California Refining Co. v. Producers Refining Corp.

THOMPSON, J.

The plaintiff has appealed from an adverse judgment which was rendered against it in a suit for declaratory relief under section 1060 of the Code of Civil Procedure construing a contract to refine oil.

In April, 1935, the respective parties to this suit signed a written agreement, in which the plaintiff appears as party of the first part, and the defendant as party of the second part. The instrument recites that the first party owns an oil refinery at Seal Beach, California. The preamble then asserts that:

“Whereas, the party of the second part has certain production from wells located in the area known as Los Angeles Basin, and desires to have said oil, or a portion thereof, refined in said refinery;

“Now, Therefore, for, and in consideration of the mutual covenants herein contained, it is hereby agreed by and between the parties hereto as follows, to-wit: ’ ’

The contract then proceeds to recite the terms, conditions and price for which the party of the first part agrees to refine oil for the second party when it is delivered. Paragraphs three and four infer that it is optional on the part of the second party for it to deliver any quantity of oil for refinement. Paragraph three begins, “All oil delivered to,” etc. The following paragraph reads: “Upon the delivery by the party of the second part to said refinery of any oil,” etc. The contract contains not one promise on the part of the second party to deliver to the refinery any oil at all. The first paragraph of the contract specifically prescribes the limit of the quantity of oil which the first party agrees to refine. It reads: “It is hereby agreed by and between the

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parties hereto that the party of the first part will, at its Seal Beach refinery, refine a minimum of 400 barrels per day and maximum of 1500 barrels per day.” But the second party does not agree to deliver that or any other quantity of oil per day. It will be observed that this contract may not be construed to be an exclusive agreement to refine all of the oil produced by the second party. It is apparent from the preceding quotation that the first party specifically refuses to accept from the second party less than 400 barrels per day, or more than 1500 barrels per day. The contract specifically states that the first’ party reserves the right to refine oil for other producers.