Arkansas-Louisiana Gas Co. v. Parker Oil Co.

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] Plaintiff, alleging that it was in physical possession of a narrow strip of land, 25 feet wide and 726 feet long, in the Rodessa oil field, brought this suit against defendant to protect its possession. It is alleged that the strip of land was part of a larger tract which it held under an oil and gas lease from the Rodessa Oil Land Company, dated February 7, 1934, and that it had taken physical possession of the leased tract by drilling thereon several producing oil wells.

In its original petition, plaintiff alleged that defendant had gone upon this narrow strip of land, without right and in violation of plaintiff's right of possession, for the purpose of exploring it for oil and gas, and that, in so doing, defendant was a trespasser. It ruled defendant to show cause why it should not be enjoined from further trespassing.

The rule was heard and dissolved, the judge citing as authority for his ruling the case of United Gas Public Service Company v. Arkansas-Louisiana Pipe Line Company, 176 La. 1024, 147 So. 66.

After the court so ruled, the defendant erected a drilling rig on the strip of land, drilled and brought in a producing oil well.

Plaintiff then filed an amended petition, in which it reiterated its former allegations and further alleged in substance that, since the original suit was filed, defendant continued its trespass by drilling on the land and had brought in a producing oil well and would, if not enjoined by the court, market the products of the well, which belonged to the plaintiff under its lease which gave it the exclusive right to extract minerals from the land.

Plaintiff further alleged that defendant had conducted its drilling operations with full knowledge of plaintiff's rights as disclosed by the records of the parish, after defendant had been notified in writing of plaintiff's rights, and after plaintiff had filed suit against it, in which suit plaintiff had set out in detail its title and claim and had specifically charged that defendant was a trespasser on the land, and had stated the reasons for making the charge.

For these reasons, plaintiff alleged that defendant was a trespasser in legal bad faith; that defendant should be ordered to remove its equipment from the premises and enjoined from further producing oil from the well; that plaintiff was entitled to all the oil previously extracted, or its proceeds, free of all cost and expense of production, including the expense of drilling. It prayed for judgment recognizing its exclusive right to explore the land for minerals, ordering defendant to remove its equipment, enjoining it from further trespassing upon the property, and recognizing plaintiff to be the owner of the oil and gas already produced or its proceeds, free of all expense of production including the expense of drilling.

Defendant excepted to both the original and the amended petitions on the ground that they set out no cause or right of action. The exceptions were overruled, and defendant answered.

It admitted the execution of the lease claimed by plaintiff but especially denied that it conferred upon plaintiff any right to produce oil and gas from the strip of land involved. It denied that plaintiff was in possession of, or had a right to possess, this strip of land at the time the suit was filed. It admitted that it had entered upon the land and drilled a well thereon under and by virtue of a lease which it acquired by assignment from R.J. Reinke; that Reinke had acquired the lease from Glenn Fitts, the owner of the strip of land, and that its operations were conducted in good faith, upon the advice of counsel that Fitts, who leased to Reinke, owned the strip of land in fee under a valid title.

Defendant admitted that it conducted drilling operations after plaintiff filed its original petition, but alleged that it had done so on the advice of counsel and in good faith.

The answer sets out at great length and in detail Glenn Fitts' chain of title to the 25-foot strip of land, and it is alleged that, should the court hold that the Rodessa Oil Land Company, plaintiff's lessor, is vested with title to the strip of land on which the well was drilled and that plaintiff held a valid lease thereon, then, because defendant acted in good faith, it is entitled to be reimbursed the cost of drilling, equipping and operating said well. Assuming the position of plaintiff in reconvention, it prayed for judgment against plaintiff for its expenses, or, in the alternative, that the court appoint a judicial sequestrator to operate the well until it produced sufficient revenue to repay all its expenses.

In a written opinion, the district court held that plaintiff's lease covered this strip of land, that it was in possession, and that it had the exclusive right to explore it for minerals; and held further that defendant's operations thereon were conducted in good faith and therefore it should be reimbursed its expenses out of the proceeds of the products of the well, all matters of accounting to be deferred. There was judgment accordingly. The injunction prayed for by plaintiff was granted.

Plaintiff appealed from the judgment. Defendant answered the appeal, praying that there be judgment rejecting plaintiff's demands in toto, and, in the alternative, that, if the court should uphold plaintiff's title, the judgment ordering that defendant be reimbursed its expenses be affirmed.

This is not an action to try title to real estate, nor is it a possessory or petitory action. Originally it was an action against an alleged trespasser to protect possession. One who is in physical possession of a tract of land under a lease which gives him the exclusive right to possess it for lawful purposes may protect his possession against a trespasser by an injunction and may recover damages. Esmele v. Violet Trapping Company,187 La. 728, 175 So. 471; Pure Oil Operating Company v. Gulf Refining Company, 143 La. 284, 78 So. 560, and cases there cited; Police Jury v. Kidder et al., 4 La.App. 296; Bright v. Bell et al., 113 La. 1078, 37 So. 976.

It is stated by counsel for plaintiff in their brief that the question of title to the property involved is not at issue. While that is true, yet in a case like this, one where possession of a tract of land is involved, and where the right to possess is inseparably connected with ownership, a discussion of the title of the person under whom the litigants possess or claim the right to possess, cannot be avoided.

In this case we note that both plaintiff and defendant put in evidence the title of the owner under whom they claim the right of possession. As neither the Rodessa Oil Land Company, plaintiff's lessor, nor Glenn Fitts, defendant's lessor, is a party to this litigation, what we here say regarding the title to this strip of land is not intended to nor can it affect their rights.

The strip of land on which defendant drilled the oil well is a part of the tract covered by plaintiff's lease. While plaintiff did not drill on this 25-foot strip of land, it did drill several wells, under its lease, on the larger tract of which this strip is a part. The tract of land covered by plaintiff's oil and gas lease was owned, prior to 1908, by the Rodessa Land Development Company (not plaintiff's lessor) and sold by that company to R.J. Riddle and by Riddle sold to the Rodessa Oil Land Company, plaintiff's lessor, in 1909.

On March 3, 1908, the Rodessa Land Development Company, the then owner of the tract now covered by plaintiff's lease, acting under the provisions of Act 134 of 1896, laid off a portion of said tract into squares, lots and streets, made a plat thereof and had it recorded in the notarial records of Caddo Parish, under the caption "Parker Addition to Rodessa, La." Rodessa was then an unincorporated village with squares, lots and streets laid off and platted. The village was never incorporated. The "Parker Addition" lies adjacent to the original village.

The land included in the "Parker Addition" lies west of and adjacent to an 11-acre tract now owned by Glenn Fitts. The original plat of the "Parker Addition" bears the following legend: "We hereby dedicate to public use all streets and alleys in above subdivision", signed "Rodessa Land Development Company, By J.D. Lee, President". The plat also has endorsed upon it the following: "No. 5006. Filed and Recd. March 3, 1908. William Haynes, Dy. Clerk Ex Off. Dy. Recorder."

Among other streets shown on this plat is one named "Parker Street", which is 50 feet wide and runs north and south. As shown by the plat, it is west of and adjacent to the 11-acre tract owned by Glenn Fitts.

As a matter of fact — and this is admitted — not a square or lot of the "Parker Addition" to the village of Rodessa was ever sold, and none of the streets shown on the plat was ever used by the public. The land when platted was open, under fence, and was being cultivated as a farm, and continued to be so fenced and cultivated. It is not suggested or claimed that the streets shown on the plat were ever used by the public. In fact, it is admitted that they were never opened or used.

For that reason, the Rodessa Oil Land Company, the owner of the tract of land out of which the "Parker Addition" to the village of Rodessa was carved and now under lease to plaintiff, presented a petition to the police jury of Caddo Parish, on March 9, 1936, twenty-eight years after the plat was recorded, in which petition it represented:

That it was the owner of the S 1/2 of the NW 1/4, Sec. 23, T. 23 N R., 16 W, with the exception of 11 acres known as the Stewart property (now owned by Glenn Fitts); that the Rodessa Land Development Company, its predecessor in title "dedicated what is commonly known as the Parker Addition to the Town of Rodessa embracing the S 1/2 of the NW 1/4 of Section 23, and caused a plat of said Parker Addition to be made and filed * * * March 3, 1908; * * * that all of the property in said ParkerAddition has been cultivated as farm property, that not a singlelot in said subdivision has ever been sold nor a single street oralley open to use, with the exception of the main highway lying to the west of the Kansas City Southern Right-of-Way and that there is not now or has there been any need for the streets and alleys shown on the annexed map with the exception of the main highway just referred to. Petitioner accordingly shows that thepublic has never used but has abandoned any right to the use of thestreets and alleys of the Parker Addition with the exception just noted." (Italics are the writer's.)

The land company prayed that the police jury by appropriate resolution "abandon unto petitioner all rights and claims that it may have to the streets and alleys shown on said attached map with the exception of the main highway lying to the west of the Kansas City Southern Right-of-Way".

On the same day, the following motion was adopted by the police jury:

"On motion of Mr. Fuller, seconded by Mr. Williamson, the streets and alleys in the Parker Addition to the town of Rodessa, dedicated for public use as recorded in the office of the Clerk of Court of Caddo Parish, March 3rd, 1908, be abandoned, and ownership restored to the present owners, with the exception that it shall not affect the main highway lying to the West of the Kansas City Southern right of way, designated as State Highway No. 8, and that a proper recording be made in the office of the Clerk of Court of Caddo Parish."

Now the 25-foot strip of land involved in this controversy and on which defendant drilled the well is the east half of Parker Street, which street, as we have said, is 50 feet wide and is west of and adjacent to the 11-acre tract of land owned by Glenn Fitts.

A few days after the police jury cancelled the dedication of the streets and alleys shown on the plat of the "Parker Addition", Glenn Fitts, who owned the 11-acre tract and who, after the cancellation and so-called "abandonment", claimed to own the east half of Parker Street, leased that strip of land to R.J. Reinke, and Reinke immediately assigned the lease to the defendant oil company; and it is by virtue of this lease that defendant claims the right to explore the strip of land for minerals.

Counsel for defendant argue first that, in as much as all of the streets, including Parker Street, as shown on the recorded plat of the "Parker Addition", had been dedicated to public use, plaintiff had no right to possess and could not legally hold possession of any of said streets, even though its lease covered a tract of land in which the "Parker Addition" was embraced and expressly included the streets, because a private individual cannot gain or hold possession of real estate, the possession of which is already vested in the public. They cite cases in support of this general principle.

They argue secondly that, when the police jury cancelled the dedication and "abandoned" the streets, a fee title to that portion of Parker Street, lying east of its center line, vested in Glenn Fitts, who owned the property adjacent thereto.

In support of the latter argument, they cite Act 151 of 1910. That act, according to its title, is one "Authorizing police juries and municipal corporations to work and set aside dedications of roads, streets and alley-ways, when same has [have] been abandoned, or no longer needed for public use".

Section 1 of the act provides that police juries and municipal corporations shall have full power and authority "in their discretion, to revoke and set aside the dedication of all roads, streets and alley-ways heretofore laid out and dedicated to public use, within their respective limits when such roads,streets and alley-ways have been abandoned, or are no longerneeded for public purposes". (Italics are the writer's.)

Section 2 of the act says: "upon such revocation, the ownership of the soil embraced in such roads, streets, and alley-ways up to the center line thereof shall revert to the then present owners of the land contiguous thereto."

But Glenn Fitts, under the facts disclosed by the public records and admitted by defendant's counsel, could not and did not acquire fee title to Parker Street up to the center line thereof by virtue of the so-called dedication and abandonment. The only theory under which he could have acquired title is that the fee was lost by the owner who made the dedication and was acquired by the public.

But here neither did the owner lose nor did the public acquire the fee. When we consider the admitted facts and circumstances, the reason is clear and manifest. The dedication by the owner, as evidenced by the written inscription on the plat, was in favor of the public. But the public, in whose favor the dedication was made, never accepted it.

It is settled by repeated decisions of this court that:

"A dedication to public use is inchoate only, until after its acceptance, which acceptance may be shown by authentic act or the use of the property in the manner and for the object designated."

The above language is quoted from the case of David and Livaudais v. Municipality No. 2, 14 La.Ann. 872, decided in 1859. The same language was quoted with approval in the case of Jaenke v. Taylor, 160 La. 109, 106 So. 711, decided in 1926.

There are numerous other decisions of this court to the same effect, many of which are cited in Jaenke v. Taylor, supra. The identical question was passed upon by the Court of Appeal, Second Circuit, in the case of Jouett v. Keeney, 17 La.App. 323, 136 So. 175, where the court reviewed the jurisprudence of this State from Martin's Reports to date. It is unnecessary to repeat the citations here.

It may be stated as a rule, deduced from the opinions of this and other courts, that the dedication by the owner of portions of his land for "public use", as streets, alleys, parks and squares, merely confers upon the public the right to use them, and that, until and unless the right is exercised by the public, the dedication is ineffective; and further that, once the public exercises its right to use the property dedicated by using it for the purposes specified in the act of dedication, the dedication is complete and irrevocable and the owner is divested of the fee as completely as if he had made a sale of the streets, alleys, etc., to the public.

For these reasons, the legislature decreed, in Act 151 of 1910, that, when roads and streets are abandoned and no longer needed for public use, the dedication is subject to revocation by the police jury or municipal authorities, and upon such revocation the ownership of the soil in such roads and streets up to the center line thereof shall revert to the owners of the land contiguous thereto.

It is clear enough that this act relates only to such dedications as were consummated and rendered effective in some manner required by law, because it is only in such cases that the fee passes from the donor to the public, and certainly the legislature did not intend thus to dispose of private property.

The result is that Fitts gained nothing by these proceedings, and, having no right or title to the strip of land, he could confer no rights or privileges upon his lessee.

Counsel for defendant say, at Page 34 of their brief, that the plat and the dedication thereunder were accepted by the parish engineer of Caddo Parish, who wrote thereon the following: "I hereby approve map as being correct as to acreage and as being in compliance with the provisions of Act 134 of 1896", signed "L.Z. Crawford, Parish Surveyor".

The parish engineer had no authority to accept the dedication for the public. Not only that, if he thought he had such authority, it is evident that he did not intend to exercise it for the public. All he did was to approve the map as being correct as to acreage and in compliance with the act of the legislature.

In plaintiff's lease mention is made of the "Parker Addition", as well as the original village of Rodessa. In precise language the Rodessa Oil Land Company leased to plaintiff the lots, squares, etc., "together with all streets and alleys lying next to and adjoining said blocks and lots". Then follows the stipulation:

"Subject to the public's presently existing right of passage over said streets and alleys, comprising the town of Rodessa, Louisiana, situated in Section 23, Township 23 North, Range 16 West, and the Parker Addition thereto situated in Sections 22 and 23."

Counsel argue that, by assenting to this stipulation, plaintiff recognized the streets as being public property. The language does not so indicate. Plaintiff accepted the lease of the streets "subject to public's presently existing right of passage" over them. As a matter of fact, up to the date on which the lease was made, the dedication had not been set aside by the police jury. And it is conceivable that, up to the time it was set aside, the public might have exercised its right of use, although more than a quarter of a century had elapsed since the dedication was made and no use of the streets had been made by the public during that time.

The Rodessa Oil Land Company petitioned the police jury to set aside the dedication at the instance of plaintiff, and it is said that this was a recognition that the streets had been dedicated. But the petition presented to the police jury is contrary to this theory, as the following quotation therefrom shows:

"Petitioner further shows that all of the property in said Parker Addition has been cultivated as farm property, that not a single lot in said subdivision has ever been sold nor a single street or alley open to use with the exception of the main highway; * * * that the public has never used but has abandoned any right to the use of the streets and alleys."

It was represented, not that the public had abandoned the streets, but had abandoned "any right to the use of the streets and alleys".

Evidently the purpose of plaintiff and its lessor in asking that the dedication be set aside was to obviate such complications as might arise in case the public should elect to exercise its right to use the streets later.

The remaining question is whether the defendant is entitled to retain possession of the well until it is reimbursed the expense of drilling and equipping it. This, of course, involves the question of its good faith, which is especially pled. It claims the rights of a possessor in good faith, one of which, according to Clause 2, Article 3453 of the Revised Civil Code, is:

"The right which such a possessor has, in case of eviction from the thing reclaimed, to retain it until he is reimbursed the expenses he may have incurred on it."

A possessor in good faith, says Article 3451 of the Revised Civil Code, "is he who has just reason to believe himself the master of the thing which he possesses, although he may not be in fact".

The possessor in bad faith "is he who possesses as master, but who assumes this quality, when he well knows that he has no title to the thing, or that his title is vicious and defective". Civil Code, Article 3452.

In the case of Southwestern Gas Electric Company v. Nowlin,164 La. 1044, 115 So. 140, this court discussed at length not only the general question of who are possessors in good faith and bad faith but their rights as well. After relating the facts of the case as disclosed by the record and after quoting Articles3451 and 3452 of the Civil Code and citing several cases, the court said (page 142):

"Since defendant knew, when he took possession, that plaintiff was claiming title to the property, and since plaintiff has established his title, it must be held that defendant was a possessor in bad faith, in contemplation of law, and he must abide the consequences following such a possessor."

One of the cases cited by the court is McDade v. Bossier Levee Board, 109 La. 625, 33 So. 628, where the court said (page 632):

"The very fact of plaintiff's having made inquiry shows that he suspected the defectiveness of his title and that his error was one of law and not of fact. Applying the law to this situation, the possession of plaintiff was in legal bad faith."

Another case cited is Ledoux, Administrator v. Burton, 30 La.Ann. 576, where it was held that: "One who buys property with full knowledge that the title to the same is in dispute, is not an innocent purchaser."

Still another is the leading case of Heirs of Dohan v. Murdock, 41 La.Ann. 494, 6 So. 131. Referring to this case, the court said (in the Nowlin Case):

"In the same case it was held that a misconception of the law, no matter how honestly it may be entertained, does not have the effect of making one a possessor in good faith."

The holding in these cases, if applicable, is fatal to defendant's pretensions of good faith. Its officers and representatives knew perfectly well before they took possession of this property that plaintiff claimed not only that it had the right to possess but that it was in physical possession of the property. It was informed of these facts by letter and later by the filing of the suit. Not only that, they knew that this strip of land was a part of a larger tract on which plaintiff had the lease, and they could see plaintiff's operations in the drilling of wells thereon. They had notice unmistakably certain that defendant's right to take possession of the land was seriously disputed by plaintiff.

Furthermore, the public records of the parish showed unmistakably that there was no consummated dedication of the streets in the "Parker Addition" to Rodessa. The so-called dedication of these streets and their subsequent abandonment are set out in defendant's answer and relied upon as a link in Glenn Fitts' chain of title. In answer defendant made special reference to the petition presented to the police jury for a cancellation of the dedication, and at the trial defendant offered it in evidence. It is recorded in the conveyance records of the parish. It shows on its face that not one of the streets of the "Parker Addition" had ever been opened or used by the public and that not a lot or square had ever been sold. Therefore, the defect in Fitts' title was patent on the face of the records.

So that, if it be true that defendant was in error, such error was one resulting from a misconception of the law and not due to ignorance of the facts. In Heirs of Dohan v. Murdock, supra, this court, speaking of errors resulting from a misconception of the law, said (page 132):

"Now, under our jurisprudence, the principle is well settled that such an error is incompatible with good faith, as characterizing the possession of an evicted vendee of immovable property."

But defendant's counsel argue that, in as much as the cases cited all relate to petitory actions or title to real estate, they have no application here. It is true that those cases involve ownership of real estate, and the court had to determine the question of title. But the question of the rights of adverse possessors was also involved, and for that reason the court was called upon to interpret the articles of the Civil Code relating to "possessors" in good or bad faith and to pass upon their rights. It is not argued that the interpretation given those articles by our predecessors is unsound, and the only reason suggested why the effect of those interpretations should not be applied in this case is that this is not one involving title to real estate.

But defendant has injected into this case the question of its good faith and has made that one of the major issues involved. It claims the right accorded to a possessor in good faith as prescribed in Article 3453 of the Code, which is to "retain it" — the well, in this case — "until he is reimbursed the expenses he may have incurred on it". We are called upon to say whether or not defendant acted in "good faith", according to the codal meaning of that term. This court has said in the cases cited what the term "good faith" means, and as to the particular point here raised, what is said in them is appropriate here.

In the case of Gregory v. Thomas, 20 Wend., N.Y., 17, the court said:

"To say that a man takes in good faith, when he acts with notice, and of course under conscious hostility to another who has before taken a similar title, would be a legal solecism."

Counsel cite and quote at length from the case of Cooke v. Gulf Refining Company, 135 La. 609, 65 So. 758. The inference which counsel seek to draw from what is quoted is that the articles of the Code relating to good faith or bad faith do not apply to cases of trespass where property is held under an oil and gas lease. But the court did, in that case, give the defendant, who was a trespasser, the benefit of the codal provisions relating to possessors in good faith, as shown by the third section of the syllabus.

In the case of Nabors Oil Gas Company v. Louisiana Oil Refining Company, 151 La. 361, 91 So. 765, it was held, according to the fourth paragraph of the syllabus, which is a correct statement of the ruling, that:

"One becomes a possessor in bad faith from the moment that the defect in his title is made known to him, or is declared in a suit brought by the owner to recover the property. If, whether acting upon his own judgment or the advice of others, he refuses, when so informed or sued, to surrender the property, and it is wrested from him by judicial decree, his status as a possessor in bad faith is established and he becomes liable accordingly."

In that case, as in the one at bar, the defendants acted upon the advice of counsel and asserted good faith. But the court held that they were in bad faith. There, as here, they proceeded with full knowledge of all the facts and after suit was filed against them. A rehearing was granted in that case, and for that reason counsel say that the ruling was set aside. But the rehearing was granted and the original judgment set aside on an entirely different issue. The ruling on the question of good faith was not mentioned in the opinion on rehearing.

In the recent case of Ruth v. Buwe et al., 185 La. 204,168 So. 776, it was said (page 779):

"Furthermore, defendants in any event became possessors in bad faith on February 2, 1933, when the present suit was instituted against them."

Under the circumstances here disclosed, we do not think that the fact that defendant acted under advice of counsel makes it a possessor in good faith. In the case of Heirs of Dohan v. Murdock and of Nabors Oil Company, supra, the defendants proceeded under advice of counsel, and yet were held to be in legal bad faith.

Plaintiff has not elected to keep the improvements — the well and its equipment — made on the land by defendant. It alleges that the well is a detriment to its lease, there being several other wells in close proximity, and prays that the entire equipment be removed from the premises.

For the reasons assigned, the judgment appealed from is affirmed in so far as plaintiff was decreed to be the owner of all oil, gas and other minerals produced from the well drilled by defendant, and enjoining and restraining the defendant from drilling any well in search of oil or gas upon any portion of the tract of land involved and from producing or continuing to produce oil, gas or other minerals therefrom, and commanding defendant to remove from the premises all equipment and material placed by it thereon. It is further ordered that said judgment be and is hereby reversed and set aside in so far as it was decreed that plaintiff's ownership of the oil, gas and other minerals produced from the well was "subject to the right of the defendant Parker Oil Company, Inc. to be reimbursed out of the proceeds of such products, the cost and expense of drilling, equipping and operating said well"; and reversed and set aside in so far as it was decreed that "the legal effect of writs of injunction in accordance with the provisions (b) and (c) of this judgment, however, to be suspended until an accounting between the parties and the reimbursement of defendant to the extent and in the manner provided for herein"; all costs to be paid by defendant.

HIGGINS, J., absent.

On Rehearing.