American Refining Co. v. Tidal Western Oil Corp.

264 S.W. 335, 1924 Tex. App. LEXIS 633
CourtCourt of Appeals of Texas
DecidedMay 14, 1924
DocketNo. 2320.
StatusPublished
Cited by4 cases

This text of 264 S.W. 335 (American Refining Co. v. Tidal Western Oil Corp.) 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
American Refining Co. v. Tidal Western Oil Corp., 264 S.W. 335, 1924 Tex. App. LEXIS 633 (Tex. Ct. App. 1924).

Opinion

HALL, C. J.

Defendant in error, Tidal Western Oil Corporation, brought this suit against plaintiffs in error, Roy Perdue and American Refining Company, to recover actual and exemplary damages and for an injunction, restraining the Refining Company from refusing to deliver casinghead gas. under what is known as a casinghead gas contract, and from interfering with the right of the Tidal Company to take such gas. The Tidal Company alleged that it was the successor in title to G. W. Snedden, who on the 6th day of September, 1919, entered into a casinghead gas contract with the IXL Oil Company, covering 2.96 acres of land involved in this suit; that at said time the IXL Oil Company had contracted with one Carl Williamson, who held a usual 88 form lease on said land to drill certain wells upon what is known as a fifty-fifty basis, and that, as a matter of necessity and as a result of such relation, and on account of the custom prevailing in the field, said IXL Oil Company was authorized to bind, not only its interest in said lease, but also the interest of Williamson; that later by conveyance title to all of said lease got in one Abe Breman, who executed a division order, ratifying and adopting said original contract so that the same was by virtue of said ratification adopted and binding as to the whole % interest. It was further alleged that the Refining Company, without right or authority, joined,by Roy Perdue, who was also sued, denied the right of the Tidal Company to take the cas-inghead gas, disconnected and removed the pipes of the Tidal Company, and that the contract was breached knowingly, purposely, and wantonly, so as to .justify exemplary damages. Facts are also set up tending to show that damages would be inadequate on account of the alleged fact that the casing-head gas was necessary to the operation of valuable property which had been constructed at a cost of about $1,500,000, upon faith of the contract. The Refining Company is the successor in title to Abe Brem'an. The Refining Company filed a general denial, and specially denied that it was bound by or had in any wise taken subject to or assumed the casinghead contract; denied that it was binding upon the interest of Carl Williamson in the property in any event; and denied that the contract had been ratified or adopted. It pleaded the statute of frauds and statute of conveyances as reasons why any transaction other than a writing would be valid to bind *336 the Williamson interest. It sets up its honest belief, based upon the advise of counsel, that it was entitled to the casinghead gas, frep from any claim of the Tidal Company, and alleged that the division order constituted a new contract subject to be terminated by either party at any time in substitution of the old.

The casinghead gas contract, which forms the basis of this action, was executed September 6,1919, between the IXL Oil Company, party of the first part, and 6. W. Snedden, party of the second part, and contains the following stipulations material to the questions urged upon this appeal:'

“And, whereas, the first party desires to sell, transfer and assign unto the second party, for the manufacture of gasoline and other products, the casinghead gas and storage which now exists and which may hereafter he produced from oil wells located upon said premises, upon the terms and conditions hereinafter appearing,
“Now, therefore, in consideration of the premises and of the covenants, agreements, and payments hereinafter mentioned, to be well and truly kept, performed, and paid by second party, first party hereby sells and covenants and agrees to and with second party to supply and deliver unto second party, and second party hereby purchases and agrees to receive at the price and upon the terms and conditions hereinafter set out, all of the casing-head gas and-gas coming from the oil wells with the oil and gas that evaporates from the oil during storage, suitable and sufficient for the manufacture of casinghead gasoline, which may be produced from oil wells now or hereafter to be located or drilled upon the lands above described, said casinghead gas to be delivered by first party into the lines of the second party, at casinghead of each well, and at any point of discharge of oil from such well, determined by second party.
“Second party agrees to furnish all lines and make all connections with the casinghead of wells, and to construct and lay the necessary lines and make the proper and necessary connections between its lines and said wells, for the removal and conveyance of such casing-head gas from such wells to the vacuum plant of the second party, and at any point of discharge of oil from the well, determined by the second party.
“Second party agrees to install, maintain, and operate at its own expense a vacuum station, pumps, machinery, and appliances required to create and maintain npon the wells on said premises a constant and steady vacuum, at least sbstantially equal to the degree of vacuum which may be used or maintained by the operators upon any well upon adjoining lands offsetting said premises.
“Second party agrees to pay to first party for each thousand cubic feet of casinghead gas received hereunder a price to be determined and fixed by the schedule of price to be paid for casinghead gas, as provided by ‘Figure I,’ attached to and made a part thereof, and said ‘Figure I’ as by reference hereby incorporated into and made a part of this contract and agreement as fully and to all intents and purposes as though in detail written herein. The price of a gallon of gasoline for the purposes of said ‘figure 1’ shall be the Chicago tank wagon price for Red Crown gasoline, in cents per gallon, shown in the first column of said ‘figure 1,’ minimum of 18 cents per thousand cubic feet.
. “For the purposes of determining the gasoline content of the gas from each lease sold hereunder by first ‘party to second party, * * * a physical test shall be made at the time second party begins to receive casinghead gas under the terms of this contract and agreement, and as often as three months thereafter, if demanded by either party thereto, and the first party shall be entitled to five days’ notice of such proposed test, and to have its representative present at the time such test is made. The tests made constitute the basis of settlement for .all casinghead gas delivered to second party by first party for period following test and up to and until such time as a later test is made.
“For the purpose of measuring and ascertaining the quantity of casinghead gas furnished and delivered by first party to second party, second party agrees to furnish and set and maintain a standard meter of sufficient capacity for the purpose required upon each of said leaseholds and the cost of expense of furnishing, setting, and operating such meters shall be paid by second party. * * * The gas taken by second party shall be paid for on a basis of measurement at four ounces pressure above atmosphere pressure. If the gas is measured at pressure 'higher or lower than four ounces above atmosphere pressure, the proper multiplier shall be used to determine the actual amount of gas to be paid for.
“Second party shall, on or before the 20th day of each month, settle and pay for all cas-inghead gas delivered to it during the next preceding calender month.

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Cite This Page — Counsel Stack

Bluebook (online)
264 S.W. 335, 1924 Tex. App. LEXIS 633, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-refining-co-v-tidal-western-oil-corp-texapp-1924.