Estate of Haynes v. Steele

• Decision Date: 27 February 1997
• Docket Number: No. 93-CA-01237-SCT,93-CA-01237-SCT
• Citation: 699 So.2d 918
• Parties: The ESTATE OF Margaret Malone HAYNES, Deceased; The Estate of Rebecca Quinn Steele, Deceased; The Estate of Pat Young Malone, Deceased; and James Perry Steele, Jr. v. Billy Dick STEELE; Kathryn H. Steele and Jeanne Swindle as Representative of the Estate of Robert B. Swindle, Deceased.
• Court: Mississippi Supreme Court

Page 918

699 So.2d 918

The ESTATE OF Margaret Malone HAYNES, Deceased; The Estate

of Rebecca Quinn Steele, Deceased; The Estate of

Pat Young Malone, Deceased; and James

Perry Steele, Jr. v. Billy Dick STEELE; Kathryn H. Steele and Jeanne Swindle as

Representative of the Estate of Robert B. Swindle, Deceased.

No. 93-CA-01237-SCT.

Supreme Court of Mississippi.

Feb. 27, 1997.

Dewitt T. Hicks, Jr., Columbus, for appellants.

Grady F. Tollison, Jr., William K. Duke, Oxford, Amy D. Whitten, Jackson, for appellees.

Before DAN LEE, C.J., and BANKS and JAMES L. ROBERTS, Jr., JJ.

DAN LEE, Chief Justice, for the Court:

¶1 Before this Court is the question of whether the fifteen percent statutory penalty is applicable to mineral royalties and accrued royalty monies. The long history of this family dispute had its beginning in the Chancery Court of Clay County, Mississippi, with a Complaint to Confirm Title, Remove Clouds upon Title, Quiet Title and to Cancel Oil, Gas & Mineral Leases, filed October 3, 1986, by Billy Dick Steele, et al. (the Steele Appellees), against Margaret Malone Haynes, et al. (the Haynes Appellants). Counterclaims followed, and the chancellor received voluminous testimony, documentary evidence, briefs and arguments of all counsel in the course of proceedings. An initial opinion rejecting the Steele Appellees' claims was issued April 11, 1988. The Steele Appellees appealed and on December 16, 1991, this Court affirmed the chancery court judgment, but on motion of the Haynes Appellants remanded the case back to the chancery court for an imposition of the statutory fifteen percent (15%) penalty. Miss.Code Ann. § 11-3-23 (1972). On October 1, 1993, the chancellor issued his Decree Awarding Statutory Penalty, Etc., which decree failed to include the mineral royalty monies paid into the court during the pending litigation upon which the penalty was not applied. The Haynes Appellants filed a Notice of Appeal on October 26, 1993, and an Amended Notice of Appeal on November 2, 1993, raising the following issues:

I. WHETHER THE CHANCELLOR ERRED IN HIS DECREE AWARDING STATUTORY PENALTIES ENTERED OCTOBER 1, 1993, BY FAILING TO IMPOSE THE 15% STATUTORY PENALTY OF MISSISSIPPI CODE ANNOTATED, § 11-3-23 PURSUANT TO THE SUPREME COURT MANDATE OF FEBRUARY 26, 1992, ON THE MINERAL ROYALTY PAYMENTS HELD IN THE REGISTRY OF THE CHANCERY COURT AS OF THAT DATE BY RULING SAID ROYALTIES WERE NOT A PART OF THE PROPERTY, THE SAME AS THE SURFACE ESTATE AND MINERAL ESTATE AND RESERVE,

II. WHETHER THE CHANCELLOR ERRED IN HIS DECREE AWARDING STATUTORY PENALTY BY FAILING TO ALLOW FOR, ADJUST, OR ACCOUNT FOR DEPLETION OF THE MINERAL RESERVE SUBSEQUENT TO THE TRIAL COURT JUDGMENT DATE OF APRIL 11, 1988, WHEN ASSESSING THE 15% PENALTY OF SAID RESERVES, and

III. WHETHER THE COURT ERRED WHEN IT FAILED TO PERFORM A PURELY MINISTERIAL FUNCTION IN FOLLOWING THE MANDATE OF THE SUPREME COURT BY MAKING A JUDICIAL DETERMINATION THAT THE ROYALTY ISSUE WAS AN IN REM PROCEEDING AND FAILING TO IMPOSE THE 15% STATUTORY PENALTY OF MISSISSIPPI CODE ANNOTATED, § 11-3-23 ON THE MINERAL ROYALTY PAYMENTS.

¶2 The Court finds that the chancellor erred in assessing the property subject to the statutory penalty by not imposing the statutory penalty on the mineral royalty payments held in the court's registry. Therefore, we affirm in part, reverse and render in part and remand this matter to the lower court for a final accounting consistent with this opinion.

STATEMENT OF THE CASE

¶3 On October 3, 1986, Billy Dick Steele, Kathryn H. Steele and Robert B. Swindle (the Steele Appellees) filed a complaint in the Chancery Court of Clay County, Mississippi, styled Steele v. Haynes, Cause No. 15,294, against Margaret Malone Haynes, Pat Young Malone, James Perry Steele, Rebecca Quinn Steele and numerous other parties having an interest or a claim in the land described in the complaint (the Haynes Appellants). The Steele Appellees were seeking to confirm their title to three tracts of land located in Clay County, Mississippi, to remove clouds upon title, and to quiet title. In addition, the ¶4 While that appeal was pending, Southland filed a separate complaint for interpleader in the Chancery Court of Clay County, Mississippi, styled Southland Royalty Co. v. Steele, Cause No. 16,068. The Steele Appellees and the Haynes Appellants were defendants in this separate interpleader action. Southland alleged that it had been granted competing mineral leases by the Steele Appellees and by the Haynes Appellants on the property that was the subject of the case then on appeal. Southland had drilled a gas well that was producing gas, thereby obligating Southland to pay royalties to the owner of the mineral interests in the land. Because the Steele Appellees and the Haynes Appellants were disputing who owned the mineral interests in the land, Southland requested to interplead the sum of $1,406,604.96 to the chancery court, which sum represented the royalty payments due to date with interest thereon. Southland also requested to begin paying additional sums to the chancery court as they became due. An agreed order was entered by the chancery court in the interpleader action on February 22, 1989, pursuant to which Southland paid $1,406,604.96 into the registry of the chancery court. In addition, Southland was to pay all future royalty payments arising from the mineral interests into the chancery court registry as well. Finally, the order directed the clerk of the chancery court to invest the funds in treasury bills and to keep an accounting of the funds.

                Steele Appellees sought to confirm oil, gas and mineral leases made by them to Southland Royalty Company with respect to some of the subject property and to cancel competing oil, gas and mineral leases made by the Haynes Appellants to Southland. 1  The Haynes Appellants answered and filed various counterclaims asserting that they had an ownership interest in the land and that they had executed valid mineral leases on such land.  The Clay County Chancery Court heard the case on March 10 and 11, 1988, and rendered its judgment on April 11, 1988.  The chancery court denied the Steele Appellees' claims, granted the Haynes Appellants' counterclaims and declared the Haynes Appellants' oil, gas and mineral leases valid as against the Steele Appellees.  The Steele Appellees appealed the chancery court's judgment
                

¶5 On or about March 21, 1989, the Steele Appellees filed a motion in the interpleader action to employ an accountant and to disburse some of the funds. The Steele Appellees requested that their uncontested fractional share of the funds, less an amount sufficient to provide a supersedeas, be disbursed to them. Pursuant to a second agreed order in the interpleader action, dated April 21, 1989, the chancery court ordered the clerk to pay the Steele Appellees an amount equal to their uncontested interest in the royalty funds paid into the court less twenty-five percent, less an additional $50,000.00, which sums were to be held pending the outcome of the appeal in the other action.

¶6 This Court affirmed the lower court's judgment on November 20, 1991, by per curiam opinion. See Steele v. Steele, 588 So.2d 845 (Miss.1991). On December 16, 1991, this Court rendered a mandate affirming the chancery court's decision in the first action. The Haynes Appellants filed a motion to amend the mandate to specifically include the fifteen percent statutory penalty pursuant to Miss.Code Ann. § 11-3-23. On February 26, 1992, this Court amended its judgment to include the following mandate:

Case remanded to the Chancery Court of Clay County for Determination of the Fifteen Percent (15%) Penalty Amount.

¶7 On October 20, 1992, the Haynes Appellants filed a pleading in the remanded action before the Clay County Chancery Court in which they argued that the fifteen percent penalty should be applied to: (1) the value of their surface rights in the subject land, which land had a stipulated value of $121,000; (2) the value of the minerals or mineral reserves in place as of December 16, 1991; and (3) their share of the royalty payments paid into the registry of the chancery court in the separate interpleader action. By order entered October 22, 1992, the chancery court consolidated the two cases, Cause No ¶8 On October 1, 1993, the Chancery Court of Clay County entered a decree awarding the statutory penalty after a hearing on March 29 and 30, 1993. The chancery court decreed that the fifteen percent statutory penalty would be applied to the value of the surface estate and the mineral reserves as of December 16, 1991, the date of the this Court's mandate. The chancellor further decreed that the penalty would not be applied to the funds held in the registry of the chancery court pursuant to the agreed orders in the separate interpleader action.

15,294 and Cause No. 16,068. On December 11, 1992, the Steele Appellees filed a response to the Haynes Appellants' pleading, requesting the application of the penalty, arguing primarily that the Haynes Appellants were not entitled to a fifteen percent statutory penalty on the funds held by the chancery court in the interpleader action.

¶9 On October 26, 1993, the Estate of Margaret Malone Haynes filed a Notice of Appeal, appealing the chancery court's October 1, 1993, decree. On November 2, 1993, the Estate of Margaret Malone Haynes, the Estate of Pat Young Malone, the Estate of Rebecca Quinn Steele, and James Perry Steele (the Haynes Appellants) filed an Amended Notice of Appeal, appealing the chancery court's October 1, 1993, decree. On April 22, 1994, the chancellor entered a bench opinion in which he explained the rationale for the October 1, 1993 decree.

STATEMENT OF THE FACTS

¶10 Pursuant to the Agreed Order entered by the chancery court in the interpleader action on February 22, 1989, Southland paid $1,406,604.96 into the registry of the chancery court on or about March 3, 1989. Southland...