Mid-American Oil & Gas, Inc. v. Borchers

597 S.W.2d 803, 68 Oil & Gas Rep. 314, 1980 Tex. App. LEXIS 3212
CourtCourt of Appeals of Texas
DecidedMarch 20, 1980
DocketNo. 5390
StatusPublished
Cited by2 cases

This text of 597 S.W.2d 803 (Mid-American Oil & Gas, Inc. v. Borchers) 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
Mid-American Oil & Gas, Inc. v. Borchers, 597 S.W.2d 803, 68 Oil & Gas Rep. 314, 1980 Tex. App. LEXIS 3212 (Tex. Ct. App. 1980).

Opinion

DICKENSON, Justice.

The Borchers family 1 sued Mid-American Oil & Gas, Inc. for an alleged underpayment of royalties due on natural gas under the gas royalty clause of leases executed by the Borchers family, for an accounting, for exemplary damages, for attorney fees, and for prejudgment and postjudgment interest. Mid-American contended that the Borchers family was paid in full for all of their gas royalty interests under the terms of a Gas Purchase Contract.2 Following a lengthy trial, the jury returned its verdict in favor of Mid-American. The trial judge disregarded all but one of the jury’s findings and rendered judgment non obstante veredicto for the Borchers family against Mid-American Oil & Gas, Inc. for the sum of $4,445,526.00 as additional gas royalties due and $767,228.38 as prejudgment interest. Mid-American appeals. We reverse and render.

The verdict of the jury may be summarized as follows:

SPECIAL ISSUE NO. 1
The jury refused to find that Mid-American failed to pay royalties to the Borchers family based upon the amounts realized by Mid-American on gas produced from lands covered by the Borchers family’s leases and “sold at the wells,” from July 1, 1974, to December 31, 1977.
SPECIAL ISSUE NO. 2
A reasonable charge for compressing and transporting gas from the Borchers [805]*805family’s leases to the pipeline delivery point is 1⅝<$. per MCF.
SPECIAL ISSUE NO. 3
This damage issue was conditionally submitted, and no answer was required in view of the “No” answer to issue 1.
SPECIAL ISSUE NO. 4
The jury refused to find that Mid-American failed to pay royalties to the Borchers family “based upon the market value at the well” of gas produced by Mid-American from the Borchers family’s leases from July 1,1974, to December 31, 1977.
SPECIAL ISSUE NO. 5
This damage issue was conditionally submitted, and no answer was required in view of the “No” answer to issue 4.
SPECIAL ISSUE NO. 6
The jury refused to find that Mid-American misrepresented, in the monthly royalty statements to the Borchers family, the prices at which Mid-American sold the gas produced from the Borchers family’s leases.
SPECIAL ISSUE NO. 7
This issue on reliance was conditionally submitted, and no answer was required in view of the “No” answer to issue 6.
SPECIAL ISSUE NO. 8
This exemplary damage issue was conditionally submitted, and no answer was required in view of the “No” answer to issue 6.
SPECIAL ISSUE NO. 9
The jury found that the Borchers family, by their conduct and by signing the October 2, 1974, letter agreement, “agreed with Defendants to accept royalties on the basis of the prices set forth” in the Gas Purchase Contract.
SPECIAL ISSUE NO. 10
The jury found that the Borchers family, by their conduct and by signing the October 2, 1974, letter agreement, “are estopped from denying that royalty payments are to be based on the prices set forth” in the Gas Purchase Contract.
SPECIAL ISSUE NO. 11
The jury found that the Borchers family, by their conduct and by signing the October 2,1974, letter agreement, waived the right to claim royalties based on prices higher than those in Article IX of the Gas Purchase Contract.
SPECIAL ISSUE NO. 12
The jury found that Mid-American ratified the October 2, 1974, letter agreement.
SPECIAL ISSUE NO. 13
The jury found that the parties to the October 2, 1974, letter agreement intended to benefit Mid-American by signing that agreement.

Mid-American has briefed 34 points of error. The first three points will be sustained, and we need not discuss the other 31 points of error. Points 1, 2 and 3 contend that the trial court erred in granting judgment non obstante veredicto for the Borch-ers family and in refusing to enter a judgment on the verdict that the Borchers family take nothing. We agree that the October 2,1974, letter agreement and Article IX of the Gas Purchase Contract constituted an unambiguous contract which established the gas prices for the purpose of calculating the disputed royalty payments. We also agree that there is evidence, which is legally and factually sufficient, to support the jury’s answer that the Borchers family “agreed with Defendants to accept royalties on the basis of the prices set forth” in Article IX of the Gas Purchase Contract. In re King’s Estate, 150 Tex. 662, 244 S.W.2d 660 (1951).

[806]*806The Cross Points of the Borchers family have been considered, and they are overruled. The Borchers family also perfected a separate appeal, contending that the trial court erred in not allowing a recovery for additional sums of money. These points of error have been considered, and they are overruled.

Our Supreme Court stated the rule as to the construction of written contracts in City of Pinehurst v. Spooner Addition Water Company, 432 S.W.2d 515 (Tex.1968), as follows:

It is elementary that if there is no ambiguity, the construction of the written instrument is a question of law for the Court. ... In the usual case, the instrument alone will be deemed to express the intention of the parties, for it is objective, not subjective, intent that controls. . . .We are to take the wording of the instrument, consider the same in the light of the surrounding circumstances, and apply the pertinent rules of construction . . .. (citations omitted)

See also Adams v. Abbott, 151 Tex. 601, 254 S.W.2d 78 (1952).

The circumstances shown by the record are that the Borchers family became concerned with securing the benefits of a gas price which was the highest price paid in that area for natural gas in 1974. They knew that the gas purchaser, Bay Pipeline, Inc., was a wholly-owned subsidiary of Mid-American and that Mid-American had acquired their leases, thereby becoming the seller under the Gas Purchase Contract. They wanted to be sure that Mid-American, as seller, and its subsidiary as purchaser, did not renegotiate the contract to their detriment. They wanted to protect their right to receive royalty payments on the basis of the price stated in that contract. Consequently, the Borchers family insisted upon, and joined in the execution of, the Letter Agreement of October 2, 1974, which provided that they “. . . will be included as a party Seller in connection with the pricing paragraph, being Article IX on page 20, of said Contract.” The pricing paragraph reads as follows:

1.

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597 S.W.2d 803, 68 Oil & Gas Rep. 314, 1980 Tex. App. LEXIS 3212, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mid-american-oil-gas-inc-v-borchers-texapp-1980.