Smith v. Holt

67 So. 2d 93, 223 La. 821, 2 Oil & Gas Rep. 1395, 1953 La. LEXIS 1373
CourtSupreme Court of Louisiana
DecidedJuly 3, 1953
Docket40972
StatusPublished
Cited by18 cases

This text of 67 So. 2d 93 (Smith v. Holt) 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
Smith v. Holt, 67 So. 2d 93, 223 La. 821, 2 Oil & Gas Rep. 1395, 1953 La. LEXIS 1373 (La. 1953).

Opinion

FOURNET, Chief Justice.

The plaintiff, Thomas W. Smith, who acquired the Ei/2 of the SW^ of the SWj^ Section 30, T. 17 N., R. 9 E., Richland Parish, which land was subject to a reservation of all the minerals made on October 28, 1939, by a former owner, defendant J. E. Holt, instituted this proceeding against Holt and those who acquired mineral and royalty interests through him, to be declared the owner of the mineral-mights and to have defendants disclaim title thereto because of the claimed expiration of the servitude through non-use for a period of ten years; and he is appealing from a judgment dismissing his suit.

According to the record, the defendant Holt, having previously acquired by mesne conveyance a forty-acre tract or a sixteenth section in Richland Parish (SWj4 of SW *825 %, Section 30, f. 17 N., R. 9 E.), on October 28, 1939, sold the east half to A. J. Pitts, and on October 30, 1939, sold the west half to J. C. Pitts, excepting from those sales and reserving to himself all of the minerals in and under both tracts. The east half, following various transfers, was purchased by the plaintiff on August 16, 1947. Meanwhile, in 1944, Holt, as owner of the two mineral servitudes, had granted an oil, gas and mineral lease covering the whole forty acres to C. H. Murphy, Jr., who (on the same date) conveyed an undivided half interest in the lease to Sun Oil Company; Holt had also conveyed (September 11, 1945) an undivided two-thirds interest in his reserved mineral rights, subject to the lease to C. H. Murphy, Jr. and Sun Oil Company, to defendant C. H. Murphy, Sr. 1

On May 31, 1945 — just prior to the last-mentioned conveyance — the Department of Conservation, under authority of Act 157 of 1940, LSA-R.S. 30:1 et seq. (the oil and gas conservation law), following publication of notice and full hearing, had issued its Order 96, establishing drilling units of forty acres each for drilling to the Holt Zone and the May Sand in the area known as the Delhi Field, which includes the sixteenth section described above; the units so established were to be comprised of lands, embraced within the outlines of a regular governmental one-sixteenth section, and not more than one well on each unit was to be allowed to produce from the Holt Zone and the May Sand. Pursuant to this Order the lessees, C. H. Murphy, Jr., and Sun Oil Company, obtained a permit from the Conservation Department to drill on the forty-acre tract composed of the SWJ4 of SWJ4> Section 30, T. 17 N., R. 9 E. A well drilled on the west half of the unit was completed as an oil producer in the Holt Zone on March 29, 1946, and has been continuously producing in allowable quantities to the present date. There has been no drilling on the east half, on which Holt, by his reservation of all minerals in the deed to A. J. Pitts, had created a mineral servitude.

Under the well settled law and jurisprudence of this State, unless prescription is suspended or interrupted, a mineral servitude becomes extinguished because of non-use for a period of ten years.

The defendants contend, however, that Sun Oil Co. and C. H. Murphy, Jr., as lessees from the mineral owner of the entire *827 tract under a single lease embracing the two servitudes, were the sole “Owner” — defined in Act 157- of 1940 as “the person who has the right to drill into and to produce from any pool, and to appropriate the production either for himself or others” (Sec. 2(h)); that a permit to drill having been obtained by them, the “owners” have in effect agreed “to pool their interests and to develop their lands as a drilling unit”, Sec. 9(a), and no further order or proceeding was authorized; that having drilled a well capable of producing, and continuing to produce, oil or gas in paying quantities, the unit constituted a “developed area”, Sec. 8(b), which had the effect of interrupting prescription as to the entire sixteenth section.

On the other hand, the plaintiff contends that the drilling and production on the west half'of the sixteenth section did not interrupt prescription of the mineral servitude which had been reserved by Holt on the east half, and that ten year liberative prescription accrued and operated to extinguish that servitude on October 28, 1949. Counsel asserts that Order 96 of the Conservation Commission is nothing more than a general spacing order for the whole area and that its provisions, which follow the language of Section 9(a) of Act 157 of 1940, clearly' show it was not intended to operate as a pooling order but merely laid the foundation for, and must be implemented by, a second order effecting a voluntary or a forced pooling of each particular unit. He denies that the permit to drill can be considered a formal pooling since it was issued ex parte, without notice and without hearing, and therefore claims that there was total lack of compliance with the requirements for voluntary or forced pooling contained in Section 9(a) of the Statute, the provisions of which are relied on as insuring due process of law and safeguarding a property holder in his inherent right to develop his own land as he sees fit. Counsel further contends that if the minerals under plaintiff’s land were to be pooled with the minerals under an adjoining tract, the plaintiff was entitled to notice, since prescription cannot be extended by the sole action of the servitude owner, relying on the cases of Hightower v. Maritzky, 194 La. 998, 195 So. 518, Achee v. Caillouet, 197 La. 313, 1 So.2d 530, Baker v. Wilder, 204 La. 759, 16 So.2d 346, Placid Oil Co. v. George, 221 La. 200, 59 So.2d 120, and Arkansas Louisiana Gas Co. v. Thompson, 222 La. 868, 64 So.2d 202.

In order to properly determine these issues, we think it necessary to review and further analyze the conservation laws of this State from the viewpoint of their intended effect on individual and property rights. It has long been established that the State’s police powers justify measures for the regulation of production of oil and gas, and for the conservation of these valuable deposits, Ohio Oil Co. v. State of Indiana, 177 U.S. 190, 20 S.Ct. 576, 44 L.Ed. 729, but the beginnings of legislative control in Louisiana were piecemeal, each law *829 giving recognition to some additional aspect of the importance of the' industry to the State. The wasteful practices of early development brought about acknowledgment of the fact that it was in the public interest that maximum recovery of oil and gas be attained, as well as realization of the necessity for a sound .public policy with reference to the conservation and production of these commodities, and caused the insertion in the Louisiana Constitution of 1921 of a new clause, creating the Department of Conservation under the control of a Commissioner and directing the Legislature to enact laws “necessary to protect, conserve and replenish the natural resources of the State, and to prohibit and prevent the waste or any wasteful use thereof.” Art. 6, Sec. 1. Certain laws adopted pursuant to this constitutional mandate have for their purpose the conservation of our oil and gas resources for the protection of the public interest.

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Bluebook (online)
67 So. 2d 93, 223 La. 821, 2 Oil & Gas Rep. 1395, 1953 La. LEXIS 1373, Counsel Stack Legal Research, https://law.counselstack.com/opinion/smith-v-holt-la-1953.