Thomas v. White

BARNARD, P. J. This is an action to quiet title to real property as against any rights of the defendant arising out of certain contractual relations between her deceased husband, D. R. White, and the plaintiff.

D. R. White and the plaintiff executed a written agreement dated January 10, 1938. By way of preamble it recited that the plaintiff owned certain land upon which was an oil well which was not then in production; that he proposed to recondition. and redrill said well so as to place it on production by a process known as “gravel pact”; that White claimed to be an experienced driller, familiar with the reconditioning and drilling of oil wells, and familiar with the process known as the “gravel pact”; and that he was willing to undertake to recondition and place said well on production on the terms thereafter mentioned. It was then mutually agreed that the owner would furnish the land, well, machinery and equipment and approximately $10,000 for the purpose of reconditioning and placing said well on production by what is known as the “gravel pact” process; that White would “take full charge of work in connection with the reconditioning and placing of said well upon production” and would serve without salary except for $5.00 a day for actual expenses during the reconditioning; that when the well was placed on production [740]the owner would pay to White 10 per cent of the net production as the oil was sold, the same to continue while the well remained pumping and producing oil in paying quantities, it being agreed that “paying quantities” would mean an output of oil of not less than 50 barrels a day over a production test of thirty consecutive days, and provided that the owner would not be required to operate the well when the production was less than 50 barrels a day. It was then agreed that White would give his personal supervision and attention during the drilling and reconditioning of the well; that after the well was placed on production he would visit the well as often as necessary to “check the production thereof for the benefit of the parties hereto”; that if White failed to put the well on production or the well failed to produce oil in paying quantities, as therein defined, the agreement should be null and void; that White should keep records of operations, costs and sales, which would be open to the inspection of the owner; and that the terms of the contract should extend to the heirs, executors, administrators and assigns of the parties.

It appears that on account of bad pipe White could not get to the bottom of the old well and was therefore unable to proceed by the “gravel pact” process. By some sort of understanding between the parties arrived at about March 1, 1938, it was decided to redrill the well, using the old hole and pipe for the first 700 feet and from there on drilling a new hole to the required depth. This was done and a well was brought in on May 17, 1938. Thereafter, two pumpers operated the well, White visited the well occasionally, and the well was continuously operated although no thirty-day production test was ever made. Bach month the plaintiff paid White 10 per cent of the net proceeds, marking the cheeks to indicate that it was his royalty, and each check was accompanied by a statement showing the sales, expenses and net proceeds. By some sort of an agreement between the parties a second well was drilled or reconditioned and placed on production about September, 1938. After that the plaintiff paid White 10 per cent of the net production of both wells.