Swaim v. Stephens Production Co.

• Decision Date: 14 October 2004
• Docket Number: No. 03-1385.,03-1385.
• Citation: 196 S.W.3d 5
• Parties: Buel D. SWAIM and Sharon Ruth Swaim and David J. Kinney, Sr., Appellants, v. STEPHENS PRODUCTION COMPANY, A Division of Stephens Group, Inc., Appellee.
• Court: Arkansas Supreme Court

196 S.W.3d 5

Buel D. SWAIM and Sharon Ruth Swaim and David J. Kinney, Sr., Appellants, v. STEPHENS PRODUCTION COMPANY, A Division of Stephens Group, Inc., Appellee.

No. 03-1385.

Supreme Court of Arkansas.

October 14, 2004.

Lonnie C. Turner, Ozark; and Warner, Smith & Harris, PLC, by: P.K. Holmes, III, Fort Smith, for appellants.

Daily & Woods, P.L.L.C., by: Thomas A. Daily, Fort Smith, for appellee.

ANNABELLE CLINTON IMBER, Justice.

Appellants Buel D. Swaim and Sharon Ruth Swaim and David J. Kinney, Sr., are successors-in-interest to Carrie Davidson and J.T. Harris who separately owned two real property tracts in Franklin County, both tracts being located adjacent to the Arkansas River.¹ Beginning in 1957, the owners of the Davidson tract entered into an oil, gas and mineral lease with Appellee Stephens Production Company, a division of Stephens Group, Inc. In 1964, Gulf Oil Corporation entered into an oil and gas lease with the State of Arkansas that encompassed a certain tract of land underlying the Arkansas River.² Likewise, in 1966, the owners of the Harris tract, which tract is located south of the Davidson tract, entered into an oil, gas and mineral lease with Stephens Production. The State lease and the Harris and Davidson leases were in customary form, reserving to the lessors a one-eighth (1/8th) royalty³ in oil and gas produced under the leases. In addition, the Davidson and Harris leases included provisions stating that accretion land would be subject to the individual lease agreements.

In connection with the development and production of natural gas in Franklin County, Appellee Stephens Production, Gulf Oil and another company not involved in this appeal, Petroleum, Inc., executed a Declaration of Pooling and Unitization on March 17, 1967. Among other things, the pooling agreement enabled Stephens Production to proceed with the development and production of natural gas located in the Davidson-Harris tracts and under the Arkansas River.

In 1990, Davidson and Harris amended their leases with Stephens Production to provide for a three-sixteenth (3/16th) royalty. The State Lease, however, remained fixed at the one-eighth (1/8th) royalty.

Meanwhile, over the course of many years of operation under the oil and gas leases, the Arkansas River shifted eastward in its course, causing accretion on the appellants' land. In January of 2000, the appellants, pursuant to Ark.Code Ann. § 22-5-405 (2004), obtained quitclaim deeds from the State of Arkansas covering the accreted land.

On August 24, 2001, the appellants filed a suit against Stephens Production for payment under the terms of the Davidson and Harris leases for their share of gas produced from the accreted acreage after confirmation of title by the State of Arkansas. Both parties moved for summary judgment. The trial court granted summary judgment in favor of Stephens Production, ruling that the State Lease providing for a one-eighth (1/8th) royalty remained effective for the accreted land. The appellants appealed to the Arkansas Court of Appeals. The case has been certified to us as an issue of first impression. Therefore, this court has jurisdiction under Rule 1-2(b)(1) of the Arkansas Rules of the Supreme Court.

We hold that the appellants, as riparian owners, are owners of the additional land formed by accretion, which ownership encompasses both the surface and mineral rights. Furthermore, because the lease agreements between Stephens Production and the appellants, i.e. the Harris and Davidson leases, by their express terms include any accretions, the accreted land is subject to the appellants' respective royalty interests granted under those leases. Thus, we conclude that the trial court erred in granting summary judgment in favor of Stephens Production. The trial court's summary-judgment order is hereby reversed and the case remanded for entry of summary judgment in favor of the appellants.

I. Standard of Review

As noted above, the instant appeal arises out of a trial court's grant of summary judgment in favor of Stephens Production Company. In Linn v. Nations Bank, 341 Ark. 57, 14 S.W.3d 500 (2000), we set out the standard of review for a grant of summary judgment:

The law is well settled that summary judgment is to be granted by a trial court only when it is clear that there are no genuine issues of material fact to be litigated, and the party is entitled to judgment as a matter of law. Wallace v. Broyles, 331 Ark. 58, 961 S.W.2d 712 (1998), supp. opinion on denial of reh'g, March 5, 1998 [332 Ark. 189, 961 S.W.2d 712 (1998)]. Once the moving party has established a prima facie entitlement to summary judgment, the opposing party must meet proof with proof and demonstrate the existence of a material issue of fact. Id. On appellate review, this court determines if summary judgment was appropriate based on whether the evidentiary items presented by the moving party in support of the motion leave a material fact unanswered. Id. This court views the evidence in a light most favorable to the party against whom the motion was filed, resolving all doubts and inferences against the moving party. Id. Our review focuses not only on the pleadings, but also on the affidavits and other documents filed by the parties.

Id. at 60-61, 14 S.W.3d at 503 (citing Adams v. Arthur, 333 Ark. 53, 62, 969 S.W.2d 598, 602 (1998)).

In this summary-judgment matter, there is no dispute as to any material fact. In cases where the parties agree on the facts, appellate courts simply determine whether the appellee was entitled to judgment as a matter of law. Jackson v. City of Blytheville Civ. Serv. Comm'n, 345 Ark. 56, 43 S.W.3d 748 (2001) (citing Aloha Pools & Spas, Inc. v. Employer's Ins. of Wausau, 342 Ark. 398, 39 S.W.3d 440 (2000), and City of Little Rock v. Pfeifer, 318 Ark. 679, 887 S.W.2d 296 (1994)).

This appeal also involves a matter of statutory interpretation. Issues of statutory interpretation are reviewed de novo because it is for this court to decide what a statute means. City of Maumelle v. Jeffrey Sand Co., 353 Ark. 686, 120 S.W.3d 55 (2003). While we are not bound to the trial court's ruling, we will accept the trial court's interpretation of a statute unless it is shown that the trial court erred. R.N. v. J.M., 347 Ark. 203, 61 S.W.3d 149 (2001).

II. The Doctrine of Accretion — Arkansas

Accretion is the "gradual deposit and addition of soil along the bank of a waterbody caused by the gradual shift of the waterbody away from the accreting bank." 8-A Williams & Meyers, Oil and Gas Law § 51 (2003). It is well settled in our case law that when accretion land is formed by a gradual and imperceptible alteration in the land, the ownership of the land vests in the riparian owner "from whose shore or bank the water receded." Warren v. Chambers, 25 Ark. 120 (1867). Almost thirty years after Warren v. Chambers, supra, in the case of Wallace v. Driver, 61 Ark. 429, 33 S.W. 641 (1896), we explained that while the land contiguous to water may change ownership where the change is gradual and imperceptible, "the true test `as to what is gradual and imperceptible in the sense of the rule is that, though the witnesses may see from time to time that progress has been made, they could not perceive it while the process was going on.'" Wallace v. Driver, 61 Ark. at 429, 33 S.W. at 642. As a general rule, the water itself is a natural boundary and contiguous landowner's rights change as the natural boundary lines change. Wallace v. Driver, supra.

This court has dealt with cases that are similar to the instant appeal. For example, in Kansas City Fibre Box Co. v. Burkart Mfg. Co., 184 Ark. 704, 44 S.W.2d 325 (1931), the appeal involved a question regarding the ownership of property contiguous to the Arkansas River where timber was being cut. The timber had originally been located in the river bed. Over time, the river boundary changed paths, leaving the timber on accretion land. The court, after stating that the law concerning accretion is beyond dispute, held that the additional land formed by accretion belonged to the contiguous landowner. Kansas City Fibre Box Co., supra (citing Nix v. Pfeifer, 73 Ark. 199, 83 S.W. 951 (1904)). More on point, perhaps, is the case of Porter v. Arkansas Western Gas Co., 252 Ark. 958, 482 S.W.2d 598 (1972), where the gas company sought to have ownership determined for a gas well located on a piece of land near the Arkansas River. Although the appellants contended that the land was an island, the court concluded that the area was a non-navigable area and that title vested in the riparian owners. Id. While the facts in the Porter case and this case are not identical, this court has consistently held that additional land formed from the river's change in flow generally belongs to the riparian owners of the contiguous land. See Wyatt v. Wycough, 232 Ark. 760, 341 S.W.2d 18 (1960); Desha v. Erwin, 168 Ark. 555, 270 S.W. 965 (1925); Yutterman v. Grier, 112 Ark. 366, 166 S.W. 749 (1914).

The common law doctrine of accretion has also been codified by the Arkansas legislature with the enactment of Ark.Code Ann. § 22-5-404 (2004), which statute acknowledges that title vests in riparian landowners when lands emerge by accretion from lakes or river beds. Specifically, section 22-5-404 states as follows:

(a) The title to all lands which have formed or may form in the beds of nonnavigable lakes, or in abandoned river channels or beds, whether or not still navigable, which reformed lands or alluvia are above the ordinary high-water mark, shall vest in the riparian owners to the lands and shall be assessed and taxed as other lands.

(b) The lands referred to in subsection (a) of this section shall include those lands which have emerged or which may emerge by accretion, reliction, evaporation, drainage, or otherwise from the beds of lakes or from former navigable streams, whether by natural or artificial causes, or whether or not the lakes...