Bailey v. Meadows

Decision Date05 May 1961
Docket NumberNo. 9502,9502
Citation130 So.2d 501
PartiesW. Frank BAILEY et al., Plaintiffs-Appellants, v. Herman C. MEADOWS et al., Defendants-Appellees.
CourtCourt of Appeal of Louisiana — District of US

Pipes & Pipes, Monroe, for appellants.

Goff & Caskey, Arcadia, for Herman C. Meadows.

Barham, Wright & Barham, Ruston, for Floyd B. James.

Stephens & Allen, Shreveport, for M. E. Pollard.

Simon Herold, Shreveport, for Virginia Brinkmann and R. R. Brinkmann, Jr.

Before HARDY, AYRES and BOLIN, JJ.

BOLIN, Judge.

The primary objects sought by plaintiffs in the lower court were: (1) the cancellation of certain mineral leases originally taken by defendant, Herman C. Meadows, on lands owned in indivision by plaintiffs and their mother (she having died intestate after the execution of the leases and before the institution of this suit), and for attorney's fees; (2) the issuance of an order for an accounting by Southern Natural Gas Company with respect to a pro rata share of funds from the accrued production of gas and distillate from a portion of the leased lands; (3) the issuance of an order requiring Southern Natural Gas Company to deposit these funds in the registry of the district court; (4) and a judgment ordering a proper disbursement of these funds. The orders referred to in clauses (2) and (3), supra, were issued by the district court on November 25, 1957, and May 2, 1958, respectively, and Southern Natural Gas Company has complied therewith and was still complying therewith at the time of trial. Therefore, these issues are not presented on appeal.

By means of five separate instruments dated April 16, 1954, Mrs. J. L. Bailey, W. Frank Bailey, Irma Bailey Shields and Irene B. Posey granted oil and gas leases to Herman C. Meadows on 120 acres of land located in Section 35, Township 17 North, Range 6 West, Bienville Parish, Louisiana. All five of these leases were for a term of one year with no provision for deferment of the termination by payment of delay rentals. After his acquisition of these leases, and on the same day, Meadows sold a small overriding royalty interest in all of the leased lands to Floyd B. James, another defendant herein. This instrument was not filed until May 25, 1955.

Mrs. J. L. Bailey, widow of J. L. Bailey, died intestate in May, 1954, leaving as her sole and only heirs three children, plaintiffs herein, who inherited her estate in indivision and in equal portions. Plaintiffs had previously acquired by inheritance from their father, J. L. Bailey, who died about 1936, his undivided one-half interest in the property, subject to the usufruct of their mother.

On June 25, 1954, Meadows sold an undivided one-half interest under one of the leases to R. R. Brinkmann, subject to a proportionate share of the overriding royalty previously sold to Floyd B. James. Although the instrument in question recited that the overriding royalty was in favor of 'T. L. James and Company and Mrs. V. A. Davidson,' the royalty instrument itself shows this was an error and the royalty was actually in favor of Floyd B. James. This instrument was not filed until April 30, 1957. R. R. Brinkmann died in November, 1954, and his widow in community and heirs were therefore made parties defendant in this suit.

On March 31, 1955, approximately two weeks before the five leases were to expire by their own terms, the Louisiana Department of Conservation issued Order No. 78--F, adding the productive portion of the Pettit Formation located in Section 35, Township 17 North, Range 6 West, to an existing unit of 640 acres located in Section 2, Township 16 North, Range 6 West. This addition included portions of the acreage leased by plaintiffs and their mother to Meadows. On July 26, 1955, the Department of Conservation amended its order No. 78--F by adopting a surveyed plat of the additional acreage. This plat designated 45 acres of the 120 acres as a part of the producing unit.

On March 14, 1956, or almost a year after this unitization, Meadows sold his remaining undivided one-half interest in certain leases to M. E. Pollard, another defendant herein. This sale and assignment contained a reversionary clause providing that an undivided one-eighth of seven-eighths interest in these three leases would 'automatically' revert to Meadows after Pollard had recovered from the oil, gas and minerals sold from the leased lands the sum of $2,400, plus any amount he might be required to expend in paying his pro rata portion of the operating costs occasioned by Department of Conservation Order No. 78--F. It further provided that the interest conveyed to Pollard and the interest to be reconveyed by him to Meadows were to be subject to their pro rata portion of the overriding royalty previously sold to Floyd B. James. This instrument was filed May 17, 1956.

One of the plaintiffs, Mrs. Irene B. Posey, after the execution of the leases hereinabove described, sold an undivided mineral interest to J. E. McAneny.

The producing unit into which portions of the leased lands were unitized, the T. A. Loe et al. Unit No. 1, has produced gas and distillate continually since April 1, 1955, the date from which the additional areas added to the unit are entitled to participate in production. Southern Natural Gas Company is the operator of the unit, but none of the defendants have sold or assigned any interest in the leases to this corporation.

As of March 8, 1957, none of the plaintiffs had been tendered or had received any money as royalties, despite the fact that production had been accruing from portions of the leased lands for almost two years. Moreover, during the period from April 1, 1955, to March 8, 1957, it is alleged plaintiff W. Frank Bailey had made several telephone calls to defendant Herman C. Meadows concerning the royalties due under the leases.

On March 8, 1957, plaintiff W. Frank Bailey wrote Herman C. Meadows (who was then the record owner of at least a one-half interest in the leases), and M. E. Pollard demanding cancellation of the leases on his property under LSA-R.S. 30:102. On March 14, 1957, Stephens & Allen, Attorneys, acknowledged receipt of this letter on behalf of Meadows and Pollard, stating that they were requesting Southern Natural Gas Company to pay Mr. Bailey his royalties, and that, should this Company fail to do so, Meadows and Pollard would pay same.

Shortly after May 1, 1957, each of the plaintiffs received two checks purportedly covering the royalties due them through March 31, 1957. These checks were drawn on the Estate of R. R. Brinkmann and Stephens & Allen, attorneys for M. E. Pollard. They were forwarded to plaintiffs with a cover letter from Stephens & Allen.

On June 4, 1957, two letters written by the attorneys for plaintiffs were mailed to Herman C. Meadows and duly received by him. Copies of each of these letters were also mailed to M. E. Pollard and the Estate of R. R. Brinkmann, via Stephens & Allen, Attorneys, and duly received by them. Enclosed were the checks previously sent by Stephens & Allen, together with a formal demand for the cancellation of the five leases in question. The defendants did not reply to any of these letters nor were the cancellations made as requested, and, therefore, this suit was filed in October, 1957 Defendants released all of the acreage covered by the leases except the 45 acres placed in the unit by order of the Conservation Department. Over objection of plaintiffs, these releases were filed in evidence during the trial.

The lower court rendered judgment in favor of defendants and thereby rejected plaintiffs' demands for a cancellation of the leases and attorneys' fees, and relegated them to the funds deposited in the registry of the court for the accrued royalties due them under the leases, ordering that costs be paid from such funds and taxing same against all parties according to their pro rata interest in such funds. From this judgment, the plaintiffs have appealed.

As to the acreage not in the unit, the appellants contend the lower court should have adjudged the cancellation rather than allow the releases to be filed during the trial. The procedure followed accomplished the same results but adversely affected their demands for attorney's fees and costs.

The principal issue presented on appeal relates to the lower court's refusal to cancel the leases as they affected the 45 acres in the unit for non-payment of production royalties for a period of approximately 18 months. The appellees give as their excuse for such delay the negotiations they were having with Southern Natural Gas Company, as the operator of the unit. The only evidence relative to these negotiations was the testimony of some of the appellees. They contend it was necessary for them to reach an agreement with the operator relative to the payment of their pro rata part of the cost of production. A dispute arose as to whether this cost should be pro rated on the basis of the original cost of drilling such a well or whether same should be calculated on a depreciated basis in relation to the length of time the added acreage had been in the unit. It was their testimony that such negotiations lasted for an extended period of time and they, therefore, did not receive any production royalties from the operator until the matter was finally resolved in their favor. Because of their inability to reach an agreement with the operator, they contend they did not receive a statement as to any amounts due under the acreage and therefore could not compute the amount of royalties due the plaintiffs.

The reasons for the delay, as given by the appellees, do not favorably impress us. The appellants, as lessors, were not a party to any of these negotiations between the appellees and the operator. Regardless of the final outcome of such negotiations, the amount due the appellants would be the same. The negotiations in question were being held exclusively...

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29 cases
  • Nunez v. Superior Oil Co.
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • 12 Mayo 1978
    ...La.App.1964,168 So.2d 435, aff'd, La.App.1966, 188 So.2d 466; Pierce v. Atlantic Refining Co., La.App.1962, 140 So.2d 19; Bailey v. Meadows, La.App.1961,130 So.2d 501. However, if the delay in payment was "justified," the failure to pay promptly is only a passive breach, and the lessor must......
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    ...primarily upon Melancon v. Texas Co., 230 La. 593, 89 So.2d 135, Bollinger v. Texas Co., 232 La. 637, 95 So.2d 132, and Bailey v. Meadows, La.App., 130 So.2d 501 (writs denied), strongly contends that royalties due him were not timely paid, that under the terms of the lease, facts and circu......
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