Court Opinion

ID: 9600746
Source: CourtListenerOpinion
Date Created: 2023-08-22 01:30:54.52418+00
Date Added: 2024-06-11T09:39:17.226074
License: Public Domain

HOWE, Justice,
dissenting:
I dissent. When Pease and Quigley signed the Farmout Agreement, they fully agreed “in writing to assume and perform all obligations of the transferor” as required by the Unit agreements.
Paragraph X of the Farmout Agreement provides in part:
By your acceptance of this Agreement, you agree to adopt, ratify and confirm the plan of unitization and Operating Agreement for [the Unit]....
(Emphasis added.) This sentence is not ambiguous. When Pease and Quigley signed the Farmout Agreement — doing so directly under the words “ACCEPTED and AGREED” — they thereby simultaneously adopted, ratified, and confirmed the Unit agreements. In other words, their signing of the Farmout Agreement was the means by which they adopted, ratified, and confirmed the Unit agreements.
Unlike numerous other provisions of the Farmout Agreement that set forth “you agree to” executory promises on the part of Pease and Quigley, paragraph X is the only provision which begins with the phrase “By your acceptance of this Agreement.” The reason is clear: The other “you agree to” provisions are all acts that could not be accomplished by the signing of the document, e.g., the drilling of a test well. However, Pease and Quigley were not precluded from ratifying the Unit agreements in the Farm-out Agreement. “By [their] acceptance” of the Farmout Agreement, Pease and Quigley fully complied with the requirement of the *776transfer provisions that they assume and agree to be bound by the Unit agreements.
Even if this court interprets paragraph X to be an executory agreement, as a matter of law, it should still act as the equivalent of a ratification. Paragraph X leaves no question that Pease and Quigley were under legal obligation to “adopt, ratify and confirm” the Unit agreements, and could have been ordered by a court to do so. See Nixon & Nixon, Inc. v. John New & Assocs., Inc., 641 P.2d 144, 146 (Utah 1982). Equity treats things agreed to be done as having been actually performed. See Travelers Ins. Co. v. Lewis, 531 P.2d 484, 485 (Utah 1975); Stauth v. Brown, 241 Kan. 1, 734 P.2d 1063, 1070 (1987); 30A C.J.S. Equity § 121 (1992); 27 Am.Jur.2d Equity § 126 (1966). Thus we should treat Pease and Quigley’s agreement to “adopt, ratify and confirm” the Unit agreements as the actual adoption, ratification, and confirmation of those agreements.
The majority rejects this argument, stating:
[Ejven if the Farmout Agreement obligated Pease and Quigley to ratify the Unit agreements, the issue still remains whether Pease and Quigley’s execution of the Farmout Agreement constituted a ratification and joinder of the Unit as required by the Unit agreements.
The majority misses the point. The law considers the promise in paragraph X to adopt, ratify, and confirm as having been fully performed. Thus “whether Pease and Quigley’s execution of the Farmout Agreement constituted a ratification and joinder” does not “remain” the issue.
The majority asserts that equity should not act “in favor of’ Pease and Quigley because “they had the option of performing” and failed to do so. To the contrary, Pease and Quigley had no “option” to ratify the Unit agreements but were legally obligated to do so. Equity should treat that absolute obligation as actual ratification.
The trial court should have held that the Farmout Agreement satisfied the ratification provisions of the Unit agreements. I would reverse the trial court judgment on this issue.