Case Name: Mrs. Myrtle Devall ANDRUS, et al. v. Kenneth H. KAHAO, J. King Woolf, Jr. and Ashland Plantation, Inc.
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1981-12-14
Citations: 414 So. 2d 1199
Docket Number: No. 81-C-1678
Parties: Mrs. Myrtle Devall ANDRUS, et al. v. Kenneth H. KAHAO, J. King Woolf, Jr. and Ashland Plantation, Inc.
Judges: WATSON, J., concurs in the result.
Reporter: Southern Reporter, Second Series
Volume: 414
Pages: 1199–1207

Head Matter:
Mrs. Myrtle Devall ANDRUS, et al. v. Kenneth H. KAHAO, J. King Woolf, Jr. and Ashland Plantation, Inc.
No. 81-C-1678.
Supreme Court of Louisiana.
Dec. 14, 1981.
On Rehearing May 17, 1982.
Rehearing Denied July 2, 1982.
John L. Olivier, and John Tarlton Olivier, of Olivier & Brinkhaus, Sunset, for plaintiff-applicant.
R. Gordon Kean, Jr., and Gary A. Bezet, of Sanders, Downing, Kean & Cazedessus, Baton Rouge, for defendants-respondents.
John M. McCollan, of Gordon, Arata, McCollman & Stuart, New Orleans, George W. Hardy, III, of Broadhurst, Brook, Man-gum, Hardy & Reed, Lafayette, John C. Christian & Claude E. Hall, of Milling, Benson, Woodard, Hillyer, Pierson & Miller, New Orleans, Amicus Curiae, for defendants-respondents.

Opinion:
LEMMON, Justice.
This is a suit to recover one-half of the bonus money and delay rentals paid to defendants under a mineral lease. The issue is whether plaintiffs' grant to defendants of the exclusive right to enter into mineral leases included the right to retain bonuses and rentals payable under leases subsequently executed by defendants pursuant to that grant.
I.
In 1969 plaintiffs sold certain immovable property to defendants Kahao and King. The act of sale contained the following provision:
"Sellers herein reserve an undivided one-half interest in and to all the outstanding minerals, the other undivided one-half interest being conveyed herein to Purchasers. The Purchasers shall have the exclusive right without the necessity of securing the joinder or consent of Sellers to enter into any oil, gas or mineral leases as they may deem fit, and such terms and conditions as they may deem fit and proper, provided, however, that no lease be executed for less than a one-sixth royalty."
These defendants subsequently sold the property to defendant Ashland Plantation, Inc. In 1973 Ashland entered into an oil, gas and mineral lease, and the lessee paid Ashland the bonuses and annual rentals due under the terms of the lease.
Plaintiffs claimed a share of the bonuses and rentals, ultimately filing this suit when Ashland rejected their claim. The trial court maintained defendants' exception of no cause of action, and the court of appeal affirmed. 400 So.2d 1194. We granted cer-tiorari to review those judgments. 404 So.2d 280.
II.
Generally, only the landowner (who has. not completely divested himself of mineral servitude rights) and the servitude owner have the right to lease property for mineral exploration and to share in bonus money and delay rentals due under the lease. On the other hand, the royalty owner has no right to lease or to share in bonuses and rentals, but has only the right to receive a fractional share of the production in the event that production is achieved. Humble Oil Refining Co. v. Guillory, 212 La. 646, 33 So.2d 182 (1947). Of course, the party with the right to lease (because of being a landowner or a servitude owner) can grant that right to another. The instant case presents the question: when a party with the right to lease grants merely that exclusive right to another party, does the grant also convey the right to receive bonuses and rentals, in the absence of an express provision in the contract? Determination of this question fundamentally involves the intention of the parties to the contract in which the exclusive right to enter into leases was granted.
At the time the contract was executed there was no statutory law providing for the transfer or retention of the right to receive bonuses and rentals when a party with the right to lease granted that right to another. In the absence of positive law or an express provision in the contract regarding the transfer or retention of the right to receive bonuses and rentals, the intention of the parties is the determinative factor. C.C. Art. 1945. Thus, the decision in this case depends upon the intent of the parties.
The interpretation of the contractual provision adopted by the lower courts is that the parties implicitly intended for plaintiffs to transfer their right to receive bonuses and rental, thereby effectively reducing the basic mineral interest retained in the contract from a servitude to a royalty. We decline to hold that the language of the contract requires that interpretation. In our opinion the contractual provision is subject to more than one interpretation, and evidence should have been presented in order for the court to determine the intention of the parties.
The exception of no cause of action is seldom an appropriate vehicle for adjudicating the rights of parties under an ambiguous contract in which several competing inferences can be drawn as to the intention of the parties. At this stage of the proceedings nothing has been presented to the courts which compels the conclusion that plaintiffs intended to transfer their right to receive income from bonuses or rentals. It is at least equally probable (or arguably even more probable) that plaintiffs intended to retain that right. Neither the contractual provision nor the statutory law at the time of the contract settles the question.
Under these circumstances the trial court erred in maintaining defendants' exception of no cause of action. The matter must be tried on the merits to determine the intention of the parties. Accordingly, the judgments of the lower courts are reversed, and the exception of no cause of action is overruled. The case is remanded to the trial court for a trial on the merits. Costs in the appellate courts are assessed to defendants.
WATSON, J., concurs in the result.
MARCUS, J., dissents and assigns reasons.
BLANCHE, J., dissents for reasons assigned by MARCUS, J.
. Since the judgment of the trial court maintained an exception of no cause of action, no evidence was introduced to support the objection raised by defendants. C.Civ.P. Art. 931. We therefore accept as true the allegations of the petition which paraphrased, but did not quote, the contractual provision. The exact contract language, quoted for purposes of establishing accurate and clear precedential value in this opinion, is taken from defendants' pleading, but plaintiffs do not dispute the accuracy of the quotation.
. Thus, if plaintiffs in the act of sale had simply reserved one-half of the minerals, they would have been entitled as servitude owners to one-half of all bonuses and rentals and as royalty owners to one-half of the royalties payable under any mineral lease. Furthermore, any prospective lessee who desired to secure a lease of all mineral interests would have been required to obtain plaintiffs' consent to the lease.
. Under the Mineral Code adopted in 1974 R.S. 31:105 defines the executive right as the exclusive right to grant mineral leases of specified land or mineral rights. R.S. 31:116 provides that a mineral lease may be granted by a person having an executive interest in the mineral rights on the property leased.
. Under R.S. 31:105, adopted by Acts 1974, No. 50, the exclusive right to grant mineral leases, in the absence of a contrary contractual provision, includes the right to retain bonuses and rentals. However, no provision of the Mineral Code may be applied to divest already vested rights. Since the mineral reservation and the mineral lease were executed prior to 1974, R.S. 31:105 is not controlling.
.The granting by one mineral owner to another mineral owner of the right, with stated limitations, to enter into mineral leases, without the necessity of securing the consent of the granting mineral owners, does not in and of itself raise any compelling inference that the granting mineral owners also intended to transfer their right to the bonuses and rentals. There are many logical explanations that could be attributed to the intent of the parties in entering into such an agreement. Some logical explanations are consistent with transferring the right to receive bonuses and rentals, while others are not. For example, the parties could have intended to transfer the right to bonuses and rentals as compensation for negotiating future leases. Or the parties could have intended, at the insistence of the one to whom the exclusive right was granted, that the party with the exclusive right be free to negotiate leases without interference and without fear of having a lease rejected after considerable efforts, while at the same time not intending to change the usual rights to bonuses and rentals. Other equally logical explanations may be inferred. (Plaintiffs contend their sole intent was to create a smaller bargaining unit.)
. It is arguably illogical that plaintiffs intended such a poor business transaction. Compensation for negotiating leases could be stipulated in terms of a percentage fee or a flat fee. If the right to bonuses and rentals were transferred to defendants as compensation for negotiating leases, then defendants could bargain to plaintiffs' detriment for a larger cash bonus and a lower royalty, subject to the limitation of at least a one-sixth royalty. On the other hand, it could be argued that plaintiffs intended to sell all of their mineral rights except for a proportionate share of a one-sixth royalty. But, as pointed out above, this argument effectively means plaintiff used language creating a servitude while intending only to reserve a royalty.
. The cases of Mt. Forest Fur Farms of America, Inc. v. Cockrell, 179 La. 795, 155 So. 228 (1943) and Ledoux v. Voorhies, 222 La. 200, 62 So.2d 273 (1952) affirmed judgments maintaining exceptions of no cause of action, holding that it was unnecessary to remand for the purpose of determining the true intent of the parties. These decisions are now expressly overruled.