American Refining Co. v. Staley

• Decision Date: 03 June 1925
• Docket Number: (No. 2509.)<SMALL><SUP>*</SUP></SMALL&gt
• Citation: 274 S.W. 272
• Parties: AMERICAN REFINING CO. v. STALEY et al.
• Court: Texas Court of Appeals

Page 272

274 S.W. 272

AMERICAN REFINING CO. v. STALEY et al.

(No. 2509.)^*

Court of Civil Appeals of Texas. Amarillo.

June 3, 1925.

Rehearing Denied July 1, 1925.

Appeal from District Court, Wichita County; H. R. Wilson, Judge.

Action by J. I. Staley and another, composing the firm of Staley & Wynne, and another, against the American Refining Company. Judgment for plaintiffs, and defendant appeals. Affirmed.

Bullington, Boone & Humphrey, and John B. King, all of Wichita Falls, for appellant.

Kilgore, Montgomery & Carrigan, of Wichita Falls, for appellees.

HALL, C. J.

On March 26, 1923, the appellant company entered into a written contract with J. I. Staley and Chester Wynne, composing the firm of Staley & Wynne, Jerome S. Stone and several other owners of a certain oil lease in Wichita county, for the purchase of all the oil to be produced by the wells on said lease, and to pay each of the owners in proportion to their several interests therein. By its terms the contract was to continue for 6 months, and thereafter until terminated by the appellant company upon 10 days' previous notice to the owners.

This suit was instituted by Staley & Wynne, joined by Jerome S. Stone, to recover amounts alleged to be due them, aggregating $5,500. No question is made by either party as to the sufficiency of the pleadings. The rights of the parties upon this appeal turn upon the construction of the following stipulation of the contract relating to the amount due them for the oil received:

"The oil received under this division order shall be paid by the purchaser (American Refining Company) to the party or parties entitled thereto according to the division of interests above shown at twenty-five (.25) cents per barrel premium over and above the posted market price of the Texas Pipeline Company for the same kind and quality of oil in the particular field in which it is received on the day in which it is received by the purchaser into its custody."

It is admitted that the words "the Texas Pipeline Company" appearing in the above-quoted stipulation should be "the Texas Company." No question is made as to the amount of oil received, and it is conceded that the appellant took all of the oil produced from the lease during the time for which compensation is claimed. The suit was filed because appellant refused to pay for the oil received at 25 cents per barrel over and above the prices shown by the Texas Company's posted prices for the same grade of oil after August 26, 1923.

The appellees contend that a proper construction of the above-quoted stipulation of the contract requires the appellant to pay them at the rate of 25 cents per barrel premium over and above the posted price of the Texas Company for the same quality of oil in the particular field in which it was received on the day it was received by the purchaser; that the contract on its face is plain and unambiguous, and the evidence showing what the Texas Company's posted price for that quality of oil during the period of time in controversy was, and the proof further showing that during said period the Texas Company in good faith purchased from others oil of that quality which it paid for in accordance with its posted price; that the "posted market price of the Texas Company" was established. On the other hand, the appellant alleged and offered testimony to prove that from August 16, 1923, until September 26, 1923, the Texas Company refused to buy oil tendered to it in that field, and would only run 70 per cent. of the oil from wells with which its pipe line was connected, and during this period refused to connect with new wells in the field; that of 70 per cent. of the oil which it would run the Texas Company would purchase, and pay for only 35 per cent. and would store the other 35 per cent. for the owner, and required the owner during said time to store the remaining 30 per cent. of the amount produced at the expense of said owner; that it was intended by the above-quoted stipulation that the term "posted market price" meant the posted price of the Texas Company when such posted price was in truth and in fact the price actually paid by the Texas Company for oil in the open market, and that under the contract the reasonable market price prevailing in that field should be the measure of payment. The appellant further contends that during the period from August 16 to September 26, 1923, the market value of oil in question did not exceed $1.25 per barrel, and that appellant had fully paid appellees for all the oil which it had received at that price.

A jury was impaneled to try the case. The appellees introduced the contract in evidence, and by the witness G. W. Cooper proved the price for the particular quality of oil in question as posted by the Texas Company for each day from March 23 to September 26, 1923. The court then excluded testimony offered by the appellant to prove: (1) That from August 16 ...