ALCO OIL AND GAS CORPORATION v. Concord Oil Company

375 S.W.2d 463, 1964 Tex. App. LEXIS 1916
CourtCourt of Appeals of Texas
DecidedJanuary 8, 1964
Docket14169
StatusPublished
Cited by9 cases

This text of 375 S.W.2d 463 (ALCO OIL AND GAS CORPORATION v. Concord Oil Company) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
ALCO OIL AND GAS CORPORATION v. Concord Oil Company, 375 S.W.2d 463, 1964 Tex. App. LEXIS 1916 (Tex. Ct. App. 1964).

Opinion

BARROW, Justice.

Aleo Oil and Gas Corporation filed this suit to recover from Concord Oil Company the sum of $23,000 under the terms of a written contract between the said parties, bearing date of February 8, 1961. Concord counterclaimed for damages for breach of this contract. After a jury trial, the trial court entered judgment that Aleo take nothing by its suit and that Concord recover the sum of $23,000 on its cross-action. Aleo has perfected this appeal.

The appeal is controlled by the construction of the written contract. This contract was written by Concord and relates to the assignment to Aleo by Concord of a riverbed lease of 220 acres in the Colorado River in Colorado County, Texas. On December IS, 1959, Concord was granted a lease from the State for a primary term of five years. The contract of February 8, 1961, provided generally for the assignment of this lease to Aleo for a cash consideration of $23,000 to be paid by Aleo, and the reservation by Concord of a one-fourth interest after the payment of acquisition and drilling costs. A well cannot be drilled in the riverbed and a lessee is given the right of eminent domain by State law to secure a surface drilling site on property adjoining the riverbed. Under the contract Concord agreed to secure the drill site.

Alco’s claim is based on the following covenant contained in paragraph V of the contract: “If we (Concord) are unable to *465 secure and assign to you such surface location by June 1, 1961, after a bona fide good faith attempt on our part to do so, you shall be relieved from all further liability hereunder, and upon tender of reassignment of the above described lease, Concord firmly agrees and obligates itself to refund to you (Aleo) the cash consideration theretofore paid by you to us under the terms of this agreement, and thereafter we shall both be relieved from further liability under the terms hereof.”

It is undisputed that Concord did not secure the drill site until June 6, 1961. On June 1, 1961, Aleo notified Concord that it was terminating the contract, and on June 7, 1961, the lease was reassigned to Concord by Aleo. Concord refused to refund the $23,000 cash consideration paid to it by Aleo, and this suit was filed by Aleo to recover same. Concord asserts that time was not of the essence of the contract and that it complied with the contract by securing the drill site on June 6, 1961. Concord further alleged that in any event Aleo was es-topped by its course of conduct to assert that time was of the essence. In its cross-action, Concord alleged that the contract was breached by Alco’s refusal to drill the well after being furnished the drill site on June 6, and that Aleo was estopped to assert that time was of the essence.

The jury returned a verdict substantially as follows: (1) That the parties did not intend that time should be of the essence of the agreement of February 8, 1961; (2) that Aleo, by the course of conduct of its officers and agents between February 8, 1961, and June 1, 1961, led Concord reasonably to believe that Concord’s failure to have the drill site by June 1, would not cause Aleo to attempt to terminate the agreement on June 1; (3) that Concord relied upon such conduct of Aleo to the extent that it in good faith believed no action would be taken by Aleo to attempt to terminate the agreement on June 1, because of Concord’s failure to secure the drill site; (4) that Concord could and would have secured a drill site by June 1, but for this belief; (5) that $23,000 would be the reasonable market value on August 1, 1961, of Concord’s one-fourth interest in the lease if Aleo had drilled and completed the well by August 1, 1961.

Aleo urges by this appeal that time was of the essence as a matter of law under the provisions of the contract. Aleo also urges that all the essential elements of estoppel were neither pleaded, raised by the evidence, nor properly submitted in the court’s charge to the jury. Concord, by a counterpoint, urges that Aleo did not timely tender the reassignment of the lease under the terms of the contract.

Neither party has asserted that the written contract is ambiguous. It is therefore our duty to construe the contract as an entire instrument in order to determine its effect and meaning. Parol evidence is not admissible to aid in this construction. Steeger v. Beard Drilling, Inc., Tex., 371 S.W.2d 684; Baker v. Fell, 135 Tex. 375, 144 S.W.2d 255. Such a construction of the contract demonstrates that time was of the essence of the contract.

The last numbered paragraph of the contract provides: “This agreement shall inure to the benefit of, and shall be binding upon, Aleo Oil and Gas Corporation and Concord Oil Company and their respective successors and assigns, and it is understood that time is of the essence hereof.’' (Emphasis ours.) There is nothing in the contract which is inconsistent or casts any doubt on this specific agreement “that time is of the essence” thereof. Cf. Langley v. Norris, 141 Tex. 405, 173 S.W.2d 454, 148 A.L.R. 555.

The contract consists of five single-spaced typewritten pages which detail all covenants between said parties. All occurrences called for by the contract are limited by certain times and specific dates. The contract contemplates that Concord might not be able to negotiate with the adjoining landowners for a drill site and provides for the institution of condemnation proceed *466 ings by Concord. There is no provision of the contract which is inconsistent with the covenant that Concord must secure the drill site by June 1, 1961, or Aleo would be relieved of all liability under the contract. Under the express agreement of the parties, time was of the essence. There was no issue of fact raised as to whether or not time was of the essence, and the trial court erred in not disregarding the jury’s answer to Question No. 1. Herber v. Sanders, Tex.Civ.App., 336 S.W.2d 783; Texas Associates v. Joe Bland Const. Co., Tex.Civ. App., 222 S.W.2d 413; 13 Tex.Jur.2d, Contracts, § 287. The trial court further erred in not holding, as a matter of law, that Concord failed to comply with the contract when it did not deliver the drill site by June 1, 1961.

Concord alleged as a defense to AIco’s claim and as an alternative ground for its own cross-action, that the conduct of AIco’s officers and agents, between Feb. 8, 1961, and June 1, 1961, was such that it led Concord to believe that Aleo would not insist upon the provision of the contract requiring Concord to furnish a drill site by June 1, and therefore that Aleo should be estopped to claim this breach. It is well settled that estoppel is defensive in character and does not create a cause of action. Southland Life Ins. Co. v. Vela, 147 Tex. 478, 217 S.W.2d 660; Cotton Belt State Bank v. Roy H. Hatcheries, Inc., Tex.Civ.App., 351 S.W.2d 325; Massachusetts Bonding & Ins. Co. v.

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375 S.W.2d 463, 1964 Tex. App. LEXIS 1916, Counsel Stack Legal Research, https://law.counselstack.com/opinion/alco-oil-and-gas-corporation-v-concord-oil-company-texapp-1964.