Untitled Texas Attorney General Opinion ( 1958 )

Honorable Earl Rudder Opinion W-348 Commissioner, General Land Office Austin, Texas Rez Under Article 54211, V.C.S., have the primary terms of two I leases been suspended In view of the fact that Humble 011 & Re- fining Company had a lease not only from the State but also from the City of Tyler and Smith County? And Dear Commissioner Rudder: related questions. In your recent opinion request of this office you state the following facts: "On October 10, 1951, the Commissioner executed an oil and gas lease to Humble 011 & Refining Company covering Tract 3, Tyler State Park, Smith County, and on April 1, 1952, the Commissioner executed an oil and gas lease to Humble covering Tract 1 of the park. Roth of these leases were issued under the pro- visions of Article 5382d, V.C.S., and were for a primary term of five years. All rentals due under the leases have been paid. "On April 12, 1955, during the primary term of these leases the City of Tyler and Smith County filed a suit against the State of Texas, HumbleiOll& Refining Company, and other parties In which they sought to recover title to and poseesslon of the land described Honorable Earl Rudder, Page 2 (``-348) In the above leases, as well aa other lands. This suit Is styled The Citg of Tyler, Texas, et al v. The State omexas, x al, No.-!&A, mh-&dlcm mix i%iii%ofsiiirthCounty, and la still pending. Your department has a- file on this suit. "On June 22, 1956, Humble Oil & Refining Company secured an oil, gas,and mineral lease from the City of Tyler, and on June 25, 1956, Humble secured an oil, gas, and mineral lease from Smith County, both of these leases covering the land here involved. Each lease was for a primary term of one year and both have terml- nated. During the primary terms of all of the leases; i.e., from the State, County, and City Humble drilled a well which was completed as a dry hole and abandoned on September 11, 1956.” You then ask If the primary terms of the two leases In question have been suspended by virtue of Article 54211, V.C.S., in view of the fact that the lessee had leases not only from the State but also subsequently acquired leases from the City of Tyler and Smith County. Article 54211 reads as follows~ "Art. 54211. Suspension of running of pri- mary term of 011 and gas lease pending litigation. "The running of the primary term of any oil, gas, or mineral lease heretofore or hereafter iesued by the Commfssioner of the General Land Office, which lease haa been, is, or which may hereafter become Involved in litigation relating to the validity of such lease or to the authority of the Commissioner of the General Land Office to lease the land aovered thereby, shall be sus- pended, and all obligations imposed by such leases shall be set at rest during the period of such lltigatlon. After the rendftion of final Judgment in any such litigation, the running of the primary term of such leases shall commence again and continue for the remainder of the period specified in suoh leases, and all obllga- tions and duties Imposed thereby shall again be operative provided such litigation has been in- stituted at least six (6) months prior to the expiration of the primary term of any such leases. Honorable Earl Rudder, Page 3 (W-348) Provided, further, that the lesrreeshall pay all annual delay rentals and any royalties which accrue during the period of litigation the same as during any other period of the extended primary term. Such rentals paid during the litigation period shall be held In suspense and returned to the lessee in the event the State is unsuccessful In any such litigation. As amended Acts 1951, 52nd Leg., p* 750, ch. 406, See, 1." (Emphasis added.) The provisions of th9B statute are for the bene- fit of the State's lessee and such provisions are as much a part of'any lease authorized by Article 9382d, V.C.S., as though embodied in the lease form itself. The statute clearly and unequivocally provides that "the running of the primary term of any oil, gas, or mineral lease heretofore or here- after issued by the Commissioner of the General Land Office which may hereafter become involved in litigation re- la&g to the validity of such lease Q e shall be suspended and all obligations imposed by such leases shall be set at rest during the period of such litlgatfon". The leases in question were issued by the Com- missioner of the General Land Office. The valfdftv of such leases were put In question by the suit styled The City of Tyler, et al v, The State of Texas, et al, No. 22599-A, 7th Judicial District Court, Smith County. Under such circumstances the statute unequivocally provides for the suspension of the running of the primary term of such lease. However, your oplnlon request inferentially raises the question of whether Humble's t king a protection lease from the Cfty of Tyler and Smith County and its drilling a dry hole amounted to a waiver of the rights conferred by Article 542lf. We do not believe the two protection leases taken by Humble from the City of Tyler and Smith County oon- stitute a waiver by Humble of the rights conferred to Humble under Articles 5382d and 54211. This aotfon by Humble fs not inconsfstent with Article 54211. In fact Humble has con- tinued to pay delay rentals up to the present time fndicating an intent to accept the provfsfons of A~tfcle 54211, not an intent to waPve the rights conferred by said article, Humble's drilling of a well is not inconsistent with Article 54211. This article provides that royalties shall be paid during the period of the extended primary term Honorable Earl Rudder, Page 4 (WW-348) of such a lease, thus aontemplating development on the part of the leeeee during the primary term or extended primary term of a state lease. We do not believe Humble’s taking of the two protection leasea and attempted development of the area evldenaes an Intent to waive the rights oonferred by Article 54211. Therefore we inform gottthat the primary terms of the two leaeea in question have been and are suapended by the provisiona of Article 54211, V.C.S., pending liti- gation in the City of Tyler case. SUMUARY The primary term8 of the oil and gas lease executed by the Commissioner of the General Land Office on October 10, 1951, In favor of Humble Oil & Refining Company, covering Trrrct3, Tyler State Park, Smith County, and the lease executed by the Commissioner of the Ueneral Land Office on April 1, 1952, in favor of Humble Oil & Refining Company, covering Tract 1 of the Tyler State Park, Smith County, are suspended during the period of litigation of the suit styled The City of Tyler, et al v. The State ol Texas, et al, Cause No. 22!Z@+A, ‘7th J tfi i 1 Di t tc t of Smith County, by v&u: Ef Ar~l%~ 5’rzr, V.C.S. Very truly yours, WILL WILSON Attorney aeneral of Texas BY Mllton Richardson Assistant APPROVRD8 OPINION COMMITTBEr REVIEWED FOR THE ATTORNEY (3eo.P. Blackburn, Chairman CIENERALBY8 Wayland River8 W .V. Oeppert Morgan Nesbitt Nary K. Wall