Humble Exploration Co. v. Amcap Petroleum Associates-1977, ASSOCIATES-1977

• Decision Date: 28 September 1983
• Docket Number: A,ASSOCIATES-1977,No. 05-82-00604-CV,05-82-00604-CV
• Parties: HUMBLE EXPLORATION CO., Appellant, v. AMCAP PETROLEUMmcap Petroleum Associates-1978, Amcap Petroleum Associates-1978B, Fayette Oil Company, American Falcon Oil Company, American Hawk Oil Company, Fairway Land Company and American Eagle Oil Company, and Penn Exploration, Ltd., Appellee.
• Court: Texas Court of Appeals

Page 860

658 S.W.2d 860

HUMBLE EXPLORATION CO., Appellant, v. AMCAP PETROLEUM ASSOCIATES-1977, Amcap Petroleum

Associates-1978, Amcap Petroleum Associates-1978B, Fayette

Oil Company, American Falcon Oil Company, American Hawk Oil

Company, Fairway Land Company and American Eagle Oil

Company, and Penn Exploration, Ltd., Appellee.

No. 05-82-00604-CV.

Court of Appeals of Texas,

Dallas.

Sept. 28, 1983.

Rehearing Denied Oct. 25, 1983.

Charles F. Guittard, Guittard & Hyden, Dallas, for appellant.

Natalie S. Taylor, Akin, Gump, Strauss, Hauer & Feld, Michael V. Powell, Rain, Harrell, Emery, Young & Doke, Dallas, for appellee.

Before STOREY, WHITHAM and ROWE, JJ.

ROWE, Justice.

This is a summary judgment case. Appellees, as Non-operators, brought suit against appellant, Humble, for a declaratory judgment construing in ten prospect agreements, tax provisions affecting the "payout" date for vesting of Humble's twenty-five percent reversionary "back-in" interest. The trial court, finding the applicable provisions unambiguous, held as a matter of law that under the agreements "the tax imposed by the Crude Oil Windfall Profit Tax Act of 1980, 26 U.S.C. § 4986, is a 'production,' 'severance' or other 'similar' or 'applicable' tax measured by production that ... constitutes a cost that plaintiffs and Intervenor (Non-operators) are entitled to fully recoup in arriving at 'payout' under each of the said ten prospect agreements before Humble Exploration, Inc.'s ('Humble') reversionary or back-in interest vests in Humble." With this result we agree. We overrule Humble's contentions to the contrary, as well as other contentions of Humble respecting an award of attorney's fees and denial of a continuance, and affirm the summary judgment.

Each of the ten prospect agreements between the parties contains a definition of "payout". While these definitions fall basically into four separate categories, for purposes of this opinion we formulate the following common paraphrase:

'Payout' shall be the date upon which Non-operators shall have received from the net proceeds from the sale of 75% of all production of oil, gas and other hydrocarbons from any well, after deduction of production, severance or other similar taxes, ¹ an amount equal to all costs incurred and paid by Non-operators in connection with the drilling, completing, equipping, and operating such well prior to payout.

Humble seeks to have the summary judgment set aside by arguing that: (1) material facts do exist with respect to Humble's claim of a special meaning for or a trade usage of the language in question and with respect to facts and circumstances surrounding execution of the agreements; (2) the terms or the prospect agreements applicable to taxes are ambiguous with respect to whether the windfall profit tax is includable, so a proper construction requires resort to parol evidence; and (3) as a matter of law the windfall profit tax is neither a "production", "severance," "similar" or "applicable" tax within the meaning of the prospect agreements.

To answer Humble's first two contentions for setting aside the summary judgment, we apply that standard deemed appropriate by our Supreme Court for the interpretation of oil and gas contracts in Sun Oil Company (Delaware) v. Madeley, 626 S.W.2d 726 (Tex.1981), and find that the language used in the definition of "payout" is unambiguous, non-technical, and without specialized meaning. Because the language used is fairly susceptible of only one meaning, consideration cannot be given to facts and circumstances surrounding execution of the agreements. Trade usage considerations are of no help in this record because the windfall profit tax was not enacted until after execution of the prospect agreements. Corso v. Carr, 634 S.W.2d 804, 808 (Tex.App.--Fort Worth 1982, writ ref'd n.r.e.). The written words of the prospect agreements are alone deemed to express the intention of the parties, Madeley, and the construction of the writings is a question of law for the court. Myers v. Gulf Coast Minerals Management Corp., 361 S.W.2d 193 (Tex.1962). Humble's first through seventh points of error are overruled.

As for Humble's third contention for setting aside the summary judgment, we find no material fact in dispute on the controlling issue of the treatment to be afforded the windfall profit tax under the...