Sunray Mid-Continent Oil Co. v. State, MID-CONTINENT

• Decision Date: 29 January 1961
• Docket Number: MID-CONTINENT,No. 19888,19888
• Citation: 368 P.2d 563,149 Colo. 159
• Parties: SUNRAYOIL COMPANY, a Delaware Corporation, and the British-American Oil Producing Company, a Delaware Corporation, Plaintiffs in Error, v. The STATE of Colorado, the State Board of Agriculture, and A. M. Ramsey, R. Kelley Jackson and A. S. Willburn, as members of and constituting the State Board of Land Commissioners, Defendants in Error.
• Court: Colorado Supreme Court

Page 563

368 P.2d 563

149 Colo. 159

SUNRAY MID-CONTINENT OIL COMPANY, a Delaware Corporation, and the British-American Oil Producing Company, a Delaware Corporation, Plaintiffs in Error, v. The STATE of Colorado, the State Board of Agriculture, and A. M. Ramsey, R. Kelley Jackson and A. S. Willburn, as

members of and constituting the State Board of Land

Commissioners, Defendants in Error.

No. 19888.

Supreme Court of Colorado, En Banc.

Jan. 29, 1961.

Rehearing Denied Feb. 19, 1962.

Tippit & Haskell, John R. Evans, Denver, for plaintiff in error, Sunray Mid-Continent Oil Co.

Moran, Reidy & Voorhees, John R. Moran, Jr., Denver, for plaintiff in error, British-American Oil Producing Co.

Norbert E. Proctor, Jr., Denver, of counsel, for plaintiffs in error.

Duke W. Dunbar, Atty. Gen., Frank E. Hickey, Deputy Atty. Gen., Clifton A. Flowers, Asst. Atty. Gen., for defendants in error.

MOORE, Justice.

We will refer to plaintiffs in error as the leaseholders or by name. Defendants in error will be referred to as plaintiffs in those instances where all of them are included in the reference, and as Board of Agriculture or Land Commissioners where the reference is to only one of said agencies.

There were no controverted issues of fact presented in the trial court. They are all admitted and raise a single question of law as to whether certain oil and gas leases executed by the State Board of Land Commissioners are valid. The trial court adjudged that the leases were void and the leaseholders seek review by writ of error. Uncontroverted facts are as hereinafter set forth.

By Act of Congress adopted April 4, 1910, 36 Stat. 274, about 6,000 acres of land in La Plata county, with certain improvements thereon, were granted to the State of Colorado by the United States. The land is generally known as the Fort Lewis lands. Section 5 of said statute provides in part:

'There is hereby granted to the State of Colorado, upon the terms and conditions hereinafter named, the property known as the Fort Lewis School, including the lands, buildings, and fixtures pertaining to said school: Provided, That said lands and buildings shall be held and maintained by the State of Colorado as in institution of learning, and that Indian pupils shall at all times be admitted to such school free of charge for tuition and on terms of equality with white pupils * * *.'

During the year 1957 various oil and gas leases were executed by the Land Commissioners, and the leaseholders above named became the assignees of one or more of the leasehold interests, or were the original lessees named therein. In so far as related to the question presented, it makes no difference whether the leaseholders are original lessees or assignees.

The Board of Agriculture contests the validity of the leases which are involved in this controvery, by reason of the following legislative enactments:

'School at Fort Lewis.--There is hereby established at the Fort Lewis school in La Plata county a school of agriculture, mechanic arts and household arts upon the grounds heretofore accepted by the governor of the state of Colorado, * * *.' C.R.S. '53, 124-14-1.

'Part of agricultural college system.--The state board of agriculture shall take and assume control of the lands, buildings and equipments at Fort Lewis school, now owned and held by the state, and the lands, buildings and equipment shall be a part of the agricultural college system of the state, and shall be controlled and managed under the same laws, rules and regulations by the state board of agriculture as the Colorado Agricultural and Mechanical College; provided, that Indian pupils shall at all times be admitted to such school free of charge for tuition and on terms of equality with white pupils.' 124-14-2.

'Development of natural resources.--The state board of land commissioners and the state board of agriculture are hereby authorized and directed to develop such coal measures, mineral deposits and oil structures under lease executed jointly, and providing for such statutory royalties or other rentals as may be agreed upon, and wherein the obligations assumed by the state of Colorado shall be faithfully kept, and mining or drilling operations be not permitted to interfere with the conduct and operation of the Fort Lewis School.' 124-14-9.

'Leasing of mineral lands.--Applications for leases of the coal measures, mineral deposits and oil structures shall be made to the state board of land commissioners, which board, with the consent and approval of the state board of agriculture, shall execute such leases as required by law, and all rentals and royalties from such leases shall be certified to the state treasurer and credited to the permanent endowment fund designated in section 124-14-8.' 124-14-10.

The State Board of Land Commissioners is an agency of the State of Colorado created by Article IX, of the state constitution. In pertinent part sections 9 and 10 of said Article read as follows:

'Section 9. State board of land commissioners.--The state board of land commissioners shall be composed of three (3) persons to be appointed by the governor, with the consent of the senate, who shall have the direction, control and disposition of the public lands of the state under such regulations as are and may be prescribed by law, * * *.

'Section 10. Selection and control of public lands.--It shall be the duty of the state board of land commissioners to provide for the location, protection, sale or other disposition of all the lands heretofore, or which may hereafter be granted to the state by the general government, under such regulations as may be prescribed by law; and in such manner as will secure the maximum possible amount therefor. * * *'

C.R.S. '53, 112-3-13 provides:

'Leases--rental--mineral lands.--The state board of land commissioners may lease any portion of the land of the state at a rental to be determined by it, except as provided in section...