Shannon v. Shaffer Oil & Refining Co.

51 F.2d 878, 78 A.L.R. 851, 1931 U.S. App. LEXIS 2975

• Court: Court of Appeals for the Tenth Circuit
• Decided: July 13, 1931
• Docket: 292
• Status: Published

Opinion

McDERMOTT, Circuit Judge.

The plaintiff (appellant) owned an eighty-acre tract of land in Oklahoma, upon which defendants held an oil and gas lease. Four wells were drilled thereon in 1925 and 1926 in an effort to produce oil. The land was underlain, in part at least, with two oil and gas bearing sands, the upper being known as the “Bartlesville” and the lower as the “Wilcox.” The Wilcox sand was supposedly the more valuable, and the wells were drilled through the Bartlesville sand to get to the Wilcox. This action is for damages for the value of gas which plaintiff alleges the defendants permitted to escape and waste. The jury returned a verdict for the defend-an(.g

. . ■ The lease is m ordinary form, granting the lessee the right to use gas produced for lts operations, and the lessee agreeing to pay to the lessor or his assigns one-eighth of the , ° i % j j net proceeds ox any gas produced and used -a ,f . nt ¿ m/7 o • r _ off the premises. Chapter 197, Session Laws n ji-in-tc ¿ of Oklahoma of 1915, prohibits waste; waste n ¿ i „ is defined to include “escape of natural gas *' * - into the open air”; and it is ftir- ,, , 1 , 9 j . ther provided that, when a gas sand is en- ¿ 3 -u n t. * n ai. ♦ countered, the gas shall be confined therein ., . ’ ., Tr. , n ., , until it is utilized, violations of the act are . . ,. , . . , mi, punishable by fine and imprisonment. The 7-, .. n__. . ¿ 3 , . Corporation Commission enacted certain reg-/r -i • 3 , _ , ,, , . . ° ulations designed to carry out these statutory , , n a eS'

In view of the narrow scope of the errors properly preserved for review, no extended analysis of the evidence is necessary.. The plaintiff testified he was about the wells frequently, but knew little of the business; he saw gas escaping into the air, but he did not know how much gas was produced as he “had a man hired to gauge those wells.” He knew large quantities of gas were saved and sold, for which he received his royalties; he testi-fled that “they might have attempted to shut in the gas by the mudding off or lubricating process but that they did not stop it.” There was a gas pipe line into the field, and the pressure of the wells was sufficient to overcome the pipe line pressure; there was no evidence of the amount of gas from this lease which the pipe line was in position to handle. A gauger testified be bad gauged tbe gas pressure on this lease, and that the company kept a record of the gauges so made. The defendants produced the record of such gang-es and tendered them to the plaintiff, who de-elined to use them. The gauger did testify to the pressure on certain dates, which would show what the well was capable of produe-iug. He testified that the gas from the Bartlesville sand was bradenheaded and allowed to flow into the slush pond; that, if oil and &as are coming from ,the same stratum, you cannot take the oil and save the gas; that defendants ran iron oxide and mud and slush tuto one well to stop the gas. Other witnesses testified that gas escaped, and no effort jyas made to stop it. ^ There was also evidence, introduced by plaintiff, of tests of one of the wells for its open flow on various dates; that ^is well No. 1 we [the defendants] held back pressure on the well putting a flow plu§ i*1 the well to hold this back pressure and conserve this gas and let it flow enough to produce its production and held the maximum pressure on the well. The gas escaped from the lead line to the well through what is ]jnown as bhe separator, and the oil stripped £rom tlle gas. The remainder of .the gas being goM as nmcb as W0 could possibly sell.” •

, . , „ , , , When the plaintiff rested, defendants’ motion for a directed verdict was denie d thereupon defendants rested; the plai n t i ff did not ask that the court instruct the jury that the Plamtfft was entitled to recover in such amount as the jury might determi n e. In Gasoline Products Co. v. Champlin Refi n ing Company, 283 U. S. 494, 51 S. Ct. 513, 75 L. Ed. 1188, it was held that all the issues, in a case need not be submitted to a jury, be- , , m. , , cause one must be. Thereupon the court sub- . ,, nutted the case to the jury, charging them, in substance, that, if they found that defendants had failed to use diligence in performing the obligations imposed upon them by and by their lease, the plaintiff should rec0ver; but 'that neither the law nor the lease required defendants to do the impossible, nor deprived them of the right to drill to fhe gand -which in their judgment justified the ¿billing operations; that if the defendants, in endeavoring to conserve the gas, used those means recognized as proper in modem oil and gag devel0pment, and exercised their best judgment ag to the method of conserving said gaS) they would not be liable if, nevertheless, some gag escaped,

Many errors are assigned, among them that tlle eóurt en’ed «eluding testimony ?ffered bJ sald Pla“tlff- Thls presents noth-^ort ^fview* -^u*e ^ this court provlde®" Wh® the error alleged is to the ad misal0J1 or rejection of evidence the assignment sba11 9^® the.fu11 substance of evidence admitted or rejected.”

At the conclusion of the charge the plaintiff excepted to this instruction: “You are further instructed that in open court the defendant tendered the plaintiff all records relative to said wells, and if the plaintiff failed to avail himself of such records and such information as he could have produced from the records of the defendant, and you further find that from the evidence introdueed you are not able to arrive at an intelligent and logical conclusion, then your verdict must be for the defendant.”

__ ,. . The exception is without merit. The substance of the instruction is that if there is not sufficient^ evidence to enable the jury to arrive at an mtdligent conclusion, the plaintiff must fad. The objection stressed is not so much to this elementary statement, but to the reference to the records The reference to the record was not uncalled for. The records were in court. The ¡plaintiff was not required to use them; but if, without them, bis evidence was so sketchy that there was no reasonable basis for estimating his loss, he could not recover. The national courts are not foreclosed from any mention of evidence or lack of evidence, or incidents of the trial.

The plaintiff further excepted to the following instruction: “You are further in-strueted that the drilling of oil and gas wells is a hazardous enterprise; that there is much risk and chance involved; that there is dan-ge¡r of losing the hole and tools, and the defendant would have the right as a driller to go to the sand which in its judgment would justify the drilling operation which it had undertaken, and if gas escaped at a higher sand, the flow of which eould not be stopped and it could not complete the drilling of the well without permitting the gas to escape, then the defendant would not be chargeable for the gas so wasted.”

Considering this instruction with the rest of the charge, we see no objection to it. The statutes and the regulations of the Corporation Commission are not intended to stop exploration for oil, nor to require the abandonment of producing oil wells; neither do they require the operator to pay for gas that unavoidably escapes. The statutes and regulations are designed to stop the reckless waste of a natural resource formerly .incident to oil production, and to require operators to take every reasonable precaution known to the industry to prevent a wastage of gas when drilling for oil. They do not require the impossible. The charge of the court, considered in its entirety, is in accord with these views.

The plaintiff filed a motion for a new trial, which was denied. The first seven points are general — that the court erred in exelud-ing testimony, and in its instructions to the jury; that errors of law occurred at the trial; and that the verdiet and judgment are contrary to the law and evidence. The next twelve points are detailed exceptions to the charge. Much of the brief is devoted to points raised, for the first time, by the motion for new trial,

The W h le plT, °* ^ ^ tional courts •would be thwarted if points eould b0 reviewed wHeb &st raised a moti(m for a new faiaL Tbe underl^ng tb o£ . trials ig tbat etE0E8 must be sb j ealled to tbe attention 0f the court wbile tbe ^ ig in progress so that the trial eourfc bave tbe opportimity to correct the and gaye tbe ne0essity of a new trial, Tb0 burden ig g el laaed on eolmgel of deteeti errors promptly pointing them out, and ti to the ralings made. Errors in ^ admission or exelusion of evidence er_ rorg in submitti a case to the jur on ^ sllffieiellt eyid errorg in tbe eb to tbe • and aU errorg oeemTÍn at the trial, faU witMll the geope of tbis rule. And yet the major part of the motion for a new trial in this ease flies fairly in the face of these settled principles and also of Rule 10 of this court, which reads: “The party excepting to the charge of the court to the jury in trials at common law must state distinctly the several matters of law in sueh charge to which he excepts before the jury retires; and no other exceptions, nor general exceptions, to the charge shall be allowed by the district courts or inserted in a bill of exceptions.”

Tbig bag hgen tb0 law ginC0 a early day> In Pennsylvania R. R. Co. v. Minds, 250 U. S. 368, 375, 39 S Ct. 531, 533, 63 L. Ed. 1039, the court said: “This court has repeatedly held that objections to the charge 0f a trial judge must be specifically made in order that he may be given an opportunity to correct errors and omissions himself before the same are made the basis of error proeeedings; this is the only course fair to the court and the parties. McDermott v. Severe, 202 U. S. 600, 610, 26 S. Ct. 709, 50 L. Ed. 1162; Norfolk & Western Ry. Co. v. Earnest, 229 U. S. 114, 120, 33 S. Ct. 654, 57 L. Ed. 1096, Ann. Cas. 1914C, 172; United States v. U. S. Fidelity Co., 236 U. S. 512, 529, 35 S. Ct. 298, 59 L. Ed. 696; Jacobs v. Southern Ry. Co., 241 U. S. 229, 236, 36 S. Ct. 588, 60 L. Ed. 970; Guerini Stone Co. v. Carlin Construction Co., 248 U. S. 334, 338, 39 S. Ct. 102, 63 L. Ed. 275. Parties may not rest content with the procedure of a trial, saving general exceptions to be made the basis of error proceedings, when they might have had all they were entitled to hy the action of the trial court had its attention been seasonably called to the matter.”

There are instances, particularly in eriminal cases, where the error is so fundamental' and glaring that it may be noticed by the appellate court in the absence of exception. N. Y. Central R. R. Co. v. Johnson, 279 U. S. 310, 318, 49 S. Ct. 300, 73 L. Ed. 706; Bogileno v. United States (C. C. A. 10) 38 F.(2d) 584. But this is not one of those unusual cases. The exceptions to the charge eontained in the motion for new trial cannot therefore be noticed. Lewis v. United States, 146 U. S. 370, 379, 13 S. Ct. 136, 36 L. Ed. 1011; Reagan v. Aiken, 138 U. S. 109, 113, 11 S. Ct. 283, 34 L. Ed. 892.

One of the grounds for the motion for a new trial is that the verdict is contrary to the evidence. An order overruling a motion for a new trial is not an appealable order (Luckenbach S. S. Co. v. United States, 272 U. S. 533, 540, 47 S. Ct. 186, 71 L. Ed. 394; Reagan v. Aiken, 138 U. S. 109, 113, 11 S. Ct. 283, 34 L. Ed. 892; Railway Company v. Heck, 102 U. S. 120, 26 L. Ed. 58; Kansas City Southern Ry. v. Littlefield (C. C. A. 10) 37 F.(2d) 707), although time does not run on the right to appeal from the judgment until the motion is ruled on (United States v. Ellicott, 223 U. S. 524, 539, 32 S. Ct. 334, 56 L. Ed. 535; Luckenbach S. S. Co. v. United States, 272 U. S. 533, 540, 47 S. Ct. 186, 71 L. Ed. 394). When the appeal is from the judgment, error cannot ordinarily be assigned on the denial of a motion for a new trial; such motion is addressed to the discretion of the trial court, and his action thereon is not reviewable on appeal unless there has been a clear abuse of discretion. Maloney Tank Mfg. Co. v. Mid-Continent Petroleum Corp. (C. C. A. 10) 49 F.(2d) 146, 150; Bowman-Hicks Lumber Co. v. Robinson (C. C. A. 9) Glenwood Irr. Co. v. Vallery (C. C. A. 8) 248 F. 483; Pugh v. Bluff City Excursion Company (C. C. A. 6) 177 F. 399.

In the last two eases cited, the verdict in one was for nominal damages for the wrongful death of a wage-earner in sound health, and the sole support of the plaintiff; in the other, the verdict deducted an amount in express disregard of the_court’s_ instructions. From these two authorities, with which we are in accord, the plaintiff argues that some gas escaped; therefore he was entitled to some damages.

We recognize the rule contended for by plaintiff that, where there is proof, within the permissible range of certainty, that a right of a plaintiff has been invaded, he should not be denied a substantial recovery because of the difficulty in accurately measuring his damages. The later authorities recognize the distinction between the ease where uneertainV exists as to whether any substantial damage resulted, and the case where the uncertainty exists only as to the extent of such damage. In Hoffer Oil Corp. v. Carpenter, 34 F.(2d) 589, 592, we held that one who had broken his contract could not escape liability because of the lack of a perfect measure of damage. The Eighth Circuit had theretofore so held. Calkins v. Woolworth, 27 F.(2d) 314, 320. Williston, in his Work on Contracts, says: “Where it is clear that substantial damage has been suffered the impossibilj* f proving its precise limits is no reason tor denying substantial damages altogether, Williston on Contracts, Vol. III, p. 2401.

In 8 R. C. L. p. 441, the author states: “Formerly the tendency was to restrict the recovery to such matters as were susceptible of having attached to them an exact pecuniary value, but it is now generally held that the uncertainty referred to is uncertainty as to the fact of the damage and not as to its amount, and that, where it is certain that damage has resulted, mere uncertainty as to the amount will not preclude the right of recovery. This is particularly true where, from the nature of the case, the extent of the injury and the amount of damage is not capable of exact and accurate proof.”

. The Fifth circuit, in Wells v. National Life Ass>n> 99 222, 53 L. R. A. 33, cites many authorities to the same effect, inelud-jng Wakeman v. Manufacturing Co., 101 N. y. 205, 4 N. E. 264, 266, 54 Am. Rep. 676, wherein it is held: “But when it is certain that damages have been caused by a breach of contract, and the only uncertainty is as to-their amount, there can rarely be good reason for refusing, on account of such uncertainty, any damages whatever for the breach. A person violating his contract should not be permitted entirely to escape liability because the amount of the damage which he has caused is uncertain.”

The Second Circuit, in Crichfield v. Julia, 147 F. 65, 71, certiorari denied 203 U. S. 593) 27 S. Ct. 781, 51 L. Ed. 332, stated the rulé: “The rule against the recovery of uncertain damages has been generally directed against uncertainty as to cause rather than uncertainty as to measure or extent; that is, if it is uncertain whether the defendant’s act caused any damage, or whether the damage proved flowed from the defendant’s act, there may be no, recovery of such uncertain damages; whereas uncertainty which affects merdy the measure or extent of the injury suffered does not bar a recovery.

_ The same circuit, in Straus v. Victor Talking Mach. Co., 297 F. 791, 802, held: “The constant tendency of the courts is to find some way in which damages can be awarded where a wrong has been done. Difficulty of aseertainment is no longer confused with right of recovery.” See, also, Pierce v. Tenn. Coal, etc., R. R. Co., 173 U. S. 1,16,19 S. Ct. 335, 43 L. Ed. 591; Hetzel v. B. & O. R. R. Co., 169 U. S. 26, 38,18 S. Ct. 255, 42 L. Ed. 648.

But this rule does not mean there need be no proof of the amount of the damage. Obviously a plaintiff may not come into court and say no more than “the defendant stole some wheat” or that “a fire destroyed some of my goods,” and ask for substantial damages. The rule is that, if an injured plaintiff has produced the best evidence available, and if it is sufficient to afford a reasonable basis for estimating his loss, he is not to be denied a substantial recovery because the exact amount of the damage is incapable of ascertainment. In Eastman Co. v. Southern Photo Co., 273 U. S. 359, at page 379, 47 S. Ct. 400, 405, 71 L. Ed. 684, the court held: “ ‘Damages are not rendered uncertain because they cannot be calculated with absolute exactness. It is sufficient if a reasonable basis of computation is afforded, although the result be only approximate.’ This, we think, was a correct statement of the applicable rules of law. Furthermore, a defendant whose wrongful conduct has rendered d i m cult the ascertainment of the precise damages suffered by the plaintiff, is not entitled to complain that they cannot be measured with the same exactness and precision as would otherwise be possible.”

In Anvil Min. Co. v. Humble, 153 U. S. 540, 14 S. Ct. 876, 38 L. Ed. 814, the Supreme Court held that mathematical certainty as to , , damage was not necessary, if the evidence furnished a basis upon which a reasonable estimate” of the elements entering into t he damage might be made. In the Hoffer Case, supra, we held that “a reasonable basis f or computation, and the best evidence which is obtainable under the circumstances of the case and which will enable the jury to aaprive at an approximate estimate of the loss, is sufficient.”

The plaintiff’s entire argument, on this point, is that beeause gome gag eseaped; be necessarily was entitled to his proportion of ^he value of all the gas the wells were capable 0f producing, less what he had been paid for. are two flaws jn this reasoning. In the £rst place, the burden was on plaintiff to s]low that defendants failed to exercise proper diligence, under their lease and the laws of Oklahoma, to prevent waste. The plaintiff’s witnesses testified that some effort was made to shut off the gas by a flow plug, with mud, by a bradenhead, and with oxide of iron, although these efforts were successful only in part. -One of his witnesses testified broadly that “the remainder of the gas being sold as much as we could.” Furthermore, it should not be assumed that defendants, owning seven-eighths of the gas, would have wasted it, if by reasonable diligence it could have been conserved. But, even if it be assumed that the evidence of defendants’ lack of diligence was undisputed, there is still the question of whether plaintiff afforded the jury any reasonable basis for computing his loss. The reeord discloses open-flow pressures at given ¿ates, which indicate the capacity of the well j£ p flows continuously and without hin¿ranee; but when the same reeord discloses £ow. pbjg^ mud, oxide, and other means wre uged obstruet and eontrol tbe fl wben fte reeord diseloses some avoidable w and wbeQ tbeir leage defendants the right to use gas for the operations be i ng earned on when these factors are considered, there is no substantial basis left from ,. . . , 3 which a jury could make a rational estimate of the amoun of avoidable waste Certainly the plaintiff’s theory that he is entitled to pay upon the basis of the capacity of the wells is unfair. The members of this court have studied this record carefully and are unable to arrive at any rational estimate of the amount of gas, if any, which was wasted through the fault of defendants. We conclude that the trial court did not abuse its discretion m declining grant a new trial because the jury did not find evidence upon which to return an intelligent ve r dict.

The judgment is therefore affirmed.