Face Challenges Confidently

460 Gonyea v. Kerby

Tuesday, September 1st, 2015

Richard F. Brown

The following is not a legal opinion.  You should consult your attorney if the case may be of significance to you.
Gonyea v. Kerby, No. 10-12-00182-CV, 2013 WL 4040117 (Tex. App.—Waco Aug. 8, 2013, pet. denied) construed two conflicting contracts for deed against the draftsman after considering extrinsic evidence.  Gonyea contracted with Kerby to sell and convey two lots that together comprised just over two acres in Alvarado, Texas.  Gonyea drafted two contracts for deed, signed them, and sent them to Kerby.  Kerby signed both, sent one back to Gonyea, and Kerby kept the other.  The contract retained by Kerby stated that the mineral rights in the property would be conveyed to the purchaser when the note for the deed had been paid in full, while the contract returned to Gonyea stated just the opposite—that no mineral rights would be conveyed to the purchaser even when the note was paid in full.  By the contract’s terms, it was a monthly installment sale over a 15‑year term.  In 2005, Gonyea signed an oil and gas lease on the property.  In 2008, shortly before the final payment was due, Kerby noticed that there was oil and gas activity happening on the property and contacted Gonyea to inquire about the mineral rights.  Gonyea told Kerby that Kerby did not own the mineral rights and that they were not for sale.  Kerby made his final payment, and when Gonyea refused to convey the minerals, Kerby sued Gonyea for breach of contract.
The parties agreed that their agreement was ambiguous, and Kerby obtained a jury verdict on his breach-of-contract claim.  The issue on appeal was the sufficiency of the evidence to support the jury finding that the parties had agreed to convey the minerals.
The court found that neither contract, when read alone, was ambiguous, and that the ambiguity only results from reading the two contracts together.  The court cited the usual rules of construction that the intent of the parties is to be determined from the written agreement and that separate instruments executed at the same time, between the same parties, and relating to the same subject matter may be considered together and construed as one contract.  The court resolved this conundrum by concluding that the jury had, in effect, picked which contract was the agreement between the parties, and that the determination of which contract was the agreement was a fact question.  The existence of the second contract that differed from the first was parol evidence that there were issues of fact which were for the jury to decide.  The fact that Gonyea drafted and Kerby kept one of the two contracts was enough for the jury to find that the parties agreed on the contract Kerby kept.
Moreover, if forced to construe the two contracts together, the court held that it would still find for Kerby, as a matter of law, because Gonyea drafted both of the contracts for deeds.  Texas law provides that contracts are to be construed against the draftsman.
Because the two contracts were so clearly irreconcilable, the case highlights the significance of a fact finding at the trial court level as to the fact of the “agreement” of the parties and the risk of being the draftsman under the law applicable to the construction of the agreement of the parties.