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Russell v. Texas Co. | 238 F.2d 636 (1956)

In an ideal scenario, an offer to enter a contract will be expressly accepted or rejected. But if there’s no express acceptance or rejection, can the offeree’s silence constitute acceptance? Generally, the answer is no. But in Russell versus Texas Company, we explore one of the exceptions to that general rule, namely acceptance by an exercise of dominion.

Theodore Russell purchased property that was subject to a reservation of mineral rights. The mineral-rights owner granted an oil and gas lease to the Texas Company, or Texaco, authorizing Texaco to extract the minerals under the property. An easement allowed Texaco to make certain uses of Russell’s surface property to facilitate the extraction. But beginning in September of 1952, Texaco exceeded the scope of that easement by using Russell’s surface property to facilitate Texaco’s operations on adjacent land.

On October 30th, Russell made Texaco an offer for a revocable license that would allow Texaco to continue its use of Russell’s surface property to benefit projects on adjacent land for a fee of one hundred fifty dollars a day. The offer also expressly stated that Texaco’s continued use of Russell’s property would constitute acceptance of the offer. Texaco continued to use Russell’s property until November 22nd. But in December, Texaco informed Russell that it rejected his offer.

Russell filed suit against Texaco, arguing, among other things, that Texaco’s continued use constituted acceptance of his offer, and Texaco therefore owed Russell thirty-six hundred dollars under the resulting revocable license. Texaco countered that its continued use didn’t constitute acceptance because it lacked intent to accept Russell’s offer.

The district court held that Texaco’s continued use did constitute acceptance and that Texaco therefore owed the fee due under the revocable license. Texaco appealed to the Ninth Circuit, and Russell cross-appealed on other grounds.

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