Whitney Nat. Bank of New Orleans v. Little Creek Oil Co.

• Decision Date: 15 December 1947
• Docket Number: 38629.
• Court: Louisiana Supreme Court
• Parties: WHITNEY NAT. BANK OF NEW ORLEANS v. LITTLE CREEK OIL CO., Inc., et al.

33 So.2d 693

212 La. 949

WHITNEY NAT. BANK OF NEW ORLEANS v. LITTLE CREEK OIL CO., Inc., et al.

No. 38629.

Supreme Court of Louisiana

December 15, 1947

Appeal from Civil District Court, Parish of Orleans Paul E. Chasez, judge.

Kenneth C. Barranger, of New Orleans, for defendant-appellant Little Creek Oil Co. Inc.

John W. O'Boyle, of Dallas, Tex., James D. Heldt, of New York City, and J. Blanc Monroe and Malcolm L. Monroe, both of New Orleans (Monroe & Lemann, of New Orleans, of counsel) for defendant-appellee Nebo Oil Co., Inc.

Milling Godchaux, Saal & Milling, of New Orleans, for plaintiff-appellee Whitney Nat. Bank of New Orleans.

HAWTHORNE Justice.

On February 1, 1947, Nebo Oil Company, Inc., as lessor, entered into an oil, gas, and sulphur lease with Little Creek Oil Company Inc., as lessee, in which the lessor leased unto lessee 320 acres of land situated in the Parish of Natchitoches, Louisiana, described as the NE 1/4 and the SW 1/4 of Section 19, Township 13 North, Range 6 West. This lease, which was executed in two counterparts, together with the consideration named therein, $2400.00, was deposited in the Whitney National Bank of New Orleans under an escrow agreement pending examination of title. A dispute having arisen between lessor and lessee as to the validity of the lessor's title to the minerals underlying the property leased, the Whitney National Bank, as depositary, deposited the lease and the consideration named therein in the registry of the court, and interpleaded both the lessor and the lessee, praying that each assert its respective rights. In due course the Whitney National Bank was discharged, and the controversy was then, and is now, between Nebo Oil Company, Inc., lessor, and Little Creek Oil Company, Inc., lessee.

Little Creek Oil Company, Inc., contended that the title of Nebo Oil Company, Inc., to the minerals leased had prescribed by ten years' non-use, and that Nebo did not own the minerals underlying the property described in the lease. It asked for the return of the consideration for the lease and for its cancellation.

Nebo Oil Company, Inc., on the other hand, contended that its title to the minerals had not been lost by the ten-year prescription, these minerals being imprescriptible under Act No. 315 of 1940, and, in the alternative, that, if that act was not applicable, there had been an interruption of the prescription of ten years for the reason that the minerals underlying these tracts had been pooled with other minerals from which production had been obtained and royalties distributed to the members of the pool. It asked that the consideration, together with one counterpart of the lease, be delivered to it.

The judgment of the district court recognized Nebo Oil Company, Inc., to have a valid title to the oil, gas, and sulphur under the property leased for the reason that its mineral rights had become imprescriptible under the provisions of Act No. 315 of 1940; decreed the lease to be good and valid, and ordered the Whitney National Bank, as depositary, to deliver the consideration and one original counterpart of the lease to Nebo and the other original counterpart to Little Creek.

From this judgment Little Creek has appealed to this court. Nebo has answered the appeal, praying that the judgment of the lower court be affirmed, and contending in the alternative that there has been an interruption of prescription because of the aforementioned pooling agreement.

On November 12, 1932, the Bodcaw Lumber Company of Louisiana, Inc., the owner at that time of the surface as well as the mineral rights thereunder, conveyed unto the Good Pine Oil Company, Inc., all of the oil, gas, and sulphur underlying a tract of land containing 37,532.13 acres, of which tract the 320 acres here involved were a part. Appellee, Nebo, acquired its title to these minerals by mesne conveyances from Good Pine Oil Company, Inc., in the month of January, 1942.

The Bodcaw Lumber Company of Louisiana, Inc., on February 11, 1936, a little over three years after the sale of the minerals to appellee's author in title, Good Pine Oil Company, Inc., conveyed a tract of land comprising more than 24,000 acres to the United States of America, of which tract the 320 acres under which the minerals had been previously conveyed, and now claimed by Nebo, formed a part. This sale to the United States government was made subject to the previous sale by the vendor therein to the Good Pine Oil Company, Inc., of all the oil, gas, and sulphur under the tracts of land here involved, said reservation being set out in the deed, a certified copy of which is filed in the record, as follows: '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, it successors and assigns.'

Subsequent to the sale by Bodcaw Lumber Company to the United States, but within 10 years after that company had parted with its title to the minerals under the property conveyed, the Legislature of this state adopted Act No. 315 of 1940, the relevant portion thereof reading as follows: 'Section 1. Be it enacted by the Legislature of Louisiana, That when land is acquired by conventional deed or contract, condemnation or expropriation proceedings by the United States of America, or any of its subdivisions or agencies, from any person, firm or corporation, and by the act of acquisition, verdict or judgment, oil, gas and/or other minerals or royalties are reserved, or the land so acquired is by the act of acquisition conveyed subject to a prior sale or reservation of oil, gas, and/or other minerals or royalties, still in force and effect, said rights so reserved or previously sold shall be imprescriptible.'

Both Nebo and Little Creek concede that since Bodcaw Lumber Company parted with these minerals on November 12, 1932, there have been no wells drilled on the 320-acre tracts or on land contiguous thereto, and that there has been no use or exercise of the mineral servitude or other acts sufficient to interrupt prescription with respect to the minerals leased, unless production and payment of royalties under a pooling or unitization agreement had the effect of interrupting prescription, as is contended by Nebo.

It is Little Creek's contention that Act No. 315 of 1940 can apply only to sales made after its enactment in 1940, and that it has no application to sales made prior to its passage even though the mineral rights had not prescribed when the statute became law. In the lower court Little Creek especially pleaded the unconstitutionality of Act No. 315 of 1940, contending that, for the act to be applicable to the prior sale in 1936 to the United States government of the land by Bodcaw Lumber Company, which was made subject to the prior mineral sale to Good Pine, it would be necessary to give the act a retroactive or retrospective effect, thereby (1) violating the Constitution of the United States in that it impairs the obligation of contracts and deprives the surface owners of property without due process of law, as set forth in Section 10, Article I, of said Constitution, and the Fourteenth Amendment thereto, and (2) violating the Fourteenth Amendment to the Constitution of the United States in that it deprives the United States of the equal protection of the law.

As pointed out in appellant's brief herein, this controversy arose because the United States is claiming title to these minerals, and this is shown by photostatic copies, filed in the record, of certain decisions of the Department of the Interior, Bureau of Land Management, rendered during 1947. These decisions show that the United States contends that Act No. 315 of 1940 does not have a retroactive effect, and is not applicable with respect to reservations created or mineral rights granted, sold, excepted, or otherwise conveyed prior to its enactment, and, further, that, if the statute is held to apply to transfers executed before its passage, it is unconstitutional for the reasons set out in the decisions.

Appellant, Little Creek, has adopted the contentions of the United States as its sole and only contentions, and these decisions are the only authority upon which it relies in support of its position.

The lower court in its reasons for judgment, after citing and discussing numerous authorities, was of the opinion that Act No. 315 of 1940 was applicable to the instant case, and that such application did not impair any vested right or obligation of contract, and that there was no foundation for the contention that Act No. 315 of 1940 denied to anyone the equal protection of the law. The judgment further provided...