Untitled Texas Attorney General Opinion ( 1939 )

-h 29, 1939
Hoiiorable
BaaoormGiles
Ccumudmione~of the GeneralLand Office
Austin,Tom
OpinionNo. O-523
Be: $ffect of sectionlo, ch. 271
General~Laws
of 1931,cm pro-
edsting river bed oil and &as
leaBe
Dear M?. Giles
This aoknowledgesreceiptof and la in reply to your letter
of Maroh 17, 1939,~in which you requestthe opiuionof this Departmant
upmi the~questionof irhether or not .%&ion 10 of Chapter 271, General
Iawa of 1931, repealedthe $2.00 par aore lease remtal provisioncm-
tained inChapter lkO,GeneralLawa of 3gthLegialature;1925. Youfur-
ther request0115'opinion aa tovhether or not you ahm.l.dissuea renewal
iease to Mrs. Ibnie O'Brienupon the erpiratlm of the presentoil.ai~d~
gas leasewhich she holda covering398.229 aores in the TrinityRiver bed
in LibertyCounty,Texas.
As ve understandyour letter,on October5, 1928,permitNo.
.?724 toprospect for oil and Sac W'iasued to Mre. Ronie W8rien cover-
ing the portionof the TrinityRiver bed in question; On April 30, 1929,
after proper proof of the discoveryof oil had beti made to your office,
ollaud gas lease Iio.I2724 vaa issuedto Mrs. IVouieOIBi%n, her heirs
and asslgu~,sald,leasehavingbeen issueduuder the terms aud provisiona
of Chapter 83, Ads of lgl?, as amendedby Ch. 140, Acts of 195, 39th
De&siature, which latterstatuteappearsaa Artlole5344,Verno~'dCivil
AnuotatedStatutes,1925,said artioleread- as follows:
"Uponthe paymentof$2.00 (two dollars)per aore
for eaoh acre in the permit a lease shall be issued
for a term of ten (10) years,or less, as may be desired
by the applicant,and with the optionof a renewalor
renewalsfor au equal or shorterperiod,end imaedlately
after the experaticm(expiration) of the ftiet year after
the date of the leaae,the sum of (two) ($2.00)dollars
!peracre shallbe paid duringths life of the lease, and
in additionthereto,the owner of the $?a80 shallpay a sue
of mcey equal to a royaltyof one-eighthof the value of
the gross productlouof petroleum. The owner of a gas well
HonorableBaama Gilas,page 2 (O-523)
shall pay a royaltyof oue-teuthof the value of the metre
outputof all gas disposedof off the premises;provided,
howevm'that the provieiom hereof as to the paymeutof
two ($2.00)dollaraper acre duriug the lease period md
the life of the said lease shall not apply to leaseeof
bays, marshes,reefs, saltwaterlakes or other submerged
lands containingas much as 0110hundred (100) acres but
not in excess of five hundred (500) aorea upon whioh 88
many 88 five wella have been drilled,and upon which BIGex-
penditureof as much aa one hundredthousand($lOO,OOO.OO)
dollarehaa bs6P.mada. The drilhlngof said wells and the
expenditureof said amount to be eatabliahedto the satis-
faotionof the commissioner:'of the land office."
You attachedto your lettera certifiedcopy of the lease
issuedto Mrs. O'Brien. Such lease ou page,1 thereofrecitesthat
a permit to proepeotfor oil and gas had bean previouel.y
issuedto
Mm. O'Brienunder the provieioneof Chapter83~of aiiAct of Meroh
16, 1917, and Acts subsequentthereto. Paragraphnumberedlonpage
2 of said oil and gas lease, in part, made aa follows:
"Ynadditlontothetwo dollarspar acre already
paid on each aore luoludedherein,the owner of the rights
hereinconveyedshallpryalike aumannuallyhere&%er in
advanoeon the mea iutsluded herein,whioh ehallbe paid
on orbeforethe expirstionof each year durlug the life of
this contract,and In additionthereto,the owner of the
rights hereiuoonveyedehallpay to the State ofTezae at
theGeneralLendOffice ofTexaa,atAuetiu,Texaa,asum
of money equal to a royaltyof me-eighth of the value of
the gross productionof petxoleumaud ehallpay a eumof
money equal to ten per cent of the value of all gae cold."
You'furtherstate in your letterthat the firat yerr lease
rental of $2.00 per acm~was paid in 1929 andbike paymeutwaa made in
1930; thatbeginniugwiththethMyearleam rentalthe paymentwas
reducedto 25 cants per acre under provleicmsof Section 10, Chapter
271, Act of May 29, 1931, and that all.subsequentannualpaymentshave
been at the rate of 25 ceuts per acre; that the 10 year periodfor
which the leasewas iaauedwill expireApril 30, 1939, aud that the
lesseehas writ&u to you making the requestthat a rem@ be issued.
As the lease in questionwan issuedon April 30, 1929,when
Chapter83, Acts of 1917, as mended by Chapter'.lkO, Acts of 1925 was iu
foroe,we are of the opinionthat the paymentof rentalson such lease
is governedand controlledby Umpter 140, Acts of 1925. The affectof
Chapter140, Acts of 1925, iu our opinion,is to requirea cash payment
at the time of the issuanceof the lease of $2.00 per acre for each 8Cm
includedin the originalpermit,and a furtherannualrental paymentof
Hon. BasccmGlles, page 3 (O-523)
$2.00 per acre during the life of the Lease,ami 2~ additim themt'.,
the oil aud gas royaltyprovidedin said act shall be paid in case of
production. The statuteplainlysays that *the 8um of $2.00.peracre
shell be paid during the life of the lease.' It IS kaiaputabh that
the life of the lease in questionto Mrs. O'Brienis flaredboth by the
terms of Chapter 140, Acts of 1925, aud by the provlsiouein the lease
Itself,at a,periodof 10 years frm April 30, 1929, with a right to
reuew the same as providedia Chapter lk0. Therefore,a requirement
of the paymentof rental of $2.00 per acre during the iife of the lee-x,
in our opinion,requiresau annualpaymentor $2.00 per acre for each
aud every year that the leaearemains In force, Includingany renewal
term. We do not believethat the 39th Legislaturein euactingChapter
140, Acts of 1925,whioh chapterexpresslyameorda subdlvisiou2, section
7 of Chapter 83, Aota of ``17,.35thLegislature,iutendedtherebyto re-
lease the State% lesaeefrom the paymentof:mmal~rentals~stlpulated
by the A& iu case productionwas secured.'The only ohangewhich Chap-
ter.140,Acts of 1925,made in Chapter83, Acts of 1917, was to insert
the word "immediately"in place of the word “annually” which appeared
in the 1917 Act end to add a provisoto the 1917 Act which proviso is
not relevantto your inquirymder the facts presentedby your letter.
We cauuot esoape the ooncluaionttvrthadtheLegislature
Intendedto hbollehthe requinrmentof the 1917 Act for the payment
of annualrentals in case of produatlou,itwouldhave used lmguege
~hWly iadiaatbg .suoh~aninteutdbn. Such inteMiou 8lfi0 ~0ul.d have
been olearly Indicatedby the Legialatum by simply strikiugfman the
1917Act the phrase O%hall~bepaid during the life of ths Lease*. In
the absenceof any such aut%ou ou the part of the Legislature,we must,
of necessity,hold that the Legislaturedid not intendto releaseleas-
see8 frm the paymeutof the $2.00 per ame auuualrentals. The proper
constructQm o?A.vticle53J&,in our opfnion,. is that mch articlere-
quiresthe paymeutof annual reutsleof $2.00 per aore duriug the eut?ze
1FPe of the leaao emu after produotiouis eszmed.
The furtherquestlouin ~eeeuted byeym? requestfor eu
opinionaa to the effect of Sectiuz10, of Chapter27~1,Acts of 1931,
RegularSession of the k?nd Legislature,whfoh appearsas Sectiou10 GE
Article5421a,Vernon'8Aumtated Civil Statutes$ 1925.
section 10 of Chapter271 read8 as followa:
"The a?eas inoludsdherein shall be leanedfor a
comlderation, in additionto the oath mouut bid tier+
for,,of not lese than one-eighth(l/8)of the gross pro-
dudson of bil, or thr value of 88100,that my be ~pmduced
and saved,'andnot lasa than one eighth (l/8)of the gross
product:ouof gas, or the value of same, aud not Iem than
one-eighth(l/8)of the gmae produc,timof sulphur,or the
value of mme that may be pmdumd, that may be prodmed aud
Hou. Baecaa'3llee,p4ga 4 (O-523)
sold.offthe area and not less thsn one-sirtdenth(l/16)
of the value q allothern&wrals thatnmybe pmduoed,
aud m additimul mua of twenty-fivecents an acre per year
for eaohyerrthereafteruutilprdcldctiou is scoured. When
pmiuot&n ham beeu mmured In ocmaero i4l quautitiee4nd
the pigmentof royaltybegins and coutlnuesto be paid,
the owner shalibe ese.@?frmfurther4unualrentsl~nte
orthe 4oreage. The provisl~ of this utiale inrespectto
p4ymentmofrent4laf'tergroduotimmdthe ceeart of pro-
duotioneh4llapply to lemes heretoforeissuedby3!e St&J
onsnfarea exoept Linda belcmgiugtotha Stata lJuiveraity4nd
el.e~aynu.y institutions. Lp productlon8bxd.d aease and
royaltynot be paid, the owner of ths lease sh4ll, at the end
of the lease year inwhiohthe myaltyaoraedto be paid4ud
annu4llythereafterin rdvanoe,p4y twenty-fiveoeuta per
aore so lcmg aa auohownermydesire tomaintainthe righta
acqutid under the lease,not to exceedfive (5) yeun from
the date of said le4ae."
Youwlllobeerve th4ttha fiualaanteneeof Seotiou a0
aboveliiaitsthe time ftiwhtiha leasewbe keptinforce bywnt
ello@Minti-*oCiacWlto 4perWoffive yem3. In your letter
yotietate that th6 leseeeof the pmtioular lease in questioubegrn tha
wt of redacedrentalsof 25 mute per aore in 1931, or eight yeti
ago. Ue think olelrrly tht If Beetlou10 of"Oh4pter~looaldbe held
to 4pply to the river bed levee-JnquestionwhichMS iseued in 1929,
neverthelese,such learn after the yeu 1936 wae not entitUddto thebene-
fit of the reducedrentalproviaicmsof Chapter271.
However,48 the question4a to the effeotof Section10 of
Article 9210 wil.Ldoubtiees often vise in the future witheepeot to
riverbed Imae wherethefive ykr limit4tionperlodhrsnotekpired,we
believethe questionof the applkaticm of Chapter27ltaang moh leases-~
on river beda cau 4ud shouldbe -redatthistimewlthoutrespwtto
the expirationornon-expintiou ofthefive year LimitationperIod~ In
determiningthe effectof Section10, Article 5b2lc on river bed larsea,
two questioname involved. Fir&, doea Section10 by ita terma apply to
or pnrpcgtto apply to river bed leases? Ebcond,Ff Section10 is con-
strudd8asapplyiugto or purportfngto apply to river bed leasea,theu d.6
suah statute,so donstrued,conetitutionali' Upon ekaiu3ng the caption
of Chapter271,Acts of 1931 (Vernou'sAnnotatedCivil Statutes;Artisle
.9&2lc),we do not find in 4uy pm% thereofanymenticmccdW4subjectrekat-
lng to tha lame, srls or developmentof river bed arem. The o4ptim
ie c&tied to aetrtementthrtthe aotia one to "ragul4tethe s4leand
leue of lende setapartforthebenefit of the public free aolmolfmd,
and to providefor the diepoaitiouandsale ofminerale oontainedinall
islands,salt w4tere, lakes,bay6, inlets,marshesaud nmfe owned by the
endilluueoldpublic free a&ml
State within the jurisdictionof Texae,,
m. Gilee, page 5 (O-523)
Basoaar
landaboth mrveyed aud uumrveyed". . . and "providiuggenerallythe
method end meaua for the sale of public,
school lauda and the lease and
developmentof the,publioschool lend&and ooastalareaa." Upcm exfaain-
ing Section lof Chapter271, whioh motion purportsto exummate speci-
fioallythe lauda aud areaa which are subjectto ooutroland sale uoder
the proviaio~ of Chapter271,we find this significantlauguager
"All landsheretoforeeet apart to the publicfree
schoolfunda under the Constitutionand3.&a of Texas,and
allofthe uuappropriatedandmmoldpublic daaainrunain-
ing in this State of whatevercharacter,exceptriver beds,
emdchnneltr,mB iaLradejlakes audbaye, and otherareas
withintidewaterlhuits, EQ% aubjeotto aontrolaud sale
uuder the provieionaof this Act."
Thw we find t&t the captionof the statute in question
fails tonention atanypointthatone of the subjectscf theAotis
riverbed8 or leasestherecnorthe paynentsofrentala colsaidUasee.
We furtherfind thatSe&iCp 109 the Aot embaly exoeptsriverbeds
md``chanue~ flwn controlorsale under the'Aut, It ie not until Section
101P~ebOd9Ofth4Bill~re~hedthtwefipd~menti~mrdeai
lauds other than those expreaalydesignatediu Sectiona~of the Aat ahd
even Section 10 of the Aot doea'notexpreselyrefer to river beds or to
le4seathereon. In foot, Seotion 10 of the Act beginswith the language,
cths~ueaa inoludedherein-shallbe leased* * l", therebyindioating
thatSeotionlOvillderl~wit;hthe ueaa apeoifieallyenmaerated in
Sectlonlof the Act. The only- in Section 10 which la susceptible
atthecons~tlonfhrtrivsrbedarreino~dinSeotiorr10isfoundin
that sentenceof Section10read5ng aa followw:
"The proviaion~of this artiole inrespecttopaymenta
of rental after produotionand the cessationof prodw3ticn
shallapplyto Isamesbsreto~ issuedby the State cneny
area except lands belongingto the State Universityaud al&e-
mosyn4ry'3lmtitutic4ls.*
In State v. Bradford,50 S. W. (2),1065,the SupraneCourt
of Teuaa held tlmt Article 5k16, 1925R. C. S., did not includenor have
the effectof'settingapart river beda to the PermanentFree School E'und
ofTexas,notwithstandingthefa&tbatArticle 916 containedthe follow-
in6 Language:
"AU lads heretoforeset apart under the conatltution
and lawa of Texas, and all of the unapprolniated
publicdomain
radning iu this State ofwhateverobaracter,andwheresoever
located,inoludlngeny land&hereafterrecoveredby th? State,
except that inaludedin lakes,brys andislende alongthe@ulf
of Mexico within tidewaterlimits,is set apart and grantedto
thepermenentschoolfundofthe State."
“In viev of the impo~e~of thisatatter to the
State an&thevhole people,the courtsof this stat+
have consistentlylsla that all grultewith rwpecrtto
landa mdernavQablewatemi,suohaa riverbeda a'
ohuule~, are t3trtatly oonqtrued agalnnt the grrntse;
that, if there IE any alblguity’ip the rot, it will be
0cmBtnled In favar of the 6trta3 ma, tml#ls the act
0oIltaineplainmdunlnietakablelmguage expmsslycou-
veying the land under river bade aud ohmnels, it``vi.Ll
not be croMtrued-to3ncd.uae them. Ih othmr voraa, be-
fo~atrtrta~w~bsacmst;Nadtoiaclude~d.lrnder
navigablewdxr6,suchasrlverbedn anddmnnels, itvlll
havu to be eqa~eed ia plain and poeitivul@ua@ rrd'
notingeneral l&uage.~ Ian&ryP.Robiscap,llOT0r.2``
219 S. W..819;8203 Robe&% V. T-U., 1OlTex. !Yri-,
~0
S. Ii.-7333City 6f Galvestonv. Menu%, 23 Tex. 349;
Ro&orough v. Pi&on, 12 Tex. Civ. App. 113, 9 5. W.
791,43 8. w. 10333Rynes V. Paakkra'p2 Tear.49, 45 S.W.
5Q;aolln~.wuser,49 s. w. (26)69y(notyetrqajeea
(instateeqort)l Wiel on waterRlghtsim,the me-tern
states~,
sacticm893."
In VihiOf'thef-t tlendther the oaptlon~ttlhe body
ofeCha@6r 271, Acts 1931;at any pol.n~mentlosu~
speoifioally
river
b&k, ipd ilso ia viev ~ofthe ~factthit Secti- lof eal(LAot+lprpressly
exoeptnriver beds frcm the Luada eubjeottb cc&r61 or sale under Said
hat, we 'fed canpelledto hold, in harmonywith Stat. v. Bradford,snpra,
thatrlverb4W or leasee~thereon, Ortho pqmentof rentaleon snob
lerrres,are not affeotedby Section10, chrpter271, ma that leaasson f
snchrraasmmtbe ocmiaeredinthe seurtenumnerm~ if mid Acthadnever
been prsaed. ..
33 vv are in error in the conalueionjnst ezpreesea,ena if
river beda qlpld properlybe heldto be inoldea in Section 10 of Chap-
ter 271,we, neverthlese, must con0hae thatseation10 80 0onstraed tronld.
not be effeotlve to reduoe fmu $2.00to 25 centa per acre the rantal~
payableon the river bed leaseIn question..Thla conclusionla expressed
beccke oftheprovieicum of Article3,Seotion 35 oftheConetitutionof
Texss,which, inpart,provides M follows:
* *%o billeroeptgemerrla``ationbilla ehsll
oontdnmore thafime subjectwhich sImll be expressedIn
ita title",and that as to any subjectwhich is not expressed
in the title of the bill, such act shall be void.
To ocnetruethe body of Se&ion 10, Chapter271, aa inclnd-
lng and apply- to river beds and river bed leaseswould bring the bod$
of the bill in oonfliotwith the captionthereofadwiththe oonstitu-
tirmalproviaim above quoted,and the necessaryree Gould be that
such portia of Seoticm 10 u1 appliesto river bed lesseewould be ancon-
et1tut1onalallavoid.
Ron. Besom Gllea, pege 7 (O-523)
Althoughwe entertainseriousdoubt aa to the oonatitutiou-
ality of the pr``iaion~ in Sectim 10 of Chapter271, with respectto
reductionof rentals to 25 cents per a6re after productionon auytract
of State laud covered by an oil and gas lease executedprior to 1931,
we make no deoiaionof such questionin this opinionfor the reason that
such questionis not directly$reaemtedby your letterand Is uunecesaary
to the opinionerprcssedabove.
The oonatruotionwehave given in this opinionto Article 5344
is oontxa5yto the constructiongiven to such Artloleby a former Attor-
ney General in an Opinionwrittenby George T. Wll&ong,Asaistant
Attonxy
General,dated October2'7,1931, addressedto Ron. J. Ii.Walker. Acoord-
inglysuchopinionand amy other prior opinionswhi6hoonstrueArtiole
5344 or Section 10 of Article54210,VenxmfiaAnnotatedStatutes,in cm-
flictwith thie opinionme herewithexpreaslywithdrawnand overruled.
You are, accordingly,advisedthat in'theopinionof this De@-
ment,~Sectlon10 of Chapter 271, Acts of 1931, did not repeal the $2.00
per acre lease annualrentalpro~ed in the lease in question,and such
act did not reduce such rental to 25 centa per acre. You are furtherad-
vised-thatit ie the opinionof thin Departmentthat a renewal lease
dmuld not be fsauedcoveringthe area in questionuntil all accruedrontaleat
the rata of $2.00 per aore per year are paid in full..
By: Robert E. Kepke /s
Robert E. Kepke
AEisintant
This opinionhaa been consideredin conference,approvedand
orderedrecorded.
Gerald C. Manu /a
G&ald C. Mann
AttorneyGeneralof Texas