Cobra Oil & Gas Corporation v. Sadler

447 S.W.2d 887, 34 Oil & Gas Rep. 274, 11 Tex. Sup. Ct. J. 597, 1968 Tex. LEXIS 311

• Court: Texas Supreme Court
• Decided: July 24, 1968
• Docket: B-637
• Status: Published

Opinions

POPE, Justice.

Cobra Oil & Gas Corporation, with leave of the court, filed its petition for writ of mandamus asking this court to order the Honorable Jerry Sadler, Commissioner of The General Land Office to accept its tender of rentals for certain mineral awards. Cobra has also joined a number of surface owners. Cobra’s contentions are: (1) Article 5395 does not require payment of a rental to the State until the January following issuance of the awards, (2) its tender of the rentals was timely because it occurred prior to the time the Commissioner stamped and signed the files as “forfeited,” (3) the Commissioner had no discretion with respect to his acceptance of the tendered rentals. We deny relator’s petition for mandamus.

The Commissioner, during June and July of 1967, pursuant to Article 5388 et seq., Vernon’s Ann.Tex.Civ.Stats., issued a number of mineral awards to Cobra covering 5,524.73 acres of land in Culberson, Pecos and Reeves Counties. Cobra neither paid nor tendered any rentals until November 28, 1967. On that date, according to the affidavits which accompany the petition for mandamus, counsel for Cobra went to the General Land Office in Austin, where, according to an affidavit of Cobra’s counsel, the following events transpired:

“On November 28, 1967, I personally visited at the General Land Office of the State of Texas where I interviewed Mr. Victor Day of the Legal Department of the General Land Office. In the course of my visit I made specific inquiry of Mr. Day as to whether or not the mineral awards of Cobra Oil & Gas Corporation had been forfeited. Thereupon Mr. Day brought to his office the files of Cobra Oil & Gas Corporation’s mineral awards concerned in the present litigation between Cobra Oil & Gas Corporation and the Honorable Jerry Sad-ler. Mr. Day thereupon proceeded to examine said awards and advised me that said awards had not been forfeited. Mr. Day did state that he was at that time reviewing various mineral claims for presentment for forfeiture and that, in fact, some other mineral awards had been forfeited. Immediately thereupon I tendered to Mr. Day a check in full payment of delay rentals. That check was returned to me the same day by Mr. Day with a letter from Mr. Sadler refusing tender of the rentals giving as his only reason a statement that the tender was not timely.”

The Land Commissioner asserts by affidavit, however, that all of the awards “had been declared forfeited by me prior to November 28, 1967, and on November 28, 1967, my staff was engaged in the mechanical process of gathering and stamping the forfeited awards for my signature at the time Mr. Marvin H. Brown visited the General Land Office.” He further asserts that at the time of Cobra’s tender, a large number of awards to Cobra and others, not parties to this action, had been stamped and signed, but a number of awards had not. yet been stamped and signed. On December 29, 1967, Cobra received letters from the Commissioner which referred to the mineral awards and stated that they “have been forfeited for failure to pay the required rental in advance after the issuance of the award.” The awards were forfeited on the records on November 28, 1967. The relevant statutes are:

Art. 5395. “The owner of each claim shall pay fifty (50) cents per acre annually in advance after the award and during the month of each succeeding January of each year thereafter; * * (Emphasis added)

Art. 5397. “If the locator or owner of any claim obtained under the provisions of this law or operating under this law shall fail or refuse to make the payment of any sum within thirty days after it becomes due, or if such one or an authorized agent should knowingly make any false return or false report concerning production, mining or development, or if such one should fail or refuse the proper authority access to the records pertaining to the operations, or if such one or an authorized agent should knowingly fail or refuse to give correct information to the proper authority, or knowingly fail or refuse to furnish the Land Office all correct reports required by this law, the rights acquired under the location or claim shall be subject to forfeiture by the Commissioner, and he shall forfeit the same when sufficiently informed of the facts which authorize the forfeiture, and the minerals covered by such location and claim shall be subject to sale in the manner provided for the sale of minerals under the present law. Such forfeiture may be set aside and all rights thereto may be reinstated at any time before the rights of another intervene, upon satisfactory evidence of future compliance with the provisions of this law. Acts 2nd C.S., 1919, p. 241; Acts 1929, 41st Leg., p. 655, ch. 291, § 1; Acts 1934, 43rd Leg., 2nd C.S., p. 61, ch. 20, § 2; Acts 1935, 44th Leg., p. 77,- ch. 29, § 2.”

Cobra contends it was not required to make rental payments until January 1968 following the issuance of the awards in June and July 1967. The contention is not supported by the requirements of Article 5395, supra. We construe the statute to require the first payment of rentals in advance after the award but within the thirty days required by Article 5397 and thereafter a like rental “during the month of each succeeding January.” In our opinion the word “and” means there are initially two payments, one after the award and another during the succeeding January. Thereafter there is only one annual payment, due each January, necessary to keep the mineral award in force. The construction urged by Cobra would better fit a statute which contained identical words but omitted the word “and”. We hold that the first payment was owing after the award and the next payment was owing during the first January following the award.

Cobra’s next argument is that there was no forfeiture because it tendered the late rentals prior to the time the Commissioner wrote or stamped on the file wrappers for the awards suitable words which showed a forfeiture. As expressed by Cobra, “ * * the critical issue is when the stamp was affixed to the award.” At the outset, Cobra is faced with the problem that the forfeiture statute which applies to sulphur awards, Article 5397, is silent about the Commissioner’s stamping the wrappers. Cobra arrives at its conclusion by resort to other statutes enacted at other times, and with respect to other kinds of state lands. It would write into Article 5397 requirements not found in Article 5397 but found in Articles 5326, 5350, 5360, and 5421m, Vernon’s Tex.Civ.Stats. In each of those statutes, the Legislature spelled out the act of forfeiture by requiring the Commissioner to stamp the file wrapper with words of forfeiture which he must then sign.

The legislative history of Texas public lands shows that from time to time different kinds of public lands have been the subject of specific legislation, and even the same kinds of lands have at different periods of time been handled differently from the method now employed. The forfeiture of contracts covering surface lands has been accomplished in a variety of statutory ways different from mineral lands. This is evident by comparing the history of Article 5326 with that of Article 5397. Article 5326¹ relates to public lands classed generally as surface and timber lands. It states that upon non-payment of interest on any sale, the lands are subject to forfeiture. Forfeiture is authorized “ * * * by the Commissioner entering on the wrapper containing the papers ‘Land Forfeited,’ or words of similar import, with the date of such action and sign it officially, * * * ” Cobra says that the Commissioner can forfeit its contracts by that method and no other, and that he didn’t do so prior to its tender.

Early in Texas history, sales of public lands were authorized by statutes which omitted provisions for forfeiture by any particular method. Acts 1856, 6th Leg., ch. 144, p. 71. In 1874 the Legislature authorized the sale of University lands and also lands set apart for the benefit of the common school fund. Forfeiture resulted by the Commissioner’s notification of the State Treasurer of the purchaser’s failure to pay his installments and interest on time, the Treasurer endorsed on the obligation a statement of such failure and signed his name. The statute also authorized a judicial ascertainment of forfeiture in a suit instituted by the district attorney. Acts 1874, 14th Leg., ch. 63, p. 72, and ch. 102, p. 142. Weaver v. Robison, 114 Tex. 272, 268 S.W. 133, 135 (1925). In 1879 the Legislature required forfeiture for non-payment of interest to be enforced by a proceeding in court with a copy of the judgment filed in the Treasurer’s office who endorsed the obligation, “forfeited.” Acts of 1879, 16th Leg., C.S., ch. 28, p. 26; Brightman v. Comanche County, 94 Tex. 599, 63 S.W. 857 (1901). After 1883, the statutes authorized forfeiture by the Commissioner, and also directed the manner in which he made it, which has, since that time, been by writing the words “land forfeited” or similar words upon the file wrapper. Brightman v. Comanche County, supra. Acts 1887, 20th Leg., ch. 99, p. 83. See, Acts 1891, 22nd Leg., ch. 114, p. 180; Acts 1897, 25th Leg., ch. 37, p. 39; Acts 1919, 36th Leg., ch. 163, p. 312; Acts 1941, 47th Leg., ch. 191, p. 351; Acts 1951, 52nd Leg., ch. 59, p. 92.

Cases arising under statutes which stated the precise manner by which the Commissioner declared and evidenced a forfeiture have held that no other method may effect a forfeiture. Underwood v. Robison, 109 Tex. 228, 204 S.W. 314 (1918); Chambers v. Robison, 107 Tex. 315, 179 S.W. 123 (1915); Adams v. Terrell, 101 Tex. 331, 107 S.W. 537 (1908); Island City Sav. Bank v. Dowlearn, 94 Tex. 383, 60 S.W. 754 (1901); Brightman v. Comanche County, supra. This rule is based upon the sound principle that “where a power is granted, and the method of its exercise prescribed, the prescribed method excludes all others, and must be followed.” Foster v. City of Waco, 113 Tex. 352, 255 S.W. 1104 (1923).

The legislative requirement in Article 5326 (surface) for a specific method for exercising the right of forfeiture and the historical development of that article are in sharp contrast with Article 5397 (minerals) and its history. Article 5397 does not prescribe any method at all for the declaration of a forfeiture. In 1889 the Legislature enacted a law to promote the development of mineral resources. Acts 1889, 21st Leg., ch. 100, p. 116. Two years previously, the 20th Legislature had provided for forfeitures of obligations to purchase surface lands by endorsement of the words “land forfeited,” upon the account kept with the purchaser. In the case of minerals, the Legislature required claimants to make application for a patent within five years from the application for survey, a survey and return of field notes, and certain assessment work. Upon the claimant’s failure to meet those requirements the statute said his claims “shall be and are declared forfeited without judicial action of any kind * * *.” Acts 1889, 21st Leg., ch. 100, pp. 116, 119. Unlike the act enacted two years previously concerning surface lands, in the case of minerals there was no requirement for any endorsement upon the account, and the forfeiture of minerals resulted by operation of law. In 1905 the Legislature amended the law and provided that a locator’s default in certain particulars meant that “the file and claim thereunder shall be void.” One of the statutory reasons for the voidness of that kind of claim was the fact that “the first payment is not paid to the State Treasurer within sixty days” from the date of application. Under the 1905 Act the first payment was one-fifth of the purchase price. If the payment was made, however, the act provided that a subsequent default in interest or principal would be subject to forfeiture by the endorsement on the obligation of the word “forfeiture” signed by the Commissioner. Acts 1905, 29th Leg., ch. 99, p. 148.. The Legislature evidenced an intent not only to treat mineral lands differently from other lands, but also to treat the first payment differently from subsequent payments.

In 1913 the Legislature repealed former laws and enacted a new law for the prospecting and development of minerals in public lands. Acts 1913, 33rd Leg., ch. 173, p. 409. Section 20 of the act required the Commissioner to endorse the claim “forfeited.” At that time provision for forfeiture of mineral claims generally corresponded to that required for forfeiture of contracts to acquire other public lands. This method of forfeiture was carried forward by the 35th Legislature in Section 20 of its amendment, to the law. Acts 1917, 35th Leg., ch. 83, pp. 158, 165. The 1917 Act recognized the need to treat certain minerals differently and accomplished this by creating groups or classifications of minerals. It separately provided for the prospecting for and development of oil and gas; coal, lignite, and sulphur; and other minerals. In 1919, the Legislature determined that minerals other than oil, gas, coal, and lignite were not subject to the same prospecting and developmental methods and enacted another separate law concerning them. Acts 1919, 36th Leg., ch. 79, p. 241. Significant changes were made in the previous law. The method of forfeiture was rather dramatically changed. The 1919 Act provided for an ipso facto termination of mining claims without any declaration or action of any kind by the Commissioner. Section 8 of the 1919 Act provided:

“Failure of the locator or owner of any claim or claims to comply with any provisions of this Act prior to receiving patent thereto, shall constitute an ipso facto forfeiture of all his rights in the claim, and the claim shall be open to location by others as prescribed in this Act, the same as if no location had ever been made.”

In 1929 the Legislature amended the 1919 Act in order that the Commissioner might permit reinstatement of terminated claims within ninety days upon payment of all delinquent rentals and royalties. The amendment, however, left unchanged the provisions for an ipso facto forfeiture. Acts 1929, 41st Leg., ch. 291, p. 655. In 1934 the Legislature enacted what is presently Article 5397, the one under consideration in this case.² Acts 1934, 43rd Leg., 2nd C.S., ch. 20, p. 61.

Article 5397 does not provide for an ipso facto termination of sulphur claims upon non-payment of rentals as earlier statutes had provided; on the other hand, it does not require stamping and signing the claim file as the only overt act by which the land “thereupon * * * shall be forfeited,” as in Article 5326. The Commissioner’s subjective intent to forfeit is not sufficient to effect a forfeiture, because it would afford no record of the forfeiture. At the time of the conference between Cobra’s and the Commissioner’s representatives in the Land Office on November 28, 1957, the Commissioner refused Cobra’s tender of the rentals giving as his reason a statement that the tender was not timely. On that same date a record was made of the forfeiture. The Commissioner’s refusal to accept the rentals and the reason given Cobra’s representative was a clear statement that Cobra’s rights were terminated. The record was made confirming that fact. The Commissioner overtly informed Cobra and made a record of the forfeitures on the same date. We hold that this was an effective declaration of the forfeitures.

Cobra’s further contention is that the Commissioner had no discretion with respect to the decision of whether to accept or decline the tendered late rentals. The effect of Cobra’s contention is that the Commissioner was compelled to accept the rentals despite the fact that the tender was untimely under the statute. The burden facing Cobra’s position was expressed in Wortham v. Walker, Commissioner of General Land Office, 133 Tex. 255, 128 S.W.2d 1138 (1939). There we said the burden upon the relator is to show that its right “is so free from doubt and the duty of the officer so clear and free from any substantial question that an order should issue to compel performance.” See Holcomb v. Robinson, 118 Tex. 395, 15 S.W.2d 1027, 1028 (1929). We recognize that contracts, such as those Cobra had with the state, are executory and that statutes which authorize a forfeiture are “to be treated as merely making provision for the exercise of the right of the state to rescind execu-tory contracts of sale for the failure of purchasers to perform the conditions on which the continuance of their rights depend, and as conferring authority upon the officer of the state to act for it in effecting such rescission.” Brightman v. Comanche County, 94 Tex. 599, 63 S.W. 857 (1901); Standifer v. Wilson, 93 Tex. 232, 54 S.W. 898 (1900); Fristoe v. Blum, 92 Tex. 76, 45 S.W. 998 (1898).

It is our opinion, however, that the Commissioner’s declaration of the forfeiture of Cobra’s mineral claims was a decision within his discretion. It is our further opinion from our study of the history of Article 5397 that his discretion on the side of an acceptance of late rentals on contracts concerning the sulphur awards was more restricted than is the case with the acceptance of late rentals on contracts concerning other state lands.

Prior to the 1934 amendment of the 1919 mineral law, the Commissioner had no discretion about forfeiture, because non-payment of rentals worked an ipso facto termination of the claimant’s rights. The enactment of Article 5397 ameliorated the strictness of the former law, but it did so with guarded language. We again find differences between Article 5397 and Article 5326 which show the Legislature’s purpose. Article 5326 empowers the Commissioner to declare a forfeiture for late payments, but leaves open the matter of how late the payments should be before he acts. Article 5397, on the other hand, treats lateness in terms of thirty days. “If the locator * * * shall fail or refuse to make the payment of any sum within thirty days after it becomes due * * The legislative policy of limiting the duration of late payments to thirty days began in 1905. In that year the Legislature changed the pre-existing law by requiring locators to pay one-fifth of the price of the land within sixty days. Act 1905, 29th Leg., ch. 99, p. 148. Failure to make the payment voided the claim. Annual interest and principal, if not paid within thirty days of due date, did not void a claim, but made the claim subject to forfeiture. The emergency clause in the 1905 Act gave its reason for so shortening the time for late payment:

Section 3. “The fact that persons who file on mineral lands containing gold, silver, cinnebar, lead, tin and copper can work them for five years without paying anything to the fund to which the land belongs and then forfeit it without recourse by the State for what may have been taken out of it, and then the same claim may again be filed on and worked another five years without payment and so on indefinitely until a valuable mineral deposit may be exhausted to the detriment of the fund to which the land belongs creates an emergency * * * »

Protection of the State from exhaustion or loss of mineral resources was the object in stating a short period of grace for late payments. Since 1905 the policy of limiting the period of delinquency has been carried forward in all amendments and changes in the law. The purpose of the law is to require prompt compensation to the State. If the law permitted long periods of delinquency as to mineral land, it would be possible for claimants to enter upon lands, do extensive assessment and development work, and prove the claim was valueless. Under these circumstances the claimants would welcome a forfeiture by the State for non-payment. Forfeiture would be the only recourse to the uncompensated state even though the claimant’s operations condemned the value of the minerals.

The Commissioner’s discretion to accept late payments is in fact discouraged by the terms of Article 5397. The statute requires him to determine facts, i. e., a claim is subject to forfeiture. If so, the statute says “he shall forfeit the same when sufficiently informed of the facts which authorize the forfeiture, * * Similar language is not found in Articles 5326 (surface); 5350 (oil and gas); or 5421m, § 19 (Veterans Land Act).

We hold that Cobra, having paid the state nothing and being delinquent beyond the time the statute made its claims subject to forfeiture did not have an unequivocal legal right to require the Commissioner to accept its late tender of rentals. The Commissioner’s forfeiture was an act of discretion in accord with the spirit of the statutes concerning mineral awards. Wortham v. Walker, 133 Tex. 255, 128 S.W.2d 1138, 1151 (1939); Holcomb v. Robinson, 118 Tex. 395, 15 S.W.2d 1027 (1929).

Relator’s petition for mandamus is denied.

GREENHILL, HAMILTON, REAV-LEY and McGEE, JJ., dissent to this opinion.

1 . Art. 5326. “Forfeiture for nonpayment of interest; restatement; outstanding grazing leases.

“If any portion of the interest on any sale should not be paid when due, the land shall he subject to forfeiture by the Commissioner entering on the wrapper containing the papers ‘Land Forfeited,' or tvords of similar import, xoith the date of such action and sign it officially, and thereupon the land and all payments shall be forfeited to the State, and the lands may be offered for sale on a subsequent sale date. In any case where lands have heretofore been forfeited or may hereafter be forfeited to the State for non-payment of interest, the purchasers, or their ven-dees, heirs or legal representatives, may have their claims reinstated on their written request by paying into the Treasury the full amount of interest due on such claim up to the date of re-instatement, provided that no rights of third persons may have intervened. The right to re-instate shall be limited to the last purchaser from the State or his vendees or their heirs or legal representatives. Such right must be exercised within five (5) years from the date of the forfeiture. In case there is an outstanding valid grazing lease which would prevent reinstatement within the time prescribed by this Act then such claim may be reinstated within sixty (60) days after the expiration of such grazing lease, provided application for re-instatement shall have been filed in the General Land Office within the five-year period above prescribed, accompanied with payment of all interest due thereon. In all cases the original obligations and penalties shall thereby become as binding as if no forfeiture had ever occurred. * *

2 . An amendment in 1935 changed the words in the last sentence of Article 5397 from “rights theretofore existing” to “rights thereto,” but the change is not material to this case. Acts 1935, 44th Leg., p. 77, ch. 29, § 2.