Case Name: HUMBLE OIL & REFINING CO. v. MULLICAN
Court: Supreme Court of Texas
Jurisdiction: Texas
Decision Date: 1946-02-20
Citations: 192 S.W.2d 770
Docket Number: No. A-770
Parties: HUMBLE OIL & REFINING CO. v. MULLICAN.
Judges: SIMPSON, SMEDLEY, and FOLLEY, JJ., dissenting.
Reporter: South Western Reporter Second Series
Volume: 192
Pages: 770–774

Head Matter:
HUMBLE OIL & REFINING CO. v. MULLICAN.
No. A-770.
Supreme Court of Texas.
Feb. 20, 1946.
Rehearing Denied March 20, 1946.
Ralph B. Lee, R. E. Seagler, and Rex G. Baker, all of Houston, for petitioner.
W. W. Campbell and W. D. Girand, both of Lubbock, for respondent.

Opinion:
ALEXANDER, Chief Justice.
This suit involves the question as to when the annual rentals were payable under a certain oil and gas mining lease.
Lon A. Mullican and wife owned a tract of land as their community property. She died intestate and he qualified as community administrator of her estate. Thereafter he executed an oil and gas mining lease on the land. The first sentence of this lease read as follows: "This agreement made this 27th day of January, 1944, between Lon A. Mullican, individually, and as independent executor of the estate of Molly Mullican, deceased, Lessor (whether one or more), and G. B. Hallmark, Lessee."
The lease was in the usual form and was signed "Lon A. Mullican, Individually and as Executor of the Estate of Mollie Mul-lican, deceased." It was to run for a period of ten years, and contained the following clause: "If operations for drilling are not commenced on said land on or before one year from this date the lease shall then terminate as to both parties, unless on or before such anniversary date lessee shall pay or tender to Lessor- or to the credit of Lessor in Lubbock National Bank at Lubbock, Texas, the sum of Three hundred twenty and 26/100 dollars ($320.26) (herein called rental),
Later Mullican executed a second lease on the same land. The first sentence of the second lease read as follows:
"This agreement made this 18th day of March, 1944, between Lon A. Mullican, Individually, and as Community Administrator of the Estate of Mollie E. Mullican, Deceased, Lessor (whether one or more) and G. B. Hallmark, Lessee." It was signed "Lon A. Mullican, Individually, and as Community Administrator of the Estate of Mollie E. Mullican, Deceased," and was otherwise in identically . the same language as the first lease, except there was attached to the front page of the lease a typewritten slip containing the following language:
"This lease is in lieu and correction of a prior lease dated 27th day of January, 1944, and recorded in Volume 8, page 595, Oil and Gas Lease Records of Lubbock County, Texas, wherein same was 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 as per the Probate Records of Lubbock County, Texas."
The lease was assigned through various parties to the Humble Oil & Refining Company and was owned by that company at the time of the filing of this suit. The lessee did not tender the annual rentals nor begin drilling operations on the land on or before January 27, 1945, and as a result the lessor brought suit to cancel the lease. The Humble Oil & Refining Company alleged the execution of the second lease and ¡contended that it was executed in lieu of and to take the place of the prior lease, and that under the terms of that lease lessee had until March 18, 1945, in which to pay the rentals! It tendered the rentals before March 18, 1945. The plaintiff by supplemental petition alleged that the lessee requested the execution of the second instrument because the first one had been executed by Mullican as independent executor of his wife's estate, whereas he should have executed the same as community administrator of his wife's estate; that no new consideration was paid for the second contract and that it was not intended as a novation or as a substitute for the first one, nor for the purpose of changing the terms of the original lease, but only as a ratification or correction of the original lease in the respect above indicated, and that all of the parties so understood. He alleged that the second contract should be construed "as a mere perfection of the title to the lease of January 27, 1944, and not as a new and independent lease discharging the said lease of January 27, 1944." It was his contention that the annual rentals were payable within one year from the date of the original lease, and that the lease lapsed because of the failure to pay the rentals as therein provided. Upon the trial he introduced evidence to sustain his contention. The trial court, upon a trial without a jury, sustained plaintiff's contention and cancelled the lease for the failure to pay the rentals on or before January 27, 1945. This judgment was affirmed by the Court of Civil Appeals. 190 S.W.2d 392.
There is no doubt about the sufficiency of the evidence to sustain plaintiff's contention. He testified without contradiction that in March, 1944, lessee éxpressed a fear that the first lease might not be good because it had not been executed in the proper capacity, and requested plaintiff to correct the defect; that lessee had prepared ' a correction lease and requested him to sign it; that lessee told lessor that the second lease was the same as the prior lease and was to be executed only for the purpose of correcting the defect as to the capacity in which the prior lease had been executed; that both parties so understood it; that both parties understood and agreed that the terms of the first lease should remain in force, and that the second lease did not change the terms of the first lease, but "was merely to verify the correctness of" the first lease. He also testified that the consideration paid for the first lease was $5 per acre, and that no new consideration was paid for the second lease. This evidence was not contradicted. The only question is, Was this evidence admissible?
Under well-established rules, if a written contract is ambiguous or its meaning is 'doubtful, parol evidence is admissible to explain its meaning and remove the ambiguity, in order that the court may arrive at the true intent of the parties; otherwise such parol evidence is inadmissible. 17 Tex.Jur. 864-873; 32 C.J.S., Evi dence, § 959, p. 891; Lemp v. Armengol, 86 Tex. 690, 26 S.W. 941; Hueske v. C. E. Broussard & Co., 55 Tex. 201; State National Bank of Corpus Christi v. Morgan, 135 Tex. 509, 143 S.W.2d 757; Pitts v. Camp County, 120 Tex. 558, 39 S.W.2d 608.
While the question is not easy of solution, we have reached the conclusion that the contract here under consideration is ambiguous and that parol evidence was admissible to explain its meaning.
It will be noted that the second agreement was entered into March 18, 1944, and it provides that "if operations for drilling are not commenced on said land on or before one year from this date the lease shall then terminate as to both parties" unless the annual rentals are paid. (Italics ours.) This provision standing alone would permit the payment of the annual rentals on or before March 18, 1945. The second lease had attached to it a statement that it was executed "in lieu" of the prior lease, and this statement, uninfluenced by other provisions, would indicate that it was to serve as a substitute for or in place of the prior lease. 31 C.J. 361. See also 42 C.J.S., p. 477. But the statement attached to the second agreement did not stop with a recitation that it was executed "in lieu" of the first lease. It went further and recited that it was executed "in lieu and correction" of the prior lease and pointed out with particularity the defect which was intended to be corrected. It recited that the prior lease had been executed by Mullican individually and as independent executor of his wife's estate, whereas it should have been executed by Mullican individually and as community administrator of his wife's estate. There was no intimation that the original lease was defective in so far as it attempted to convey Mullican's individual interest in the property, nor that there was any need for correction in this respect. The defect which the parties had attempted to correct pertained only to the capacity in which Mullican had undertaken to convey the interest in the property formerly belonging to his wife. This is made clear by the statement attached to the second agreement. It pointed out the book and page of the public records where the instrument which was to be corrected could be found, and one comparing the two instruments would find that the body of the first instrument had been brought forward, word for word, in the second agreement. The provision requiring the payment of annual rentals "on or before this date" was a part of the printed form commonly in use, and it was brought forward in the second agreement in the same language as had been used in the instrument which was being corrected. The revenue stamps on the first instrument indicated that substantial consideration had been paid for the lease. There were no stamps on the second agreement, thus indicating that little or no consideration had been paid for it.
The first lease was certainly good as to Mullican's one-half interest in the property. Under the authorities, it was probably good as to the interest formerly owned by his wife. Rev.Stat.Art. 3669; McGraw v. Merchants & Planters Nat. Bank of Sherman, 34 S.W.2d 633 (writ refused); Hough v. Hill, 47 Tex. 148; Link v. Page, 72 Tex. 592, 10 S.W. 699. But the parties desired to remove all doubt in this respect, and they executed the second agreement to correct this defect.
It is true that the introductory paragraph of the correction agreement stated that it was made on March 18, 1944, and the agreement concluded, "this instrument is executed on the date first above written"; but one examining the two instruments in the light of the fact that the expressed purpose of the second agreement, and apparently the only purpose, was to change the capacity in which Mullican had undertaken to convey his deceased wife's interest in the property, might very well conclude that this was intended merely to indicate the date on which the correction as to capacity had been made, and not as a new date from which to begin to calculate the time for the payment of the annual rentals as well as the running of the ten-year period for which the lease was to run.
The words "in lieu of" when read in the light of the expressed purpose intended to be accomplished, do not necessarily imply an intention to substitute the second agreement for the first one. Joiner v. Joiner, 117 Miss. 507, 78 So. 369. The instrument when read as a whole is subject to the construction that it was intended merely as a correction of the original instrument as to the capacity in which it had been executed, and not as a substitute for the original lease.
Since the contract was ambiguous and the admissible parol evidence showed an intention to correct and ratify the original lease, the trial court and Court of Civil Appeals correctly held that the lease had lapsed for the failure to pay the annual rentals on or before January 27, 1945.
The judgment of the Court of Civil Appeals is affirmed.
SIMPSON, SMEDLEY, and FOLLEY, JJ., dissenting.