Griffith v. Enochs

• Court: U.S. District Court — Western District of Louisiana
• Citation: Griffith v. Enochs, 43 F.Supp. 352 (W.D. La. 1942)
• Decision Date: 16 February 1942
• Docket Number: No. 495—Civ. A.,495—Civ. A.
• Parties: GRIFFITH v. ENOCHS.

43 F. Supp. 352

GRIFFITH v. ENOCHS.

No. 495—Civ. A.

District Court, W. D. Louisiana, Opelousas Division.

February 16, 1942.

O. E. Guillory, of Ville Platte, La., Plauche & Stockwell, of Lake Charles, La., and Seth Lewis, of Opelousas, La., for plaintiff.

White, Holloman & White, of Alexandria, La., and Marc Dupuy and Couvillon & Couvillon, all of Marksville, La., for defendant.

PORTERIE, District Judge.

The plaintiff, a resident of Evangeline Parish, Louisiana, brought this suit in the Twenty-Seventh Judicial District Court for St. Landry Parish, Louisiana, against the defendant, a citizen and resident of the state of Arizona, describing in his petition to the state court what purports to be an action to declare the nullity of a certain ex parte judgment of that court. The petition declared "that the said undivided one-half interest" in certain described land "is of a value in excess of two thousand dollars."

The defendant, alleging diversity of citizenship and jurisdictional amount, petitioned and secured the order of the state court, and the case was removed to the federal court. The defendant then filed a motion to dismiss on the ground of want of jurisdiction of subject matter and of person. There are several alternative requests which, because of the decision reached herein, need not be itemized.

Concurrently, the plaintiff filed a motion to remand, alleging two grounds, to wit: that plaintiff's suit is a probate proceeding and the federal court is without jurisdiction, and secondly, that the amount in dispute does not exceed the sum of $3,000.

At the hearing, which was made a joint one covering both the motion to dismiss and the motion to remand, it was argued, followed by briefs, that there was another reason for remanding the case to the state court and that was that the suit originally in the state court is purely, simply and only an action in nullity of a judgment of that state court.

We should outline the evidence submitted at the joint trial of the motions.

(a) By both sides was filed, as a mutual exhibit, an oil, gas and mineral lease by and between Theodore M. Enochs, sole heir of Theodore J. Enochs, deceased, a resident of Bixbee, Arizona, lessor, granting, leasing and letting unto Amerada Petroleum Corporation the exclusive right to enter upon and use, for the exploration and production of oil, gas, etc., the lands involved herein, situated in Avoyelles Parish; the rental per acre therein being $2.50, for a period of five years, with an immediate bonus of $1,000 in addition to the yearly rental per acre; also there is the usual condition of the stoppage of yearly rental payment per acre in the case of oil, gas or any other mineral being found, in which contingency the basic provision, as is common to such lease agreements, applies:

"6. The royalties to be paid by Lessee are: (a) on oil, one-eighth ( 1/8 ) of that produced and saved from the land and not used for fuel in conducting operations on the property or in treating said oil to make it marketable; (b) one-eighth ( 1/8 ) of the market value of the gas sold or used by the Lessee in operations not connected with the land leased; (c) one-eighth ( 1/8 ) of the value at the mouth of the well of casing-head gas * * *. Oil royalties shall be delivered to Lessor free of expense at Lessor's option in tanks furnished by Lessor at the well or the Lessor's credit in any pipe line connected therewith. In the event Lessor does not furnish tanks for such royalty oil and no pipe line is connected with the well, Lessee may sell Lessor's royalty oil at the best market price obtainable and pay Lessor the price received F.O.B. the leased property, less any severance or production tax imposed thereon."

(b) By plaintiff, a certified copy of the proceedings of the Probate Docket (No. 1259) of the 13th Judicial District Court, parish of Evangeline, State of Louisiana, in the "Estate of Isaac Griffith, I." consisting of the petition for homologation of inventory, the evidence of appointment of appraisers, the oath of the appraisers, the copy of the inventory and appraisement of property then made by the appraisers, which shows a valuation of the property involved herein at $1,600.

(c) By plaintiff, a certificate from the Assessor for the parish of Avoyelles to the effect that 80 acres of the property involved herein is assessed for state and parish taxation purposes at the sum of $300 (inference to be made: the 160 acres would be assessed, excluding any and all oil, gas and mineral rights, at $600).

(d) By plaintiff, a certificate from the same assessor to the effect that the movable property under the name of Amerada Petroleum Corporation, Tulsa, Oklahoma, situated on the 160 acres involved herein, comprising oil tanks, oil wells and equipment, is assessed in the sum of $75,470.

(e) By defendant, the affidavit of one L. M. Myles, Chief Clerk of Amerada Petroleum Corporation at Bunkie, Louisiana, to the effect that affiant is familiar with the Eola oil field and that the property at issue herein is a part of the Eola oil field; that he knows there are nine producing oil wells thereon, the first having been brought on August 24, 1939; and, after affirming details serving as a basis for computation, affiant arrives at the result in the affidavit that the one-eighth of one-half royalty of the production of this well, which represents the share to follow the ownership to the property involved in this suit, is worth $33,338.16 for twelve months; further, that the "total run from said nine wells, from the respective dates on which they were brought into production up to and inclusive of June 30, 1941, is 747,763.39 barrels, which has sold for $856,491.65, one-sixteenth of which is $53,530.72; that based on said figures of actual production, the undivided one-half interest in said NW¼ of Sec. 6, T. 2 S., R. 3 E., with the one-eighth royalty on the oil production therefrom, is worth far in excess of $3,000.00; that the price of gas is not included in said figures; that based on the present monthly production and price, the undivided one-half interest in said land, together with the one-eighth royalty thereon, is worth far more than $3,000.00 per annum."

Mr. Myles continues: "Affiant further states that all the royalties on said production from said land are being held in suspense until it is determined who owns the land from which said oil is being produced." (Dated July 16, 1941.)

The superficial value of the property (180 acres) for agricultural purposes is perhaps under $3,000, since the property is swamp land and not suitable for farming. The state looks to severance taxes on the minerals after being reduced to possession above ground, and leaves out the ad valorem feature of the minerals under ground (Constitution of Louisiana, Article X, Sec. 21). The tax assessor's estimate of $600 as value of the property is purely for the land superficially, as if there were no oil under it, whether being brought to the surface or not.

Disregarding the value of this property as far as oil production be concerned, in other words, as if this case were before us without oil having been discovered, we should still have to consider its rental value. We should ascertain what invested capital would be necessary to bring the yearly revenue of $400 (160 acres at $2.50 per acre). Considering money to be worth the quite satisfactory rate of 4%, it would take $10,000 of capital to yield $400 per year. Using as one factor the principal of $3,000 (amount necessary for jurisdiction) and the annual return of $400 as the other factor, the rate of interest is 13 1/3 %. For a similar computation, see Western & Atlantic R. R. v. Railroad Comm. of Georgia et al., 261 U.S. 264, 267, 43 S.Ct. 252, 67 L.Ed. 645. It would seem but just and reasonable to assume that the value of this property is several times $3,000.

We have excluded in this computation the clear bonus of $1,000, which is the equivalent of another $200 per year for the period of the lease, five years. In other words, if the $400 per year rental support by a multiple margin the jurisdiction, the $1,000 bonus supports it 50% more with the same multiple factor of safety, since $200 per year is the half of the $400 per year — the basis of our first computation.

This court, additionally, must recognize the mineral value of the land which is shown to be under lease of record, and to have nine producing oil wells thereon, developed since August, 1939; must consider that the actual worth of the oil taken out in the month of July, 1941 was $44,450.90, and the one-eighth of one-half of the royalty therein (which is to go to the owner-litigant of this suit) is, for the month of July, $2,778.18, and that for twelve months this amount alone, excluding previous accumulations of eight months, reaches the sum of $33,338.16.

The value in money of this one-eighth of the oil is the amount of rent due. See Shell Petroleum Corp. v. Calcasieu Real Estate & Oil Co., 185 La. 751, 170 So. 785, from which we quote: "It is well settled that the paying of a royalty, under a mineral lease, is the paying of rent. Spence v. Lucas, 138 La. 763, 70 So. 796; Logan v. State Gravel Co., 158 La. 105, 103 So. 526; Board of Com'rs of Caddo Levee District v. Pure Oil Co., 167 La. 801, 120 So. 373; Roberson v. Pioneer Gas Co., 173 La. 313, 137 So. 46, 82 A.L.R. 1264." 170 So. at page 791.

Additionally again we have as an item of evidence that all money from royalties accumulated from the land at issue are being held in suspense until it is determined who owns the land. (Mr. Myles' affidavit, previously quoted.) Though the prayer of the petition does not ask for a decree disposing of this money in escrow, it is clear that, immediately after the judgment decreeing title to the land, would follow the delivery of the money held in suspense. This is so without more ado — no suit to be filed, no order of court to be sought. And it would be so under the ...