TXO Production Corp. v. Oklahoma Corp. Com'n, 68862

• Decision Date: 24 March 1992
• Docket Number: No. 68862,68862
• Citation: 829 P.2d 964,1992 OK 39
• Parties: TXO PRODUCTION CORPORATION, Appellant, v. OKLAHOMA CORPORATION COMMISSION, Appellee.
• Court: Oklahoma Supreme Court

Page 964

829 P.2d 964

1992 OK 39

TXO PRODUCTION CORPORATION, Appellant, v. OKLAHOMA CORPORATION COMMISSION, Appellee.

No. 68862.

Supreme Court of Oklahoma.

March 24, 1992.

As Corrected April 13, 1992.

Rehearing Denied May 12, 1992.

CERTIORARI TO THE COURT OF APPEALS, DIV. 2.

The Oklahoma Corporation Commission refused to give the appellant-operator an exception from compliance with the so-called "Unclaimed Pooled Monies Act" ¹. The Court of Appeals reversed the order by an unpublished opinion holding the Act, as applied to this case, to be unconstitutional, but otherwise valid. Both parties seek review of this decision. Certiorari previously granted,

THE COURT OF APPEALS' OPINION IS VACATED; THE CORPORATION COMMISSION'S ORDER IS REINSTATED AND THE CAUSE REMANDED.

Clyde A. Muchmore, Barbara Snow Gilbert, Kelley C. Callahan, Harvey D. Ellis, Jr., Crowe & Dunlevy, Oklahoma City, for appellant.

Lindil C. Fowler, Jr., General Counsel, Gretchen P. Hoover, Deputy General Counsel, Leslie Wilson Pepper, Patricia A. Morris, Oklahoma City, for appellee.

OPALA, Chief Justice.

The issues presented on certiorari are: (1) Is the "Unclaimed Pooled Monies Act" [UPMA] ² constitutional under the federal common law fashioned in Texas v. New Jersey?; ³ (2) If, under the facts presented here, the UPMA is held unconstitutional, can it still be treated as partially enforceable in the narrow circumstances set forth in Texas ? and (3) If the UPMA be found constitutional, does Texas bar from the State's temporary custodial reach the funds in question which are to be held in the state treasury in trust for the rightful owner or until claimed by another state having a superior right to their custody or escheat? Because we answer the first question in the affirmative, it is unnecessary to address the second question; we answer the third question in the negative.

I THE ANATOMY OF LITIGATION

TXO Production Corporation [TXO] applied to the Corporation Commission [Commission] for an exception to the UPMA, ⁴ which would allow it to discontinue remittance of unclaimed funds for the 1986 reporting year. ⁵ TXO sought exclusion of six items totaling $5,241.00 from the UPMA's custodial taking procedures. ⁶ The persons entitled to these funds, who own forced pooled oil and gas interests, are unknown or could not be located. At the Commission hearing TXO asserted that under federal common law fashioned in Texas The Commission denied TXO's application solely because no court of competent jurisdiction had declared the UPMA unconstitutional and the Commission held itself to be without authority to grant an exception from compliance with the statutory requirements. The Commission concluded that, as mandated by the UPMA, TXO should remit the disputed funds.

⁷ only the state of an owner's last known address or, if there be no last known address, the holder's state of incorporation (in this case Delaware) may claim the funds by escheat. TXO argued that if it is forced to remit the funds in question, it could be subjected to multiple liability for the same obligation by other states legally entitled to them under the Texas standards.

The Court of Appeals reversed the Commission order, holding that under the Texas guidelines the UPMA, insofar as it is sought to be applied to the facts of this case, is unconstitutional. Nevertheless, the appellate court held that the UPMA would be enforceable in three situations: 1) when Oklahoma is an unknown pooled owner's last known address; 2) when an unknown pooled owner has no known address and the holder's state of incorporation is Oklahoma; and 3) when an unknown pooled owner's last known address is in a state with no escheat or custodial taking provisions, and Oklahoma is the holder's state of incorporation. In all other situations, the Court of Appeals held, the UPMA would not meet fundamental-law standards. Finally, the appellate court concluded that under the guidelines of Texas the contested funds in this case were excluded from Oklahoma's custodial reach. Both TXO and the Commission sought certiorari. While TXO agrees that the UPMA is unconstitutional insofar as it conflicts with the Texas standards, it objects to the appellate declaration of the UPMA's constitutionality in three fact situations, none of which was presented by the appeal. The Commission claims the opinion should have been published since it declares the UPMA to be unconstitutional. ⁸

II

THE FEDERAL AND STATE STATUTORY REGIME GOVERNING UNCLAIMED PROPERTY

A. FEDERAL COMMON LAW

In Texas the U.S. Supreme Court established priority among multiple states attempting to take custody of or to escheat unclaimed intangible property. ⁹ The Court limited the states' power by setting guidelines that determine which of the competing states has a right to reach the property for custodial taking or escheat. The Court held that unclaimed property is subject to custodial taking or escheat only in the state of the owner's last known address. ¹⁰ If there is no record of that address, or if the last known address is in a state with no custodial taking or escheat laws, the property is subject to custodial taking only by the state of the holder's "corporate domicile". ¹¹

The Supremacy Clause ¹² makes federal law the supreme law of the land and

                preempts conflicting state laws. 13  In Texas, the Court fashioned common-law norms--i.e., rules of non-statutory (judge-made) federal law of limited application to govern interstitially in an exclusively federal field. 14  This form of federal common law is in essence jurisprudence applied in the exercise of the U.S. Supreme Court's constitutional judicature when entertaining interstate disputes.  Because in Texas the Court was fashioning substantive legal standards for an interstate dispute it is constitutionally authorized to settle and for a controversy that lies within the range of Congress' constitutional power to regulate by law, 15 the Court's declared common-law norms are binding on the States.  "States can no more override ... [federal] judicial rules validly fashioned than they can override Acts of Congress." 16  Oklahoma courts are hence bound by the federal law's jurisprudential exposition pronounced in Texas. 17
                

B.

THE STATE STATUTORY SCHEME

We begin our analysis with the cardinal principle of our constitutional law that every statute is to be treated as valid until its nonconformity to fundamental law is clearly shown. ¹⁸ The reviewing court will uphold a statute unless it is clearly, palpably and plainly inconsistent with fundamental law. ¹⁹ The primary goal of statutory construction is to determine legislative The UPMA clearly expresses legislative intent to regulate the disposition of unclaimed proceeds derived from forced pooled oil and gas interests where the owners cannot be located. ²⁶ The Act must be construed to achieve this purpose. Section 556 ²⁷ of the UPMA provides that such proceeds held for more than seven years in the UPMA Mineral Owner's Fund shall be transferred to the Unclaimed Property Fund, after which time they shall be subject to the Uniform Disposition of Unclaimed Property Act [Uniform Act]. ²⁸ In In 1984 the legislature amended the Uniform Act by adding §§ 658.2 through 658.8 [1984 Act]. ³¹ These statutes specifically deal with the custodial taking of monies owed to unknown mineral interest owners. In American Petrofina ³² the court also construed the 1984 Act, holding that it does not on its face strictly follow the Texas guidelines. Because of this conflict the court concluded that the 1984 Act is preempted by Texas 's pronouncement of federal common law. We are not persuaded by this view. In American Petrofina the court did not construe the 1984 Act in conjunction with both the UPMA and the Uniform Act.

                intent. 20  That intent is to be ascertained from the statute in light of its general purpose and object. 21  It is presumed that the legislature has expressed its intent in a statute and that it intended what it so expressed. 22  The statute should then be interpreted to attain that purpose and end. 23  The legislature will not be presumed to have intended an absurd result.  Statutory construction that would lead to an absurdity will be avoided if this can be done without violating legislative intent. 24  A reasonable and rational construction is preferred. 25  In order to interpret the UPMA in a manner consistent with legislative intent, we must adopt the construction that would uphold its constitutionality
                American Petrofina Co. of Texas v. Nance 29 a U.S. district court held that the Uniform Act 30 "observes" the Texas guidelines for determining which state could escheat or take custody of unclaimed intangible property.  We agree
                

Unless legislative intent would be violated, these three acts must be construed together to effectuate the purpose of providing for the custodial taking of unclaimed intangible property in a constitutional manner. ³³ When amending a statute the legislature is presumed familiar with the extant judicial construction then in force. ³⁴ Similarly, it can be presumed that when enacting a statute the legislature is familiar with the U.S. Supreme Court jurisprudence affecting that enactment.

The legislature's failure to include the Texas guidelines in the UPMA is not fatal to its validity. Texas was decided in 1965. Its effect on the custodial taking of intangible property was well established by 1983, when the UPMA was passed, and in 1984, when the Uniform Act was amended to include custodial taking of monies owed to unknown mineral interest owners. The legislature presumably considered Texas' impact on the statutory scheme when drafting these acts and intended to conform them to the Texas guidelines--that is, it intended to allow Oklahoma to seize unclaimed monies belonging to (a) owners of forced pooled oil and gas interests with a Where there are two possible interpretations of a statute, only one of which would render the statute ...