Court Opinion

ID: 9443116
Source: CourtListenerOpinion
Date Created: 2023-08-03 19:11:32.160238+00
Date Added: 2024-06-11T17:29:22.789375
License: Public Domain

PHILLIPS, Chief Judge
(dissenting).
On May 19, 1950, the United States filed its petition to condemn three oil and gas leases covering 480 acres of land situate in Osage County, Oklahoma. The leases were executed on December 17, 1938, by the Osage Tribe of Indians to Charles Petroleum Corporation and on April l'S, 1948, were assigned to the H. & H. Supply Company4 and Waggoner. The declaration of taking filed June 2, 1950, .estimated the compensation at $84,607. The estimated compensation was deposited in court and by order of court was paid over to the Supply Company and Waggoner.
The jury returned a verdict fixing the just compensation for the leases, exclusive of *557salvage values, at $15,000. The Supply Company and Waggoner have appealed. • The Supply Company and Waggoner acquired the leases on April 1, 1948. The daily average production from the leases was 21 barrels. The production from the time the wells were drilled until April 1, 1948, was 547,586 barrels. The total production from April 1, 1948, to June 2, 1950, the date of the taking, was approximately 16,000 barrels. The average net profit during the latter period from the wells was $700 per month. The production between April 1, 1948, and June 2, 1950, was relatively stable.
The salvaged equipment was sold by the Supply Company and Waggoner for $34,000.
There is a method commonly employed in the oil industry for the recovery of additional oil after the primary production of oil has become uneconomical. By this method, water is inj ected into the wells under pressure and into the producing sand. The water pressure moves the oil toward the bottom of the hole and permits additional recovery. The Supply Company and Waggoner purchased the leases with the belief they could profitably increase the production from the wells by water flooding.
At the trial an issue was sharply drawn as to whether the wells on the leases were susceptible of economical secondary recovery through water flooding under pressure.
Expert witnesses for the Supply Company and Waggoner, after proper qualification and after proof of the facts upon which they based their opinion, testified that in their opinion water flooding of the wells under pressure was practical and feasible and that such water flooding would result in profitable secondary recovery.
David Dooley, an expert called on behalf of the United States, was permitted to testify that, in his opinion, the wells were not susceptible of economical secondary recovery. He stated that in his opinion the wells would not respond to water flooding sufficiently to produce profitable secondary recovery. His opinion was based, in substantial part, on records of the Blackwell Oil & Gas Company, the former owner, from which the Supply Company and Wag-goner acquired the leases, and from statements made to him by pumpers in the oil field. His opinion was, therefore, based on hearsay evidence. The pumpers could have been produced as witnesses and the records could have been brought before the court and jury.
It is well settled that while an expert may base his opinion on personal knowledge gained from observation or examination, hearsay in the form of information gained from the statements of others outside the court room is not such personal knowledge and may not constitute the basis of an expert opinion.5
An exception is recognized when an expert is testifying as to value. He may consider the cost and price of the property, the value of sales of similar property, the result of inquiries made of others, and like matters, which would ordinarily fall in the category of hearsay.6
But, the opinion given by the witness Dooley that the wells were not susceptible of economical secondary recovery through water flooding was not an opinion as to value. It was as to a basic, material, and important fact, which the jury had the right to consider in arriving at its finding of just compensation. Moreover, I think the jury found from Dooley’s evidence that the wells were not susceptible of economical secondary recovery. On no other basis can the verdict be rationalized.
The trial court instructed the jury that they could not consider the hearsay as establishing the facts outlined by the witness *558Dooley, but it could be considered as a basis for Dooley’s opinion that water flooding would not result in profitable secondary recovery. In so doing, I think the court committed prejudicial error.
I would reverse with instructions to grant a new trial.

. Hereinafter called the Supply Company.

. Jones, Commentaries on Evidence, 2d Ed., p. 2442, § 3335; Security Benefit Ass’n v. Small, 34 Ariz. 458, 272 P. 647, 650; Foster v. Fidelity & Casualty Co., 09 Wis. 447, 75 N.W. 69, 71, 40 L.R.A. 833; Safe-Deposit & Trust Co. v. Berry, 93 Md. 560, 49 A. 401, 406; Reed v. Barlow, Tex.Oiv.App., 357 S.W.2d 933, 935.

. See MeElligott v. Freeland, 139 Oal. App. 143, 33 P.2d 430, 436-437; Baltimore American Ins. Oo. v. Pecos Mercantile Co., 10 Cir., 122 F.2d 143, 146; 32 O.J.S., Evidence, § 545, p. 293.