Honorable Earl Rudder OpinionW-348

Commissioner,General Land Office Austin, Texas Rez Under Article 54211, V.C.S., have the primary terms of two I leases been suspended In view of the fact that Humble 011 & Refining Companyhad a lease not only from the State but also from the City of Tyler and Smith County? And Dear CommissionerRudder: related questions.

In your recent opinion request of this office you state the following facts:

"On October 10, 1951, the Commissioner executed an oil and gas lease to Humble 011 & Refining Company coveringTract 3, Tyler State Park, Smith County, and on April 1, 1952, the Commissionerexecuted an oil and gas lease to Humble covering Tract 1 of the park. Roth of these leaseswere issuedunder the provisions of Article 5382d,V.C.S., and were for a primary term of five years. All rentals due under the leaseshave been paid.

"OnApril 12, 1955, during the primary term of these leases the City of Tyler and Smith County filed a suit against the State of Texas, HumbleiOll & Refining Company, and other parties Inwhich they sought to recover title to and poseesslon of the land describedHonorable Earl Rudder, Page 2 (~~-348)

In the above leases, as well aa other lands. This suit Is styled The Citg of Tyler, Texas, et al v. The State omexas, x al, No.-!&A, mh-&dlcm mix i%iii%ofsiiirth County, and la stillpending.Your departmenthas afile on this suit.

"OnJune 22, 1956, Humble Oil & Refining Company securedan oil, gas,andmineral lease from the City of Tyler, and on June 25, 1956, Humble secured an oil, gas, andmineral lease from Smith County,both of these leases covering the landhere involved.Each leasewas for a primary term of one year and both have termlnated. During the primary terms of all of the leases; i.e., from the State, County, and City Humble drilled a well which was completedas a dry hole and abandonedon September 11, 1956.”

You then ask If the primary terms of the two leases In questionhave been suspendedby virtue of Article 54211,V.C.S., in view of the fact that the lesseehad leases not only from the State but also subsequentlyacquired leases from the City of Tyler and Smith County.

Article 54211 reads as follows~

"Art. 54211. Suspension of running of primary term of 011 and gas leasepending litigation.

"Therunning of the primary term of any oil, gas, or mineral leaseheretofore or hereafter iesuedby the Commfssionerof the General Land Office,which leasehaa been, is, or which may hereafter become Involved in litigationrelating to the validity of such lease or to the authority of the Commissionerof the General Land Office to lease the land aovered thereby, shall be suspended, and all obligations imposedby such leases shall be set at rest during the period of such lltigatlon.After the rendftionof final Judgment in any such litigation, the running of the primary term of such leases shall commence again and continue for the remainder of the period specified in suoh leases,and all obllgations and duties Imposed thereby shall again be operativeprovided such litigationhas been institutedat least six (6) months prior to the expirationof the primary term of any such leases.Honorable Earl Rudder, Page 3 (W-348)

Provided, further, that the lesrreeshallpay all annual delay rentals and any royalties which accrue during the period of litigation the same as during any other period of the extendedprimary term. Such rentalspaid during the litigationperiod shallbe held In suspenseand returned to the lessee in the event the State isunsuccessful In any such litigation.As amended Acts 1951, 52nd Leg., p* 750, ch. 406, See, 1." (Emphasisadded.)

The provisions of th9B statuteare for the benefit of the State's lessee and such provisions are as much a part of'any lease authorizedby Article 9382d, V.C.S., as though embodied in the lease form itself. The statute clearly and unequivocallyprovides that "therunning of the primary term of any oil, gas, or mineral lease heretofore or hereafter issued by the Commissionerof the General Land Office which may hereafter become involved in litigationrela&g to the validity of such lease Q e shall be suspended and all obligations imposedby such leases shallbe set at rest during the period of such litlgatfon".

The leases in questionwere issuedby the Commissioner of the General Land Office. The valfdftv of such leaseswere put In questionby the suit styled The City of Tyler, et al v, The State of Texas, et al, No. 22599-A, 7th Judicial District Court, Smith County.Under such circumstances the statuteunequivocallyprovides for the suspensionof the running of the primary term of such lease.

However, your oplnlon request inferentially raises the question of whether Humble's t king a protection lease from the Cfty of Tyler and Smith County and its drilling
a dry hole amounted to a waiver of the rights conferredby Article 542lf.

We do not believe the two protection leases taken by Humble from the City of Tyler and Smith County oonstitute a waiver by Humble of the rights conferred to Humble under Articles 5382d and 54211. This aotfon by Humble fs not inconsfstentwith Article 54211. In fact Humble has continued to pay delay rentalsup to the present time fndicating
an intent to accept the provfsfons of A~tfcle 54211,not an intent to waPve the rights conferredby said article,

Humble's drilling of a well is not inconsistent with Article 54211. This articleprovides that royalties shall be paid during the period of the extendedprimary termHonorable Earl Rudder, Page 4 (WW-348)

of such a lease, thus aontemplatingdevelopmenton the part of the leeeee during the primary term or extendedprimary term of a state lease.We do not believe Humble’s taking of the two protection leaseaand attempteddevelopment of the area evldenaesan Intent to waive the rights oonferred by Article 54211.

Therefore we inform gottthat the primary terms of the two leaeea in questionhave been and are suapended by the provisiona of Article 54211,V.C.S., pending litigation in the City of Tyler case.

SUMUARY

The primary term8 of the oil and gas lease executedby the Commissionerof the General Land Office on October 10, 1951, In favor of Humble Oil & Refining Company, covering Trrrct 3, Tyler State Park, Smith County, and the lease executedby the Commissionerof the Ueneral Land Officeon April 1, 1952, in favor of Humble Oil & Refining Company, covering Tract 1 of the Tyler State Park, Smith County,
are suspendedduring the period of litigation of the suit styled The City of Tyler, et al
v. The State ol Texas, et al, Cause No. 22!Z@+A,

‘7th J tfi i 1 Di t by v&u: Ef Ar~l%~ tc t of Smith County, 5’rzr, V.C.S.
Very truly yours,

WILL WILSON Attorney aeneral of Texas

BY Mllton Richardson

Assistant

APPROVRD8

OPINION COMMITTBEr REVIEWED FOR THE ATTORNEY (3eo.P. Blackburn, Chairman CIENERAL BY8 Wayland River8 MorganNesbitt W.V.Oeppert
Nary K. Wall