United States v. Nebo Oil Co.

• Decision Date: 22 April 1950
• Docket Number: Civ. A. No. 2379.
• Citation: 90 F. Supp. 73
• Parties: UNITED STATES v. NEBO OIL CO., Inc.
• Court: U.S. District Court — Western District of Louisiana

90 F. Supp. 73

UNITED STATES v. NEBO OIL CO., Inc.

Civ. A. No. 2379.

United States District Court W. D. Louisiana, Shreveport Division.

April 22, 1950.

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Malcolm E. Lafargue, U. S. Atty., William J. Fleniken, Asst. U. S. Atty., both of Shreveport, La., and Sol. B. Pressburg, Sp. Atty., of Alexandria, La., for plaintiff.

Monroe & Lemann, New Orleans, Louisiana; and James D. Heldt, Dallas, Tex., for defendant.

PORTERIE, District Judge.

This litigation arises out of a conveyance of all of the oil, gas and sulphur in, on and under the tracts in dispute from Bodcaw Lumber Company of Louisiana, Inc., to Good Pine Oil Company, Inc. (the defendant's predecessor in title), under a deed dated November 12, 1932.

The instrument granting the mineral rights contained the following provision: "* * * it being expressly stipulated that none of said rights in any of said lands shall be prescribed unless there shall elapse a Full Period of Ten (10) Years in which there shall be no exercise of any of the foregoing rights or user of any of the lands aforesaid under and by virtue hereof."

The history of that conveyance is of some importance. In 1932 five lumber companies owning lands in north central Louisiana decided to pool the mineral rights which they owned in order to secure the exploration and development of their lands. To that end, they conveyed all of the oil, gas and sulphur in, on and under the lands which they owned to Good Pine Oil Company, Inc., a corporation organized for that purpose, receiving stock in direct proportion to the minerals which they contributed. Included in these conveyances was a deed dated November 12, 1932, conveying the minerals under 37,352 acres of land in Natchitoches Parish (including the tracts involved in this suit) from Bodcaw Lumber Company of Louisiana, Inc., to Good Pine Oil Company, Inc. That deed contained the following paragraph: "It is intended hereby to confer upon Vendee absolutely and without limit for time of their enjoyment any and every right, title and interest which this Vendor has to the oil, gas and sulphur within said lands, including the exclusive right to extract and produce same. And the rights herein conferred may be assigned, transferred or leased, in whole or in part, by Vendee or under its authority and shall inure to the benefit of Vendee, its successors and assigns, and lessees hereunder, it being expressly stipulated that none of said rights in any of said lands shall be prescribed unless there shall elapse a full period of ten (10) years in which there shall be no exercise of any of the foregoing rights or user of any of the lands aforesaid under and by virtue hereof."

Within ten years after this conveyance from Bodcaw to Good Pine Oil Company was executed and within ten years of the date on which this suit was instituted, five wells, all dry holes, were drilled on the lands described in that conveyance. None of those wells, however, were drilled on the tracts involved in this suit or on tracts which were contiguous thereto.

In 1940, however, production was developed on other tracts conveyed to Good Pine Oil Company under the 1932 pooling agreement and many of the wells developed at that time are still producing. Most of the production which has been developed on the pooled acreage has been on acreage contributed by Good Pine Lumber Company of Louisiana, Inc., Trout Creek Lumber Company of Louisiana, Inc., and Tall Timber Lumber Company of Louisiana, Inc., although a small amount of production has been developed on acreage contributed by Bodcaw; no production has ever been developed on the acreage contributed to the pool by Grant Timber & Manufacturing Company of Louisiana, Inc., the fifth member of the pooling agreement. The income arising from such production has been distributed periodically to the participants in the pool in the form of dividends on the Good Pine stock, which in turn was owned in direct proportion to the acreage which each lumber company contributed to the pool.

Beginning in 1934, Bodcaw Lumber Company of Louisiana, Inc., and Grant Timber & Manufacturing Company of Louisiana, Inc., sold approximately 184,000 acres of land to the United States for inclusion in the Kisatchie National Forest. The mineral rights under approximately 180,000 acres of that land had previously been conveyed to Good Pine Oil Company under the pooling agreement. In each case where the mineral rights had previously been sold to Good Pine Oil Company, the deed to the United States specifically stated that the sale to the United States was made subject to the prior sale to Good Pine Oil Company. The deed from Bodcaw Lumber Company to the United States covering the lands here involved was dated February 11, 1936, and specifically provided:

"This sale and transfer is made subject to the sale of all the oil, gas and sulphur, in, on, and under all of the lands conveyed herein as shown by act of sale dated November 12, 1932 * * * wherein Bodcaw Lumber Company of Louisiana, Incorporated, was the vendor, and Good Pine Oil Company, Incorporated, was the vendee. The mention of these mineral sales and of the rights granted therein is made solely for the purpose of limiting vendor's warranty to the United States of America in the present sale, and the recital of the said mineral sales shall in no wise extend or enlarge the same in point of time, or limit, control, or otherwise restrict the manner of exercising its rights by the Good Pine Oil Company, Incorporated, its successors and assigns."

"There are also specially reserved by and unto the Bodcaw Lumber Company of Louisiana, Incorporated, the vendor herein, all the oil, gas and other minerals in, on and under all of the lands conveyed herein and which is subject to the two sales to the Good Pine Oil Company, Incorporated, mentioned above, for a period of ten years after the expiration of the rights of the said Good Pine Oil Company, Incorporated, under the laws of the State of Louisiana.

"At the termination of the ten (10) year period, if not extended, or at the termination of any extended period * * * the right to drill for and remove oil and gas and to mine and remove minerals shall terminate, and a complete fee in the land became vested in the United States."

Prior to the time that Bodcaw sold the lands here in question to the United States, the Louisiana courts had held that a mineral conveyance created only an incorporeal interest in the nature of a servitude and had held that such mineral rights were subject to prescription by ten years nonuser. These decisions had seriously hampered the attempts of the United States to acquire lands in Louisiana for national forest purposes, and in 1935 the Solicitor of the Department of Agriculture rendered two opinions specifically considering the problem thus presented. After examining the applicable state and federal statutes he ruled that the prescriptive provisions of the Louisiana Civil Code were not applicable to lands acquired by the United States for national forest purposes. At the time Bodcaw sold its lands to the United States, it was advised by representatives of the United States that the mineral rights owned by Good Pine Oil Company would not be subject to prescription under the Louisiana Civil Code and a copy of the opinion of the Solicitor of the Department of Agriculture was delivered to Bodcaw's officers. The value fixed for the lands sold to the United States did not include the minerals, which the officers of Bodcaw considered to be very valuable, and the sale to the United States probably would not have been made had the officers of Bodcaw been of the opinion that Good Pine's mineral rights under the lands sold to the United States would prescribe or had the representatives of the United States taken the position that they were subject to the Louisiana laws of prescription. Both Bodcaw and Grant were very interested in the preservation of Good Pine's mineral rights since they owned 64.9% of Good Pine's stock.

In 1940, less than ten years after the mineral rights under tracts in question were conveyed to Good Pine Oil Company and within ten years of the date on which the lands in question were sold to the United States, the Louisiana legislature enacted a statute, La.Act No. 315 of 1940, declaring that when the United States acquired land subject to the prior sale of the oil, gas or other mineral rights, the mineral rights so previously sold were imprescriptible.

The defendant in this case, Nebo Oil Company, Inc., has acquired, by mesne conveyances, the oil, gas and sulphur conveyed by Bodcaw to Good Pine Oil Company, Inc., on November 12, 1932, and the basic question presented in this case is whether those mineral rights have prescribed.

This present action was instituted by the United States to obtain a declaratory judgment as to the ownership of the mineral rights involved.

This case is practically the exact duplicate of the case of Whitney National Bank of New Orleans v. Little Creek Oil Company, Inc., 212 La. 949, 33 So.2d 693, except that now, in the instant case, the United States is a party and the constitutionality vel non of La.Act No. 315 of 1940 may legally be put at issue.

We have to announce that most of this opinion is quoted verbatim from the brief of defendant. After a full consideration of the case, after a full reading of the briefs and the cases cited by both sides, we find the defendant to be correct. It would be a tremendous work to restate in our language the same conclusions that are so well stated already.

On the facts, we have checked the references to the record each time to our satisfaction.

Act No. 315 of the Louisiana Legislature of 1940 Applies to the Facts of This Case.

The rights acquired by a vendee under a mineral deed in Louisiana are in the nature of a personal servitude and, under normal circumstances, are subject to...