Court Opinion

ID: 9445603
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:34:13.372406+00
Date Added: 2024-06-11T17:30:20.682068
License: Public Domain

HUTCHESON, Chief Judge
(dissenting).
What is a very simple case, its facts brief and without dispute, has I think by hypostasis been converted into something entirely different in fact and in law from the reality the case itself presents. Because this is so, and I cannot agree with the assumptions on which the opinion of the district judge and that of the majority proceed, I will undertake to state the case as the record presents it and my reasons for believing that the judgment was wrong and ought to be reversed.
It is admitted that the suit arises out of defendant’s mailing to plaintiffs a dry hole contribution letter, the opening sentence of which reads:
“When accepted by you, this letter will constitute our agreement, regarding the drilling by you of a test well for oil in Grayson County, Texas, and our dry hole contribution in support of the well.” (Emphasis supplied.)
Further providing that the operations should be prosecuted until one of the following depths is reached: “(a) a depth which in the opinion of our geologist is sufficient to test the oil creek sand of ■Ordivician age; or (b) a total depth of 10,000 feet, whichever is the lesser ■depth”, the letter went on to say:
“In the event that said well is abandoned as a dry hole after reaching either of the depths set out above and provided that you have complied with all the terms and conditions of this letter, then in that event, and only in that event, we will pay you jointly as a dry hole contribution the sum of $25,000.” (Emphasis supplied.)
'The letter contained other provisions, which in the view I take of the case are not important.
The complaint alleged, in Par. IV, that the well called for by the agreement was drilled without having encountered the oil creek sand of Ordivician age to a depth of approximately 10,021 feet, said depth having been reached on or about July 27,1955, at which time plaintiffs ordered the rig on the well shut dóíon and abandoned as a dry hole; and further alleged that on July 27th plaintiffs’ representatives contacted defendant’s representative and made demand of defendant for the sum of $25,000 specified in the agreement.
In the pretrial order it was declared that it was admitted that on or about July 27th the well was drilled without having encountered the Ordivician age sand, to a depth of approximately 10,025 feet. “It was further admitted that the said well has never been abandoned as a dry hole and said well was completed by plaintiffs as a producer of oil and has produced some oil from formations at a depth greater than 10,000 feet beneath the surface each and every month since its completion.” (Emphasis supplied.)
Notwithstanding these admissions, which seem to be conclusive against the right of the plaintiffs to be paid, the recovery has been allowed upon a theory having, in my opinion, no relation to the facts of this case. This theory, as the district judge states it, is that there was an anticipatory breach of the agreement by defendant and that this released plaintiffs from the conditions on which alone they were entitled to receive the pay the dry hole letter called for. By this simple but wholly unorthodox device of labelling defendant’s counter-claim, that the contract had not been complied with, an anticipatory breach of agreement, the defendant is made to pay the amount which under the agreement it was obligated to pay only upon condition which was never performed, that a dry hole be drilled, while the plaintiffs are permitted to complete the well as a producer and receive pay for it as a dry hole, in short to have their cake and eat it too.
Ingenious as the theory is and operative as it might conceivably be if the *191facts were as they are assumed to be rather than as they are, it seems to me to be clear beyond any controversy that the theory can have no application here for two solid and sufficient reasons.
The first of these is that no anticipatory breach, within the dictionary or case law meaning of those terms, has occurred or could possibly, under the undisputed facts, have occurred here. This is so because, as pleaded by plaintiffs and found by the court, all drilling required of plaintiffs had been done and if, as they pleaded, they ordered the rig on the well shut down and the well abandoned as a dry hole, the contract had then been performed and they were entitled to their pay if, but only if, the well stayed shut down and was abandoned and plugged as a dry hole.
Under these admitted facts, it is a complete misnomer to speak of an anticipatory breach. Such breaches occur only when, before, and not after, the contract is completed and there are things still to be done under it, there is a breach which prevents or excuses carrying out the promise, on the performance of which the payment of the consideration depends.
A leading case on this whole subject from this court is Southern Cotton Oil Co. v. Heflin, 99 F. 339.
Here, assuming that defendant’s telegram was a breach of the contract and, under the authorities, it seems clear to me it was not but was only a counter-demand to that of plaintiffs, it was not an anticipatory breach but a claim that it was not obligated to pay the amount demanded for the reasons put forward by it. The result of this would be, not to enable the plaintiffs to bring in the well as a producer while holding the defendant to the payment of the dry hole money, but to entitle the plaintiffs to plug and abandon the well, and sue for the contract price.
No one I think would claim that if the plaintiffs had plugged and abandoned the well and had then made demand upon defendant for the $25,000 and that demand had been refused, there would have been an anticipatory breach. Nothing in anywise different occurred here. When the defendant, for the reasons it deemed sufficient, made a counter demand upon plaintiffs for the tests which it claimed to have the right to demand, thus, for the reasons stated by it, putting up defenses to plaintiffs’ demand, it would have a right in any suit upon the demand, without being subjected to the payment of damages for having made the claim, to submit this claim to judicial scrutiny.
Assuming that its claim was unfounded and that it refused to pay the money without cause, its only liability in case the well had been brought in as a dry hole and plugged and abandoned would have been the payment of $25,000 with interest and costs of suit.
No case is cited, none I think can be, holding that when, as here, it is claimed that the contract was fully performed on one side so as to entitle plaintiffs to the contract price, and that the other party refused to perform on his side, the complaining party, upon showing not that he complied with the condition, precedent upon which the agreed amount was to be paid, but that he did not comply with it, was allowed as here to recover that amount less certain deductions.
In the second place, even if we assume that there was an anticipatory breach, this would not aid plaintiffs unless we assume for the purpose of the argument, that the plaintiffs had not really intended to abandon the well but, knowing the existence of producing sands some three feet or so below where they had ostensibly stopped, they had, as a part of a scheme to obtain for themselves both the dry hole money and the well, merely pretended that the well was a dry hole. This is so because, in the case of an anticipatory breach, the recovery must be-limited to the damages shown to have resulted therefrom, Southern Cotton Oil Co. v. Heflin, supra, and unless they had! intended all along to so manage the situation as to get both dry hole money and a production well (and this in law and in morals they could not do), no damage whatever was shown to the plaintiffs as a *192result of the defendant’s action. On the contrary, the plaintiffs, considering themselves released, by defendant’s action, from the obligation to plug as a dry hole and abandon the well, brought it in as a producer and have received and retained for themselves and will continue to receive and retain all the monies received therefrom, and no evidence was offered to show that the amount received and to be received would not equal or exceed the dry hole money.
I have found no case, I believe none can be found, supporting the result reached below. I respectfully dissent from the affirmance of the judgment.