Andrus v. Kahao

414 So. 2d 1199
CourtSupreme Court of Louisiana
DecidedMay 17, 1982
Docket81-C-1678
StatusPublished

This text of 414 So. 2d 1199 (Andrus v. Kahao) is published on Counsel Stack Legal Research, covering Supreme Court of Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Andrus v. Kahao, 414 So. 2d 1199 (La. 1982).

Opinion

414 So.2d 1199 (1981)

Mrs. Myrtle Devall ANDRUS, et al.
v.
Kenneth H. KAHAO, J. King Woolf, Jr. and Ashland Plantation, Inc.

No. 81-C-1678.

Supreme Court of Louisiana.

December 14, 1981.
On Rehearing May 17, 1982.
Rehearing Denied July 2, 1982.

*1200 John L. Olivier, and John Tarlton Olivier, of Olivier & Brinkhaus, Sunset, for plaintiff-applicant.

R. Gordon Kean, Jr., and Gary A. Bezet, of Sanders, Downing, Kean & Cazedessus, Baton Rouge, for defendants-respondents.

John M. McCollan, of Gordon, Arata, McCollman & Stuart, New Orleans, George W. Hardy, III, of Broadhurst, Brook, Mangum, Hardy & Reed, Lafayette, John C. Christian & Claude E. Hall, of Milling, Benson, Woodard, Hillyer, Pierson & Miller, New Orleans, Amicus Curiae, for defendants-respondents.

LEMMON, Justice.

This is a suit to recover one-half of the bonus money and delay rentals paid to defendants under a mineral lease. The issue is whether plaintiffs' grant to defendants of the exclusive right to enter into mineral leases included the right to retain bonuses and rentals payable under leases subsequently executed by defendants pursuant to that grant.

I.

In 1969 plaintiffs sold certain immovable property to defendants Kahao and King. The act of sale contained the following provision:[1]

"Sellers herein reserve an undivided one-half interest in and to all the outstanding minerals, the other undivided one-half interest being conveyed herein to Purchasers. The Purchasers shall have the exclusive right without the necessity of securing the joinder or consent of Sellers to enter into any oil, gas or mineral leases as they may deem fit, and such terms and conditions as they may deem fit and proper, provided, however, that no lease be executed for less than a one-sixth royalty."

These defendants subsequently sold the property to defendant Ashland Plantation, Inc. In 1973 Ashland entered into an oil, gas and mineral lease, and the lessee paid Ashland the bonuses and annual rentals due under the terms of the lease.

Plaintiffs claimed a share of the bonuses and rentals, ultimately filing this suit when Ashland rejected their claim. The trial court maintained defendants' exception of *1201 no cause of action, and the court of appeal affirmed. 400 So.2d 1194. We granted certiorari to review those judgments. 404 So.2d 280.

II.

Generally, only the landowner (who has not completely divested himself of mineral servitude rights) and the servitude owner have the right to lease property for mineral exploration and to share in bonus money and delay rentals due under the lease. On the other hand, the royalty owner has no right to lease or to share in bonuses and rentals, but has only the right to receive a fractional share of the production in the event that production is achieved.[2]Humble Oil Refining Co. v. Guillory, 212 La. 646, 33 So.2d 182 (1947). Of course, the party with the right to lease (because of being a landowner or a servitude owner) can grant that right to another.[3] The instant case presents the question: when a party with the right to lease grants merely that exclusive right to another party, does the grant also convey the right to receive bonuses and rentals, in the absence of an express provision in the contract? Determination of this question fundamentally involves the intention of the parties to the contract in which the exclusive right to enter into leases was granted.

At the time the contract was executed there was no statutory law providing for the transfer or retention of the right to receive bonuses and rentals when a party with the right to lease granted that right to another.[4] In the absence of positive law or an express provision in the contract regarding the transfer or retention of the right to receive bonuses and rentals, the intention of the parties is the determinative factor. C.C. Art. 1945. Thus, the decision in this case depends upon the intent of the parties.

The interpretation of the contractual provision adopted by the lower courts is that the parties implicitly intended for plaintiffs to transfer their right to receive bonuses and rental, thereby effectively reducing the basic mineral interest retained in the contract from a servitude to a royalty. We decline to hold that the language of the contract requires that interpretation.[5] In our opinion the contractual provision is subject to more than one interpretation, and evidence should have been presented in order for the court to determine the intention of the parties.

*1202 The exception of no cause of action is seldom an appropriate vehicle for adjudicating the rights of parties under an ambiguous contract in which several competing inferences can be drawn as to the intention of the parties. At this stage of the proceedings nothing has been presented to the courts which compels the conclusion that plaintiffs intended to transfer their right to receive income from bonuses or rentals. It is at least equally probable (or arguably even more probable) that plaintiffs intended to retain that right.[6] Neither the contractual provision nor the statutory law at the time of the contract settles the question.

Under these circumstances the trial court erred in maintaining defendants' exception of no cause of action.[7] The matter must be tried on the merits to determine the intention of the parties. Accordingly, the judgments of the lower courts are reversed, and the exception of no cause of action is overruled. The case is remanded to the trial court for a trial on the merits. Costs in the appellate courts are assessed to defendants.

WATSON, J., concurs in the result.

MARCUS, J., dissents and assigns reasons.

BLANCHE, J., dissents for reasons assigned by MARCUS, J.

MARCUS, Justice (dissenting).

I agree with the rulings of the courts below and this court's decisions in Ledoux v. Voorhies, 222 La. 200, 62 So.2d 273 (1952), and Mt. Forest Fur Farms of America, Inc. v. Cockrell, 179 La. 795, 155 So. 228 (1934), which cases were overruled by the majority in footnote 7. My view is also in accordance with the new Mineral Code. See La. R.S. 31:105. Accordingly, I respectfully dissent.

ON REHEARING

CALOGERO, Justice.

As is evident from our opinion on original hearing, we are presented in this case with the question of whether the trial court properly sustained the defendant's exception of no cause of action filed in response to plaintiffs' petition for a share of the bonuses and delay rentals paid to the defendant Ashland Plantation.

On original hearing, persuaded by plaintiffs' contention that the parties intended, as to bonuses and rentals under prospective leases, the conveyance of only a proportionate interest in keeping with the mineral conveyance, we reversed the lower court judgments and ordered the case remanded to the trial court to give plaintiffs an opportunity to prove their claims. In doing so, we overruled two prior cases of this Court, Mt. Forest Fur Farm of America, Inc. v. Cockrell, 179 La. 795, 155 So. 228 (1934) and Ledoux v. Voorhies, 222 La. 200, 62 So.2d 273 (1952).

We granted a rehearing to reconsider our decision and our overruling of that long standing jurisprudence.

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Related

Ledoux v. Voorhies
62 So. 2d 273 (Supreme Court of Louisiana, 1952)
Bond v. Midstates Oil Corp.
53 So. 2d 149 (Supreme Court of Louisiana, 1951)
Roberson v. Pioneer Gas Co.
137 So. 46 (Supreme Court of Louisiana, 1931)
St. Martin Land Co. v. Pinckney
33 So. 2d 169 (Supreme Court of Louisiana, 1947)
Mt. Forest Fur Farms of America, Inc. v. Cockrell
155 So. 228 (Supreme Court of Louisiana, 1934)
Humble Oil & Refining Co. v. Guillory
33 So. 2d 182 (Supreme Court of Louisiana, 1946)
Andrus v. Kahoa
400 So. 2d 1194 (Louisiana Court of Appeal, 1981)

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