Mire v. Sunray DX Oil Company, Civ. A. No. 12993.

• Decision Date: 09 May 1968
• Docket Number: Civ. A. No. 12993.
• Parties: Anelie LeBlanc MIRE et al. v. SUNRAY DX OIL COMPANY et al.
• Court: U.S. District Court — Western District of Louisiana

285 F. Supp. 885

Anelie LeBlanc MIRE et al. v. SUNRAY DX OIL COMPANY et al.

Civ. A. No. 12993.

United States District Court W. D. Louisiana, Lafayette Division.

May 9, 1968.

Domengeaux, Wright & Bienvenu, D. Mark Bienvenu, Lafayette, La., for plaintiffs.

Liskow & Lewis, Austin W. Lewis, and James L. Pelletier, New Orleans, La., for defendants.

MEMORANDUM OPINION

PUTNAM, District Judge.

This case originated in the Fifteenth Judicial District Court of the State of Louisiana, Parish of Lafayette, having for its object the cancellation of an oil, gas and mineral lease affecting lands owned by plaintiffs in the Parish of Lafayette and an accounting for the proceeds of production since the date of the alleged default. The lease in question was executed on June 18, 1963, in favor of Charles L. Beck (Beck), a citizen of Louisiana residing in Lafayette. The rights thus acquired by Beck were assigned by him to defendant Sunray DX Oil Company (Sunray), with subsequent transfers of overriding royalties to J. P. Owen, Sr. (Owen), also a Louisiana citizen residing in Lafayette, and to General American Oil Company of Texas (General American). Sunray and General American are foreign corporations qualified to do business in Louisiana; these corporations now own the entirety of the leasehold interest in the property. All four of these parties were named defendants.

Alleging diversity of citizenship and jurisdictional amount as required by 28 U.S.C.A. § 1332(a) and 1441(a), and that the joinder of Beck and Owen was fraudulent and for the purpose of defeating the jurisdiction of the court, the matter was removed. Beck and Owen filed motions for summary judgment supported by affidavits and documentary evidence, establishing that they claim no further interest in the lease, praying for dismissal. They were dismissed.

Sunray and General American also filed motions for summary judgment. Plaintiffs have moved for a new trial on the question of Beck's dismissal as above set forth. These motions are now before the court for decision.

The issue quickly resolves itself to the single question of whether or not the original lessee of a Louisiana mineral lease remains bound to the lessor for the fulfillment thereof after having executed a complete assignment of the lease. We hold that he does.

Louisiana's Civil Law system applies concepts to mineral leases which are basically different from legal theories of the common law. The distinction was recognized in Viterbo v. Friedlander, 120 U.S. 707, 7 S.Ct. 962, 30 L.Ed. 776 (1887), as follows:

"In considering this case it is important to keep in mind that the view of the common law of England and of most of the United States, as to the nature of a lease for years, is not that which is taken by the civil law of Rome, Spain, and France, upon which the Civil Code of Louisiana is based." (120 U.S. at 712, 7 S.Ct. at 964)

Contracts relating to the development of the mineral resources of the State have been the subject of much travail for the legal profession and for the judiciary. Volumes have been written concerning the nature of these contracts, which are usually in the form of a sale or reservation of a mineral right upon the land, constituting a servitude, or in the form of a lease of the property for purposes of its development and the production therefrom of oil, gas and other minerals. Moreover, rights and interests which come into being as the incidental results of these contracts, such as assignments, subleases, mineral royalty interests (sold or reserved), and overriding royalties payable out of the lessee's portion of production have posed problems of interpretation and classification peculiar to the civil law property system. See, for example, Palmer v. Bender, 49 F.2d 316 (W.D.La.1931); Whitehall Oil Co. v. Heard, 197 So.2d 672 (La.App.1967, mineral servitudes and mineral royalties); Yiannopoulos, Civil Law of Property, 1966, Sec. 99, p. 284; Note, 39 Tul.Law Rev. 922 (1965); Campbell, "Principles of Mineral Ownership in the Civil Law and Common Law Systems", 31 Tul.Law Rev. 303 (1957); Tucker, "Sublease and Assignment: Some of the Problems Resulting from the Distinction," Third Annual Institute on Mineral Law, p. 176 (La. State University, 1955); Moses, "The Distinction Between a Sublease and an Assignment of a Mineral Lease in Louisiana," 18 Tex. Law Rev. 159 (1939); Comment, "The Juridical Nature of Oil and Gas Rights in Louisiana," 9 Tul.Law Rev. 275 (1934-1935); Note, 2 Tul.Law Rev. 65 (1917).

The mineral lease is the most common vehicle used to obtain development of lands for oil, gas and other minerals, and development of the law in this area has been at times inconsistent and confusing; the legal nature of this contract in particular being the subject of constant "clarification". The jurisprudence as it had evolved up to 1936 was marshalled and what has for many years been regarded as a definitive holding by the Louisiana Supreme Court was handed down in Gulf Refining Co. of Louisiana v. Glassell, 186 La. 190, 171 So. 846 (1936). There it was held that a "mineral lease" was in fact a "lease" and that the rights acquired by the lessee were purely personal, not such as would permit him to institute a petitory action without the concurrence or consent of his lessor. The decision was overturned procedurally by the enactment of Act No. 205 of the General Assembly of Louisiana for the year 1938, which classified oil, gas and mineral leases as real rights and provided that they could be protected, asserted and defended in the manner provided by laws relating to the ownership and possession of immovable property. This Act gave rise to the contention that the holders of such lease rights enjoyed a jus in re, a proprietary right or interest in the land itself; but in Arnold v. Sun Oil Co., 218 La. 50, 48 So.2d 369 (1949) the Court held that the rights conferred were procedural and remedial in nature and did not affect substantive rights flowing from such contracts. The reaction to this decision was the amendment of Act 205 of 1938 by Act No. 6 of the Second Extra Session of the General Assembly of Louisiana for the year 1950, which added the proviso that:

"This Section shall be considered as substantive as well as procedural so that the owners of oil, gas and other mineral leases and contracts within the purpose of this Section shall have the benefit of all laws relating to the owners of real rights in immovable property or real estate."

The entire provision was incorporated into the Revised Statutes of 1950 as R.S. 9:1105.

The hope of the industry that mineral leases would thereafter be classified and treated as real rights in the property affected thereby, or as a separate proprietary interest in the land, was short lived. Reagan v. Murphy, 235 La. 529, 105 So.2d 210 (1958) followed and reiterated the rule that such contracts are to be considered as leases giving rise to personal rights between the lessor and the lessee and governed by the articles of the Louisiana Civil Code pertaining to leases. Citing In re Morgan R. & S. S. Co., 32 La.Ann. 371 (1880), the Court made it clear that the lessee became possessed of a jus ad rem, not a jus in re, a right upon the thing (the land subject thereto) rather than a proprietary interest in it. Much of the language employed by the Court in reaching this conclusion gives the impression that the leasehold interest should be regarded as a personal right upon the land, but careful analysis reveals that this language is nothing more than obiter dicta. The result reached, that rights granted mineral lessees by LSA-R.S. 9:1105 did not render mineral leases amenable to the liberative prescription of ten years under Article 3529 or Article 3546 of the Louisiana Civil Code of 1870, (LSA-R.C.C. Arts. 3529, 3546), applicable to servitudes, did not require such an interpretation.

The Court has since 1936 consistently held that the mineral lease is to be considered in no other light than that of lease and the rights and obligations between the parties governed by the articles of the Code dealing with leases. Royalties provided for after production, either during or following the primary term, are considered as rent, fruits of the land, falling into the community of acquets and gains between husband and wife even though production is obtained from the separate property of the husband, Milling v. Collector of Revenue, 220 La. 773, 57 So.2d 679 (1952); the lease can be forfeited or cancelled on demand of the lessor for nonpayment of royalties (rent), Melancon v. Texas Company, 230 La. 593, 89 So.2d 135 (1956); Bollinger v. Texas Co., 232 La. 637, 95 So.2d 132 (1957). These are but two examples from the legion of cases in which the appellate courts of this state have held to this view; others dealing with different aspects of the relationship are: Calhoun v. Gulf Refining Co., 235 La. 494, 104 So.2d 547 (1958); Coyle v. North American Oil Consolidated, 201 La. 99, 9 So.2d 473 (1942); Tyson v. Surf Oil Co., 195 La. 248, 196 So. 336 (1940); Martel v. Hunt, 195 La. 701, 197 So. 402 (1940). The list could be extended indefinitely. In all of these cases, moreover, the Court recognized that mineral leases were to be considered as incorporeal immovable property. See also Art. 1997, Louisiana Civil Code, the third paragraph of which states that an obligation is "* * * real when it is attached to immovable property, and passes with it into whatever hands it may come, without making the third possessor personally responsible."

Able counsel for defendants contend that more recent enactments by the Legislature in adopting the 1960 Code of Civil Procedure, particularly Article 3664, and more recent decisions of the courts have changed the nature of the rights obtained by a mineral lessee. We do not agree that any change has taken place. What has happened is that the Louisiana Supreme Court in the recent case of Succession of Simms, 250 La. 177, 195 So.2d...