Leiter Minerals, Inc. v. California Co.

HAMLIN, Justice

(dissenting).

I am compelled to dissent from the majority opinion.

The Leiter Minerals, Inc., applicant for writs herein, submits that the judgment of the Court of Appeal, Fourth Circuit, should be reversed and the judgment of the district court reinstated.

Since I agree with the contention of the .applicant, and believing that the unpublished 'opinion of the district court is eminently ■sound in law and correctly sets at rest the issues involved herein, I adopt it as my dissent.:

“This is a declaratory judgment action brought by the Plaintiff, The Leiter Minerals, Inc., a Louisiana corporation, against the defendants, The California Company, Allen L. Lobrano and Mrs. Ethel M. Fontenelle Lobrano, individually and as natural tutrix of her minor children, Robert Leo Lobrano and Karen Katherine Lobrano, pursuant to the decision of the U. S. Supreme Court which was rendered on January 14, 1957. The Leiter Minerals, Inc. v. United States, 352 U.S. 220 , 1 L.ed.2d 267, 77 S.Ct. 287 .

“For the purposes of this decision, the following summary of the litigation is sufficient :

“The Leiter Minerals, Inc., as successor in title to Thomas Leiter, claims to be the owner of the minerals under a large tract of land in Plaquemines Parish, Louisiana. The claim of Plaintiff is based on a reservation made by Thomas Leiter in a sale of the land to the United States of America on December 21, 1938, recorded in Plaque-mines Parish Conveyance Book 112, Folio 479. The pertinent portion of the mineral reservation insofar as the present litigation is concerned reads as follows :

“ ‘The Vendor reserves from this sale the right to mine and remove, or to grant to others the right to mine and remove, all oil, gas and other valuable minerals which may be deposited in or under said lands, and to remove any oil, gas or other valuable min *947 erais from the premises; the right to enter upon said lands at any time for the purpose of mining and removing said oil, gas and minerals, said right, subject to the conditions hereinafter set forth, to expire April 1, 1945, it being understood, however, that the vendors will pay to the United States of America, 5% of the gross proceeds received by them as royalties or otherwise from all oil or minerals so removed from in or under the aforedescribed lands, until such time as the vendors shall have paid to the United States of America, the sum of $25,000 being the purchase price paid by said United States of America for the aforedescribed properties.

“ ‘Provided, that if at the termination of the ten (10) year period of reservation, it is found that such minerals, oil and gas are being operated and have been operated for an average of at least 50 days per year during the preceding three (3) year period to commercial advantage, then and in that event, the said right to mine shall be extended for a further period of five (5) years, but that the right so extended shall be limited to an area of twenty-five acres of land around each well or mine producing, and each well or mine being drilled or developed at time of first extension, to-wit: April 1, 1945.

“ ‘Provided, that this said right to mine as previously stated shall be further extended from time to time for periods of five (5) years whenever operation during the preceding five (5) year period has been for an average of 50 days per year during this period, and

“ ‘Provided that at the termination of the ten (10) year period of reservation, if not extended, or at the termination of any extended period in case the operation has not been carried on for the number of days stated, the right to mine shall terminate, and complete fee in the land become vested in the United States.

“ ‘The reservation of the oil and mineral rights herein made for the original period of ten (10) years and for any extended period or periods in accordance with the above provisions shall not be affected by any subsequent conveyance of all or any of the aforementioned properties by the United States of America, but said mineral rights shall, subject to the conditions above set forth, remain vested in the vendors.’

“In 1940 the Legislature of Louisiana passed Act 315 dealing with reservations of mineral rights that were involved in sales to the government or in condemnation proceedings by the government. The relevant sections of the Act read 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 per *949 son, 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.’

“Plaintiff, in 1953, filed a petitory action in this Court against the California Company and others, asserting the Plaintiff’s title to the minerals under the above reservation.

“The subsequent history of the case shows that after the petitory action had been pending in this Court for several months and after this Court had rendered a decision overruling all of Defendants’ exceptions in the petitory action, the United States government filed a suit in the Federal Court in New Orleans and obtained a preliminary injunction against the Plaintiff proceeding in the petitory action. The injunction suit in the Federal Court finally went to the U. S. Supreme Court, which, on January 14, 1957, rendered its said decision, and modified the injunction which had previously been granted by the lower Federal courts and permitted the parties to file a declaratory judgment suit in the Louisiana State court so as to obtain an interpretation of the 1940 statute by the Louisiana Supreme Court. The following language of the U. S. Supreme Court’s decision is quoted as follows :

“ ‘The Government contends that Act No. 315 of 1940 does not apply when the parties themselves have contracted for a reservation of specific duration and that if the statute is construed to apply to this situa tion 1 it would impair the obligation of the Government’s contract. Petitioner contests these contentions. The Supreme Court of Louisiana has never considered the specific issue or even discussed generally the rationale of the statute, especially with reference to problems of constitutionality. The District Court recognized the importance of the statute in deciding this case; it also recognized that a problem of interpretation was involved, that the statute cannot be read by him who runs. What are the situations to which the statute is applicable? Is the statute merely declaratory of prior Louisiana laws? What are the problems that it was designed to meet? The answers to these questions are, or may be, relevant. Before attempting to answer them and to- decide their relation to the issues in the case, we think it advisable to have an interpretation, if possible, of the state statute by the only court that can in *951 terpret the statute with finality, the Louisiana Supreme Court. The Louisiana declaratory judgment procedure appears available to secure such an interpretation, La Rev Stat, 1950 Sect 13-4231 et seq., and the United States of course may appear to urge its interpretation of the statute. See Stanley v. Schwalby, 147 U.S. 508, 512, 513 , 37 L.ed. 259, 261, 262, 13 S.Ct. 418 . It need hardly be added that the state courts in such a proceeding can decide definitely only questions of state law that are not subject to overriding federal law. [Emphasis mine.]

“ ‘We therefore modify the judgment of the Court of Appeals to permit an interpretation of the state statute to be sought with every expedition in the state court in conformity with this opinion.’

“This suit was filed by the Plaintiff in compliance with the U. S. Supreme Court decision and was tried before this Court on March 11, 1959. The matter has now been submitted to the Court upon written briefs filed by the parties.

“A decision in this matter by this Court has been made much easier by reason of the fact that both the Supreme Court of Louisiana and the U. S. Court of Appeals for the 5th Circuit have previously rendered decisions construing Act 315 of 1940 in a number of respects helpful to a proper decision in the present case. The decisions referred to are the case of Whitney National Bank of New Orleans vs. Little Creek Oil Co., 212 La. 949 , 33 So.2d 693 and U. S. vs. Nebo Oil Co., 190 F.2d 1003 . In the latter-decision, the U. S. 5th Circuit Court of Appeals affirmed the comprehensive opinion of District Judge Gaston L. Porterie in the-lower court. See U. S. vs. Nebo Oil Co. [D.C.], 90 F.Supp. 73 .

“The fact that the deed from Thomas; Leiter to the U. S. was executed prior to-the passage of Act 315 of 1940 does not make the 1940 Act inapplicable to the previously executed sale and mineral reservation.

“In the Whitney National Bank [of New Orleans] vs. Little Creek Oil Co. case and' in the U. S. vs. Nebo Oil Company decision,, both the State and the Federal Courts,, squarely held that the 1940 Act was retrospective in its operation. It should be noted’ that in both of the above cases, the sales and' reservations were made a much longer period prior to the 1940 Act than Leiter’s; sale and mineral reservation in the present case.

“It is this Court’s opinion, therefore; that since both the Louisiana Supreme-Court and the Federal Courts have held Act 315 of 1940 to be retrospective, it clearly applies to Leiter’s 1938 mineral reservation.

“There remains only two additional points, which this Court feels it must consider ini deciding this case.

*953 “The first question is whether the Act applies to the 1938 mineral reservation quoted above in view of the language used therein. The next and final question is, if the 1940 Act applies to Leiter’s 1938 reservation and thereby renders the mineral reservation imprescriptible, whether the Act is unconstitutional.

“On the first point, in view of the very broad and comprehensive language in the 1940 act and the apparent objective which the Legislature had in mind when it passed the Act, it seems plain to this Court that the 1940 Act is fully applicable to Leiter’s mineral reservation.

“It is well recognized, both in this State and in other jurisdictions, that the parties to a contract can establish a period of limitation or prescription. It is clearly within the Legislature’s power to enact legislation which affects equally all prescriptions, both statutory and conventional. If the Legislature intended to limit Act 315 to the 10 yr. prescriptive period established by the Civil Code of Louisiana, the Legislature would have indicated its purpose to so limit the scope of the Act.

“Not only is there no language in the 1940 Act which would indicate the Legislature’s purpose to qualify or limit the application of the Act but the obvious public policy of the State as demonstrated by the passage of that Act makes it unreasonable to believe that the Legislature had in mind any limited application of the Act. JudgePorterie, in the Nebo case used the following language:

“ ‘Moreover, the Federal Government is the largest landowner in Louisiana, and the dedication of large tracts for public purposes, such as forests and game preserves, withdraws these lands from commerce. It would appear entirely reasonable under these circumstances for the Louisiana Legislature to do all in its power to preserve-the mineral rights in its citizens.’

“It was held, in Ray vs. Lib. Ind. Life Ins. Co. [La.App.] 180 So. 855 , that a 1932 statute dealing with the subject of interruption of prescription and which, similar to the-case here, did not limit the scope of its application, applied to conventional as well as statutory prescription.

“In 1938, when Leiter sold to the government and reserved the mineral rights, the government had no assurance that the mineral rights would not be forever preserved to the vendor. The government’s right to-become thereafter vested with the ownership of the minerals, depended entirely on the uncertain future. The contract contained specific provisions which would have-permitted Leiter to maintain his mineral rights forever, or at least indefinitely. It is this Court’s considered opinion that what the parties did in 1938 was to establish, in a mode not prohibited by law or public policy, a conventional or contractual prescription *955 as to the mineral rights and when the Legislature passed Act 31S a year and a half later, those mineral rights were still in effect. Likewise, at the time the Legislature passed the 1940 Act the government’s rights to the minerals were just as contingent and uncertain as they were when Leiter executed the deed in 1938.

"It is this Court’s opinion. that the language of Leiter’s mineral reservation merely established the minimum term of the reservation, and not the maximum term. The maximum term, according to the language of Leiter’s reservation, was left entirely indeterminate and indefinite. [Emphasis mine.] Judge Porterie, in the Nebo case ( 90 F.Supp. 73, 89 ) discussed this very question and held:

“ ‘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.

* * * * * *

“ ‘It is clear that under the deed dated November 12, 1932, Bodcaw conveyed the mineral rights to Good Pine Oil Company in perpetuity. The last clause sets forth the minimum term of the grant and in no way seeks to restrict the terms of the conveyances.’

“It is therefore, this Court’s decision that the 1940 Act applies to the 1938 reservation by Thomas Leiter and that the rights of Leiter were then and thereafter rendered imprescriptible.

“The final question is the constitutional issue which has been raised by the Defendants. It is not difficult for the Court to decide these constitutional questions as they are fully disposed of in both the District Court’s and the Courts of Appeals’ decision in U. S. vs. Nebo. As was decided in the Nebo decisions, the government at the time of the execution of the deed in 1938, as well as at the time the Legislature passed the 1940 Act, did not - have any vested rights which were impaired or divested. The government’s ‘rights’, as had already been declared in this opinion and as the District Court and the U. S. Court of Appeals held in the Nebo decisions, were entirely contingent and inchoate. In other words, all that the government had was a mere expectancy or a hope and the Legislature in *957 1940 was well within the State and Federal constitutional provisions in passing Act 315 dealing with mineral reservations which had been executed prior to that time. On appeal, in the Nebo case the Federal Court of Appeals declared:

“ ‘We conclude that this so-called “reversionary interest” is nothing more than a mere expectancy, or hope, based upon an anticipated continuance without change of the applicable laws of prescription and cannot be regarded as a vested right protected by the Constitution.’

“The only argument which the Defendants make on the constitutional points is to refer to Section 15 Article IV of the Louisiana Constitution which prohibits the passing of any law impairing the obligation of contracts or the divesting of vested rights. As this Court has already stated, the government did not have any vested rights in 1940 and it is difficult for this Court to perceive how the government’s contract could be impaired if the government at that time did not have any vested rights arising out of the contract. Also, the decisions are uniform that in cases like this, Act 315 is valid as a reasonable exercise of the police power of the State. U. S. vs. Nebo Oil Co. [D.C.], 90 F.Supp. 73 ; affirmed [5 Cir.], 190 F.2d 1003 and the many decisions there cited.

“For these reasons it is this Court’s opinion that Act 315 of 1940 applies to the mineral reservation contained in the deed of Thomas Leiter to the U. S. in 1938; that,the mineral rights to be reserved were rendered imprescriptible by Act 315 of 1940; and that the Act of 1940 is not unconstitutional in any respect.”

I respectfully dissent.

FOURNET, C. J., and HAMLIN, J., adhere to the views expressed in their written opinion; and, therefore vote for a rehearing in order that a judgment may be rendered accordingly. SUMMERS, J., joins in the view that a rehearing should be granted so that a judgment may be rendered on all of the issues involved in the case.

. It is my view that the words “this situation.” mean the situation prevailing in the instant ease and that we must look Into and interpret the provisions of the contract; otherwise, we are not completely answering the questions propounded by the United States Supreme Court.