30 Ky.L.Rptr. 91, 123 Ky. 763
Court of Appeals of Kentucky.
CORBIN OIL & GAS CO. v. MULL ET AL.
Nov. 21, 1906.
ACTION: Reversed and remanded.


Appeal from Circuit Court, Knox County.
"To be officially reported."
Action by The Corbin Oil & Gas Company against L. A. Mull and others.
From the judgment, plaintiff appeals.

O'REAR, J.
L. A. Mull, who owned and operated a drilling outfit, contracted with appellant, who owned certain mineral privileges near Corbin, in Knox county, to drill for it an oil well to the depth of 2,000 feet, unless oil or gas were sooner found in paying quantities, or unless appellant directed the work to stop at a less depth. The work was to be paid for by the foot at the end of each 500 feet, or when the work was completed. The contractor agreed to do the work in a skillful manner, and to case the well when necessary to protect it from water, or when necessary from any cause. The well was sunk over 1,500 feet deep, when the contractor abandoned it. He failed to case it as was required, and as was necessary to protect it from salt water, so that it filled up, and, as appellant claims, drowned a flow of gas and oil which was of some market value. The contract gave appellant a lien on the rig or drilling outfit to secure the performance of appellee L. A. Mull's contract, and this suit was brought in equity to recover the damages for the breach, and to enforce the lien. The circuit court found that the contract had been breached by L. A. Mull, and that for its damages appellant had an enforceable and superior lien on the property in suit. We concur with the circuit judge in his findings thus far. But when he came to admeasure the damages he gave appellant nominal damages only, on the ground that they were not susceptible of measurement otherwise.

Appellant claims that, by the failure of L. A. Mull to properly case the well, it was totally destroyed; that the effect of allowing the salt water to encroach upon the gas deposit and the gas-bearing shale was to destroy it, and to render the adventure valueless; that the sides of the well are so affected by the accumulated water as to be caved in, making it necessary to redrill the well to even get at what may be at the bottom of the 2,000 feet. Appellee on the other hand contends that, as it is impossible to know what is at the bottom until the well is drilled that deep, it would be impossible to say that appellant sustained any damage by reason of the failure to go that deep; that it is wholly speculative, and not susceptible of proof what the value of the well would have been if completed; and that, therefore, the court was right in assessing nominal damages only. Or, appellees contend, appellant should have drilled the well itself the remainder of the 2,000 feet, when the cost to which it would have been put, less the contract price agreed to be paid L. A. Mull, would have been the measure of damages, and, as appellant did not finish the well nor prove the excessive cost of doing so, the court had no other alternative in fixing the measure of damages than to give nominal damages only. Appellant was entitled to have its contract executed. Even though it were a foolish enterprise, still, it was not illegal, and it does not lie in the mouth of the contractor to say that it was not worth to appellant what appellee was being paid to do the work. Corbin is in the gas and oil region of Southeastern Kentucky. Some gas and traces of oil were found in this well. So appellant may well have been justified in the exploitation of its property. That was the way to find out whether they had oil or gas upon it. In the prosecution of the work under the contract appellant incurred an expense of some $1,800, including what was paid to L. A. Mull. That is what their hole in the ground has cost them. It may not be worth anything, and may not have been had it been completed to the 2,000 feet depth. But manifestly, if it were worthless as a paying well at 1,800 feet, that is not evidence that at 2,000 feet it would still be worthless. Indeed, as a venture it may reasonably and truly be said that, in one sense, it was worth up to that point what it had cost, in view of the contract which contemplated going 2,000 feet. If it had been left so that it could have been utilized for drilling deeper, its worth for that purpose could have been enjoyed by the owner. But it was not. It is claimed that it was totally destroyed, as much so as if it had never been sunk at all. However that may be, it is certain that, before it could be utilized to go deeper, it would have to be cleaned out, and maybe cased up so as to put it in a fit condition as it would have been in had L. A. Mull kept his undertaking. And this, we think, is the measure of damages: The necessary cost of cleaning out the water or debris allowed to accumulate in the well; to case it as L. A. Mull was required to do; and then the excess of cost of drilling it to 2,000 feet over what the contract agreed to pay L. A. Mull for doing that work. On this should be credited whatever is owing L. A. Mull for the number of feet drilled by him lower than 1,500, he having been paid only for digging 1,500 feet. Or, if it should be ascertained that in reality the well has been destroyed by caving of its sides so that it would cost as much to clean it out as to drill a new one, then the measure of damage to the plaintiff is the sum which it has paid L. A. Mull for doing the work he has destroyed by his lack of attention and skill.

The case is not so prepared as to justify a judgment. It should be prepared, or be allowed to be prepared, on the line of recovery herein outlined. Ordinarily we will adjudge an equity case as it may be when it comes here, and direct a final judgment to be entered according to the merit disclosed by the then state of the record. But this is not an invariable rule. Really, this branch of the case is an action at law, and where the court might call a jury to pass upon the quantum of damages. There was no evidence, and no way that we know of, to prove the value of the gas deposit which was struck in the course of sinking the well. Anybody knows that such deposits may be found that are practically worthless, though apparently strong, but giving out in a few days or weeks. The only way to test the value of such a deposit is to allow the gas to flow long enough to demonstrate that it is not a pocket, but that it is there in sufficient quantity to be a paying well. In the absence of such test, and owing to the inability to now make it, it is impossible to lay down any rule by way of compensatory damages for failure of the driller to keep the water away from it than that of allowing nominal damages only. So, upon that branch of the case, the rule applied by the circuit court is right.

The judgment is reversed, and cause remanded for proceedings not inconsistent herewith.

Ky.App. 1906.
CORBIN OIL & GAS CO. v. MULL ET AL.
97 S.W. 385, 30 Ky.L.Rptr. 91, 123 Ky. 763



     

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