Ahern v. Superior Court of Los Angeles County

Plaintiff appeals from a judgment of nonsuit entered in its action to recover the balance alleged due from defendant for the drilling of an oil well. The evidence, stated most favorably to plaintiff, is as follows: Plaintiff entered into a written contract with defendant to drill an oil well in Oklahoma. The contract was negotiated with defendants agents Smith and Kunau and sent to California, where it was signed by defendants vice-president Cody. It was then returned to Oklahoma, where it was executed by plaintiff. It provided that the well should be drilled to the Gibson sand, which was expected to be encountered at or below 6,500 feet. Plaintiff was to receive $5.25 per foot for the hole drilled up to 6,500 feet in depth, and $6.00 per foot thereafter, plus certain amounts for standby time. Drilling proceeded until a depth of somewhat over 4,000 feet was reached, at which depth a steep dip in the geological formation was encountered, and drilling became much more expensive. Plaintiffs vice-president and general manager Frederickson then informed defendants Oklahoma agents that plaintiff would be unable to continue with the drilling unless more favorable terms could be agreed upon to compensate it for the unforeseen expenses and difficulties. Kunau, defendants Oklahoma drilling and production superitendent, orally agreed to a modification of the contract whereby plaintiff should be paid at the contract rate of $5.25 per foot for the hole drilled up to that time, and on a cost plus basis thereafter. Drilling continued until a depth of 7,254 feet was reached, at which time the well was abandoned as a dry hole. Plaintiff then submitted three statements to defendant. One was for $96,872.63, described as the actual cost of the well; the second was for $100,121.42, based upon "footage contract to 4000, actual cost from 4000 to 7254"; and the third was for $47,697.46, the amount that would have been earned under the terms of the original written contract. Defendant sent plaintiff a check for the latter amount, which was accepted and cashed after defendants agent Smith assured