Crown Central Petroleum Corporation v. Barousse

117 So. 2d 575, 238 La. 1013, 13 Oil & Gas Rep. 181, 1960 La. LEXIS 900
CourtSupreme Court of Louisiana
DecidedJanuary 11, 1960
Docket44764
StatusPublished
Cited by22 cases

This text of 117 So. 2d 575 (Crown Central Petroleum Corporation v. Barousse) 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
Crown Central Petroleum Corporation v. Barousse, 117 So. 2d 575, 238 La. 1013, 13 Oil & Gas Rep. 181, 1960 La. LEXIS 900 (La. 1960).

Opinions

McCALEB, Justice.

This concursus proceeding was provoked by Crown Central Petroleum Corporation in order to determine ownership of royalties accruing under an oil, gas and mineral lease executed by Homer Barousse, Jr. on June 24, 1948, covering an 150-acre tract of land in Acadia Parish. Prior to 1943, Barousse owned the entirety of the surface and minerals of this tract but, on October 21, 1943 he sold a Yz2nd mineral royalty interest in approximately 110 of the acres to Andrew J. Wilfert. On January 22, 1944 Barousse sold a Vzith mineral royalty interest in approximately 112 acres of the tract to M. N. Stafford, and another %4th mineral royalty interest in the same area to A. C. Gardiner. By various conveyances, the interests represented by those three royalty sales (amounting in all to a %6th mineral royalty) have passed into the hands of some 13 persons who have been designated by plaintiff in these' proceedings as the “First Group” while the ownership of the Barousse tract has passed, by conveyance and inheritance, into the hands of 19 other persons, who have been designated as the “Second Group”.

The mineral lease executed by Barousse on June 24, 1948, which is now owned by Crown Central Petroleum Corporation, is still in effect as a consequence of production obtained from the lands chiefly through pooling agreements unitizing segments of the tract with other mineral properties. On August 15, 1952, twenty-four acres of the Southwestern portion of the tract were conventionally grouped with other adjacent lands in a drilling unit (known as the Harmon-A-Unit) for the purpose of producing gas and gas distillate therefrom. Subsequently, on November 12, 1952, within 10 years from the date the first royalty was sold, a well was completed on the unit, although not on the tract here in question, and has been producing gas and gas distillate continuously ever since.

On December 1, 1954, more than 10 years since the last royalty was sold by Barousse, another conventional unit was formed which embraced all land in the 150-acre tract except the 24 acres in the Harmon-A-Unit. In addition, the Conservation Department created other units on March 8, 1955 and June 14, 1955, which included various parts of the Barousse tract and the other units which were already on it. There is no dispute over the fact that production from the well on the Harmon-A-Unit effectively interrupted the prescription which was accruing against the “First Group’s” royalty interest in the twenty-four acres included in that unit. A controversy [1019]*1019does exist, however, over whether or not production on the Harmon-A-Unit, prior to October 21, 1953, from a well not located on the Barousse tract, had the effect of tolling the prescription of ten years on the royalty interests burdening the remaining part of the land which was not included in the Harmon-A-Unit.

The district judge found that the provisions of paragraph 4 of the mineral lease (in which Barousse granted the lessee the authority to pool his land, or any part thereof, with other lands for development purposes) and the provisions of the unitization agreement (signed by the interested parties) “indicate a clear intention on the part of all parties that if the unit well produced, it would constitute production from the lands involved in this dispute, and that such production would operate to preserve the royalty rights of all parties in the ‘First Group’ ”. Accordingly, judgment was rendered in favor of the “First Group” recognizing and maintaining their royalty rights in and to all lands described in the royalty deeds.

The “Second Group” prosecuted this appeal from the adverse decision contending (1) that the judge erred in holding that the provisions of the mineral lease and the pooling agreement establishing the Harmon-A-Unit reflected that the parties intended that production from the unit would be considered production from all land subjected to the royalty rights, and (2) that the judge should have held that the mineral royalty rights had been divided by the unitization agreement, the case being governed by the rulings in Elson v. Mathewes, 224 La. 417, 69 So.2d 734; Childs v. Washington, 229 La. 869, 87 So.2d 111 and Jumonville Pipe & Machinery Co. v. Federal Land Bank, 230 La. 41, 87 So.2d 721.

In addition to the reasons given by the judge for his resolution in their favor, appellees claim that paragraph 4 of the mineral lease executed by Barousse and paragraph 6 of the pooling agreement establishing the Harmon-A-Unit evidences an acknowledgment on the part of the parties of the “Second Group” or their privies which effectuated an interruption of prescription.

It is settled that the sale of a mineral royalty by the owner of a tract of land imposes upon the property a real obligation being a species of real right running with the land. Such a sale does not create a servitude but it is nevertheless governed by the rules of suspensive conditional obligations and subject to the prescription of ten years liberandi causa if the event, i. e., the production of minerals from the land, does not occur prior thereto. Vincent v. Bullock, 192 La. 1, 187 So. 35; Continental Oil Co. v. Landry, 215 La. 518, 41 So.2d 73 and cases there cited. It is also well established that the right to search and explore, which is implicit in the grant of a mineral servitude, does not attach to the sale of royalty and that the royalty owner’s right to share [1021]*1021in the production is necessarily dependent upon the development of the property by either the landowner and/or the mineral owner, in cases in which a servitude has been created, or by a mineral lessee, holding under a lease from the landowner or mineral owner or both. Vincent v. Bullock, supra; Union Sulphur Co. v. Andrau, 217 La. 662, 47 So.2d 38 and Le Blanc v. Haynesville Mercantile Co., Inc., 230 La. 299, 88 So.2d 377.

The royalty deeds executed by Barousse provide that a specified percentage of the whole “of any oil, gas and other minerals, except sulphur on and under and to be produced from said lands * * * ” are conveyed, sold and transferred to the various grantees, and further state that the grantor reserves the right to grant future leases affecting the lands “ * * * so long as there shall be included therein, for the benefit of the grantee herein, the royalty rights herein conveyed.”

At the time these royalty rights were sold there was no existing lease on the property. The mineral lease covering the entire tract, subsequently granted by Barousse on June 24, 1948 to W. Bates White, plaintiff’s predecessor in title, specially provided in paragraph 4 thereof that the mineral lessee was given the authority at his option to pool into units all or any part of the lands covered by the lease and further specified that:

“ * * * All drilling, reworking or other operations on or production from any unit shall be considered as though such operations were carried on or production secured from land embraced in this lease whether or not the well or wells be located on this lease * *

This type of provision has been made unnecessary by our jurisprudence which holds that mineral leases are maintained in their entirety beyond their primary terms by obtaining production in paying quantities from operations on legally established units which embrace the leased tracts, either in part or in whole, even though no wells have been drilled on the leased land. See Boddie v. Drewett, 229 La. 1017, 87 So.2d 516 and the authorities cited in footnote 4 of that opinion.

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Crown Central Petroleum Corporation v. Barousse
117 So. 2d 575 (Supreme Court of Louisiana, 1960)

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Bluebook (online)
117 So. 2d 575, 238 La. 1013, 13 Oil & Gas Rep. 181, 1960 La. LEXIS 900, Counsel Stack Legal Research, https://law.counselstack.com/opinion/crown-central-petroleum-corporation-v-barousse-la-1960.