Appellant drilling contractor challenged judgments of nonsuit by the Superior Court of Los Angeles County (California) in favor of respondent owners in the contractor's action for damages for breach of an oil well drilling contract. The judgments were rendered following the sustaining of objections to the introduction of certain evidence offered by the contractor.
California Business Lawyer & Corporate Lawyer, Inc. shares pros and cons of joint venture
The owners failed to make installment payments for the contractor to drill an oil well to a certain depth for a certain sum. The court found that although the trial court properly refused to admit extrinsic evidence because the contract as written was complete in itself and embodied the entire agreement of the parties, it committed prejudicial error in granting the owners' motions for nonsuit. The court found that the installment payments were conditions precedent to further work by the contractor and that the contractor would have been entitled to the damages sought if his cause of action were proven. The contract was by its terms clearly entire and not severable, calling as it did for the drilling of an oil well to a specified depth for a stated compensation. Continued performance of the work was dependent upon payment of installments, and a default in payment was to be considered a permanent and definite breach and to be treated accordingly. The court thus found that the only logical and reasonable construction that could be given to such terms was that continued performance was dependent upon punctual payment.
The court reversed the judgment of nonsuit.