Court Opinion

ID: 9677784
Source: CourtListenerOpinion
Date Created: 2023-08-24 05:59:47.016539+00
Date Added: 2024-06-11T18:16:58.395885
License: Public Domain

LEE, Justice.,
dissenting.
Because I disagree with the majority’s holding that the contract does not give appellant the exclusive right to buy all used drill bits that appellees dispose of, I respectfully dissent. I would hold that appellees failed to meet their summary judgment burden of proving (1) that the contract does not give appellant the exclusive right to buy the used drill bits appellees dispose of, and (2) failed to prove that such a construction renders the contract unenforceable.
The contract in question is a form “sale order” covering “sale of [the following materials] on ‘as is — where is’ basis:”
MATERIAL: Such quantities of used drill bits in various sizes, that Seller, may want to dispose of from the Denver, Los Angeles, Midland and New Orleans operations of:
Texaco Inc. — Producing
Texaco Producing Inc.
Texaco Oils Inc.
Getty Oil Company
Appellees asserted in their motion for summary judgment the following arguments:
(1) the language of the contract is inconsistent with appellant’s position that it had *282the exclusive right to purchase used drill bits from appellees; and
(2) even if the contract does give appellant the exclusive right to purchase used drill bits from appellees, the contract is illegal and unenforceable under the Texas Antitrust Statute, Tex.Bus. & Com.Code Ann. § 15.05(c) (Vernon 1968).
In support of its claim that the contract did not give appellant the exclusive right to purchase used drill bits, appellees attached the affidavits of four of its employees, including Richard N. Johnson, the custodian of the blanket orders and a senior buyer in the Purchasing Department, J.E. Toumbs, a senior clerk, H.O. Baker, a materials coordinator, and T.W. LeBlanc, a yard foreman. Johnson testified that appellees did not intend to give appellant an exclusive right to purchase used drill bits. Toumbs testified that, on two occasions, appellant refused to purchase drill bits offered. Baker testified that communication with appellant was difficult, they often failed to keep appointments, and they were selective about the drill bits they would purchase. LeBlanc testified that appellant failed to keep appointments, was often late, and that he was never advised that appellant was to only company to whom he could sell used drill bits.
We may not consider any of this summary judgment proof because to do so would violate the rules of contract construction. In construing a contract, we are to “take the wording of the instrument, considering the same in the light of the surrounding circumstances, and apply the pertinent rules of construction....” Sun Oil Co. v. Madeley, 626 S.W.2d 726, 731 (Tex.1981). If the contract is unambiguous, we must give effect to the parties’ intention as expressed or as is apparent in the writing. Id. Usually, the intention of the parties will be determined from the instrument alone because it is the objective, and not the subjective, intent that controls. Id. Parol evidence is inadmissible to render a contract ambiguous, which on its face can be given a definite legal meaning. Id. at 732. Neither party contends the contract is ambiguous; therefore, we may not consider the extrinsic evidence attached to appellees’ motion. See id.
Furthermore, we should construe a contract in such a way as to make the obligation imposed on the parties mutually binding. Portland Gasoline Co. v. Superior Marketing Co., 150 Tex. 533, 243 S.W.2d 823, 824 (1951). This coincides with the rule that courts should construe contracts in a way that renders them effective, rather than ineffective. Id.; Harris v. Rowe, 593 S.W.2d 303, 306 (Tex.1980).
Appellant argues that if we construe this contract to deny an exclusive right to buy appellees’ used drill bits, there is a lack of mutuality of obligation rendering it unenforceable and such a construction would violate the rules of contract construction. The majority holds that the contract does not give appellant the exclusive right to buy all used drill bits appellees want to dispose of. This holding means that appellees are not obligated to sell the drill bits to appellant, but may sell to whomever they wish. Where a contract imposes no definite obligation on one party to perform, it lacks mutuality. Bank of El Paso v. T.O. Stanley Boot Co., Inc., 809 S.W.2d 279, 285 (Tex.App.—El Paso 1991), aff'd in part, rev’d in part on other grounds, 847 S.W.2d 218 (Tex.1992). I disagree with the majority’s approach because it renders the contract unenforceable for lack of mutuality.
Appellant contends that the language of the contract creates an output contract. An output contract is one in which the quantity of materials sold consists of the seller’s good faith output. Cooper v. Fortney, 703 S.W.2d 217, 219 (Tex.App.—Houston [14th Dist.] 1985, writ ref'd n.r.e.). Even if an output contract requires the seller to sell only to one buyer, it is usually not violative of Texas antitrust laws. Because this contract gives appellant the right to purchase those used drill bits that appellees want to dispose of, I would hold that the contract in question is an output contract, for which the quantity of drill bits sold consists of appellees’ good faith output, i.e. the bits they decide to sell.
Appellees argue that, even if the contract is an output contract, it is illegal and unenforceable because it violates Texas antitrust laws. Texas antitrust law makes unlawful any contract in restraint of trade or commerce. Tex.Bus. & Com.Code Ann. § 15.05(a) *283(Vernon 1987). The portion of the statute upon which appellees relied in their motion provides:
(c) It is unlawful for any person to sell, lease, or contract for the sale or lease of any goods, whether patented or unpatent-ed, for use, consumption, or resale or to fix a price for such use, consumption, or resale or to discount from or rebate upon such price, on the condition, agreement, or understanding that the purchaser or lessee shall not use or deal in the goods of a competitor or competitors of the seller or lessor, where the effect of the condition, agreement, or understanding may be to lessen competition substantially in any line of trade or commerce.
TexJBus. & Com.Code Ann. § 15.05(c) (Vernon 1987) (emphasis added). The italicized portion of this statute indicates that a contract is unlawful if it precludes the buyer from dealing in the goods of competitors of the seller. This section is inapplicable to the contract here because there is no condition limiting appellant’s right to deal with any of appel-lees’ competitors.
In conclusion, I would find that appellees failed to meet their burden of establishing that the contract does not give appellant the exclusive right to purchase appellees’ used drill bits. Likewise, appellees failed to establish that the contract violates Texas antitrust laws. Therefore, I would sustain appellant’s point of error, reverse the judgment, and remand the cause for trial.