Bouterie v. Kleinpeter

247 So. 2d 548, 258 La. 605, 39 Oil & Gas Rep. 256, 1971 La. LEXIS 4358
CourtSupreme Court of Louisiana
DecidedMay 4, 1971
Docket50695
StatusPublished
Cited by11 cases

This text of 247 So. 2d 548 (Bouterie v. Kleinpeter) 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
Bouterie v. Kleinpeter, 247 So. 2d 548, 258 La. 605, 39 Oil & Gas Rep. 256, 1971 La. LEXIS 4358 (La. 1971).

Opinion

SUMMERS, Justice.

Plaintiffs Gertrude Bouterie and Alma B. Leckert instituted this suit to cancel two fail, gas and mineral leases granted by them as lessors to T. W. Kleinpeter as lessee. Kleinpeter and David J. Robichaux, Jr., were made joint defendants in the suit, Robichaux having acquired a one-half interest in the leases by assignment.

The leases are dated September 20, 1961 and affect a one-fifth interest owned by each plaintiff in an eighty-acre tract and the interest of Alma B. Leckert in a second tract containing thirteen acres, both tracts being in Lafourche Parish.

In June 1962 portions of the lands affected by these leases were included within a producing unit created by the Commissioner of Conservation. Portions of the property were thereafter included in another Conservation Commission unit created on April 1, 1963 and later revised on April 1, 1965. Again, by order of the Commissioner effective February 1, 1965, portions of the property were included in a third unit. All units contained producing wells, and plaintiffs were therefore entitled to their royalty share of the production.

Plaintiffs contend, however, that lessees breached their lease obligations by failing to make timely payments of lessors’ royalties in these respects: 1) By failing to tender royalty payments for condensate productions from one unit during the period from April 1, 1963 through November 30, 1964 until December 30, 1965; 2) no royalty payments were made on gas production from one unit during the period April 1, 1963 through January 31, 1964, until March 7, 1964; and 3) no payments for gas or condensate production fx-om another unit were made for the pex-iod June 1962 through February 1963, until May 2, 1963.

*609 On December 9, 1964 plaintiffs wrote to lessees referring to the leases and stating:

In the past you have failed to timely pay the Lessor’s royalty under the above leases on production attributable to those portions of the leased property included in producing Commissioner’s Units. Despite your having been timely paid monthly by the respective unit operators all of the production proceeds attributable to such unitized portions of the leased property, you have not paid the Lessor’s royalty monthly, and in fact you have permitted 2 and 3 month periods to elapse between the Lessor’s royalty payments.
By your failure to pay the Lessor’s royalty monthly under the circumstances hereinabove mentioned you have breached the above described leases. Formal demand is hereby made upon you to timely pay to us each month the Lessor’s royalty share of all production proceeds attributable to the property covered by the above leases. Be assured that if the demand herein made for payment of Lessor’s royalty is not complied with we shall institute the necessary legal action to cancel the said lease.

Notwithstanding the letter demand of December 9, 1964, plaintiffs allege in their suit that lessees persisted in their failure to make timely monthly payments of royalties, although plaintiffs’ co-owners of the eighty-acre tract received timely monthly payments of royalties from their lessees on the gas and condensate production from the units affecting these lands.

Plaintiffs accepted and cashed all royalty payments tendered before and after the letter of December 9, 1964 until September 1, 1965, after which time they refused to negotiate checks received by them from defendants. On December 29, 1966 plaintiffs made formal demand pursuant to Section 102 of Title 30 of the Revised Statutes 1 for a termination of the leases, and, when defendants refused to comply, this suit was filed on March 8, 1967.

Each defendant filed an exception of prematurity to plaintiffs’ petition, and, in *611 time, the exceptions, were tried and sustained by the trial court. On appeal to the First Circuit this ruling was affirmed. 234 So.2d 812. We granted writs on plaintiffs’ application. 256 La. 612, 237 So.2d 396.

The narrow question presented by the exceptions of prematurity is whether Paragraph 11 of each of the leases, which are identical, are applicable to a claimed breach of the lease obligation to pay royalties. Lessees contend that Paragraph 11 requires lessor to notify lessee in writing of the basis upon which the breach of the lease is claimed and allow sixty days to lessee to commence to • comply. This provision, lessees argue, imposes a condition precedent to a suit for cancellation, and, since lessors .have not complied with that condition, the suit is premature.

Paragraph 11 provides:

In the event that Lessor at any time considers that operations are not being conducted in compliance with this lease, Lessor shall notify Lessee in writing of the facts relied upon as constituting a breach hereof, and Lessee, if legally required to conduct operations in order to maintain the lease in force, shall have sixty (60) days after receipt of such notice in which to commence the necessary operations to comply-with the requirements hereof.

Lessors’ position is that'Paragraph 11 of the lease is not applicable to lessees’ breach of their obligation to make timely and proper payment of royalties. Conceding that Paragraph 11 creates a condition precedent which must be complied with before the lease may be cancelled, lessors assert the word “operations” as used in Paragraph 11 contemplates a breach of lease obligations other than the nonpayment of royalties — that is, the breach must involve the performance or nonperformance of some physical activity on the lease leading to the production of oil or gas. Therefore, since the breach claimed here is nonpayment of royalties and not a failure to “conduct operations” under the lease, under this view, it was not necessary to give the notice required by Paragraph 11 as a prerequisite to this suit.

In order to properly present the problem in the context of the lease, all pertinent provisions wherein the word "operations” appear are quoted:

“Lessor, in consideration of the sum of One thousand and other considerations ($1,000.00 O.V.C.) hereby leases and lets unto Lessee, the exclusive right to enter upon and use the land hereinafter described for the exploration for, and production of oil, gas, sulphur and all other minerals, together with the use of the surface of the land for all purposes incident to the exploration for and production, ownership, *613 possession and transportation of said minerals (either from said land or acreage pooled therewith), and the right of ingress and egress to and from said lands at all times for such purposes, including the right to construct, maintain and use roads and/or canals thereon for operations hereunder or in connection with similar operations

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Cite This Page — Counsel Stack

Bluebook (online)
247 So. 2d 548, 258 La. 605, 39 Oil & Gas Rep. 256, 1971 La. LEXIS 4358, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bouterie-v-kleinpeter-la-1971.