Lazy M Ranch, Ltd. v. Txi Operations, Lp

978 S.W.2d 678 (1998)

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Nature of the Case

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Facts

P and D executed a written contract that required P to pay D $2,000 for the right by conducting subsurface tests on a part of D's land--1,669 acres specifically described in the contract by metes and bounds. P also got an exclusive and irrevocable option to lease 300 of the 1,669 acres to mine subsurface materials. To exercise the option right, the contract required P to give D written notice of its election within six months of the April 1 contract and (2) tender $98,000 to D. P paid the required $2,000 and began exploration under the contract. Morris, who negotiated the contract on D's part died in August 1996. On September 27, 1996, P attempted to exercise its option by delivering the required written notice accompanied by a $98,000 bank check. George Morris, III, who had succeeded his father as president of D, refused to lease any of the land to P. He returned P's check with a letter explaining that D would not lease the land as promised because P had breached the contract by entering upon and testing D's land outside the 1,669 acres specified in the contract. Morris stated that P had taken advantage of his ailing father. P sued for specific performance. The trial court granted summary judgment. D appealed: P materially breached the contract before attempting to exercise the option, thereby excusing D from performance; P was not entitled in equity to specific performance because P had 'unclean hands' in the transaction.