Humble Oil & Refining Co. v. Mullican

The opinion of the majority appears to me to run so contrary to the plain meaning of the oil and gas lease in question that I feel constrained respectfully to enter my dissent. I am mindful that the district court, the Court of Civil Appeals, and a majority of this Court have determined that the lease is an ambiguous one. With all deference to the views of these able jurists, I believe the lease is quite unambiguous and that testimony should not have been let in to vary its terms.

The majority opinion proceeds, as I understand it, upon the assumption that had it not been for the supposed ambiguity in the questioned lease, the petitioner would have been entitled to prevail. In stating my views I shall proceed upon this assumption.

Looking to the lease of March 18, 1944, we find within its "four corners" a complete agreement. It stated that the lease was given "in lieu and correction of a prior lease dated 27th day of January, 1944 * * * executed by Lon A. Mullican, Individually and as Independent Executor of the Estate of Molly Mullican, Deceased, which was erroneous in that it should have been executed by Lon A. Mullican, Individually and as Community Administrator of the Estate of Mollie E. Mullican, Deceased, as said Mollie E. Mullican died intestate and Lon A. Mullican qualified as Community Administrator of her estate * * *." It is obvious that the parties were not satisfied with the sufficiency of the first instrument and concluded to start all over again. So they explicitly and simply stated in the second lease that it was "in lieu and correction" of the first one. There was no longer any need to refer to any part of the old lease for any purpose. New complete provisions, including a new delay rental payment date, were published by the parties in their new agreement. They contracted in what I submit are plain and unequivocal terms, — terms by which the court ought to declare them bound.

The words "in lieu of" mean "in place of; instead of; in substitution for." 42 C.J.S. 477. Manifestly, as a matter of law, the plain language of the new lease effectively corrected the old agreement and substituted the new one for it, and if we give the language the parties have employed its usual and commonly understood significance, I think it abundantly clear that there is no uncertainty or ambiguity which requires evidence to explain. The addition of the words "and correction of" to the term "in lieu of" does not confuse what was meant in the slightest. The two phrases are harmonious and consistent, and emphasize, as I see it, a clear, unequivocal intention of the parties to do what they stated they were doing, that is, to substitute a new agreement for the old one.

Elementary principles require that the court give effect to the intention of the parties as expressed in the language they have used. The word "construction" implies uncertainty as to the meaning of the contract, and where the agreement is clear and unambiguous there is nothing to be construed. The courts will not by construction import an ambiguity into a contract which is plain and certain, and give the agreement a different operative effect from what it plainly provides. 10 Tex. Jur. 271 et. seq.; 14 Tex. Jur. 910 et seq.; 31 Tex. Jur. 612 et seq. It appears to me clear that the majority opinion substantially trenches upon these principles.

It will also be agreed, I take it, that forfeitures are not favored by the courts and that this principle has application to an oil and gas lease. Thus, Judge Leddy stated in Ryan v. Kent (Tex. Com. App.), 36 S.W.2d 1007:

"Forfeitures are not favored at law and will only be decreed where the provision therefor is clear and specific. Waggoner Estate v. Sigler Oil Co., 118 Tex. 509, 19 S.W.2d 27, and authorities there cited. `The authority to forfeit a vested right or estate,' says Judge Stayton, in Benavides v. Hunt, 79 Tex. 392,15 S.W. 396, 399, `should not rest in provisions whose meaning is uncertain and obscure. It should be found only in language which is plain and clear — whose unequivocal character may render its exercise fair and rightful.' Decker v. Kirlicks,110 Tex. 94, 216 S.W. 385, 386.

"This rule of construction is universally applied to oil leases. It must therefore be held that, if this contract is fairly susceptible of two interpretations it should be so construed as to prevent a forfeiture of the rights granted thereunder. Adams v. Fidelity Lumber Co. (Tex. Civ. App.)201 S.W. 1034; Decker v. Kirlicks, 110 Tex. 94, 216 S.W. 385, 386."

The rules thus announced indicates that even if the lease were susceptible of two constructions, one of which would result in a forfeiture and the other of which would not, the trial court should have embraced the latter construction in order to avoid a forfeiture. And even were it conceded that the majority is correct in stating that there is an ambiguity, under Ryan v. Kent and the authorities it follows, it would be the duty of the court to avoid a forfeiture and sustain the lease.

Much the same sort of case as this was decided in Poitevent v. Scarborough, 103 Tex. 111, 124 S.W. 87. In that case, Poitevent made Scarborough a deed in 1882 which conveyed certain lands including a certain 109-acre tract. In 1892, an objection to the sufficiency of the description of the lands so conveyed was made by a bank to whom Scarborough wanted to give a mortgage, and a new deed was made to Scarborough, which was accepted in lieu of the first, describing two other tracts of land but entirely omitting to describe the 109 acres. The following clause occurred immediately after the description in the second deed:

"These lands being the same lands sold to said A.B. Scarborough on the 2d of March, 1881, and described in said deed dated March 2d 1881, and delivered to said Scarborough, conveying said lands to him. This deed being made to give a more full and complete description of the said land."

It was also recited in the deed that the consideration for the conveyance was the payment of the purchase money notes mentioned in the first deed. The trial court and the Court of Civil Appeals found for Scarborough and awarded him title to the 109-acre tract. This judgment was reversed. This Court, speaking through Associate Justice Brown, stated:

"* * * Looking to the terms of the deed and the recitals in it, it is very clear that the second deed was substituted for the first, and by its very terms it is stated that the land described therein was the very land conveyed in the first. The plaintiff is estopped by the terms of the second deed from claiming any of the land which is not embraced therein. * * * The effect of thesecond deed made to the plaintiff was a question of law for thecourt to decide, and it was error to submit that issue to thejury. The court should have instructed the jury to return averdict for defendants." (Emphasis supplied.)

If Justice Brown had pursued such reasoning as the majority has sanctioned in the present case, I deem it certain he would have arrived at exactly the opposite conclusion.

The very simplicity of the language used in the questioned lease speaks so effectively for the construction I believe the proper one that I shall not pursue numerous other and obvious arguments which inevitably present themselves. At the end of it all, we would still find ourselves with a plain, unequivocal provision in a lease, giving petitioner the right to defer the commencement of drilling operations for one year by paying rentals on or before March 18, 1945. The petitioner complied with this provision. The lease was thus kept in full force and I believe the trial court erred in not so holding.

Associate Justices SMEDLEY and FOLLEY concurring.

Opinion delivered February 20, 1946.