Myers v. Gulf Coast Minerals Management Corp.

Decision Date03 October 1962
Docket NumberNo. A-8994,A-8994
Citation361 S.W.2d 193
CourtTexas Supreme Court

Nye, Cohn & Morris, Corpus Christi, for petitioner.

King, Anderson & Porter, Corpus Christi, for respondent.

SMITH, Justice.

In September, 1960 Myers and Gulf Coast entered into a contract, commonly referred to as a farmout agreement or letter agreement. Myers alleged, in this suit, that on September 28, 1960, he offered Gulf Coast certain rights, title, and interest in and to a certain oil and gas leasehold estate on specified terms and conditions in writing, and that Gulf Coast accepted the offer and paid the sum of $500.00 immediately upon acceptance of the terms and conditions of the contract, but failed to comply with the terms of the contract by paying the additional sum of $2000.00 within 30 days from the date of acceptance or commencement of drilling operations, whichever was sooner, as provided in the contract. Hence, this suit to recover of and from Gulf Coast the sum of $2000.00, with interest at the rate of 6% per annum from November 6, 1960 until paid. On January 16, 1961, Gulf Coast filed a general denial and prayed that Myers take nothing by his suit.

On February 7, 1961 Gulf Coast filed its motion for summary judgment based upon the contention that there was no genuine issue as to any material fact and that it was entitled to judgment as a matter of law upon the pleadings on file and a letter agreement between the parties. A copy of the letter agreement was attached to the motion for summary judgment. On February 23, 1961 Myers filed an affiadvit with a copy of the letter agreement attached, and on March 24, 1961, in a motion for summary judgment, alleged that there was no genuine issue as to any material fact in the case and that he was entitled to judgment as a matter of law.

On May 9, 1961 the trial court granted Myers' motion for summary judgment, and the judgment entered recites that the court found that the pleadings, opposing affidavits and the letter agreement, attached as an exhibit to both motions, showed an absence of any genuine issue as to any material fact and that summary judgment should be rendered for Myers as a matter of law. Gulf Coast's motion for summary judgment was overruled. On Appeal, the trial court's judgment in favor of Myers for $2000.00 and interest at the rate of 6% per annum from November 6, 1960 was reversed and judgment was rendered that Myers take nothing by his suit, thus sustaining Gulf Coast's motion for summary judgment. Tex.Civ.App., 354 S.W.2d 944.

We have concluded to sustain the judgment of the trial court for the reasons now to be stated.

The farmout agreement contains an introductory paragraph, 1 being the recital portion of the contract, and numbered operative paragraphs 1, 2 2, 3 and, 6, 4 and we are directly concerned with the meaning of these paragraphs, including the introductory paragraphs, in determining the true meaning of the contract.

The Court of Civil Appeals has held that the words 'may earn' found in the recital portion of the farmout agreement were permissive rather than compulsive. The Court, apparently having made the recital paragraph controlling over the operative paragraphs of the agreement, went on to hold that the agreement meant that Gulf Coast could either gain the rights or lose them as it willed, citing the cases of State v. Clements, Tex.Civ.App., 319 S.W.2d 450, (1958), wr. ref., and Kleck v. Zoning Board of Adjustment of San Antonio, Tex.Civ.App., 319 S.W.2d 406, (1958), wr. ref., in support of its holding.

In the case of State v. Clements, supra, the court was called upon to construe a 1956 amendment to the Texas Constitution. The amendment added Section 51-c to Article III, Vernon's Ann.St., and provided that the Legislature may grant aid and compensation to any person who had theretofore paid a fine or served a sentence in prison under the laws of this State for an offense for which he was not guilty. The court simply determined that the word 'may' as first used in the Constitutional Amendment, and as later used in connection with the word 'deem' in the amendment, was permissive in meaning and that obviously the amendment was not self-executing. Kleck, supra, was a zoning ordinance case, the court holding being that where a municipal zoning ordinance provided that noncommercial parking lots 'may be permitted', the word 'may' was merely permissive and the Zoning Board of Adjustment had the right to use its discretion in granting or denying applications for noncommercial parking lot permits, subject to the limitations, conditions, and restrictions set out in the ordinance. This holding refuted the contention of the applicant for a noncommercial parking lot permit that where the ordinance said parking lots for noncommercial parking 'may be permitted' it meant 'must be permitted'. In rejecting this contention, the court said that to adopt Kleck's theory would be to hold that the Zoning Board had no discretion in the matter, but must grant a proper application as a matter of right.

It is to be noted that be refusing the application for writ of error in each of these cases, this court adopted the opinion in each case as its own. Our approval of these cases still stands. However, we decline to follow the holding of the Court of Civil Appeals that the holdings in those cases are decisive of the question we are called upon to decide by this appeal. We do not mean by this to say that the rules of construction of written contracts which we consider applicable here were not applied in those cases. In the present case, we are to be governed by the universal rule in this jurisdiction that an instrument, such as the farmout agreement involved here, must be viewed in its entirety and that no single portion, sentence, or clause when considered alone will control. We have no doubt but that this rule was implicitly followed by the court in both the Clements and Kleck cases and a correct construction was made of the instruments under consideration. The result reached in those cases, however, does not necessarily mean that the same result should obtain in this case. The courts are to ascertain the real intention of the parties, and the very nature of the inquiry dictates that there can be no fixed rule, for every case, in a great measure, depends upon its own facts, the context of the instrument, and circumstances. It is elementary that if there is no ambiguity, the construction of the written instrument is a question of law for the court. See Turner v. Montgomery, Tex.Com.App., 293 S.W. 815; North v. North, Tex.Civ.App., 2 S.W.2d 481, 483; Brown v. Payne, 142 Tex. 102 176...

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