Killam Oil Co. v. Bruni
Texas Court of Appeals
806 S.W.2d 264 (Tex. 1991)
The Bruni Mineral Trust (Trust) (plaintiff) leased oil and gas rights to the Killam Oil Company (Killam) (defendant) and Hurd Enterprises (Hurd) (defendant). The Trust retained the right to royalties based on gas produced from the land, as well as gas sold or used off-premises. The defendants signed a gas-sales contract with United Texas Transmission Company (UTTCO). The contract included a take-or-pay provision, which required UTTCO to either buy a certain amount of gas each year or, if UTTCO chose not to take the gas, pay a certain amount for gas not taken. In a separate proceeding, Killam brought suit against UTTCO because UTTCO had not taken gas or made any payments under the sales contract. Killam settled with UTTCO for $4 million, while Hurd settled with UTTCO without suit for $2.8 million. The Trust brought suit against the defendants, seeking to recover royalties based on the settlement payouts to the defendants. The trial court granted the Trust summary judgment. The defendants appealed.
Rule of Law
Holding and Reasoning (Butts, J.)
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