Appeal by defendant from the Circuit Court of Jackson county;
the Hon. C.E. WRIGHT, Judge, presiding. Heard in this court at
the May term, 1954. Judgments affirmed. Opinion filed October 6,
1954. Released for publication November 4, 1954.
MR. JUSTICE SCHEINEMAN DELIVERED THE OPINION OF THE COURT.
William G. Fortner, now deceased, entered into a written contract with Don Slape, a well driller, for the sinking of an oil well on certain premises in Indiana. At that time the defendants, Joe F. Van Natta, Phillip M. Kimmel and A.G. Storme, were the purported oil lessees of the premises, subject to Fortner's overriding royalty of one-fourth of the seven-eighths working interest therein.
When the well drilled by Slape was completed, it proved to be a dry hole, and nobody was willing to pay for it. Slape then filed this suit against Fortner and the lessees above named. Fortner answered, claiming that he acted only as agent for the other defendants. The other defendants answered, asserting Fortner had no authority to bind them. The death of Fortner occurred before trial, and his executor was substituted as defendant, thereby introducing the usual complications which arise under the Evidence Act.
The case was heard by the court without a jury and resulted in a judgment for the plaintiff for $9,902.28 against Fortner's executor alone, the other defendants being absolved of liability. The executor took this appeal, and is hereafter referred to as appellant. The plaintiff, seeking judgment against the other defendants, cross-appealed, and is called cross-appellant, while the other defendants are referred to as appellees.
The drilling contract introduced in evidence does not contain the names of appellees in the body thereof, the caption naming the parties thus: "William G. Fortner as Agent and, as Operator, and Don Slape as Contractor." However, beneath Fortner's signature appear these words: "Operator and Agent for Joe F. Van Natta, Phillip Kimmel and Albert G. Storme." The cross-appellant relies upon this wording as evincing an intent to bind the purported principals, as well as the agent individually.
It is undisputed that prior to the date of this drilling contract, all of the defendants had signed a written agreement purporting to designate Fortner agent of the other parties, and which provided that he was to proceed with the development of the leaseholds, which included some 1400 to 1600 acres, to contract for the necessary services, and to make all arrangements, at no cost to himself, all the expense to be paid by the others. But appellees contend that their signatures were affixed for a special purpose pursuant to representations of Fortner, hereafter stated. They assert that the contract contained a blank in one paragraph; and that it had been agreed by all the signatories the contract was not to become effective until this blank had been filled in and initialed by all the parties. The paragraph containing the blank is as follows:
"4. It is further understood and agreed by and between the parties hereto that the said party of the first part shall have the right to contract for the drilling of said wells and for the payment of the same for which the said parties of the second part bind themselves, their heirs, administrators and assigns to pay in a sum not exceeding ............ Dollars."
In behalf of appellees, testimony of an attorney named Prosser was introduced, purporting to relate the conversations between these parties, which, if admissible and if true, tends to support the following history, upon which appellees rely: Appellees had gone to Indiana and there, apparently with the help of Fortner, negotiated the acquisition of the oil rights in question for some $3,000 from a man named Hayden. Fortner brought the assignments to Illinois made out in his name alone. However, he agreed to assign them to appellees at once, but asked that they enter a contract making him the agent to develop the property.
As inducement, he stated that he knew of other prospective investors, and, out of the total area, he could sell one-half the oil rights in a tract of 147 acres (which he pointed out on a map) for enough money to pay the cost of drilling a well. During further negotiations, he urged appellees to put up the money for drilling, but they refused, and he then requested that they sign a copy of the contract, leaving the one paragraph blank, to show he represented these people. He was sure he could realize enough to drill a well. He explained that the exact amount of the sale would be inserted in the blank space, and all parties would then affix their initials, and sign all the copies.
Mr. Fortner had his attorney prepare the final draft of the contract and one copy was signed. There is no testimony as to what was said at the time of signing. The document bears a notarial certificate dated July 6, 1949, and the drilling contract signed by Fortner and Slape is dated four days later.
It was proved that Fortner showed Slape the document signed by appellees, that Slape saw the blank space therein but attached no significance to it, and made no further inquiries.
The testimony of Prosser is not directly contradicted, but it is here argued that it was not admissible, it was incredible, and is controverted by the acts of the parties. Reference is made to the principle that the contemporaneous construction by the parties is the best evidence of their intent, and it is also urged that their acts amounted to a ratification of the contract.
In support of the last points, there is evidence that appellees were present at the drilling of the well and made no protest. And about three weeks later they sent a telegram to Fortner saying, "Don't start any action on any of our oil leases until further notified by us." This was followed by a letter stating that they had held a meeting and "unanimously voted to dispense with your services." Counsel reasonably inquire why anyone should purport to terminate an agency which did not exist.
It being apparent that the real controversy over the agency contract was between Fortner's executor and appellees, the trial court held that appellees were not competent witnesses in their own behalf, but also held that attorney Prosser was competent. This lawyer was a brother-in-law of appellee Kimmel, the latter having married a sister of the witness. The witness stated that he advised only as to the legal form of the contract, and at his suggestion there was included a provision giving appellees the right to terminate the contract on notice. His competency was ...