EDINGTON v CREEK OIL COMPANY

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NO. 84-23 I N T H E S U P R E M E C O U R T O F T H E S T A T E O F MONTANA 1984 P H Y L L I S E D I N G T O N a n d BOW V A L L E Y PETROLEUM, I N C . , a n d F L A R E ENERGY CORPORATION, P l a i n t i f f s and A p p e l l a n t s , VS. C R E E K O I L COMPANY, and L O U I S BIBY, a Wyoming Corp., Defendants, Cross-Complainants, a n d Cross-Appellants, and SIGNAL DRILLING CO., et al., Defendants. A P P E A L FROM: D i s t r i c t C o u r t of t h e S e v e n t h J u d i c i a l D i s t r i c t , I n and f o r t h e C o u n t y of R i c h l a n d , H o n o r a b l e R. C . M c D o n o u g h , Judge p r e s i d i n g . COUNSEL O F RECORD: For A p p e l l a n t s : H a b e d a n k , C u m m i n g , B e s t and Maltese, S i d n e y , Montana O t t o T. H a b e d a n k argued and R o b e r t J. S a v a g e argued, Sidney, M o n t a n a For D e f e n d a n t s - C r o s s - A p p e l l a n t s : J a m e s R. Carlson, Jr., argued, Hysham, Montana Submitted: 'If3 2 d 884 ' 7 - f?/ 1984 Decided: F i l e d : June 4 , October 29, 1984 Justice Court. John M. r In this Sheehy C. case the delivered District the Court, Opinion Seventh of the Judicial D i s t r i c t , Ri.chl.and County had. b e f o r e it. t h e q u e s t i o n which of two o i l and g a s l e a s e s was l e g a l l y i n e f f e c t a s t o p r o d u c t i o n from an o i l well- under t h e l e a s e s from and a f t e r December On oil and February 2 , gas lease 1962, P h y l l i s Edington e n t e r e d i n t o an with John covering mineral i n t e r e s t s owned by h e r i n Richland County, Montana. During W. Batts t h e p r i m a r y t e r m o f t h e l e a s e a p r o d u c i n g w e l l was d r i l l e d . The working i n t e r e s t i n t h e w e l l was a s s i g n e d by B a t t s t o Creek O i l Company which o p e r a t e d and produced t h e w e l l u n t i l July 1973. of P r o d u c t i o n wa.s s t o p p e d a t t h a t ' t i m e by an o r d e r t h e Montana O i l and Gas Commission b e c a u s e o f sa-ltwater seepage from a s a l t w a t e r d e p o s i t p i t a t t h e wel-I s i t e . The t r i a l c o u r t , i n i t s f i n d i n g s o f f a c t , found t h a t s o l v i n g t h e problem control of of saltwater seepage Creek Oil. Company. was within the reasonable The remedy w a s s e a l i n g t h e l e a k a g e w i t h a t r u c k l o a d o f mud which was a v a i l a b l e . O i l Company d i d n o t resume p r o d u c t i o n o f Creek t h e w e l l w i t h i n 90 days a f t e r i t s c e s s a t i o n pursuant t o paragraph 8 ( c ) of t h e Edington L e a s e , t o - w i t : " I n t h e e v e n t of c e s s a t i o n o f p r o d u c t i o n and operations hereunder after the primary term t h e r e o f , t h e lessee s h a l l have a p e r i o d o f n i n e t y ( 9 0 ) d a y s w i t h i n which t o resume o p e r a t i o n s o r p r o d u c t i o n , and i f o p e r a t i o n s o r p r o d u c t i o n a r e resumed w i t h i n such t i m e , t h e n t h i s l e a s e s h a l l c o n t i n u e i n f o r c e a s i f t h e r e had n e v e r been any i n t e r r u p t i o n i n t h e operations o r production, t h a t i s subject only t o l i m i t a t i o n s set f o r t h i n Section 2 hereof. " Section 2: "Subject to the further provisions hereof, this lease shall remain in force for a term of 5 years from this date, called 'Primary Term' and as long thereafter as either (1) oil, gas, or other minerals are produced (whether or not in paying quantities) from the leased premises, or (2) operations are conducted on the leased premises, or ( 3 ) there is a well or wells on the leased premises, which, although capable of producing oil, gas, or other minerals in paying quantities hereunder is shut in for lack of market or outlet. "Operations as used herein means all operations for the drilling of a well for oil or gas, including building of roads, preparation of the drill site, moving in for drilling, drill.ing, deepening, plugging back, reworking or recompleting and also secondary recovery operations benefiting the leased premises." On December 12, 1974, Phyllis Edington executed a second oil and ga.s lease to Wendell H. Elliott, which lease was recorded in the records of Richland County. On May 2 , 1980, Phyllis Edington executed a further oil. and gas lease to Mountain & Plains Company which lea.se was recorded on May 2, 1980, in the records of Richland County. Mountain & Plains Company assigned its lease to Bow Valley Petroleum, Inc. on May 13, 1980, and this assignment was also recorded. in the county records. In December 1980, Creek Oil Company and Louis Riby entered the lands and resumed production of the oil well.. On November 18, 1981, Bow Valley assigned one-half of its leasehold right, title and interest under its lease to Flare Energy Corporation. That assignment was also duly recorded. Edington, Bow Val-ley Petroleum, Inc. , and Flare Energy Corporation, as plaintiffs, filed an action to quiet title, in effect, to the oil produced from the lands a.fter December 1980, and in due course, trial was had in January 1983. On April 6, 1983, the District Court entered its first findings of f a c t , c o n c l u s i o n s o f law, and o r d e r . held that the provisions in lease had October The D i s t r i c t C o u r t terminated 1973, and its under that, by express re-leasing her p r o p e r t y t o E l l i o t t , Edington had a s s e r t e d an i n t e r e s t i n t h e p r o p e r t y o f r e c o r d which was a d v e r s e t o t h a t c l a i m e d by t h e defendants. of The c o u r t a l s o h e l d t h a t t h e m i n e r a l ownership Edington Petroleum, and the leasehold interest of Bow Valley I n c . and F l a r e Energy C o r p o r a t i o n a-re s u p e r i o r t o any c l a i m e d i n t e r e s t of Creek O i l and Biby, whose c l a i m s a r e w i t h o u t any r i g h t whatever. d e f e n d a n t s had no r i g h t , The c o u r t a l s o r u l e d t h a t t h e t i t l e , o r i n t e r e s t i n t h e minerals under the lands. However, the Creek O i l D i s t r i c t Court Company and Biby were entitled to found t h a t 874% o f the p r o d u c t i o n from t h e well- from Decemher 1980 t o t h e d a t e of his order. determinatior, Biby to Later to entitle 874% of including the January all 26, District Court amended d.ef e n d a n t s Creek O i l production 1983, the of the date well the that Company and up to and trial in the D i s t r i c t C o u r t ended. The c o u r t a l s o rul-ed, on A p r i l 6 , 1983, t h a t t h e c a s i n g i n t h e w e l l i s t h e p r o p e r t y of Bow V a l l e y P e t r o l e u m , I n c . and F l a r e Energy C o r p o r a t i o n , b u t t h a t s a i d Bow V a l l e y P e t r o l e u m , I n c . and F l a r e Energy C o r p o r a t i o n must pay t o Biby and Creek O i l Company t h e p r e s e n t v a l u e of s a i d c a s i n g l e s s t h e c o s t of removal. A f t e r a f u r t h e r hearing, t h e D i s t r i c t Court r u l e d t h a t Bow V a l l e y and F l a r e Energy s h o u l d pay Creek O i l and Biby t h e sum of $5,250, which r e p r e s e n t s t h e p r e s e n t v a l u e of t h e c a s i n g l e s s t h e c o s t of removal. Both p a r t i e s a p p e a l from t h e judgment o f t h e D i s t r i c t Court. P l a i n t i f f s P h y l l i s E d i n g t o ~and Bow V a l l e y P e t r o l e u m , I n c . a p p e a l on t h e f o l l o w i n g i s s u e s : That t h e defendants, I-. were bad faith trespassers Creek Oil. Company and Biby, on December 1980, when they resumed o i l p r o d u c t i o n of t h e s u b j e c t w e l l . T h a t Creek O i l Company and Biby a r e n o t e n t i t l e d t o 2. any s h a r e of t h e p r o d u c t i o n o r c o s t o f p r o d u c t i o n b e c a u s e of their bad entitled faith to trespass credit for in December expenses 1980, incurred or nor are they deduction of c o s t s of p r o d u c t i o n . 3. There i s i n s u f f i c i e n t e v i d e n c e t o s u p p o r t t h e t r i a l c o u r t ' s f i n d i n g s t h a t $5,250 r e p r e s e n t s t h e p r e s e n t v a l u e of t h e c a s i n g l e s s i t s c o s t o f removal. Creek O i l Company and L o u i s bib^ c r o s s - a p p e a l and r a i s e t h e following issues: 1. The D i s t r i c t C o u r t failed t o give e f f e c t t o the f o r c e majeure c l a u s e o f t h e l e a s e . 2. The E i s t r i c t C o u r t failed t o give e f f e c t t o the j u d i c i a l a s c e r t a i n m e n t c l a u s e of t h e l e a s e . 3. The judgment of t h e D i s t r i c t C o u r t unduly e n r i c h e s Bow Val-ley, I n c . 4. There is insufficient evidence to support the essential- findings of t h e D i s t r i c t Court. 5. The c o u r t s h o u l d n o t have p e r m i t t e d t h e u . s e o f t h e d i s c o v e r y d e p o s i t i o n o f M r s . Edington a t t h e t r i a l . FORCE MAJEURE The f o r c e majeure c l a u s e i n t h e l e a s e , under which Creek O i l and Biby c l a i m t h e i r i n t e r e s t s , provid-es: "17. T h i s l e a s e s h a l l n o t e x p i r e , t e r m i n a t e o r be f o r f e i t e d i n whole o r i n p a r t n o r s h a l l l e s s e e b e 1 i a b l . e i n damaqe f o r f a i l u r e o f l e s s e e t o comply w i t h any expreLs o r i m p l i e d c o v e n a n t s h e r e u n d e r - s o t l o n g as c ~ r n ~ l i a n c ~ h e r e w i s h h i n d e r e d , d e l a y e d , revented o r i n t e r r u p t e d 2 f o r c e majeure. The :ern ' f o r c e m a j- e u r e ' a s used h e r e i n s h a l l mean and i n c l u d e s t a . t e and f e d e r a l s t a t u t e s , a l l o r d e r s , r u l e s and r e g u l a t i o n s of any governmental body (either federal, state or municipal) fire, storm, flood, war, rebellion, riots, strikes, differences with workmen, acts of God, breakage or failure of machinery or equipment, inability to obtain material or equipment or the authority to use the same (after effort in good faith), failure of pipe lines normally used to transport or furnish facilities for transportation or any other cause the (whether similar or dissimilar) beyond reasonable control - lessee. " of (Emphasis added. ) Creek Oil and Ei.by maintain that the order of the Montana Oil and Gas Commission in July 1973, which suspended production of oil under their lease, is covered by the force majeure clause and that thereby the lease cannot be terminated for their failure to comply with any express or implied covenants of the lease. majeure They claim that the force clause has the effect of suspending termination provisions contained in paragraph 8 (c), quoted above, and that their only responsibility, once the well was shut in, was to exercise due diligence in returning the well to production. They further contend that eccnomic factors material to the question of reasonable diligence shou1.d be considered, including the cost of disposing of the saltwater and the market price of the crude oil at the time. Edington and Bow Valley, on the other hand, contend that the underlying reason for the State Oil and Gas Commission order to shut in the well was the defendants own wrongdoing in permitting majeure clause saltwater seepage and does not apply. therefore the They point out force that. substantial evidence in the record supported the court's findings that. Creek Oil could rea.sonably solve the saltwater problem, that Edington lost royalty payments for over seven years by their suspension of production, and that Creek Oil and Biby suspended production of oil for economic reasons and not for reasons covered by the force majeure clause. It is obvious that the purpose of the force majeure clause in this oil and gas lease was to relieve the lessees from harsh termination of the lease due to circumstances beyond control of the lessees that would make their performance under the lease untenable or impossible. The force maieure clause, if applicable, would have the effect of suspending the clause for termination by reason of cessation 4 Williams, - - - - S 683.2 at 392, Oil and Gas Law, of operations. suggests that the effect of the force majeure clause in an oil and gas lease is to amend a paragraph such as 8 (c) to read: "upon failure of production during the secondary term, unless such failure was due to force majeure." The District Court made findings of fact that the Montana Oil and Gas Commission would have allowed further production of the subject well if Creek Oil had sealed the saltwater pit; problem of that Creek leakage with Oil a could truckload have of corrected the mud which was available; that a natural saltwater seep existed where Creek Gil had located its saltwater bit and Creek Oil did not make a request to the Commission for a variance to allow the saltwater to seep to the natural. pit; tha.t solving the problem was reasonab1.y possible and within the control. of Creek Oil. bind this M.R.Civ.P. These findings are supported in the record and Court unless clearly erroneous. Rule 54 (b), We do not find the court in error. In appl.ying the law, the District Court determined that the force majeure clause did not apply because the problem which caused the well to be shut in, and its solution, were not beyond the control of Creek Oil and Biby. Talbert (Ark. 1976), 535 S.W.2d (Ark. 1957), 307 S.W.2d 210. 807. Wilson v. See Hixson v. Parker Under the findings, the District Court properly applied the law to the force majeure clause here. Where the action of the governmental unit to shut in the well, as in this case, is brought about and continued in force by the wrongful or improper action of the lessees, they cannot rely on the force majeure clause to escape the other provisions of the oil and. gas lease. clause is not an escape way production that could be termination The force majeure for those interruptions of prevented by the exercise of prudence, diligence, care, and the use of those appliances that the situation or party renders it reasonable that. he should employ. 61 F. 300. Jutte v. The George Shiras (3rd Cir. 1894), The other contentions of Creek Oil and Biby respecting the force majeure clause are without merit. THE JlJDICIAL ASCERTAINMENT CLAUSE The oil and. gas lease held by Creek contained a judicial ascertainment clause. Oil Company Such cl.a.usesvary from lease to lease, and from jurisdiction to jurisdiction, according to the practice of those in the industry. case the judicial ascertainment cl-ause was In this stated in paragraph 14: "14. This lease shall never be forfeited or cancel-led for breach of implied covenant until it shall have been finally judicially determined that such breach exists and lessees shall ha.ve failed within a reasonable time of such final determination, to remedy such breach." Creek Oil Company and Biby contend that the obligation, if any, of lessees under the lease to cure the saltwater seepage problem was an implied covenant; that it was the duty of the lessors, before the lease could be terminated or cancelled, to proceed through court for a determination that a breach of covenant actually existed; and after such determination tha.t Creek Oil Company and Biby were entitled to a reasonable time to remedy such breach. Since the lessors did repair to court proceedings in this case, Creek Oil Company and. Biby contend that their oil and gas lease is stiI.1 in effect because there has been no judicial ascertainment of a breach of an implied convenant. This particular oil and gas lease does not contain a notice provision for termination of the lease by lessors in the case of a. breach of an implied covenant under the lease. Creek Oil Company and Riby, however, equate the ?udicial ascertainment clause with a notice clause and contend that we should apply the same rule with respect to the judicial ascertainment clause in this case that was applied in Christian v. A. A. Oil Company (1973), 161 Mont. 430, 506 P.2d 1369, relating to a failure to give notice. The District Court. determined that the 9 0 day cessation of production clause was an express covenant and as such the judicial ascertainment clause did not apply to it. It is beycnd cavil, from the plain language of the lease, that the judicial ascertainment clause applies only to breaches of implied covenants of the lease. See Eitel v. Alford (Colo. 1953), 257 P.2d 955. For most purposes, courts construe oil and gas ].eases under the rules of contract interpretation. 2 Summers, The Law of Oil - - - - and Ga.s (1959), Ch. 12, 5 371, at 484, et seq. This oil and gas lease had extended beyond its primary term of 5 years. Because a producing oil well had been completed by the lessees under their lease, leasehold rights vested in the lessees for a secondary term as long as (1) oil and gas or other minerals were produced (whether or not in paying quantities) from the lease premises; or ( 2 ) operations were conducted by lessees on the leased premises; or there was a well (3) or wells on the leased premises that, although capable of producing oil and gas or other minerals in paying quantities thereunder, is or were shut in for lack of a market or outlet. Paragraph 8(c) of the oil and gas lease provided a limitation on that leasehold estate and term, however. In the event of "cessation of production and operations" after the primary term of the lease, the lessee is given a period of 90 days in which to resume operations or production and, if resumed within the 90 days, the lease would continue in force as if there had never been any interruption in the operations or production. In their leasehold estate under the oil and gas lease, therefore, lessees had the contractual duty not to cease either production or operations for a period of more than 90 days. Their duty of production of minerals or the conduct of operations was an express condition for the continuance of the leasehold estate. When, as it clearly appears here, lessees allowed the production to cease and operations not to be conducted for a period of more than 90 days, their oil and gas lease terminated and ended by its own terms. McQueen v. Santa Oil Company (6th Cir. 1954), 213 F.2d 889. In Hall v. McWilliams (Tex. Civ. App. 1966), 404 S.W.2d 606, where !esseest a producing well saltwater permit was was shut down because suspended by the governmental action, no production occurred, and no drilling or reworking operations were conducted for a period of more than 60 days the Texas court held that the lease had terminated under its own terms (that lease contained a 60 day provision). The court said it could not be held to be a "temporary" stoppage where the cessation of production lasted more than 60 days. We determine that under the facts of this case, the judicial ascertainment clause was not called into effect and that, because of the cessation of production and lack of conduct of operations hv the lessees on the leased premises for a period of 90 days, the Creek Oil Company and Biby lease terminated by it.s own provisions. The lessees had no leasehold estate upon which to rely when they reentered the premises to produce oil in December 1980. IfiINOCENT - WILLFUL TRESPASS V. The District Court found t.hat Creek Oil Company and Eiby were qood faith trespassers until the time of trial, January 26, 1983, and thereafter bad faith trespassers. The District Court found as facts that the Creek Oil Company and Biby acted in good faith, their entry and possession were peaceful, and they had acted in an honest belief up to and inc1ud.i.n.g the trial of the action. The District Court found that at the trial, the defendants became aware of all the facts that constituted their claims as well as the facts upon which the plaintiffs based their claims and consequently, subsequent t.o January 26, 1983, in producing said well. have acted as a trespassers in bad faith. The District Court also found that the equipment on the well site when production was di.scontinued in 1973 wa.s in a state of disrepair. Louis Biby, on behalf of the defendants, prior to December 1980, made substantial expenditures of time and money including $269,000.00 for permanent improvements to the well. Based on its finding of good faith to the time of trial, the District Court prorated the gross value of all oil sold from the well through March 1983 as follows: $ 16,062.98 Phyllis Edington (12+%) Creek Oil and Biby Row Valley ~etroleum TOTAL 82,207.16 Bow Valley appeals from the order of the District Court with respect to its share of the production, contending that Creek Oil and Biby were bad faith trespassers from and after December 1980, and are entitled to no recompense for the cost of production nor from the proceeds of the oil. Also, that Bow Valley and Flare Energy should be awarded the full value of the working interest proceeds from the oil, subject to a 5% overriding royalty to Mountain & Plains Oil Company. The argument of Bow Valley respecting the distribution of the proceeds arises from a difference in the measure of damages based on whether Creek Oil Company and Biby were in good faith or bad faith in trespassing upon the leased premises as explained. by Sullivan, Handbook - - - - Gas of Oil and Law, - at 58 and 59: "In the case of good faith trespassers the measure of damages that must be paid is the value of the oil and gas in place. Because of the difficulty in proving such value in place, courts have adopted the measure as being the value of the petroleum at the surface, whether in tank or pipeline, less the reasonable cost of production. The costs of ~roduction include the cost of drilling and equipping the well in addition to the expense of brinqing it to the surface . . . "Where the trespa.ss has been made in bad faith, no deduction is allowed for the cost of production. The proper measure of damages in such a case is the value of the petroleum at the surface . . ." Important to this discussion is the finding of the District Court that the Creek Oil Companv and Biby first became aware of all the facts which constitute their claim and the facts whj ch constitute the plaintiff's claim at the trial of the action. Bow Val-ley disputes this finding, claiming that, from the evidence before the District Court, Creek O i l Company and Biby ha.d actual and constructive notice that their lease had terminated. It i s certain that Creek Oil Company and Biby . had constructive notice of the recorded instruments, including oil and gas leases and assignments, that were given by Edington, and those acting under her, after Creek Oil Compzny ceased production in 1973 and before production was resumed in December 1980. We have recited in the first part of this opinion those particular instruments. Bow Valley further claims that Creek Oil Company and Biby had actual notice of the claims of Bow Valley and its subsequent assiqnees. In particular they point to the provisions of the agreement between Creek Oil Company and Biby, constituting Creek Oil's proposal for resumed production on the premises, which was expressly made subject to a "favorable resolution of the top lease" given by the royalty owner. Creek Oil Company's president was aware on December 4, 1976 that Edington had issued the first lease which expired after a two year term. Edington's attorney wrote to Creek On June 7, 1977, Oil Company their contention that the Creek Oil Company lease had expired under its own terms. Of equal wejght in determining that Creek Oil Company and Biby were aware that their lease had terminated is the language of their own oil and gas lease, with the specific provisions in it for termination upon cessation of production for 90 days. It seems impossible that they could have an honest and title. reasonable belief in the superiority of their Sullivan, Handbook - - - - Gas Law, at 58. of Oil and - The controlling case in this situation is Reickhoff v. Conso!.idated 1.076. on Gas Company (1950), 123 Mont. 555, 217 P.2d In that case, Consolidated drilled a gas well on lands which Reickhoff held a valid oil and gas lease. Consolidated had commenced an action against Reickhoff and others seeking to quiet title to the real estate and minerals and. the District Court had entered. its order or decree in favor of Consolid.ated. Reickhoff was inducted into the U.S. Army the day before the decree was filed. entry of Consolidated, upon the decree, went on the leased. lands, removed Reickhoff's oil drilling rig, set up its own rig, and started drilling. Reickhoff appealed the Distrj.ct Court decision to the Montana Supreme Court and the judgment in favor of Consolidated was reversed. (19441, 116 Mont. Consolidated Gas Co. v. Reickhoff 1, 151 P.2d 588. Thereafter Reickhoff sought recovery from Consolidated for the value of the gas it had produced from the well and claimed that Consolidated was a bad faith trespasser. In finding the trespass wil.lful this Court said: ". . . That the company was a trespasser on the leased lands is beyond doubt. But the company says it was not a willful trespasser for it entered under the district court's decree, assuming to annul the lease and to quiet title in it. However, it knew the law gave to Reickhoff the right of appeal and that on such appeal the decree might be either reversed, modified, a-£firmed,or the case be sent back for the taking of further evidence or a new trial-. It knew Reickhoff had vigorously fought the suit and that he was likely to appeal from the judgment entered against him. In misjudging the law and Reickhoff the gas company acted at its peril. It assumed the attendant risk of drilling the well on the lands leased to Reickhoff and of having the trial court's judgment reversed on appeal, but it took the chance and lost. . " . . 'Why should one be treated as acting in good faith when dealing with property as his own, when he knows all of the facts which constitute his claim, as well as the claims of his adversary, which facts, when properly construed, give him no title to the land? Such a holding would make every man a judge of the law in his own case, instead of being bound by the law as interpreted by those charged with that duty. We must therefore conclude that the defendants, when they drilled the wells on these lands, were willful trespassers, just as much so as though there had. been no question but that the plaintiffs had the superior right. They could not decide the disputed question in their own favor, and then proceed with the hope that their acts woul-d be characterized by this Court as in good faith, even though their judgment upon the law of the case should not be approved. ' " (Citations omitted. ) Reickhoff v. Consolidated Gas Co. (1950), 1-23 Mont. 555, 562, 563, 217 P.2d 1076, 1079, 1080. Reickhoff is applicable to this case. Creek Oil Company and Biby were willful trespassers when they entered upon the lands for which their oil. and gas lease had expired to recommence drilli~goperations. As willful trespa-ssers they are not entitled to recover either proceeds from the oil produced or the cost of producing the oil. The District Court was clearly erroneous in findha good faith up to the time of trial. Creek Oil Rule 54(b), M.R.Civ.P. Company and Biby further argue that in determining good faith. we should take into account that they have never taken possession of the funds from the sale of the oil, that such funds have been deposited in court, and that the sa.le of the oil has been commercially reasonable. They also argue that finding them bad faith trespassers would have the effect of unjustly enriching Bow Valley which has not done anything to produce the oil. Yet, it is Bow Valley's right to the working interest in its lease that Creek Oil Company and Biby usurped, without any basis for relying on the superiority of the Creek Oil title to the leasehold. interest. Their essential act. of willful trespass was going upon the land to reproduce the well in the face of the provisions in their own lease that it had terminated for cessation of production. Creek Oil Company and Biby have continued to usurp Bow Valley's right to the working interest throughout the litigation. Preserving the proceeds does not ameliorate their bad faith trespass. OF VALUE - CASING The District Court found that Creek Oil Company and Biby were entitled to receive from Row Valley $5,250.00 as the present value of the casing in place in the oil well, less its costs of removal. The District Court arrived at its figure by determining the present value of the 5,000 feet of casing at $3.75 per foot less the cost of removal, $2.70 per foot. In reaching this finding, the court admitted the evidence of value of the casing was "sketchy," that the casing was 17 years old, and the amount of removable pipe is speculative. Accordingly, Bow Valley argues that the decision of the District Court is speculative and conjectural and should be set aside. This Court has approved the concept that in assessing damages, the trier of fact must exercise calm and reasonable Ijuc7tgment and the amount of the award. rests of necessity in the sound discretion of the trier of fact. Johnson v. Murray (Mont. 1982), 656 P.2d 170, 1.75, 39 St.Rep. 2257. When there is strong evidence of the fact of damage, a defendant should not escape liability because the amount of damage cannot be proved with precision. Johnson, supra; Jarussi v. Board of Trustees of School District No. 28 (Mont. 1983), 664 P.2d 316, 318, 40 St-Rep. 720, 723. We have adopted the concept that. a wrongdoer is not allowed to escape by merely paying nominal damages if there is any reasonable way in which the . am0ur.t that he should pa-y in damages can be determined.. Therefore, if the damages are measured by a method which is reasonably definite, and not likely to give compensation in excess of the loss suffered, the damages brill be approved. Laas v. Montana State Highway Commission et a. ]. Mont. 121, 131, 483 P.2d 699, 704. (1971), 157 Although these rul-es of damages apply against wrongdoers, there is no reason why we should not apply the same rules here where it is undoubted that Creek Oil Company and Biby are entitled to recover for the present value of the casing less its costs of removal. We hold that in view of the difficulty in ascertaining the value of the casing, the Court adopted a reasonable method and price for determining the damages based on the evidence of experts before it.. We therefore affirm the award of the District Court with respect to the value of the casing. USE OF - - EDINGTON DEPOSITION Creek Oil Company and Biby claim on appeal that it wa.s improper for the District Court to allow the deposition of plaintiff Mrs. Phyllis Edington to he used at trial in her absence as a witness. Creek Oil and Riby contend that the deposition of Mrs. Edington was taken as a "discovery deposition," that she is a resident of Sidney, Montana, where the trial was held, and that she was not "unavail.able" for appearamce as a witness as Rule 804 (c)( 1 5 ) , M.R.Evid., requires. Testimony in the case indicated that at the time of the trial Phyllis Edington was residing in Mesa, Arizona, and that she spent part of the time in Arizona and the remainder of the year in Sidney. At the time of the trial she was in Arizona. The District Court permitted the use deposition under the terms of Rule 32 (a)(3) ( R ) . of her Tha.t rule provides t " T h e d.eposition of a witness, whether or not a party, may be used by any party for any purpose if the court finds: "(B) That the witness is at a greater distance than LOO miles from the place of trial or hearing, unless it appears that the absence of the witness was procured by the party offering the deposition;. . ." lJnd.er the record in this case, the District Court was clearly within the provisions of Rule 32(a), allowing the use of the deposition of Mrs. Edington, although she was a party to the action. Rules of Civil No other distinction is made in the Montana Procedure between depositions taken d.iscovery, and those intended to be used at trial. provisions of Rule 804, M.R.Evid., The are not appl..icableto the problem of the use of the Edington deposition. directed to hearsay exceptions. in Rule 8 0 4 is It is Rule 32, M.R.Ci~.P. that governs the use of depositions at trial. We find no error in the use of the Edington deposition. DECISION Affirmed in part and reversed in part, and remanded to the District Court for entry of judgment in a-ccordance with this opinion. We Concur: a4-.4.ii~/&.,ueea Chief Justice Justices

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