Daggett, Harriet S.

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Louisiana Law ReviewVolume 11 | Number 2The Work of the Louisiana Supreme Court for the1949-1950 TermJanuary 1951Private Law: Mineral RightsHarriet S. DaggettThis Article is brought to you for free and open access by the Law Reviews and Journals at LSU Law Digital Commons. It has been accepted forinclusion in Louisiana Law Review by an authorized editor of LSU Law Digital Commons. For more information, please contact kreed25@lsu.edu.Repository CitationHarriet S. Daggett, Private Law: Mineral Rights, 11 La. L. Rev. (1951)Available at: https://digitalcommons.law.lsu.edu/lalrev/vol11/iss2/7LOUISIANA LAW REVIEWJustice Hamiter dissented on the ground that the proximate causeof the accident and injury was not the stack of lumber with itsgalvanized iron covering but the fact that the child tripped duringplay on some other and disconnected object. He felt that if aniron chair had been at the same place the injury could have hap-pened just as easily.MINERAL RIGHTSHarriet S. Daggett*REVERSIONS-SERVITUDE AND LEASEOne of the interesting developments in the jurisprudencesince the last resum6 involves what the court in Gailey v. Mc-Farlain1 termed a "reversionary interest." In that case the courtexpressed the opinion that such an interest could be dealt with,but under the test of intention had not been dealt with in thecontract under consideration.In later cases, apparently because of obvious difficulties ofapplication of prescription and possible dangers to settled prin-ciples of public policy, the court strengthened resistance to theconcept by deciding that a vendor dealing with the possibility ofreversion was simply selling something that he did not own.During the past year, in at least three important decisions, thecourt has adhered to the non-recognition policy. Long-BellPetroleum Company v. Tritico 2 may be said to stand for a denialunder the theory of the sale of a thing not owned; it was citedby the court for this principle in McMurrey v. Gray.3 The lattercase is emphatic on the point and grounds strongly on the publicpolicy argument advanced by Chief Justice O'Niell in McDonaldv. Richard,4 wherein, incidentally, the idea was further blightedby the word "so-called" consistently prefixing the phrase "rever-sionary interest" used by the court in Gailey v. McFarlain.5In Liberty Farms v. Miller,6 the court again in no uncertainterms negates the reservation, termed a reversionary "right" inthis case, grounding in part on the theory of sale of property not* Professor of Law, Louisiana State University.1. 194 La. 150, 193 So. 570 (1940).2. 216 La. 426, 43 So. 2d 782 (1949).3. 216 La. 904, 45 So. 2d 73 (1949).4. 203 La. 155, 13 So. 2d 712 (1943).5. 194 La. 150, 193 So. 570 (1940).6. 216 La. 1023, 45 So. 2d 610 (1950).[VOL. XIWORK OF THE SUPREME COURTowned, citing McDonald v. Richard,7 Gulf Refining Company v.Orr,8 and Long-Bell Petroleum Company v. Tritico9It is clear that the court feels an evolution of this concept isinimical to the best interests of the state. If it should occur thata landowner with clear intent had sold the reversion and uponthe lapse of the original servitude still retained the land, thecourt might experience difficulty in maintaining denial of therights of the vendee under the sale-of-a-thing-not-owned doctrineand cases cited in Gailey v. McFarlain.10In Vincent v. Bullock11 the court faced up to the propositionthat the owner of a valuable, merchantable right may deal withit if not prohibited by the law or the public policy of the state.They proceeded to find an available legal pattern by which thenew material might be governed in an orderly and useful man-ner. A reasonable prescriptive period was then applied.Certainly the expected reversion, particularly in the declin-ing years of an outstanding servitude, is a thing of value to thelandowner and might be a very useful purchase for a prospectiveproducer in making pooling agreements or other contracts secur-ing an area for development. There are several existing legalpatterns into which the idea might fit, more convenient, perhaps,than those available for the justices who dealt with Vincent v.Bullock.12 Because considerations of public policy prevent thepractical use of the doctrine, however, it may well be that this"certain object" of commerce disappeared concurrently with itsannouncement of being.As suggested above, the situation wherein a landowner, hav-ing sold his hope of the expiration of an outstanding servitude,retains the land until the date of the extinction of the originalservitude has not yet been definitely litigated. For the decisionin Gailey v. McFarlain,13 in which this hope of extinguishmentwas said to be an object of commerce, the court relied on GayosoCompany v. Arkansas Natural Gas Company. 14 This case, decidedin 1933, stated that a lease granted by a landowner eight andone-half years after his vendor of the land had reserved all ofthe minerals was valid and the transaction a proper one, no use7. 203 La. 155, 13 So. 2d 712 (1943).8. 207 La. 915, 22 So. 2d 269 (1945).9. 216 La. 426, 43 So. 2d 782 (1949).10. 194 La. 150, 193 So. 570 (1940).11. 192 La. 1, 187 So. 35 (1939).12. Ibid.13. 194 La. 150, 193 So. 570 (1940).14. 176 La. 333, 145 So. 677 (1933).1951]LOUISIANA LAW REVIEWof the servitude having been made during its life term by itsowners, or of course, by the landowner's lessee. In this connec-tion the recent case of Wier v. Glassell15 is of interest. Therein,recognition is incidentally given to the validity of a so-called toplease, obtained by a sublessee from the landowner while the orig-inal lease from which the sublessee derived his title was inexistence. Here we find an interesting parallel to the servitudesituation where the landowner deals with his hope of expirationof a lease while an outstanding lease is still valid.The public policy of the one situation seems hardly moreinimical to the general welfare than that of the other. The legalgroove into which the new type of royalty was placed in Vincentv. Bullock"' might also fit dealings with hope of extinction ofservitude even better than it does royalty as the happening of thefuture uncertain condition, extinguishment of an outstandingservitude, clearly is beyond the sole control of the landowner.These comparisons are entertaining to the writer, af least, and itis always an uncertainty as to whether they may sometime havea practical value.VINCENT-BULLOCK ROYALTYFurther development of the theory of royalty per se, as firstpostulated in Vincent v. Bullock1 7 is found in Union SulphurCompany, Incorporated v. Andrau.18 A short but most interestingopinion by Chief Justice Fournet clearly and logically proceedsto the conclusion that production of minerals in paying quanti-ties must occur within the ten year period to effect an interrup-tion of prescription. The time element creates an unusual qualityof dramatic suspense as drilling had ceased, oil and gas had beenfound and efforts to complete the well as a producer met withsuccess only three days too late.SERVITUDELiberty Farm V'. Miller is again most interesting for its dis-cussion and holding on the use of a mineral servitude as security.The contention was made that a certain agreement set forth asecurity title only, by which actual title to the servitude did notpass but was pledged. The court agreed that there was a clearintention to give security only but stated that this intention didnot hinder title from passing. Furthermore, the court decided15. 216 La. 828, 44 So. 2d 882 (1950).16. 192 La. 1, 187 So. 35 (1939).17. Ibid.18. 47 So. 2d 38 (La. 1950).[VOL. XIWORK OF THE SUPREME COURTthat pledge of a servitude was impossible since delivery, real orsymbolic, could not be made. Moreover, the court indicated thatif counsel's argument prevailed the bank would have the pledgeof a non-existent security since title to a servitude must be in oneother than the landowner.Act 97 of 1938,19 providing for the pledging of certain mineralrights without delivery, is not mentioned in the case as it wasnot on the statute books at the time of the execution of the agree-ment in question and it does not appear that the legislatureintended it to have retroactive effect. The statute does not usethe word servitude but it conceivably might be included underthe broad language "other contracts relating to minerals" andthe like. However, the case by its analysis raises a doubt as towhether the landowner, even under this interpretation of the actcould pledge his minerals. Regardless of the non-ownershiptheory, Act 96 of 193820 might be said to purport to permit amortgage of the landowner's minerals separately from his land.Support by the court for this interpretation of the act seemsunlikely.CREATION OF SERVITUDEOn rehearing, the court in Long-Bell Petroleum Company v.Tritico21 adhered to the generally accepted rules of creation ofservitude by sale or reservation of the landowner. The theory ofthe first hearing was that a new servitude had been created bythe vendees by virtue of the reservation made by the vendor ofthe land since a "sale of land with reservation of the minerals isequivalent, in other words, to the sale of land and the simultane-ous reconveyance of the minerals."22AcKNOWLEDGMENT TO INTERRUPTThe court continued in Long-Bell Petroleum Company v.Tritico,2 3 as in other recent cases, to adhere to the "expressedand certain intention to interrupt" theory in matters of acknowl-edgment of servitude. A "mere" or "bare" acknowledgment isnot enough, having as its purpose no more than a declaration ofexisting fact for protection against warranty or for clarity andexactness.19. La. R.S. (1950) 9:4301-4304.20. La. R.S. (1950) 9:5101.21. 216 La. 426, 43 So. 2d 782 (1949).22. 216 La. 426, 438, 43 So. 2d 782, 786.23. 216 La. 426, 43 So. 2d 782 (1949).19511LOUISIANA LAW REVIEWUSERMcMurrey v. Gray24 contains another interesting discussion,that of user. The court indicated, without deciding, 5 that drillingto the Nacatosh sand was not a valid user of plaintiff's servitudeand hence did not interrupt prescription. However, the courtfound that there had been no intent to abandon when defendantsstopped operations and that plaintiff should be permitted tocontinue his efforts for a reasonable time by going on to a deepersand, the relief for which he asked. Prescription of the servitudewould have accrued on March 29, 1947. Actual drilling operationswere not started until March 16, 1947. The Nacatosh sand wasreached on March 26, 1947. The defendant was not interferedwith until April 4, 1947. Thus, no obstacle was placed in the wayuntil after the date of accrual of prescription; hence no ordinarysuspension theory would seem to be involved. A reasonable timefor continuance might seem fair and proper under the facts andpleadings, but a certain rule would be desirable in the writer'sjudgment. Doubt may now exist as to the depth which must bereached as of the date of expiration of the servitude. Proof mustbe adduced of intent to continue to the proper depth at whichuser sufficient to interrupt prescription would be established.The date of commencement here seems late in the ten yearperiod-a matter of only thirteen days before accrual. Wouldcommencement on the last day be enough if equipment, et cetera,indicated intent to drill to a depth at which it might be reason-ably expected that oil could be found in the area? Should therule be flexible? Here the Nacatosh sand was reached within theterm of the servitude. Oil had been found there and might havebeen discovered, but was not. The court stated that this opera-tion was not sufficient to constitute user but an extension of timewas given since there was no abandonment or cessation of activi-ties. To shade any further the time in a ten year period forcompletion to the proper depth would seem an unwarrantedextension of the life of the servitude unless bona fide commence-ment within the period is to be the criterion of user for interrup-tion, if operations are continued to a proper depth. The clear anddefinite rule announced for date of production to interrupt pre-scription for royalty per se in the hard fact case26 discussed givesthe satisfaction of certainty. Doubt is raised in this user case,under discussion, even though interruption as such was said by24. 216 La. 904, 45 So. 2d 73 (1949).25. See Per Curiam, 216 La. 904, 922, 45 So. 2d 73, 79.26. Union Sulphur Co., Inc. v. Andrau, 47 So. 2d 38 (La. 1950).[VOL. XIWORK OF THE SUPREME COURTthe court on application for a rehearing, not to have been raisedby the pleadings.SUSPENSION BY MINORITYThe executor of S. G. Sample, of the famous Sample v.Whitaker suits,2'7 was sued in Davidson v. Bolton28 for damagesfor failure to cancel a mineral lease upon land held by the plain-tiff. The youngest of the Sample heirs came of age on July 31,1937, when prescription began to run again on the servitudeinvolved, which would have been valid under the original deci-sion until August 20, 1946. Act 232 of 1944 cut off the right onJuly 26, 1945. The letter to defendants demanding cancellationof the lease was sent on September 6, 1944, and hence defendantwas not liable in damages since at that date, and incidentally alsoas of the date of filing suit, the rights were in effect and refusalto renounce and cancel was justified. Since suspension of pre-scription for incapacity has been wiped out,29 this method ofprolonging the life of the servitude will cease to trouble thecourt.SUBLEASE AND RENT ROYALTYThe case of Wier v. Glasse1130 also stands for the settledproposition that a sublease and not an assignment results regard-less of label on the instrument if control evidenced by retentionof overriding royalty or otherwise is retained by the originallessee. The further point is logically made that the overridingroyalty thus attached falls with the lease and does not followfuture leases made by the sublessee. In this case the sublesseewithout fraud or estoppel obtained a top lease from the land-owner while the lease under which he held but which he had notdeveloped was in existence. The first lease expired at the end ofits primary term; and after the erstwhile sublessee became lesseeunder the top lease, he then developed. The original lesseenaturally was anxious to retain by some means a one-sixteenthroyalty, which the original sublessee sloughed off by his fore-sight, legitimately exercised.CANCELLATIONSuit was instituted to cancel a mineral lease in Hunter Com-27. 171 La. 949, 132 So. 511 (1930); 172 La. 722, 135 So. 38 (1931); 174 La.245, 140 So. 37 (1932).28. 216 La. 677; 44 So. 2d 700 (1950).29. La. Act 510 of 1950 (La. R.S. [Supp. 1950] 9:5805).30. 216 La. 828, 44 So. 2d 882 (1950).1951]LOUISIANA LAW REVIEWpany, Incorporated v. Vaughn.3 1 The land under lease was pooledby order of the Commissioner of Conservation during the primaryterm of the lease and no minerals were produced from the spe-cific land or from any of the lands within the pool during theprimary term of the lease in question. The Crichton v. Lee 32 casewas distinguishable on one fact, that production from the poolensued during the primary term of the questioned lease, tlhoughnot from the land covered by the lease. The instrument in litiga-tion here took cognizance of the possibility of state intervention,as it contained a provision to cover such a contingency. Becauseof this clause and since the situation in principle was the sameas that of Crichton v. Lee,3 3 the court refused to cancel the lease.No delay in beginning and continuing construction of the cyclingplant and pressure maintenance system had occurred.A careful and conscientious survey of evidence occupied thecourt in Angelloz v. Southwestern Oil & Refining Company34 inattempting to ascertain the intention of the parties to a minerallease. Admission of extrinsic evidence was approved since thewording of the document was ambiguous.OBLIGATIONSJ. Denson Smith*The most interesting case under this heading was LakesideDairies v. Gregersen,' where the court affirmed a position it hadpreviously taken that the value of property at the date an optionto purchase is exercised rather than at the date it is originallygiven is controlling for purposes of the action of lesion beyondmoiety. The option in question was contained in a lease orig-inally made in 1942 and was exercised in 1945. The court alsotook the sound view that lesion beyond moiety may be urged asa defense to an action for specific performance brought by thebuyer. In addition to the purchase money to be paid by thebuyer, the seller was to be granted the so-called privilege of re-buying from the buyer certain of the lots making up the entireproperty. The court recognized that this was simply a condi-tional option to be available to the vendor if and when thevendee exercised his option and said that if the vendor shouldhave purchased the lots, the action of lesion would have been31. 217 La. 459, 46 So. 2d 735 (1950).32. 209 La. 561, 25 So. 2d 229 (1946).33. Ibid.34. 215 La. 1056, 42 So. 2d 753 (1949).* Professor of Law, Louisiana State University.1. 217 La. 510, 46 So. 2d 752 (1950).[VOL. XI

Private Law: Mineral Rights

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