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Kincaid v. Gulf Oil Corp.

Court of Appeals of Texas
675 S.W.2d 250 (1984)


On March 1, 1974, E.D. Kincaid (plaintiff) and F.T. Kincaid each executed an oil and gas lease to Gulf Oil Corporation (Gulf) (defendant). Each lease provided that it would terminate unless Gulf constructed a well or paid an annual delay rental, due on March 1 of each year, or made “a bona fide attempt to pay” the delay rental. Gulf paid rentals under each lease until late 1979. Gulf had discussed with Omega Minerals, Inc. (Omega) the possibility of drilling on the E.D. tract. As a result of these discussions, Gulf temporarily withheld payment on the E.D. tract. Gulf paid the 1980 delay rental on the F.T. tract. On February 29, 1980, Gulf learned that drilling operations on the E.D. tract would not proceed. Gulf instructed Omega to make the rental payment on its behalf. Gulf contacted the bank several times and confirmed that Omega would act on its behalf and deliver a check for the E.D. account. On March 1, 1980, an Omega employee delivered a check for the amount of the E.D. rental. However, the Omega employee inadvertently wrote “F.T.” on the check. On March 3, 1980, after Omega learned of the error, Omega instructed the bank to deposit the check in the E.D. account. E.D. sued in the District Court of Uvalde, Texas, seeking a declaratory judgment that his lease had terminated. The trial court ruled in favor of Gulf, and E.D. appealed.

Rule of Law


Holding and Reasoning (Cantu, J.)

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