Curry v. Texas Co.

• Decision Date: 13 January 1928
• Docket Number: (No. 386.)
• Citation: 8 S.W.2d 206
• Parties: CURRY v. TEXAS CO. et al.
• Court: Texas Court of Appeals

8 S.W.2d 206

CURRY v. TEXAS CO. et al.

(No. 386.)

Court of Civil Appeals of Texas. Eastland.

January 13, 1928.

Rehearing Denied June 22, 1928.

Appeal from District Court, Stephens County; C. O. Hamlin, Judge.

Action by J. C. Curry against the Texas Company and others, in which defendant named filed a cross-action. From the judgment, plaintiff appeals. Affirmed in part, and in part reversed and remanded.

Preston Martin, of Weatherford, and Hawkins & David, of Breckenridge, for appellant.

H. S. Garrett, of Fort Worth, and Goggans & Allison, of Breckenridge, for appellees.

PANNILL, C. J.

The parties to this suit occupy in this court the same position as in the trial court, and will be designated in the same manner. The appellant Curry brought this suit against the Texas Company, Hanlon Gasoline Company, G. O. Bateman, Mike Scott, and A. York; the purpose and object of the suit being to recover the royalties provided in the following contract between the plaintiff and the defendant the Texas Company:

"The Texas Company agrees with the royalty owner to keep account of the casing-head gas as saved and utilized, or sold as aforesaid, rendering monthly statements if requested, and to pay to the royalty owner 1/2 of 1/8 of .08 cents per one-thousand cubic feet, corrected to atmospheric pressure and 60 deg. F. temperature, for all casing-head gas from the above-described land so saved and utilized or sold by the company not including any quantity used in its operations on said land, the company being free to use casing-head gas for such purposes without charge. Payments will be made quarterly, and the company at any and all reasonable times will allow the royalty owner to inspect its meters."

The petition averred that the Texas Company had caused to be drilled on said lease a certain well, and that from said well large quantities of casing-head gas had been produced, which had been run to the plant of the defendant Hanlon Gasoline Company. The petition alleged, by way of explanation, that the said contract was executed under an agreement between the plaintiff and the Texas Company, whereby the latter agreed and bound itself to pay to the plaintiff as a royalty owner 1/2 of 1/8 of eight cents per thousand cubic feet for all casing-head gas made and produced from said lease, and that by inadvertence and mutual mistake it was written in said contract in figures as hereinabove set out, that it was the intention of all the contracting parties at the time that the Texas Company was to pay the plaintiff at the rate of 1/2 of 1/8 of eight cents per thousand cubic feet, and that said construction had been given the said agreement by the parties at all times thereafter, and that the Texas Company had under said contract paid the plaintiff at the rate of 1/2 of 1/8 of eight cents per thousand cubic feet for gas saved and produced from other wells on said leased premises. The allegations attempting to fix liability upon the Hanlon Gasoline Company were that said company had at all times used the gas produced from said well and converted same to its own use and benefit, with actual and constructive knowledge of plaintiff's said contract, and that, in taking said gas, it was operating with the Texas Company. As to the other defendants, Bateman, Scott, and York, the allegations are that they are claiming some interest in said well and the gas and oil produced therefrom, which interest is being claimed through their codefendant the Texas Company; that plaintiff is unable to state the interest of said defendants, inasmuch as no contract or assignment appears of record, but, if said defendants have any interest in said oil, gas, and other minerals produced from said well, they acquired the same from the defendant the Texas Company.

Separate answers were filed by the defendants the Texas Company and Hanlon Gasoline Company, and a joint answer by Bateman, Scott, and York. It will be unnecessary to notice the various defenses set up by the several defendants, except that the Texas Company filed a cross-action in which it was specifically alleged that the defendant Bateman drilled said well under an assignment to him from the Texas Company of 40 acres of the leasehold held by the Texas Company under the plaintiff, and that in said assignment said Bateman bound himself as assignee to pay to said Curry any and all royalties accruing from said land, and that thereafter the plaintiff, Curry, having made claims for royalties from the well, the defendants Bateman, Roberts, and Mike Scott executed and delivered to the Texas Company a bond of indemnity for the claims and demands of the plaintiff, and specifically agreeing to pay off and satisfy any judgment which was rendered against the Texas Company.

The several defendants demurred to the plaintiff's petition, all of which were overruled except the special exceptions of the Hanlon Gasoline Company, which were sustained, and, the plaintiff declining to amend, that company was dismissed from the suit.

There was a trial to a jury as to the remaining defendants, and the plaintiff introduced the contract sued on, together with proof that a well had been drilled by the defendant Bateman, which produced large amounts of gas, and that this gas was being taken and used by the Hanlon Gasoline Company. Letters were introduced from the Hanlon Gasoline Company to the plaintiff, showing the production of gas by the well in question and the delivery of said gas to said Hanlon Gasoline Company, amounting to 2,696,947,000 cubic feet. No objection was made to these letters by either of the defendants. Other testimony was introduced by plaintiff to the effect that the contract when negotiated was, in fact, that the Texas Company should pay the plaintiff at the rate of 1/2 of 1/8 of eight cents per thousand cubic feet, and that this contract was made about the first of April, 1919, and that thereafter the Texas Company drilled and produced oil and gas from said lands and paid the plaintiff at the rate which was agreed upon; that is, at the rate of eight cents per thousand cubic feet. A letter from the Texas Company was introduced, stating plainly that the agreement was for payment for royalty on gas on the basis of 1/8 of eight cents. Plaintiff testified he did not know of any other claim being made until Bateman, after the well was drilled by him, told the plaintiff that he could not recover under the contract more than 1/2 of 1/8 of eight one-hundredths of one cent and that no amount had been paid to plaintiff for royalty on gas produced from said well called the Bateman well, although a demand had been made therefor.

The statement of facts shows that, during the introduction of plaintiff's testimony and prior to the time plaintiff closed his case, the following occurred:

"Mr. Allison: The defendants G. O. Bateman, Mike Scott, and Jack B. Robert agree, if any judgment is rendered in this case against the defendant the Texas Company, judgment shall be rendered in favor of the Texas Company against said defendants Jack B. Robert, Mike Scott, and G. O. Bateman, for the amount of the judgment against the Texas Company.

"Mr. Garrett: We believe the court should instruct a verdict for the plaintiff for the amount of the alleged royalty as per the written contract, the actual amount is simply a matter of mathematical figures, one-half of one-eighth of eight-hundredths cents per thousand cubic feet."

At the conclusion of the testimony the defendants presented a request for an instructed verdict in their favor, and, if that was denied, in the alternative, the defendants requested the court to instruct a verdict for the amount of alleged royalty as per the written contract, 1/2 of 1/8 of eight-hundredths of one cent per thousand cubic feet, the Texas Company to have its recovery over and against the defendants sued by it.

In response to this motion, the court instructed a verdict for plaintiff for the sum of $153.06 on the basis of 1/2 of 1/8 of eight one-hundredths of a cent per thousand cubic feet. Under plaintiff's contention as noted above, he would have been entitled to approximately $14,000. The difference is therefore material.

In plaintiff's appeal, it is loudly and emphatically asserted that the court was in error in construing the contract as contended for by the defendants to be for the payment of 1/2 of 1/8 of eight one-hundredths of a cent per thousand cubic feet, but claimed that the contract should have been construed to provide for the payment at the rate of 1/2 of 1/8 of eight cents per thousand cubic feet, both on its face and because of the construction to that effect given to the contract by the parties, the plaintiff and the Texas Company, over a period of years from 1919, to and including the trial of the case, and that, if mistaken in that, plaintiff was entitled to reform the contract so as to make it express the true agreement of the parties.

All of these contentions are aggressively opposed by the defendants on the ground that the contract is on its face unambiguous; that the petition failed to allege any ambiguity therein, and therefore evidence as to its construction by the parties cannot be given any effect; that the reformation is barred by the four years' statute of limitation, which was duly pleaded; and that the court could only take the contract as written, which the defendants insist plainly provides for payment at the rate of 1/2 of 1/8 of eight one-hundredths of a cent. In addition, if mistaken as to these matters, the defendants claim that no evidence whatever was introduced by the plaintiff as to the amount of gas produced from said well, and that the letters of the Hanlon Gasoline Company were hearsay and not admissible against any of the defendants, and, though admitted without objection, cannot be given any effect on appeal; that, disregarding said letters, there is no evidence in the record upon which a judgment could be entered for the plaintiff for any...