Jurisdictional Statement — EDEN H. POND v. ULYSSES G. WALDENEN JR. (Nos. 80-1018, 80-965)

80-1018 ;-

_ Supreme Court, U.

LED

NO. DEC 19 1980

IN THE

SUPREME COURT OF THE UNITE

OCTOBER TERM, 1980

EDEN H. POND,

EDNA H. BOBE,

CONSOLIDATION COAL COMPANY,

Appellants,

Vv.

ULYSSES G. WALDEN, JR.

CAROLYN SALLEE WALDEN,

Appellees,

LOUISE F. SHORT,

Intervenor.

ON APPEAL FROM THE SUPREME COURT OF INDIAN».

JURISDICTIONAL STATEMENT

JAMES M. BUTHOD and MARK W. RIETMAN

BUTHOD, LONGEST, BUTHOD and RIETMAN

Citizens Building, Suite 409

115 Southeast Third Street

Evansville, Indiana 47708

Telephone: (812) 423-5261

Counsel for Appellants

Unigraphic, Inc., 1401 N. Fares Ave., Evansville, Ind. 47711, Phone 424-3680

a.

THE QUESTIONS PRESENTED FOR REVIEW

This Appeal raises the issue of the constitutionality of

an Indiana Statute, Indiana Code 1971, 32-5-11-1 through

32-5-11-8, commonly known as the Indiana Mineral Lapse Act,

which statute provides that a mineral interest severed from the

surface is deemed to have lapsed if a use of the mineral interest

is not made within twenty years of the severance or if a state-

ment of claim setting forth the ownership of the severed miner-

al interest is not filed within the statutory period with the

recorder in the county in which the property is located. There

are four constitutional questions presented for review:

a) Whether the Indiana Mineral Lapse Act violates

procedural due process protections of the Fourteenth

Amendment, Section 1, of the Constitution of the

United States by failing to provide for any notice

or hearing prior to the termination of the mineral

interest, or at some meaningful time After the termi-

nation of the mineral interest.

b) Whether the Indiana Mineral Lapse Act constitutes an

* impairment of contract in violation of the Constitu-

tion of the United States, Article I, Section 10, by

voiding contractual conveyances of mineral interests,

with there being no overriding public interest which

justifies the methods used in transferring ownership

of the mineral interest.

c) Whether the Indiana Mineral Lapse Act constitutes

a taking of private property without compensation

and for private use in violation of the due process

clause of the Fourteenth Amendment, Section 1,

of the Constitution of the United States, in that no

compensation is given to the owner of the severed

mineral interest upon the lapse of this interest pursu-

ant to the statute and the ownership is thereby

transferred to a private rather than public entity.

2-

d) Whether the provision in the Indiana Mineral Lapse

Act - which provides that owners of more than ten

mineral interests in a county who inadvertently fail

to file a statement of claim, must be given written

notice prior to the lapse of their interest, when simi-

lar protection is not provided for owners of less than

ten mineral interests in a county - violates the equal

protection clause of the Fourteenth Amendment,

Section 1, of the Constitution of the United States.

THE PARTIES TO THE PROCEEDING

All of the parties to the proceeding are shown in the

caption with the exception that Theodore L. Sendak, the Attor-

ney General for the State of Indiana, is also a party to this

Appeal, and has received notice of the appeal.

There is a companion case, although not consolidated

with the present case, which raised substantially the same issues

before the Supreme Court of Indiana as the present case,

styled “Louise F. Short v. Texaco, Inc., et al., Supreme Court

of Indiana, No. 179 S. 23.” Both this case and the Short case

concern the constitutionality of the Indiana Mineral Lapse

Act (“the Act”) as applied to interests in oil, gas and other

fugacious minerals. The instant case raises, additionally, the

constitutionality of the act as applied to coal and other solid

minerals. While the questions presented are largely parallel,

certain conceptual distinctions were raised below which might

‘dictate differing conclusions as between solid and fugacious

minerals.

3

TABLE OF CONTENTS

Page

The Questions Presented for Review ............200005- 1

The Parties to the Proceedings ...........cccseeccerecs 2

po BM RP ee Bp eo nn ae a ee 3

Table of Authorities .........ccceccees ace dee’ ee 4,5

Reference to the Opinion Below ............ceeeeeeees 6

Statement of the Grounds on which the Jurisdiction

OC COE BS ooo hd a 0 00 hb) cet Vetce 6

Constitutional Provisions and Statutes Involved .......... 6

SE ND a Bb 0 cS he oeesawwe RTS avoweies 11

EEE I TU vieaiccccesdceMaiiesdecs¥ien 14

CE oii aioe baba 08 oe CRONE PE BES Ve baci 24

Appendix A - Opinion and Judgment of the Supreme

CGE NN CFs ceacachebivedcdscbeswese A-l

Appendix B - Trial Court’s Memorandum Opinion

and Judgment on Agreed Case ...........--06. A-16

Appendix C - Order of the Indiana Supreme Court

ONE EEE SScinwd es Vip de webe.vedceses A-20

Appendix D - Notice of Appeal to the Supreme

Court of the United States .......ccccceceees A-21

4.

TABLE OF AUTHORITIES

Cases: Page

Allied Structural Steel Company v. Spannaus, (1978)

438 U.S. 234, 98 S.Ct. 2716, 57 L.Ed.2d 727 ...... 21

Bickle v. Fairchild, (May, 1978) 83 Mich.App. 467,

26S LW 26 SEE vc cccccccewcscccrcscvcccce 15,22

Chicago and Northwestern Transportation Company

v. Pederson, (1977) 80 Wis.2d 566, 259 N.E.2d

REN AAAI Se fates ADS, Ser ee 3 15, 17, 18,21, 22

City of New Orleans v. Duke, (1976) 427 U.S. 297,

Fe ee Ee RU ER cdc edseccccenns 23

Contos v. Herbst, (1979) Minn. , 278

PREP Se chebhessovcedisebevneces 16, 17, 21

James T. M. Prest, appellant v. Robert L. Herbst, et

al, appellees, No. 79-49, US. ‘

PP SEC ET ob ccc cavbsbeseccccceces 17

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

Se EI EE ia bin dc ona 0.6 cddweresor 2

Louise F. Short v. Texaco, Inc., et al., (1980)

Ind. ,406 N.E.2d 625 ..... 6, 13, 18, 22

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

436 US. 1,98 S.Ct. 1554, 56 L.Ed.2d 30 ......... 20

Missouri Pacific R. Co. v. Nebraska ex rel. Board of

Transportation, (1896) 164 U.S. 403, 17 S.Ct.

Es ON We 5 oink s Ka ah ps how b 0066.00 22

Mullane v. Central Hanover Trust Company, (1950)

339 US. 306, 70 S.Ct. 652, 94 L.Ed. 865 ......... 20

Ochoa v. Hernandez y Morales, (1913) 230 U.S.

SSR, oo OA, BOSS; ST LBS. U4ZF sc ccccccccce 2U

7%

Cases (con’t.): Page

United States Trust Company v. New Jersev. (1977)

431 U.S. 1,97 S.Ct. 1505, 52 LEd.2d92......... 21

Van Slooten v. Larsen, (1978) Mich. App. .

EE dG bdaeded yenwed cibaenacoeee 16

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

BE ke Uns + conde badbavesetaececns 16,22

Wilson v. Bishop, (October, 1980) Ill. ;

SMES Ase a ay i awliae 6s tae 17, 18,21

Constitutional Provisions:

Constitution of the United States, Article 1, Section 10 .... 1

Constitution of the United States, 14th Amendment,

UL This 6k cP a p8's 60.66 0 8:d wesere cee eee soe 2,6

Statutes:

Indiana Code 1971, § 32-5-11-1 et seq. ............ 1,6, 11

Indiana Code 1971,832-5-l1-1 2.0... .. cc cece eee eee 7,19

Indiana Code 1971, 8 32-5-11-2 ...... neds hasipee bee e en's 7

Indiana Code 1971, $32-5-11-3 1... .... cece eceeceees 8

Indiana Code 1971, 8 32-5-114 ........ cece eee e ween 8

Indiana Code 1971,832-5-11-5 ........ cece cece ees 9,23

Indiana Code 1971, $8 32-5-11-6 .........cceeeeeees 10, 20

PI CORE ISTE CORNET ic icc cccccccccccocens 10

Indiana Code 1971, $32-5-11-8 .......... cee eee eeees 11

Indiana Code 1971, $ 34-1-29-1 ef seq. 2... cc eee eeeeee 11

Title 28, United States Code, Section 1257, Sub-

SE oe cob sip aes ncbheteh Ca¥ ace we 6

ibe

REFERENCE TO THE OPINION BELOW

The Supreme Court of Indiana combined the present

case with the aforementioned case of Short v. Texaco, et al.,

for purposes of its opinion. This opinion is reported as Short

v. Texaco, Ind. , 406 N.E.2d 625 and it is re-

printed in Appendix A hereto.

The unreported “Memorandum Opinion and Judgment

on Agreed Case” entered by the Judge of the Gibson County

Circuit Court, dated July 24, 1978, is reprinted in Appendix

B hereto.

STATEMENT OF THE GROUNDS ON WHICH

THE JURISDICTION OF THIS COURT IS INVOKED

The judgment of the Supreme Court of Indiana, declar-

ing constitutional the Indiana Statute, Indiana Code 32-5-1 1-1

through 32-5-11-8, commonly known as the Indiana Mineral

Lapse Act, was entered on June 23, 1980.

A. petition for rehearing, timely filed, was denied on

September 24, 1980. (Appendix C)

A Notice of Appeal to this court was duly filed in the

Supreme Couri of Indiana on December 5, 1980. (Appendix D)

This Appeal is being docketed in this court within ninety

(90) days from the denial of rehearing below. The jurisdiction

of this court is invoked under Title 28, United States Code,

Section 1257, Subparagraph 2.

CONSTITUTIONAL PROVISIONS AND

STATUTES INVOLVED

14th Amendment, Section 1, United States Constitution:

“All persons born or naturalized in the

United States, and subject to: the jurisdiction

thereof, are citizens of the United States and of

Je

the state wherein they reside. No state shall make

or enforce any law which shall abridge the privi-

leges and 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 protection of the laws.”

Article 1, Sec. 10, United States Constitution:

“No state shall enter into any treaty, alliance

or a confederation; grant letters of marque and

reprisal; coin money; emit bills of credit; make

anything but gold and silver coin as tender in

payment of debts; pass any bill of attainder, ex

post facto law, or law impairing the obligations

of contracts, or grant any title of nobility.”

The Indiana Code (Compiler’s additions shown in bold

face type):

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 extinguished, unless a state-

ment 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 carved. [IC 32-5-11-1, as added by

Acts 1971, P.L. 423, 8 1.]

32-5-11-2 [46-1809]. Mineral interest - De-

finition. - A mineral interest shall be taken to

mean the interest which is created by an instru-

ment transferring, either by grant, assignment, 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.]

8-

32-5-11-3 [46-1810]. Use of mineral inter-

ests - 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 rights

granted by such instrument. [IC 32-5-11-3, as

added by Acts 1971, P.L. 423, 8 1.]

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

Requirements. - The statement of claim provided

in section one [32-5-11-1] above shall be filed by

the owner of the mineral interest prior to the

end of the twenty-year period set forth in section

two [one] [32-5-11-1] or within two [2] years

after the effective date [September 2, 1971] of

this act, whichever is later, and shall contain the

name and address of the owner of such interest,

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

9.

the statement of claim was filed. [IC 32-5-11-4,

as added by Acts 1971, P.L. 423, § 1; 1972, P.L.

11,815.]

32-5-11-5 [46-1812]. Extinguishment of

mineral interest - Exceptions. - Failure to file a

statement of claim within the time provided in

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

interest 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 four

[32-5-11-4] preserve other mineral interests, 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 re-

quired, 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 published, within sixty [60] days after

receiving actual knowledge that such mineral

interest had lapsed. [IC 32-5-11-5, as added by

Acts 1971, P.L. 423, 81.]

-10-

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

Notice requirements - Prima facie evidence. - Any

person who will succeed 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 address of such

mineral interest owner is shown of record or

can be determined upon reasonable inquiry, by

mailing within ten [10] days after such publica-

tion 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 there-

of, shall be promptly filed in the office of the

recorder of deeds in the county wherein such

land is located, the record thereof shall be prima

facie evidence, in any legal proceedings, that such

notice was given. [IC 32-5-11-6, as added by

Acts, 1971, P.L. 423, 8 1.]

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 ser-

vice 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 interest is located, the

recorder shall record the same in a book to be kept

for that purpose, which shall be known as the

“Dormant Mineral Interest Record” and shall

indicate by marginal notation on the instrument

creating the original mineral interest the filing of

the statement of claim or affidavit of publication

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

Acts, 1971, P.L. 423, 81.]

-l1-

32-5-11-8 [46-1815]. Waiver of chapter's

provisions - Time limit. - The provisions of this

chapter 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 32-5-11-8,

as added by Acts 1971, P.L. 423 $1.]

STATEMENT OF THE CASE

The action at bar was filed in the Circuit Court of Gibson

County, Indiana, as an Agreed Case, with an Agreed Statement

of Facts, pursuant to an Indiana Statute, Indiana Code 1971,

Sections 34-1-29-1 and following. The parties stipulated that

the sole issue for determination by the trial court was whether

the Indiana Mineral Lapse Act, Indiana Code 1971, Sections

32-5-11-1 through 32-5-11-8, was constitutional under the

Constitution of the United States and the Constitution of the

State of Indiana. All of the questions set forth in the section

of this Jurisdictional Statement entitled “The Questions Pre-

sented for Review” were first raised and presented to the trial

court. The Agreed Statement of Facts may be summarized as

follows:

On March 1, 1954, Clara M. Haper, Eden H. Pond and

Edna H. Bobe were the owners as tenants in common of an

eighty acre tract of land in Gibson County, Indiana. On that

date, they conveyed by Warranty Deed this eighty acre tract to

Ulysses Walden and Mildred Walden, his wife. This Warranty

Deed contained a reservation of the total mineral estate by the

grantors, Clara M. Haper, Eden H. Pond and Edna H. Bobe.

On August 13, 1959, Ulysses G. Walden and Mildred

Walden conveyed by Warranty Deed to Ulysses G. Walden, Jr.

and Carolyn Sallee Walden, his wife, a seventy-nine acre tract

of land which was part of the aforementioned eighty acre tract.

About the year 1958, Clara M. Haper died intestate

leaving as her sole and only heirs her daughters, Eden H. Pond

and Edna H. Bobe, who succeeded to the interest of Clara M.

-2-

Haper in the severed minerals under the eighty acre tract.

On June 17, 1976, Eden H. Pond, Edna H. Bobe and

Raymond W. Bobe, her husband, as lessors, made, executed

and delivered to Consolidation Coal Company, as lessee, a

coal mining lease covering forty acres of the aforementioned

seventy-nine acre tract. On March 4, 1977, Ulysses Grant

Walden, Jr., and Carolyn Sallee Walden gave written notice to

Edna H. Bobe and Eden H. Pond of the lapse of the mineral

interest pursuant to the Indiana Mineral Lapse Act. On the

same date, March 4, 1977, there was published in the Prince-

ton Daily Clarion, a daily newspaper in Gibson County, Indiana,

a notice of the lapse of the mineral interest pursuant to the

Indiana Mineral Lapse Act. On May 27, 1977, Charles R.

Nixon, as the Attorney for Ulysses Grant Walden, Jr., sent a

notice to Consolidation Coal Company of the claim of his

client, Ulysses Grant Walden, Jr.

On January 12, 1978, the Agreed Statement of Facts

(Complaint) was filed in the Circuit Court of Gibson County,

Indiana. It was stipulated by Eden H. Pond and Edna H. Bobe

that they had made no use of the mineral interest as defined

by the Mineral Lapse Act, and had not filed a Statement of

Claim with the Recorder of Gibson County, Indiana, setting

forth their ownership of the mineral interest. It was further

stipulated by the parties that the sole question for determina-

tion by the trial court was whether the Indiana Mineral Lapse

Act is constitutional under the Constitution of the United

States and the Constitution of the State of Indiana. If the

statute is unconstitutional, Eden H. Pond and Edna H. Bobe

are the owners of the mineral interest in and under the subject

property. If the Mineral Lapse Act is constitutional, the owners

of the mineral interest pursuant to the statute are Ulysses G.

Walden, Jr. and Carolyn Sallee Walden, his wife.

Pursuant to an Indiana statute, the Attorney General

of the State of Indiana was notified during the lawsuit that

the constitutionality of a state statute was being questioned.

The attorney general entered his appearance in the action and

submitted trial briefs on the question of the constitutionality

of the act. In addition, Louise F. Short filed a Petition to

-13-

Intervene in the action and such petition was granted by the

court, After the questions regarding the constitutionality of the

Indiana Mineral Lapse Act were fully briefed and oral argument

was heard, the Trial Court rendered its “Memorandum Opi:.ion

and Judgment on the Agreed Case” [Appendix B] on July 24,

1978, holding that the Indiana Mineral Lapse Act was unconsti-

tutional.

Several weeks after the trial court's opinion and judge-

ment in the present case, the trial court issued its judgment in

another case that was pending in the Gibson Circuit Court in-

volving the constitutionality of the Indiana Mineral Lapse Act,

which case was styled Louise F. Short v. Texaco, Inc., et al.

This case involved oil and gas mineral interests only, The trial

court held that the Indiana Mineral Lapse Act was also uncon-

stitutional as it applied to oil and gas mineral interests.

Constitutional questions being involved, pursuant to

the Indiana Rules of Appellate Procedure, a direct appeal was

taken from the Trial Court judgment to the Supreme Court of

Indiana, Again, all the questions presented in this appeal were

raised, briefed and argued before the Supreme Court of Indiana.

The Attorney General of the State of Indiana was a party to

the appeal and represented the State of Indiana on the question

of the constitutionality of the act. The aforementioned case of

Short v. Texaco was also appealed directly to the Supreme

Court of Indiana. The Supreme Court of Indiana combined

the present case with Short v. Texaco for purposes of oral argu-

ment and opinion. However, the cases were never consolidated.

On June 23, 1980, the Supreme Court of Indiana issued a

joint opinion in the two cases - the present case and Short v.

Texaco - reversing the Trial Court and declaring that the Indiana

Mineral Lapse Act was constitutional. A Petition for Rehearing

was timely filed with the Supreme Court of Indiana, which

petition was denied on September 24, 1980.

-14-

QUESTIONS ARE SUBSTANTIAL

The fundamental issue presented by this appeal is the

determination of what constitutional parameters and guidelines

apply to legislation of the same general nature and thrust of the

Indiana Mineral Lapse Act. Legislative enactments similar to

that here in question - variously designated as dormant mineral

acts or mineral lapse acts - have become prevalent in recent

years and have, in various forms and under various theories,

been adopted in a number of states. As energy shortages con-

tinue and intensify, it is certain that additional efforts of a

similar nature will be made, both in states which have not

previously ventured into the particular area and in those where

prior attempts have been found unconstitutional. Unless and

until definitive guidance as to Federal Constitutional concerns is

available from the ultimate arbiter, continued confusion and

instability is inevitable, thus confounding the announced pur-

poses of this family of legislation. The question is not whether

the states are acting within the police power in enacting such

legislation. Nor is it a question of whether such legislation is

necessary or helpful in promoting mineral development, al-

though there is a strong difference of opinion on the effective-

ness of such legislation. Rather, what must be decided is

exactly what constitutional safeguards should apply to this

form of legislation. The Indiana Mineral Lapse Act is an exam-

ple of a state legislature passing legislation in an attempt to pro-

mote mineral development, without due regard to appropriate

constitutional safeguards.

Conflict Among States

Several other states in addition to Indiana have passed

legislation generally similar to the Indiana Mineral Lapse Act.

This type of legislation is commonly referred to as dormant

mineral legislation. Such other states include Michigan, Wis-

consin, Nebraska, Minnesota and IMinois. The constitutional

validity of each of these dormant mineral statutes has been

«15-

challenged in their respective state courts.

The Supreme Court of Wisconsin considered the constitu-

tionality of Wisconsin dormant mineral legislation in the case

styled Chicago and Northwestern Transportation Company v.

Pederson, (1977) 80 Wis. 2d 566, 259 N.W. 2d 316. Under the

Wisconsin statute the owners of severed mineral rights were

required to record the severance instrument with the register of

deeds of the county with.» three years from the date of the act

or the date of the instrument, whichever was later. Failure to

record within this time period caused the mineral interest to

revert to the surface fee owner. The Wisconsin statute differed

from the Indiana Mineral Lapse Act in that “use” of the mineral

interest did wot preserve the mineral interest. In addition, the

statute required payment of an initial, and thereafter an annual,

registration fee to preserve the mineral rights. Failure to pay

such registration fee within three years from the due date also

resulted in the reversion of the mineral interest to the surface

fee owner, The Supreme Court of Wisconsin held that the Wis-

consin dormant mineral statute was unconstitutional because

it denied procedural due process to the owner of the mineral

interest and because it constituted a taking of private property

from one person for the private use of another without com-

pensation.

Two separate panels of the Court of Appeals in the State

of Michigan have considered the constitutionality of that state's

dormant mineral legislation and have reached directly opposite

conclusions. The Michigan statute applied only to severed oil

and gas interests, It provided that the owner of the oil and gas

mineral interest had twenty years in which to make certain

statutorily defined uses of the property or record a Notice of

Interest with the register of deeds, or else the mineral interest

would be deemed abandoned, with a reversion to the surface

owner, There was also a three year grace period immediately

following the effective date of the act allowing the mineral

interest owners to record their notice preserving their interest.

The Court of Appeals of Michigan in the case of Bickle vy.

Fairchild, (May, 1978) 83 Mich.App. 467, 268 N.W.2d 881,

held the Michigan dormant mineral act to be unconstitutional as

-16-

applied to the defendants in that case, the owners of the miner-

al interest, in that it constituted an unconstitutional impairment

of the obligations of contracts prohibited by the Constitution

of the United States, Article 1, Section 10. In October of 1978,

a second panel of the Court of Appeals of Michigan in the case

of Van Slooten v. Larsen, (1978) Mich.App. yoy

N.W.2d 675, held that the Michigan dormant mineral act was

constitutional, finding that it was a valid exercise of the police

power. This case did not cite the prior decision of Bickle v.

Fairchild.

In December of 1978, the Supreme Court of Nebraska

rendered an opinion regarding the constitutionality of the

Nebraska dormant mineral act in a case styled Wheelock y.

Heath, (1978) 201 Neb. 835, 272 N.W.2d 768. The Nebraska

statute applied to all severed mineral interests and provided that

the owners of the surface could bring an action seeking a ter-

mination and extinguishment of the severed mineral interest,

naming as parties-<defendant all persons having or appearing to

have an interest in the severed mineral interest. The severed

mineral interest would be deemed abandoned if, for a period

of twenty-three years prior to the filing of the lawsuit, certain

satutorily defined uses of the property had not been made nor

a verified claim of interest recorded. There was also a two

year grace period after the effective date of the statute in which

the severed mineral interest owner could assert his claim. The

Supreme Court of Nebraska held that the Nebraska dormant

mineral act was unconstitutional, insofar as it attempted to

operate retroactively, as being violative of the due process and

contract clauses of the United States and the Nebraska Con-

stitutions.

The Minnesota Supreme Court in the case of Contos v.

Herbst, (1979) Minn. , 278 N.W.2d 732, con-

sidered the constitutionality of that state's dormant mineral

legislation, which provided for the forfeiture of a severed

mineral interest to the state unless the record owner filed a

registration statement. Notice was provided for by publication

in a newspaper within the local county and in two mining

publications with nationwide circulation and the statute further

-17-

provided for compensation following forfeiture. However, the

Supreme Court of Minnesota held that the statute was violative

of due process in that it made no provision for a hearing to

determine the validity of the forfeiture. An appeal from this

decision was taken to this court, but was summarily dismissed

for want of a substantial federal question. James T. M. Prest,

appellant v. Robert L. Herbst, et al., appellees, No. 7949,

US. , 100 SC 24, 62 L.Ed.2d 17. The dismissal

of the appeal by this court in the Contos case, should be con-

trolling in the present case on the question of the constitutiona-

lity of the Indiana Mineral Lapse Act.

Most recently the Supreme Court of the State of Illinois

considered the question of the constitutionality of that state’s

dormant mineral legislation in the case of Wilson v. Bishop,

(October, 1980) Ill. ; N.E.2d . The

Illinois statute provided that if a severed oil and gas mineral

interest had not been produced, or a written notice filed with

the County Recorder’s Office setting out the ownership, within

twenty-five years after its creation, the severed mineral interest

_ would be deemed abandoned with the interest then vesting in the

owner of the surface. There was a three year grace period after

the effective date of the act to produce oil and gas or file the

written notice. The Illinois Supreme Court held that the statute

was unconstitutional in that the owners of the severed mineral

interest were entitled to the procedural safeguards of due

process and that failure to provide adequate notice and oppor-

tunity to be heard rendered the legislation unconstitutional.

As is apparent from the above synopses of the various

state court cases determining the constitutionality of dormant

mineral legislation, there is a conflict among the various juris-

dictions regarding the applicability of constitutional provisions

as to this general type of legislation. This conflict is further

shown by the opinion of the Indiana Supreme Court in the

present case in which it cited and discussed the aforementioned

Wisconsin Supreme Court case of Chicago and Northwestern

Transportation Company v. Pederson, (1977) 80 Wis.2d 566

259 N.W.2d 316, which had held the Wisconsin Dormant

Mineral Act unconstitutional. The Indiana Supreme Court,

-18-

in reaching the opposite conclusion on the constitutionality of

this type of legislation, stated:

“Based upon the foregoing analysis we do not find

the case of Chicago and Northwestern Transporta-

tion Company v. Pederson, supra, persuasive.

The reasoning of the Trial Court in 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 re-

quired by procedural due process.” (406 N.E.2d

at 629)

In the aforementioned Illinois Supreme Court case of

Wilson v. Bishop, (October, 1980) Il.

N.E.2d , in which the Illinois dormant mineral act was

held to be “De unconstitutional, the Illinois Supreme Court con-

sidered the Indiana Supreme Court’s decision in the present

case and found it unpersuasive. The Illinois Supreme Court

stated:

“In Short v. Texaco, Inc., (1980) Ind.

, 406 N.E.2d 625, however, the Indiana

Supreme Court upheld a statute that provided for

the reversion of severed mineral interests to surface

owners if, after twenty years, no specified acts

of ownership had occurred or no claim of interest

had been filed within two years after the effective

date of the act. The court concluded that the

statute comported with procedural due process

upon finding that its enactment, along with the

opportunity to prevent reversion of the mineral

interest by filing a claim of interest, provided

sufficient notice to affected owners. That court

also appears to have found support for its con-

clusion in the fact that such 6wners would receive

notice and an opportunity to be heard if a court

-19-

should be called upon at some future time to

determine whether the statutory conditions of

mandatory reversion had occurred. We are un-

persuaded by these reasons and others which

analogize the statute to ordinary statutes of

limitations. * * *”

Given this conflict among the various state courts on the

question of the constitutionality of dormant mineral legislation,

there is a substantial uncertainty as to the constitutional valid-

ity of such legislation. Such uncertainty will continue until

this court fully addresses and resolves the constitutional ques-

tions presented by this type of legislation. This constitutional

uncertainty is particularly harmful since it affects record

ownership of real estate. Certainty in record cwnership of

real estate is essential to the development of the property.

Until this court addresses the constitutional questions raised

by this type of legislation, there will be a chilling effect on

development of mineral interests in those states having such

legislation, including Indiana.

Constitutional Defects of Statute

The most flagrant constitutional defect of the Indiana

Mineral Lapse Act is its failure to require the giving of notice

and to provide a hearing prior to the taking - euphemistically

called a lapse in the act - of the mineral interest or within any

meaningful time period after the taking as required by proce-

dural due process of the Fourteenth Amendment of the United

States Constitution. The Indiana Mineral Lapse Act makes no

provision for giving notice or providing a hearing before or after

the taking of the mineral interest: rather, it provides for a

preemptory, automatic, self-executing and irremediable taking.

Indiana Code 32-5-11-1 states:

“Any interest in coal, oil and gas, and other

minerals, shall, (emphasis added) if unused for

-20-

a period of twenty years be extinguished, unless

a Statement of Claim is filed in accordance with

Section 5 hereof, and the ownership shall (empha-

sis added) revert to the then owner of the interest

out of which it was carved.”

Indiana Code 32-5-11-6 states:

“Any persons who will succeed to the ownership

of any mineral interest, upon the lapse thereof,

may (emphasis added) 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 address of such mineral interest owner is

shown of record or can be determined upon

reasonable inquiry, by mailing within ten days

after such publication a copy of such notice to

the owner of such mineral interest. * * *”

As can be seen, there is no requirement that notice be

given prior to the lapse of the mineral interest. After the lapse

of the mineral interest, the successor in interest may give notice

to the mineral interest owner of the fact that the interest has

already lapsed. Therefore, the taking of the mineral interest

becomes final before any notice provision of the Indiana

Mineral Lapse Act applies and then the successor in interest

has the option of giving notice of the lapse or remaining silent,

without any significant difference in result in most cases,

whether or not notice is given.

This court has stated many times in the past that due

process of law prohibits the deprivation of property without

providing notice and an opportunity for a hearing appropriate

to the case. Mullane v. Central Hanover Trust Company , (1950)

339 U.S. 306, 313, 70 S.Ct. 652, 657, 94 L.Ed. 865, 872-73;

Memphis Light, Gas and Water Division v. Craft, (1978) 436

US. 1, 98 S.Ct. 1554, 1562-63, 13-16, 56 L.Ed.2d 30, 41-43;

Ochoa v. Hernandez y Morales, (1913) 230 U.S. 139, 33 S.Ct.

-21-

1033, 57 L.Ed. 1427, 1437. The Trial Court in the present case

held the Indiana Mineral Lapse Act to be unconstitutional

because of its failure to provide notice and a hearing as required

by procedural due process. Furthermore, the Supreme Courts

of the States of Wisconsin, Minnesota and Illinois held their

states’ dormant mineral legislation to be unconstitutional for

failure to provide notice and a hearing pursuant to procedural

due process requirements. Chicago and Northwestern Trans-

portation Company v. Pederson, (1977) 80 Wis.2d 566, 259

N.W.2d 316; Contos v. Herbst, (1979) Minn ,

278 N.W.2d 732; Wilson v. Bishop, (October, 1980)

Il N.E.2d ,

The Indiana Mineral Lapse Act also violates Article 1,

Section 10 of the Constitution of the United States by im-

pairing the obligations of contracts. The Indiana Mineral Lapse

Act provides for the transfer of a severed mineral interest from

the owner of that interest to the person, or his successors or

assigns, who contractually agreed to the original severance of

the mineral interest. In two recent cases this court has re-

asserted that the contract clause is not without meaning in

modern constitutional jurisprudence United States Trust

Company v. New Jersey. (1977) 431 U.S. 1, 97 S.Ct. 1505,

52 L.Ed.2d 92; Allied Structural Steel Company v. Spannaus,

(1978) 438 U.S. 234, 98 S.Ct. 2716, 57 L.Ed.2d 727, rehearing

denied 99 S.Ct. 233. This court stated in the Spannaus decision

that despite the customary deference courts give to state laws

directed to economic problems, legislation adjusting the rights

and responsibilities of contracting parties must be upon reason-

able conditions appropriate to the public purpose justifying

its adoption:

“The severity of the impairment measures

the height of the hurdle the state legislation

must clear.” (98 S.Ct. 2723.)

The Indiana Mineral Lapse Act totally destroys the effect

of a contractual agreement to sever the mineral interest from

the surface. This legislation was passed without any showing

-22-

that an emergency existed justifying this severe impairment.

Furthermore, less extreme measures, including giving prior

notice, an opportunity for a hearing, and compensation to the

owner of the severed mineral interest for the taking could have

been employed to achieve the same ends. One panel of the

Michigan Court of Appeals in the case of Bickle v. Fairchild

(1978) 83 Mich.App. 467, 268 N.W.2d 881, and the Supreme

Court of the State of Nebraska in the case of Wheelock v.

Heath, (1978) 201 Neb. 835, 272 N.W.2d 768, held that their

‘respective state’s dormant mineral legislation was constitution-

ally defective because of its violation of the contract clause of

the United States Constitution.

Another basis on which the Indiana Mineral Lapse Act

is unconstitutional is that it fails to compensate the owner of

the mineral interest for the taking of that interest. This court

has stated that it is a denial of due process to take property

from one individual for the private use of another individual.

Missouri Pacific R. Co. v. Nebraska ex rel. Board of Transpor-

tation, (1896) 164 U.S. 403, 417, 17 S.Ct. 130, 41 L.Ed.

489, 495. The Indiana Supreme Court in this case stated that

the Indiana Mineral Lapse Act did not constitute an exercise

by the state of its power of eminent domain in that it was not

actually a taking of the mineral interest for the use and benefit

of the state. Short v. Texaco, (1980) Ind. , 406

N.E.2d 625, 631. However, this taking of property from one

individual and transferring it to another individual is even more

constitutionally defective since such a transfer is strictly pro-

hibited by the due process clause of the Fourteenth Amend-

ment. The Supreme Court of the State of Wisconsin in the

case of Chicago and Northwestern Transportation Company v.

Pederson, (1977) 80 Wis.2d 566, 259 N.W.2d 316, held that one

of the constitutional defects of the Wisconsin dormant mineral

legislation was that it violated the rule that the legislature could

not take private property from one person for the private use of

another.

Each of the above three bases of constitutional attack on

the Indiana Mineral Lapse Act has been used by other juris-

dictions in striking down similar types of dormant mineral

23-

legislation. However, the Indiana Mineral Lapse Act also vio-

lates the equal protection clause of the Fourteenth Amend-

ment, while the other dormant mineral statutes do not.

There is a provision in the Indiana Mineral Lapse Act, indi-

ana Code 1971, 32-5-11-5, which provides that owners of ten or

more mineral interests in a county who inadvertently fail to file

a Statement of Claim, having made diligent effort to preserve

all such interests not being used in the county, must be given

written notice prior to the lapse of their mineral interest, when

similar protection is not provided to owners of less than ten

mineral interests in the county. It is recognized that in the

local economic sphere, only an invidious discrimination, or

wholly arbitrary act, will violate the equal protection clause

of the Fourteenth Amendment. City of New Orleans v. Duke,

(1976) 427 U.S, 297, 96 S.Ct. 2513, 49 L.Bd.2d 511. How-

ever, the aforementioned provision in the Indiana Mineral Lapse

Act makes an invidious discrimination and constitutes an

arbitrary classification. It provides procedural due process

notice to owners of extensive mineral interests, who generally

would have substantial capital and personnel to keep abreast

of legislation affecting their mineral interests, but denies similar

procedural due process protection to small mineral interest

owners who are generally in greater need of such protection.

Constitutional and statutory safeguards should be provided

for everyone similarly situated - not only for the politically

powerful, Furthermore, since the purpose of the Indiana

Mineral Lapse Act is to promote the development of mineral

interests by identifying and locating the owners of the mineral

interest, this purpose would best be served by giving prior

notice to all mineral interest owners along with an opportunity

for all mineral interest owners to protect their rights by filing a

statement of claim before the lapse becomes final. It would

seem that the administrative inconvenience involved would

be minimal in requiring that all mineral interest owners be

given advance notice and an opportunity to file a statement

of claim prior to the lapse. It is evident that this classification

in the Mineral Lapse Act was created without due regard to

its reasonableness.

-24-

CONCLUSION

Due to the conflict among the various states in con-

struing the constitutionality of the dormant mineral legislation,

and given the substantial constitutional questions raised by such

legislation, this court should note probable jurisdiction of this

appeal,

A-l

APPENDIX A

OPINION AND JUDGMENT OF THE

SUPREME COURT OF INDIANA

FOR

PUBLICATION

ATTORNEY FOR

APPELLANT SHORT

Verner P, Partenheimer, Jr.

219 N, Hart Street

Princeton, Indiana 47670

ATTORNEY FOR

APPELLANTS WALDEN

Charles R. Nixon

223 West State Street

Princeton, Indiana 47670

ATTORNEY FOR

AMICUS CURIAE

Theodore L. Sendak

Attomey General of Indiana

219 State House

Indianapolis, Indiana 46204

ATTORNEYS FOR

APPELLEES TEXACO, INC,

ot al,

John L. Carroll

Russell T. Woodson

2230 W. Franklin Street

Evansville, Indiana 47712

ATTORNEYS FOR

APPELLEES POND et al.

James M, Buthod

Mark W. Rietman

Suite 409, Citizens Building

115 Southeast Third Street

Evansville, Indiana 47708

A-2

IN THE

SUPREME COURT OF INDIANA

NO. 179 § 23

TEXAOO, 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

DEVELOPMENT, DeBEERS DIAMOND

INVESTMENT, LTD.,

Appellees,

STATE OF INDIANA,

Intervenor.

me me ee ee re re ee ee ee ee ee ee ee ee ee ee ee”

A3

ULYSSES G, WALDEN, JR. and

CAROLYN SALLEE WALDEN,

Appellants,

v. NO. 1278 § 303

EDEN H, POND, EDNA H. BOBE

and CONSOLIDATION COAL CO,

Appellees,

LOUISE F. SHORT,

me me ee ee ee ee et ee eee ete ee”

Intervenor.

APPEAL FROM THE GIBSON CIRCUIT COURT

The Honorable Walter H. Palmer, Judge

DeBRULER, J. -

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

interest 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

A4

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

the interest. This is an appeal from two judgments below,

consolidated 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 con-

stitutes an impediment to the development of the mineral

interests that may be present and to the development of the

ductive potential of the property again available for human

use

The trial court concluded that the legislative purpose of

the Act is to eee toa Ge

accepted 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

preceded by due process notice and an opportunity to be

Interests or estates in oil, gas, coal and other minerals

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

A-5

natural resources.

Courts of this state and nation have always given due

regard to constitutional constraints upon their authority to

void statutes, In doing so in Noel v. Ewing, (1857) 9 Ind. 57,

we said: ,

“It is due from the judiciary to sustain and

reconcile their enactments, if possible. We

will not lightly co: clude that the lawmaking

power has either ignorantly, or wilfully

violated the constitution. To justify the

Courts in declaring an act void, it must be

clearly subversive of that instrument, (Cita-

tions omitted.)

They who claim that the legislature has,

in this particular, transcended its constitu-

tional 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 Han-

over 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

A-6

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 mini-

mum 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.

An elementary and fundamental requirement

of due process in any proceeding which is to be

accorded finality is notice reasonably calculated,

under all the circumstances, 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

account 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 with-

out notice or hearing if security wag not posted to cover the

damages claimed by aggrieved parties in the accident reports.

In the course of holding this system violative of procedural due

A-7

process the court specifically noted:

“If the statute barred the issuance of licenses

to all motorists who did not carry liability insur-

ance 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 permits

the Georgia statutory scheme where not all mo-

torists, but rather only motorists involved in

accidents, are required 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

consideration. 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 Commission, (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.

The Act under question does not provide for any adjudi-

catory process by a court or administrative agency. The ab-

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

Act simply spells out the conditions which when existing

mandate 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 conditions 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 National Bank v. Luckett, (1944) 321

AS

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 not find the case of Chicago & North Western Transporta-

tion Co. v. Pederson, supra, persuasive.

The reasoning of the trial court and the cases relied upon

by it do not warrant the conclusion that the Act is unconstitu-

tional because it fails to afford notice and hearing to mineral

interest owners required,by procedural due process.

The trial court also concluded that the extinguishment

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

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

District Court of Appeals summarized the due process analysis

applicable here in Foreman yv. 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 promote 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 exercise 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 re-

lation 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 interests are terminable. Whatever

may be the exact legal dimensions of such interests, they are

not greater than fee simple titles. Under the statute of limita-

tions and the law of adverse possession a fee simple title to

land is terminable. The Mineral Lapse Act can be viewed as

vesting legal title in the owner of the surface rights which is

Ad

free of the 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 limitation 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 interest which is required

to be prosecuted. Given these differences and aforementioned

similarities, we believe that this Act is, according to its principal

intent and effect, and for the purpose of constitutional analysis,

analagous to acts of limitation which vests title to real and

personal property.

Acts of limitation are not per se unconstitutional as

impairing the obligation of contracts or as denying a person

property without due process of law. This is so even though

they extinguish 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 Peters 457, is an early case upholding the

validity of a seven year limitation upon actions to recover

possession of land in Kentucky. In the course of that opinion

it is said:

“It is argued, that limitation laws although be-

longing to the lex fori, and applying immediately

to the remedy, yet indirectly they effect a com-

plete 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 appropriate

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.”

A-10

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

direct product of the limitation law. The transfer or right

effected by the Indiana Act under consideration is its direct

product. That minor difference would not support a contrary

evaluation of our Act.

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 uncon-

stitutional, if a reasonable time is given for the

commencement of an action before the bar takes

effect. ...

In all such cases, the question is one of reason-

ableness, 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 govern-

ment, unless a palpable error has been committed.”

95 US. 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

seventeen days given to sue upon a cause of action was not

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

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

declaring that past sales and conveyances by a comptroller

for nonpayment of taxes would be conclusively presumed

regular six months after the effective day of the statute was

upheld as providing 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 consiitute a

A-ll

reasonable time as contemplated by these cases.

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, af:er

twenty-one years had expired during which no declaration or

acknowledgement of the existence of the right or claim had

been made. The statute provided that the bar and extinguish-

ment 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 supports the validity of our Act, because it

upheld a statute having an extinguishment feature similar to

the Indiana Act under consideration.

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 granting 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 them-

selves provide 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 obligation of contracts.

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

that extinguishment of mineral interests 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

A-12

actually taking the mineral interest for its own use and benefit.

Consequently, Art. I, 8 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. Depart-

ment of National Resources, supra. Appellees point to Evans-

ville & 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

standard for constitutional review of it.

Appellant next contends that the trial court erred in

concluding that the Act is violative of the guarantees of Art.

I, 8 23, of the Indiana Constitution and the Fourteenth Amend-

ment 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 provided in section 4 shall not cause a

mineral interest 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, the owner of ten

or more mineral interests, as above defined, in the

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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 years prior to the expiration of the

period provided in section 4 preserve other mineral

interests, 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 re-

quired, within sixty days after publication of

notice as provided in section seven herein, if such

notice is published, and if no such notice is pub-

lished, within sixty days after receiving actual

knowledge that such mineral interest had lapsed.”

By declaring the mineral interest terminable under the con-

ditions 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 objec-

tive would create economic benefits for the people and indus-

tries within local communities where actual development

activities result and would create other land development where

abandonment results. The criteria in Ind. Code § 32-5-11-5,

can be rationally 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 formations which do not necessarily

coincide with the manner in which man has chosen to divide

the surface area, Consequently it is commonly necessary to

assemble several mineral interests in order to render the ex-

traction 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

A-14

and actually produce minerals, The separate classification of

interests so held within these essential clusters is rationally

related to the legitimate objective of the enactment and is con-

sequently not contrary to the requirements of state and federal

equal protection.

The Act seeks to remedy a situation thought to retard

economic activity vital to the welfare of local communities

and the general public as well, The classification erected does

not involve a suspect classification or an impingement upon —

the exercise 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., No, 1078

S 216 (Ind, 5/16/80); Steup, et al. v. Indiana Housing Authorl-

ty, No. 1179 § 309 (Ind, 4/2/80), In this area of economic and

social concern, 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.

Williamson vy. Lee Optical of Oklahoma, (1955) 348 U.S, 483,

487, 75 S.Ct. 461, 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 super.

legislature to judge the wisdom or desirability of

legislative policy determinations 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. 421, 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 US.

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 dis-

criminatory or wholly arbitrary.

A-15

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,, Hunter, Prentice and Pivarnik, JJ., concur.

A-16

APPENDIX B

MEMORANDUM OPINION AND

JUDGMENT ON AGREED CASE

IN THE

GIBSON CIRCUIT COURT

1978 TERM

EDEN H. POND ) NO, C-78-17

EDNA H, BOBE )

CONSOLIDATION COAL CO, ) FILED

) Russell Kern

v8. ) July 24, 1978

) Clerk of the

ULYSSES G.WALDEN, JR. ) Gibson Circuit Court

CAROLYN SALLEE WALDEN )

ORDER ENTRY, JULY 25, 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 seq., 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 refer-

ence,

The Trial Court wishes to express its gratitude to counsel

for Plaintiffs, Defendants, Attorney General of the State of

Indiana and Intervenor for their scholarly Briefs in this compli-

cated legal issue.

The essential decision necessary in this case is to deter-

mine whether or not the so-called Indiana Mineral Lapse Statue,

being I.C., 1971, 32-5-11-1 e¢ seq. is constitutionally acceptable.

If as contended by plaintiff it is unconstitutional, then plain-

tiff will prevail by judgment. If constitutional, there must

necessarily be judgment for the defendants.

This Court feels that a short statement of matters of

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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 Indiina

reserves the right inherent in this organized society to act in

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

contract. Home Building and Loan y. Blaisdell, (1934) 290

U.S. 398. As a general proposition of Constitutional Law,

however, this Court believes the U.S. Supreme Court normally

will abstain 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 interests. There is no “cloud” on the title to this

real estate, except 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 be-

lieved to be unconstitutional.

As stated, very scholarly arguments are advanced for

the proposition that the Statute is Constitutional. ll of

these arguments fail to answer the basic inequitable result

of 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.

A-18

Would not Constitutionally there be a requirement of notice

to the mineral owners, a right of hearing, some form of com-

pensation, 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 Constitutionally it would seem the hearing would revolve

around the facts essential to determination of the controversy.

Bell v. Burnson (1971), 402 U.S. 535; Mullane v. Central Han-

over 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

- litigation, but one queries whether that is not already the

case with the statutory framework existing. The notice pro-

vision in LC. 1971, 32-5-11-6 would seem just as precipitating

a rule as would be notice prior to the legislature taking. Ex-

pediency is not always justice, whether the end sought is

laudable or not.

For the reasons stated herein, this Court finds, Indiana

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

unconstitutional, void and of no effect.

This Memorandym 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 pursuant to the Agreed Facts, and Consolidation

Coal Company is the holder of a valid and subsisting lease

covering said interests.

A-19

Judgment accordingly.

WALTER H. PALMER, JUDGE

GIBSON CIRCUIT COURT

A-20

APPENDIX C

ORDER OF THE INDIANA SUPREME COURT

DENYING REHEARING

IN

SUPREME COURT OF INDIANA

LOUISE F. SHORT )

Appellant, )

)

vs. ) NO. 179 § 23

)

TEXACO, INC., et al )

Appellees. )

ULYSSES G. WALDEN, JR., et al )

Appellants, )

)

vs. ) NO. 1278 S 303

)

EDEN H. POND, et al )

Appellees. )

You are hereby notified that the Supreme Court has on

this day denied Appellee’s Petition for Rehearing.

Givan, C.J.

September 24, 1980

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APPENDIX D

NOTICE OF APPEAL TO THE

SUPREME COURT OF THE UNITED STATES

IN THE

SUPREME COURT OF INDIANA

ULYSSES G. WALDEN, JR. )

CAROLYN SALLEE WALDEN, ) NO. 1278 S 303

)

Appellants ) Appeals from the

) Gibson Circuit Court

vs. )

) The Honorable

EDEN H. POND, ) Walter H. Palmer, Judge

EDNA H. BOBE, )

CONSOLIDATION COAL CO., ) FILED

) Marjorie H. O’Laughlin

Appellees ) December 5, 1980

) Clerk of the

LOUISE F. SHORT, ) Indiana Supreme Court

) and Court of Appeals

)

Intervenor.

Notice is hereby given that Eden H. Pond, Edna H.

Bobe, and Consolidation Coal Company, the Appellees above

named, hereby appeal to the Supreme Court of the United

States from the final judgment of the Supreme Court of the

State 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).

A-22

Dated this 5th day of December, 1980.

James M. Buthod

James M. Buthod

James M. Buthod (a Member of the

Bar of the United States Supreme

Court)

Attorney for Appellees Eden H. Pond,

Edna H. Bobe and Consolidation Coal

Company

BUTHOD, LONGEST, BUTHOD AND RIETMAN

Citizens Bldg., Suite 409

115 Southeast Third Street

Evansville, Indiana 47708

(812) 423-5261