Kennedy & Mitchell, Inc. v. Anadarko Production Co., 61272
Decision Date | 29 April 1988 |
Docket Number | No. 61272,61272 |
Citation | 243 Kan. 130,754 P.2d 803 |
Parties | , 94 P.U.R.4th 533 KENNEDY & MITCHELL, INC., Appellant, v. ANADARKO PRODUCTION COMPANY, Appellee. |
Court | Kansas Supreme Court |
Syllabus by the Court
1. The construction of a written instrument is a question of law, and the instrument may be construed and its legal effect determined by an appellate court.
2. Whether an ambiguity exists in a written instrument is a question of law to be decided by the court.
3. Language in a contract is ambiguous only when the words used to express the meaning and intention of the parties are insufficient in that the contract may be understood to reach two or more possible meanings.
4. Where parties have carried on negotiations, and have subsequently entered into an agreement in writing with respect to the subject matter covered by such negotiations, the written agreement constitutes the contract between them and determines their rights.
5. A "market-out" clause in a gas purchase contract is discussed and held to grant to the pipeline purchaser the unilateral right to propose a lower gas purchase price if it determines the existing price is "uneconomical and unacceptable."
Bruce M. Daniel, of Albright & Welch, P.C., Tulsa, Okl., argued the cause, and Stanley E. Antrim, of Yoxall, Antrim, Richardson & Yoxall, Liberal, was with him on the brief for appellant.
Robert J. O'Connor, of Hershberger, Patterson, Jones & Roth, Wichita, argued the cause, and David E. Bengtson, Wichita, and Clarence A. Conoley, of Anadarko Production Co., Kansas City, Mo., were with him on the brief for appellee.
This is a declaratory judgment action seeking a judicial determination of the effect of a "market-out" provision in a gas purchase contract. The district court held the contract was clear and unambiguous and that the defendant-purchaser's actions in lowering the price paid for the gas were authorized by the contract. Plaintiff-seller appeals from the summary judgment entered in favor of the defendant-purchaser.
The facts pertinent to the controversy herein are not materially disputed and are set forth in the district court's journal entry of judgment as follows:
"3. Article XIV of the Contract concerns billing and payment for gas sold and purchased under the Contract. Specifically, Section 14.6 of the Contract states:
'Each party hereto shall have the right at reasonable times to examine the books and records of the other party to the extent necessary to verify the accuracy of any statement, charge, computation, or demand made under or pursuant to this Agreement.'
The trial court then concluded:
KMI appeals from the entry of summary judgment in favor of APC. KMI's position may be summarized as follows:
1. The contract is clear and unambiguous;
2. the market-out clause grants APC the right to lower the price only if the existing price is provably uneconomical;
3. "uneconomical" means APC is losing money in its sale of the gas purchased under the contract and the burden of proof of same is on APC;
4. KMI has the right to inspect APC's books and records pursuant to Section 14.6 of the contract to determine whether the existing purchase price is, in fact, uneconomical and, accordingly, whether or not the market-out clause has been triggered;
5. the district court erred in construing the disputed contractual provisions adversely to the position of KMI; and,
6. as a fall-back position, the contract is ambiguous and should be construed strictly against APC, its scrivener.
The construction of a written instrument is a question of law, and the instrument may be construed and its legal effect determined by an appellate court. Peterson v. Midland Nat'l Bank, 242 Kan. 266, Syl. p 1, 747 P.2d 159 (1987). Whether an ambiguity exists in a written instrument is a question of law to be decided by the court. Holly Energy, Inc. v. Patrick, 239 Kan. 528, 534, 722 P.2d 1073 (1986). Language in a contract is "ambiguous" only when words used to express the meaning and intention of the parties are insufficient in that the contract may be understood to reach two or more possible meanings. Havens v. Safeway Stores, 235 Kan. 226, 231, 678 P.2d 625 (1984).
The district court held that the...
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...review over the construction of a written instrument and the determination of its legal effect. Kennedy & Mitchell, Inc. v. Anadarko Prod. Co., 243 Kan. 130, 133, 754 P.2d 803 (1988). The statute "Any person having a claim against a municipality which could give rise to an action brought un......
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