195 Ky. 445 | Ky. Ct. App. | 1922
Opinion op the Court by
Reversing.
This action was brought by the appellees, Petty Brothers, a partnership composed of L. M. and W. P. Petty, engaged in the drilling of oil and gas wells, seeking to recover of the Arrowhead Oil Company, a corporation created under the laws of New Jersey, $1,166.00 by the enforcement of a mechanics ’ lien upon a certain lease and leasehold embracing 100 acres of land in Allen county described in the petition, that'sum being, as alleged, due and owing to them by the Arrowhead Oil Company upon a written contract for the drilling of an oil well on the 100-acre tract of land mentioned, which the appellees by the terms of the contract referred to and for the consideration therein specified, undertook to drill and did partially drill for it. The appellant, J. Dan Stark, of whom, as further alleged, the Arrowhead Oil Company acquired the lease in question, was made a defendant to the action because of his setting up of a claim to the leased premises.
Respecting the lien asserted on the leasehold, the petition alleged that it was perfected by the filing in the office of the clerk of the Allen county court of the required statement containing the facts necessary under the statute to its assertion, verified by the appellees ’ affidavit, which was done within six months of the completion by the appellees of the drilling of the oil well. It was further substantially alleged in the petition that appellees entered into the contract with the Arrowhead Oil Company to drill the well in question at the instance of the appellant Stark and were induced to do so, and to do the work of drilling the well as performed by them, upon his representation that he had sold and conveyed the lease and leasehold to that company, which was then the owner of same.
It also appears from other averments of the petition and from the terms of the written contract between appellees and the Arrowhead Oil Company, which was filed with and made a part of the petition, that they were to be paid by that company for the work of drilling the well for it, at the price of $3.00 per foot, and the further sum of
The Arrowhead Oil Company made no defense to the action, but Stark did so by filing an answer traversing all averments of the petition affecting him and looking to the enforcement of the lien therein asserted; and in addition alleged, that after appellees ceased to drill the well under their contract with the Arrowhead Oil Company, they continued to drill it under employment by the appellant until oil was produced therefrom, in consideration of which and of the compensation they received from appellant for the drilling they did for him, the appellees released him and relieved the leasehold of any and all liability for their debt against the Arrowhead Oil Company. All affirmative allegations of the answer were controverted by the appellees’ reply. After the taking of proof by the parties and the submission of the case, the chancellor rendered judgment, declaring that the appellees had and held a mechanics’ lien upon the lease held by the appellant, J. Dan Stark, on the 100-acre tract of land described in the petition and such interest as it created in the land, including the equipment and output of oil from the well drilled by the appellees, as security for the payment of their debt of $1,166.00, sued for, which lien the judgment enforced by directing the sale by the master commissioner of the property described in satisfaction of the debt and the appellees’ costs. Stark complains of the judgment and has appealed.
It is, however, unnecessary to speculate as to the theory upon which the circuit court predicated its conclusions expressed by the judgment appealed from. In our opinion the right of appellees to the lien adjudged them may safely be rested on the doctrine of equitable estoppel relied on by them, and the facts justifying its application which seem to be sufficiently pleaded. This doctrine extends to real and personal estate, and is bottomed on the theory that a person who has induced another to believe and act in a certain manner, will not after-wards be permitted to injure or prejudice in his rights such person, because of the acts done under the belief that they were consented to. And where one of two persons must suffer by the act of a third, the one who enabled the third person to occasion the loss must sustain it. Myrick v. Hembree’s Admrx., 136 Ky. 110; Trimble v. King, 131 Ky. 1; Begley v. Combs, 32 R. 538; Spears v. Conley, 27 R. 1169; Chenault v. Yates, 156 Ky. 280; Advance Thresher Co. v. Fishback, 157 Ky. 427; Wilson v. Hall, 150 Ky. 663; Arnyx, etc. v. Hurt, 24 R. 291; Wright v. Williams, 25 R. 1337.
It appears from the evidence that before the appellees contracted with the Arrowhead Oil Company to drill the well in question, or met its representative with whom the contract was made, one of them, L. M. Petty, called up by telephone the appellant Stark, the then owner, as he supposed, of the lease in question, and in a telephone conversation with the latter expressed to him the wish of Petty Brothers to undertake by contract the drilling of a well or wells on this leasehold, in reply to which Stark informed him, in substance, that he did not own the lease, but had sold and assigned it to the Arrowhead Oil Company, which would drill it for oil, and advised him to see
It appears from the record, and was admitted by the appellant Stark, that the writing evidencing his sale and assignment of the lease to the Arrowhead Oil Company was never.recorded, and as his representation of the Arrowhead Oil Company ownership of the lease was con-. firmed by that company, and it was in possession of the land on which the well was drilled when it made with the appellees the contract for the drilling by them of the well, it is not apparent that any inquiry or investigation on the part of the appellees before making the contract would or could have given them any knowledge that the Arrowhead Oil Company was not the owner of the lease.
In giving his testimony the appellant Stark admitted the telephone conversation with L. M. Petty and that he advised him to contract with the Arrowhead Oil Company for the drilling of the well on the leased premises, but denied that he made any statement or representation to Petty to the effect that- he had actually sold or assigned to that company the lease in question; and, on the contrary, claimed to have informed him that it had only conditionally purchased the lease, to become effective upon its making payment of a part of the consideration, the writing evidencing the contract being then held in escrow
It was shown by evidence in behalf of the appellees, and not denied by the appellant, that after the latter began the drilling of the well under their contract with the Arrowhead (Oil Company the appellant made one orhnore visits to the well, noted the progress being made with the work and manifested great interest therein, and that on none of these, visits did he inform the appellees that the contract by which the Arrowhead Oil Company claimed to have leased of him the land containing the well, had never been perfected, or, for any .reason, become ineffective.
The fact, that appellees completed the well under employment from appellant, and for a consideration paid by him, throws no light upon the questions in issue; nor does the further fact that the appellees, before or at the time of accepting the last employment, demanded of appellant that he pay them for the previous drilling, or his refusal to do so, militate against their right to enforce the lien therefor allowed by the statute. Upon the facts and circumstances presented by the record, we are not authorized to say that the equitable estoppel relied on by the appellees was not established by the weight of the evidence. Hence, the Tights of the parties should be determined as if the lease from the appellant to the Arrowhead Oil Company had been an executory contract which, by act of the parties, was rescinded. Therefore, as the appellant was the person to whom the leasehold was returned upon its surrender by the Arrowhead Oil- Company after the well drilling contracted for by it was partly performed by the appellees he is estopped to complain that it was by the judgment of the court below subjected to the appellees’ lien, as by virtue of the provisions of the statute, supra, it followed the property into his hands. In other words, in the state of case here presented, the estoppel must be given the same legal effect that the statute declares shall attend the rescission of an executory leasing contract.
However, as further declared by the statute, supra, the lien of the appellees for the drilling of the well performed under their contract with the Arrowhead Oil Company is enforceable “to the extent only that the actual value of the property may be enhanced” by the work of the appellees. A lease on real estate or an interest therein is a chattel real; that is, it possesses the elements or char
We find in the record no evidence tending to show to what extent the well drilling done by the appellees under their contract with the Arrowhead Oil Company enhanced the actual value of the property covered by the lease, considering the purposes for which its use would be permissible under the appellant’s lease; and it seems to us that the testimony of experts in the business of oil production or exploitation should be obtained on that question. ' The drilling done by the appellees under their contract with the Arrowhead Oil Company did not result in the discovery of oil, but it was found by the drilling which they subsequently did in the same well by employment of the. appellant. The oil would not have been produced without the drilling to the depth of 222 feet done by the appellees under the first contract, but it nevertheless required the drilling they did under their contract with appellant to produce it. The first drilling was as necessary as the last, yet there was no evidence whatever as to the proportion in which the first drilling, compared with the second drilling or the drilling as a whole, contributed to whatever enhanced value was given the lease or property covered by it by the resulting improvement. The circuit court, however, adjudged an enforcement of the appellees’ lien for the full amount claimed by them. A personal judgment in favor of the appellees against the
We are convinced that the appellees should not have been adjudged a lien or its enforcement for the $25.00 per day, aggregating $500.00, claimed for the twenty days during which they were prevented by the fault of the Arrowhead Oil Company from drilling the well. Obviously, no increase in the value of the lease or property covered by it could have resulted from appellees’ discontinuance of the drilling of the well, and the statute allows no lien' for it. The provision of the contract between appellees and the Arrowhead .Oil Company making the latter responsible to the former for such delay or loss of time, is a penalty enforceable only as between the parties themselves. Under no rule of law or equity known to us can such loss be made a lien against the lease in question or property covered by it.
For the reasons indicated the judgment is reversed and cause remanded to the circuit court with directions to set it aside and enter such judgment as will reject the $500.00 of the appellees’ claim for the time they had to discontinue drilling on the well, and allow the lien asserted by them on the lease and property it covers to the extent the well drilling done by them on the leased premises under the contract with the Arrowhead Oil Company contributed to enhance the value of the property, but not to exceed $666.00. And as to this issue the parties, if it be desired, should be permitted to take proof.