Court Opinion

ID: 9448585
Source: CourtListenerOpinion
Date Created: 2023-08-03 23:40:44.345627+00
Date Added: 2024-06-11T17:31:29.770037
License: Public Domain

GRIFFIN B. BELL, Circuit Judge.
This appeal is from the dismissal of a complaint alleging breach of contract on the ground that the terms were clear and unambiguous and would not sustain, the contention of appellant.
Phillips is a producer and manufacturer of petroleum products and appellant was the jobber of Phillips products in the Waco area. Phillips purchased a group of stations and a bulk storage plant in Waco from Arkansas Fuel Company after appellant became jobber and in turn leased the stations and sold the bulk plant and the equipment at the stations to appellant. Appellant operated on both the wholesale and retail level in the sale of gasoline products, making sales from stations it owned, from others leased from Phillips, and from other owned by third parties.
Appellant paid Phillips $33,358.06 for the Arkansas Fuel stations equipment, being $3,358.06 in cash with the balance being represented by a promissory note in the amount of $30,000 which note was secured by mortgage. About a year thereafter the parties decided to terminate their relationship and entered into the contract in dispute here containing numbered paragraphs with the first paragraph stating that the contract was for the purpose of mutually cancelling all contracts and agreements between the parties arising out of the jobber relation*96ship. The contract was in the form of a letter, prepared by Phillips, and written by appellant to Phillips.
A reading of the contract indicates that each substantive paragraph was independent and distinct in that each covered some separate aspect of the relationship. We need set out only paragraph three verbatim but paragraph two dealt with certain stations and provided for their disposition and the consideration therefor. Paragraph four disposed of a dispute over an option in consideration of the entire agreement. Paragraph five obligated Phillips to repurchase merchandise theretofore sold to appellant. Paragraph six concerned a paint contract and required appellant to reimburse Phillips the cost of painting certain stations. Paragraph seven provided for payment by appellant to Phillips of past due rentals. Then under paragraph eight appellant agreed to pay Phillips all indebtedness due on or prior to the execution of the instruments involved in the entire agreement. Paragraph three, the subject matter of this controversy provided:
"(3) Phillips Petroleum Company has heretofore sold and conveyed to Haltom-Murphy, Inc., a bulk station and certain personal property and equipment, the purchase price of which was covered by a promissory note and various security instruments including a Deed of Trust and Chattel Mortgage. These properties and equipment are known by the parties as the Arkansas Fuel property and equipment. Phillips Petroleum is to purchase from Haltom-Murphy, Inc., for a total consideration of $30,000.00 said property and equipment subject to any downward adjustment pursuant to an inventory of equipment in existence. For these purposes, the parties agree to use the oil industries code for a determination of the market value of the properties which are unaccounted for. Phillips Petroleum Company agrees to cancel said note covering Haltom-Murphy, Inc.’s purchase price of this property and equipment. (Emphasis added.)”
Prior to the various closings under the agreement a dispute arose as to the meaning of this paragraph. Appellant contended that Phillips was to pay it $30,000 in addition to cancelling the balance due on the note in the amount of $22,247.53. Phillips took the position that the balance due it on the note was to be set off or credited against the payment by it of the $30,000.00, and these contentions make the issue here.
Paragraph three is the only portion of the entire contract dealing with the Arkansas Fuel properties transaction, and is independent and complete within itself. The last or cancellation sentence in the paragraph is: “Phillips Petroleum Company agrees to cancel said note covering Haltom-Murphy, Inc.’s purchase price of this property and equipment.” We must decide whether this sentence relates, as Phillips contends, to the other provisions in paragraph three which have only to do with the properties covered by the promissory note and mortgage and for which Phillips was to pay a total consideration of $30,000 as the repurchase price, or whether it relates to the entire contract as appellant contends.
Under the first alternative there is no ambiguity. The total consideration for repurchase was to be $30,000 with the cancellation of the note being a part of that consideration. If, on the other hand, it applies to the entire agreement, the total consideration is $52,247.53. To adopt the contention of appellant makes it necessary to disregard the language “total consideration of $30,000.00” in paragraph three. We cannot put aside or ignore these words and thus the contract must be construed in the light of them. Pure Oil Company v. Petrolite Corp., 5 Cir., 1946, 158 F.2d 503. Neither can we add language for the parties as we would have to do to make this paragraph read that Phillips was to pay $30,000 cash and cancel the note in addition. Harrison v. Fortlage, 1896, 161 U.S. 57, 16 S.Ct. 488, 40 L.Ed. 616; Chicago, R. I. & P. Ry. Co. v. Maryland Casualty Co., 8 Cir., 1935, *9775 F.2d 596; and 12 Am.Jur., Contracts, § 228. Furthermore, to apply the cancellation sentence to the whole contract would be to create an ambiguity for paragraph eight provides that appellant will pay all of its debts to Phillips, the opposite of the language of the cancellation clause. This would render the entire contract ambiguous whereas applying the cancellation sentence only to paragraph three leaves that paragraph without ambiguity and the entire contract as well.
No ambiguity appearing in the contract and no other error appearing the judgment is
Affirmed.