Koffman v. Dekoch

California Court of Appeal Jul 17, 1931 No. Docket No. 6584.Published

Before: Thompson

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Holding. The court held that the defendants were entitled to use a dehydrating process to treat oil to meet contract specifications, as the raw production did not meet the gravity or purity requirements of the contracts.

Issues

Whether the defendants had the right to use a dehydrating process to remove water and foreign substances from oil before delivery.
Whether the raw oil produced from the well satisfied the gravity and quality requirements of the contracts.

Disposition. affirmed

Quotations verified verbatim against the opinion

“In view of the fact that the production as it came from the well was not the subject of either contract, i. e., was not of sufficient gravity, we entertain- no doubt that respondents were entitled to make use of the most efficient method possible”

[522]

THOMPSON (IRA F.), J.

This is an appeal from the judgment entered in favor of the defendants. The litigation arose out of the following situation. On November 9th the predecessor in interest of the respondents entered into a contract with the Standard Oil Company for the sale of oil which the former was producing from a well in the Signal Hill field. The material provisions of that contract read as follows: “The first party (respondents’ predecessor) hereby sells and agrees to deliver to the second party during the period of five years from the date hereof, unless this contract is sooner terminated as herein provided the total amount of Crude Petroleum Oil, subject to the maximum limit herein set forth, of

a gravity of not less than fourteen degrees A. P. I.,

at a temperature of sixty (60) degrees Fahrenheit, produced by the first party from its property situate in the Signal Hill Oil Field (here follows legal description).”

“The first party agrees that it will operate its property and wells in good faith and with reasonable diligence and endeavor to deliver the maximum monthly quantity expressed herein during the period of this contract.”

“Oil considered as a delivery under this contract must be free from water, sand and other foreign substance, as ascertained from the 1 Gasoline Test’ by means of the centrifugal machine, but should said test fail to prove' the existence in said oil of more than three (3) per cent of water, sand and other foreign substance, the second party will accept the oil and make deduction for all water, sand and other foreign substances determined by the test hereinbefore mentioned ...

“If at any time oil offered for delivery hereunder shall be of a lower gravity than the minimum gravity hereinbefore specified, second party, at its option may accept said oil and pay for said oil at the lowest price at that time effective hereunder, or if at any time oil offered for delivery hereunder shall contain more than Three (3) per cent of water, sand or other foreign substances, as determined by said test . . . , but no such acceptance shall be deemed a .waiver of second party’s right at any time thereafter to require deliveries hereunder strictly in accordance with the conditions herein specified, ...”

Koffman v. Dekoch

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THOMPSON (IRA F.), J.

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