Court Opinion

ID: 9852435
Source: CourtListenerOpinion
Date Created: 2023-09-24 05:30:21.337193+00
Date Added: 2024-06-11T09:22:27.688796
License: Public Domain

Schroeder, J.,
concurring: I concur with the result reached by the court, but disagree as to the reasons. In my opinion, the written instruments in question are ambiguous and require a resort to extrinsic evidence. Only then can a court consider the fact that the appellees knew they were dealing with Dougherty as an agent, and that the parties recognized the overriding royalty interest of the appellees in subsequent assignments.
*499Another rule of construction (in addition to the rules stated in the court’s opinion) applicable to a written contract is that where an irreconcilable conflict exists between general provisions of the contract and particular portions written into the contract, preference is given to the latter for the purpose of ascertaining the intention of the parties. (Haynes Hardware Co. v. Western Casualty & Surety Co., 156 Kan. 356, 133 P. 2d 574; and Geier v. Eagle-Cherokee Coal Mining Co., 181 Kan. 567, 313 P. 2d 731.)
The paragraph specifically reserving the overriding royalty interest concludes with the specific provision: “This overriding royalty interest shall continue so long as Dougherty operates the properties hereunder.” It may fairly be said this is a specific provision of the contract. On the other hand, paragraph 9 is a concluding paragraph which generally says the provisions of the contract are binding on the assigns of the parties, among others. Under these circumstances, the rule is that preference shall be given to the specific provision.
When we look more closely to the specific provision further questions are suggested. What is meant by “operates the properties hereunder?” Did operation mean ownership? Or did it mean management? Or did it mean supervision for either a principal or for himself? What degree of control by Dougherty was required to amount to operation? Upon the happening of what event did the overriding royalty interest terminate, if the overriding royalty has, in fact, terminated?
The appellant says it cannot be contended the instruments in question are ambiguous for two reasons: (1) No oral testimony was presented; and (2) the trial court found that the contract was unambiguous. These reasons have no merit.
The introduction of oral testimony in the trial court is not a condition precedent to a determination by the Supreme Court of the ambiguity of a written instrument. Furthermore, extrinsic evidence need not be parol evidence. As here, stipulations and admissions of the parties conceding the execution and delivery of written legal documents were presented to the trial court. They become material in construing the instruments before the court, where ambiguity is determined.
Where the controlling facts in a case are based upon stipulations, admissions and documentary evidence, the Supreme Court has the same opportunity to consider the evidence as did the trial court. *500(Wolf v. Mutual Benefit Health & Accident Association, 188 Kan. 694, 366 P. 2d 219; and Keeler Co. v. Atchison, T. & S. F. Rly. Co., 187 Kan. 125, 354 P. 2d 368.)
In my opinion the contract and the assignment of the leases to Dougherty pursuant thereto are ambiguous as a matter of law.
At this point extrinsic evidence becomes material to assist in the construction of the instruments.
Where, as here, extrinsic evidence is conclusive and undisputed and renders the meaning of an instrument clear, construction of such instrument becomes a question of law for the court.
An important fact supplied by the extrinsic evidence is that the parties knew, at all times material herein, that Dougherty was an agent acting for a disclosed principal.
In Mosher v. Kansas Co-op. Wheat Mkt. Ass'n., 136 Kan. 269, 15 P. 2d 421, it was said:
“. . . The obligation of the court, if it can legally and fairly be done, is to read life rather than death into a written instrument executed by competent parties. (Gas Co. v. Altoona, 79 Kan. 466, 469, 100 Pac. 50.) To accomplish this end the court should take into consideration all of the circumstances and conditions which confronted the parties when they made the contract, and sometimes these circumstances will make plain the otherwise doubtful intent of the parties. (Ehrsam v. Jackman, 73 Kan. 435, 85 Pac. 559; Berg v. Scully, 120 Kan. 637, 245 Pac. 119.) It may also take into consideration the interpretation placed upon the contract by the parties themselves. (Kanzius v. Jenkins, 98 Kan. 94, 97, 157 Pac. 417.) If the parties have by their conduct placed an interpretation on an ambiguous contract it will be followed by the court, if not inconsistent with the language of the contract. (Landon v. Railway Co., 113 Kan. 628, 216 Pac. 309; Carlisle v. Business Association, 104 Kan. 512, 180 Pac. 280.) This is true even though the language used may more strongly suggest another construction. (Brick Co. v. Bailey, 76 Kan. 42, 90 Pac. 803.)” (p. 274.)
The construction of the instruments placed upon them by the parties is indicated by the assignment and transfer orders executed by Dougherty to his principal just twenty-three days after he acquired the property, recognizing the continuing and unrestricted overriding royalty interest of the appellees. In each assignment of the leases here involved the parties or their successors recognized the overriding interest of the appellees by either specifically excepting it in the assignment or by leaving the interest of the appellees out of the transfer orders. Not one of the parties to the various instruments contested die appellees’ overriding interest until the appellant received its assignment in 1961. Thus, from January 26, 1939, to December 1, 1961, a period of approximately twenty-two *501years, different parties placed an interpretation on the various instruments to the effect that the overriding royalty interest of the appellees extended to and bound the assigns of H. K. Dougherty. Such construction is not unreasonable in view of the language utilized in the instruments to express the intent of the original contracting parties.
It can be assumed that the parties to a contract know best what was meant by its terms, and they are the least liable to be mistaken as to the intention of the contract. (Berg v. Scully, 120 Kan. 637, 245 Pac. 119; Mayse v. Grieves, 130 Kan. 96, 285 Pac. 630; and Oliver v. Nugen, 180 Kan. 823, 308 P. 2d 132.)
When the extrinsic facts disclosed by the evidence, together with the parties’ own interpretation of the instruments, is considered, it becomes clear that the parties to the original contract and assignment intended the overriding royalty reserved to the appellees to extend and bind the assigns of Dougherty; that the name of “Dougherty” was simply an identification of the party of the second part in the contract and the assignment; and that each reference to Dougherty throughout the instruments applied fully to his assigns in accordance with the provisions of paragraph 9 of the contract.