Hanks v. Wilson

633 So. 2d 1345, 1994 WL 86310
CourtLouisiana Court of Appeal
DecidedMarch 11, 1994
Docket93 CA 0554
StatusPublished
Cited by7 cases

This text of 633 So. 2d 1345 (Hanks v. Wilson) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hanks v. Wilson, 633 So. 2d 1345, 1994 WL 86310 (La. Ct. App. 1994).

Opinion

633 So.2d 1345 (1994)

James B. HANKS
v.
Thomas M. WILSON, III, Sandra Fuller Wilson and Amoco Production Company.

No. 93 CA 0554.

Court of Appeal of Louisiana, First Circuit.

March 11, 1994.

R. Loren Kleinpeter, Baton Rouge, for plaintiff-appellant James B. Hanks.

James L. Williams, L. Linton Morgan, Metairie, for defendants-appellees Thomas Wilson, III and Sandra Fuller Wilson.

J. Clayton Johnson, Baton Rouge, for defendant-appellee Amoco Production Co.

Before FOIL, PITCHER and PARRO, JJ.

PITCHER, Judge.

In this mineral law litigation, plaintiff, James B. Hanks (Hanks), appeals the portion of the trial court judgment dismissing his claim against defendant, Amoco Production Company (Amoco), for improper payment of royalties in the sum of $49,580.85 allegedly due from Amoco to Hanks by virtue of an assignment of a mineral royalty interest. We affirm.

FACTS

The facts are not in dispute. On August 12, 1975, Daniel E. Littleton (Littleton) executed an oil, gas and mineral lease wherein he leased his undivided one-half mineral interest in 159 acres that he owned in Pointe Coupee Parish to James L. Moore. The leased premises subsequently became a part of the Morganza Field. At all times pertinent in this action, Amoco was the lessee under the mineral lease.

On February 10, 1983, Littleton executed a royalty deed in favor of T.M. Wilson and Sandra Fuller Wilson in which Littleton conveyed *1346 100% of his remaining royalty interest arising out of the mineral lease to the Wilsons.[1] As a result of this sale, Littleton remained owner and lessor of an undivided one-half mineral interest in the leased premises, with the right to receive rental payments due under the lease, but not royalties.

On February 25, 1983, the Wilsons executed an assignment of mineral royalty interests, which created a reversionary mineral royalty interest in favor of Littleton in the royalty interest which the Wilsons had purchased from him on February 10, 1983. By this act, the Wilsons assigned back to Littleton one-half of their royalty interest to:

become effective only at such time and upon such date as Assignor obtains sufficient production revenues, from any well drilled either on the leased premises or on lands pooled therewith, to recover all costs incurred with his acquisition of same including interest on investment.

The assignment did not contain a specific mathematical formula to determine when the reversionary interest would become effective. As a result of this assignment, Littleton now owned a reversionary royalty interest in one-half of the production royalties he had previously conveyed to the Wilsons, as well as an undivided one-half mineral interest which he already owned in the leased premises. Littleton did not record the assignment.

By mineral deed, on April 16, 1985, Littleton sold his undivided one-half mineral interest to Hanks, subject to Littleton's prior conveyances of 100% of the royalties due to the lessor. Hanks recorded the assignment of mineral royalty interests on April 23, 1985 and the mineral deed on June 4, 1985. Hanks thereafter sent to Amoco four letters which are pertinent to this action.

The first letter, dated June 25, 1985, provided Amoco with a certified copy of the mineral deed. Amoco's response letter, dated July 23, 1985, acknowledged receipt of the deed and informed Hanks that Amoco would pay future rental payments to him. Amoco made rental payments to Hanks, but continued to pay royalties arising under the mineral lease to the Wilsons or the Wilsons' bank.

The second letter, dated October 1, 1987, alleged that Amoco had substantially underpaid royalties on the decimal interest because Amoco had underestimated the actual number of acres in the leased tract. The letter demanded that Amoco correct the error and pay royalties using the correct decimal interest to the owner, "T.M. Wilson-A/W Peoples Bank and Trust Co."[2] The letter further stated that Hanks was the record mineral owner of the leased premises and owner of a recorded reversionary mineral royalty interest. Amoco continued to pay royalties to the Wilsons.

The third letter, dated December 1, 1987, alleged that the "division interest for royalty owner, T.M. Wilson-A/W Peoples Bank and Trust Co," was incorrect because of survey errors. The letter requested that Amoco change the division interest and pay [the Wilsons] the difference in the royalties owed. The letter stated that if the correct royalties for all wells and units affecting the lease were not received within 30 days of its receipt, legal action would be instituted.

The fourth letter, dated March 24, 1988, provided Amoco with a certified copy of the assignment of mineral royalty interests, a certified copy of a quitclaim deed from Littleton to Hanks and a copy of the Wilsons' mortgage to Peoples Bank and Trust Co., which covered the mineral royalty interest purchased from Littleton. The letter stated that the mortgage was paid in December. The letter further stated that, pursuant to LSA-R.S. 31:137 et seq., Amoco was put on notice that Hanks owned a mineral royalty interest (the former reversionary interest). The letter also demanded that Amoco issue a transfer order for the royalty interest at issue, correct the alleged error in the decimal interest used for "T.M. Wilson," and change the ownership interest to include Hanks as an owner.

*1347 Although Hanks claimed in his March 24, 1988 letter to Amoco that his share of the mineral royalty interest had reverted to him, the Wilsons claimed that the suspensive condition in the assignment had not yet occurred. Amoco immediately began suspending payment of one-half of the royalties to the Wilsons arising out of the assignment, beginning in May of 1988, which included royalties for April of 1988.

On February 1, 1989, Hanks filed this suit against Amoco and the Wilsons, seeking to have his ownership interest in the mineral lease recognized, arguing particularly that the reversionary interest had become effective.

Amoco answered the petition and, by reconventional demand, invoked a concursus proceeding for the determination of the ownership of the mineral royalty interest. Amoco deposited all of the suspended royalties in the registry of the court.

ACTION IN THE TRIAL COURT

The trial court found that the Wilsons' cost of acquisition for the mineral royalty interest was $325,500.00, which included attorney's fees of $500.00; that the interest on the investment was the interest rate charged by Peoples Bank and Trust Company on the $325,000.00 loan to the Wilsons; that the reversionary mineral royalty interest came into effect in December of 1987, when the Wilsons, upon receipt of the initial $1,961.99 in royalties for that month, finally recovered their acquisition and interest costs; that Hanks owned the reversionary mineral royalty interest; that the Wilsons were liable for royalties Amoco paid to them after the reversion occurred; and that Amoco acted reasonably in paying the royalties to the Wilsons and in subsequently suspending payment of the royalties in dispute.

Judgment was entered in favor of Hanks and against the Wilsons for $49,580.85, together with legal interest from the date the Wilsons received the royalties until paid. The judgment declared Hanks the owner of the monies deposited in the registry of the court, and dismissed, with prejudice, Hanks' claim against Amoco for royalties in the amount of $49,580.85, which Amoco paid the Wilsons between December of 1987 and April of 1988.

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Cite This Page — Counsel Stack

Bluebook (online)
633 So. 2d 1345, 1994 WL 86310, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hanks-v-wilson-lactapp-1994.