Lone Star Producing Company v. Gulf Oil Corporation

• Court: U.S. District Court — Eastern District of Texas
• Writing for the Court: SHEEHY
• Citation: Lone Star Producing Company v. Gulf Oil Corporation, 208 F.Supp. 85 (E.D. Tex. 1962)
• Decision Date: 17 July 1962
• Docket Number: Civ. A. No. 2961.
• Parties: LONE STAR PRODUCING COMPANY, a corporation, Plaintiff, v. GULF OIL CORPORATION, a corporation, Defendant.

208 F. Supp. 85

LONE STAR PRODUCING COMPANY, a corporation, Plaintiff, v. GULF OIL CORPORATION, a corporation, Defendant.

Civ. A. No. 2961.

United States District Court E. D. Texas, Tyler Division.

July 17, 1962.

Roy E. Pitts, Archie D. Kroney, D. L. Case, Dallas, Tex., Jack T. Life, Athens, Tex., for plaintiff.

W. B. Edwards, Fred A. Lange, Houston, Tex., for defendant.

SHEEHY, Chief Judge.

Plaintiff, a Texas corporation, hereinafter referred to as Lone Star, instituted this suit seeking to recover from the Defendant, a corporation organized and existing under and by virtue of the laws of the State of Pennsylvania, hereinafter referred to as Gulf Oil, the sum of $50,815.62 for 16,442.64 barrels of crude oil received and purchased from Plaintiff by the Defendant during the month of December 1960 under a contract in writing dated April 1, 1958, entered into by and between the Plaintiff and the Defendant relating to the sale by Plaintiff and the purchase by the Defendant of crude oils produced from the Opelika and LaRue Fields in Henderson County, Texas, a copy of which contract is attached hereto as Appendix "A" and made a part hereof, together with reasonable attorney's fees in the amount of $7,500.00. The Defendant, by its Answer and Counterclaim filed herein on January 5, 1962, admits that it purchased from Plaintiff the 16,442.64 barrels of crude oil in the month of December 1960 but contends that the purchase price for said oil under its contract with Plaintiff is the sum of $49,171.34 rather than the sum of $50,815.62 alleged by Plaintiff and by its Counterclaim seeks to recover from Plaintiff the sum of $44,522.33 as an alleged over-payment which it alleges that through inadvertence and mistake on its part it paid to Plaintiff for crude oil totalling 445,223.28 barrels it received and purchased from Plaintiff under the contract of April 1, 1958, from the period May 8, 1958, through November 1960, and asked that said sum of $44,522.33 be deducted from and allowed as an offset against its acknowledged indebtedness to Lone Star in the amount of $49,171.34 for crude oil purchased from Lone Star by Gulf Oil during December 1960. Gulf Oil in its cross-action also asked for the recovery of reasonable attorney's fees in the amount of $5,000.00.

Plaintiff, in its Answer to Defendant's Counterclaim, raises a number of defenses including a contention that said Counterclaim is barred by the Texas two year statute of limitation.¹

The facts, in addition to those above stated, as stipulated by the parties and as found, are as hereinafter stated.

For some time prior to April 1, 1958, and at all times thereafter hereto pertinent Lone Star was engaged in the production of crude oil in the Opelika and LaRue Fields in Henderson County, Texas. As a result of negotiations between them, Plaintiff and Defendant entered into the contract attached hereto as Appendix "A" which became effective on April 1, 1958, under the terms of which Lone Star was to sell and Gulf Oil was to purchase the crude oils produced by Lone Star from the Opelika and LaRue Fields during the existence of said contract with the deliveries of said crude oil to be made by Lone Star from its tanks at its Opelika plant located in the Opelika Field into the pipe line of Gulf Refining Company, a wholly owned subsidiary of the Defendant Gulf Oil Corporation, for the account of Gulf Oil with title to said crude oil passing to Gulf Oil upon delivery of same to the pipe line of Gulf Refining Company. The price Gulf Oil was to pay Lone Star for the crude oil purchased was provided for by the following provisions of the contract, hereinafter referred to as the pricing clause:

"Subject to the adjustment of volume as provided above, Gulf Oil Corporation shall pay to Lone Star Producing Company for each barrel of forty-two (42) United States standard gallons of crude oil delivered hereunder a price per barrel equal to Gulf Oil Corporation's Northeast Texas Area posted price for the gravity received in effect on the date which said crude oil is allocated for pricing purposes, less any transportation cost in excess of five (5) cents per barrel as stipulated in pipe line tariffs of Gulf Refining Company for transportation of the crude oil to its Big Sandy Station."

The contract, which was cancelled by Gulf Oil as of January 1, 1961, further provided that Gulf Oil should make payment to Lone Star for the oil purchased under said contract on or before the twentieth day of each calendar month for all crude oil delivered during the preceding calendar month.

In keeping with the contract Lone Star sold to Gulf Oil and delivered to Gulf Refining Company's pipe line at Lone Star's Opelika Plant during the period May 8, 1958, through November 1960, 445,223.28 barrels of oil. Gulf Oil paid Lone Star each month for such oil purchased the preceding month with the payments being made on the basis of Gulf Oil's Northeast Texas Area posted price. In so doing, Gulf Oil made no deductions whatsoever for costs for transporting said oil from Lone Star's Opelika Plant to Gulf Refining Company's Big Sandy Station. Each month when Gulf Oil made payment to Lone Star for the oil purchased the preceding month during the period from May 8, 1958, through November 1960, there accompanied Gulf Oil's check submitted to Lone Star in payment for said oil Gulf Oil's statement which reflected the number of barrels of oil Gulf Oil received from Lone Star each day of the month on which oil was received, the price per barrel and the value of said oil based on said price per barrel. Each such statement had printed on its face the following: "Please examine immediately, as it may be impossible to correct errors after 30 days." Gulf Oil made payment to Lone Star for the full value of the oil as shown by such statements without making any deduction for any costs of transporting said oil from Lone Star's Opelika Plant to Gulf Refining Company's Big Sandy Station. It was Gulf's failure to deduct the portion of the transportation costs incurred by it for transporting the oil from Lone Star's Opelika plant to Gulf Refining Company's Big Sandy Station that it claims it was entitled to deduct under the contract that resulted in the alleged overpayment Gulf Oil made to Lone Star and which forms the basis of Gulf Oil's Counterclaim.

During December 1960 Gulf Oil purchased and received from Lone Star under the contract 16,442.64 barrels of oil which, based upon Gulf Oil's then Northeast Texas Area posted price for such type of oil had an aggregate value of $50,815.62 without any deductions being made for transportation costs. Although Lone Star has made demand in writing of Gulf Oil to pay said sum of $50,815.62 for the oil it purchased from Lone Star during December 1960, which demand was made more than thirty days prior to the institution of this suit, Gulf Oil has refused to pay said sum of $50,815.62, Gulf Oil alleging and contending that it is only indebted to Lone Star in the amount of $4,649.01, which amount it tendered to Lone Star in March 1961 and which amount Lone Star refused to accept.

On May 6, 1958, Gulf Refining Company duly filed with the Interstate Commerce Commission its Local Pipe Line Tariff I. C. C. No. 44 establishing a rate of 15¢ per barrel for crude oil transported in its pipe line from lease tankage within the territory of Gulf Refining Company's gathering facilities in the Opelika Field to Gulf Refining Company's Big Sandy Station in Upshur County, Texas, for interstate transportation beyond the Big Sandy Station. On May 7, 1958, Gulf Refining Company, by letter of transmittal of that date addressed to the Railroad Commission of Texas, Austin, Texas, transmitted to said Railroad Commission its Texas Local Tariff No. 163 and its Texas Local Tariff No. 164 with the request that said Tariffs, which were to become effective on May 8, 1958, be filed. Said Tariff No. 163 and Tariff No. 164, and each of them, were duly received by the Railroad Commission of Texas at its offices in Austin, Texas, on May 8, 1958. The Railroad Commission duly marked said Tariff No. 164 as being filed but through inadvertence or oversight neglected to formally place a file mark on said Tariff No. 163 until June 28, 1961, although said Tariff No. 163 remained in the offices of the Railroad Commission in Austin from its receipt in said offices on May 8, 1958, until June 28, 1961. Said Tariff No. 163 provided for a charge of 15¢ per barrel to be made by Gulf Refining Company for crude oil transported in its pipe lines from lease tankage within the territory of the Gulf Refining Company's gathering facilities in the Opelika Field to Gulf Refining's Big Sandy Station.

Lone Star does not question the validity of Tariff I. C. C. No. 44 or that it was effective at all times pertinent hereto but does contend that the movements of the oil in question from its Opelika Plant in the Opelika Field to Gulf Refining's Big Sandy Station was not interstate commerce and, therefore, said Tariff No. 44 did not apply to said movements of the oil. While conceding that under the provisions of Sec. 6a of Art. 6049a, Vernon's Civil Statutes of Texas, Annotated, a tariff such as Texas Local Tariff No. 163 becomes effective upon the filing of same with the Railroad Commission of Texas, Lone Star contends that said Tariff No. 163 was not filed with the Railroad Commission until June 28, 1961, and, therefore, said Tariff was not in effect during any of the time hereto pertinent. This contention of Lone Star is without merit. Under the finding above made to the effect that said Tariff No. 163 was received by the Railroad Commission of Texas on May 8, 1958, for filing and thereafter remained in the office of the Railroad Commission, said Tariff was filed with the Railroad Commission on May 8, 1958, even though for some reason the Railroad Commission did not formally place the file mark thereon until June 28, 1961.²

During all times...