Opinion
No. 37862.
April 22, 1946. On Rehearing November 10, 1947. Further Rehearing Denied December 15, 1947.
Appeal from Thirteenth Judicial District Court, Parish of Evangeline; J. Cleveland Fruge, Judge.
Concursus proceedings by the Humble Oil Refining Company against Arceus Guillory and others to determine which defendants were entitled to the royalty interest in oil, gas and other minerals produced by the plaintiff. From a judgment in favor of the named defendant, the other defendants appeal.
Judgment affirmed in part and reversed in part.
Liskow Lewis, of Lake Charles, White, Holloman White, of Alexandria, Wesley H. Clanton, of Eunice, and Edward Dubuisson, of Opelousas, for defendants-appellants.
Jerome A. Broussard, of St. Martinville, S.W. Plauche, S.W. Plauche, Jr., Alvin O. King and W. W. Thompson, all of Lake Charles, and Marion J. Epley, Jr., of New Orleans, amici curiae.
E. Herman Guillory, of Ville Platte, for defendant-appellee.
On account of a dispute between the landowner and various persons claiming royalty interest in the oil, gas and other minerals produced from a certain tract of land, the Humble Oil and Refining Company, owner of the mineral lease under which the production was obtained, instituted these concursus proceedings in order that it might be determined who is entitled to the royalty interests.
On January 19, 1923, Arceus Guillory sold to Augustus Hill Garland the "undivided one-fourth interest in and to all royalties stipulated for or hereafter to be stipulated for, in any oil, gas or mineral lease that may be or has been executed in favor of third persons and more particularly in that certain lease executed in favor of the Louisiana Oil and Refining Corporation or its assignors and granted by vendor on a certain tract of land. * * *" The land is described and it contains 52 acres. It is further stated in the act of sale: "It being well understood and agreed that the interest herein conveyed is and will remain an interest in all contracts by the vendor with third persons for the exploration and development of the said lands for oil, gas or other minerals, the purchaser not to participate with the vendor in any of the proceeds of the rental of the said land for said purposes, but only to share in the royalties in the proportions above set forth. This grant to be continuous and to run with the land into whomsoever's hands it may fall; by assignment, bequest, devise or otherwise."
The dispute in these concursus proceedings is between the landowner and various persons claiming a royalty interest through the Garland royalty deed. Among the various persons who had acquired a royalty interest from Garland was one C. H. Fenstermaker, whose wife died on May 21, 1928 leaving four children, two of whom were minors. All of the claimants, except the landowner, rely on the Garland royalty deed for an interest in the royalties flowing from the Humble lease.
At the time Garland acquired the royalty interest on January 19, 1923, the land was under lease to the Louisiana Oil and Refining Corporation, which subsequently lapsed without production in pursuance to its terms. Some 17 years after Garland acquired the royalty interest, the landowner executed a mineral lease in favor of the Humble Oil and Refining Company. Two years thereafter a producing well was brought in. The producing well was brought in some 19 years after the date Garland acquired the royalty interest.
Upon trial of the proceedings the lower court decreed the royalties to be the property of the landowner and rejected the claims of all the parties relying on the Garland deed. The matter has been brought to us on appeal by the unsuccessful claimants.
The appellants contend that the sale of the one-fourth interest in the royalties by Guillory to Garland of January 19, 1923 created a servitude and that the servitude was suspended as to all the claimants who traced their title to the Garland deed on account of the minority of the Fenstermaker children. We see no merit in this contention for the reason that a royalty deed predicated on a lease or future leases does not create a servitude.
The sale of royalties under an existing lease and future leases, is nothing more than the transfer of a proportionate share of the production, if any, that the landowner may be entitled to under the terms of the lease. It is a right predicated upon another right, the lease. Whenever the lease lapses by its terms the right to royalties thereunder necessarily passes out of the picture. Calcasieu Oil Co., Inc., v. Yount-Lee Oil Co. et al., 174 La. 547, 141 So. 55; Parten v. Webb et al., 197 La. 197, 198, 1 So.2d 76.
"* * * in oil and gas leases, under the settled jurisprudence of this state, the payment of a royalty is the payment of rent, and is not the payment of a price for the oil or gas rights, as if they were sold." Roberson et al. v. Pioneer Gas Co., 173 La. 313, 314, 137 So. 46, 48, 82 A.L.R. 1264.
In the case of Tyson et al. v. Spearman et al., 190 La. 871, 183 So. 201, 208 it is stated: "`It is the established jurisprudence of this state that the lessee in the usual oil and mineral lease merely obtains a personal right and not a real right in the property' (Marchand v. Gulf Refining Co. of Louisiana, 187 La. 1002, 175 So. 647, 649. See, also, Sabine Lumber Company v. Broderick, 5 Cir., 88 F.2d 586; Posey v. Fargo, 187 La. 122, 174 So. 175), and his possession being for another (his lessor) does not thereby acquire rights for himself. On the contrary, such rights as the lessee may have acquired by virtue of his possession inures to the benefit of his lessor."
This Court pointed out in the case of Vincent et al. v. Bullock et al., 192 La. 1, 187 So. 35, that the royalty under a lease depends upon the continued existence of the right, the lease, to which it is an appendage and it can not have a life of its own independent of the lease. We further pointed out that a party to a contract who sells royalty under an existing lease transfers only a part of the whole of his rent due from the lease upon which his royalty depends.
From an examination of the Garland royalty deed it is apparent that an attempt was made to convey a perpetual, indeterminate royalty interest in all future leases. The lease in favor of the Louisiana Oil and Refining Corporation having lapsed and passed out of the picture, the question now resolves itself as to whether the royalty deed, in so far as it attempts to convey an undivided interest in royalties thereafter to be stipulated in a lease that may be executed by the landowner, is valid.
Under the provisions of Article 2674, R.C.C., a lease must have a fixed term. In considering a lease without a fixed term, in the case of Bristo v. Christine Oil Gas Company, 139 La. 312, 71 So. 521, 522, the Court made the following pertinent statement: "Hence the only question presented for decision is whether the stipulation that the grantee might prevent a forfeiture and continue the lease or option from year to year by paying an annual rental of 10 cents an acre was or is enforceable. Our opinion is that that stipulation in the contract is null for want of a fixed or definite term. Whether it be regarded as a lease or an option, it would be an anomalous contract without a definite term or limitation. To recognize that the defendant has the right, without any obligation, to hold the plaintiff's land under a perpetual lease or option, would take the property out of commerce, and would be violative of the doctrine of ownership, defined in the second title of the second book of the Civil Code."
A royalty predicated on a lease that has no fixed term would fall in the same category for the reason that the royalty right depends upon the lease. Since a lease cannot be granted in perpetuity, a right dependent upon a lease could not be granted in perpetuity. We therefore conclude that a conveyance of a perpetual, indeterminate royalty interest in all future leases is absolutely null under the principles of law enunciated in the Bristo case.
Moreover, the transfer of an undivided one-fourth interest in and to all royalties hereafter to be stipulated for in any lease that may be executed by the landowner creates a potestative condition which is reprobated by law.
"The potestative condition is that which makes the execution of the agreement depend on an event which it is in the power of the one or the other of the contracting parties to bring about or to hinder." Article 2024, R.C.C.
"Every obligation is null, that has been contracted, on a potestative condition, on the part of him who binds himself." Article 2034, R.C.C.
"The last preceding article is limited to potestative conditions, which make the obligation depend solely on the exercise of the obligor's will; but if the condition be, that the obligor shall do or not do a certain act, although the doing or not doing of the act depends on the will of the obligor, yet the obligation depending on such condition, is not void." Article 2035, R.C.C.
From the above-quoted articles of the Code a potestative condition depending solely upon the will of the obligor is null. We recognize the fact that a potestative condition imposing on the obligor the duty of fulfilling it or making a sincere effort towards its fulfillment is not the potestative condition reprobated by law, but only potestative in the sense that the obligor is in a position to hinder or prevent the execution of the contract. However, the Garland deed contains a potestative condition where the obligor does not even promise to execute future leases, let alone obligate himself to do so. The execution of future leases is left entirely to the will of the landowner and is incapable of enforcement. Many contracts involving potestative conditions have been entertained by this Court, but we have been unable to find a single case where a decision was contrary to the views herein expressed. In all of the cases where a contract with a potestative condition has been upheld there has been at least a promise to do something. Under the terms of the Garland deed there is no obligation on the part of the landowner to fix any definite royalty interest in the future leases. In other words, the deed purports to convey an undivided one-fourth interest in whatever royalty interest the landowner may stipulate. It does not obligate the landowner to lease the property. It merely states that royalty interest is conveyed in any mineral lease that the landowner may execute. The deed strictly confines the interest to leases that the landowner may execute. In fact, the landowner did not obligate himself to execute future leases and the amount of royalty interest conveyed is uncertain in that the landowner could stipulate any royalty in any future lease that he saw fit.
We have therefore concluded that the deed is null because it attempts to transfer a perpetual royalty in future leases and for the further ground that it contains a potestative condition that is reprobated by law.
For the reasons assigned, the judgment of the lower court is affirmed at appellants cost.
ROGERS, HAMITER and KENNON, JJ., concur in the decree.
O'NIELL, C. J., absent.
On Rehearing
As shown in the opinion rendered on the original hearing of this concursus proceeding, Arceus Guillory disputes herein the claims of various persons to royalty interests affecting a certain tract of land which he owns.
All of the claims are predicated on and grow out of an instrument executed by Guillory on January 19, 1923, by which he sold and conveyed to Augustus Hill Garland: "The undivided `one fourth (1/4) interest in and to all royalties stipulated for or hereafter to be stipulated for, in any oil, gas or mineral lease that may be or has been executed by vendor in favor of third persons and more particularly in that certain lease executed in favor of the Louisiana Oil Refining Corporation * * *."
The instrument further recited:
"* * * It being well understood and agreed that the interest herein conveyed is and will remain an interest in and (to) all contracts by the vendor with third persons for the explorations and development of the said lands for oil, gas or other minerals, the purchaser not to participate with the vendor in any of the proceeds of the rental of the said land for said purposes, but only to share in the royalties in the proportions above set forth.
"This grant to be continuous and to run with the land into whomsoever's hands it may fall; by assignment, bequest, devise, or otherwise."
Garland, on August 4, 1925, executed an act of sale conveying one-half of his acquired interest to "R. M. Hallowell, for self and as Trustee for O. D. Keller; S. M. Lee; C. H. Fenstermaker, all residents of the Parish of Allen, here present, purchasing and accepting for himself and them, his and their heirs and assigns, and acknowledging delivery and possession thereof * * *". The consideration for the sale, according to the act, was "the price and sum of $2,000.00, cash in hand paid, the receipt whereof is hereby acknowledged * * *". None of the persons named therein as vendees signed the instrument or has since sold any portion of the interest purchased.
Later, Garland conveyed his remaining one-half interest to H. M. Journee; and thereafter the latter, through two sales, divested himself of it. His vendees, their heirs or assigns are among the claimants herein.
On May 21, 1928, death occurred to Mrs. Mattie Andrews Fenstermaker, wife of C. H. Fenstermaker (named in the act of August 4, 1925). Surviving, besides her said husband, were four minor children who were issues of their marriage.
On June 13, 1938, the Humble Oil Refining Company acquired an oil, gas and mineral lease on the land (the previous lease in favor of Louisiana Oil Refining Corporation having expired), and on February 13, 1942, some nineteen years after the execution of the Guillory-Garland deed, it completed under the lease an oil producing well. On the occurrence of this completion two of the Fenstermaker children were still minors.
Following the development of the dispute between Guillory and the various persons claiming royalties through his conveyance to Garland on January 19, 1923, the lessee instituted this proceeding. The district court rendered judgment, after a trial of the merits, recognizing the landowner as being the owner of the entire disputed royalty interest. All of those opposing him (their claims were rejected) appealed.
It is the position of appellants that Fenstermaker, under the deed of August 4, 1925, acquired from Garland (who had previously purchased from Guillory) a 1/256 royalty interest; that on the death of Mrs. Fenstermaker her minor children inherited her one-half community interest in the royalty; and that because of the minority of these children, and pursuant to the provisions of Civil Code, Article 802, the prescription of ten years liberandi causa was suspended not only as to the interest of such minors but also as to that of all of their coproprietors (all of those claiming through the Guillory deed) up to and including the date of the completion of the producing oil well. They urge, therefore, that the royalty conveyed by Guillory is still outstanding and it belongs to them in the proportions asserted.
In assailing the claims of appellants, the landowner through his counsel, offers numerous alternative contentions. First, he insists that C. H. Fenstermaker acquired no interest under the deed executed by Garland on August 4, 1925, and hence, upon the death of his wife on May 21, 1928, his minor children did not inherit an interest in the royalty. This deed, as before shown, recited a conveyance to Hallowell, for self and as trustee for Keller, Lee and Fenstermaker; and it was signed only by the vendor. Under this first alternative contention it is argued that the sale was never accepted because not one of the named vendees affixed his signature to the instrument; further, that R. M. Hallowell, designated as trustee, had no written evidence of his authority to act for C. H. Fenstermaker and the others, and that he at no time assigned, by valid written act, any interest to them.
There was no need for any or all of the named vendees to formally accept the act of sale. The conveyance was a cash transaction; and the payment of the $2,000 purchase price, acknowledged by the vendor in the instrument, constituted a complete acceptance. Beard et al. v. Nunn et al., 172 La. 155, 133 So. 429.
Regarding the other argument, the record shows that Fenstermaker personally paid to Garland (by check) his portion of the purchase price. Also, it discloses that a few days after the execution of the deed Hallowell gave to each of his co-purchasers in the transaction, including Fenstermaker, the following letter:
"Elizabeth, La. August 17, 1925.
Mr. S. M. Lee, Mr. C. H. Fenstermaker, Mr. O. D. Keller, Elizabeth, Louisiana. Dear Sirs:
This is to advise that purchase made from A. H. Garland of Opelousas of 1/64 royalty on certain tracts of land in the Pine Prairie territory, which is deeded to me as Trustee, is held by me, and interest in said purchase is 1/4 equal interest for each of you and for myself.
Yours very truly, R. M. Hallowell Trustee
RMH:EKA"
In view of these facts and the circumstances hereafter mentioned we must hold that Fenstermaker, particularly in so far as Guillory was concerned, acquired a definite interest.
When Guillory, in a cash transaction, conveyed to Garland, the latter was vested with the right to sell his interest to any one he chose and in any manner he pleased, Guillory's control of it during the period of its existence, in other words, was completely relinquished, and he was without right to complain about a lack of evidence in proof of the Fenstermaker title. And especially is this so since neither Garland nor Hallowell has complained. In fact, each of these persons, by his pleadings in this cause, has judicially recognized Fenstermaker's interest. Of course, it happened that the minor children of Fenstermaker inherited the interest of their mother prior to the lapse of ten years from the date of the original deed (a circumstance that was perhaps disadvantageous to Guillory); but that was a mere legal consequence of the sale to Garland.
For us to rule otherwise, we would be compelled to overrule a conclusion reached in the comparatively recent case of Standard Oil Company of Louisiana v. Futral et al., 204 La. 215, 15 So.2d 65, 73, and which was based on a substantially identical factual situation.
In that case Futral, the landowner, had conveyed to one Van Geffen a certain mineral interest. Although the latter was the only vendee named in the act of sale (in the instant case all vendees were named), he was purchasing not only for himself but also for six other persons concerning whom he wrote a letter and therein listed their respective portions. Among these copurchasers were Charles R. Houssiere and Nathan Rosenberg. Within ten years after the acquisition, the wife of each of the two last-named persons died leaving minor children. Futral, with respect to the issue of whether prescription had been suspended by reason of the minority of such children, contended that Houssiere and Rosenberg never in fact acquired any interest in the sale to Van Geffen. On this point we said and held:
"Under the terms of the above quoted letter and according to the testimony of Van Geffen, it is clear that the purpose of the letter was to show that Van Geffen purchased the property, not for himself alone, but for himself and those named in the letter, in the proportions set out therein. Van Geffen in his testimony makes this perfectly clear. He says that, at the time the property was purchased, one of the Houssiere brothers was with him, and that it was understood that the purchase price of $3,500 was to be paid by draft drawn on `H. A. Houssiere Bro.', which was done. And it was then clearly understood that the interest in the minerals was acquired, not for himself alone, but for himself and the others mentioned.
"Since Van Geffen is not complaining, but concedes that the others named in the letter own the undivided interests in the minerals as set out therein, Futral has no right to complain, because he does not now deny that by his sale to Van Geffen he divested himself of title to an undivided 1/64 of his minerals or mineral rights."
To support the argument herein that Fenstermaker acquired no interest, counsel has cited numerous other decisions in our jurisprudence. All have been considered; but they are not applicable here, being distinguishable particularly on the facts.
Next, the landowner (Guillory) contends alternatively that his deed to Garland on January 19, 1923, conveyed only a one-fourth interest in the royalty provided for in the lease then existing in favor of the Louisiana Oil Refining Corporation (a rent royalty), and it expired upon the lapse of the lease; and, further, that the additional stipulation in the deed, conveying an interest in royalty under any future lease or contract executed by the vendor with third persons, was and is reprobated by law in that it was potestative in nature and an attempt on the part of the contracting parties to grant a perpetual right in Garland.
On the original hearing in this court, merit was found in the contention. After further consideration, however, we have reached a contrary conclusion. The interest conveyed by Guillory to Garland was a mineral royalty (not a rent royalty) running with the land. Except in a few minor particulars hereinafter mentioned, it was the same as (although described somewhat differently from) the royalty involved in Vincent et al. v. Bullock et al., 192 La. 1, 187 So. 35, 37, the validity of which received judicial approval.
In the Vincent case the contested interest, reserved by the plaintiffs in perpetuity when they sold the land, was described as "a one-sixteenth (1/16th) royalty of all the oil, gas and other minerals produced and saved from said premises * * *". Regarding this we said that what the plaintiffs reserved was a full share, free of the cost of production, of 1/16th of the oil, gas and other minerals if and when successful exploration is had upon the land sold by them. Further, we held that the reservation created a real obligation or a real right in favor of the plaintiffs, their heirs or assigns, which was subject to the prescription of ten years liberandi causa. The royalty interest of the plaintiffs therein, in other words, ran with the land for the duration of the prescriptive period (not in perpetuity) and was payable out of production if and when obtained either by the landowner or by a lessee.
Unlike that in the Vincent case, the interest here was sold, not reserved; and it was limited to a percentage (1/4) of the royalties that would accrue under any lease or contract executed by the landowner with a third person. But it was similar in that it was a real obligation in favor of Garland, his heirs or assigns (it ran with the land); and it authorized participation in the production obtained under any lease on the property. What Garland bought from Guillory was "the undivided one-fourth (1/4) interest in and to all royalties stipulated for or hereafter to be stipulated for, in any oil, gas or mineral lease that may be or has been executed by vendor in favor of third persons * * *", such interest "to be continuous and to run with the land into whomsoever's hands it may fall * * *". Thus, the interest under consideration differs from that in the Vincent case only to the extent that here it was sold, instead of reserved, and the holders thereof are limited to a participation in production obtained by a lessee. Fundamentally and basically, however, the two interests are identical.
Of course, in view of the provisions of Civil Code, Articles 2024 and 2034, it would seem reasonable and proper to conclude, as was done on the original hearing of this cause, that a transfer, running with the land, of an interest in royalties hereafter to be stipulated for in any mineral lease that may be executed by the landowner (such was the conveyance made by Guillory to Garland) would constitute an obligation that is null and void because of its being contracted on a potestative condition. These articles read:
"Art. 2024. The potestative condition is that which makes the execution of the agreement depend on an event which it is in the power of the one or the other of the contracting parties to bring about or to hinder."
"Art. 2034. Every obligation is null, that has been contracted, on a potestative condition, on the part of him who binds himself."
But when consideration is also given to Civil Code, Article 2035 (assuming arguendo that a mineral royalty contract contains a potestative condition), it must be decided that a transfer of that kind is not reprobated by law. It reads: "The last preceding article is limited to potestative conditions, which make the obligation depend solely on the exercise of the obligor's will; but if the condition be, that the obligor shall do or not do a certain act, although the doing or not doing of the act depends on the will of the obligor, yet the obligation depending on such condition, is not void."
According to this article, which relates to Article 2034, it is not every potestative condition that renders null the obligation to which it is attached. Under the first provision thereof an obligation dependent purely or wholly on the wish or pleasure of the obligor is null; under the second provision, however, an obligation that is conditioned upon the obligor's performance or non-performance of some substantial act, his failure with respect to which would result in some material detriment or serious sacrifice to him, is not invalid.
A distinction between the two kinds of obligations was recognized by the French commentators. Respecting it, the great jurist Pothier commented:
"It is of the essence of agreements which consist in promising something that they should produce an obligation in the party making the promise to discharge it; hence it follows, that nothing can be more contradictory to such an obligation, than an entire liberty in the party making the promise to perform it or not as he may please. An agreement giving such entire liberty would be absolutely void for want of obligation. If, therefore, I agree with you to give you something in case I please, such an agreement is absolutely void.
* * * * * *
"Lastly, though I promise something under a condition, which depends upon my will whether I will accomplish it or not (condition potestative) as, if I promise to give you ten pistoles in case I go to Paris, the agreement is valid; for it is not entirely in my power to give the money or not, since I can only refuse to do so in case I refrain from going to Paris. There is then on my part an obligation and a real engagement. L. 3. ff. de legat. 2(a)." Pothier, Vol. 1, Art. IV, Section 7; Evans' translation, Vol. 1, page 25.
In interpreting Article 1174 of the Code Napoleon, the counterpart of our Civil Code, Article 2034, even though the French Code did not contain the provisions of Louisiana Civil Code, Article 2035, Planiol explained: "* * * Conditions Purely Potestative. — Article 1174 provides that: `An obligation is null whenever it is contracted under a potestative condition on the part of the one who obligates himself.' It refers to the purely potestative condition, or condition sic voluero: He who contracts under such a condition does not obligate himself, because there does not result therefrom the actual will to bind oneself. But nothing prevents the insertion in a contract of a condition which is a simple potestative condition that is to say, dependent upon the realization of a future event depending upon the will of one of the parties; for example; I will sell you my house if I decide within two years to change my domicile to another department. It is true that the happening of the event depends upon my will, but I am not sure that I shall be able to realize it, and besides in case I change my domicile within the delay foreseen I cannot prevent the contract from producing its effect; the condition is, therefore, not purely potestative on my part * * *." Planiol, Traite Elementaire de Droit Civil, Vol. 2, Page 417, Chapitre XI, Des Contrats Faits Sous Condition.
The distinction thus shown has heretofore been recognized in the jurisprudence of this state, and by the Federal Circuit Court of Appeal of the Fifth Circuit. Anse La Butte (Le Danois) Oil Mineral Company, Ltd. v. Babb, 122 La. 415, 47 So. 754; Cockburn v. O'Meara, 5 Cir., 141 F.2d 779; Colbert v. District Grand Lodge No. 21, Grand United Order of Odd Fellows, (First Circuit), La.App., 178 So. 694, 696. In the latter case it was appropriately observed: "The potestative condition reprobated by the Code is that condition or event upon which an obligation depends, and which it is entirely within the will and power of the obligor to bring about or hinder, without himself suffering some material detriment or disadvantage. In other words, it is where the condition is dependent merely on the state of mind or whim of the obligor to do or not to do. But if the condition, although dependent on the will and power of the obligor to bring about or hinder, involves some detriment, disadvantage, or inconvenience to the obligor if he brings about or hinders the happening of the event on which the obligation depends, then the condition does not render the obligation null."
Let us test now, under the second provision of Civil Code, Article 2035, the transfer made by Guillory to Garland. Garland's right to participate in future royalty was conditioned upon the performance by Guillory (or his successor in title) of a substantial act — the execution of a lease contemplating the exploration for oil. Had a third person sought to obtain from Guillory such a lease, the granting of it, of course, depended on his will. A refusal to grant it, however, unquestionably would have resulted in a material detriment to him — his foregoing the receipt of a bonus, of rentals, and possibly of royalties from production under the lease. It follows, therefore, that the transfer herein, dependent on the discussed condition, was not a nullity.
If this were incorrect, almost every sale or reservation of a mineral royalty confected in this state while the property is unleased would be reprobated by our law, including the royalty reservation involved in Vincent et al. v. Bullock et al., supra. In the usual mineral royalty deed the purchaser does not receive from the landowner an obligation to drill or to grant a lease for exploration purposes. All that he acquires is a right attached to the land and the assurance that he will receive his share of the oil produced therefrom if and when successful production results.
Another contention of appellee herein is that the sale made by Garland on August 4, 1925, and all subsequent sales, concerned mineral rights, not royalty such as was originally conveyed. We find this to be without merit also. An examination of the several deeds referred to discloses that they relate to the same type and kind of interest as that transferred in the deed from Guillory to Garland.
Finally, counsel for appellee argues that the prescription of ten years liberandi causa (which he specially pleaded) operated, as to all of the appellants, against the royalty sold under the deed of January 19, 1923, irrespective of the minority of the Fenstermaker children; and, further, but in the alternative, that since royalty is not a servitude prescription ran against the major appellants, although it might have been suspended as to the minors.
Considering these alternative arguments in their inverse order, we agree that a mineral royalty interest (one running with the land, a real right) is not a servitude. Such was the conclusion of this court in Vincent et al. v. Bullock et al., supra. We agree also that the minority of the Fenstermaker children had no effect on the royalty claims of the other appellants. The principle of law that the minority of a person causes a suspension of prescription as to his major coproprietors, which has been recognized and applied often in our jurisprudence, springs solely from the provisions of Civil Code, Article 802. This article is found under Title IV "Of Predial Servitudes or Servitudes of Land", and it relates exclusively to the extinguishment of servitudes. Since a mineral royalty is not a servitude the discussed legal principle is without application here. See St. Martin Land Company v. Pinckney et al., La.Sup., 33 So.2d 169, and Union Sulpher Company, Inc., v. Lognion et al., La.Sup., 33 So.2d 178, numbered respectively 38,163 and 38,176 on the docket of this court, the decisions in which are today being rendered.
Respecting the issue of the running of prescription against the royalty inherited by the Fenstermaker minors themselves, a different legal situation is presented. In that part of the Civil Code which treats of the liberative prescriptions, we find Article 3554 reading: "Prescription does not run against minors and persons under interdiction, except in the cases specified by law."
In examining the law for the purpose of ascertaining the excepted cases, we find Civil Code, Article 3541, as amended by Act No. 17 of 1922, reciting:
"The prescription mentioned in the preceding article, and those provided in paragraphs I and II of section three (3) of chapter three (3) of this title, shall run against married women, minors and interdicted persons, reserving, however, to minors and interdicted persons recourse against their tutors or curators.
"This prescription shall also run against persons residing out of the State."
These provisions, it will be noticed, have reference to Articles 3534 to 3537, inclusive, of the prescription of one year; to Articles 3538 and 3539, of the prescription of three years; and to Article 3540, of the prescription of five years concerning negotiable and non-negotiable bills and notes. We find nothing in the Civil Code, or in any of our statutes, providing for the running of the liberative prescription of ten years against minors.
Since the prescription of three years, for the payment of money and for accounts due, and of five years, relating to bills and notes, are not suspended as to minors, it would seem that the ten year prescription applicable to royalty rights should also run against them. Especially is this so when the nature of mineral royalty is considered. The owner of such an interest can not go upon the land and explore for minerals; his privilege, as before shown, is restricted to a sharing in production if and when it is obtained by the landowner or a lessee. He has, in other words, only a passive interest in possible production. The fact is, however, that the lawmakers have not removed a minor's royalty interest from the scope and purview of Civil Code, Article 3554, and we are without authority to do so.
But by reason of minority, the current of prescription is only suspended; it is not interrupted. Thus, on the inheritance by the Fenstermaker children of their mother's interest in the mineral royalty in question (the mother died May 21, 1928), the prescription which had been running (a period of five years and some months) was suspended as to them.
Moreover, the suspension was effective as to each child only for the duration of his or her minority. And, because of this, it is necessary to consider the ages of the several children for the purpose of determining whether or not there was sufficient suspension to prevent, as to their respective interests (1/2048 to each), the tolling of the ten years prescription between January 19, 1923 (the date of the original deed), and February 13, 1942 (the date when the oil producing well was completed).
The names and dates of birth of the children are as follows:
Robert Fenstermaker, August 4, 1927.
Elizabeth Fenstermaker, January 25, 1922.
Charles H. Fenstermaker, Jr., June 22, 1917.
Mrs. Kathryn Fenstermaker Ahrens, September 11, 1912.
Clearly the interests of Robert and Elizabeth Fenstermaker did not prescribe, for both were yet minors on the completion of the well. Likewise, the interest of Charles H. Fenstermaker, Jr., was not lost. As to him, the running of prescription was suspended from the date of his inheritance (May 21, 1928) to that on which he attained his majority (June 22, 1938), or for ten years, one month and one day. When this period of suspension is deducted from the time elapsing between the execution of the Guillory royalty deed and the completion of the well (19 years and 25 days), there remains less than the required prescriptive period of ten years. This is not so, however, with reference to the oldest child, Mrs. Kathryn Fenstermaker Ahrens. The period of suspension as to her was only five years, three months and twenty days (from the date of inheritance to that of the attainment of her majority); hence, the prescription of ten years ran. Accordingly, the claim to a royalty interest of Mrs. Kathryn Fenstermaker Ahrens was correctly rejected by the district court, but the claims of the other children (each for a 1/2048) must and will be recognized.
For the reasons assigned the judgment of the district court is reversed and set aside in so far as it rejected the demands of Robert Fenstermaker, Elizabeth Fenstermaker and Charles H. Fenstermaker, Jr., and there is now judgment recognizing each of those claimants as the owner of a 1/2048 royalty interest, entitled as such to be paid proportionately out of the funds deposited in the registry of the court. As to the remainder of the royalty in dispute herein the judgment is affirmed.
All costs shall be paid out of the disputed funds; however, Arceus Guillory is granted judgment for such costs against all of the litigants who contested his rights herein, except the three named in the preceding paragraph, pursuant to the provisions of Act No. 242 of 1944.
The right to apply for a rehearing is reserved to appellee and also to the appellants.
I concur in the decree affirming the judgment of the district court for these reasons: The Humble Oil Company is producing oil from a tract of land in Evangeline Parish under a mineral lease granted by Arceus Guillory, the landowner. The controversy involves a 1/32 royalty interest in the oil produced between Guillory the lessor and a number of persons claiming the royalty interest in various proportions. The facts are not disputed. On January 19, 1923, Arceus Guillory sold to Augustus H. Garland a 1/32 royalty interest in the land. On August 4, 1925, Garland sold a 1/64 royalty interest (1/2 of the royalty interest purchased from Guillory) to R. H. Hallowell, purporting to act for himself and as trustee for O. D. Keller, S. M. Lee and C. H. Fenstermaker. On September 7, 1923, Garland sold a 1/64 royalty interest (the remaining 1/2 of the royalty interest purchased from Guillory) to H. Mark Journee. The oil was first produced from the land and the royalty began to accrue under the lease granted to the Humble Oil Company on February 13, 1942. The assignees from Garland and from Journee and their heirs are parties defendant to this litigation. All these defendants base their claim to the 1/32 royalty interest sold by Guillory to Garland on January 19, 1923, on the fact that Mrs. Mattie K. Andrews Fenstermaker, wife of C. F. Fenstermaker, one of the parties named in the deed from Garland to Hallowell, died on March 21, 1928, leaving four minor children who inherited her undivided half interest in and to the rights, if any, acquired by Fenstermaker from Garland.
Defendant Arceus Guillory, the owner of the land, claims ownership of the 1/32 royalty interest in dispute on the ground that his sale of the royalty interest to Garland was restricted to the royalties to be paid under the existing lease in favor of the Louisiana Oil and Refining Company, and as that lease had expired by limitation any rights acquired by Garland or his assignees had likewise expired and also on the further ground that since oil was not produced on his land until February 15, 1942, under the lease to the Humble Oil Company, executed on January 13, 1938, all rights that may have been acquired by Garland and his vendees under the deed of January 19, 1923, have become prescribed and he specially pleaded the prescriptions of ten years liberandi causa and acquirendi causa.
It is admitted by all of the royalty claimants that the question in dispute is whether the 1/32 royalty interest that Garland acquired from Guillory and transferred to Hallowell and Journee is still outstanding and owned by the royalty claimants, or whether that interest has become prescribed. All of the defendants as against the defendant Guillory base their claim to the 1/32 royalty interest involved in the litigation on the alleged fact that the minor children of Mrs. Mattie K. Andrews Fenstermaker became owners of an interest in the royalty by virtue of the death of their mother and as ten years prescription liberandi causa had not run at the time of her death, the prescription was suspended as to the minors and also as to all their major co-owners.
It appears to be conceded by all of the parties claiming the 1/32 royalty interest in dispute, that the question of whether prescription was suspended depends solely on whether C. H. Fenstermaker did in fact acquire an interest in the royalty under the deed executed by Garland to Hallowell, purporting to act for himself, Fenstermaker, Keller and Lee, because if Fenstermaker did acquire an interest in the royalty, as a result of the deed executed by Garland to Hallowell, prescription was suspended as to all the royalty claimants. On the other hand, if Fenstermaker did not acquire any interest in the royalty by virtue of the deed in question, his minor children acquired none as the result of the death of their mother and hence the prescription of ten years liberandi causa was never suspended.
In passing upon this issue, the judge of the district court held that Fenstermaker never acquired title to any portion of the royalty interest in dispute and as a consequence his minor children had no interest therein and their minority never suspended the running of prescription against royalty rights acquired by Garland or his purported assignees, which rights became prescribed on January 19, 1933.
In support of his holding, the judge assigned the following reasons, in which I concur:
"The act of sale from Augustus Hill Garland to R. M. Hallowell, for self and as trustee for Fenstermaker et al., is an ex parte deed signed only by Augustus Hill Garland. There is no evidence in the record that any of the vendees named in the deed were even present when the conveyance was attempted to have been made by Garland; there is also no legal evidence in the record of any authority to R. M. Hallowell to purchase the royalty interest for the account of Keller, Lee or Fenstermaker, nor any subsequent transfer by him to his purported principals, nor that the purported vendees ever exercised any acts of ownership on the royalty interest until the filing of this suit, more than 19 years after the deed was signed by Augustus Hill Garland. * * *"
The royalty deed in this case purports to grant a one-fourth interest in the royalties under a certain lease and a one-fourth perpetual royalty interest in any royalties stipulated for or to be hereafter stipulated for in any lease that may be or has been executed. This is the first deed of this nature that has been presented for our consideration. We had an entirely different situation in the case of Vincent v. Bullock because the deed involved therein was a royalty interest in future production and was not restricted or limited to any lease or future leases. A royalty right under a lease depends on the continued existence of the lease to which it is an appendage and it cannot have a life of its own independently of the lease. A lease must have a fixed term. The deed did not provide for the amount of royalty to be reserved in future leases or fix a term for the leases. Furthermore, there was no obligation on the part of the grantor to execute any future leases. Having no special laws governing the oil industry, it became necessary to resort to the articles of the Civil Code deemed most applicable. The question that gave us most concern was the grant of a perpetual royalty. I was of the opinion on the original hearing that since the royalty right was restricted to leases and dependent on them for its existence recourse should be had to the articles of the Civil Code dealing with lease to be applied to the leases upon which the royalty depends for its existence. I had serious doubt of the validity of a royalty right depending on a non-existing lease.
On the rehearing of this case, we now have the benefit of the views of a number of attorneys who have made a special study of the laws governing the industry, which were presented to us in briefs as amici curiæ. After a careful consideration of the majority opinion, I am convinced that it establishes a uniform rule. Royalty rights granted under leases and future leases are placed in the same category in so far as prescription is concerned as royalty rights in any production, not restricted to leases, except where they are limited by the terms of a lease or special contract. I feel that the conclusions reached by the majority opinion on this rehearing simplifies the matter and will eliminate possible confusion. I did not at the time of the original hearing, and do not now, believe that the provision that the grant was to be continuous and run with the land into whomsoever hands it may fall was of particular significance for the reason that the same effect would necessarily follow by operation of law.
For the reasons assigned, I concur with the majority opinion.