# American Refining Co. v. Sims Oil Co.

> Court of Appeals of Texas · January 30, 1926 · 282 S.W. 894

URL: https://www.frixlaw.com/law-library/cases/9829143

## Case

- **Full name:** American Refining Co. v. Sims Oil Co.
- **Court:** Court of Appeals of Texas
- **Decided:** January 30, 1926
- **Citations:** 282 S.W. 894
- **Precedential status:** Published
- **Opinion:** On rehearing
- **Judges:** Dunklin
- **Cited by:** 5 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9829143

## Opinion text

On Motion for Rehearing.
Appellee insists that the conclusions reached by this court on original hearing, as shown in the opinion filed, to the effect that under th'e testimony introduced the term “posted market price” was sufficiently ambiguous to render it a disputed issue of fact as to whether or not the market price there referred to was understood and intended by the parties to mean such price as the Texas Company might pay for oil purchased by it, or the prices prevailing in the open market in the usual and ordinary course of trade and competition, is in conflict with the decision of the Court of Appeals in American Refining Company v. Staley, 274 S. W. 272 . In the case just cited the same contract was involved as was sued on‘in this case, and upon the trial of the case the trial judge excluded testimony tendered by the American Refining Company to show its intention in using the phrase “posted market price” and its reason for inserting the same in the contract. The trial court further concluded as a matter of law that the expression “posted market price” was plain and unambiguous, and not subject to explanation as to what the parties meant and intended by its use, and upon the conclusion so reached judgment was rendered in favor of the plaintiffs Staley and Winn upon an instructed verdict. The Court of Appeals affirmed that judgment, and in the course of the opinion had this to say:
“The words ‘posted’ and ‘market price,’ when considered separately, have a well-defined legal meaning, and, when used together, as has been done in this contract, they present no patent ambiguity. When considered in the light of the testimony, there is no latent ambiguity.”
It thus appears from the opinion that the only proof offered to show what the parties understood by the use of the quoted term in the contract was testimony of the intention of the American Refining Company in the use of those terms without any proof to show that such intention was made known to the other parties to the contract, or that the question was in any manner discussed between them. It is elementary that a mere secret understanding or intention of one party to a written contract not communicated or assented to by the other party cannot be given effect to vary the terms of the contract, and, therefore, cannot be considered in determining the meaning of the terms used in the written contract upon the same subject. In that respect the ease cited is clearly distinguishable from the one at bar, since, as pointed out in the original opinion, the contract between the parties to this suit as originally prepared by the appellee and presented to appellant for its execution contained the words “posted price” ; that as so written the representative of the appellant company declined to execute it, unless the word “market” was inserted after the word “posted” so as to make it read “posted market price,” as appears in the contract. Appellee’s representative acceded to that request, made the change suggested, and the contract was then executed by both parties. Such testimony, considered in connection with other testimony introduced tending to show that the prices posted by the Texas Company were in excess of the price of the same commodity when purchased in open market in the free and unobstructed course of trade and competition, was sufficient to raise the issue of a latent ambiguity, and under such circumstances the issue of the understanding of the parties as to the meaning of the language quoted was a question to be determined by the jury.
It is further insisted that the conclusion we reached on original hearing that the evidence tended to shpw that the claims made by appel-lee upon the appellant for amounts due under the contract and for which claims checks were given and accepted were unliquidated claims is in conflict with the decisions in the following cases: Humphrey v. McCarty, decided by this court, .reported in 251 S. W. 609 , and by the Supreme Court in opinion reported in 261 S. W. 1015 ; and also in conflict with the decision of the Court of Appeals at Amarillo in the case of Chas. E. Noble Oil & Gas Co. v. Waggoner, in an opinion rendered December 2, 1925, in cause No. 2487, not to be reported.
The McCarty Case was a suit by a lessee in an oil and gas lease to recover from Mrs. McCarty, the lessor, a sum of money which was claimed to be the balance of an excess consideration paid on a lease theretofore executed by her. The proof showed that the lease purported to cover 217 acres of land, and that the contract price therefor was $100 per acre. The lessee paid that price, but later discovered that the tract of land embraced only 131.4 acres, thus making a deficiency of 85.6 acres, for which deficiency the lessor had received $8,560. A controversy having arisen between the lessor and lessee as to the right of the latter to a repayment by the former of the amount of $8,560, the lessee paid to the lessor, by check, the sum of $6,520, or $2,040 less than the amount claimed to be due. In a suit to recover that balance, the lessor pleaded accord and satisfaction, by reason of the acceptance of the check, for the sum of $6,520. The defense was sustained by the trial court, but this court, in an opinion by Mr. Justice Buck, reversed that ruling, and that reversal was sustained by the Supreme Court, as shown in 261 S. W. 1015 . The check given in that case by Mrs. McCarty for $0,-520 had this memorandum indorsed on it: “For lease to D. H. Humphrey,” and, as pointed out in the opinion of Mr. Justice Buck;
*899 “All of the lessees who testified stated positively that they Bid not agree that the $6,420 received was in full satisfaction of the claim of the lessees against the lessors.”
In the opinion hy the Supreme Court the following was said:
“The partial payment to plaintiffs was made hy a check, on the margin of which was a notation reading, ‘for lease from T. D. Humph-ries.’ It is significant and' important that this check did not have upon it some such notation as ‘in full’ or ‘in full for all claims.’ ”
The Supreme Court further pointed out that none of the defendants, though all appeared to have been present at the trial, offered any testimony to rebut plaintiffs’ testimony, and it was further pointed out that the ■ testimony did not establish a conclusive case of accord because it lacked a conclusive showing of a mutual consent to that effect.
It thus appears that the defense of accord and satisfaction hinged upon the question whether or not the check given by Mrs. McCarty was understood by the parties to be in full satisfaction of the plaintiffs’ demand, and that was a disputed issue of fact.
Likewise in the case of Chas. F. Noble Oil & Gas Co. v. Waggoner, by the Court of Civil Appeals of the Seventh District, referred to above, the controlling question in the defense of accord and satisfaction was whether or not under testimony introduced a check tendered was accepted in full satisfaction of the debt claimed to be owing, as shown by the following excerpt from the opinion:
“The defendant pleaded that there had been, an accord and satisfaction of the matters sued for. Pending the negotiations, the defendant sent Waggoner some checks, marked ‘payment in full,’ and which bore the words: ‘Indorsement hereon will constitute receipt in full for items appearing on the statements attached to this cheek.’ Before cashing the cheeks, Greene, as the representative of Waggoner, wrote the company that the checks would not be accepted in full, and the evidence sustains the acquiescence of the company in this qualified acceptance. Graver testified that the company did not expect Mr. Waggoner to be bound by a test which was inaccurate. The undisputed evidence shows that the October test with the defective machine was inaccurate and was not accepted by either party, and, according to practically all the witnesses upon that point, the gasoline content was higher than shown by such test. The test being admittedly incorrect, and such fact having been admitted upon the trial, there was no dispute or contention and an accord and satisfaction did not arise. No consideration moved to Waggoner for taking less than was actually due him upon a correct test.”
The two cases last cited are manifestly distinguishable from the present suit, since in the latter not only was there no testimony offered to show that appellee did not agree to accept the checks in full satisfaction, but, on the contrary, as pointed out in our original opinion, the checks with the memoranda indorsed thereon to the effect that they were given in full payment of the claims therein noted were tendered three times to appellee, accompanied by a letter each time stating that they covered the full amount due for the items mentioned; and, while the first two tenders were declined by appellee, on the ground that the same were for less than the sum due, yet appellee accepted the third tender without further protest or objection, and without any further communication with appellant upon the subject. And, in the absence of some agreement or understanding between the parties as to the acceptance of the checks with the memoranda to the effect that the same were in full payment, such acceptance would be a binding contract of settlement, if the claims were unliquidated claims, under such decisions as Hunt v. Ogden, 125 S. W. 386 , 58 Tex. Civ. App. 443 , and Bergman Produce Co. v. Brown (Tex. Civ. App.) 172 S. W. 554 .
However, since, as shown in our original opinion, the reversal of the judgment of the trial court is based in part on the disputed issue of whether or not the claims sued on were unliquidated, it is unnecessary for us to determine, and we have not intended to decide, the issue as to whether or not the oral testimony, independently of the memoranda contained in the checks, conclusively showed an agreement by appellee to accept the checks in full payment. That question is left open for another trial.
The motion for rehearing is overruled.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9829143. Public record. Not legal advice.