Case Title: State v. BHP Petroleum Co., Inc.

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1991-01-14T00:00:00Z

Document:
State v. BHP Petroleum Co., Inc.1991 WY 5804 P.2d 671Case Number: 90-40Decided: 01/14/1991Supreme Court of Wyoming
 
 

STATE of 
Wyoming and Howard 
M. Schrinar, State Commissioner of Public Lands,

 

Appellants 
(Defendants),

 

v.

 

BHP 
PETROLEUM COMPANY, INC., a Delaware Corporation,

 

Appellee 
(Plaintiff).

 
 

Appeal from 
the District Court, Fremont 
County, Elizabeth 
A. Kail, J.

 

Joseph B. 
Meyer, Atty. Gen., and Vicci M. Colgan, Senior Asst. Atty. Gen., for appellants.

 

Harold E. 
Meier of Lonabaugh & Riggs, Sheridan, and Paul F. Hultin, Janet F. Kabili, 
and David A. Bailey, Denver, Colo., for 
appellee.

 

OPINION

 

Before 
URBIGKIT, C.J., and THOMAS, CARDINE, MACY and GOLDEN, JJ.

 

MACY, 
Justice.

 

[¶1]  Appellants State of Wyoming and Howard 
M. Schrinar, State Commissioner of Public Lands, (the State, collectively) 
appeal from a summary judgment in favor of Appellee BHP Petroleum Company, Inc., 
declaring that BHP did not owe interest to the State on underpaid gas royalties 
which were due to the State.

 

[¶2]  We affirm.

 

[¶3]  The State raises the following 
issue:

 

[Is the 
State] entitled, as a matter of law, to interest before the effective date of 
W.S. 30-5-301 et seq. for late royalty payments made by [BHP]?

 

[¶4]  The parties stipulated to the following 
facts. BHP has a working interest and the State has a royalty interest in a 
federal oil and gas unit located in Natrona and 
Fremont 
Counties. In 
January 1987, BHP tendered $428,567.50 in delayed royalty payments to the State 
for the period of October 1979 through June 1982. BHP also tendered $318,290.25 
in interest for delayed payments dating from December 1, 
1982, through 
January 15, 
1987. The 
interest was calculated at the rate of eighteen percent, simple interest. The 
State accepted the tendered interest payment but objected to the method of 
calculation.

 

[¶5]  In addition, the parties acknowledged 
that the leases and unit operating agreement did not expressly provide for 
interest on late royalty payments. BHP's affidavits established that it 
discovered the inadvertent underpayments in the course of an independent audit 
conducted for a purpose unrelated to the discovery of the royalty underpayments. 
The State had not brought the underpayments to BHP's attention nor had it made 
any demands for payment of underpaid royalties. 

 

[¶6]  Upon cross-motions for summary judgment, 
the district court determined that, pursuant to Wyo. Stat. §§ 30-5-301 and 
30-5-303 (1977),1 the State was entitled to statutory 
interest for the period subsequent to June 1, 1982, and no issue is raised in 
this appeal regarding that decision. However, the district court also determined 
that the State was not entitled to interest on the underpayments for the period 
of time from the date the payments became overdue until June 1, 
1982, and the 
State appeals that decision.2

 

[¶7]  Since the facts in this case are not in 
dispute, we must decide whether the district court's decision is correct as a 
matter of law. Provence v. Hilltop 
National Bank, 780 P.2d 990 (Wyo. 1989). The 
right to interest may emanate from an expressed or implied contract, from a 
statute, or by way of damages. 45 Am.Jur.2d, Interest and Usury § 34 (1969). 
Because the parties agree the terms of the leases did not provide for interest 
on late royalty payments and because the legislature did not enact a statute 
until 1982 granting the right to interest to the State on late royalty payments, 
the State premises its right to recovery upon the equitable doctrine of unjust 
enrichment.3 We have addressed the doctrine of 
unjust enrichment many times. In Zitterkopf v. Bradbury, 783 P.2d 1142 
(Wyo. 1989), we 
reiterated that our standard of review in the unjust enrichment/quantum meruit 
cases places the burden of proof upon the party asserting that theory. 
Approximately one month before that decision was released, we repeated these 
tenets of the unjust enrichment doctrine:

 

"The phrase 
`unjust enrichment' is used in law to characterize the result or effect of a 
failure to make restitution of, or for, property or benefits received under such 
circumstances as to give rise to a legal or equitable obligation to account 
therefor. It is a general principle, underlying various legal doctrines and 
remedies, that one person should not be permitted unjustly to enrich himself at 
the expense of another, but should be required to make restitution of or for 
property or benefits received, retained, or appropriated, where it is just and 
equitable that such restitution be made, and where such action involves no 
violation or frustration of law or opposition to public policy, either directly 
or indirectly."

 

R.O. 
Corporation v. John H. Bell Iron Mountain Ranch Company, 781 P.2d 910, 912 
(Wyo. 1989) 
(emphasis omitted) (quoting 66 Am.Jur.2d, Restitution and Implied Contracts § 3 
at 945 (1973)).

 

[¶8]  The State principally relies upon the 
unjust enrichment analysis utilized in Rissler & McMurry Company v. Atlantic 
Richfield Company, 559 P.2d 25 (Wyo. 1977). In that case, a statute granting the 
right to interest to the creditor on unpaid debts did not exist, and the 
contract between the parties was "silent with respect to interest." 
Id. at 31. 
Thus, this Court articulated a two-part test for determining the existence of a 
right to prejudgment interest under the doctrine of unjust enrichment. First, we 
held that prejudgment "interest is recoverable on liquidated but not on 
unliquidated claims and that a claim is considered liquidated when it is readily 
computable by simple mathematical computation." 
Id. Second, we 
stated that the "debtor must receive notice of the amount due before interest 
starts to run." Id. at 34.4 The Rissler & McMurry Company 
court based its decision upon the principle that a debtor, who holds money which 
it should have yielded to a creditor, is unjustly enriched because the use of 
money has real economic value. Id.

 

[¶9]  While this case does not involve 
prejudgment interest, it does involve facts sufficiently analogous to those in 
Rissler & McMurry Company to trigger application of the Rissler & 
McMurry Company test. We hold that the State is not entitled to interest on the 
delayed royalty payments for the period of October 1979 through June 1982. The 
State concedes that BHP did not discover the deficiency in royalty payments 
until 1987 and that BHP promptly compensated the State for those underpayments. 
Although BHP may have been enriched by its failure to pay royalties when they 
became due, it was not unjustly enriched since it did not withhold payment after 
learning that the deficiency existed. Hence, interest did not start to 
run.

 

[¶10]  Affirmed.

 

URBIGKIT, C.J., and 
THOMAS, J., filed dissenting 
opinions.

 

URBIGKIT, Chief 
Justice, dissenting.

 

[¶11]  This appeal in essential components has 
simple parts. From 1979 to 1987, appellee BHP Petroleum Company, Inc., oil and 
gas lessee, failed to pay contractual royalty obligations for gas production to 
the State of Wyoming as lessor. 
Constitutional trust funds from school lands were involved under the provisions 
of Wyo.Const. art. 18. With an eight year delay in royalty payments due to the 
State of Wyoming finally satisfied by a January 1987 payment of $428,567.50, the 
debtor also recognized an interest payment obligation to the state under W.S. 
30-5-301 through 30-5-303, first effective June 1, 1982, but no obligation for 
interest on the retained state land funds for two plus years prior to passage of 
the Stroock/Urbigkit Oil Royalties Non-Payment Act, Wyo. Sess. Laws ch. 27 
(1982).1 The real issue presented is whether 
delayed contractual payment of state trust funds constituting oil and gas lease 
proceeds would have always remained interest free if the enforcement statute, 
W.S. 30-5-301 through 30-5-303, had never been enacted.

 

[¶12]  It is recognized that the state-phrased 
resistance to absolution of oil producers responsibility for retention and use 
of state funds speaks to an unjust enrichment concept. In particular, since we 
deal here with constitutionally obligated funds, I present the issue of right of 
a government as identical with private parties to collect statutory interest on 
debts due and unpaid as the price of retention where the contract makes no 
specific provision for a deficiency interest accrual. It is my conclusion that 
when the money is a liquidated sum, from the date due, interest is accrued 
equally for a governmental entity as would be for any private entity. It would 
then logically follow that the State's brief and the consequent discussion in 
this court's opinion is converted into a non-issue since government should 
equally be accorded the statutory right to interest on unpaid debts to it. 
Within that concept, neither a demand requirement nor unjust enrichment ideology 
has preclusive relevancy.2

 
[¶13]  Realistically, resolution of this 
obligation of the oil producer which was delinquent in payment of the school 
land royalties to the state for the period before the penalty interest statute 
was enacted should have been determinable by answering three 
questions:

 

1. Does 
Wyoming have an 
interest statute which is applied to unpaid liquidated 
obligations?

2. Do 
governmental entities, including the state, share in the benefit of that 
interest rate statute?

3. Was the 
oil and gas leasehold obligation a liquidated amount in this case?

 

[¶14]  Ancillary to these questions is the 
suggestion derived from Rissler & McMurry Co. v. Atlantic Richfield Co., 559 P.2d 25 (Wyo. 1977) that application of the interest statute is first dependent 
upon demand by the payee. See however Goodwin v. Upper Crust of Wyoming, Inc., 
624 P.2d 1192, 1198 (Wyo. 1981) and 
Northern Gas Co. v. Town of Sinclair, 592 P.2d 1138 (Wyo. 
1979).

 

[¶15]  Answering the first question requires 
reconstruction of Wyoming history since obviously there is a general interest 
statute, albeit emplaced within the Uniform Commercial Code as W.S. 
40-14-106(e): "If there is no agreement or provision of law for a different 
rate, the interest of money shall be at the rate of seven percent (7%) per 
annum."

 

[¶16]  That section came into the 
Wyoming code by a 
provision in Wyo. Sess. Laws ch. 191, § 9-103 (1971) which provided:

 

(2) Section 
13-477, Wyoming Statutes 1957, Compiled 1965, is amended and reenacted to read 
as follows:

If there is 
no agreement or provision of law for a different rate, the interest of money 
shall be at the rate of seven per cent per annum.

 

The quoted 
language came into the current law as W.S. 40-9-103 (1975 Cum.Supp.) (and now 
W.S. 40-14-106(e)) as recited in Rissler & McMurry Co., 559 P.2d  at 31-32 
(footnote omitted):

 

Section 
13-477, W.S. 1957, C. 1965, in 1970, provided as follows:

"Interest 
upon the loan or forbearance of money, goods or things in action, shall be at 
the rate of seven per cent. per annum, unless a greater rate, not exceeding ten 
per cent. per annum, be contracted for by the parties."

By § 9-103, 
Ch. 191, 
Session Laws of Wyoming, 1971, 
that section was amended to read as follows:

"If there 
is no agreement or provision of law for a different rate, the interest of [sic] 
money shall be at the rate of seven percent per annum."

The same 
words appear also as § 40-9-103, W.S. 1957, 1975 Cum.Supp., as part of the 
Wyoming Uniform Consumer Credit Code. As far as this case is concerned, the law 
has not changed. The interest rate is adopted only as a convenient measure of 
damage for loss of use of money and recognizes the legislative view that money 
has value beyond its intrinsic worth.

None of the 
Wyoming cases which have been cited clearly particularized that the statute is 
incorporated as a matter of law in all contracts or whether, where allowed as a 
part of recovery, interest is added as an item of damages for breach of contract 
in failure to pay a just claim when due. In any event, the statutory interest 
has been used only as the standard for the rate of interest allowed, when the 
court has determined the amount due is liquidated. Regardless of whether 
interest is agreed upon in advance or the statutory rate is applied, it 
constitutes a penalty for failure to pay over money when due.

 

[¶17]  Not only Rissler & McMurry Co., but 
the subsequent case, Northern Gas Co., and the group of even more recent cases3 establish that where contractual 
obligations exist establishing liquidated amounts to be paid with no specific 
provision for interest computation, the payee is entitled to seven percent 
interest under what is now W.S. 40-14-106(e) as a general liquidated claim 
interest statute. The rule for interest entitlement was recently stated in O's 
Gold Seed Co. v. United Agri-Products Financial Services, Inc., 761 P.2d 673, 
677 (Wyo. 1988):

 

Prejudgment 
interest is recoverable in Wyoming on 
liquidated claims but not on unliquidated claims, with a liquidated claim being 
defined as one that is readily computable by basic mathematical calculation. 
Holst v. Guynn, 696 P.2d 632 (Wyo. 1985); 
[State 
Highway Com'n v.] 
Brasel & Sims Construction Co., Inc., 688 P.2d 871 
[Wyo. 1984]. We 
have established that, in the absence of a contractual provision to be contrary, 
W.S. 40-14-106(e) is applicable in determining the rate of prejudgment interest 
to be awarded. Holst, 696 P.2d 632; Rissler & McMurry Company v. Atlantic 
Richfield Company, 559 P.2d 25 (Wyo. 1977). 
W.S. 40-14-106(e) provides:

"If there 
is no agreement or provision of law for a different rate, the interest of money 
shall be at the rate of seven percent (7%) per annum."

 

See also 
Miles v. CEC Homes, Inc., 753 P.2d 1021, 1028 
(Wyo. 
1988).

 

[¶18]  These cases preserve the heritage of 
Wyoming law predating the 1971 passage of the Uniform Commercial Code including 
W.S. 13-478 (1957) relating to interest on judgments now found in W.S. 1-16-102 
and W.S. 13-479 (1957) from which the present liquidated debt interest statute, 
W.S. 40-14-106(e), was derived. In actual result, the 1971 Uniform Commercial 
Code renovation of Wyoming interest 
statutes removed the usury limitation of ten percent interest earlier emplaced 
in W.S. 13-477 (1957) and then continued the provisions of W.S. 13-479 (1957) 
where no provision establishing an interest rate existed in the agreement 
between the parties. Clearly, Wyoming now has a 
historically continued general interest statute at a seven percent rate 
applicable to liquidated obligations for which no agreement determining a higher 
rate of interest is provided.

 

[¶19]  The second inquiry is whether 
Wyoming's interest 
case law and the present W.S. 40-14-106 provisions equally apply to governmental 
entities as otherwise applied to private individuals and business concerns. That 
subject is settled by Northern Gas Co., 592 P.2d 1138, where Justice Thomas, 
writing for the court, specifically applied the Rissler & McMurry Co. 
interest entitlement for liquidated obligations to the benefit of the 
governmental entity, the Town of Sinclair. It is 
additionally noted that neither the litigant nor the majority provide argument 
or authority that interest entitlement under W.S. 40-14-106 does not reach 
obligations owed to the state's governmental entities.

 

[¶20]  We then examine within the third 
question for any application of the interest statute whether a liquidated 
indebtedness exists here. A definition of liquidated debt has been frequently 
and consistently restated by this court:

 

This court 
has spoken frequently about the prerequisites to recovery of prejudgment 
interest and holds with the majority of courts that interest is recoverable on 
liquidated but not on unliquidated claims and that a claim is considered 
liquidated when it is readily computable by simple mathematical computation. 
Zitterkopf v. Roussalis, Wyo. 1976, 546 P.2d 436; Mader v. James, Wyo. 1976, 546 P.2d 190; Chandler-Simpson, Inc. v. Gorrell, 676 Wyo. 1970, 464 P.2d 849, 853 
(see Wyoming cases there cited); United Pacific Insurance Company v. Martin and 
Luther General Contracts, Incorporated, Wyo. 1969, 455 P.2d 664; Leet v. Joder, 
1956, 75 Wyo. 225, 295 P.2d 733. See also Wyoming Construction Company v. 
Western Casualty and Surety Company, 10 Cir. 1960, 275 F.2d 97, cert. den., 362 U.S. 976, 80 S. Ct. 1061, 4 L. Ed. 2d 1011, allowing recovery of interest on a 
claim decided on the basis of Wyoming law.

 

Rissler 
& McMurry Co., 559 P.2d  at 31. See likewise Bueno v. CF & I Steel Corp., 
773 P.2d 937 (Wyo. 1989) 
reciting the same test.

 

[¶21]  In this case, the royalty was to be 
computed by terms of the Wyoming oil and 
gas lease at a one-eighth (12 1/2%) of production. What the record reflects is 
that from commencement of production on October 1979 until November 1981, BHP 
Petroleum paid no part of the one-eighth royalty and then for the next seven 
months, paid part, to accumulate the readily computed total of $428,567.50 which 
then was only paid in January 1987. Obviously, oil royalty fits within a 
liquidated obligation definition which was coincidentally the whole premise of 
the eighteen percent penalty provision introduced into the 1982 enactment of the 
Unpaid Royalty Act statute. Bueno, 773 P.2d  at 940 teaches that "[m]athematical 
computability is the criterium for a liquidated claim."4 Holst v. Guynn, 696 P.2d 632 
(Wyo. 1985); 
Goodwin, 624 P.2d  at 1198. The Wyoming rule is similar to a more detailed 
statement in Arizona law, Homes & Sons Const. Co., Inc. v. Bolo Corp., 22 
Ariz. App. 303, 526 P.2d 1258, 1261 (1974) (quoting Arizona Title Insurance 
& T. Co. v. O'Malley Lbr. Co., 14 Ariz. App. 486, 496, 484 P.2d 639, 649 
(1971)), providing "the definition that a claim is liquidated `if the evidence 
furnishes data which, if believed, makes it possible to compute the amount with 
exactness, without reliance upon opinion or discretion.'" Mathematical 
computability from undisputed records establishes the liquidated nature of the 
obligation. Bueno, 773 P.2d  at 940.

 

[¶22]  The ancillary question of required 
demand for interest accrual exculpated from Rissler & McMurry Co. is 
specifically settled by the further analysis on the subject provided in Northern 
Gas Co., 592 P.2d at 1143:

 

The real 
question is whether Northern Gas Company should be excused by the indication in 
Rissler & McMurry Company v. Atlantic Richfield Co., supra, that notice of 
the amount due must be furnished before the interest will start to run. The 
record is clear that the information with respect to the natural gas sales 
always was available to Northern Gas Company. Northern Gas Company informed the 
Town of Sinclair of the 
amount of gross revenue at the time that it paid the franchise fee provided for 
in Section 6 of Ordinance No. 112. As between the two parties, Northern Gas 
Company had the information needed to compute the franchise fee, and the Town of 
Sinclair had to 
obtain the information from Northern Gas Company even for purposes of this 
litigation. Since the thrust of the caveat found in Rissler & McMurry 
Company is that a defendant should not be held in default if he has not been 
informed of what to pay, it need not be applied in this case. In this instance 
there would be no necessity for the Town of Sinclair to inform 
Northern Gas Company of what it should pay because Northern Gas Company, had it 
followed the terms of the contract, would have known the correct amount which 
was due.

 

Goodwin, 
624 P.2d  at 1198, in analysis of both Rissler & McMurry Co. and Northern Gas 
Co., recognized for the lessee obligation:

 

From the 
language in these two cases, it is clear that notice was not necessary to start 
the interest running in this case. Appellants knew that if they paid the rent 
due under the sublease agreement that interest would thereby be stopped. They 
did not need notice from appellees informing them of the amount 
due.

Appellees 
were entitled to the use of the money they were to receive under the agreement 
from the date it became due. The use of money has real economic value, 
particularly in the current economy of inflation and high interest rates of 
which we take judicial notice. Appellees were deprived of that benefit. 
Prejudgment interest should have been awarded as an attempt to compensate for 
that loss. Since the amount due under the contract was at all times readily 
computable, appellants should be charged with the statutory rate of interest on 
all the unpaid rents from the date each became due. We must remand to the 
district court to modify its judgment accordingly.

 

[¶23]  Succinctly, BHP Petroleum produced the 
gas from state school lands and failed, neglected or refused to file correct 
reports or pay royalties to the landowner, the State of 
Wyoming. To 
summarize, a liquidated obligation was created, it was not paid when due, for 
which reason payee under W.S. 40-14-106(e) should, in addition to the late 
payment, be obligated for the statutory rate of seven percent interest 
commencing October 1979 and continuing until the penal interest statute applied 
a much higher eighteen percent interest, so that the State would be properly 
compensated for about $4.9 million in gas sales for which it had a royalty 
entitlement of twelve and one-half percent totaling $480,946 of which it was 
only promptly and properly paid $52,379.5

 
[¶24]  I would reverse and remand for 
assessment of interest on withheld royalty payments accrued from monthly 
leasehold production between October 1979 and June 1982.

 

THOMAS, Justice, 
dissenting.

 

[¶25]  I am not in agreement with the result 
reached by the majority opinion, nor the justification offered for it in this 
case, and I dissent. I view the case a bit differently from the analysis offered 
by the Chief Justice in his dissenting opinion, although I am completely 
satisfied that Northern Gas Co. v. Town of Sinclair, 592 P.2d 1138 (Wyo. 1979), 
just as the Chief Justice explains, does dispense with the requirement of notice 
by the State of Wyoming to BHP Petroleum Company, Inc. in order to recover 
interest in this instance. It is painfully clear that, since BHP Petroleum 
Company Inc. was marketing the gas, knew the amount that it had received for it, 
and knew the amount it was to pay to the State of Wyoming under its leases, 
there is no more necessity for the State of Wyoming to inform BHP Petroleum 
Company, Inc. of its duties than there was for the Town of Sinclair to similarly 
inform Northern Gas Company. BHP Petroleum Company, Inc. had those facts at its 
command.

 

[¶26]  There is no dispute that interest 
generally may be claimed by virtue of a contract to pay interest, by virtue of a 
statute providing for interest, or by way of damages. See cases cited in 45 
Am.Jur.2d Interest and Usury § 34 (1969); 47 C.J.S. Interest and Usury § 6 
(1982). It seems to me that the parties, the majority, and the Chief Justice 
have not recognized the proposition that our Wyoming cases, e.g., O's Gold Seed 
Co. v. United Agri-Products Financial Services, Inc., 761 P.2d 673 (Wyo. 1988); 
Miles v. C.E.C. Homes, Inc., 753 P.2d 1021 (Wyo. 1988); Bueno v. C.F. & I. 
Steel Corporation, 773 P.2d 937 (Wyo. 1989); Goodwin v. Upper Crust of Wyoming, 
Inc., 624 P.2d 1192 (Wyo. 1981); Northern; Rissler & McMurry Co. v. Atlantic 
Richfield Co., 559 P.2d 25 (Wyo. 1977), all involve situations in which interest 
was claimed by way of damages for breach of contract. The statute was invoked 
only to establish the rate of interest, and none of those cases appear to rely 
upon an express or implied agreement to pay interest.

 

[¶27]  Neither does the State of 
Wyoming apparently 
rely upon either an express or implied agreement to pay interest. In relying 
upon Rissler, the State of Wyoming is 
invoking its right to recover interest as damages. As damages, the right to 
interest encounters the quaint rule that interest recoverable as damages does 
not constitute a distinct claim and can only be recovered in an action brought 
to recover the principal. This rule leads to a denial of interest as a separate 
claim after payment has been made. See cases cited in 25 C.J.S. Damages § 52, 
793-94, nn. 91-93 (1966). This rule is not without its exceptions, however, and 
interest generally will be allowed for its detention when money belonging to 
another is not paid over to the person entitled to receive it at the time it 
should be paid. See cases cited under 25 C.J.S. Damages § 52, n. 80 (1966). 
There does seem to be a general accord that concepts of equity, which the State 
of Wyoming really 
argues here, may require that interest be paid in order to do 
justice.

 

[¶28]  That is how I see this case. While the 
allowance of interest may well be a matter of discretion with the trial court, 
given the situation in which BHP Petroleum Company, Inc. had the exclusive 
knowledge of the receipt of the monies, knew of its duty to pay them monthly to 
the State of Wyoming, presumably utilized the money in the operations of its own 
business, and did not pay them over for several years, justice should require 
the payment of interest for the detention of these monies. I recognize that the 
reason for non-payment was inadvertence on the part of BHP Petroleum Company, 
Inc. That fact does not lead to a conclusion that BHP Petroleum Company, Inc.'s 
use of the state money was just. Certainly, it does not serve to justify a 
decision that does not award interest for the period prior to the statute. In my 
view, the trial court did abuse its discretion in the failure to award interest 
in this case for the period of time prior to December 1, 
1982, and I 
would reverse that aspect of the trial court's decision.

 

Footnotes

 1 These statutes 
were enacted in 1982 and became effective on June 1, 
1982. They were 
enacted to deal with underpayment situations, such as that at issue here. 
Section 30-5-301(a) provides:

The proceeds derived from the sale of production from any well producing 
oil, gas or related hydrocarbons in the state of Wyoming shall be paid to all 
persons legally entitled thereto, except as hereinafter provided, commencing not 
later than six (6) months after the first day of the month following the date of 
first sale and thereafter not later than sixty (60) days after the end of the 
calendar month within which subsequent production is sold, unless other periods 
or arrangements for the first and subsequent payments are provided for in a 
valid contract with the person or persons entitled to such proceeds. Payment 
shall be made directly to the person or persons entitled thereto by the lessee 
or operator or by any party who assumes such payment obligation under any legal 
arrangement.

Section 30-5-303(a) provides:

Any lessee or operator, purchaser or other party legally responsible for 
payment who violates the provisions of this article is liable to the person or 
persons legally entitled to proceeds from production for the unpaid amount of 
such proceeds, plus interest at the rate of eighteen percent (18%) per annum on 
the unpaid principal balance from the due date specified in W.S. 
30-5-301(a).

The 
interest rate of eighteen percent per annum is a penalty to discourage 
underpayment of such royalties. 1982 Wyo. Sess. Laws 
Ch. 27. See 
also Independent Producers Marketing Corp. v. Cobb, 721 P.2d 1106 
(Wyo. 
1986).

2 The State demanded seven percent interest per annum for the period of 
time prior to June 1, 1982, on the basis of our decisions in O's Gold Seed 
Company v. United Agri-Products Financial Services, Inc., 761 P.2d 673 (Wyo. 
1988), and Rissler & McMurry Company v. Atlantic Richfield Company, 559 P.2d 25 (Wyo. 1977).

3 The 
doctrine of unjust enrichment, or quantum meruit, provides for recovery of 
damages on a contract implied in equity." Johnson v. 
Anderson, 768 P.2d 18, 25 (Wyo. 
1989).

4 The Rissler & McMurry Company court held that, absent an agreement 
specifying the applicable interest rate, the interest on liquidated claims would 
be seven percent per annum pursuant to the predecessor of Wyo. Stat. § 
40-14-106(e) (1977). Rissler & McMurry Company, 559 P.2d 25.

 

Footnotes 
for the Dissent

 

 1 The provisions 
of Wyo. Sess. Laws ch. 27 (1982), effective June 1, 
1982, are not 
at issue in this appeal. Rather, the question is what obligations for interest, 
if any, did the defaulting lessee have before the 1982 passage of the punitive 
eighteen percent interest statute. See, for a discussion of the statute, 
Independent Producers Marketing Corp. v. Cobb, 721 P.2d 1106 
(Wyo. 
1986).

2 It is of interest to recognize that the state school land sale statute, 
W.S. 36-9-107, provides a delinquency provision of eight percent per year on all 
amounts not paid when due.

3 Bueno v. CF & I Steel Corp., 773 P.2d 937 (Wyo. 1989); O's Gold Seed 
Co. v. United Agri-Products Financial Services, Inc., 761 P.2d 673, 677 (Wyo. 
1988); Miles v. CEC Homes, Inc., 753 P.2d 1021, 1028 (Wyo. 1988); Goodwin, 624 P.2d 1192.

4 Statements in trial hearing and briefing that nonpayment of the 
landowner's royalty of $428,567.50 over thirty-three months was just an 
"inadvertent miscalculation" belies belief and requires multiplexed factual 
blinders for logical review. Actually, contrary to those statements, it was not 
"miscalculation", except for the last seven months involving about $14,000, it 
was twenty-six months of total nonpayment of the leasehold royalty obligation 
constituting the lessor/landowner's twelve and one-half percent 
entitlement.

5 The amount involved in this appeal has never been computed within this 
record, but it is obviously something less than the original claim of the State 
as added interest of about $79,000. The difference, in part, is the result of 
the district court's decision to impress the penalty interest at an earlier date 
than the oil company had desired. Apparently, the contested amount for this 
appeal is in the general range of about $40,000 based on an approximated 
computation by averaged total. It is not the dollar amount involved in this 
case, but a general application to protect governmental revenues that is 
important. Legislative vigilance and protective enactments are invited, if not 
required. Non-penalty retention of money results in delayed, if not total, 
nonpayment. That is just a matter of "good business" without payment of the 
rental cost - interest.