United Gas Public Service Co. v. Eaton

• Decision Date: 29 March 1934
• Docket Number: 4782
• Citation: 153 So. 702
• Court: Court of Appeal of Louisiana — District of US
• Parties: UNITED GAS PUBLIC SERVICE CO. v. EATON et al

153 So. 702

UNITED GAS PUBLIC SERVICE CO. v. EATON et al

No. 4782

Court of Appeal of Louisiana, Second Circuit.

March 29, 1934

Rehearing denied May 4, 1934.

Melvin F. Johnson, C. B. Prothro, Bryan E. Bush, John B. Files, and Nash Johnson, all of Shreveport, for appellants.

Wilkinson Lewis & Wilkinson, of Shreveport, for appellee.

TALIAFERRO Judge.MILLS, Judge (dissenting).

It is conceded that we have no law in this state on the question submitted. Article 21 of our Civil Code provides:"In all civil matters, where there is no express law, the judge is bound to proceed and decide according to equity. To decide equitably, an appeal is to be made to natural law and reason or received usages, where positive law is silent."In this case the lease is a joint or entire lease and not severable. Nabors v. Producers' Oil Co., 140 La 985, 74 So. 527, L. R.A.1917D, 1115.The description of the land leased is: "South Half of Southwest Quarter of Section 27, Township 23 North, Range 16 West," containing 80 acres more or less. There is a recited consideration of $ 1 per acre and other good and valuable considerations. The term is three years and as long thereafter as oil or gas, or either of them, is produced from said land by the lessees.The $ 1 per acre is not the main consideration. The real consideration is the obligation to explore for oil or gas. Why should this lease, which contains no suggestion of separation of interest in the description of the land or terms, be held a joint lease as to everything except its very essence development? The view adopted in the majority opinion does not make of it a gambling proposition, as suggested, but on the other hand invests the lessees with the sole power to determine whose land they will develop and which one of the joint lessors will receive the whole consideration for the lease to the exclusion of the joint lessors. It also enables the lessees to hold the land of the joint lessors, throughout the period of its mineral value, without development or the payment of any consideration whatever. There is no showing that the lessors are the owners of adjoining land which would increase in value or that the development would enrich them in any way, if denied the right to participate in the minerals produced on the leased premises.Such a situation is not tolerated by the civil law and certainly is not equitable. I cannot conclude from the terms of the lease that any such condition was contemplated. On the other hand, it seems reasonable to me that the intention was that all the joint lessors should share proportionately in the consideration realized from the joint venture. To me, the best indication that the lease was intended to be joint is that the lessors entered into a joint and not a separate lease.For the above reasons, I respectfully dissent and am of the opinion that the judgment of the lower court should be affirmed.

OPINION

The primary question involved in this case, and submitted for decision on an agreed statement of facts, is: To whom shall rentals and royalties from a producing gas well on the S. E. 1/4 of S.W. 1/4, section 27, township 23 north, range 16 west, in Caddo parish, be paid?

On December 27, 1928, J. J. Emmons, J. D. Eaton, and B. E. Young executed to D. L. Perkins a regular commercial mineral lease (Bath Form No. 10) on the S. 1/2 of S.W. 1/4, section 27, township 23 north, range 16 west. The lease was for a term of three years, and as long thereafter as oil or gas was produced therefrom. Among the obligations assumed by the lessee are these:

To pay to lessors $ 200 each year for each well producing gas only, until such time as the gas shall be utilized or sold off the leased premises, at which time payment of this royalty shall cease, and thereafter the lessors shall receive one-eighth of the value of such gas, based on the market price.

At the date of this lease, the ownership of said 80-acre tract, disclosed by the public records, was as follows:

1. B. E. Young owned one-half of all the minerals;

2. J. J. Emmons owned the S.W. 1/4 of S.W. 1/4 thereof and one-half of the mineral rights thereto;

3. J. D. Eaton owned the S. E. 1/4 of S.W. 1/4 thereof and one-half of the mineral rights thereto.

The rights of D. L. Perkins under said mineral lease are now owned by the United Gas Public Service Company, plaintiff herein, and the producing gas well on the east 40 of said tract was brought in by it during the primary term of the lease.

In the statement of facts submitted as evidence in the case, it is admitted that Eaton transferred to Winfred Herrsher one-fourth of the minerals under the S. E. 1/4 of S.W. 1/4, and Herrsher transferred one-eighth of the minerals under that 40 to J. S. Slack and Conway Stroud, and transferred the other one-eighth owned by him to J. K. Wadley and Mrs. Alma B. Brown; and thereafter Eaton transferred one-eighth of the minerals under said 40 to C. B. Prothro and Prothro transferred one-sixteenth of such minerals to J. B. Mobley, and thereafter to Bryan E. Bush, 1/32 of said minerals.

Emmons transferred to J. W. Mobley one-fourth of the minerals under the S.W. 1/4 of S.W. 1/4 of said section, and thereafter Mobley transferred to C. B. Prothro and Bryan E. Bush one-eighth of said minerals under said 40.

On the face of these transfers, when this suit was tried, the ownership of the royalty accruing to Eaton and Emmons respectively under the lease to Perkins, it is conceded by all concerned, except Slack and Stroud, was vested as follows:

S. W. 1/4 of S.W. 1/4:

J. J.Emmons,

4/16

J. W. Mobley,

2/16

C. B. Prothro,

1/16

Bryan E. Bush,

1/16

S. E. 1/4 of S.W. 1/4:

J. D. Eaton,

4/32

J. K. Wadley,

2/32

J. W. Mobley,

2/32

C. B. Prothro,

1/32

Bryan E. Bush,

1/32

Alma B. Brown,

2/32

J. S. Slack,

2/32

Conway Stroud,

2/32

Before institution of the present suit, an adverse claim arose as to an undivided half interest in said tract of land, and a petitory action was instituted by the claimant, George Frank Margetich, against J. J. Emmons et al., in the district court of Caddo parish, which was finally decided by the Supreme Court in favor of the defendants, and the alleged interest of Margetich and assignees passed out of the controversy. 178 La. 159, 151 So. 65. Margetich and his assignees gave a mineral lease on said land, so far as their interest therein was concerned, to R. W. Norton, and plaintiff acquired the rights of Norton thereunder.

While the Margetich Case was pending, plaintiff herein, availing itself of the provisions of Act No. 123 of 1922, brought this interpleader suit, making each and every person who according to the records, had a real or apparent interest in the mineral or surface rights to said land, parties thereto.

It is alleged that during the primary term of said lease, plaintiff drilled and brought in a well producing natural gas in paying quantities, 1,337 feet east and 660 feet north of the southwest corner of section 27, which locates said well 17 feet east of the west boundary line of the S. E. 1/4 of S.W. 1/4 of that section; that because of the controversy over the title to one-half interest in said land, involved in the Margetich suit, it could not determine the proper parties to whom to pay rentals and royalties due under the terms of the leases held by it on the land; that no dispute existed as to the other one-half of said rentals and royalties (that accruing to B. E. Young and his assignees); and that same had been paid to the owners thereof.

In keeping with prayer to that effect, the court authorized plaintiff to deposit in the registry of the court the rental fund then in its hands, ownership of which was in controversy, and in like manner to make further deposits of the rentals and/or royalties due under said mineral leases as the same from time to time accrued. The various persons named in the petition as claiming an interest in said rental and royalty fund were ordered cited to appear and make such claim thereto as they desired. This suit was filed October 3, 1931. J. K. Wadley, Alma B. Brown, J. S. Slack, and Conway Stroud promptly answered and denied that Margetich, or any one holding under deed or transfer from him, had any legal interest in said lands or the mineral rights therein. Other defenses were urged against Margetich's title. Margetich and those parties holding under him also answered. No further action was taken in the case until November 22, 1933, after the Margetich Case had been decided by the Supreme Court. On that date plaintiff filed a supplemental petition reiterating and affirming all the allegations of its original petition, and, in addition, averred that while the Margetich suit had been finally adjudicated and there was no longer any dispute as to the ownership of the one-half interest in the minerals therein involved, another dispute had arisen as to the ownership of one-half of the rentals and/or royalties due under the terms of the oil and gas lease executed by Emmons, Eaton, and Young, unto Perkins, and that said dispute arose from the adverse contentions of Eaton and his transferees and Emmons and his transferees; the petition on the subject saying:

"That the parties owning an undivided one-half interest in the minerals in under the S. E. 1/4 of S.W. 1/4 of Section 27 Township 23 North, Range 16 West, as hereinabove set forth, namely; J. D. Eaton, J. S. Slack, Conway Stroud, C. B. Prothro, Bryan E. Bush, J. W. Mobley, J. K. Wadley and Alma B. Brown, with the exception of C. B. Prothro, Bryan E. Bush and J. W. Mobley, are contending that they are entitled to receive one-half of the rental due for a closed-in gas well in the sum of $ 100.00, which amount has heretofore been deposited in the Registry of this court; that they are also...