Standard v. Sadler, A-10078

• Decision Date: 07 October 1964
• Docket Number: No. A-10078,A-10078
• Citation: 383 S.W.2d 391
• Parties: B. L. STANDARD et al., Relators, v. Jerry SADLER, Commissioner of the General Land Office, et al., Respondents.
• Court: Texas Supreme Court

Page 391

383 S.W.2d 391

B. L. STANDARD et al., Relators, v. Jerry SADLER, Commissioner of the General Land Office, et al., Respondents.

No. A-10078.

Supreme Court of Texas.

Oct. 7, 1964.

Rehearing Denied Nov. 18, 1964.

Rutledge & Rutledge, Abilene, for relator.

W. R. Niblack, Dallas, Tex., Will Wilson, Joe Osborn, Austin, Walter B. Morgan, Houston, Tex., A. W. Walker, Jr., Dallas, for respondent Humble Oil & Refining Co.

Waggoner Carr, Atty. Gen., Milton Richardson, Asst. Atty. Gen., Austin, for respondent Sadler.

CALVERT, Chief Justice.

B. L. Standard and Trace Mining Company, a partnership, seek a writ of mandamus directing Jerry Sadler, Commissioner of the General Land Office, to accept and file an oil and gas lease of a 67 2/5-acres tract of land in Taylor County. The lease is executed by Standard and his wife to Trace Mining Company. Humble Oil & Refining Company is made a respondent in the proceeding because it claims to own an exclusive oil and gas lease on the same property.

The relevant facts are undisputed. The fee simple title to the tract of land, including all minerals, was acquired by the State of Texas through a judgment of a district court of Taylor County rendered June 6, 1925, in an escheat proceeding, and was set apart to the Permanent Free School Fund under the provisions of Art. 3281 ¹. The tract was sold by the State to Leo Standard in December 1936, and a patent, in which all minerals were reserved to the State, was issued March 14, 1939. Leo Standard conveyed the premises to B. L. Standard and wife on February 14, 1946.

On November 5, 1963, Jerry Sadler, Commissioner of the General Land Office, executed and delivered to Humble Oil & Refining Company an oil and gas lease on the tract, which lease grants the exclusive right to Humble to prospect for and produce oil and gas for a primary term of five years and as long thereafter as oil and gas are produced in paying quantities. Although notified by B. L. Standard that the validity of its lease was being questioned, Humble entered upon the premises and commenced drilling operations on March 5, 1964. Production was obtained March 25, 1964.

On February 24, 1964, B. L. Standard executed and delivered to Trace Mining Company an oil and gas lease of the tract similar in terms to that given by Sadler to Humble. The lease was filed for record in Taylor County on March 10, 1964, and a certified copy was tendered to Sadler for filing on March 11, 1964. Sadler refused to accept and file the lease and still refuses to do so. Under the provisions of Art. 5421c-2 the lease cannot be effective, even if authorized by law, until a certified copy is filed in the General Land Office. Relators thus have no recourse for adjudicating the validity of their lease except through this direct proceeding in this Court. If the lease is valid, writ of mandamus should issue; but if it is not valid, the prayer for relief should be denied.

The validity of Relators' lease turns on the soundness of their argument that under the Relinquishment Act of 1919 Standard, as owner of the soil, is the agent of the State with the exclusive right to negotiate and execute oil and gas leases on behalf of the State.

The Attorney General, representing respondent Sadler, asserts that the argument is unsound because the Relinquishment Act of 1919 has been repealed by a 1939 Act of the Legislature. Respondent Humble differs with the position of the Attorney General. It asserts that the provisions of the Relinquishment Act of 1919 still govern the leasing of lands sold from the Permanent Free School Fund with a mineral classification or mineral reservation before enactment of House Bill 358 in 1931; but it asserts that the argument of Relators is unsound because the land involved here was sold thereafter, and that leasing of such lands is governed by the provisions of that Act and subsequent amendments. Alternatively, Humble assets the argument is unsound because a 1934 amendment to Art. 3281 confers exclusive authority to lease escheated lands on the Commissioner of the General Land Office.

The various arguments require examination of the statutes mentioned in some detail.

The first Relinquishment Act was enacted in 1919. See Acts 36th Leg., 2nd Called Session, ch. 81, p. 249. Its provisions, as subsequently amended, are now included in Arts. 5367-5379. Its history and purposes and the history of the times which prompted its enactment have been reviewed in previous opinions of this Court. See Greene v. Robison, 117 Tex. 516, 8 S.W.2d 655; Empire Gas and Fuel Co. v. State, 121 Tex. 138, 47 S.W.2d 265; Lewis v. Oates, 145 Tex. 77, 195 S.W.2d 123; Norman v. Giles, 148 Tex. 21, 219 S.W.2d 678. As construed in Greene v. Robison, supra, the Act constitutes the owner of the soil the agent of the State for the purpose of negotiating and executing oil and gas leases on surveyed and unsurveyed public free school land and asylum land sold by the State with a mineral classification or mineral reservation by which all minerals are reserved to the State. The operative effect of the Act is by its broad terms both prospective and retrospective. Buvens v. Robison, 117 Tex. 541, 8 S.W.2d 664. It will be referred to throughout this opinion as the Relinquishment Act of 1919.

In 1931 the Legislature enacted two bills dealing with sales and mineral leases of public school lands. The first was Senate Bill 310, which dealt exclusively with lands sold with mineral classification or mineral reservation. See Acts 42nd Leg., Reg.Ses., ch. 23, p. 28. The operative effect of the bill was both prospective and retrospective with respect to such lands. By its terms the Legislature sought to enlarge the interests of owners of such lands theretofore sold to include a fee ownership of 15/16 of the minerals, to validate leases theretofore executed by them on a basis of such ownership subject to certain statutory payments to the State, and to authorize the execution of leases by owners for oil and gas and other mineral development in which leases a free royalty of 1/16 would be reserved to the State. This Act will be referred to as the Relinquishment Act of 1931. It was declared unconstitutional in its entirety in Empire Gas and Fuel Co. v. State, 121 Tex. 138, 47 S.W.2d 265.

The second bill enacted in 1931 was House Bill 358. See Acts 42nd Leg., Reg.Ses., ch. 271, p. 452. It will be referred to as the Sales and Leasing Act of 1931. With subsequent amendments, it is now Art. 5421c. Other amendments and additions are shown in Arts. 5421c-1 through 5421c-9. The operative effect of this Act was strictly prospective. Section 1 declared:

'All lands heretofore set apart to the public free school funds under the Constitution and laws of Texas, and all of the unappropriated and unsold public domain remaining in this State of whatever character, except river beds, and channels, and islands, lakes and bays, and other areas within tide water limits, are subject to control and sale under the provisions of this Act.'

As pertinent here, the Act provided for sale by the Commissioner of the General Land Office of surveyed public free school land to the highest bidder, with reservation to the State of a 1/8th free royalty on sulphur and a 1/16th free royalty on all other minerals produced. The Act also authorized the Commissioner to execute mineral leases of surveyed public free school land to the highest bidder. Authority of the Commissioner to execute such leases was provided in Section 8, which read:

'All islands, salt water lakes, bays, inlets, marshes and reefs owned by the State within tidewater limits, and that portion of the Gulf of Mexico within the jurisdiction of Texas, and all unsold public free school land, both surveyed and unsurveyed, shall be subject to lease by the Commissioner to any person, firm or corporation for the production of the minerals, except gold, silver, platinum, cinnabar and other metals, that may be therein or thereunder, in accordance with the provisions of this Act and subdivision 2, Chapter 4, Title 86, Revised Statutes of 1925, relating to leasing public areas, in so far as same is not in conflict herewith.' ²

Section 13 of the Act expressly repealed Arts. 5323, 5338 and 5374, Revised Statutes of 1925, and repealed, as well, all conflicting laws.

Changes were made in some of the provisions of the Sales and Leasing Act of 1931 and certain new provisions were added by enactment in 1939 of House Bill 9. See Acts 46th Leg., Reg.Ses., ch. 3, p. 465. Section 1 of House Bill 9 dealt exclusively with sale and leasing of vacant and unsurveyed land, a matter with which we are not concerned. Section 2 amended Section 8 of the Sales and Leasing Act of 1931, quoted above, by carrying that section forward verbatim and adding a proviso reading as follows:

'Provided, however, that nothing in this Act shall be construed as removing from or interfering with the rights and powers of the surface owner of land sold or to be hereafter sold by the State, with a mineral reservation, to act as agent of the State in making and executing mineral leases covering and affecting such lands, but the authority of such surface owner shall remain the same as provided by law, and is in no wise abridged, modified or removed by this Act.'

Two of the new sections added were Section 4-a and Section 5. Section 4-a read:

'No mineral lease executed by an owner or owners of land or minerals under what is commonly known as the Relinquishment Act shall be effective until a certified copy of such lease is filed in the Land Office. No such lease executed after the effective date hereof shall be binding upon the State unless it recites the actual and true consideration paid or promised therefor.'

That section appears in Vernon's Texas Civil Statutes today as Art. 5421c-2. Section 5 created the School Land Board composed of the Commissioner of the General Land Office, the Governor and the Attorney General, and prescribed the...