Jurisdictional Statement — Texaco, Inc. v. Short

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Text

80-965

ory r''> S.

No. DEC 29 1980

ieee, CLERK

In THE

United States Supreme Court

OcTOBER TERM, 1980

TEXACO, INC., ROBERT BRASELTON, ELECTRA FIELDS,

CHARLES BRASELTON, CHESTER BRASELTON, ROBERT E.

BRASELTON, CLIFFORD N. BRASELTON, OSBORNE T. BRASELTON,

Jr., DAvip E. BURKHART, JOHN P. BRASELTON, Rosa G.

BuRKHART, D. W. MAYHEW, d/b/a MAYHEW Olt AND Gas

DEVELOPMENT,

Appellants,

vs.

Louise F. SHort,

Appellee,

STATE OF INDIANA,

Intervenor.

JURISDICTIONAL STATEMENT

JOHN L. CARROLL

JOHNSON, CARROLL & GRIFFITH

2230 West Franklin Street

P.O. Box 6016, Station B

Evansville, Indiana 47712

Telephone: (812) 425-4466

Attorneys for Appellants

St. Louis Law Printing Co., Inc., 411 No. Tenth Street 63101 314-231-4477

QUESTIONS PRESENTED BY THE APPEAL

This is an appeal of the decision of the Supreme Court of In-

diana in holding the Dormant Mineral Interests Act, (also

known as the Indiana Mineral Lapse Act) Indiana Code

32-5-11-1, et seq. to be constitutional where the Act provides

that a mineral interest severed from the surface ownership is

deemed extinguished if use of the mineral interest is not made

within twenty (20) years or a statement of claim setting forth the

ownership is not filed in the county recorder’s office.

1. Due Process.

Does the Dormant Mineral Interests Act of the State of In-

diana (Indiana Code 32-5-11-1 et seq.) violate the United States

Consitution as to the Fourteenth Amendment by depriving

landowners of their property without due process of law, in

that non-use of a mineral right for twenty (20) years under the

Act purports to extinguish the right without any notice or hear-

ing?

2. Equal Protection.

Does the Dormant Mineral Interests Act of the State of In-

diana (Indiana Code 32-5-11-1 et seq.) violate the United States

Constitution as to the Fourteenth Amendment by denying cer-

tain persons of the equal protection of the law when it provides

that the owners of ten or more mineral interests in a county who

inadvertently fail to file a statement of claim must be given writ-

ten notice and a chance to file their claim prior to extinguish-

ment of their interest when similar treatment is not afforded to

those having less than 10 mineral interests.

3. Impairment of Contract.

Does the Dorman Mineral Interests Act of the State of In-

diana (Indiana Code 32-5-11-1 et seq.) violate the United States

Constitution as to Article 1, Section 10, by unreasonably im-

pairing the obligations of contracts in that it purports to ter-

minate a contract right without consent or action of the parties?

4. Just Compensation.

Does the Dormant Mineral Interests Act of the State of In-

diana (Indiana Code 32-5-11-1) violate the United States Con-

stitution as to Section 1 of the Fourteenth Amendment by the

taking of private property without any compensation when

mineral rights are extinguished after 20 years of non-use.

PARTIES TO THE PROCEEDING

All parties to the proceeding are listed in the caption of the

case in this court. DeBeers Diamond Investment Ltd. was named

a party below but a stipulation filed in the trial court shows they

have no interest and are not a party before this Court. There is a

companion (but not consolidated) case raising the same issues in

the Supreme Court of Indiana, No. 12788303, in which Ulysses

G. Walden, Jr. and Carolyn Sallee Walden were Appellants and

Eden H. Pond, Edna H. Bobe and Consolidation (eal Com-

pany were Appellees. This appeal attacks the constitutionality

of the Indiana Dormant Mineral Act on behalf of oil and gas in-

terest holders. The Walden case attacks the same act on behalf

of coal interest holders. The Supreme Court of Indiana made no

distinction between the two interests, holding both to be vested

property interests.

TABLE OF CONTENTS

Page

NE od nce b bus occcavduaveskauveeses i

Parties to the Proceeding ...0cccccccccccccccccccecs iii

PU ci enc bheakecbapicccvesbeseeecsss v

Opinion of the Court Below ...............cceeeeees 1

RD OU IID 0 6 db 0006 0 vicbvccnnseenesners 2

Comstitutional Provisions ooo. ccsccccsvccccccscesess 2

PCP MEE PMO Nccadsecevovetsncansesccesens 3

RIL hws sc veendcdedscdncebevesecs 8

Se, MUNN s CRANK b5N 000s chenecveeneees 8

De EEE cicdcenecurcccdeséceceass 11

So | MRE OF COMERS. oon ie cc cccccccccs 12

Sy) BERNER. cobb cdccdcccccdccncees 13

RE nu tdbi hsb aches naedekipdeneinnce caves 14

APPENDIX

Appendix A

Opinion of the Supreme Court of Indiana........ A-l

Appendix B

Opinion of the trial court .........ccccccccccecs A-14

Appendix C

Judgraent appealed from ...............0ee000% A-20

Appendix D

Denial of petition for rehearing...............+. A-27

Appendix E>

eS Se ndnns bap adeGbdbedcneces oe A-28

Appendix F

The Indiana Dormant Mineral Interests Act, (1.C.

Pc stb neoebnedbvcrtocscces A-32

Appendix G

Chicago & North Western Transportation Co. v.

Paderson, (1977) 80 Wis 2d 566, 259 NW 2d

DLAC Cae e ha cdee ob Lbe's web edeceeneces A-35

Appendix H

Contos v. Herbst, (Minn 1979) 278 NW 2d 732.... A-44

Appendix I

Wilson v. Bishop, (1980, Ill.) NE2d__.... + A-72

Appendix J

Wheelock v. Heath, (1978) 201 Neb 835, 272 NW

RUS AGAELe PARA ne een bises cv eertecacpes A-80

TABLE OF AUTHORITIES

Anderson National Bank v. Luckett, (1944) 321 U.S.

233, 64S.Ct. 599, 88 L.Ed. 692............0005- 10

Chicago & North Western Transportation Co. v. Pader-

son, (1977) 80 Wis 2d 566, 259 NW 2d 316........ 8,13

Contos v. Herbst, (Minn 1979) 278 NW 2d 732 ........ 8,13

vii

Fuentes v. Shevin (1972) 407 U.S. 67, 92 S.Ct. 1983, 32

Ce ee i ves

Home Building and Loan Association v. Blaisdell,

(1934), 290 U.S. 438 54S.Ct. 231, 78 L.Ed. 413...

Memphis Light, Gas & Water Division v. Craft, (1978)

436 US 1, 56 L.Ed 2d 30, 98 S.Ct. 1554 ..........

Mullane v. Central Hanover Trust Co., (1950) 339 US

- § ee bee. rrr y ere

Ohio v. Dollison, (1904) 194 US 447, 48 L.Ed. 1062....

Sniadach v. Family Finance Corporation of Bayview,

(1969) 395 U.S. 337, 23 L.Ed. 2d 349, 89A S.Ct.

United States Trust Co. of New York v. New Jersey,

(1977) 431 U.S. 197S.Ct. 1505, 52 L.Ed2d92....

Wheelock v. Heath, (1978) 201 Neb 835, 272 NW 2d

Wilson v. Bishop, (1980, Ill.) . NE2d___.........

10,13

9,11

No.

IN THE

United States Supreme Court

OcToBER TERM, 1980

Texaco, INC., ROBERT BRASELTON, ELECTRA FIELDS,

CHARLES BRASELTON, CHESTER BRASELTON, ROBERT E.

BRASELTON, CLIFFORD N. BRASELTON, OSBORNE T. BRASELTON,

Jr., DAvip E. BURKHART, JOHN P. BRASELTON, Rosa G.

BurkKHArT, D. W. MAYHEw, d/b/a MayHew OiL AND Gas

DEVELOPMENT,

Appellants,

vs.

Louise F. SHort,

Appellee,

STATE OF INDIANA,

Intervenor.

JURISDICTIONAL STATEMENT

OPINION OF THE COURT BELOW

The opinion of the Supreme Court of Indiana which appears

in the Appendix herein, (page A-1) is reported at 406 NE

2d 625. It is not yet published in the official Indiana Reports.

The opinion of the Gibson Circuit Court appears in the Appen-

dix herein (page A-14).

a ae

GROUNDS OF JURISDICTION

This is a direct appeal from the decision of the Supreme

Court of Indiana (the highest court of the State) holding the In-

diana Dormant Minerals Interests Act (Indiana Code 32-5-11-1)

to be constitutional under the United States Constitution.

Jurisdiction of this Court is founded on 28 U.S.C. §1257(2).

Judgment was entered by the Gibson Circuit Court on

September 18, 1978. The Indiana Supreme Court rendered its

decision on June 23, 1980. A timely petition for rehearing was

filed and it was denied by the Supreme Court of Indiana on

September 24, 1980. Notice of Appeal to the Supreme Court of

the United States was filed with the Supreme Court of Indiana

on November 17, 1980. (Appendix, page A-28)

28 U.S.C. §1257(2) reads as follows:

‘Final judgments or decrees rendered by the highest

court of a state in which a decision could be had, may be

reviewed by the Supreme Court as follows:

**(2) By appeal, where is drawn in question the validity

of a statute of any state on the ground of its being repug-

nant to the Constitution, treaties or laws of the United

States, and the decision is in favor of its validity.’’

CONSTITUTIONAL PROVISIONS

Constitution of the United States of America

Fourteenth Amendment, Section 1:

**No State shall make or enforce any law which shall

abridge the privileges or immunities of citizens of the

United States; nor shall any State deprive any person of

life, liberty, or property, without due process of law; nor

deny to any person within its jurisdiction the equal protec-

tion of the laws.”’

Section 10, Clause 1:

**No state shall enter into any treaty, alliance, or con-

federation; grant letters of marque and reprisal; coin

money; emit bills of credit; make anything but gold and

silver coin a tender in payment of debts; pass any bill of al-

tainer, ex post facto law, or law impairing the obligation of

contracts, or grant any title of nobility.’’

STATEMENT OF FACTS

In Indiana and in many of the states there are many instances

where the ownership of minerals (such as coal, oil or gas)

underlying property is in the hands of persons other than those

who own the surface of such property. In some instances these

mineral rights have not been used for many years.

In an apparent effort to solve a perceived preblem, Indiana in

1971 passed the INDIANA DORMANT MINERAL IN-

TERESTS ACT (I.C. 32-5-11) (also known as the Indiana

Mineral Lapse Act) (Hereafter referred to as the Act) (Set forth

in full text at Appendix F).

The Act provides:

32-5-11-1 [46-1808]. Lapse of mineral

interest—Prevention.—Any interest in coal, oil and gas, and

other minerals, shall, if unused for a period of 20 years, be ex-

tinguished, unless a statement of claim is filed in accordance

with section five [32-5-11-5] hereof, and the ownership shall

revert to the then owner of the interest out of which it was carv-

ed. [IC 32-5-11-1, as added by Acts 1971, P.L. 423, § 1.]

32-5-11-2 [46-1809]. Mineral interest—Definition.—A

mineral interest shall be taken to mean the interest which is

created by an instrument transferring, either by grant, assign-

ment, or reservation, or otherwise an interest, of any kind, in

coal, oil and gas, and other minerals. [IC 32-5-11-2, as added by

Acts 1971, P.L. 423, § 1.]

ae yn

32-5-11-3 [46-1810]. Use of mineral interests—Definition.—A

Mineral interest shall be deemed to be used when there are any

minerals produced thereunder or when operations are being

conducted thereon for injection, withdrawal, storage or

disposal of water, gas or other fluid substances, or when rentals

or royalties are being paid by the owner thereof for the purpose

of delaying or enjoying the use or exercise of such rights or

when any such use is being carried out on any tract with which

such mineral interest may be unitized or pooled for production

purposes, or when, in the case of coal or other solid minerals,

there is production from a common vein or seam by the owners

of such mineral interests, or when taxes are paid on such

mineral interest by the owner thereof. Any use pursuant to or

authorized by the instrument creating such mineral interest shall

be effective to continue in force all right granted by such instru-

ment. [IC 1971, 32-5-11-3, as added by Acts 1971, P.L. 423, § 1,

p. 1970.]

32-5-11-4 [46-1811]. Statement of claim—Filing—Re-

quirements.—The statement of claim provided in section one

[32-5-11-1] above shall be filed by the owner of the mineral in-

terest prior to the end of the twenty [20] year period set forth in

section two [one] [32-5-11-1] or within two [2] years after the ef-

fective date [September 2, 1971] of this act, whichever is later,

and shall contain the name and address of the owner of such in-

terest, and description of the land, on or under which such

mineral interest is located. Such statement of claim shall be filed

in the office of the recorder of deeds in the county in which such

land is located. Upon the filing of the statement of claim within

the time provided, it shall be deemed that such mineral interest

was being used on the date the statement of claim was filed. [IC

1971, 32-5-11-4, as added by Acts 1971, P. L. 423, § 1, p. 1970;

1972, P. L. 11, § 15, p. 336.]

32-5-11-5 [46-1812]. Extinguishment of mineral interest—Ex-

ceptions.—Failure to file a statement of claim within the time

a ee

provided in section 4 [32-5-11-4] shall not cause a mineral in-

terest to be extinguished if the owner of such mineral interest:

(1) was at the time of the expiration of the period provided in

section four [32-5-11-4], the owner of ten [10] or more mineral

interests, as above defined, in the county in which such mineral

interest is located, and;

(2) made diligent effort to preserve all of such interests as

were not being used, and did within a period of ten [10] years

prior to the expiration of the period provided in section 4

[32-5-11-4] preserve other mineral intersets, in said county, by

the filing of statements of claim as herein required, and;

(3) failed to preserve such interest through inadvertence, and;

(4) filed the statement of claim herein required, within sixty

[60] days after publication of notice as provided in section seven

[32-5-11-7] herein, if such notice is published, and if no such

notice is publied, within sixty [60] days after receiving actual

knowledge that such mineral interest had lapsed. [IC 1971,

32-5-11-5, as added by Acts 1971, P. L. 423, § 1, p. 1970.]

32-5-11-6 [46-1813]. Successor in interest—Notice re-

quirements—Prima facie evidence.—Any person who will suc-

ceed to the ownership of any mineral interest, upon the lapse

thereof, may give notice of the lapse of such mineral interest by

publishing the same in a newspaper of general circulation in the

county in which such mineral interest is located, and, if the ad-

dress of such mineral interest owner is shown of record or can

be determined upon reasonable inquiry, by mailing within ten

[10] days after such publication a copy of such notice to the

owner of such mineral interest. The notice shall state the name

of the owner of such mineral interest, as shown of record, a

description of the land, and the name of the person giving such

notice. If a copy of such notice, together with an affidavit of

service thereof, shall be promptly filed in the office of the

recorder of deeds in the county wherein such land is located, the

pak a

record thereof shall be prima facie evidence, in any legal pro-

ceedings, that such notice was given. [IC 1971, 32-5-11-6, as ad-

ded by Acts 1971, P. L. 423, § 1, p. 1970.]

32-5-11-7 [46-1814]. Statement of claim—Filing—Recorder’s

duty.—Upon the filing of the statement of claim, provided for

in section 4 [32-5-11-4] of this chapter or the proof of service of

notice as provided in section seven [six] [32-5-11-6] of this

chapter in the recorder’s office for the county where such in-

terest is located, the recorder shall record the same in a book to

be kept for that purpose, which shall be known as the ‘‘Dor-

mant Mineral Interest Record’’ and shall indicate by marginal

nvtation on the instrument creating the original mineral interest

the filing of the statement of claim or affidavit of publication

and service of notice. [IC 1971, 32-5-11-7, as added by Acts

1971, P. L. 423, § 1, p. 1970.]

32-5-11-8 [46-1815]. Waiver of chapter’s provisions—Time

limit.—The provisions of this chapter [32-5-11-1—32-5-11-8]

may not be waived at any time prior to the expiration of the

twenty [20] year period provided in section 1 [32-5-11-1]. [IC

1971, 32-5-11-8, as added by Acts 1971, P. L. 423, § 1, p. 1970.]

Appellants are the owners of fractional undivided interests in

oil, gas and other minerals underlying a tract of land in Gibson

County, Indiana (the mineral interests). Appellee is the owner

of the surface of such land. No use was made of the mineral in-

terests for twenty (20) years immediately preceding September

2, 1971 (the effective date of the Indiana Dormant Mineral In-

terests Act [I.C. 32-5-11] [the Act]) nor for the two years follow-

ing. At no time during the two year period were Appellants the

owners of ten or more mineral interests in Gibson County, In-

diana. Further Appellants did not file any statement of claim

within the two year grace period provided by the Act.

Thereafter, Appellee surface owner filed an action for

declaratory judgment with the Gibson Circuit Court against the

— -

mineral interest owners praying that the mineral interest claimed

by the Appellants be declared extinguished under the Act. Ap-

pellants filed answer claiming the Act to be unconstitutional

under the Indiana and United States Constitutions. The matter

was heard by the trial court based upon a stipulation where the

only issue before the Court was the Constitutionality of the Act

under both the Constitution of Indiana and the Constitution of

the United States.

The trial court by written opinion (Appendix B) held the Act

unconstitutional under the Fifth and Fourteenth Amendments

to the United States Constitution. On appeal the Supreme Court

of Indiana held the Act constitutional under both the Indiana

and United States Constitutions (Appendix A). The sole ques-

tion before this Court is the constitutionality of the Act under

the United States Constitution.

Indiana has held, in the opinion of the Indiana Supreme

Court in this case, (Appendix A) that:

**Interest of estates in oil, gas, coal and other minerals ly-

ing beneath the surface of the land are interests in real

estate for our purposes here, and as such are entiiled

beyond question to the protection of the Constitution

from irrational state action. They are vested property in-

terests separate and distinct from the surface ownership.

The State has no power to deprive an owner of such an in-

terest without due process of law. They are entitled to the

same protection as are fee simple titles.’’

Given a vested property right, can a State by legislation con-

stitutionally determine that because the use of t*« mineral right

was dormant for twenty years, the ownership of the mineral in-

terests shall revert to the surface owner, without providing

notice or opportunity for hearing prior to the extinguishment of

the property right? Does this not violate the Fourteenth Amend-

ment of due process and Article 1, Section 10 on impairment of

contracts?

QUESTION IS SUBSTANTIAL

1. Due Process. The question is clear cut. Does the Act

violate the procedural due process clause of the United States

Constitution? The States of Illinois, Minnesota, Michigan and

Wisconsin have passed similar laws and in each instance the

Supreme Court of the respective State has held the Act un-

constitutional as violating the United States Constitution. These

cases are as follows:

Wilson v. Bishop, (1980, Ill.) NE 2d (Appendix I)

Wheelock v. Heath, (1978) 201 Neb 835, 272 NW 2d 768

(Appendix J)

Chicago & North Western Transportation Co. v. Paderson,

(1977) 80 Wis 2d 566, 259 NW 2d 316 (Appendix G)

Contos v. Herbst, (Minn 1979) 278 NW 2d 732 (Appendix H)

Thus, the decision of tne Supreme Court of Indiana is in con-

flict with the decisions of the court of last resort of four other

states. This in itself raises a fundamental question of equality of

constitutional treatment among the several states.

The Illinois statute is almost identical to the Indiana statute

and that statute was held unconstitutional under the United

States Constitution by the Illinois Supreme Court in Wilson v.

Bishop, (1980 Ill) _-.NE 2d____.. The opinion is set forth in

full at Appendix I. There the Court held:

“The United States Supreme Court has emphasized that

due process of law, at a minimum prohibits the deprivation

of property without providing notice and an opportunity

for a hearing appropriate to the nature of the case. [Mem-

phis Light, Gas & Water Division v. Craft, (1978), 436

U.S. 1 13-16, 56 L.Ed. 2d 30, 41-43, 98 S.Ct. 1554,

1562-63; Mullane v. Central Hanover Trust Co., (1950),

339 U.S. 306, 313, 94 L.Ed. 865, 872-73, 70 S.Ct. 652,

657]...“‘The statute provided no notice of any kind to

record owners of oil and gas interests that they must record

a statement of their interest in order to prevent the

forfeiture of their property interests...Failure to provide

those owners with adequate notice and an opportunity to

be heard renders the statutory scheme unconstitutional.”’

The basic question presented is whether the Act denies basic

constitutional rights under the banner of a perceived public in-

terest. In Sniadach v. Family Finance Corporation of Bayview,

(1969) 395 U.S. 337, 23 L.Ed. 2d 349, 89A S.Ct. 1820, this

Court said: ‘‘The question is not whether the Wisconsin law is a

wise law or an unwise law. Our concern is not what philosophy

Wisconsin should or should not embrace.’’

The Indiana decision, if left standing, states an erroneous

view of Constitutional requirements relating to procedural due

process. The court below says that the Act is ‘‘self executing”’

and ‘‘does not contemplate an adjudication before a tribunal

before the lapse occurs’’. From that it reasons that due process

does not require notice and opportunity for hearing before the

lapse occurs. Such reasoning is directly contrary to Mullane v.

Central Hanover Bank and Trust Company, (1950) 339 U.S.

306, 70 S.Ct. 652, 94 L.Ed 865, where this Court held:

‘The fundamental requisite of due process of law is the

opportunity to be heard.”’

In Memphis Light, Gas & Water Division v. Croft, (1978) 436

U.S. 1, 56 L.Ed.2d 30, 98 S.Ct. 1554, this Court said:

**This Court consistently has held that some kind of hear-

ing is required at some time before a person is finally

deprived of his property interest.”’

In Sniadach v. Family Finance Corporation of Bayview,

supra, this Court held that a prejudgment garnishment of wages

is unconstitutional ‘‘where the taking of one’s property is so ob-

vious that it needs no extended argument to conclude that ab-

sent notice and prior hearing this prejudgment garnishment pro-

cedure violates the fundamental principles of due process.”’

In Fuentes v. Shevin, (1972) 407 U.S. 67, 92 S.Ct. 1983, 32

L.Ed.2d 556, this court struck down the Florida and Penn-

sylvania prejudgment replevin statutes, holding, inter alia, that

the statutes violated the procedural due process clause because

there was no hearing before the seizure of property. This Court,

speaking through Justice Stewart said (at 401 U.S. 83):

**The right to a prior hearing has long been recognized

by this Court under the Fourteenth and Fifth Amend-

ments. Although the Court has held that due process

tolerates variances in the form of a hearing ‘appropriate to

the nature of the case’, Mullane v. Central Hanover Trust

Co., . . . and ‘depending upon the importance of the in-

terests involved and the nature of the subsequent pro-

ceedings (if any)’ . . . the Court has traditionally insisted

that, whatever its form, opportunity for that hearing must

be provided before the deprivation at issue takes effect.’’

The Indiana decision completely misreads Anderson National

Bank v. Luckett, (1944) 321 U.S. 233, 64 S.Ct. 599, 88 L.Ed.

692, when it cites that case as authority to support the Act under

procedural due process. In Anderson the requirement of notice

and opportunity to be heard was fully afforded to the dormant

account holder. There was no forfeiture of the account holder’s

rights as here. The Kentucky act in Anderson merely transferred

the dormant accounts from the Bank to the State. The rights of

the account owner to the account were fully preserved in the

hands of the State. The Anderson decision was the only case

cited by the Court on procedural due process.

This case raises the question of whether or not the passage of

the Act itself and its presumption that everyone knows the law is

sufficient to satisfy the notice requirement of procedural due

process. This Court has consistently said that to satisfy pro-

cedura! *»e process the notice has to be reasonably calculated to

appris. erested parties of the contemplated action. Mullane

v. Centra Hanover Bank & Trust Co., supra.

On the question of procedural due process, the decision of the

Indiana Supreme Court in this case is in direct conflict with at

least four other state courts on the same issue and is in conflict

with the decisions of this court on an important federal ques-

tion.

2. Equal Protection. Section Five of the Act provides that

failure to file a statement of claim shall not cause a mineral in-

terest to be extinguished if the owner of ten or more interests

failed to do so by inadvertance after having filed a statement of

claim as to other mineral interests. This section is unique to In-

diana and is not found in the statutes of other states.

The section raises the question: Can a state constitutionally

excuse one property owner from inadvertance in filing a claim

because the property owner has more than nine mineral interests

when it does not excuse property owners having nine or less in-

terests? Does this not violate the equal protection clause of the

Fourteenth Amendment?

It is submitted that this is arbitrary discrimination based on

number of holdings. It can be explained only by realizing that

the lobbists for the larger mineral interest holders were able to

protect themselves while the smailer holders could not. The Act

treats persons of the same class differently in violation of the

equal protection clause. Ohio v. Dollison (1904) 194 US 447, 48

L.Ed. 1062.

Notice further that this section provides a statutory scheme

for giving actual notice to the holder of ten or more interests

and if he fails within sixty (60) days after actual notice to file his

statement of claim the interest lapses. Thus, the statute provides

a scheme or method of complying with the notice requirements

of due process as to the holders of ten or more interests but does

— 12 —

not afford the same due process rights as to the holders of lesser

interests. This is invidious discrimination on a fundamental con-

stitutional right.

3. Impairment of Contract. The rights of mineral interests

holders arises out of a deed or other document of conveyance.

Such right thus arises out of contract. The effect of the Act is to

destroy that contract right. Under the Act the right is not only

impaired it is extinguished. The consequence of such destruc-

tion is to take a property right from the mineral interest holder

and give it to the surface interest holder. We say that state ac-

tion violates the Contract Clause of Article 1, Section 10 of the

U.S. Constitution.

The ruling of the Supreme Court of Indiana is contrary to the

decisions of this Court in Home Building and Loan Association

v. Blaisdell (1934), 290 U.S. 438 54 S.Ct. 231, 78 L.Ed. 413 and

United States Trust Co. of New York v. New Jersey (1977) 431

U.S. 1 97 S.Ct. 1505, 52 L.Ed 2d 92. In Home Building and

Loan Association, this Court held:

‘The obligations of a contract are impaired by a law which

renders them invalid or releases or extinguishes them.’’

In the United States Trust Co. of New York, supra, the

Court, speaking through Mr. Justice Blackmun held that the

contract clause limits the power of the states to regulate con-

tracts between private parties. Admittedly, the absoluteness of

the contract clause is tempered by the police power of the

several states. But even the police power has its limitations. In

United States Trust Co. of New York, supra, the Court said

that a State is not free to impose a drastic impairment of con-

tract when an evident and more moderate course would serve its

purposes equally well. Here the action of the state was draco-

nian. It provided for immediate and absolute extinguishment.

Had the state required the giving of notice and an opportunity

— eo

for a mineral interest owner to have protected his right, the in-

terests of the State would have been equally served and the Con-

stitutional mandate satisfied.

4. Just Compensation. The Act has the effect of ex-

tinguishing a vested property right but in doing so it is taking

private property from one person and giving it to the surface

owner all without any compensation. This violates the just com-

pensation provision of Section 1 of the Fourteenth Amendment.

See Wheelock v. Heath, supra (appendix j); Chicago & Nor-

thwestern Transportation Co. v. Paderson, supra (appendix f);

and, Contos v. Herbst, supra (appendix g). See also Fuentes v.

Shevin, supra.

— oo

CONCLUSION

This case presents an important constitutional issue. It is

clean cut, as there are no collateral facts to be weighed, the sole

question being the constitutionality of the Act on its face. Four

other state courts dealing with similar acts have held them in-

valid on Federal Constitutional grounds. The citizens of Indiana

are entitled to the same protection of the same Federal Constitu-

tion.

For these reasons, this Court should note probable jurisdic-

tion of this appeal.

Respectfully submitted,

John L. Carroll

Attorney for Appellants

JOHN L. CARROLL

Johnson, Carroll and Griffith, P.C.

2230 West Franklin Street

P. O. Box 6016, Station B

Evansville, Indiana 47712

Telephone: (812) 425-4466

7 ‘ty

oh vy aa .

ait,

Atta: op Ago

‘

4! Oris

APPENDIX

Appendix A

Opinion of the Supreme Court of Indiana........ A-1

Appendix B

Opinion of the trial court ............00 cece eee A-14

Appendix C

Judgment appealed from .............0eeeeeees A-20

Appendix D

Denial of petition for rehearing................. A-27

Appendix E

PO NE 8.0 b's 6 oncccnecdedyseciccacens A-28

Appendix F

The Indiana Dormant Mineral Interests Act, (1.C.

pe tf errr errr tere A-32

Appendix G

Chicago & North Western Transportation Co. v.

Paderson, (1977) 80 Wis 2d 566, 259 NW 2d

DOE Cisivicveaseectveceusseseuseerseeate A-35

Appendix H

Contos v. Herbst, (Minn 1979) 278 NW 2d 732.... A-44

Appendix I

Wilson v. Bishop, (1980, Ill.) NE2d_.... + A-72

Appendix J

Wheelock v. Heath, (1978) 201 Neb 835, 272 NW

np yee

APPENDIX A

(Opinion of the Supreme Court of Indiana)

Short v. Texaco, Inc.

Cite as, Ind., 406 N.E.2d 625

Louise F. SHORT, Appellant,

TEXACO, INC., Robert Braselton, Electra Fields, Charles

Braselton, Chester Braselton, Robert E. Braselton, Clif-

ford N. Braselton, Osborne T. Braselton, Jr., David E.

Burkhart, John P. Braselton, Rosa G. Burkhart, D. W.

Mayhew d/b/a Mayhew Oil and Gas Development, De-

Beers Diamond Investment, Ltd., Appellaees,

State of Indiana, Intervenor.

Ulysses G. WALDEN, Jr. and Carolyn

Sallee Walden, Appellants,

Eden H. POND, Edna H. Bobe and Consolidation

Coal Company, Appellees,

Louise F. Short, Intervenor.

Nos. 179823 and 12788303.

Supreme Court of Indiana.

June 23, 1980.

DeBRULER, Justice.

The trial court declared Ind.Code §§ 32-5-11-1 through

32-5-11-8, the Mineral Lapse Act, unconstitutional. The Act

puts an end to interests in coal, oil, gas or other minerals which

have not been used for twenty years. The ‘‘use’’ of a mineral in-

terest which continues it in force includes actual production,

payment of rents, royalties or taxes, or the filing of a claim in

the dormant mineral interest record in the recorder’s office. It

granted owners of mineral interests a two year period of grace

after its effective date in which to file the claim and preserve the

interest. This is an appeal from two judgments below, con-

solidated here, that termination of an interest under the Act is

contrary to due process, equal protection, and the guarantee of

just compensation for property taken by the State.

The Act reflects the legislative belief that the existence of a

mineral interest about which there has been no display of activity

or interest by the owners thereof for a period of twenty years or

more is mischievous and contrary to the economic interests and

welfare of the public. The existence of such stale and abandoned

interests creates uncertainties in titles and constitutes an impedi-

ment to the development of the mineral interests that may be pre-

sent and to the development of the surface rights as well. The

Act removes this impediment by returning the severed mineral

estate to the surface rights owner. There is a decided public in-

terest to be served when this occurs. The extinguishment of such

an interest makes the entire productive potential of the property

again available for human use.

The trial court concluded that the legislative purpose of the

Act is to facilitate the exploitation of energy sources and ac-

cepted such purpose as legitimate. While all its conclusions are

not entirely clear, it went on to void the entire statute because it

determined among other things that due process of law required

the divestiture of the vested mineral interest to be preceded by

due process notice and an opportunity to be heard.

[1] Interests or estates in oil, gas, coal and other minerals ly-

ing beneath the surface of the land are interests in real estate for

our purposes here, and as such are entitled beyond question to

the firmest protection of the Constitution from irrational state

action. They are vested property interests separate and distinct

—

from the surface ownership. The State has no power to deprive

an owner of such an interest without due process of law. They

are entitled to the same protection as are fee simple titles. They

are themselves of great utility and benefit to the society as a

means of facilitating the development of natural resources.

{2} Courts of this state and nation have always given due

regard to constitutional constraints upon their authority to void

statutes. In doing so in Noe/ v. Ewing, (1857) 9 Ind. 37, we said:

**It is due from the judiciary to sustain and reconcile their

enactments, if possible. We will not lightly conclude that

the law-making power has either ignorantly or wilfully

violated the constitution. To justify the Courts in declaring

an act voide, it must clearly subversive of that instrument.

(Citations omitted.)

They who claim that the legislature has, in this par-

ticular, transcended its constitutional power, should be

prepared to make a strong and clear case. All doubts must

fall in favor of the validity of the law.’’ 9 Ind. at 43.

We reaffirm again now in this case our adherence to this vital

principle.

In Chicago and North Western Transportation Co. v.

Pedersen, (1977) 80 Wis.2d 566, 259 N.W.2d 316, the Supreme

Court of Wisconsin voided a similar act which directed that

mineral rights revert to the surface fee ownership if they were

not registered or taxes had not been paid on them. That statute

was deemed contrary to procedural due process in that the

mineral interest owner was not given notice or an opportunity to

be heard prior to the reversion of his interest to the surface

rights owner. That court relied upon Mullane v. Central

Hanover Bank & Trust Co., (1950) 339 U.S. 306, 70 S.Ct. 652,

94 L.Ed. 865, and Bell v. Burson, (1971) 402 U.S. 535, 91 S.Ct.

1586, 29 L.Ed.2d 90. The court below took the same tack in

voiding the Indiana Act.

—_

In Mullane, supra, primarily relied upon by the trial court,

the United States Supreme Court said:

‘*Many controversies have raged about the cryptic and

abstract words of the Due Process Clause but there can be

no doubt that at a minimum they require that deprivation

of life, liberty or property by adjudication be preceded by

notice and opportunity for hearing appropriate to the

nature of the case.

eee ee

An elementary and fundamental requirement of due

process in any proceeding which is to be accorded finality

is notice reasonably calculated, under all the cir-

cumstances, to apprise interested parties of the pendency

of the action and afford them an opportunity to present

their objections.’’ (Emphasis added.) 339 U.S. at 313, 314,

70 S.Ct. at 656, 657.

In Mullane the bank petitioned a court for settlement of an ac-

count of a trust fund, and the sufficiency of publication notice

to beneficiaries was the issue. Notice was due to the

beneficiaries because a tribunal was about to adjudicate upon

their property. The Mineral Lapse Act in contrast is self-

executing and does not contemplate an adjudication before a

tribunal before a lapse occurs. When the statutory conditions

exist the lapse occurs. Mullane does not support the trial court

conclusion that notice and hearing are due to a mineral interest

owner prior to the occurrence of an extinguishment.

Bell v. Burson, supra, relied upon by the trial court does not

support the conclusion either. There a Georgia law provided

that the drivers license of an individual motorist involved in an

accident is to be automatically suspended without notice or

hearing if security was not posted to cover the damages claimed

by aggreived parties in the accident reports. In the course of

—<

holding this system violative of procedural due process the court

specifically noted:

“If the statute barred the issuance of licenses to all

motorists who did not carry liability insurance or who did

not post security, the statute would not, under our cases,

violate the Fourteenth Amendment. (Citations omitted.) It

does not follow, however, that the amendment also per-

mits the Georgia statutory scheme where not all motorists,

but rather only motorists involved in accidents, are re-

quired to post security under penalty of loss of the

licenses.’’ 402 U.S. at 539, 91 S.Ct. at 1589.

Thus, even in Bell, a case involving a different complex of social

concerns, there is this language supportive of the Act under con-

sideration. It would support as consistent with procedural due

process a legislative enactment which declared no more than

that all licenses issued by the state would cease to be valid on a

date certain in the future unless proof of financial responsibility

were filed. Cf. Frost & Frost Trucking Co. v. Railroad Commis-

sion, (1926) 271 U.S. 583, 46 S.Ct. 605, 70 L.Ed. 1101. Such a

hypothetical statute would be very similar in operation to the

Act being questioned in this case.

[3] The Act under question does not provide for any ad-

judicatory process by a court or administrative agency. The

absence of such a provision is not, we think, invalidating. The

Act simply spells out the conditions which when existing man-

date the extinguishment of an interest. If a court should be called

upon to determine whether such conditions arose in a particular

case so as to have effected the loss of an interest, the owner of

such interest would be entitled to notice and an opportunity to

be heard. Prior to any extinguishment the owner of an interest

will have had notice by reason of the enactment itself of the con-

ditious which would give rise to an extinguishment and at a

minimum a two year opportunity to prevent those conditions

from occurring by filing a statement of claim. Anderson Na-

— es

tional Bank v. Luckett, (1944) 321 U.S. 233, 64 S.Ct. 599, 88

L.Ed. 692. That procedure is both simple and inexpensive. Based

upon the foregoing analysis we do find the case of Chicago &

North Western Transportation Co. v. Pedersen, supra, per-

suasive.

The reasoning of the trial court and the cases relied upon by it

do not warrant the conclusion that the Act is unconstitutional

because it fails to afford notice and hearing to mineral interest

owners required by procedural due process.

[4,5] The trial court also concluded that the extinguishment

of mineral interests under the Act constituted a taking of prop-

erty without due process of law. Judge Young for the Fourth

District Court of Appeals summarized the due process analysis

applicable here in Foreman v. State ex rel. Department of

Natural Resources, (1979) Ind. App., 387 N.E.2d 455:

“The government has the inherent power or ‘police

power’ to enact laws, within constitutional limits, to pro-

mote order, safety, health, morals, and the general welfare

of society. . . . Property rights are not absolute and may be

restricted by legislation which constitutes a proper exercise

of the State’s police power. . . . Legislation is a proper ex-

ercise of the police power when the collective benefit to the

general public outweighs the restraint imposed. . . The

methods or means used to protect the public order, health,

morals, safety or welfare must have some reasonable rela-

tion to the purpose or end sought.’’ 387 N.E.2d at 460.

Study of this Act reveals that its outstanding feature is its

declaration that mineral interest are terminable. Whatever may

be the exact legal dimensions of such interests, they are not

greater than fee simple titles. Under the statute of limitations

and the law of adverse possession a fee simple title to land is ter-

minable. The Mineral Lapse Act can be viewed as vesting legal

title in the owner of the surface rights which is free of the

oti on

mineral servitude when the conditions required by it exist. A

statute of limitations vests legal title in an adverse possessor as

against the true legal owner when the conditions required by it

exist. Brown v. Anderson, (1883) 90 Ind. 93. Statutes of limita-

tion are statutes of repose founded upon a rule of necessity and

convenience and the well-being of society. Chase Securities

Corp. v. Donaldson, (1945) 325 U.S. 304, 65 S.Ct. 1137, 89

L.Ed. 1628. This Act is also based upon the same rule. Cf. Love

v. Lynchburg National Bank and Trust Co., (1965) 205 Va. 860,

140 S.E.2d 650. We do not disregard the distinctions between

the two types of statutes. The element of possession is different.

No cause of action has arisen in the owner of the mineral in-

terest which is required to be prosecuted. Given these dif-

ferences and aforementioned similarities, we believe that this

Act is, according to its principal intent and effect, and for the

purpose of constitutional analysis, analogous to acts of limita-

tion which vests title to real and personal property.

[6] Acts of limitation are not per se unconstitutional as im-

pairing the obligation of contracts or as denying a person prop-

erty without due process of law. This is so even though they ex-

tinguish the right of the party having a true title and vest a

perfect title in the adverse holder. Hawkins v. Barney’s Lessee,

(1831) 5 Pet. 457, 8 L.Ed. 190, is an early case upholding the

validity of a seven year limitation upon actions to recover posse-

sion of land in Kentucky. In the course of that opinion it is said:

‘It is argued, that limitation laws although belonging to

the lex fori, and applying immediately to the remedy, yet

indirectly they effect a complete divesture and even

transfer of right. This is unquestionably true, and yet in no

wise fatal to the validity of this law. The right to ap-

propriate a derelict is one of universal law, well known to

the civil law, the common law, and all law; it existed in a

state of nature, and is only modified by society, according

to the discretion of each community.’’

—_ oo

The transfer of right upheld by the court was deemed the in-

direct product of the limitation law. The transfer or right ef-

fected by the Indiana Act under consideration is its direct pro-

duct. That minor difference would not support a contrary

evaluation of our Act.

[7,8] In Terry v. Anderson, (1877) 95 U.S. 628, 24 L.Ed. 365,

Chief Justice Waite stated the general rule regarding the manner

in which statutes of limitation are received by courts:

‘This court has often decided that statutes of limitation

affecting existing rights are not unconstitutional, if a

reasonable time is given for the comencement of an action

before the bar takes effect... .

In all such cases, the question is one of reasonableness,

and we have, therefore, only to consider whether the time

allowed in this statute is, under all the circumstances,

reasonable. Of that the legislature is primarily the judge;

and we cannot overrule the decision of that department of

government, unless a palpable error has been committed.’’

95 U.S. at 632-633.

Indiana is in accord with the rule stated and the reasoning

behind it. Guthrie v. Wilson, (1959) 240 Ind. 188, 162 N.E.2d

79; Sansberry v. Hughes, (1910) 174 Ind. 638, 92 N.E. 783. In

Terry the court held that the period of nine months and seven-

teen days given to sue upon a cause of action was not un-

constitutional. In Turner v. People of State of New York,

(1897) 168 U.S. 90, 18 S.Ct. 38, 42 L.Ed. 392, a statute declar-

ing that past sales and conveyances by a comptroller for non-

payment of taxes would be conclusively presumed regular six

months after the effective day of the statute was upheld as pro-

viding a reasonable period for bringing an action. Pursuant to

Ind.Code § 32-5-11-4, owners of mineral interests are granted a

minimum of two years in which to act to preserve their interests.

Such a period of grace would constitute a reasonable time as

contemplated by these cases.

—* po

In Wilson v. Iseminger, (1902) 185 U.S. 55, 22 S.Ct. 573, 46

L.Ed. 804, the United States Supreme Court upheld a statute

which barred actions to recover ground rents and extinguished

totally the right to recover further such rents, after twenty-one

years had expired during which no declaration or acknowledg-

ment of the existence of the right or claim had been made. The

statute provided that the bar and extinguishment would not be

effective until three years after the passage of the act. The court

held that the act gave a reasonable time to the owners of the

ground rents for preserving their rights. This case strongly sup-

ports the validity of our Act, because it upheld a statute having

an extinguishment feature similar to the Indiana Act under con-

sideration.

[9] The purposes of this Act as stated above at the beginning

of this opinion are to remedy uncertainties in titles and to

facilitate the exploitation of energy sources and other valuable

mineral resources. The dependence of local economies upon the

mineral recovery industry and the entire State upon limited

fossil fuel resources illustrates the public nature of these pur-

poses. The objectives are valid and similar to those served by

acts of limitation and the law of adverse possession. In limiting

its incursion upon mineral rights to those which have been unused

in the statutory sense for as long as twenty years, and in gran-

ting a two year period of grace after the enactment of the statute

to preserve interests, the Legislature adopted means which are

rationally related to such objectives, and which themselves pro-

vide a reasonable time and a simple and inexpensive method,

taking into consideration the nature of the case, for preserving

such interests. We find that this Act is within the police power

of the states and does not unconstitutionally impair the obliga-

tion of contracts.

{10} The trial court’s judgment is arguably based upon the

conclusion that the statute effectuates a taking of property

without just compensation contrary to the mandate of Art. I, §

= Arid =

21, of the Indiana Constitution. We agree with appellant that

extinguishment of mineral interest under this statutory scheme

does not involve an exercise by the State of its power of eminent

domain. The State through this statute is not actually taking the

mineral interest for its own use and benefit. Consequently, Art.

I, § 21, does not provide an applicable standard for review of

this statute. Buckler v. Hilt, (1936) 209 Ind. 541, 200 N.E. 219;

Foreman v. State ex rel. Department of National Resources,

supra. Appellees point to Evansville & Crawfordsville R. R. Co.

v. Dick, (1857) 9 Ind. 433, in which this Court stated:

**{T])he legislature have no power to authorize, in any case,

either a direct or consequential injury to private property,

without compensation to the owner.’’ 9 Ind. at 436.

This statement in context gave support to the court’s ruling

that the power of eminent domain cannot serve as a source of

immunity from suits for damages for injury to private property.

The Mineral Lapse Act does not involve the injury to private

property through conduct or activities of governmental agents

or others having and exercising the power of eminent domain. It

declares instead that a lapse of a mineral interest will occur in

the event of specified conditions and circumstances. We are

satisfied that substantive due process provides the proper stan-

dard for constitutional review of it.

[11] Appellant next contends that the trial court erred in con-

cluding that the Act is violative of the guarantees of Art. I, § 23,

of the Indiana Constitution and the Fourteenth Amendment of

equal protection of the law by reason of the special treatment

afforded certain owners of mineral interests described in

Ind.Code § 32-5-11-5. That provision states:

‘*Failure to file a statement of claim within the time pro-

vided in section 4 shall not cause a mineral interest to be

extinguished if the owner of such mineral interest:

— A-ll —

(1) was at the time of the expiration of the period provided

in section four, the owner of ten or more mineral interests,

as above defined, in the county in which such mineral in-

terest is located, and;

(2) made diligent effort to preserve all of such interests

as were not being used, and did within a period of ten years

prior to the expiration of the period provided in section 4

preserve other mineral interests, in said county, by the fil-

ing of statements of claim as herein required, and;

(3) failed to preserve such interest through inadvertence,

and;

(4) filed the statement of claim herein required, within

sixty days after publication of notice as provided in section

seven herein, if such notice is published, and if no such

notice is published, within sixty days after receiving actual

knowledge that such mineral interest had lapsed.”’

By declaring the mineral interest terminable under the condi-

tions set forth in the other sections of the Act, the Legislature

sought to create an environment in which mineral interests will

be promptly exploited or abandoned. If achieved, this objective

would create economic benefits for the people and industries

within local communities where actual development activities

result and would create other land development where abandon-

ment results. The criteria in Ind.Code § 32-5-11-5, can be ra-

tionally conceived as establishing a border line beyond which

strict application of the Act’s extinguishment standards would

become destructive of these goals. Minerals exist within the

earth in strata and informations which do not necessarily coin-

cide with the manner in which man as chosen to divide the sur-

face area. Consequently it is commonly necessary to assemble

several mineral interests in order to render the extraction of

minerals safe and profitable. The Legislature could reasonably

have concluded that those meeting the criteria set forth above

include those most likely to assemble such interests and actually

— A-12 —

produce minerals. The separate classification of interests so held

within these essential clusters is rationally related to the

legitimate objectives of the enactment and is consequently not

contrary to the requirements of state and federal equal protec-

tion.

[12] The Act seeks to remedy a situation though to retard

economic activity vital to the welfare of local communities and

the general public as well. The classification erected does not in-

volve a suspect classification or an impingement upon the exer-

cise of a fundamental right, and consequently the traditional

fair and substantial relation test is applicable to it. Johnson et

al. v. St. Vincent Hospital, Inc. et al., Inc., 404 N.E.2d 585

(1980); Steup, et al. v. Indiana Housing Authority, Ind., 402

N.E.2d 1215 (1980). In this area of economic and social con-

cern, legislative choices are entitled to a large degree of

deference from the court. They are not required to be made with

mathematical precision or along entirely logical lines. William-

son v, ee Optical of Oklahoma, (1955) 348 U.S. 483, 487, 75

S.Ct. 461, 464, 99 L.Ed. 563; Indiana Aeronautics Com’n v.

Ambassadair Inc., (1977) 267 Ind. 137, 368 N.E.2d 1340.

**In short, the judiciary may not sit as a superlegislature to

judge the wisdom or desirability of legislative policy deter-

minations made in areas that neither affect fundamental

rights nor proceed along suspect lines, see, e.g. Day-Brite

Lighting, Inc. v. Missouri, 342 U.S. 42, 423, [72 S.Ct. 405,

407, 96 L.Ed. 469] (1952); in the local economic sphere, it

is only the invidious discrimination, the wholly arbitrary

act, which cannot stand consistently with the Fourteenth

Amendment.’’ City of New Orleans v. Dukes, (1976) 427

U.S. 297, 303-304, 96 S.Ct. 2513, 2517, 49 L.Ed.2d 511.

There has been no demonstration made which convinces us that

the classification of Ind.Code § 32-5-11-5 is invidiously

discriminatory or wholly arbitrary.

— A-13 —

The judgments of the trial court here appealed from declaring

the statute unconstitutional are reversed and the cases remanded

to the trial court for enforcement of the Act.

GIVAN, C. J., and HUNTER, PRENTICE and PIVARNIK,

JJ., concur.

— A-14 —

APPENDIX B

(Opinion of Trial Court)

STATE OF INDIANA

SS:

COUNTY OF GIBSON

IN THE GIBSON CIRCUIT COURT

Cause No. C-77-248

Louise F. Short

vs.

Texaco, Inc.

Robert Braselton

Electra Fields

Charles Braselton

Robert E. Brazelton

Clifford M. Braselton

Osborne T. Brazelton, Jr.

David Burkhart

D.W. Mayhew, d/b/a Mayhew Oil

And Gas Developments

DeBeers Diamond Investment, LTD.

JUDGMENT ENTRY

(Filed September 18, 1978)

Comes now the plaintiff, by counsel, and come now the

defendants, by counsel, and this matter having been submitted

to the Court on the Stipulation of Facts and the Pre-trial Order

of the Court dated July 28, 1978, and the parties having exten-

sively briefed the legal issues involved, same now comes on for

judgment by the Court, without the intervention of a jury.

And now the Court finds:

— A-15 —

1. The Court has jurisdiction of the parties and subject mat-

ter.

2. The Attorney General of the State of Indiana has been du-

ly notified of the claimed unconstitutionality of Indiana Code

1971, Section 32-5-11-1, ef seg, and has appeared and filed brief

herein.

3. The Stipulation of Facts, filed herein, is hereby adopted

by the Court as the Court’s Finding of Fact.

4. Indiana Code 1971, Section 32-5-11-1, et seg, being the so-

called Indiana Mineral Lapse Statute, is unconstitutionally

defective and is violative of the following Sections of the In-

diana Constitution:

a. Article I, Section 21, providing:

**No man’s property shall be taken by law without

just compensation’’.

b. Article I, Section 23, providing:

‘*The General Assembly shall not grant to any citizens

or class of citizens privileges and immunities which,

upon the same terms, shall not equally belong to all

citizens.’’

c. Article I, Section 24, providing:

**No ex post facto law, or law impairing the obliga-

tion of contracts, shall ever be passed.””

5. Indiana Code 1971, Section 32-5-11-1, ef seq, being the so-

called Indiana Mineral Lapse Statute, is unconstitutionally

defective and is in violation of the following provisions of the

Constitution of the United States of America:

a. As to the Fifth Amendment to the Constitution of the

United States of America reading:

— A-16 —

**No person shall be . . . deprived of life, liberty or

property without due process of law; nor shall private

property be taken for public use, without just com-

pensation.”’

b. Section 1 of the Fourteenth Amendment to the Con-

stitution of the United States of America providing:

**No State shall make or enforce any law which shall

abridge the privileges or immunities of citizens of the

United States; nor shall any State deprive any person

of life, liberty or property, without due process of

law; nor deny to any person within its jurisdiction

equal protection of the law.’’

6. The constitutional defects of the state in question go to the

very heart of the statute and therefore the entire statute is un-

constitutional, void and of no effect.

A The Court adopts, by reference, its reasoning as to un-

constitutionality the memorandum opinion entered July 24,

1978 in Pond et al v. Walden, et al, being Cause Number C-78-1

in this Court.

The Court having stated its Findings of Facts now states its

Conclusions of Law:

A. Indiana Code 1971, Section 32-5-11-1, et seg, being the

so-called Indiana Mineral Lapse Statute, is unconstitutional in

its entirety and is therefore void and of no effect.

B. The plaintiff, Louise F. Short, is the owner of the follow-

ing described real estate, situated in Gibson County, Indiana,

to-wit:

The east half of the southwest quarter of Section 29,

Township 2 South, Range 11 west, containing 80 acres,

more or less.

— A-17 —

ALSO, a part of the west half of the southwest quarter of

Section 29, Township 2 south, Range 11 west, and more

particularly described as follows:

Beginning at the northeast corner of said half quarter sec-

tion and running thence south 104 rods; thence west of the

west line of said half quarter section; thence north to the

northwest corner thereof; thence east to the place of begin-

ning, and containing 52 acres, more or less,

and containing in all 132 acres, more or less.

(herein called the ‘‘Real Estate’’), subject to the following:

C. An undivided one-half (2) interest in and to all of the

‘oil, gas and other minerals, except coal, that may be produced

from’’ the Real Estate, ‘‘together with the right of ingress and

egress at all times for the purpose of mining, drilling, exploring,

operating and developing said lands for oil, gas and other

minerals and storing, handling, transporting and marketing the

same therefrom with the right to remove from said land all of

Grantee’s property and improvements.’’ Said interest being

subject to all of the terms and conditions of a ‘‘Mineral Deed’’

recorded April 23, 1942 in Deed Record Book 115, at page 197,

in the Office of the Recorder of Gibson County, Indiana, which

Mineral Deed interest is now vested in the defendant, Texaco,

Inc.

D. An undivided one-sixth (1/6th) interest in and to all of the

oil, gas and other minerals, except coal, that may be produced

from the Real Estate, said interest being subject to all of the

terms and conditions of a Mineral Deed dated July 7, 1944 and

recorded in Deed Record 120, at page 17, in the Office of the

Recorder of Gibson County, Indiana, which interest is now

vested in the defendants, O. T. Brazelton, Jr., and Robert E.

Brazelton.

E. An undivided one-thirty-second (1/32nd) interest in and

to all of the oil, gas and other minerals, except coal, that may be

— A-18 —

produced from the Real Estate, said interest being subject to all

of the terms and conditions of a Mineral Deed dated July ___.,

1944 and recorded in Deed Record 120, at page 46, in the Office

of the Recorder of Gibson County, Indiana, which interest is

now vested in the defendants, Robert E. Brazelton, Charles

Brazelton, Chester Brazelton, Clifford Brazelton, O. T.

Brazelton, Jr., John P. Brazelton and Rosa G. Burkhart.

F. An undivided two-sixteenth (2/16th) interest in and to all

of the oil, gas and other minerals, except coal, that may be pro-

duced from the Real Estate, said interest being subject to all of

the terms and conditions of a Mineral Deed dated July ___.,

1944 and recorded in Deed Record 120, at page 46, in the Office

of the Recorder of Gibson County, Indiana, which interest is

now vested in the defendants, Robert E. Brazelton.

G. The defendant, D.W. Mayhew, d/b/a Mayhew Oil and

Gas Development, is the Lessee of an oil and gas lease from the

defendants, Texaco, Inc., John P. Brazelton and Jane E.

Brazelton, Charles Brazelton, ef ux, and Clifford Brazelton, ef

ux, Robert E. Brazelton, et ux, Clifford Brazelton and Ellen

Brazelton and O.T. Brazelton, a/k/a O. T. Brazelton, Jr.,

which oil and gas leases are recorded as follows:

(a) In Drawer 2, Card 9155

(b) In Drawer 2, Card 9370

(d) In Drawer 2, Card 9072

(e) In Drawer 2, Card 9073

(f) In Drawer 2, Card 9074

in the office of the recorder of Gibson County, Indiana, which

oil and gas leases are valid and subsisting as relates to the Real

Estate.

— A-19 —

H. The plaintiff should pay the costs of this action.

IT IS, THEREFORE, CONSIDERED, ORDERED, AD-

JUDGED AND DECREED that judgment herein be entered in

accordance with the aforementioned Findings of Facts and

Conclusions of Law and that plaintiff take nothing by her com-

plaint, that defendants are entitled to relief as set forth herein

and that the plaintiff pay the costs of this action.

/s/ Walter Palmer, Judge, Gibson

Circuit Court

JOHNSON, CARROLL AND GRIFFITH, P. C.

2230 W. Franklin Street

P.O. Box 6016, Station B

Evansville, Indiana 47712

Telephone: (812) 425-4466 (#5)

—< Po

APPENDIX C

(Judgment Appealed From)

STATE OF INDIANA

SS:

COUNTY OF GIBSON

IN THE GIBSON CIRCUIT COURT

1978 TERM

Cause No. C-78-17

Order Entry, July 25, 1978

Eden H. Pond, Edna H. Bobe, Consolidation Coal Co.

Ulysses G. Walden Jr., Carolyn Sallee Walden

MEMORANDUM OPINION AND

JUDGMENT ON AGREED CASE

(Filed July 24, 1978)

This case comes before this Court upon the Submission of an

Agreed Case by the parties herein, pursuant to Indiana Code

1971, Sections 34-1-29-1 ef seg., with the necessary facts and

Record, as defined in that statute. It is believed reiteration of

the facts or of the Record are unnecessary except for reference.

The Trial Court wishes to express its gratitude to counsel for

Plaintiffs, Defendants, Attorney General of the State of In-

diana and Intervenor for their scholarly Briefs in this com-

plicated legal issue.

— A-21 —

The essential decision necessary in this case is to determine

whether or not the so-called Indiana Mineral Lapse Statute, be-

ing 1.C. 1971, 32-5-11-1 et seg. is constitutionally acceptable. If

as contended by plaintiff it is unconstitutional, then plaintiff

will prevail by judgment. If constitutional, there must necessarily

be judgment for the defendants.

This Court feels that a short statement of matters of concern

by way of Memorandum may be helpful to those affected by

this Decision, as well as those reviewing the action of this Court.

It cannot be rationally doubted that the State of Indiana

reserves the right inherent in this organized society to act in the

public welfare, even to the extent of impairment of private con-

tract. Home Building and Loan v. Blaisdell, (1934) 290 U.S.

398. As a general proposition of Constitutional Law, however,

this Court believes the U.S. Supreme Court normally will ab-

stain upon issues relating to the contract laws of the individual

States. However, there are discussions in cited cases as to the

principles, Blaisdell, supra.

It should be noted in the Agreed Facts of this case that we are

not discussing an issue of murky titles, or long-lost owners of in-

terests. There is no ‘‘cloud’’ on the title to this real estate, ex-

cept to the extent that the Statute challenged poses such a cloud.

This Statute creates a challenge to vested property rights, by the

statutory terms of non-use or failure to register. At Common

Law, there could be no termination in mineral rights as a

separate estate from the fee. The question then becomes, first:

can the Indiana Legislature create such a challenge, and second:

has the Legislature in this Statute done so in a Constitutionally

acceptable manner.

This Court does not question that the Legislature had a valid

purpose in passage of this Statute, i.e., exploitation of the

State’s energy sources, but the method chosen is believed to be

unconstitutional.

= A-22 =

As stated, very scholarly arguments are advanced for the

proposition that the Statute is Constitutional. All of these

arguments fail to answer the basic inequitable result in this case,

that a judgment for the surface rights owners would give them a

demonstrably valuable asset in derogation of their contractual

purchase, with no notice to the mineral rights owners, and no

compensation to the valid owners for their loss.

Suppose the State of Indiana had been the takers of these

rights from the mineral owners for distribution to some one who

would exploit them, arguably for the common good. Would not

Constitutionally there be a requirement of notice to the mineral

owners, a right of hearing, some form of compensation, as, for

example, the tax sale of real estate?

It seems clearly the law in this Country that before property

rights can be taken from persons, these persons have some

rights as to notice and hearing. The subject matter would

govern what procedural requirements are involved, but Con-

stitutionally it would seem the hearing would revolve around the

facts essential to determination of the controversy. Bell v. Burn-

son (1971), 402 U.S. 535; Mullane v. Central Hanover Bank and

Trust Co. (1950) 339 U.S. 306; Goldberg v. Kelley (1970), 397

U.S. 254.

Another unresolved question is, what harm would result had

the statute required notice been given the mineral owners prior

to the drastic severage and delivery of ownership from the

mineral owner to the surface owner, at least such notice as is

contemplated in Mullane, supra? It would perhaps induce litiga-

tion, but one queries whether that is not already the case with

the statutory framework existing. The notice provision in I.C.

1971, 32-5-11-6 would seem just as precipitating a rule as would

be notice prior to the legislature taking. Expediency is not

always justice, whether the end sought is laudable or not.

= Ad —

For the reasons stated herein, this Court finds, Indiana Code,

1971 32-5-11-1, et seq. being Acts 1971, P.L. 423 is unconstitu-

tional, void and of no effect.

This Memorandum of Opinion constitutes the Findings of

Fact and The Conclusions of Law of This Court.

IT IS, THEREFORE, ORDERED, ADJUDGED AND

DECREED by this Court that there be judgment for the Plain-

tiffs herein and against the Defendants, that Plaintiffs shall

recover their costs expended, that Plaintiffs, Eden H. Pond and

Edna H. Bobe, are declared to be the equal owners as tenants in

common of the mineral rights in the real estate in question pur-

suant to the Agreed Facts, and Consolidation Coal Company is

the nolder of a valid and subsisting lease covering said interests.

Judgment accordingly.

/s/ WALTER H. PALMER, JUDGE

GIBSON CIRCUIT COURT

= A-34 =

STATE OF INDIANA

SS:

COUNTY OF GIBSON

IN THE GIBSON CIRCUIT COURT

1980 Term

Cause No. C-77-248

In Re

Louise F. Short

Vv.

Texaco, Inc., et al,

ORDER

(October ___., 1980)

Comes now the plaintiff by counsel and come also the defen-

dants by counsel, and the Court now takes judicial notice of the

opinion of the Supreme Court of Indiana issued in this cause on

June 23, 1980, which opinion is in the words and figures follow-

ing, to-wit:

(H.1.)

and also takes judicial notice of the denial of Appellees’ petition

for rehearing issued in this cause on September 24, 1980.

And now the Court, having reconsidered the stipulated facts

and issues in this cause in accordance with the foregoing, does

now vacate the judgment heretofore entered and in lieu thereof

enters the following conclusions of law and judgment:

Conclusions of Law

1. The statements of claim of mineral interest filed on June 9

and June 17, 1977, by certain of the defendants did not preserve

the interest of said defendants, or any of them, from extinction

or lapse under Public Law 423, Acts of the Indiana General

Assembly of 1971.

2. Plaintiff’s failure to give notice to John P. Braselton and

Gwendolyn Burkhart of the lapse of their interests did not

preserve the interests of said defendants, or any of them, from

extinction or lapse under Public Law 423, Acts of the Indiana

General Assembly of 1971.

3. The issuance of the oil and gas leases described in

paragraph 18 of the Stipulation of Facts did not preserve the in-

terests of the defendants, or any of them, from extinction or

lapse under Public Law 423, Acts of the Indiana General

Assembly of 1971.

4. As applicable to the facts of this case, Public Law 423, Acts

of the Indiana General Assembly of 1971, is constitutionally

valid and enforceable under the Constitutions of both the State

of Indiana and the United States of America, and, in accor-

dance with the provisions of said Act, plaintiff is entitled to the

relief prayed for in plaintiff’s Complaint for Declaratory Judg-

ment.

IT IS, THEREFORE, ORDERED, ADJUDGED AND

DECREED by the Court that the mineral intersts described and

referred to in numbered paragraphs 2, 3, 4, 5, 6, 7 and 10, of the

Stipulation of Facts heretofore filed herein, be and the same are

hereby declared to be permanently and absolutely lapsed and

extinguished.

IT IS FURTHER ORDERED, ADJUDGED AND

DECREED by the Court that the plaintiff, LOUISE F.

SHORT, has succeeded to said interests as the present owner of

the interest out of which said mineral interests were carved.

IT IS FURTHER ORDERED, ADJUDGED AND

DECREED by the Court that the oil and gas leases described in

numbered paragraph 11 of the Stipulation of Facts in favor of

D. W. Mayhew d/b/a Mayhew Oil and Gas Development are

invalid and ineffective by reason of prior extinguishment of the

Lessors’ mineral interests.

IT IS FURTHER ORDERED by the Court that the defen-

dants shall pay the costs of this action.

/s/ WALTER PALMER

Judge, Gibson Circuit Court

— A-27 —

APPENDIX D

(Denial of Petition for Rehearing)

(Received September 26, 1980)

STATE OF INDIANA

Clerk of the Supreme Court

and Court of Appeals

Majorie H. O‘Laughlin, Clerk

217 State House

No. 179823 and 12788303

Louise F. Short v. Texaco, Inc., et al

State of Indiana, et al v. Eden H. Pohd, et al

You are hereby notified that the Supreme Court

has on this day denied Appellee’s Petition for Rehearing.

Givan, C.J.

Please acknowledge receipt of this notice in order

that our records may show that you have been

notified of this action.

WITNESS my name and the seal of said Court,

this 24th day of September, 1°20

/s/ Marjorie H. O’Laughlin

Clerk Supreme Court and Court

of Appeals

Hall, Partenheimer & Leucking, Princeton

Mark W. Rietman, Evansville

Charles R. Nixon, Princeton

Johnson, Carroll & Griffith, Evansville

Fine, Hatfield, Sparrenberger & Fine, Evansville

— A-28 —

APPENDIX E

(Notice of Appeal)

IN THE

SUPREME COURT OF INDIANA

No. 179 S 23

Louise F. Short,

Appellant,

Vv.

Texaco, Inc., Robert Braselton, Electra Fields, Charles Braselton,

Chester Braselton, Robert E. Brazelton, Clifford N.

Braselton, Osborne T. Braselton, Jr., David E. Burkhart,

John P. Braselton, Rosa G. Burkhart, D.W. Mayhew,

d/b/a Mayhew Oil and Gas Development, DeBeers Dia-

mond Investment, Ltd.,

Appellees,

State of Indiana,

Intervenor.

Appeal from the Gibson Circuit Court

The Honorable Walter H. Palmer, Regular Judge

NOTICE OF APPEAL TO THE SUPREME COURT

OF THE UNITED STATES

(Filed November 17, 1980)

Notice is hereby given that Texaco, Inc., Robert Braselton,

Electra Fields, Charles Braselton, Chester Braselton, Robert E.

Brazelton, Clifford N. Braselton, Osborne T. Braselton, Jr.,

David E. Burkhart, John P. Braselton, Rosa G. Burkhart, D.

W. Mayhew d/b/a Mayhew Oil and Gas Development, DeBeers

— A-29 —

Diamond Investment, Ltd., Appellees, hereby appeal to the

Supreme Court of the United States from the final judgment of

the Supreme Court of Indiana reversing the judgment of the

trial court, entered in this action on September 24, 1980.

This appeal is taken pursuant to Title 28, United States Code,

Section 1257, subparagraph two (2).

Dated this 17th day of November, 1980.

/s/ John L. Carroll (a Member of

the Bar of the United States

Supreme Court)

For Appellees, Texaco, Inc.,

Robert Braselton, Electra Fields,

Charles Braselton, Chester

Braselton, Robert E. Braselton,

Clifford N. Braselton, Osborne T.

Braselton, Jr., David E. Burkhart,

John P. Braselton, Rosa G.

Burkhart, D. W. Mayhew d/b/a

Mayhew Oil and Gas Develop-

ment, DeBeers Diamond Invest-

ment, Ltd.

JOHN L. CARROLL

Johnson, Carroll and Griffith, P. C.

2230 W. Franklin Street

P.O. Box 6016, Station B

Evansville, Indiana 47712 (#35)

Certificate of Service

JOHN L. CARROLL, being first duly sworn, upon his oath,

says:

1. That he is the Attorney of record for the Appellants in the

above entitled cause.

— A-30 —

2. That on or before the 3rd day of December, 1980, he served

upon the opposing counsel in the above entitled cause, the

following:

Notice of Appeal to the Supreme Court of the United

States

by depositing the same in the United States Mail, certified mail,

return receipt requested, postage paid, at Evansville, Indiana,

properly addressed to:

Verner P. Partenheimer, Jr.

Attorney at Law

219 North Hart Street

P.O. Box 313

Princeton, Indiana 47670

James M. Buthod

Attorney at Law

Suite 409, Citizens Building

115 Southeast Third Street

Evansville, Indiana 47708

Charles R. Nixon

Attorney at Law

223 West State Street

Princeton, Indiana 47670

Theodore Sendak

Attorney General

State of Indiana

State House

Indianapolis, Indiana 46204

/s/ John L. Carroll

SUBSCRIBED AND SWORN TO before me, a Notary

Public in and for said County and State, this 3rd day of

December, 1980.

— A-3l =

Anne V. Finck, Notary Public

County of Residence: Vanderburgh

My Commission Expires:

August 1, 1981

JOHNSON, CARROLL & GRIFFITH, P.C.

2230 West Franklin Street

P.O. Box 6016

Evansville, Indiana 47712

Telephone: (812) 425-4466 (#36)

— A-32 —

APPENDIX F

(The Indiana Dormant Mineral Interests Act)

I.C, 32-5-11-1 et seq.

32-5-11-1 [46-1808]. Lapse of mineral

interest—Prevention.—Any interest in coal, oil and gas, and

other minerals, shall, if unused for a period of 20 years, be ex-

tinguished, unless a statement of claim is filed in accordance

with section five [32-5-11-5] hereof, and the ownership shall

revert to the then owner of the interest out of which it was carv-

ed. (IC 32-5-11-1, as added by Acts 1971, P.L. 423, § 1.]

32-5-11-2 [46-1809]. Mineral interest—Definition.—A

mineral interest shall be taken to mean the interest which is

created by an instrument transferring, either by grant, assign-

ment, or reservation, or otherwise an interest, of any kind, in

coal, oil and gas, and other minerals. [IC 32-5-11-2, as added by

Acts 1971, P.L. 423, § 1.]

32-5-11-3 [46-1810]. Use of mineral interests—Definition.—A

Mineral interest shall be deemed to be used when there are any

minerals produced thereunder or when operations are being

conducted thereon for injection, withdrawal, storage or

disposal of water, gas or other fluid substances, or when rentals

or royalties are being paid by the owner thereof for the purpose

of delaying or enjoying the use or exercise of such rights or

when any such use is being carried out on any tract with which

such mineral interest may be unitized or pooled for production

purposes, or when, in the case of coal or other solid minerals,

there is production from a common vein or seam by the owners

of such mineral interests, or when taxes are paid on such

mineral interest by the owner thereof. Any use pursuant to or

authorized by the instrument creating such mineral interest shall

be effective to continue in force all right granted by such instru-

ment. [IC 1971, 32-5-11-3, as added by Acts 1971, P.L. 423, § 1,

p. 1970.)

— A-33 —

32-5-11-4 [46-1811]. Statement of claim—Filing—Re-

quirements.—The statement of claim provided in section one

{32-5-11-1] above shall be filed by the owner of the mineral in-