Texlouana Producing & Refining Co. v. Wall

• Decision Date: 23 January 1924
• Docket Number: (No. 427-3847.)
• Citation: 257 S.W. 875
• Parties: TEXLOUANA PRODUCING & REFINING CO. v. WALL.
• Court: Texas Supreme Court

257 S.W. 875

TEXLOUANA PRODUCING & REFINING CO. v. WALL.

(No. 427-3847.)

Commission of Appeals of Texas, Section B.

January 23, 1924.

Error to Court of Civil Appeals of Seventh Supreme Judicial District.

Action by J. H. Wall against Texlouana Producing & Refining Company. Judgment for defendant was reversed by the Court of Civil Appeals (241 S. W. 521), and plaintiff brings error. Affirmed.

Mathis & Caldwell, of Wichita Falls, for plaintiff in error.

E. B. Hendricks, of Fort Worth, for defendant in error.

POWELL, P. J.

The Court of Civil Appeals, in its opinion in this case, favors us with a most admirable statement of the nature and result of this cause, as follows:

"The appellant, J. H. Wall, brought an action to recover $2,500 and interest upon the contract hereinafter set out against the appellee company, the contract having been entered into between Wall and J. A. Colliton, on the one part, and the appellee company, on the other. Wall sues in his own right and as the assignee of Colliton's interest in the contract. Wall also sued out a writ of attachment and levied upon certain oil lease land as the property of the appellee, praying for a foreclosure of the attachment lien. The appellee answered, admitting the execution of the contract as alleged; that it failed to make the payment sued for because appellee exercised its right to forfeit the $10,000 paid on the contract, and the oil and gas lease which appellant and Colliton agreed to sell to appellee, and refused to pay the sum of $2,500. The contract sued on is as follows:

"`This contract made and entered into this 29th day of March, A. D. 1920, by and between J. A. Colliton and J. H. Wall, both of Wichita county, Tex., parties of the first part, and the Texlouana Producing & Refining Company, a trust estate, of Wichita county, Tex., party of the second part, Witnesseth:

"`For and in consideration of the sum of $12,500.00 to be paid in cash, as hereinafter stipulated, parties of the first part hereby agree to sell and convey by proper assignment to party of the second part, and party of the second part hereby agrees to buy from parties of the first part, the oil and gas lease covering the following described real estate situated in Wichita county, Tex., to wit: The west one half of Lot No. 6 of the E. S. Kellar Subdivision No. 101 of Block 70 of the Red River Valley lands, containing 2½ acres.

"`Parties of the first part further agree to furnish party of the second part on or before March 31, 1920, an abstract of title beginning with the A. A. Morgan estate, showing a good and merchantable title to said oil and gas lease to be vested in parties of the first part. It is further understood and agreed that party of the second part shall have five days from the date said abstract is delivered, as aforesaid, in which to examine the same and point out in writing any defects, if any there be, in the title to said lease, and it is further understood and agreed that parties of the first part shall have five days after said objections are so pointed out to them in writing in which to correct said defects.

"`Party of the second part hereby agrees to place the sum of $5,000.00 in escrow in the First National Bank of Wichita Falls, Tex., together with a copy of this contract and a proper assignment of said oil and gas lease executed by parties of the first part, which sum of $5,000.00 shall be paid by said bank to parties of the first part on approval of the abstract of title by party of the second part or its attorneys. Party of the second part further agrees to pay the additional sum of $5,000.00 on or before May 1, 1920, and the further sum of $2,500.00 on or before May 21, 1920, to said First National Bank, which sums of money shall by the bank be paid to parties of the first part.

"`Party of the second part further agrees to begin the drilling of an oil and gas well with a rotary rig on said premises on or before May 1, 1920, unless prevented from doing so by fire, weather conditions, lack of supplies, or any other cause over which it has no control, and to continue said drilling with due diligence until said well is completed.

"`It is hereby agreed and understood that on the payment of the last installment due under the provisions of this contract the assignment of said oil and gas lease placed in escrow as above stipulated shall be turned over by said First National Bank to party of the second part.

"`It is hereby agreed and understood that in case parties of the first part fail to furnish an abstract of title, or fail to correct any defects in their title to said oil and gas lease within the time above set forth, then and in that event all moneys placed in escrow under the provisions of this contract shall be null and void.

"`It is hereby agreed and understood that in case party of the second part fails to make the payments as above provided, or fails to begin the drilling of said well as herein stipulated, then and in that event all moneys theretofore paid for said oil and gas lease shall be forfeited, and this contract shall be null and void.

"`Witness our hands this the 29th day of March, A. D. 1920.'

"The parties present an agreed statement of facts under the statute. It is agreed that Wall owned all the right, title, interest, and estate in and to the above contract, and that J. A. Colliton had properly assigned his interest to Wall; that Wall and Colliton had performed and complied in all respects with the provisions and stipulations contained in the agreement obligatory upon them to keep and perform. The Texlouana Producing & Refining Company performed all its obligations in the agreement except it failed to pay to Wall and Colliton, or either of them, $2,500 mentioned in the agreement, due and payable by appellee to appellant on May 21, 1921. Appellee refused to pay the same because it believed it had the right to elect to forfeit all prior payments made by it under the contract and the oil and gas lease and refused to pay the sum of $2,500, being the balance due under the agreement. Wall and Colliton did not attempt to forfeit any of the payments made by appellee to appellant or Colliton nor did they at any time forfeit or attempt to forfeit the oil and gas lease, but at all times insisted on the specific performance of the contract and the payment of the $2,500, the balance due under the agreement. It is agreed the attachment issued in the suit was levied on the property described in the return thereon, and that, if appellant was entitled to enforce the agreement and collect the $2,500 and interest, appellant is also entitled to a foreclosure of his attachment lien on the property levied upon. The parties also agree and admit the execution and delivery of the contract of March 29, 1920, above set out. A trial before the court without a jury resulted in a judgment that appellant take nothing by his suit, and that the land levied on by the attachment be released. From the above agreed facts it will be seen the only issue to be determined on this appeal is the construction of the contract sued on; that is, whether it is a contract of sale or an option."

Upon appeal to the Court of Civil Appeals, that court reversed the judgment of the district court and rendered judgment in favor of Wall for the entire amount sued for, with foreclosure of attachment lien as prayed for. See 241 S. W. 521.

The late Chief Justice Huff, for the Court of Civil Appeals, has correctly stated the only issue in this case and has, in our judgment, correctly decided that issue. We think he has written clearly and ably and we very much doubt if we can add anything of value to what he has said.

This contract is an absolute agreement of sale and purchase between the respective parties thereto, unless the last paragraph thereof is an agreement by the parties releasing the company from its aforesaid obligation, at its option, to purchase this lease. In other words, we here have a definite agreement to buy the lease upon the tender of a good title. Such a title was tendered. The parties so admit. The vendors faithfully executed their part of the contract. Was it their intention, in making this contract, to permit the company to relieve itself of its obligations under the contract at any time it saw fit to do so?

In the first place, does the provision that all moneys heretofore paid for the lease shall be "forfeited," relieve the company from paying the remaining note still due? A very enlightening case in this connection is that of Moss & Raley v. Wren, 102 Tex. 567, 113 S. W. 739, 120 S. W. 847.

We quote from the opinion of Chief Justice Gaines in that case, as follows:

"This is a certified question from the Court of Civil Appeals of the second district, and in order to save copying a long statement we undertake to state the point in the case.

"The appellants were employed as real estate brokers to make sale of certain land belonging to appellee, and, having effected, as they claimed, a sale to one Clark, brought suit for their commission. In the contract for the conveyance of the land, after specifying the price, consideration, etc., the following stipulation was inserted:

"`And it is further mutually agreed in case purchaser fails to comply with the terms hereof relating to the payment and securing of the purchase price as above mentioned and by the time herein designated, purchaser shall forfeit the amount paid hereon to seller, and the same shall be paid to seller by said trustees and accepted by said seller as and for liquidated damages for such injury and damage as the seller may suffer by reason of the nonperformance of this contract on the part of the purchaser.'

"The question certified for our determination is, whether upon this contract a sale was effected so as to entitle the appellants to their commission.

"We have numerous decisions holding that, although there is a stipulation in the contract of this character, payment of a fixed sum...