Phillips Petroleum Co. v. Buster
Opinion of the Court
These four cases — filed in the state court and seasonably removed to the United States court on the ground of diversity of citizenship with the requisite amount in controversy — present for determination questions relating to injunc-tive relief to prevent threatened disconnecting of certain deep water wells used for the irrigation of farm lands in Oklahoma from gas lines of a major producing oil and gas company. The cases are numbered 5309, 5310, 5311, and 5312, in this court. In Number 5309, Robert W. Buster and his wife were plaintiffs below; in Number 5310, H. C. Hitch, Jr., and wife, and John B. Gray and wife were plaintiffs; in Number 5311, Henry C. Hitch and wife were plaintiffs; and in Number 5312, The Hitch Land and Cattle Company, a corporation, Harry H. Hitch, and Bill Logsdon were plaintiffs. In all of the cases, Phillips Petroleum Company, a corporation, and A. M. Rippel, manager of the natural gas department of Phillips Petroleum Company were defendants. The defendant Rippel was a nominal party and no further reference will be made to him. The cases will be referred to as the Buster, the Hitch, Jr., the Hitch, Sr., and ¡the Hitch Land Company cases, respectively; and the parties will be referred to as plaintiffs and Phillips, respectively.
,Although the cages j were consolidated for trial, the court; made separate findings of fact and conclusions of law in eaeh case. In the Buster case, the court made these findings of fact. Piaintiffs owned a tract of land in Texas County, Oklahoma, containing 160 acres. Phillips held oil and gas leases covering the land and had a producing gas well thereon, known as the M^yoe well. Dale Lewis was the field superintendent of Phillips, in about December, 1952, Lewis represented, promised, and agreed with plaintiffs that if they completed the drilling and equipping of an irrigation well on sueh land’ p^mi Provide natural gas pr°f the Mayoe wel1 m the amount reasonably; necessary for the operation of the water well. In reliance upon such representation, promise, and agreement, and upon the custom, practice and policy of Phillips and other companies having producing gas wells in the vicinity of the land upon which the Mayoe well was Ideated to permit the purchase and use at reasonable prices of gas for the operation of irrigation wells, plaintiffs subsequently completed their well. The completing and equipping of the well cost about $17,000, more than $10,000 of which ¡was expended subsequent to and in reliance upon the representation, promise, ; and agreement made by Lewis for Phillips. Phillips had notice and knowledge of the expenditures made by plaintiffá in completing the drilling and equipping of the well. On 0r about January ¡15, 1953, Phillips installed the valve for the connection of the water well to the gas line of Phillips for the receipt of gas ¡for the operation of the irrigation well;'; and from the time of such connection, Phillips had notice and knowledge of such! use of gas. Natural gas produced on the land owned by the plaintiffs at a reasonable price was the only fuel the use of which would permit irrigation for agricultural purposes of such land with reasonable assurance of
The judgments are challenged upon the ground that Lewis lacked authority to enter into the oral agreements in respect to the furnishing of natural gas for the operation of the irrigation wells. In the Buster and the Hitch Land Company eases, the [court found that oral agreements were entered into, but in the Hitch, Jr. and the [Hitch, Sr. cases the court did not make such findings and the record is completely barren of evidence indicating that in those cases agreements of that kind were entered into. Therefore, this contention and all other contentions subsequently ¿onsidered concerning the oral agreements relate only to the Buster and the Hitch Land Company cases. The headquarters of Phillips are located in Bartlesville, Oklahoma. Lewis had been in the employ of the company for more than ten years. He resided at the Hansford plant [of the company, held the position of area superintendent, was in charge of the company offices in Texas County, and had field men under his supervision. The Sh'erman and Hansford gathering systems were within his area. They included the gas fields of the company in Texas County. And it was the general custom and practice for farmers and owners of land in the area to deal with Lewis as the agent and representative of Phillips. It is the law in Oklahoma that apparent authority exists when the principal,! by statement or conduct, either places the agent in position in which he appears with reasonable certainty to be acting for the principal, or without interference suffers the agent to assume such position so that third per
The judgments are challenged upon the further ground that the oral agreements were at most mere agreements to make future contracts without any meeting of the minds of the parties. The evidence presented sharp conflicts in respect to the substance of the oral agreements. But the court resolved the conflicts. In each instance, the court found in substance that by the oral agreement the parties intended to reach and did reach a present understanding that if the well was drilled or the drilling completed and water was found gas would be supplied for the operation of the well. The court found in effect that by entering into the oral agreements the parties made present commitments and assumed immediate obligations rather than merely agreeing to enter into a future contract. The findings of the court in that respect are supported by substantial evidence and are not clearly erroneous. Therefore they must stand on appeal. Accordingly, there is no sustainable factual basis in the record for the contention that by the oral agreements the parties merely agreed to enter into effectual contracts later.
The judgments are attacked upon the additional ground that the oral agreements were unenforceable for indefiniteness and uncertainty. Harmonizing in full measure with the general principle of law obtaining elsewhere, it is the rule in Oklahoma that the destruction of contracts or agreements for vagueness and uncertainty is disfavored; and that if a contract or agreement is sufficiently definite and certain in its totality that the intention of the contracting parties can be ascertained with reasonable certainty, it is not void for indefiniteness and uncertainty even though it fails to enter into all of the details respecting the subject matter, especially where there has been partial performance. Harlow Publishing Co. v. Patrick, 181 Okl. 83, 72 P.2d 511; Oklahoma Portland Cement Co. v. Pollock, 181 Okl. 266, 73 P.2d 427; Webb v. Moran, 186 Okl. 140, 96 P.2d 308; Brown v. Bivings, Okl., 277 P.2d 671. The oral agreements each related only to the furnishing of natural gas for the operation of the water well located on the land of plaintiffs. The quantity of gas to be furnished was the amount reasonably necessary for the operation of the well during the irrigation season. And the gas was to be furnished from the line of Phillips on the land of plaintiffs. These constituent elements were implicit or implied in each agreement. And viewed in the light of them, the agreements were sufficiently definite to enable the court to fix a reasonably exact meaning to its terms. Therefore, the agreements were not fatally infirm for indefiniteness and uncertainty.
Another ground of attack upon the judgments is that the oral agreements lacked mutuality of obligation. The channel of the argument is that there was no agreement in respect to the term or duration of the agreements; that there was no agreement respecting the extent or length of time plaintiffs would irrigate their lands; that there was no agreement concerning the volume of gas plaintiffs would take; that there was no agreement that plaintiffs would not
The remaining attack upon the judgments predicated upon asserted invalidity of the oral agreements is that such agreements were void under the statute of frauds. The statute of frauds of Oklahoma provides among other things that an agreement which by its terms is not to be performed within one year from the making thereof shall be invalid unless the sanie, or some note or memorandum thereof, be in writing and subscribed by the party to be charged, or by his agent. 15 O.S.1951 § 136. But these were not ¡actions for the enforcement of the oral agreements. They were actions to restrain wrongful discontinuance of the furnishing of gas pursuant to the terips of the agreements. And having entered jinto the agreements with the mutual intent and purpose that plaintiffs would act in reliance thereon, plaintiffs having acted in that manner, and it being reasonably certain that plaintiffs will sustain irreparable injuries for whijch they do not have any adequate remedé at law if the furnishing of gas is discontinued, Phillips is estopped to invoke the statute of frauds. Lacy v. Wozencraft, supra.
The judgments in the Hitch, Jr., and the Hitch, Sr.] cases are assailed upon the ground that the court erred in holding that by reason of custom, practice, and policy, Phillips was obligated to furnish gas for the operation of the irrigation wells. As previously stated, the court found in each of these cases that until July, 1953, it was the general custom, practice, and policy of Phillips and other companies having producing gas wells in the vicinity of the land owned by plaintiffs to permit the purchase and use of gas at reasonable prices and in ¡amounts reasonably necessary for irrigation operations from gas wells on irrigated lands. Evidence was adduced tending to show that Skelly Oil Company furnished gas for the operation of six irrigation wells, and there was evidence that Several farmers used gas for the operation of their irrigation wells. But the eyidence was general and did not extend jinto details respecting the terms or conditions upon which such gas was supplied, either by Skelly or other companies. | Excluding the cases involved here, Phillips in only eight instances furnished to farmers gas for
Finally, the Legislature of Oklahoma, at its session in 1955, passed an act relating to natural gas and the use thereof on the premises from which it is produced to pump to the surface water to be used for irrigation on such premises, and for other purposes. 52 O.S. 1955 Supp. § 248 et seq. The act provides among other things that every person owning or operating any well from which natural gas is produced, sold, or used off the premises on which the well is located, shall upon request, make gas available to the person engaged in agricultural activities upon such premises in sufficient quantities for the operation of irrigation pumps thereon. If the act were valid, perhaps it would be effective to require Phillips to furnish to plaintiffs gas for the operation of their irrigation wells. But in a recently decided case, it was held that the act contravenes due process of law and therefore is invalid. Phillips Petroleum Co. v. Corporation Commission of Oklahoma, Okl., - P.2d -. Accordingly the act lends no aid to plaintiffs.
The judgments in the Buster and the Hitch Land Company cases, respectively, are severally Affirmed; and the judgments in the Hitch, Jr., and the Hitch, Sr., cases, respectively, are severally Reversed and the causes are Remanded with directions to dismiss the actions.
Concurring Opinion
(concurring).
I concur unqualifiedly in the reversal of the judgments in the Hitch, Jr., and Hitch, Sr., cases, and concur in the affirmance of the judgments in the Buster and the Hitch Land Company cases because I cannot say that the finding of the trial court holding Phillips’ promise to furnish gas to be without limitation as to time is clearly erroneous. However, I believe the record would support a finding that Phillips’ promise was limited to the supplying of gas in accordance with the actual contract submitted to Buster and signed by him but subsequently rejected by Phillips. I would prefer such a finding and a consequent limitation upon the relief granted.
Reference
- Full Case Name
- The PHILLIPS PETROLEUM COMPANY, a corporation v. Mayoe Porter BUSTER, Appellee The PHILLIPS PETROLEUM COMPANY, a corporation v. H. C. HITCH, Jr., Appellees The PHILLIPS PETROLEUM COMPANY, a corporation v. Henry C. HITCH, Appellees The PHILLIPS PETROLEUM COMPANY, a corporation v. The HITCH LAND AND CATTLE COMPANY, a corporation
- Cited By
- 8 cases
- Status
- Published