Concord Oil Co. v. Alco Oil & Gas Corp., A-10041

• Citation: 387 S.W.2d 635
• Decision Date: 24 February 1965
• Docket Number: No. A-10041,A-10041
• Parties: CONCORD OIL CO., Petitioner, v. ALCO OIL AND GAS CORP., Respondent.
• Court: Texas Supreme Court

Page 635

387 S.W.2d 635

CONCORD OIL CO., Petitioner, v. ALCO OIL AND GAS CORP., Respondent.

No. A-10041.

Supreme Court of Texas.

Feb. 24, 1965.

Dodson, Duke & Branch, San Antonio, Black & Stayton, Austin, for petitioner.

Cox, Smith & Smith, San Antonio, for respondent.

ON MOTION FOR REHEARING

GRIFFIN, Justice.

The opinion heretofore rendered by this Court is withdrawn and the following substituted therefor:

Respondent, Alco, filed this suit in a district court of Bexar County, Texas, to recover from Concord the sum of $23,000.00 which Alco had paid Concord by virtue of a written contract between the parties.

Concord filed a cross action for damages because it alleged Alco had not carried out the terms of the contract, but had defaulted thereon. Concord contended as a defense to Alco's suit, that it had performed the contract, except in so far as Alco had extended the time of performance and pleaded that Alco was estopped to insist on the provisions of the contract because by its actions and conduct Alco had led Concord to believe that a strict compliance with the terms of the contract would not be insisted upon by Alco.

On a trial by jury and the answers the jury gave to the Court's charge, the trial court had entered a judgment that Alco take nothing by its suit, but awarded Concord $23,000.00 damages by virtue of Alco's breach of the contract.

Upon appeal the Court of Civil Appeals reversed the trial court's judgment and rendered judgment in favor of Alco against Concord for the $23,000.00 sued for. On Concord's cross-action a take-nothing judgment was entered. 375 S.W.2d 463.

Concord has appealed seeking to uphold its judgment in the trial court and to overturn the judgment of the Court of Civil Appeals.

We affirm the judgment of the Court of Civil Appeals.

The contract involved was in the form of a letter offer prepared by Concord and submitted to Alco and which was accepted by Alco.

The contract, generally speaking, was one whereby Concord farmed out to Alco an oil and gas lease which it had secured on a portion of the bed of the Colorado River in Colorado County, Texas.

After setting out the consideration to be paid by Alco to Concord for an assignment of the lease, and providing for the reassignment of an undivided 1/4th interest in the lease when certain conditions had been met, the contract recognized that a well must be drilled on the leased premises, and that a drillsite must be obtained on lands adjoining the river.

Paragraph V is the one dealing with this drillsite and the obligations of the parties in this regard. It provides:

'It will be necessary to drill the well above described, or the substitute therefor, at the surface location adjoining the actual riverbed covered by the lease to be assigned to you (Alco). We (Concord) are presently negotiating with the owner of said surface location for a lease thereof, together with the right of ingress and egress to and from same. In the event such negotiations do not promptly result in our securing such surface lease, we will promptly proceed to condemn such surface location in accordance with the law of the State of Texas providing therefor. You hereby authorize the bringing of said suit in our joint names if necessary to complete such condemnation. The securing of such surface location shall be at our sole cost and expense, and we agree and obligate ourselves to execute and deliver to you an assignment of such surface lease or condemned surface location, promptly after we have secured same. It is contemplated that the assignment of said surface location will be delivered to you prior to the date on which you are obligated to commence the drilling of the well above described but if, for any reason, we are delayed in securing said location beyond such time, the date for commencement of said first well shall be deferred for a period of thirty (30) days after tender to you of the assignment of said surface location. If we are unable to secure and assign to you such surface location by June 1, 1961, after a bona fide good faith attempt on our part to do so, you shall be relieved from all further liability hereunder, and upon tender of reassignment of the above described lease, Concord firmly agrees and obligates itself to refund to you the cash consideration, theretofore paid by you to us under the terms of this agreement, and thereafter we shall both be relieved from further liability under the terms hereof.'

In paragraph XI it is expressly provided 'and it is understood that time is of the essence hereof.' A reading of the contract as a whole demonstrates that it was the intention of Concord when it drew and tendered the contract to Alco and of Alco when it accepted this offer and completed the contract that time was of the essence.

The Court of Civil Appeals opinion has correctly and clearly analyzed this proposition that time was of the essence and we agree with and adopt its holding that the contract is not ambiguous and that time was made the essence of the contract. Baker v. Fell, 135 Tex. 375, 144 S.W.2d 255 (1940); 13 Tex.Jur.2d p. 524, § 287; 31 C.J.S. Estoppel p. 402, § 67; Corbin: On Contracts, Vol. 3A, p. 360, § 715; Williston: On Contracts, 3rd Ed. Jaeger, p. 181, § 846; Herbert v. Denman (Tex.Civ.App., 1931), 44 S.W.2d 441(4), writ refused. It is undisputed that Concord had not obtained the drillsite by June 1, 1961, the date set out in the contract.

Concord relies on facts, and circumstances, and conduct on the part of Alco's agents and officers to estop Alco from claiming and relying on the provision that time was of the essence of the contract.

Concord was unable to secure the drillsite voluntarily from the landowners and was forced to file condemnation suit therefor. This contingency was specifically covered by the terms of the contract.

Concord plead equitable estoppel in the trial court. Issues were submitted to the jury on this defense and the jury gave favorable answers to Concord on such issues. In the Court of Civil Appeals and here estoppel is relied upon as a defense to Alco's suit.

The letter from Concord was dated February 8, 1961, and accepted by Alco February 10, 1961. It was soon ascertained by Concord that it was not going to be able to get the drillsite by an agreement with the landowners, so condemnation proceedings were commenced at once. The landowners by three different restraining orders secured from the various Judges of Colorado County having jurisdiction, prevented the commissioners of condemnation from hearing any witnesses until May 31, 1961.

The third petition for condemnation was filed May 5, 1961, and the hearing set for May 16, 1961. May 12, 1961, a temporary restraining order was entered by the District Judge enjoining the May 16th hearing.

May 19, 1961, Concord's president, Pawel, telephoned the general counsel for Alco and told him of this restraining order and the delay in condemnation proceedings and told him that it would be his 'guess that it would take about another 30 days to get the drillsite.' And Mr. Moore (Alco's counsel) said that 'We are having a meeting on Monday, May 22nd. * * *' And he said, 'At that meeting we will discuss whether these delays are all right, and if they are not all right we will let you know.' He never told Concord the result of this meeting. Concord's president testified 'by not letting me know I came away with the firm impression that if I had gotten a drillsite any time until 30 days from May 19th, I guess June 18th that that was agreeable with Alco.'

May 22, 1961, Concord dismissed its condemnation proceedings and filed its fourth petition in condemnation and hearing was set on this petition for May 31, 1961. In this petition it was alleged Concord and the landowners were unable to agree on the amount to be paid for the needed drillsite.

On May 30th those owning the land sought to be condemned for the drillsite, secured an injunction prohibiting the hearing on May 31st. This injunction was dissolved the morning of May 31st and the commissioners for condemnation heard one witness that date and postponed further hearing until June 5th.

May 29, 1961, Pawel again telephoned Alco's general counsel 'and told him that the new setting was May 31st * * *; that we had now been restrained by the two Judges, who had slowed us down, we overcame their objections, there was one more district judge and we thought he would not stop us; and that we should have this drillsite within a few days after this May 31st hearing.' When asked what Mr. Moore said in reply to this, Pawel testified: 'Well, he said something like, 'that's fine' or something non-committal.'

With reference to the May 19th and later conversations on June 1st with Moore, Pawel testified, 'I think I had the general impression that he (Moore) did not have the authority to extend the contract.'

Concord's president, Pawel, after dismissal of the restraining order on May 31st, put in a telephone call for Mr. Moore in Chicago. Moore was out of town. June 1st Pawel called Moore in Chicago and was informed Moore was in Denver. Pawel called the Denver office and left word for Moore to call him. Moore returned the call about 3:00 or 3:30 the afternoon of June 1st, and Pawel told Moore of the status of the condemnation.

Pawel testified, 'I sort of gathered some hesitance on his part, and he said, 'Well, we will have a meeting on this and I will call you back." Moore did call back about 4:00 or 4:30 that afternoon and told Pawel something to the effect, 'Our position has changed, and we have no quarrel with you but we would like to get out from under this deal.' On Pawel's expressing shock and surprise, Moore said: 'Well, I would like you to give us an option to stay in this deal and let us know after June 5th when you get the drillsite, and we will see then where we stand.'

The above are the statements of Alco's agents and officers Concord relies on to establish their plea of estoppel.

While...