Armour v. Smith , 247 La. 122 ( 1964 )

FOURNET, Chief Justice.

This proceeding was instituted by the plaintiff, Mrs. Cortez Burns Armour, in which she was joined by her husband, Olon G. Armour, as owner of the Northwest Quarter of Northwest Quarter (NWj4 of NWJ4) of Section Sixteen (16), Township Twenty-three (23), North, Range Nine (9) West, Webster Parish, Louisiana, to have decree prescribed because of nonusage for a period extending beyond ten years certain mineral rights affecting her property in favor of R. O. Smith and J. I. Roberts, defendants herein, and to have same cancelled from the records of Webster Parish; and is now before us on a writ of certiorari granted on the application of the plaintiff to review the judgment of the Court of Appeal, Second Circuit, reversing the judgment of the district court in her favor. See, La.App., 158 So.2d 446.

The facts are not in dispute and according to the stipulation of counsel, plaintiff acquired the above described property by deed dated December 6, 1939, from Andrew C. Burns, in which he reserved all of the oil, gas and other minerals although in acquiring this same property by deed from Drew Burns dated December 18, 1936, vendor reserved unto himself a one-fourth interest of the minerals.¹ By instrument dated May 29, 1946, plaintiff, her husband, Andrew C. Burns and his wife, as lessors, executed an oil, gas and other mineral lease in favor of Hunt Oil Company using a printed Bath-Gram form. The lease was for a primary term of ten years, and as long thereafter as there was production of oil, gas and other minerals; it contained the usual annual renewal clause with the specific typewritten' agreement: “ * * * among lessors that all the delay rentals payable under • this lease if paid, are to be paid to Cortez Bums Armour; It is further agreed between and among lessors that 50% of the royalty, if production occurs, is to be paid to Cortez Burns Armour and 50% of the royalty is to be paid to Andrew C. Burns.” Andrew C. Burns sold a one-fourth interest in all the minerals in and under this property to R. O. Smith by deed dated March 1, 1948, with the understanding: “ * * * between the parties hereto that this sale is made subject to any valid and duly recorded oil and gas lease, but covers and includes one fourth (1/4) of all the oil royalties and gas rentals or royalties due and to become due under the terms of any such lease." Smith, in turn, on September 3, 1948, conveyed by deed an undivided one-eighth interest in the minerals to J. I. Roberts, which contained a similar provision. (Emphasis ours)

On April 8, 1948, plaintiff, her husband, her vendor Burns and his wife joined in an instrument declaring that in the deed of December 6, 1939, by which she had acquired the property, an error was committed in that Burns reserved unto himself all of the mineral rights, and in order to correct this error, they (the Burns) specifically conveyed an undivided one-half interest in and to all oil, gas and other minerals to the plaintiff with the further stipulation: “ * * * this deed of correction is and shall be effective from the date of this deed so that * * * Andrew C. Burns and Mrs. Florence M. Newsome Burns shall be the owners of the minerals jointly with her (plaintiff), subject to prior mineral sales.” (Emphasis and brackets ours)

These same parties, i.e., Mr. and Mrs. Burns and Mr. and Mrs. Armour, in an instrument dated March 20, 1953, acknowledged the deed whereby plaintiff had acquired the property on December 6, 1939, and its modification or correction by the instrument of April 8, 1948, observing: “Whereas, some question has been raised as to whether or not prescription was interrupted on the one-half (1/2) interest in the oil, gas and other minerals so reserved, by the execution of the act of correction dated April 8, 1948;” and in resolving the matter stated: “ * * * in order to remove any doubt as to the effect of the instrument dated April 8, 1948, of record * * * SECOND PARTIES HERETO (the landozvners, the Armours) do hereby expressly acknowledge and declare that it was the intention of all parties to said instmment to interrupt the ntnning of the liberative prescription on the mineral servitude resulting from the reservation of one-half (1/2) of the oil, gas and other minerals by FIRST PARTIES (the Burns) in the above mentioned deed, the said interruption to be effective as of April 8, 1948.” (Emphasis and brackets ours)

The original lease executed on May 29, 1946, was amended (by instruments dated January 23, 1951, March 20, 1951, September 20, 1954 and February 18, 1955) whereby the lessee, Hunt Oil Company, was joined by the plaintiffs, Mr. and Mrs. Armour, the defendants Smith and Roberts and Andrew C. Burns, as LESSOR, authorizing the LESSEE to “ * * * pool, combine, and unitize the lands covered thereby, * * * ” with any other land or lease of land adjacent thereto “ * * * so as to ■create by such combination one or more operating unit or units * * * ” not to exceed 160 acres each, and wherein it was specifically provided: “ * * * In lieu of the royalties, overriding royalties or other production payments provided for in the above mentioned lease, or other contract to which they are parties, each of the parties constituting LESSOR shall receive on the production from any unit formed hereunder ■only such proportion of such royalties, overriding royalties or other production payments as the amount of the acreage to ■which such royalties, overriding royalties or other production payments pertain and which is placed m the unit hears to the total acreage so pooled in the particular unit involved. * * * ” The lease, as amended, also contained the statement that: “The foregoing provisions shall have the same effect as though they had been incorporated in said lease at the time it was originally written and executed,” which was on May 29, 1946. (Emphasis ours)

The discovery of oil led to production on February 1, 1955, and on February 18, 1955, in conformity with the contract of lease, as amended, Hunt Oil Company joined with Carter Oil Company in forming a unit for the production thereof.

From the foregoing, it is obvious the lease granted by plaintiff and Andrew C. Burns to the Hunt Oil Company is a joint lease under the well established jurisprudence of this state on this subject,² extending as it does for a period more than six years beyond the time when the servitude of Andrew C. Burns would have prescribed, with the stipulation that in the event of production, plaintiff, Mrs. Armour, and Andrew C. Burns are each to receive 50% of the royalty. It is clear that on May 29, 1946, plaintiff landowner could not grant a valid mineral lease as title to all the mineral rights under the property was outstanding, hence in order to derive the advantages under the terms of the lease, i.e., the delay rentals during the primary term thereof, and, in the event of production, to share in the royalties, 50% to each, it was necessary that she be joined in the contract by Andrew C. Burns and consent that his servitude be extended beyond the date when it would have prescribed (December 6, 1949) in order that the lease might have legal effect during its primary term.³ Having thus joined with Burns in this contract of lease in consideration of the advantages to be derived for their common benefit, the contract is joint and indivisible and binding on all parties thereto.

It necessarily follows that inasmuch as the payment of royalties had been expressly fixed by the contract of May 29, 1946, Smith’s acquisition from Andrew C. Burns being subject to said lease, he thereby succeeded his vendor in the enjoyment of the benefits thereunder to the extent of his acquisition, as did Roberts, to whom Smith later transferred one-half of his interest.

The construction and interpretation placed by the parties themselves on the contract of lease by their subsequent acts unquestionably demonstrate, as we concluded, their intention to enter into a joint contract for their common benefit. As shown herein-above, the Armours and the Burns not only executed the correction deed on April 8, 1948, which recites; “ * * * this deed of correction is and shall be effective from the date of this deed so that * * * Andrew C. Burns and Mrs. Florence M. Newsome Burns shall be the owners of the minerals jointly with her (plaintiff), subject to prior mineral sales,” and the instrument of March 20, 1953, wherein it is specifically stated the above agreement had been entered into with the definite purpose of interrupting the then running of prescription against the Andrew C. Burns servitude as of that date, April 8, 1948; but also, they voluntarily joined the lessee Hunt Oil Company and the defendant mineral holders in amending the lease, whereby the mineral interests of the various parties were pooled and unitized so as to authorize the lessee to form units to secure production- — each to participate in the royalties according to his respective ownership of acreage in proportion to the total acreage so pooled in the particular unit involved. (Brackets ours)

A perusal of the authorities relied on by plaintiff in her contention that the contract was not a joint lease and the defendants’ servitudes had prescribed readily discloses they are inapposite from both a factual and legal standpoint, and are not pertinent to the case at bar; hence no useful purpose would be served by a discussion of them herein.

We therefore conclude the holding of the Court of Appeal: “* * * that the mineral rights of the defendants were contractually preserved during the period of the lease and were extended indefinitely by the beginning of production on February 1, 1955[.] * *” is correct.

For the reasons assigned, the judgment of the Court of Appeal, Second Circuit, is reinstated and made the final judgment of this court. All costs are taxed to the plaintiff.

1 . This mineral servitude prescribed on December 18, 1946, a few months after the execution of the lease in favor of Hunt Oil Company.

2 . Frost Lumber Industries v. Union Power Co., 182 La. 439, 162 So. 37; Vincent v. Bullock, 192 La. 1, 187 So. 35; Spears v. Nesbitt, 197 La. 931, 2 So.2d 650; White v. Hodges, 201 La. 1, 9 So.2d 433; Deas v. Lane, 202 La. 933, 13 So.2d 270; Baker v. Wilder, 204 La. 759, 16 So.2d 346; Farrell v. Simms, 209 La. 1072, 26 So.2d 143; Adam v. Johnson, La.App., 133 So.2d 175 (cert. den.); Union Oil Company of California v. Touchet, 229 La. 316, 86 So.2d 50; Namie v. Namie, La.App., 134 So.2d 572 (cert. den.); see also, cases cited under footnote three.

3 . Mulhern v. Hayne, 171 La. 1003, 132 So. 659; Bremer v. North Central Texas Oil Co., 185 La. 917, 171 So. 75; Kennedy v. Pelican Well Tool & Supply Co., 188 La. 811, 178 So. 359; English v. Blackman, 189 La. 255, 179 So. 306; Goldsmith v. McCoy, 190 La. 320, 182 So. 519; Hightower v. Maritzky, 194 La. 998, 195 So. 518; Achee v. Caillouet, 197 La. 313, 1 So.2d 530; Robinson v. Horton, 197 La. 919, 2 So.2d 647; Arkansas Louisiana Gas Co. v. Thompson, 222 La. 868, 64 So.2d 202; Barnsdall Oil Co. v. Succession of Miller, 224 La. 216, 69 So.2d 21; Elkins v. Roseberry, 233 La. 59, 96 So.2d 41.