Case ID: pa_202/html/0416-01.html
Source: Caselaw Access Project
Author: {"author": "Per Curiam,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Douthett v. Fort Pitt Gas Company, Appellant.
    
      Oil and gas lease — Construction—Parol evidence.
    
    Where a contract provided that a well sunk in oil and gas land should under certain conditions be operated as an oil well and belong to one of the parties, and if oil should not be found, the other party should drill deeper into another strata, the oral evidence of experts and practical producers of oil and gas in the oil and gas belts is admissible, not to change, modify or contradict the writing, but to show the surroundings of the parties at the time the contract was made, and thus aid the court in the interpretation of the written agreement.
    In such a case it is proper to show that in the region in which the land was situated oil was found in a particular strata of sand, and if not found there was not likely to be found at all, and that when the well reached this strata it was proper to have the well tested by “shooting,” unless it was made to appear that such treatment would seriously jeopardize the further drilling of the well in case oil was not found, and it was necessary to drill to a lower strata. If the court finds from such evidence that a test by “ shooting” was proper under the circumstances, the appellate court will not reverse the finding.
    Argued April 22, 1902.
    Appeal, No. 48, Oct. T., 1902, by defendant, from decree-of C. P. No. 1, Allegheny Co., Sept. T., 1901, No. 421, on bill in equity in case of Lemuel Douthett, trading as The Thorn Hill Oil Company v. Fort Pitt Gas Company.
    Before Dean, Fell, Bbown, Mestbezat ' and Potteb, JJ.
    Affirmed.
    Bill in equity for an injunction.
    Stowe, P. J., filed the following opinion:
    The plaintiffs under the name of the Thorn Hill Oil Company are joint owners of certain leaseholds and properties for oil and gas purposes; one under a lease from Mary A. Douthett for forty acres, more or less, dated November 3, 1900, and another from C.- Weldon, for sixty acres, more or less, dated June 26, 1900. On February 25, 1901, plaintiffs entered into a written agreement with the Rochester Tumbler Company wherein, for $3,000 in money and other considerations, they assigned and transferred to the tumbler company all the gas rights covered by said two leases on the farms of Douthett and Weldon, in-eluding the gas rights in the well then drilled on said Douthett farm, together with the rig and casing therein.
    As a further consideration the tumbler company agreed to drill a well on the Douthett farm, commencing within sixty days from said date and to prosecute the same to completion with due diligence, the agreement containing the following provisions :
    1. If the well produces no oil, the same to be at the cost of the tumbler company.
    2. If the well produces less than ten barrels per day of oil, it was to belong to plaintiffs upon payment to the tumbler company for the rig and casing at well values; the rig not to cost more than $200. The drilling to be at the cost of the tumbler company.
    8. If the well produces more than ten barrels per day, the plaintiffs shall pay the cost of rig and casing at well values; the rig not to exceed the cost of $200, and also pay the cost of drilling, and said well shall belong to plaintiffs.
    4. If neither gas nor oil are found in paying quantities sooner, the defendants shall drill well into the fourth sand.
    • The tumbler company commenced the drilling of a well on the Douthett farm in pursuance of this agreement about May, 1900, and drilled it through what is known as the hundred foot sand, which appears to be the sand in which almost all the oil produced in that section of country is found. The evidence sufficiently shows that there were such indications of oil at this point to justify the conclusion that with proper treatment by “ shooting” or exploding torpedoes at this point, oil might be found in paying quantity. The plaintiffs demanded the right to “shoot” the well, before defendants should drill further for the purpose of determining whether oil could be obtained in this sand, which defendants refused to allow, and thereupon plaintiffs filed this bill and obtained an injunction preventing the defendants from further drilling the well until plaintiffs had been allowed to fairly test said well, or have it tested for oil, in said sand. No test has yet been made, and the drilling has been stopped, and there the matter stands to this day, when the case comes up for determination on final hearing as to whether defendants shall be allowed to proceed with drilling the well before the plaintiffs shall be allowed to test in this hundred foot sand for oil by shooting or torpedoing it in this sand.
    The evidence satisfies us that the general understanding of oil men in this district at the time this agreement was entered into was that oil was nearly always found in this hundred foot sand, if found at all, and that if it was not found there it was not likely to be found at all. It is clear the well could not be operated as both an oil and a gas well. It must be one or the other, and therefore we think the contract should be construed in view of that fact, and that plaintiffs should have the right when the indications fairly promised oil, and the reasonable probability was it would be found in paying quantity to have the well tested in the proper and usual manner by “ shooting ” unless it is made to appear from testimony that such treatment would seriously jeopardize the further drilling of the well in case oil was not found and it was necessary to drill to the fourth sand.
    How then does the evidence stand upon this question ?
    We must here note that defendants do not deny the right of plaintiffs to test the well at some time, but claim that they should not do so until the drilling has gone to the fourth sand, or at least below where it has now been drilled, alleging that such test was dangerous to the further drilling of the well and, if not productive of sufficient oil to pay, would'stop its further development by destroying it, and thus prevent them having the benefit of their agreement, and also aver that in such cases as this, that is ■ not only the safer course, but is the one usually adopted under similar circumstances. Considerable testimony was given to show that persons contracting to drill wells will not allow “shooting” tests as they drill unless specially provided for in their agreement, but we have no evidence at all in regard to such a case as this. So far as the evidence tends to show, the danger to the well by shooting it is well enough, but it fails to throw any light upon the proper construction of this particular agreement in any other respect. While the evidence satisfies me that there is some danger in “ shooting ” a well in the situation this one is in, if not carefully and properly done, it appears to me to be the usual course and that the danger is not so great as to justify us in saying that it was not intended to be allowed under this agreement. Taking it all together we think the fair interpretation of this agreement is that plaintiffs have the right to secure oil in this hundred foot sand if it can be done by “shooting,” that such is the usual course under similar circumstances for testing a well for oil, and that the danger to the further drilling of the well by such shooting is not such as should prevent it now being tested by plaintiffs before further drilling is done by defendants, and therefore are of opinion that plaintiffs are entitled to the relief prayed for. We further think that the findings of facts requested by plaintiffs are correct as also the conclusions of law arising therefrom, and therefore affirm the same, and the prothonotary is now directed to enter a decree sec. reg. in accordance with this opinion.
    April 28, 1902:
    
      Error assigned was the decree of the court.
    
      William II. Me Clung, with him Edwin S. Qraig and Ralph Longeneclcer, for appellant.
    
      W. H. S. Thomson, with him John W. Thomas, for appellee.
   Per Curiam,

This is by no means a one sided-case. Its decision rests on the interpretation of the written agreement of February 25, 1901. As an aid to such interpretation, the court heard oral evidence of experts and practical producers of oil and gas in the oil and gas belts ; not to change, modify or contradict the writing, but merely as explanatory thereof; in other words, to show the surroundings of the parties at the time their minds were brought to assent to the same thing. This kind of evidence is always admissible in the interpretation of such writings. The subject of it is not well known to any, but those engaged in the particular business which gives rise to the contract. Many phases of that business arc so familiar to the parties, that knowledge of them is assumed, on the part of all others as well as by courts; hence, what is implied in the minds of the contracting parties is often not expressed in the writing, and hence also the admissibility of oral evidence. The learned judge of the court below in his opinion says :

“ The evidence satisfies us that the general understanding of oil men in this district at the time this agreement was entered into was, that oil was nearly always found in this hundred foot sand, if found at all, and if it was not found there it was not likely to be found at all. It is clear the well could not be operated as both an oil and a gas well. It must be one or the other, and therefore, we think the contract should be construed in view of that fact, and that the plaintiffs should have the right when the indications fairly promised oil, and the reasonable probability was it would be found in paying quantity, to have the well tested in the proper and usual manner by “ shooting ” unless it is made to appear from testimony that guch treatment would seriously jeopardize the further drilling of the well in case oil was not found and it was necessary to drill to the fourth sand.”

He then in his conclusion says: “ Taking it all together, we think the fair interpretation of this agreement is, that plaintiffs have a right to secure oil in this hundred foot sand if it can be done by “shooting”; that such is the course under similar circumstances for testing a well for oil and that the danger to the further drilling of the well by “ shooting ” is not such as should now prevent its being tested by plaintiffs before further drilling by defendant.”

There was evidence on part of the defendant that under the circumstances to shoot the well at the present depth might destroy it, which would be greatly to its loss, and therefore ought not to be implied as a right under the contract. This view has been very ably and plausibly argued by counsel for appellant; but in an evenly balanced case like this, the opinion of the trial judge who had before him the witnesses is very persuasive with us, and we therefore adopt his opinion.

The decree is affirmed.