okl. 363, 135 P. 390, we held that parol evidence was admissible to show that the written subscription agreement did not constitute the whole contract and was not to become binding until the happening of a certain contingency.

It will be noted that in all of these cases, the parol evidence did not contradict or vary the terms of the written agreement. As we stated in the syllabus of Colonial Jewelry v. Brown, supra:

“Such evidence does not tend to show any modification or alteration of the written agreement, but that it never became operative, and that its obligation never commenced.”

We recognized the importance of this distinction in the case of Moore v. Err-r-son, Okl., 325 P.2d 437, 438, wherein we said in the first paragraph of the syllabus:

“Where a writing or memorandum of contract does not purport to disclose the complete contract, or if, when read in the light of attendant facts and circumstances, it appears to contain only part of the agreement entered into by the parties, parol evidence is admissible to show what the rest of the agreement was; but such parol evidence must not be inconsistent with or repugnant to that part of the agreement integrated in the writing or memorandum(Emphasis added.)

The reason for the distinction is apparent when we consider the provisions of 15 O.S.1951 § 137:

“Writing excludes oral negotiations or stipulations. — The execution of a contract in writing, whether the law requires it to be written or not, supersedes all the oral negotiations or stipulations concerning its matter, which preceded or accompanied the execution of the instrument.”

And in Warren v. Pulley, 193 Okl. 88, 141 P.2d 288, we stated in paragraph one of the syllabus:

“In absence of fraud, accident or mistake, evidence of prior or contemporaneous oral agreement is inadmissible to vary terms of written contract, apparently complete on its face, as to an element or matter with which written contract deals, or as to a subject so closely bound to the matter of the written contract that parties would ordinarily be expected to have embodied it therein. 15 O.S.1941, § 137.”

The written contract in the instant case, in plain, concise language, obligates defendant to pay the entire contract amount, which is conceded by defendant. The evidence relied on by defendant to establish a condition precedent clearly contradicts the terms of the written contract, inasmuch as it attempts to relieve defendant of the liability imposed by the contract as to ^ths of the consideration due plaintiff.

Therefore, such evidence was incompetent under the statute and cases cited, and was properly disregarded by the trial court, whether such evidence was objected to or not. Seal Oil Co. v. Roberson, 175 Okl. 140, 51 P.2d 801.

Defendant’s second contention is that his letter of March 19th, in which he requested that plaintiff “bill each of us direct for our pro rata share of the drilling costs,” and plaintiff’s reply of March 20th, agreeing to defendant’s request, constituted a new proposal and acceptance, and a binding agreement under which plaintiff agreed to hold each owner of the lease liable for his pro rata share of the contract amount.

Was defendant’s letter of March 19th, a qualified acceptance of the written contract, or a new proposal? Although the letter was dictated and mailed on the same day defendant returned the executed written contract to plaintiff, it did not expressly purport to qualify defendant’s acceptance of, or to modify the written contract as to defendant’s liability thereunder, and it did not apprise plaintiff of any such intention or understanding on the part of defendant. It appeared to be merely a request that plaintiff bill each lease owner direct, because “it would be much simpler for us”. Simpler than what? Simpler than billing defendant for the entire amount according to the contract, which would result in defendant, as lease operator, having to collect from his co-owners their pro rata part? And plaintiff’s reply merely acceded to defendant’s request.

We are of the opinion that the trial court did not err in interpreting the letters contrary to defendant’s contention.

Defendant, in his fourth contention, argues that plaintiff’s action in billing the lease owners separately constituted a construction of the written contract by plaintiff as releasing defendant from ^jths of the contract amount.

A somewhat similar situation was presented in the case of McConnell v. Holderman, 1908, 24 Okl. 129, 103 P. 593, 594, wherein it appeared that defendant engaged plaintiff to procure oil and gas leases to be taken in the names of several oil companies designated by defendant. In an action by plaintiff against defendant to recover the consideration agreed upon, defendant contended that the parties intended that plaintiff was to look to the several oil companies for the consideration. We affirmed judgment on verdict for plaintiff, and stated that plaintiff’s motion for directed verdict should have been sustained. The following statement from the opinion is, we think, pertinent here:

“The defendant, to break the force of the foregoing contract, which clearly appears to us to have been an agreement on the part of the defendant to employ the plaintiff personally, and not as an agent, presented in evidence a showing that after all of the work had been done, the plaintiff had sent to him hills for leases to the oil companies charged in the names of the companies to whom made, and that furthermore, he thereafter wrote a letter to defendant in which he urged defendant to have the parties to whom the leases were made pay for the same; and, furthermore it is insisted that the fact that the leases were not taken in the name of defendant, but were taken in the names of the different oil companies, was evidence that the plaintiff understood and knew that he was not working for the defendant, but was hired by and was working for these oil companies. We are not able to agree with counsel in this claim. The evidence which we have set forth above, which shows the contract and the terms of it, is in nowise affected or modified by any of the facts insisted by counsel for defendant. There was nothing inconsistent therewith in plaintiff sending defendant his bill charging in separate items the leases taken showing the different companies in which they were written.”

We are of the opinion that plaintiff did not construe the contract in the manner contended by defendant, in billing and attempting to collect from the separate lease owners their pro rata part according to their respective ownership interests, for the reason that such conduct did not go beyond mere compliance with defendant’s request for separate billing, and did not evince any intention to release defendant from his full liability under the written contract.

Defendant argues that plaintiff, by borrowing money from plaintiff’s bank on the security of the Redlands invoice, thereby acknowledged that Redlands, and not defendant, was the one obligated to pay the balance due under the contract. This does not add anything to defendant’s previous contentions. It could just as well be argued that the act of sending the invoice to Redlands was an acknowledgment that Redlands, and not defendant, was liable therefor. Such conduct on the part of plaintiff was entirely consistent with defendant’s request for separate billing, and with plaintiff’s position that defendant remained primarily liable for the entire contract amount, according to the contract terms.

The remaining contention of defendant is that the trial court erred in directing a verdict for plaintiff because the question of whether the written contract was modified was one for a jury.

In Coston v. Adams, 203 Okl. 605, 224 P.2d 955, 957, cited by defendant in support of this contention, we stated, in the sixth paragraph of the syllabus, as follows :

“Whether a written contract has been superseded by an oral contract is a jury question where the facts are in dispute.” (Emphasis added.)

There was no dispute of facts in the instant case. The telephone conversation with plaintiff’s representative, testified to by defendant, occurred prior to the execution of the contract. It was clearly incompetent to vary the terms of the written contract under 15 O.S.1951 § 137. The only real issue presented was whether the letter from defendant to plaintiff, and plaintiff’s reply (Defendant’s Exhibits No. 2 and No. 3) constituted a modification of the written contract. This was a question of interpretation for the court, not for a jury, unless the letters rendered the contract ambiguous as to the extent of defendant’s liability. Defendant does not contend that the contract is ambiguous. In Littlefield Loan & Investment Co. v. Walkley & Chambers, 65 Okl. 246, 166 P. 90, we held, in paragraph two of the syllabus :

“It is the duty of the court to construe unambiguous written instruments introduced in evidence. Instructions submitting to the jury the construction of written instruments in evidence, which contain no ambiguities or uncertainties requiring explanation, constitute error.”

The trial court, in directing verdict for plaintiff, obviously interpreted the letters adversely to defendant’s contentions, and we find no error in such interpretation and judgment. There was no question for determination by a jury. Baker v. Traders & General Ins. Co., 10 Cir., 199 F.2d 289; Van Horn Drug Co. v. Noland, Okl., 323 P.2d 366.

Judgment affirmed.

HALLEY, JOHNSON, BLACKBIRD, IRWIN and BERRY, JJ., concur. DAVISON, C. J., WILLIAMS, V. C. J., and WELCH, J., dissent.