Court Opinion

ID: 9826976
Source: CourtListenerOpinion
Date Created: 2023-09-01 17:01:25.318908+00
Date Added: 2024-06-11T07:42:20.200139
License: Public Domain

SMITH, J.
After drilling an oil well to á depth of 2,710 feet, upon an 80-acre lease owned by it in Medina county, the Wither-spoon Oil Company entered into a contract with R. B. Randolph to complete the well to a depth of 3,200 feet, unless paying production was reached at a lesser depth. In consideration of his agreement to complete the well, Randolph was to receive from the oil company an assignment of one-half interest in the well and in the lease upon which the well was located, and a one-third interest in the remaining leases owned by the company in the vicinity of the well. It was stipulated in the agreement that for a rental of $750 a month Randolph should have the use of the rig and equipment owned by the company and theretofore used by it in the operation, and that, upon termination of the contract, he should deliver the outfit back to the company in as good condition as it was in when he took possession of it, usual wear and tear excepted. To secure performance of the contract by Randolph,, the company required the latter to execute a bond in the sum of $5,000, with the Employers’ Casualty Company as surety. The bond was made payable to the oil company and others who might perform labor or furnish material to Randolph in the project. It was stipulated in the contract that Randolph should begin drilling the well “immediately, and proceed therewith with *588reasonable diligence until completed.” Tbe contract was entered into early in September, 1924. Randolph promptly entered upon tbe drilling operation, but made slow progress, and abandoned tbe project on December 15, after haying drilled only 80 feet in the well. He paid the first month’s rental on the drilling outfit, but no more, and when he abandoned the operation he was in substantial arrears with his laborers and materialmen.
The oil company filed this suit against Randolph and the casualty company, as surety, to recover damages for breach of the drilling contract, for rental of the drilling outfit up to April 26,1925, and for damages to it. The company alleged that it had fully complied with its obligations in the contract, including the assignment to Randolph of a third interest in the leases owned by it, and a one-half interest in the lease on which the well was located, but that Randolph had breached the contract by failing to diligently prosecute the drilling of the well to completion. The unpaid laborers and materialmen intervened in the suit and .prayed for judgment against both Randolph and the surety on his bond. The court directed a verdict for plaintiffs and interveners against both defendants, and rendered judgment in accordance with the directed verdict. Randolph and the Employers’ Casualty Company have appealed.
 Randolph set up, among other defenses, that he was induced to enter into the contract through the fraud of the oil company, alleging that the president of the company falsely represented to him that there was a sufficient supply of water available, and arranged for to complete the drilling operation undertaken in the contract by Randolph, whereas such supply of water was wholly inadequate for such purpose, and delayed and finally rendered impossible the completion of the well as provided for in said contract. These allegations were supported by testimony, and appellee did not seek to controvert it, but urged in defense thereto that, by failing to promptly disaffirm the contract after ascertaining the inadequacy of the water supply, appellant had waived his right to rescind the contract, or complain of the fraud. We are of the opinion that the evidence upon the issues of fraud and waiver was such as to require the submission of those issues to the jury, and that therefore the court erred in peremptorily directing a verdict for appel-lee thereon.
Appellee correctly asserts the rule that, when a party to a contract intends to disaffirm on account of the fraud of his adversary, he must act promptly upon discovery of the fraud. But the issue of diligence must be determined from the peculiar facts in each case, and, where there is any evidence from which a jury could find from all the circumstances of the case that the complaining party acted diligently, then it becomes | a jury question. And, it should 'be added, even though by lack of diligence the complaining party loses his right to disaffirm, he still has his action for damages occasioned by the fraud, and this remedy exists until barred by limitations. In this case there is evidence that Randolph’s experiments in ascertaining the dependability of the water supply carried him into a period of threats of suits for damages and for cancellation of his contract, which soon culminated in an injunction against him, and the whole uncertainty was erystalized into this action We are not prepared to uphold the directed verdict against all the circumstances of the case.
The evidence was uneontroverted that the oil company had never assigned to Randolph a half interest in the well or in the lease upon which the well is located, although it was expressly stipulated in the contract that such assignment should be made as a part of the consideration passing to Randolph in the transaction. The contract was silent as to when this transfer should be executed and delivered to Randolph. The assignments of adjacent leases provided for were made promptly, and the evidence strongly indicates that Witherspoon, president of the oil company, was entirely willing, when he made the other transfers, to assign the interest in the well and lease on which the well is located, and thought he had in fact made ¡such assignment. But he did not do so then or thereafter, has never tendered such assignment, and still refrains from doing so, although as a basis for complaining of Randolph’s breach of the contract he asserts full compliance therewith on the part of his company. Appellee seeks to defeat appellants’ right to complain of this breach because théy did not plead it below. On the other hand, appellee itself expressly pleaded that it had fully complied with the contract, even to the extent of executing and delivering this particular assignment, and it is probable that this pleading had the effect of raising the issue for both parties. We will not undertake to decide this question of pleading, however, as it will probably be obviated upon another trial.
No complaint is made of the judgment in favor of the interveners, and, as to tnem, the judgment will be affirmed, but, as to all the other parties, the judgment must be reversed and the cause remanded.
Affirmed in part, and in part reversed and remanded.