Louisiana Intrastate Gas Corp. v. Muller

275 So. 2d 909, 46 Oil & Gas Rep. 17, 1973 La. App. LEXIS 6943
CourtLouisiana Court of Appeal
DecidedApril 3, 1973
DocketNo. 4102
StatusPublished
Cited by2 cases

This text of 275 So. 2d 909 (Louisiana Intrastate Gas Corp. v. Muller) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Louisiana Intrastate Gas Corp. v. Muller, 275 So. 2d 909, 46 Oil & Gas Rep. 17, 1973 La. App. LEXIS 6943 (La. Ct. App. 1973).

Opinions

MILLER, Judge.

In this suit for declaratory judgment, plaintiff Louisiana Intrastate Gas Corporation appeals the trial court’s cancellation of its Gas Purchase Contract and Liquifiable Hydrocarbon Purchase Agreement with defendant F. J. Muller. The basis of cancellation was the holding that LIG had not timely paid for gas delivered by Muller subsequent to October 1, 1966. We reverse.

At the outset we note that the parties agree that the trial court properly found that the value of the gas committed by Muller to LIG had increased by October 1966 and a cancellation of the contract redounds to Muller’s financial benefit and to LIG’s detriment.

Muller is the owner, as lessee, of approximately 800 separate mineral leases in the Lawson Field in Acadia Parish. He and several other producers whose gas reserves had not then been committed, were not satisfied with the price offered by the only pipeline then serving that field. LIG owned a pipeline fourteen miles away and became interested in extending its line to purchase gas from the Lawson Field. In order to economically justify the expenditure required to extend its pipeline, LIG required commitments of substantial quantities of gas at a stipulated escalating price schedule. Toward this end the Lawson Agreements were executed by H. L. Hunt on April 29, 1965 and thereafter ratified by Muller and numerous other producers whose Lawson Field gas reserves were not then committed.1 On July 8, 1965, after the agreement and ratifications had been signed by the producers and returned to LIG, LIG signed the agreement and ratifications.

The Lawson Agreements executed by Hunt on April 29, 1965 provided in part as follows:

Article II. 2.2: Seller shall sell and deliver and Buyer shall take and pay for, . a quantity of gas . . . .’
Article III. 3.1 Point of Delivery: The point of delivery for gas purchased and sold pursuant to this agreement shall be at a mutually agreeable point in the Northeast Quarter of Section 34, Township 9 South, Range 1 East, Acadia Parish, Louisiana.
Article IX. 9.1 Addresses and Notices: Until Buyer is otherwise notified in writing by Seller, notices, statements and payments made to Seller shall be addressed to Seller at the addresses set forth below or at such other addresses as Seller may hereafter designate by notifying Buyer in writing:
H. L. Hunt
1401 Elm Street
Dallas 1, Texas
Until Seller is otherwise notified in writing by Buyer, notices to Buyer shall be addressed to Buyer at the address set forth below or at such other address as Buyer may hereafter designate by notifying Seller in writing ....

The ratification agreement executed by Muller on May 10, 1965 provided in part as follows:

I. Seller agrees to sell and deliver and Buyer agrees to purchase and take gas under the terms, conditions and limitations set forth in the (Lawson Agreements signed by Hunt).
3. In accordance with Paragraph 9.1 of the aforesaid Gas Purchase Contract, [912]*912Seller hereby appoints and designates H. L. Hunt as Seller’s Representative for the purposes therein stated.

LIG completed the pipeline extension in October, 1965. While this work was progressing, H. L. Hunt and the other producers committed to LIG, installed at their expense a gas collection system hereinafter called the Lawson Gas Collection System, to deliver the committed gas to LIG’s single receiving station. The Lawson Gas Collection System written letter agreement between the producers, Muller included, provided in part as follows:

H. L. Hunt, as Operator and for the joint account of all parties hereto, shall construct and place in operation at the earliest practicable time, a gas collection system consisting of some 5,800 feet of 6JHÍ" line pipe together with necessary valves, fittings and appurtenances at the location indicated . . . . It is desire that H. L. Hunt operate, at joint-cost, said pipeline system for collecting the gas attributable to the interests of the parties hereto which is produced by the wells to be connected. The ownership of the system is based on the net well ownership of the parties hereto which is arrived at by adding the divided and undivided interest of each party in all of the wells to be connected and translating this to percentage of the total number of net wells.
METERING PROCEDURE
Gas shall be measured prior to entering the collection system, and the meter used for this purpose shall hereinafter be referred to as “system inlet meter.” For accounting and settlement purposes, the volumes of gas sold from the purchaser’s meter or meters shall be allocated to the source of origin on the basis that the system inlet meter volume bears to the total inlet meter volume from all sources delivering gas to purchaser through a common sales meter or meters. (Emphasis added.)

Mr. Muller owned 24.7663% of the Lawson Gas Collection System.

We note that the Lawson Agreements and ratifications did not comtemplate well-head purchases by LIG, but on the contrary provided for delivery of commingled gas of committed producers to LIG’s single receiving station. H. L. Hunt was operator of the Lawson Gas Collecting System and under paragraph 9.1 of the Hunt-LIG agreement, Hunt was agent for the Lawson Agreement producers to receive payment from LIG for 100% of all gas delivered to LIG’s receiving station.

In accordance with paragraph 3 of Muller’s ratification agreement which specifically referred to paragraph 9.1 of Hunt’s contract, Hunt received and held as agent for Muller, payments made by LIG for Muller’s proportionate interest in the gas purchased. This method of delivery and payment began in November 1965 and continued through October, 1966. Muller confirmed these arrangements on August 8, 1966 by signing an additional agreement dated July 19, 1966, again appointing H. L. Hunt as agent to receive from LIG, Muller’s share of the commingled stream of gas.

By letter dated October 11, 1966, Mr. James Mary as attorney for Muller, wrote LIG a letter disavowing Muller’s ratification of the gas purchase contract and declared it null and void from the beginning. By letter dated October 11, 1966, Mary as attorney for Muller, notified H. L. Hunt that Muller considered his ratification of the Lawson Agreements null and void ab initio and that Muller was withdrawing from the Lawson Gas Collection System. The letter stated further that Muller’s gas was not being taken by LIG, and sought an accounting and refund for Muller’s share of the Lawson Gas Collection System. By letter dated October 12, 1966, Mary as attorney for Muller, notified LIG that Muller had cancelled his appointment of H. L. Hunt as agent.

[913]*913LIG answered Muller on October 31, 1966 stating that LIG was unaware of facts or circumstances which would vitiate Muller’s ratification of the Lawson Agreements and asked for clarification. Muller replied with two letters, the first dated November 5, 1966 and the second November 15, 1966, wherein he expanded his contention that the contract with LIG was void ab initio because of error of fact and supplied a form of release (to release Muller from the Lawson Agreements) with a demand that LIG execute the release.

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Related

Louisiana Intrastate Gas Corporation v. Muller
290 So. 2d 888 (Supreme Court of Louisiana, 1974)
Louisiana Intrastate Gas Corp. v. Muller
279 So. 2d 683 (Supreme Court of Louisiana, 1973)

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Bluebook (online)
275 So. 2d 909, 46 Oil & Gas Rep. 17, 1973 La. App. LEXIS 6943, Counsel Stack Legal Research, https://law.counselstack.com/opinion/louisiana-intrastate-gas-corp-v-muller-lactapp-1973.