Case Name: R. E. HIBBERT, Plaintiff-Appellant, v. William MUDD et al., Defendants-Appellees-Appellants
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 1972-12-13
Citations: 272 So. 2d 697
Docket Number: No. 4022
Parties: R. E. HIBBERT, Plaintiff-Appellant, v. William MUDD et al., Defendants-Appellees-Appellants.
Judges: Before SAVOY, CULPEPPER and MILLER, JJ.
Reporter: Southern Reporter, Second Series
Volume: 272
Pages: 697–713

Head Matter:
R. E. HIBBERT, Plaintiff-Appellant, v. William MUDD et al., Defendants-Appellees-Appellants.
No. 4022.
Court of Appeal of Louisiana, Third Circuit.
Dec. 13, 1972.
Rehearing Denied Jan. 24, 1973.
Bailey & Hollier by William C. Hollier, Lafayette, for plaintiff-appellant.
Domengeaux & Wright by James Do-mengeaux, Lafayette, for defendant-appel-lee.
Before SAVOY, CULPEPPER and MILLER, JJ.

Opinion:
MILLER, Judge.
In Hibbert v. Mudd, 187 So.2d 503 (La. App. 3 Cir. 1966), [writ denied 249 La. 714, 190 So.2d 233 (1966) because the judgment was not final] we reversed the trial court's summary judgment. We found a genuine issue of fact and remanded for a determination of whether the marriage of Frank Mudd and Agnes Sinclair was miscegenous.
On remand the parties stipulated to many facts and specifically that the Mudd Sinclair union was miscegenous. The trial court adopted the dissent reported in 187 So.2d 503 at page 508 as the applicable law relative to inheritance by miscegenous natural children. Tr. Vol. II, page 69. Additionally, the trial court cited Loving v. Commonwealth of Virginia, 388 U.S. 1, 87 S.Ct. 1817, 18 L.Ed.2d 1010 (1967) as supporting that result. These issues are not before this court because the State of Louisiana did not appeal. The natural brothers and sisters of lessor Edna Mudd Anderson have been recognized as the sole heirs of lessor Edna Mudd Anderson.
Plaintiff R. E. Hibbert instituted this concursus proceeding on July 19, 1963 and on that date deposited in the registry of court the royalties which had accumulated to the owner of land leased by Hibbert from Anderson. Except for an alleged telephone call, Hibbert made no prior attempt to pay these royalties which accumulated from production starting December 9, 1961 through January 14, 1962. The production was under a voluntary unit dated September 15, 1961, recorded in Book M-35, Folio 387, Entry No. 414582, Conveyance Records of Lafayette Parish. Hib-bert also held royalties produced from January 15, 1962 through April 2, 1962 under the second unit when that forced unit was approved by the Louisiana Conservation Commission.
Cited as defendants having conflicting claims to the royalties were the State of Louisiana (which could claim the property by escheat if Anderson left no heirs) and certain alleged natural brothers and sisters, and/or their descendants, of lessor, Edna Mudd Anderson, who died intestate in 1961. Some of the defendants were born of an alleged miscegenous union and others were born of an adulterous union all as stipulated at trial.
The Mudd-Sinclair group reconvened seeking cancellation of the lease because of Hibbert's failure to pay royalties for nineteen months after production. The trial court cancelled the lease on finding lessee had actively breached the lease contract. LSA-R.S. 30:105 and 106. Pierce v. At lantic Refining Company, 140 So.2d 19 (La.App. 3 Cir. 1962). However the trial judge refused to cancel those portions of the lease which were in production citing the lease provisions that " . . .in the event of the forfeiture of this lease for any cause the lessee shall have the right to retain around each well producing oil, gas or other minerals, the number of acres fixed and located by (the Louisiana Conservation Department) under which said well is being drilled or produced . . . " Paragraph 3 of lease, Vol. I, Tr. 9. Attorney's fees of $7,500 (the parties stipulated that amount IF landowners were entitled to fees) were awarded under LSA-R.S. 30:102.
Plaintiff Hibbert appealed the judgment insofar as it cancels the lease outside the units and awards attorney's fees. The Mudd-Sinclair group answered the appeal, seeking cancellation of the lease in its entirety. We affirm the trial court's cancellation of the lease and award of attorney's fees and reverse the holding that lessee is entitled to retain the producing lands.
There is an issue of fact and an issue of law presented in this case. Although many facts were stipulated, others must be gleaned from the depositions and answers to interrogatories filed in evidence.
The factual issue is: When did lessee Hibbert learn that lessor Anderson had died ? The legal issue is: Does death of a lessor relieve lessee from paying the royalties required by the lease? More particularly is LSA-R.S. 30:105 suspended when lessee withholds royalties on learning of lessor's death? We find that it does not.
A lease should not be cancelled when the delay in paying royalties is based on a bona fide title dispute. Mire v. Hawkins, 177 So.2d 795 (La.App. 3 Cir. 1965); Broadhead v. Pan American Petroleum Corporation, 166 So.2d 329 (La.App. 3 Cir. 1964); Fawvor v. U. S. Oil Company, 162 So.2d 602 (La.App. 3 Cir. 1964); Bonsall v. Humble Oil & Refining Company, D.C., 201 F.Supp. 516; 300 F.2d 150 (5th Cir. 1962).
We agree that eight months after royalty was due (it was due under the voluntary unit which produced from December 9, 1961 through January 14, 1962) Hibbert learned FOR THE FIRST TIME that there was a bona fide title dispute as to who inherited from Edna Mudd Anderson. But note this: there is not now and never has been a question as to Edna Mudd Anderson's title to the property. Hibbert first learned of a possible title dispute as to who inherited from Anderson on Sep tember 10, 1962 when he received the demand for cancellation of the lease. Although there was no question as to Anderson's title to these royalties, Hibbert continued to hold them until July 19, 1963 when he first deposited the accumulated royalties into the registry of court.
Hibbert does not contend that he knew of a title dispute prior to September 10, 1962. Until that date, he contends only that he knew that his lessor Edna Mudd Anderson had died. She died on September 20, 1961.
Lessee's proof that he was justified in withholding royalties because he knew of Anderson's death is meager. The only evidence offered to prove this knowledge is Hibbert's selfserving unsupported testimony that he was informed of her death by two people and that he later received a newspaper clipping which noted her passing. Deposition of R. E. Hibbert, Tr. Vol. II, p. 4. Hibbert does not pin down the time that he allegedly learned of her passing. The record allows two inferences: 1) lessee learned of Anderson's death shortly after completing the well on her property, or 2) he later learned of her death, possibly as late as September 10, 1962 when the Mudds demanded cancellation of the lease. It is argued that we should accept the former interpretation because Hibbert's testimony is uncontradicted. It is difficult to establish when a party first learned of a certain fact. In making that determination, we look to his response to the information.
If Hibbert promptly learned of Anderson's passing, his response falls so far short of the requirements needed to maintain his lease, that he has lost the lease under LSA-R.S. 30:105. What did he do? He testified that he telephoned (Vol. II, p. 18, line 17) the Mudd's attorney's office and asked "a girl" (Vol. II, p. 13, line 18) if he could speak to the Mudd's attorney. When told by telephone that the attorney was out, Hibbert asked "a girl" to send him a copy of the judgment of possession in the Anderson succession as soon as it was signed. He did not identify the girl or the approximate date when he allegedly telephoned. Hibbert did not testify 1) that he established that the firm was handling the succession; 2) that he asked to have an attorney return his call; or 3) that he sought advice as to what he should do with the accumulated royalties or those which would accumulate pending receipt of a judgment of possession. Hibbert did not attempt to follow up this alleged telephone call. He never wrote a letter to the firm and never spoke to a lawyer about the problem of what he should do with the accumulating royalties.
When asked what he would have done had not the succession been opened, Hib-bert replied "That is a technicality on which we would have followed the law, whatever the law required." Vol. II, p. 17. His actions do not support this testimony. He admits that it is a legal question, yet he made no effort to determine what the law required. So far as this record shows, Hibbert first consulted an attorney to determine the proper disposition of the accumulated royalties after receiving the demand for cancellation of the lease.
On the basis of a telephone call (we note again, there is not one shred of evidence to suggest when this telephone call was made) and conversation with "a girl" in the office of Mudd's attorneys, Hibbert withheld royalties admittedly due from January 14, 1962 until he first learned of a bona fide title question as to who inherited Anderson's property. This knowledge came with the cancellation demand of September 10, 1962.
After September 10, 1962, Hibbert had a bona fide reason to withhold royalties from the Mudds, but not from Anderson's heirs whoever they might be. A title problem as to who inherited from Anderson does not entitle Hibbert to withhold royalties due to Anderson's successors, whoever they might be. Hibbert held these royalties until July 19, 1963 when he deposited them in the registry of court. For over eighteen months, Hibbert had the use of these royalties which had been due since January 14, 1962.
Hibbert's timely knowledge of Anderson's death is basic to his defense against the lease cancellation. We could not fail to cancel the lease if Anderson were alive and Hibbert failed to pay royalties for either eight or eighteen months. LSA-C.C. Art. 2712. Melancon v. Texas Co., 230 La. 593, 89 So.2d 135 (1956). Hibbert's testimony that he knew of Anderson's death was insufficient to carry his burden of proving that he was justified in withholding royalties. The trial court may have rejected his testimony as lacking credibility (although this was not specifically stated). This is suggested because the lease was dissolved. And if the trial court rejected Hibbert's testimony, there was no manifest error in that determination.
Even if we accept Hibbert's contention that he promptly learned of Anderson's passing, what was his duty? The lease specifically provides for that contingency in paragraph 9:
"All provisions hereof shall extend to and bind the successors and assigns (in whole or in part) of Lessor and Lessee; but no change in the ownership of the land or any interest therein of change in the capacity or status of Lessor whether resulting from sale, inheritance or otherwise, shall impart any additional burden on Lessee nor shall any change in ownership or in the status or capacity of Lessor impair the effectiveness of payments made to Lessor herein named unless the then record owner of said lease shall have been furnished thirty (30) days before payment is due with certified copy of recorded instrument or judgment evidencing such transfer, inheritance or sale or evidence of such change in status or capacity of Lessor. The furnishing of such evidence shall not affect the validity of payments theretofore made in advance . . ."
Under the express terms of the lease, lessee is protected when he pays royalties to the named lessor. He testified that he knew her last address; had received no request that payments be sent elsewhere; and that he had not sent royalty payments to anyone.
The lease drawn by lessee was so worded in order that lessor or her successors would have the burden and duty of notifying lessee of the changed status of lessor. In this way and by the express lease terms, lessee is given a mode of payment which protects its interest should lessor die. The corollary to lessor's duty to notify is a corresponding duty of lessee to continue to pay royalties to the named lessor. Were it otherwise, and lessee had discretion under the jurisprudence to withhold payment until notified, at least one obvious inequity would result: lessee would derive the unintended windfall of interest-free use of another's money while the heirs (whoever they might be) waited sans accumulated interest on their royalties. As demonstrated by this case, it sometimes takes years to get a recognized judgment of possession. See also concurring opinion in Pierce v. Atlantic Refining Company, 140 So.2d 19, 31 (La.App. 3 Cir. 1962).
No provision of the mineral lease and no provision of law has been cited which allows lessees to withhold payment of royalties when a lessor dies. Absent such authority, the court will strictly interpret the mineral lease with ambiguities construed against the lessee who prepared it. Odom v. Union Producing Co., 243 La. 48, 141 So.2d 649 (1961); Pecot v. Callery Properties, Inc., 247 So.2d 160 (La.App. 1 Cir. 1971).
The lease provides an adequate and definite mode of payment. To allow lessee to delay rentals when he learns of lessor's death would expand the ambit of the term "justified" as it has been used in the jurisprudential rule that delay in making royalty payments will not result in lease cancellation when the delay is "justified." Bonsall v. Humble Oil & Refining Company, D.C., 201 F.Supp. 516; 300 F.2d 150 (5th Cir. 1962); Fawvor v. U. S. Oil Company, 162 So.2d 602 (La.App. 3 Cir. 1964); Broadhead v. Pan American Petroleum Corporation, 166 So.2d 329 (La.App. 3 Cir. 1964); Mire v. Hawkins, 177 So.2d 795 (La.App. 3 Cir. 1965).
"The lessee may be expelled from the property if he fails to pay the rent when it becomes due." LSA-C.C. Art. 2712. On death of the lessor, we cannot countenance a lessee's nonpayment of rent for eight or eighteen months while it enjoyed the benefits of the lease.
Mineral royalties are the same as rent. Mineral leases are to be construed according to the same codal provisions applicable to ordinary leases. Melancon v. Texas Company, 230 La. 593, 89 So.2d 135 (1956).
Failure to pay mineral royalties to a lessor is a grievous wrong which results in the harsh but necessary expedient of lease cancellation. Bollinger v. Texas Company, 232 La. 637, 95 So.2d 132 (1957); Melancon v. Texas Company, 230 La. 593, 89 So.2d 135 (1956); Fontenot v. Sunray Mid-Continent Oil Company, 197 So.2d 715 (La.App. 3 Cir. 1967), writ refused, 250 La. 898, 199 So.2d 915 (1967). In order to avoid cancellation, lessee must carry the awesome burden of establishing that his failure to pay was justified. Mire v. Hawkins, 177 So.2d 795 (La.App. 3 Cir. 1965); Broadhead v. Pan American Petroleum Corporation, 166 So.2d 329 (La.App. 3 Cir. 1964); Fawvor v. U. S. Oil Company, 162 So.2d 602 (La.App. 3 Cir. 1964); Bonsall v. Humble Oil & Refining Company, D.C., 201 F.Supp. 516; 300 F.2d 150 (5th Cir. 1962).
Having found that the trial court properly cancelled the lease, we consider the reservation to lessee of the developed property. The trial court cited no authority for this holding.
An identical provision was considered in the case of Melancon v. Texas Company, 230 La. 593, 89 So.2d 135 (1956). The Supreme Court refused to recognize the provision stating that to except the developed land ". . . would lead to an anomalous, if not ridiculous, situation, for the lessor would be at the mercy of the lessee." The court went on to state that " . . . this is an equitable provision for the benefit of the lessee and apply (s) to those cancellations involving a bona fide dispute as contemplated in the first clause of this particular paragraph."
Hibbert contends that there was a bona fide dispute as to the title, and therefore he is entitled to retain the developed lands. Hibbert did not know of a title dispute until September 10, 1962. And that title dispute did not concern the last record owner. For eight to eighteen months, Hib-bert withheld royalties which he was required to pay to the last record owner .(Anderson). There was no bona fide title dispute as to her ownership. He knew her last address, that she was the last record owner, and that he had received no requests to pay royalty to others.
The trial court judgment is affirmed with the exception of that part of the decree recognizing Hibbert's lease as to Anderson's interest in the following lands:
1) 1,089.018 acres, Anderson Sand Unit "A" established by Louisiana Department of Conservation Order 197-G-l, effective May 13, 1970.
2) 323.41 acres, Stutes Sand Unit "M", established by Louisiana Department of Conservation Order 197-C-ll, effective May 13, 1970.
That portion of the trial court judgment is reversed. All costs of court are taxed to plaintiff-appellant.
Affirmed in part. In part reversed and rendered.
. Many of the facts stipulated on remand are therefore irrelevant.
. The claimants referred to in our 1966 opinion as the "Sinclair-Birrat" group sold their interest in the property to William Mudd, a member of the Mudd-Sin-elair group and did not appeal.
.Sec. 105. Withholding payment of rentals or royalties, when unlawful.
It shall be unlawful for a person acquiring mineral rights from, or mineral rights under a lease by, the last record owner and holding under an instrument sufficient in terms to transfer title or for a person purchasing mineral products to withhold pay ment of any rentals, royalties or other sums due to a party holding an interest in the minerals, or under the lease.
Sec. 106. Right to revenues pending test of title; effect of recorded lease.
A. A person producing minerals under a lease granted by the last record owner and holding under an instrument sufficient in terms to transfer title to the land or mineral rights, shall be presumed to have derived his right from the true owner. The lessor, royalty owner, lessee or producer or persons holding from them shall be entitled to all minerals produced or to their proceeds, unless and until a suit testing title of the land or mineral rights embraced in the lease is filed in the district court of the parish in which the property is located.
B. A purchaser of minerals produced from a recorded lease granted under iliese conditions shall be fully protected in making payment to any party in interest under the lease unless and until the above mentioned suit should be filed and the purchaser receives notification of it by the usual postal registry receipt card. The purchaser shall not be entitled to this protection unless he has recorded in the conveyance records of the parish in which the land is located, notice that the minerals have been and will be bought by him.
. "If a lessee, having been given written notice demanding cancellation of the lease, fails or refuses to comply within ten days, he shall be liable to the lessor for a reasonable attorney's fee incurred by the lessor in bringing suit to have the cancellation adjudged."