Norman v. Giles

219 S.W.2d 678, 148 Tex. 21, 1949 Tex. LEXIS 380
CourtTexas Supreme Court
DecidedMarch 2, 1949
DocketNo. A-1952
StatusPublished
Cited by18 cases

This text of 219 S.W.2d 678 (Norman v. Giles) is published on Counsel Stack Legal Research, covering Texas Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Norman v. Giles, 219 S.W.2d 678, 148 Tex. 21, 1949 Tex. LEXIS 380 (Tex. 1949).

Opinion

Mr. Justice Garwood

delivered the opinion of the Court.

This is an original mandamus proceeding by relators, as surface owners of a 140-acre tract of what was formerly surveyed public free school land in Crane County, against respondent, Commissioner of the General Land Office, to compel the latter to receive, file, and recognize as valid an oil and gas lease to Cities Service Oil Company (hereafter referred to as Cities Service lease) covering the tract mentioned and purportedly executed by relators as agents for the State under the terms of the so-called “Relinquishment Act” (Ch. 81, Acts 2nd Called Session, 36th Legislature, 1919, as amended by Ch. 38, Acts First Called Session, 37th Legislature, 1921; Arts. 5367, et seq., R. C. S. 1925), hereafter generally referred to as the Act.

In general the position of the respondent Commissioner is that the authority of relators to act as leasing agents for the [23]*23State had terminated under particular provisions of the Act (Arts. 5369-70, R. C. S.) well over a year prior to the execution of the tendered lease, because of the admitted fact that oil had then been discovered in paying quantities on land “not included in this law, and within one thousand feet of” the tract in question, and no well on the latter had been commenced “within one hundred days after” the discovery well or for that matter at any time.

At the time the land was patented to relators, the minerals were reserved to the State pursuant to the applicable statutes, but admittedly the “relinquishment Act” applies to the premises, so as to entitle relators, at least under ordinary conditions, to make leases of the oil and gas on behalf of the State as its agents. Greene v. Robison, 117 Texas 516, 8 S. W. (2d) 655. In March 1941, several years prior to the date of the tendered Cities Service lease, relators had thus executed a lease to one Billingsley which was shortly thereafter assigned to Stanolind Oil & Gas Company and will be hereafter referred to as the Stanolind lease. This lease and assignment were duly filed with and accepted by the Commissioner of the General Land Office, and who was also duly paid the State’s share of the bonus money under the terms of the Act. Stanolind Oil and Gas Company thereafter duly paid delay rentals each year up to and including the year 1948, the General Land Office currently receiving and accepting its statutory portion thereof. On some undisclosed day during December, 1946, the abovementioned discovery of oil in paying quantities within one thousand feet of relators’ tract was made by means of a well known as Texas American Syndicate No. 1 Nellie Tucker, but notwithstanding this discovery, neither Stanolind, which then held the lease, nor anyone else ever commenced drilling operations. To the contrary, on September 9, 1948, or well over a year after expiration of the one-hundred-day offset period following the No. 1 Nellie Tucker discovery, Stanolind Oil and Gas Company formally surrendered all its interest in the lease which, at least on its face, had still several months to run without further payment of delay rentals. Thereafter, on September 23, 1948, relators, again purporting to act as agents of the State, executed the Cities Service lease here in question. Somewhere about this latter date the facts in connection with No. 1 Nellie Tucker well evidently became known to the General Land Office and thereafter, on October 5, 1948, the respondent Commissioner made an endorsement on the General Land Office file covering relators’ tract, stating that “Relinquishment Rights granted by Article 5367 R. C. S., of 1925 are terminated for failure to drill offset well in accordance with Article 5370 R. C. S. of 1925.” A substantially similar endorsement was made by the [24]*24Commissioner on the same date upon the General Land Office file covering the Stanolind lease, though as stated the latter had been surrendered some time previously.

On October 20, 1948, the Cities Service lease, along with the State’s portion of the bonus payment therefor, in the amount of $5,250.00, was tendered to the General Land Office pursuant to Article 5421c-2, Vernon’s Ann. Civ. Stat, On the same date the respondent Commissioner refused to file the lease or accept the payment and returned both with a letter stating as his reason, that he considered “the rights, which were granted to the surface owner by virtue of Article 5367, R. C. S., to be terminated for failure to drill an offset in accordance with Article 5370, R. C. S., The Commissioner about the same time stated in writing that he considered the consideration and terms of the tendered lease to be fair.

Thereafter the Commissioner, purporting to act pursuant to Article 5371, R. C. S., which in his view authorizes him to sell to the highest bidder the oil and gas of a tract as to which there has been a forfeiture under Article 5370, joined with the School Land Board of the State of Texas in thus offering relators’ tract for lease, and on December 7, 1948, bids were received from various oil companies on the basis of a three-sixteenth royalty plus cash bonuses; the highest bonus offered being $101,315.11 and several others from well known oil producing companies ranging from $75,211.00 to $14,700.00, the majority being very much larger than the cash bonus tendered only a short time earlier in connection with the Cities Service lease which the Commissioner had refused to accept.

At it will be necessary to refer further to the abovementioned statutes and certain others forming part of the Relinquishment Act, these are set out in full in a foot note1, together with Article 5421c-2, Vernon’s Ann. Civ. Stat., relating to the matter of filing in the General Land Office certified copies of leases made by the surface owner as agent under the act.

[25]*25In connection with Article 5870, it will be noted that the refusal of the respondent Commissioner is necessarily based on the premise that the forfeiture of rights under that article means not merely forfeiture of any mineral lease that might exist on the premises at the time of default but also forfeiture of the right of the surface owner to continue to act as the State’s agent in leasing the property. The matter of a lease forfeiture [26]*26is not directly involved here, because the Stanolind lease was voluntarily surrendered, and the Cities Service lease was not made until long after the alleged forfeiture event occurred. Relators’ principal grounds of attack upon respondent Commissioner’s decision are, that, at least as regards relators, Articles 5370 and 5371 are unconstitutional, and that even if constitutional, Article 5370 must be construed as not forfeiting relator’s agency for the failure of the lessee or holder of the Stanolind lease to perform the offset obligation of Article 5369. Appreciation of relators’ contentions requires some further explanation.

In 1919 when the Relinquishment Act was passed, it was and had been for some years the policy of the State to sell the free school and asylum lands with full reservation to the State of the minerals and to dispose of the mineral rights by separate transactions. Usually this policy resulted in placing the surface ownership and mineral leasehold rights of the same land in different parties, which fact, together with the relatively insignificant indemnity provided the surface owner for. damage by mineral development, was thought to create serious conflict between the surface and. mineral owners and also to be rather ineffective in promoting adequate development of the State’s minerals.

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Bluebook (online)
219 S.W.2d 678, 148 Tex. 21, 1949 Tex. LEXIS 380, Counsel Stack Legal Research, https://law.counselstack.com/opinion/norman-v-giles-tex-1949.