Foster v. Fisher

WOOD, J.

Appellants Day and Johnson have taken this appeal from a, judgment in favor of respondent and against appellants and their co-defendant Fisher in an action brought by respondent to recover the reasonable rental value of certain oil well drilling equipment.

The action is founded upon three written agreements, all executed on January 7, 1938, although one was antedated as of September 30, 1937. The agreements provide in substance for the rental by respondent’s assignor, P. W. Willett, Inc., of certain drilling equipment consisting of boilers, drill pipe, etc., to be used in the drilling of two oil wells. The consideration for the use of such equipment was to be an

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“overriding royalty” of 2 per cent or 3 per cent in the production of such oil wells, depending upon the length of time the equipment was used not to exceed 120 days. In two of the agreements defendant Fisher and appellant Johnson were named as lessees, while in the third Fisher was named as the sole lessee. All three agreements were signed by Fisher alone. Although the equipment was in fact used, no papers showing royalty interests were ever issued to respondent’s assignor and nothing was ever paid to him as a percentage of the production of the wells.

Appellant Day and one Dilley were lessees of certain oil property known as the Watkins lease and the Washburn lease. In August, 1937, they executed a sublease of the Watkins lease to W. H. Martgan. On October 22, 1937, Martgan sublet the Watkins lease to defendant Fisher. On December 15,1937, Day and Dilley executed a sublease of the Washburn lease to defendant Fisher. Fisher obtained a drilling permit and with the equipment of respondent’s assignor commenced the drilling operations which consisted of deepening the two wells which were already on the leased property. Defendant Johnson financed the drilling operations under an agreement with Fisher whereby he was to receive a 21 per cent overriding royalty interest in the two wells. In July, 1938, Day and Dilley repossessed the leased premises and terminated the subleases because of the failure of the wells to produce oil in paying quantities. The only evidence presented tended to prove that defendants diligently attempted to produce oil, but without success.

By this action, which was commenced on March 1, 1939, respondent sought to recover the reasonable rental value of the equipment from Fisher, Day and Johnson on the theory that they were joint adventurers or partners in the drilling of the two wells. The trial court found that Fisher, Day and Johnson were joint adventurers and awarded respondent a judgment for $4,200 as the rental value of the equipment.