Texana Oil Company v. Stephenson

521 S.W.2d 104, 52 Oil & Gas Rep. 286, 1975 Tex. App. LEXIS 2511
CourtCourt of Appeals of Texas
DecidedMarch 12, 1975
Docket6407
StatusPublished
Cited by10 cases

This text of 521 S.W.2d 104 (Texana Oil Company v. Stephenson) 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
Texana Oil Company v. Stephenson, 521 S.W.2d 104, 52 Oil & Gas Rep. 286, 1975 Tex. App. LEXIS 2511 (Tex. Ct. App. 1975).

Opinion

*105 OPINION

WARD, Justice.

This is a summary judgment case which was granted in favor of the plaintiff. The plaintiff, Roger L. Stephenson, sued Tex-ana Oil Company in Count 1 on a promissory note allegedly given by the defendant as payment of the balance owed on the purchase of the assignment of a farmout agreement and in Count 2 on a contractual basis of the balance due to the plaintiff on the assignment and without reliance upon the promissory note. The trial Court granted the plaintiff a summary judgment in the principal amount of $19,500.00 without indicating which of the plaintiff’s theories it accepted. We reverse and remand.

The plaintiff’s motion for summary judgment was based upon both the promissory note executed by the defendant and upon the contractual obligation arising from the assignment to the defendant of the farmout. As pointed out, the final judgment was silent as to which ground was relied upon by the trial Court. To avoid an affirmance upon any possible ground of waiver, the defendant’s points upon appeal properly attack both grounds upon which the trial Court might have acted. Malooly Brothers, Inc. v. Napier, 461 S.W.2d 119 (Tex.1970).

The established facts are that the plaintiff owned a farmout agreement from Midwest Oil Corporation, which was dated August 24, 1971. The Midwest farmout provided that on or before October 15, 1971, a test well be commenced on the subject acreage and thereafter drilled with due diligence to 17,000 feet. It provided that the only penalty for failure to drill was the loss of any right to the assignment of the outstanding oil and gas lease held by Midwest. In September, 1971, the plaintiff assigned the Midwest farmout to the defendant, Texana Oil Company, which in turn agreed to pay the plaintiff the sum of $50,000.00, payable in two installments of $23,000.00 each, with the first installment due September 17, 1971, and the second installment due on or before January 5, 1972. This assignment also provided that the defendant Texana should be under no duty to drill the test well called for in the farmout but if drilled then the lease minus certain overriding royalties would be assigned to the defendant. At this time, the plaintiff had secured from Midwest an additional agreement extending the time to commence the test well to December 15, 1971. The first installment of $25,000.00, as provided for in the assignment of the farmout, was paid by the defendant to the plaintiff on September 17, 1971. The defendant then requested the plaintiff to attempt to extend the life of the farmout once more and the plaintiff was able to secure a 45-day extension which provided that drilling operations on the first test well could be commenced on or before February 1, 1972. The January 5, 1972, installment of $25,000.00 was not paid by the defendant to the plaintiff. On January 12, 1972, the plaintiff secured from Midwest Oil Company a new extension whereby the drilling operations on the first test well under the farmout could be commenced on or before March 1,1972.

On January 14, 1972, the plaintiff wrote to the defendant, Texana Oil Company, a letter, the terms of which control the defendant’s appeal. In the letter, the plaintiff, after noting the non-payment of the second installment of $25,000.00, stated: “Therefore, I am formally advising you that our agreement is null and void and of no further force and effect, as you are aware of our past conversations, inasmuch as you have not performed under the conditions and obligations” of our letter agreements. The letter then provided that in the event the defendant is able to deliver the said second installment prior to the time that the plaintiff is able to sell the farmout agreement to someone else “then we again ‘have a deal’ on this property.” On January 16, 1972, this letter was amended by Mr. Stephenson and the de *106 fendant to the extent that the parties agreed that the second installment of $25,000.00 might be made on or before January 21, 1972.

The $25,000.00 installment was never paid but on January 24, 1972, $5,500.00 was paid by the defendant to the plaintiff. A dispute exists between the parties as to the purpose of this payment. The summary judgment affidavit offered by the plaintiff is to the effect that he “understood” this $5,500.00 was a partial payment on the $25,000.00 installment. The defendant’s version is that this $5,500.00 was not a payment on the installment but was an advance made in an attempt to keep the “transaction” alive but the plaintiff would “not reestablish and/or reinstitute the deal”; that after the letter from the plaintiff declaring the agreement null and void, the agreement was never reinstated; and that the defendant unsuccessfully attempted to revive the farmout deal with Midwest Oil by starting a well and setting surface casing from March 1 through March 17, 1972, when all efforts to drill a well were abandoned.

The plaintiff’s position, as maintained by his pleadings in Count 2 and by his summary judgment proof, is that the $25,000.00 installment was never released; that the defendant paid $5,500.00 thereon on January 24, 1972; and that a balance of $19,500.00 remains owing on this contractual obligation. By its third point on appeal, the defendant insists that a fact issue exists as to defensive issues on waiver, excuse and release because of the plaintiff’s letter of January 14, 1972. We hold that at least a fact issue exists under the present state of the record as to the defense of waiver. Waiver is an intentional relinquishment of a known right or intentional conduct inconsistent with claiming it. It is essentially unilateral in its character; it results as a legal consequence from some act or conduct of the party against whom it operates; and no act of the party in whose favor it is made is necessary to complete it. It need not be founded upon a new consideration, nor is it essential that it be based upon an estoppel. Massachusetts Bonding and Insurance Co. v. Orkin Exterminating Company, 416 S.W.2d 396, 401 (Tex.1967); 60 Tex.Jur.2d Waiver § 1, et seq.

The summary judgment proof is to the effect that at the time the January 14, 1972, letter was written by the plaintiff that the defendant then owed the balance of $25,000.00 on the assignment, while the defendant at the same time had the right to exercise its option to enter the lease and commence drilling, which option right would not expire until February 1st. The letter in no uncertain terms declared the agreement “null and void and of no further force and effect.” At least a fact issue exists that the known right of the plaintiff to collect the $25,000.00 was can-celled just as well as the option in the defendant’s favor to drill. The extension until January 21st modified the January 14th letter only to that extent when again the “null and void” features of the letter were effected.

The plaintiff counters that any claim for relief based upon the letter is valueless because any claim of discharge would be unsupported by any consideration; that the extension secured by the plaintiff of the farmout to February 1st and the subsequent one to March 1st were not called for under any agreement with the defendant; and that the right to the second $25,000.00 payment was unqualified after September,' 1971, and matured on January 5, 1972.

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Bluebook (online)
521 S.W.2d 104, 52 Oil & Gas Rep. 286, 1975 Tex. App. LEXIS 2511, Counsel Stack Legal Research, https://law.counselstack.com/opinion/texana-oil-company-v-stephenson-texapp-1975.