Court Opinion

ID: 9448586
Source: CourtListenerOpinion
Date Created: 2023-08-03 23:40:44.353812+00
Date Added: 2024-06-11T17:31:29.771177
License: Public Domain

RIVES, Circuit Judge
(dissenting).
The majority has concluded that the contract in question is unambiguous because: 1) “A reading of the contract indicates that each substantive paragraph was independent and distinct in that each covered some separate aspect of the relationship”, and 2) to rule that the purchase-price note should be cancelled in addition to the payment of $30,000.00 specified in paragraph No. 3 would be to create a “total consideration of” $52,-247.53 — a result in conflict with the express language of that paragraph. I cannot agree since this conclusion rests upon the unsupported and mistaken assumption that, because each paragraph dealt with a distinct and separate relationship between the parties, the consideration for the agreement was also frag-mentized and distinctly allocated to each paragraph. Such an assumption seems contrary to the whole nature of the agreement. For, as stated in paragraph No. 1, the purpose of the agreement was a mutual termination of all contractual relations between the parties. Thus no one paragraph may be considered to stand completely independent as if the parties would be willing to carry it out in the absence of the other paragraphs; and the consideration for any one paragraph must be looked at in terms of the whole agreement. In fact, paragraph No. 4 specifically so implies when it states that Haltom-Murphy’s release of any claim to the Option of Purchase on property at 14th and Austin in Waco-Texas, is as “part of the consideration for this entire agreement.” Thus it is reasonable to conclude that cancellation of the note in question may also be a “part of the consideration for this entire agreement” and have no relation to the repurchase price put on the Arkansas Fuel property and equipment in paragraph No. 3. In the absence of specific language resolving this uncertainty, I do not see how the issue can be anything but ambiguous.
This basic ambiguity on the allocation of consideration is augmented by analysis of the very language in question—that “Phillips Petroleum Company agrees to cancel said note * * If no mention of the note had been made, then paragraph No. 8 (whereby Haltom-Mur-phy agreed to pay all outstanding indebtedness) would require that it be paid off. Since the appellee’s interpretation of the cancellation language does no more than require payment by offsetting the note against the $30,000.00, it would appear that the agreement to cancel the note is surplusage. If, on the other hand, the added agreement to “cancel” were construed as intending a discharge of the note without payment, substantial meaning would attach.
Moreover, the use of the word “cancel” specially lends itself to such a construction. Under Texas law, a contract is to be construed giving technical words their technical meaning. Magnolia Warehouse & Storage Co. v. Davis & Blackwell, 108 Tex. 422, 195 S.W. 184 (1917); Frost v. Martin, 203 S.W. 72 (Tex.Civ.App.1918). Under Article 6939 of the Texas Civil Statutes, “intentional cancellation thereof by the holder” is one of the means for the discharge of a negotiable instrument. The most complete definition of “cancellation” by a Texas court is to be found in Hickox v. Hickox, 151 S.W.2d 913, 917-918 (Tex.Civ.App.1941), where the court said:
“We have been unable to find a satisfactory definition of the term ‘cancellation,’ as used in the statute. *98Cancellation of a negotiable instrument is a manifestation by act of intention with reference thereto to render same inefficacious as a legal obligation. This act manifesting the intention may take several forms; for instance, the surrender of the instrument to the obligor, the erasure of the signature of the obli-gor, destruction of the instrument, or the marking of same cancelled. It is not necessary that a cancellation be supported by a consideration. 10 C.J.S., Bills and Notes, § 475, p. 1036.”
Most states seem to agree that a “cancellation” means an abrogation of any duties under the contract remaining unperformed, F. & M. Drilling Co. v. M. & T. Oil Co., 192 Okl. 372, 137 P.2d 575; Hampton v. Commercial Credit Corp., 119 Mont. 476, 176 P.2d 270, and some have gone so far as to say that “cancellation” is inconsistent with payment, Brown v. Gibson’s Ex’r., 107 Va. 383, 59 S.E. 384, 386. It would appear clear, then, that “cancellation” of a note is often used to indicate discharge by some means other than full monetary satisfaction and that if the parties here, intended to discharge the note without payment in consideration for the entire agreement, then “cancellation” would be the most appropriate term to use. Since the appellant's interpretation of the agreement not only avoids making the language in question surplusage but accounts for the technical language used, I cannot help but conclude that, at the very least, the agreement is reasonably susceptible to more than one meaning.1
The appellee also claims that the appellant’s interpretation of the contract-would require the language “for a total consideration of $30,000.00” to read “payment of $30,000.00 cash.” However, the language actually used is perfectly consistent with the appellee’s view that the indebtedness referred to in paragraph No. 8 might be offset against the $30,000.00.
I think that the contract is ambiguous and that evidence is needed to resolve the ambiguity. I therefore respectfully dissent.

. “* * * if after applying established rules of interpretation to the contract it remains reasonably susceptible to more than one meaning it is ambiguous, but if only one reasonable meaning clearly emerges it is not ambiguous.” Universal C.I.T. Credit Corp. v. Daniel, 150 Tex. 513, 1951, 243 S.W.2d 154, 157.