WEST DAUPHIN LTD. PARTNERSHIP v. Callon Offshore Prod., Inc.

• Decision Date: 04 September 1998
• Citation: 725 So.2d 944
• Parties: WEST DAUPHIN LIMITED PARTNERSHIP et al. v. CALLON OFFSHORE PRODUCTION, INC., et al.
• Court: Alabama Supreme Court

725 So.2d 944

WEST DAUPHIN LIMITED PARTNERSHIP et al. v. CALLON OFFSHORE PRODUCTION, INC., et al.

1952118.

Supreme Court of Alabama.

September 4, 1998.

Rehearing Denied December 4, 1998.

John W. Donald, Jr., and David A. Boyett III of Hamilton, Butler, Riddick, Tarlton & Sullivan, P.C., Mobile, for appellants.

Conrad P. Armbrecht, David E. Hudgens, and Duane A. Graham of Armbrecht, Jackson, DeMouy, Crowe, Holmes & Reeves, L.L.C., Mobile, for appellees Callon Offshore Production, Inc., Callon Petroleum Company, and Callon Petroleum Operating Company.

Norton Brooker, Jr., of Lyons, Pipes & Cook, P.C., Mobile, for appellee Atlantic Richfield Company.

William A. Gunter, asst. atty. gen., for appellee James D. Martin, as commissioner of the Department of Conservation and Natural Resources.

COOK, Justice.

This appeal arises out of an interpleader action commenced in the Montgomery County Circuit Court to determine the right to royalties from the production of natural gas in offshore waters adjacent to Dauphin Island. The trial court entered a summary judgment, which we affirm.

This action began in February 1994, when Callon Offshore Production, Inc.; CN Resources; and Callon Consolidated Partners, Ltd. (collectively "Callon"), filed a "Complaint for Declaratory Judgment and in Interpleader." The complaint named a large number of defendants, including West Dauphin Limited Partnership (hereinafter "West Dauphin" as collectively including not only that entity but all its predecessors in title) and Atlantic Richfield Company. The list of defendants also included the State of Alabama, the Alabama Department of Conservation and Natural Resources, and "Charley" Grimsley, as Commissioner of Conservation and Natural Resources (collectively "the State").

Atlantic Richfield and Mobil Oil Exploration & Producing Southeast, Inc. ("Mobil") drilled producing gas wells on certain offshore tracts adjacent to Dauphin Island. The drilling operations were accomplished pursuant to oil and gas leases the State had granted Atlantic Richfield and Mobil. Subsequently, these leases were assigned to Callon, which now operates the wells on the offshore tracts.

The complaint alleged that a dispute had arisen over the proceeds of Callon's operations on the submerged lands. The dispute consisted of conflicting claims by the State and West Dauphin to ownership of submerged land lying generally along a line intersecting "portion[s] of Offshore Tracts 72, 73, and 91, and the Northeast Quadrant of Offshore Tract 90 (all as designated on [a] plat entitled `State of Alabama Chart of Submerged State Lands Oil and Gas Lease Tracts')." The disputed land, which West Dauphin and Callon have labeled the "Harbor Line Property" and the "Improvement Line Property," respectively, includes the area into which the gas-producing wells were drilled. Consequently, both the State and West Dauphin claimed the right to receive "the royalties attributable to gas production from that property." Brief of Appellants, at 1. Callon suspended disbursements of the disputed funds, depositing them, instead, with the court, which opened an interest-bearing account to receive accrued and accruing royalties.

Callon's complaint sought a judgment identifying the proper payee. The State and West Dauphin cross-claimed, each asserting ownership of the Improvement Line Property and entitlement to the royalties. Subsequently, Callon moved the court to enter a summary judgment in favor of the State. That motion was granted on August 9, 1996, and West Dauphin appealed.

West Dauphin contends that it acquired title to the Improvement Line Property pursuant to Ala.Code 1975, § 33-7-53, or, at least, pursuant to § 33-7-53 in conjunction with what it alleges was a quid pro quo dedication in 1954 to public use of West Dauphin real estate and its payment since 1954 of ad valorem taxes on the Improvement Line Property. We shall address each of these claims in the following three parts of this opinion.

I. Section 33-7-53

Section 33-7-53 provides:

"[¶ (1)] In order to encourage the building of bridges, causeways and other development work and relief work, the owner of any lands in the state of Alabama abutting on tidelands, the title to which or control of which may now or hereafter be vested in the State of Alabama, which shall not have been improved by or under valid public authority and shall not be otherwise devoted to public use, shall be authorized to acquire such tidelands and to fill, reclaim or otherwise improve same and to fill in, reclaim or otherwise improve the abutting submerged land and to own, use, mortgage and convey the lands so reclaimed, filled or improved, and any improvements thereon, under and subject to the conditions and approval herein stated.

"[¶ (2)] Any such improvement shall conform to any harbor line established at the time of such improvement by state or federal authority having jurisdiction over such matters, or if not then already established, same shall conform to any harbor line stipulated by any such authority having jurisdiction on application by such riparian owner.

"[¶ (3)] If such land shall be used for a bridge, road or causeway over navigable waters, or for bridgehead or approach thereto or for terminal facilities, depots, storage or sale yards, stores, warehouses or wharves abutting on such bridge or road or causeway, the plans for such bridge, road or causeway shall be approved by the United States engineer officers or other federal authority having jurisdiction, and by the Director of the State Docks Department and the Governor of Alabama, and when so approved and when improved pursuant to such approval the title to the said lands and the entire improvements thereon shall vest in such riparian owner without further approval when the bridge, road or causeway shall be constructed pursuant to the plans so approved.

"[¶ (4)] If such improvement constructed or proposed shall not consist of a bridge, bridgehead, road or causeway, approach or related improvement included within this section, title shall not pass to the riparian owner making or proposing such improvement unless and until the riparian owner shall have obtained the approval of the county commission of the county in which the land is situated, and of the Director of the State Docks Department and the Governor of Alabama, on application of such owner made after publication of 10 days' notice thereof by a single publication in a newspaper published in the county in which the land is situated and shall have filed for record in the county a certificate of such approval executed and acknowledged by the presiding officer of said respective authorities."

(Emphasis added.)

At the outset of its discussion of the facts and issues, West Dauphin states: "Most of the events which give rise to this dispute occurred between 1932 and 1955." Brief of Appellants, at 5. It then directs our attention to the history of 33-7-53, stating:

"This dispute arises from § 33-7-53, Code of Alabama (1975). This statute was introduced in the 1932 session of the Alabama Legislature as Senate Bill No. 125, also known as the `Craft Bill' after the Mobile County senator who sponsored it. The overall purpose of the bill was to promote the economic development of Dauphin Island by enabling private riparian landowners to obtain title to submerged lands adjacent to their property. More specifically, the bill was intended to enable a private corporation to acquire the lands necessary to construct a bridge from the Mobile County mainland to the island [`the Dauphin Island Bridge']."

Brief of Appellants, at 5 (emphasis added). Because West Dauphin has thus introduced the section's connection with the Dauphin Island Bridge, and acknowledged the significance to this case of the statute's history and purpose, we shall enlarge somewhat upon those themes.

The history of the Dauphin Island Bridge and, by extension, the history of § 33-7-53, begins in the 19th century. As early as the 1880s, projects to connect Dauphin Island to the mainland by a bridge or causeway were being discussed and attempted. "Dauphin Island Bridge," The Mobile Press, October 13, 1938, at 8. By 1932, however, no such project had been accomplished. The absence of a method of funding was one of the primary obstacles proponents encountered. Newspapers from that period suggest that at least one of the objectives the proponents sought was a way to finance the project without resorting to state or county tax revenues.

In 1932, Senator John Craft, of Mobile County, introduced Senate Bill 125, which, in its final form, became Act No. 147, 1932 Ala. Acts 167, codified at Ala.Code 1975, § 33-7-53. The purpose of the bill was "to enable a private corporation to construct a bridge from the mainland of Mobile County to Dauphin Island." Letter from Gessner T. McCorvey to John H. Peach, legal advisor to the Governor, October 20, 1932. C.R. 1009-10. McCorvey further stated:

"Of course, it will be necessary to so provide that such corporation can obtain a title to the bridge approaches which can be covered by a trust deed or mortgage securing a bond issue on the bridge. I understand that the corporation proposes to obtain a loan from the Reconstruction Finance Corporation at 3%, which loan is to be liquidated from tolls collected from the Bridge, and that the County is in no manner to be obligated for the indebtedness.

"In my opinion the bill is a good one, and I think it will bring about the development of the Southern end of Mobile County, and that the enactment of this bill will result in a bridge being built at Dauphin Island.

"....

"... There has been a lot of controversy in this County about Dauphin Island, but all of this controversy arose out of the fact that many people felt that the County, as a County, should not become financially obligated to construct a bridge of this character in the present state of our County's treasury. However, the proposed bill

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