Magnolia Petroleum Co. v. Walker

• Decision Date: 15 May 1935
• Docket Number: No. 6560.,6560.
• Parties: MAGNOLIA PETROLEUM CO. v. WALKER.
• Court: Texas Supreme Court

Page 929

83 S.W.2d 929

MAGNOLIA PETROLEUM CO. v. WALKER.

No. 6560.

Supreme Court of Texas.

May 15, 1935.

Original petition for writ of mandamus by the Magnolia Petroleum Company against J. H. Walker, Commissioner of the General Land Office.

Petition refused.

W. H. Francis, A. S. Hardwicke, and Walace Hawkins, all of Dallas, for relator.

William McCraw, Atty. Gen., H. Grady Chandler, Asst. Atty. Gen., James V. Allred, former Atty. Gen., and R. W. Yarborough, former Asst. Atty. Gen., for respondent.

J. R. Wilson, of Wichita Falls, pro se.

Homer C. De Wolfe, former Asst. Atty. Gen., for the State Board of Education, amicus curiæ.

Charles L. Black, of Austin, amicus curiæ.

SHARP, Justice.

Relator seeks a writ of mandamus to compel the respondent to cancel and set aside the order of cancellation and forfeiture of an oil, gas, and mineral lease, and that same be reinstated according to its terms, covenants, and conditions.

The controlling facts are as follows: That on and prior to March 17, 1909, the state sold and awarded to J. A. Ballou, at a price of $3.57 per acre, on a classification of "mineral and grazing," under the terms of the Land Sales Act, chapter 47, Acts of 1895, chapter 129, Acts of May, 1897, and the Acts approved April 19, 1901, c. 125, and April 15, 1905, c. 103, and May 16, 1907, 1st Called Sess., c. 20, section 24, block 50, township 8, certificate 4686, Texas & Pacific Railway Company survey, located in Reeves county, Tex.; that said land was public free school land, owned and held in fee simple by the state of Texas and its public free school fund; that by proper conveyances on August 17, 1923, J. R. Wilson became the substituted purchaser of this land. On July 23, 1925, Wilson failed and refused to pay the interest due on the original sales price, and the commissioner of the general land office, acting under the terms of the act of 1925, chapter 94, p. 267, Acts Regular Session 39th Legislature, 22 Gammel's Laws (Vernon's Ann. Civ. St. art. 5326 note), amended by chapter 25, p. 43, § 1, Acts First Called Session 39th Legislature, approved October 27, 1926, 24 Gammel's Laws (Vernon's Ann. Civ. St. art. 5326a), forfeited the original sale of the land. On July 28, 1925, the request was made of the land commissioner by Wilson, the owner thereof at the date of forfeiture, that the land be revalued, and the land was revalued at $2 per acre, as a substitute for $3.57 per acre, the forfeited price. This section was awarded to Wilson on April 5, 1926, on his application to repurchase the land at the new price of $2 per acre.

On November 15, 1927, Wilson and wife leased the whole section to P. G. Northrup, for $100 bonus and a delay rental of 50 cents per acre. The lease provided that if the state is entitled to one-sixteenth of the oil and gas, as provided in article 5367, Revised Civil Statutes 1925, "then it is agreed that the lessee may deduct ten cents (10¢) per acre per annum from rentals herein provided to be paid to lessor, and pay same to the State and out of the royalties herein provided to be paid to lessor, lessee may pay the State such portion to which the State is entitled not to exceed one-sixteenth (1/16) of the oil and gas or the value thereof." On November 21, 1927, Northrup assigned the lease to the Humble Oil & Refining Company, and that company assigned the north half of the lease to R. R. Penn. On March 30, 1929, Penn assigned to the relator the oil and gas lease of November, 1927, in so far as the same covered the northwest one-fourth of the section of land here involved. The original lease was for ten years.

Northrup paid to the state the sum of $64 on November 23, 1927, same being initial bonus at the rate of 10 cents per acre. On October 27, 1928, the Humble Oil & Refining Company, as assignee, paid $64 rental on said oil and gas lease, same being one year's rental at 10 cents per acre. The Humble Oil & Refining Company paid to the general land office $32 on November 7, 1929, and $32 on November 5, 1930, as rentals on the south half of the section, each payment being for one year at the rate of 10 cents per acre per annum. On October 17, 1929, relator paid to the general land office $40, as rental on the oil and gas lease on the northwest quarter of the section of land in controversy, same being at the rate of 25 cents per acre per annum, being one-half of the amount of delay rentals stipulated in the original lease. On October 22, 1930, relator made a like payment of $40, but on October 21, 1931, relator paid $16 as the delay rentals for one year on this quarter section of land, said payment being made on the basis of 10 cents per acre per annum. On October 22, 1932, relator paid $40 as delay rentals on this quarter section of land, said payment being made at the rate of 25 cents per acre per annum.

Relator's lease on this quarter section was forfeited by the commissioner of the general land office on July 28, 1933, for failure to pay the full amounts due under said lease.

The original sale of this land, made in 1909, was on a classification of mineral and dry grazing. On forfeiture under the act of 1925, the official revaluation did not carry the classification of the land. No classification of this land was made by the commissioner of the general land office in the repurchase of this land by Wilson. The application, the obligation, and the application wrapper stated that the lands were being repurchased under the provisions of the act of 1925, and the grantee's obligation provided: "And it is expressly understood that I am to comply strictly with all the conditions, limitations and requirements, and am subject to and accept all the penalties contained and prescribed in said laws."

Relator contends that J. R. Wilson having repurchased under the terms of the act of 1925, under the conditions of his repurchase thereunder he became, and still is, the owner of the surface estate and fifteen-sixteenths of all the oil, gas, and minerals in and under section 24 above described, and entitled to complete said purchase by compliance with the obligations and covenants therein contained, and to receive thereupon the full fee-simple title and patent to the surface estate, and fifteen-sixteenths of all the oil, gas, and mineral estate thereunder. That by the terms of said act, and the covenants and obligations of the sale of said land, the state of Texas and its public free school fund reserved and holds title and ownership in and to one-sixteenth of the value of the oil, gas, and other minerals that may be discovered, produced, and marketed from said land. Relator also contends that the oil and gas lease is now, and was at the time of the alleged unlawful acts of the respondent, Hon. J. H. Walker, in full force and effect, and that relator was the owner of same in so far as it covers the northwest quarter of said section, and vested with the oil, gas, and mineral leasehold estate, with the corresponding seven-eighths working interest in and to the oil, gas, and other minerals in and under this land. That neither oil nor gas nor other minerals have been discovered, produced, or marketed from this land, nor has any well therefor been commenced thereon; that the 50 cents per acre annual delay rentals payable on November 15, 1928, 1929, 1930, and 1931 have been regularly and timely paid to J. R. Wilson and wife, as well as the $100 down bonus payment therein contracted for.

Relator further charges that Hon. J. H. Walker is asserting that the state of Texas and its public free school fund is entitled to one-half of the contractual bonus and annual delay rentals as contracted for in said lease; that said respondent has demanded that this relator pay one-half of the bonus and accrued delay rentals therein, as provided in articles 5380 and 5381, R. S. 1925, and that such payments are secured by a first lien upon the oil, gas, and mineral estate; that this relator having heretofore failed and refused to pay the state and its public free school fund the proportionate one-half of the bonus and one-half of the accrued annual delay rentals due and payable on the northwest quarter of this lease, the respondent, acting in his official capacity, did undertake to forfeit and declare the lease invalid and forfeited as to the northwest quarter of this section of land, acting under the terms and provisions of article 5372 et seq., R. S. 1925.

Relator further contends that in the event the lease covering the northwest quarter of this section of land includes any oil, gas, or mineral interest or estate therein, held, reserved, and owned by the state and its public free school fund, then relator says that no portion of said contractual bonus, down payment, or delay annual rentals therein stipulated for was reserved, held, or owned by the state and its public free school fund, either by the terms of said Repurchase Act of 1925, or under the terms and provisions of the award and sale of this land, nor is any bonus, down payment, or delay rentals contracted for or due and payable to the state and its public free school fund under the terms of this lease. That respondent by his acts in undertaking to cancel and forfeit this lease acted without the authority of law, and that said lease is in all things a valid and enforceable contract, and that relator has a legal right to the reinstatement of same, and to have the alleged forfeiture and cancellation set aside.

Respondent contends: (1) That mineral classified school lands forfeited and repurchased by the forfeited owner under the act of 1925 and its amendment of 1926 are repurchased with the reservation to the state of all the minerals in the land; that no power of reclassification was granted to the land commissioner by the act of 1925; and that every forfeited and repurchasing owner repurchased his land with its mineral status unchanged, and upon the same mineral classification and with the same title, rights, and privileges as existed...