Horn v. Skelly Oil Co.

• Decision Date: 11 January 1954
• Docket Number: No. 41233,41233
• Citation: 70 So.2d 657,224 La. 709
• Parties: HORN v. SKELLY OIL CO. et al.
• Court: Louisiana Supreme Court

Page 657

70 So.2d 657

224 La. 709

HORN v. SKELLY OIL CO. et al.

No. 41233.

Supreme Court of Louisiana.

Jan. 11, 1954.

Rehearing Denied Feb. 15, 1954.

Gordon B. Golsan, Jr., Mansfield, for plaintiff-appellant.

Colvin & Hunter, Mansfield, James E. Hara, Tulsa, Okl., Craig, Magee & Spann, Mansfield, for defendants-appellees.

FOURNET, Chief Justice.

Aaron H. Horn having acquired from S. W. McRae, Mr. and Mrs. Fred Humphrey, and Mrs. N. E. Sanders, by separate deeds in which the parties each reserved certain mineral interests, a 412-acre tract of land in Sections 4, 5, and 8, T. 12 N., R. 16 W., DeSoto Parish--being the same tract originally acquired by S. W. McRae from the Federal Land Bank of New Orleans on February 28, 1938, subject to a controversial mineral interest reserved by the bank, McRae having subsequently conveyed to Humphrey and Mrs. Sanders in separate deeds on May 12, 1938, an undivided 1/4 interest each therein--availing himself of the provisions of the Uniform Declaratory Judgments Act, R.S. 13:4231 to 13:4246, is seeking to have himself declared the owner of this property, together with an undivided 13/16ths interest in the minerals thereunder, free from the mineral lease granted the Skelly Oil Company by McRae, the Humphreys, and Mrs. Sanders, with reservation of his right to sue for damages and for an accounting of the minerals produced from the acreage.

The case is now before us on a second appeal taken by the plaintiff from adverse judgments, we, in the former appeal, having remanded the case so that the Federal Land Bank, considered a necessary party, might be joined as a defendant. See, 221 La. 626, 60 So.2d 65. The bank in its answer has disclaimed any interest in the minerals or land involved.

The facts of the case, which must be stated in detail in order that the issues may be clearly understood, are that on February 28, 1938, the Federal Land Bank of New Orleans, the then owner of the acreage in question, sold it to S. W. McRae for a consideration of $2,000 and 10 promissory notes of $200 each, secured by mortgage and vendor's lien, which notes were finally paid the latter part of 1943. In this deed in contained the following reservation that raises the pivotal controversial point in the case:

'There is excepted from this conveyance and reserved unto The Federal Land Bank of New Orleans a one-half mineral interest in and to all minerals and mineral rights in and under the above described property. It is provided, however, that the purchaser is hereby granted the privilege of leasing the minerals and mineral rights, including the said reserved interest, without joinder of The Federal Land Bank of New Orleans on the following conditions, to-wit: (1) That any lease or leases so granted will provide that a one-half of the usual royalty of one-eighth of all minerals be paid direct to The Federal Land Bank of New Orleans. (2) That one-half of all bonuses and rentals and one-half of the remaining royalties accruing to the purchaser under any such leases granted will be and are hereby assigned to the said Bank as long as the within Act of Sale and Mortgage is in force and effect with the agreement that the Bank will, upon receipt of such income, apply the same in the manner in which special payments are provided for therein. (3) That the remaining one-half of the bonuses and rentals and the remaining one-half of the royalties will be paid direct to the purchaser. (4) That upon payment in full of the indebtedness secured by the within Act of Sale and Mortgage, all income accruing under any mineral lease except one-half of the usual royalty of one-eighth of the minerals which is to be paid direct to The Federal Land Bank of New Orleans as hereinabove provided, shall be the property of the purchaser.'

On May 12, 1938, McRae sold to Fred Humphrey and Mrs. N. E. Sanders, by separate but identical deeds, an undivided 'one-fourth (1/4) interest in and to all of the right, title and interest acquired' from the land bank, subject 'to the terms and obligations' in the bank's deed to McRae. On September 22, 1941, Humphrey sold to his then wife, Vivia Story Humphrey, a 1/4 interest 'in and to all of the right, title and interest' he acquired from McRae. McRae, the Humphreys, and Mrs. Sanders, in separate deeds, subsequently sold the property to the plaintiff, reserving mineral interests that are also controversial. McRae in conveying his half interest excepted an undivided 1/2 mineral interest 'in and under said land.' Mrs. Sanders and the Humphreys in conveying their interests to Horn each reserved an undivided 1/4 mineral interest 'in and under said land.' In addition, the Humphreys stipulated that in the event 'the undivided one-half of the undivided one-fourth of the one-eighth royalty reserved and retained by the Federal Farm Land Bank of New Orleans, ever reverts, (it) shall revert to A. H. Horn, his heirs and assigns.' ¹ By separate instruments on December 19, 1946, McRae, Mrs. Sanders, and Fred Humphrey (individually and as the legal guardian of his minor child, Frances Gill Humphrey) granted a mineral lease to the Skelly Oil Company for a combined consideration of $14,420. Mrs. Vivia Story Humphrey ratified the lease on July 25, 1950. There was, however, no development on the property during the ten year period between February 28, 1938, and February 28, 1948, although in May of 1949 the Commissioner of Conservation included a portion of the acreage in a then producing unit known as the W. H. Nunley Lease Unit.

The plaintiff having made amicable demand that all of the defendants cancel this mineral lease in favor of Skelly from the public records (alleged to be slandering his title to the minerals) without avail, instituted this suit to have his title to the property and to 13/16ths of the minerals thereunder vindicated.

At the time McRae transferred a 1/4 of whatever interest he had acquired from the land bank to Humphrey, Humphrey was married and the father of a minor child, Frances Gill Humphrey. His first wife died in 1940 and it is now conceded by all parties concerned that this child thereupon inherited his mother's interest in the land and minerals--stated to be a 1/8th. It is also conceded that Horn is the surface owner in indivision with this minor, his interest therein being 7/8ths.

With respect to the remaining mineral interest, it is the contention of all of the defendants that the reservation in the deed from the land bank to McRae, when read in its entirety, discloses it was nothing more than a reservation of a royalty interest in the proceeds derived from the sale of the minerals produced therefrom, which royalty interest was an obligation imposed upon and to be deducted from the mineral rights, which were acquired in their entirety by McRae under the conveyance, and that, of necessity, when this interest expired for lack of production during the ten year period, the then mineral owners were relieved of this obligation. Consequently, at the time McRae, Mrs. Sanders, and the Humphreys (except the minor) conveyed the surface interest in the 412 acre tract to Horn in 1943 and 1944, they were the owners of the entirety of the minerals and the reservation in their deeds to Horn was of all of these minerals in the proportions in which they were then respectively owned by them (1/2 by McRae, 1/4 by Mrs. Sanders, and 1/4 by Mr. and Mrs. Humphrey), and they are, therefore, still the owners of all of these minerals, none having been reserved by the land bank and none having been conveyed to the plaintiff. In any event, they claim the reservation is ambiguous and the extrinsic evidence in the record, which may be resorted to for this reason, discloses the intention of the parties was that the bank would reserve a royalty interest only.

It is the contention of the plaintiff, on the other hand, that (1) the bank having reserved 'a one-half interest in and to all minerals and mineral rights in and under' the property, thereby established a mineral servitude that expired for nonuse of February 28, 1948, and, at that time, reverted to him and the Humphrey minor as the then owners of the land, thus entitling them to half of the minerals under the tract in proportion to their respective interest in this land, and (2) as to the other half of the minerals, inasmuch as McRae, at the time he sold his undivided interest in the land to the plaintiff in 1944 and reserved unto himself an undivided half interest in the minerals, owned only a half interest therein (the interest under his fractional interest in the land), or a 1/4 of the minerals, equivalent to 8/32nds (half of the minerals being owned by the bank and half of the remaining half having been conveyed to Mrs. Sanders and Humphrey in equal proportions) he actually reserved unto himself only a 4/32nds interest and the plaintiff became possessed of the other 4/32nds interest; further, that inasmuch as the Humphreys and Mrs. Sanders at the time of their conveyances to him in 1943 owned only an undivided 1/8th (or 1/32nds) interest in the minerals, their reservation of a 1/4th of that constituted the reservation of a 1/32nd mineral interest, and vested in the plaintiff the remaining 3/32nds interest formerly owned by each. On other words, that he became the owner of 6/32nds of the minerals owner of 4/32nds under the McRae deed, and owner of 4/32nds under the McRae deed, and the owner of 16/32nds of these minerals when the bank's servitude expired in 1948, thus entitling him to 26/32nds, or 13/16ths, of these minerals, subject to the claim of the minor against him for a 1/16th interest, the remaining half being due the minor (1/16th) by the Humphreys.

The contention of the defendants that the reservation by the bank in the deed to McRae was a royalty, as contra-distinguished from a mineral interest (predicated principally upon the bank's failure to specifically reserve to itself the right of ingress and egress for...