State ex rel. Rausch v. Amerada Petroleum Corp.

49 N.W.2d 14, 78 N.D. 247, 1951 N.D. LEXIS 86
CourtNorth Dakota Supreme Court
DecidedAugust 9, 1951
DocketFile No. 7266
StatusPublished
Cited by36 cases

This text of 49 N.W.2d 14 (State ex rel. Rausch v. Amerada Petroleum Corp.) is published on Counsel Stack Legal Research, covering North Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State ex rel. Rausch v. Amerada Petroleum Corp., 49 N.W.2d 14, 78 N.D. 247, 1951 N.D. LEXIS 86 (N.D. 1951).

Opinion

Morris, C.J.,

In this action the relator. challenges the-validity of a lease executed for the State of North-Dakota by the Commissioner of University and School Lands, granting to A. M. Fruh and Thomas W. Leach, as lessee, the right, under certain conditions, to explore, mine, and operate for oil and gas upon certain lands belonging to the state, which lease has been assigned to and is now owned by the Amerada Petroleum Corporation.

The relator, after setting forth the corporate capacity of the Amerada Petroleum Corporation, the establishment of the Board of University and School Lands as an agency of the State of North Dakota, the official capacity of the attorney general and his refusal upon demand to institute and maintain this action, and the capacity of the relator as a taxpayer who brings the action for himself and on behalf of other taxpayers similarly situated, pleads facts upon which his asserted right to relief is predicated. He alleges that the State of North Dakota, acting through the Board of University and School Lands and the State Land Commissioner, executed and delivered a lease, dated November 10,1948, covering the following described lands in Williams County, to-wit: the Ni, N-JSE1-, SW^SE-J, SWJ Section 36, Township 155N, Range 96W, and numerous other oil and gas mining leases in other counties of the state, each of which has been assigned to and is owned by the Amerada Petroleum Corporation. It is • also alleged that each of these'' leases is upon lands in the possession of and owned by the State of North Dakota, which were acquired by it as a part of the lands granted for the support of the common schools by the' United States of America to thé State of North Dakota, pursuant to the Enabling Act, being an Act of the Congress of the United States of America, approved February' 22, 1889, and known as Chapter 180, 25 U. S. Statutes at Large, p 676, and [250]*250accepted by the State of North Dakota through the adoption of its constitution. (Section 205, N. D. Const.)

It is further alleged that the leases in question were made by the Board of University and School Lands and the State Land Commissioner in accordance with the provisions of Chapter 15-05 BCND 1943, and that the law as set forth in that chapter has been complied with.

The complaint further states: “That the State of North Dakota is the owner of each of said tracts of land, or of one-half of the oil, gas and other minerals thereunder, and in possession thereof, subject only to Amerada Petroleum Corporation’s said leases, and that said corporation asserts the validity of its said oil and gas leases and claims the right to exercise the rights and privileges granted thereby.”

It is then further alleged: “That, however, said oil and gas leases, and each of them, are invalid and of no effect because issued .without valid authority of law, and particularly without valid statutory authorization because the said legislative enactments are in conflict with and contrary to the 'provisions of the Enabling Act and the Constitution of North Dakota, specifically Section 11 of the Enabling Act and Section 161, Article IX of the Constitution.”

The plaintiff then seeks to have the leases of the Amerada Petroleum Corporation adjudged null and void.'

The Amerada Petroleum Corporation admits the execution of the leases alleged in the complaint and the assignments thereof to the corporation and alleges that they are lawfully executed on behalf of the State of North Dakota by the Board of University and School Lands and that the corporation has “complied with each and all of the terms and provisions of said oil and gas leases, including the payment of rentals therein provided for the privilege of deferring commencement of- a well; and that each and all of said oil and gas leases were and are valid and subsisting leases.”

The Board of University and School Lands and the Attorney General, by joint answer, admit the execution of the leases and allege the regularity and validity of their execution.'

The complaint describes but one specific lease and land that [251]*251it covers. There is on file a stipulation of facts signed by all of the parties admitting the execution and. assignment of this lease and identifying photostatic copies of the lease, assignment, and a consent to the assignment signed by the State Land Commissioner. Both the pleadings and the stipulation also set forth that the Amerada Petroleum Corporation is the owner, as assignee, of other oil and gas leases similarly given by the State of North Dakota covering original grant lands which the state still owns, and also lands that were originally granted from the United States Government and which have been sold to private persons, and in which the state has reserved an- undivided one-half of the oil, gas, and other minerals. These leases are not described with particularity, nor are the lands which they cover identified. As to those leases covering an interest in the oil and gas of lands that have been sold by the state, the purchasers or the owners are not identified and have not been made parties to the action. The court will not undertake to determine the validity or invalidity of specific leases which may or may not involve rights of persons not parties to this action upon the general allegation that they are similar to the lease set forth and described in detail in the complaint. This decision will be confined to a determination of the validity of the one lease described and identified in the complaint and stipulation.

Oil and natural gas are generally classified as minerals. 24 Am Jur, Gas and Oil, Sec 1; 58 CJS, Mines and Minerals, Sec 2: A list of authorities supporting this assertion may be found under the heading “Mineral” in Words and Phrases, Permanent Edition, Vol 27, p 215. The lease in question gives to the lessee the right to explore and exploit the oil and gas resources underlying the land described therein for a term of five years, and as long thereafter as oil or gas or either of them is produced from the land by the lessee. The lease provides for payment to the state, under certain conditions, of one-eighth of the gas and oil produced from the premises, and in event drilling is deferred beyond a certain date, an annual rental of twenty-five cents per acre.

The land covered by the lease is a part of the original land grant by the United States of America to the State of North [252]*252Dakota for the support of the common schools of the state and, as such, is under the control of the Board of University and School Lands, subject to constitutional and statutory limitations. Section 156 ND Const; Section 15-0102 BOND 1943. The Commissioner of University and School Lands acts as general agent of the board under its direction and authority.

Section 15-0509 BOND 1943 provides that: “The board of university and school lands may lease any lands under its control- believed to contain oil, gas, coal, cement materials, sodium sulfate, sand and gravel, road material, building stone, chemical substances, metallic ores, or colloidal or other clays, and may make and establish rules and regulations for development and drilling operations.”

The execution of the lease by the Board of University and School Lands appears to be in accord with the letter and spirit of the laws enacted by the legislature pertaining to this subject.

The relator challenges the validity of 'the lease, regardless of statutory law, upon two basic and fundamental grounds.

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Cite This Page — Counsel Stack

Bluebook (online)
49 N.W.2d 14, 78 N.D. 247, 1951 N.D. LEXIS 86, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-rausch-v-amerada-petroleum-corp-nd-1951.