- .,



### E OENEY GENERAL TEXAS

June 1, 1959

Honorable Bill Allcorn OpinionNo. WW-636 Commissioner,Qeneral Land Office Re: Whether rentalswere due Austlh 14, Texas December 4, 1958 on certain submerged lands leases ln,the Gulf of Mexico dated December 4, 1953 if the lessees desired to have the running of primary terms suspendedunder Article 54211,VCS, and reDear Mr. CommlssionePt lated questions.

In your opinion requestyou refer to the pending "Tidelands" litigationand to Attorney ffeneral's Opinion No. WW-540 regarding the suspensionof leases covering submergedtracts In the Gulf of Mexico beyond three (3) geographicmiles under the provisions of Article 54211, VCS, as amended.*

You state: "A question'

has now arisen concerning the payment of rentals on leases executedDecember4, 1953,which would have expired December 4, 1958 but for the fact that the running of the primary terms thereofwere suspendedas of November 7, 1957," the date the suitwas filed and which was approximately 13months prior to the December4, 1958 rental date.
In your opinion request after referring to Opinion No. WW-540, and setting forth certain facts,you propound three questions,which are in'substance: (1) In view of the commencementof litigationon November 7, 1957,were rentals due December 4, 1958 on submerged lands leases in the Gulf of Mexico executedDecember 4, 1953 If the lessees desired to have the running of the

*(Acts 1941, h7th Leg., p. 140~5, ch. 637, sec. 1, as amended Acts 1951, 52nd Leg., P. 750, ch. 406, sec. 1).

Honorable Bill Allcorn, Page 2 (OpinionNo. WW-636)

primary terms thereof suspendedunder the provisions of Article 54211?
(2) If such rentals are not paid are such leases

subject to forfeitureby the Commissioner under the provisions of Article 5372, VCS? (3) Is the primary term of such a lease (aswell as obligations thereunder) suspendedas to that portion lyingmore than three (3)geographicmiles seaward from the ordinary lowwater mark or outer limit of inlandwater, as indicated in Opinion No. NW-540?
You also state that paragraph 2 of each of the leases In question provides in part: "2

. On or before one year from the date of this lease and annually thereafter for each of the followingyears during the life of this lease, the lessee shallpay to the Commissionerof the GeneralLand Office,Austin, Texas, an annual rental of Two Dollars ($2.00)per acre; provided that when royaltiespaid during any year during the life of this lease equal or exceed the annual rental, no annual rentalwill be due for the followingyear; otherwlse, there shall be due and payable on or before the anniversarydate hereof Two Dollars ($2.00)per acre, less the amount of royaltiespaid during the precedingyear." Your questions will be answered in sequence:

In view of the commencementof litigationNovember 7, 1957, were rentals due December 4, 1958 on submerged lands leases In the Gulf of Mexico axecuted December 4, 1953 if the leasues desired to have the ;,unning of the primar,'terms thereof suspendedunder the p&#cvisions of Article ,42li?

Rentals were due on Decembe-~ 4, 1958 on leases dated December +, 1953 if the lessees desired to &ve the primary terms suspended .tnder Article 54211, VCS.
You ytate In substance that some of tlielessees take the position that no rentalswere due December 4, ~$58Honorable Bill Allcorn, Page 3 (OpinionNo. W-636)

because Article 54211 refers to rentalswhich "accrue" during the period of litigationand that since-rental payments have beenmade no further rentalswill "accrue' during the litigation,and therefore the leases are to remain in effectwithout further payment. In our opinion that view fails to take into account the further and decisivewording of the statutewhich is underscoredbelow:

"Provided further, that the lessee shallpay all annual delay rentals and any royaltieswhich accrue during the period of litigation the same as during any other period of the extendedprimary term."
In our opinion the statute requires rental payments not only during,but after, the primary term in consideration for keeping the lease alive but suspended. Otherwise, the phrase "during any other period of the extendedprimary term" would be meaningless.

A statute shouldbe construed so as to accomplish a purpose or result, and the object of statutory construction is to enforce and give effect to legislative intent. (39Tex 5ur ,&atuteg Sec. 87, p. 160 et seq.) Here, the intent is expressedplainly.

"Extended"both by court decisions and dictionary definitionmeans to stretch or draw out; to lengthen or p-olow, either in spa-e or time; to protrac;, or to continue (Webs;ertsNew Internatio.>al Dictionar?r.

2nd Edition, Una-

'. * 17L $%E;; ~0. K & T K C fT kex& & N 0 Rv. Co

; ti..jhing

v. In&.b~tan~~'o~*Townof LA.,ie H' 2d 330, l-48

Me. 24,; State v. Zozzaro, 20 At1 2d Conn. 169; West Madison Stat, Bank v. Mudd, 250 Ill. A 258; dane namelware Comoan v. Smi~L.+ 168 Tenn. 203, S.W.2d 644 Loeffler v. 

### d, 92At1 73i, 128 .PP. 76 ,v18 '.2d%62.
In enactingArticle 54211, as amended, it is apparent that the Legislaturehad inmind the fact that litigation can be protracted. It was providing for the eventuality that the litigation couldwell extend beyond the primary term, but, for the protection of the State it provided for a continuance in the payment of rentals during the extended term, and for the protection of the lessees it provided for the rentals to be held in suspense and subject to refund to the lessees if the Statewas unsuccessful in the litigation. It is difficult to conceivehow the Legislature couldhave enacted a more just statuteprotecting, as it does, both the State and the lessees.Honorable Bill Allcorn, Page 4 (OpinionNo. W-636).

Paragraph 2 of the leases, quoted above, evidences that the Land Commissionerfollowed the Legislative intent, and the lessees are, of course, bound by the terms of the leases they received. That paragraph refers to the "life" of the lease. Under the circumstancesthe "life" of the lease can be extendedby compliancewith Article 54211. If the lessees choose not to pay the annual rental (whichdoes not appear to be an "annual delay rental" in the traditional sense) to effectuate the suspension then the leases may be forfeited.
(2)

If such rentals are not paid are such leases subject to forfeitureby the Commissionerunder the provisions of Article 5372, VCS? ANSWER:

Assuming that the leases In question were executed under and by virtue of Title 86, chapter 4, RCS, then if the rentals referred to were not paid such leases are subject to forfeitureby the Commissionerunder the provisions of Article 5372,VCS (Acts 2nd C.S. 1919,p. 249) for the reasons set forth in our answer to question No. 1. (3) Is the primary term of a lease (aswell as obligations thereunder) suspendedas to that portion of a lease lyingmore than three geographicmiles seaward from the ordinary low-watermark or outer limit of inlandwaters, as indicated in Opinion No. W-540? ANSWER: If a portion of a lease liesmore than three (3) geographicmiles seaward from the low-watermark or from the outer limits of inlandwaters oi'fthe coast of Texas, and a portion lies landward of that line, the obligations of the lessees,under Article 54211, are not suspendedas to the portion lying landward of that line,but the primary terms and other lease obligations are suspendedas to that portion lying seaward of such line except that the lessees must continue to pay annual delay rentals or royalties on the seawardportion. The statute in question reads in part as follows:
oil, gas "The running of the primary term of any

or mineral lease.

. .whichmay hereafterHonorable Bill Allcorn, Page 5 (OpInionNo. NN-636)

become involved in litigation.

. .shallbe suspended,and all obliaatlons imposedby such leases shallbe set at rest during the period of such litigation

. . *provided.

. .thatthe lessees shallpay all annual delay rentals or any royaltieswhich accrue during the period of litigation.

. .' (Emphasis supplied.)

SUMMARY
As to submerged lands leases in the Gulf of Mexico involved in the "Tidelands" litigation* as to which four prior rental paymentshad been made and which would have expired December 4, 1958,but for the fact that about 13months prior thereto the running of the primary termswas conditionally suspendedunder Article 54211 as of November 7, 195 lands" suitwas filed7, (date last "Tidesuch leases could be continued in effect during the lltigaWon under that Statute if, and only If, such lesseesmadeannual rentalpayments December 4, 1958 and continue tomake annual rentalpayments in tue future during the period of litigation (whetherduring, or after, the ordinary primary terms of the leases) throughout the period of the 'extended'primary terms. Non-payment of such rentals subjects the leases to forfeiture by the Commissionerunder Article 5372, vcs. If a portion liesmore than three (3) geographicmiles seaward from the ordinary low-watermark or from the outer limits of inlandwaters off the coast of Texas in the Gulf of Mexico, and a portion lies landward of that line, the obligations of the lessee (under Article j&211, 3s amended) are not suspentied

as to the portion lying landward of that line, but the primary term and other lease obligationsare suspendedas to that portion lying seaward of such line except

* (United States v. Louisiana, et al, U.S. Sup. Ct. No. 10 Original,

October Term 1958, now set for argument October 12, 1959.)Honorable Bill Allcorn, Page 6 (OpinionNo. WW-636)

the lesseemust continue to pay rentals and royalties on the seawardportion as stated in OpinionNo. WW-540, to which reference is here made. Very truly yours, WILL WILSON Attoqey General of 'Texas

v -.- S N. LUDLUFi-- 

# V First Assistant JNL:bct APPROVED: OPINION COMMITTEE: Geo. P. Blackburn, Chairman
James H. Rogers Grundy Williams John Wildenthal, Jr, APPROVED FOR THE ATTORNEX GENERAL By: W. V. Geppert