J.P. Furlong Enterprises, Inc. v. Sun Exploration and Production Co.

• Decision Date: 18 April 1988
• Docket Number: No. 870075,870075
• Citation: 423 N.W.2d 130
• Parties: J.P. FURLONG ENTERPRISES, INC., a North Dakota corporation, and Nantasket Petroleum Corporation, a Colorado corporation, David A. Papineau and Catherine Mary Papineau, Plaintiffs and Appellants, v. SUN EXPLORATION AND PRODUCTION COMPANY, a corporation; State of North Dakota; Grace M. Oyloe; Orville Oyloe; Ladd Petroleum Corporation, a corporation; R.E. Puckett; and Bruce P. Alfson, Defendants and Appellees. Civ.
• Court: North Dakota Supreme Court

Page 130

423 N.W.2d 130

J.P. FURLONG ENTERPRISES, INC., a North Dakota corporation and Nantasket Petroleum Corporation, a Colorado corporation, David A. Papineau and Catherine Mary Papineau Plaintiffs and Appellants, v. SUN EXPLORATION AND PRODUCTION COMPANY, a corporation State of North Dakota; Grace M. Oyloe; Orville Oyloe Ladd Petroleum Corporation, a corporation; R.E. Puckett; and Bruce P. Alfson, Defendants and Appellees.

Civ. No. 870075.

Supreme Court of North Dakota.

April 18, 1988.

Bjella, Neff, Rathert, Wahl & Eiken, P.C., Williston, for plaintiffs and appellants; argued by Fred C. Rathert.

Owen L. Anderson, University of North Dakota School of Law, University Station, Grand Forks, for plaintiffs and appellants.

Lawrence Bender, Asst. Atty. Gen., Bismarck, for defendant and appellee State of N.D.

Zuger, Kirmis, Bolinske & Smith, Bismarck, for defendant and appellee Sun Exploration and Production Co.; argued by Murray G. Sagsveen.

McIntee & Whisenand, P.C., Williston, for defendants and appellees Grace M. Oyloe and Orville Oyloe. No appearance by Fred E. Whisenand.

MESCHKE, Justice.

We consider whether a man-made change in the course of the navigable Missouri River affects ownership of oil and gas underlying the former riverbed. Applying a statute derived from Napoleonic and Roman law through the Field Code, we hold that it does. Therefore, we reverse a summary judgment declining to apply the statute.

FACTS

In 1957, the United States of America acquired land by eminent domain in section 15, Township 152, Range 103, McKenzie County, from Emery Papineau. The condemnation decree stipulated that Papineau retained "all oil and gas rights."

After acquiring the land, the U.S. Corps of Engineers dug a large trench through section 15. The navigable Missouri River formed a new channel through the trench, leaving a long oxbow of former riverbed north of the new channel. Part of that oxbow is located in the NE 1/4 of section 9 of the same township.

Ladd Petroleum Corporation obtained an oil and gas lease, dated August 9, 1983, from the State of North Dakota for the oxbow riverbed in section 9. Sun Exploration and Production Company obtained an oil and gas lease, dated October 5, 1982, from Grace M. Oyloe on related lands adjoining the oxbow in section 9.

The oxbow riverbed in section 9 was also leased by Marc A. Chorney on September 16, 1983 from David A. Papineau as successor in interest of Emery Papineau. Chorney assigned this lease to J.P. Furlong Enterprises, Inc. and Nantasket Petroleum Corporation.

In November 1985, Sun drilled a producing oil and gas well in the NE 1/4 of section 9.

THIS LITIGATION

Following completion of the oil well, Furlong, Nantasket, and Papineau ("Furlong plaintiffs") began this quiet title action against Sun, Ladd, Oyloes, State of North Dakota and several other associated mineral and royalty owners ("Sun defendants"). The Furlong plaintiffs claimed ownership of the oil and gas under the oxbow riverbed in section 9 and contended that the state owned the oil and gas beneath the new channel in section 15 on the basis of NDCC 47-06-07, which says:

"Ancient stream bed taken by owners of new course as indemnity.--I f a stream, navigable or not navigable, forms a new course abandoning its ancient bed, the owners of the land newly occupied take by way of indemnity the ancient bed abandoned, each in proportion to the land of which he has been deprived."

The Sun defendants took the position that NDCC 47-06-07 did not apply to artificial changes in the course of a navigable river and did not apply to the oxbow riverbed which still contained water. After preliminary discovery and motions, the trial court apparently declined to apply the statute, dismissed the Furlong complaint, and granted summary judgment to the Sun defendants.

The Furlong plaintiffs appealed, arguing that the plain meaning of NDCC 47-06-07, as well as historical objectives of it and connected sections, call for application of that statute to both natural and artificial changes in the course of a navigable river and to an abandoned riverbed that still contains some water.

The Sun defendants do not dispute either the history or the policy of NDCC 47-06-07, but urge that it should be applied only to natural changes, not to man-made changes, and that the oxbow is not an abandoned riverbed. They argue that Papineau does not need "indemnity" and therefore still owns the minerals under section 15. They further argue that laches and limitations support the summary judgment below and that the United States is a necessary party if the statute is applied.

The State of North Dakota argues that we should strictly construe NDCC 47-06-07 to protect the state's "sovereign lands" from "intrusion." Since Papineau was compensated by the United States for taking of his land in section 15, while being allowed to retain the underlying oil and gas, the State submits that he has not been deprived of anything by the river change, so indemnification under NDCC 47-06-07 is unnecessary. If the statute applies, the State further argues that the oxbow riverbed has not been "abandoned," leaving factual issues to be addressed upon remand.

BACKGROUND

When North Dakota became a state, the beds of navigable waters, including that of the Missouri River, became state property by virtue of the equal footing doctrine. The purpose of state title was to protect the public right of navigation. See Montana v. United States, 450 U.S. 544, 551, 101 S.Ct. 1245, 1251, 67 L.Ed.2d 493 (1980) and Pollard's Lessee v. Hagan, 44 U.S. (3 How.) 212, 225, 11 L.Ed. 565 et seq. (1845) (at 229: "... to Alabama belong the navigable waters, and soils under them, ... subject to the rights surrendered by the constitution to the United States.") Thus, the State of North Dakota holds title to the bed of the Missouri River. ¹ See NDCC 47-01-14 ² and 47-01-15. ³ This title includes underlying oil and gas. State of North Dakota v. Andrus, 506 F.Supp. 619 (D.N.D.1981), aff'd, 671 F.2d 271 (8th Cir.1982), rev'd on other grounds, sub nom. Block v. North Dakota, 461 U.S. 273, 103 S.Ct. 1811, 75 L.Ed.2d 840 (1983), on remand, sub nom. State of North Dakota v. Andrus, 711 F.2d 118 (8th Cir.1983), appeal after remand, sub nom. State of North Dakota v. Block, 789 F.2d 1308 (8th Cir.1986). The Submerged Lands Act, § 3, 43 U.S.C. § 1311 (1976), reaffirmed the title of the states to lands beneath navigable waters at statehood, including "the natural resources within such lands and waters."

The Missouri River and the land adjoining it (i.e., riparian land) are subject to the processes of accretion, erosion, avulsion In the event of accretion and reliction, any accreted or bared land "belongs to the owner of the bank, ..." NDCC 47-06-05. ⁵ This statute "is essentially a restatement of the well-established common law rule governing riparian rights;" Hogue v. Bourgois, 71 N.W.2d 47, 53 (N.D.1955). It generally follows the common-law rule that a riparian owner gains land by accretion and reliction and loses it by erosion. See United States v. 11,993.32 Acres of Land, 116 F.Supp. 671 (D.N.D.1953) (at 678: "[T]he general rule rests upon the equitable idea that a riparian owner should have the opportunity to gain by accretion since he is subject to the hazard of loss by erosion.") In two situations, however, this statute, which originates in the Field Code, does not follow common law.

                and reliction. 4  The consequences of these processes are addressed in NDCC Ch. 47-06
                

The first situation is where land, originally surveyed as riparian, is submerged by encroaching river erosion causing land, originally surveyed as nonriparian, to become riparian. When the river shifts back, causing the land originally surveyed as riparian to reemerge, this court, in construing NDCC 47-06-05, has held that title to the reemerging land rests with the owner of the original riparian land and not with the owner of the original non-riparian land. ⁶ Perry v. Erling, 132 N.W.2d 889, 897 (N.D.1965).

The second situation, where NDCC 47-06-05 apparently does not square with common law, concerns accretion, erosion, and reliction caused by the nonnatural shifting of a river. NDCC 47-06-05 begins with the phrase "[w]here from natural causes...." (Emphasis added). The word "natural" tends to indicate that this provision excludes from the general rule accretion and reliction resulting from artificial or man-made efforts. Thus, if a river shifts due to artificial or man-made efforts, the accreted or bared land may not belong "to the owner of the bank...." See Beck II at p. 449-50. At common law, the benefit of nonnatural accretion and nonnatural reliction went to the owner of the accreting bank, provided that the benefitted owner was not the primary contributor to the artificial or man-made effort that caused the accretion or reliction. ⁷

These general observations lead to consideration of two additional statutes, both on avulsion, NDCC 47-06-06 ⁸ and, the subject of this decision, NDCC 47-06-07, which says:

"If a stream, navigable or not navigable, forms a new course abandoning its ancient bed, the owners of the land newly occupied take by way of indemnity the ancient bed abandoned, each in proportion to the land of which he has been deprived."

While this court has not construed either NDCC 47-06-06 or 47-06-07, it is evident that these sections also significantly modify common-law avulsion rules. ⁹

At common law, avulsion did not result in a change of title; boundaries remained as before the avulsive change. ¹⁰ This basic common-law rule was applied whether the avulsive change resulted from natural or artificial causes. ¹¹ Apparently, no court has refused to apply the common-law avulsion rule to artificial or man-made avulsion. ¹² Consistent with the common-law rule, NDCC 47-06-07 appears to treat natural and artificial (man-made) avulsion alike. ¹³

But, in another respect, NDCC 47-06-07 greatly...