Case Name: R. E. HIBBERT v. William MUDO et al.
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1974-04-29
Citations: 294 So. 2d 518
Docket Number: No. 53271
Parties: R. E. HIBBERT v. William MUDO et al.
Judges: BARHAM, J., concurs and dissents in part with reasons.
Reporter: Southern Reporter, Second Series
Volume: 294
Pages: 518–526

Head Matter:
R. E. HIBBERT v. William MUDO et al.
No. 53271.
Supreme Court of Louisiana.
April 29, 1974.
W. C. Hollier, Bailey & Hollier, Lafayette, for plaintiff-applicant.
James Domengeaux, Domengeaux & Wright, Lafayette, for defendants-respondents.
Lawrence K. Benson, Charles A. Snyder, Milling, Benson, Woodward, Hillyer & Pierson, New Orleans, William M. Hall, Jr., Liskow & Lewis; Lawrence E. Dono-hoe, Jr., Davidson, Meaux, Onebane & Do-nohoe, Lafayette, for amici curiae.

Opinion:
MARCUS, Justice.
In this concursus proceeding, R. E. Hib-bert sought to determine the ownership of certain accrued production royalties under an oil and gas lease which had been executed in 1959 between Edna Mudd Anderson, as lessor, and himself, as lessee. The said royalties were deposited in the registry of the court at the time the concursus was filed. Edna Mudd Anderson died intestate on September 20, 1961 without legitimate ascendants, descendants or collat- erais. Production under the aforesaid lease commenced on December 9, 1961. A dispute arose as to the title to these royalties between lessor's collaterals. One group was allegedly from a miscegenous union (Mudd-Sinclair), and the other group from an adulterous union (Sinclair-Birrat). The latter groups, as well as the State of Louisiana, were impleaded in the concursus proceeding.
The State of Louisiana filed an answer claiming the property by escheat for want of any heirs. The Mudd-Sinclair claimants averred they were owners of record of the property by virtue of a judgment of possession dated December 5, 1961 and a transfer from the Sinclair-Birrat claimants. Coupled to that answer was a recon-ventional demand for cancellation of the Anderson lease because of Hibbert's failure to pay royalties to the reconvenors or to the estate of Edna Mudd Anderson during a nineteen-month period from commencement of production to the filing of the concursus.
In due course, Hibbert filed answer setting up as defenses that reconvenors had no standing or capacity to seek cancellation because they had never been recognized as lessor's irregular heirs by a contradictory proceeding in the form and manner provided by the codal articles dealing with irregular successions; that no demand for payment had been made on him nor had he been placed in default, which action was a condition precedent to an action to cancel under the unusual circumstances presented; and that the delay in payment was legally justified by a bona fide and unresolved dispute as to the ownership of the said royalties between the State of Louisiana and lessor's miscegenous and adulterous collaterals. In the alternative, if cancellation was decreed, Hibbert sought to invoke paragraph 3 of the lease providing that, in the event the forfeiture or cancellation for any cause, lessee would be entitled to retain unit acreage from the effects of cancellation.
Initially, the district court maintained a motion for summary judgment filed by the Mudd-Sinclair claimants as against the claims of the State of Louisiana. The matter was appealed, and the Court of Appeal reversed, holding there was a genuine issue of fact as to whether the Mudd-Sin-clair unit was miscegenous. The cause was remanded for trial. 187 So.2d 503 (La.App.).
Following this remand, the district court rendered judgment in favor of the Mudd-Sinclair claimants as against the claims of the State. The demand for cancellation was granted on the finding that Hibbert would have been protected had he paid royalties to lessor's "estate" and that his failure to do so was in violation of R.S. 30:105 and was thus an active breach of the lease contract sufficient in law to serve as a basis for cancellation. The effect of cancellation was, however, limited to the non-unitized areas of the leased premises pursuant to the "forfeiture" provision incorporated as paragraph 3 of the lease, permitting lessee's retention of all that portion of the acreage included in units.
Hibbert appealed. The Mudd-Sinclair claimants answered the appeal, praying for amendment of the judgment so as to order cancellation of the Anderson lease in its entirety. The State and the Sinclair-Bir-rat claimants neither appealed nor answered the appeal. The Court of Appeal reversed the district court insofar as its decree permitted Hibbert to retain unitized acreage from the effects of cancellation, and, in all other respects, the judgment was affirmed. 272 So.2d 697 (La.App.). We granted certiorari. 274 So.2d 390 (La.).
As previously indicated, Edna Mudd Anderson died intestate on September 20, 1961, leaving no legitimate ascendants, descendants or collaterals. Hibbert completed a shut-in gas well on the Anderson lease on or about September 18, 1961. He testified that he learned of the lessor's death two days after completion of said well. The succession of Edna Mudd Anderson was opened in the 15th Judicial District Court for the Parish of Lafayette, and, on December 5, 1961, the Mudd-Sin-clair and Sinclair-Birrat claimants were recognized as the irregular heirs of the decedent and sent into possession of her property. No administrator was appointed or qualified. Under the terms of the ex parte judgment of possession, all monies and funds owed to the succession were ordered delivered to the attorney for the Mudd-Sinclair and Sinclair-Birrat claimants. The gas well completed on September 18, 1961 was placed on production on December 9, 1961, some four days after the ex parte judgment was signed.
After learning of the death of Mrs. Anderson as aforesaid, Hibbert testified that he telephoned the office of the law firm which had originally secured the Anderson lease for him and had rendered him a title opinion in connection therewith. Hibbert further stated that counsel was out of the office at the time and, after identifying himself, informed the lady who answered the phone that he desired the names of the heirs, if any, of Mrs. Anderson and requested a copy of the judgment of possession. Hibbert testified, and it was stipulated that he was never furnished with a copy of the judgment of possession.
Hibbert's testimony is that, since this same law firm had previously performed legal serivces for him in connection with this lease, it was his feeling that he was "in friendly hands" and that a copy of the judgment of possession would be furnished him in due course. While the record indicates that Hibbert did not know that this law firm represented the claimants in the succession proceedings, it does show he knew that they had represented the lessor at the time the lease was confected. The record also shows that this same law firm did in fact handle the succession proceedings and also represents the Mudd-Sinclair and Sinclair-Birrat claimants in this matter.
No demand for payment was made on Hibbert. However, on September 10, 1962, Hibbert received written demand for cancellation of the mineral lease involved in this suit. This was some eight or nine months after production. Thereafter, the parties entered into negotiations and exchanged correspondence over a period of the next ten months in an attempt to settle the title dispute to the royalties. Also, no demand for payment was made during this latter period. Ultimately, a compromise offer was made on July 9, 1963 which was rejected on July 19, 1963. On that date, Hibbert filed the concursus petition.
The alleged heirs claim that, despite the fact that production was established under the lease as of December 9, 1961, no payment of royalties was made or tendered prior to the institution of the concursus proceeding some nineteen months later. Hibbert contends that the royalties in question were not paid because the lessor, Edna Mudd Anderson, died intestate in September of 1961, creating a title dispute between her alleged natural brothers and sisters and/or their descendants and the State of Louisiana.
Cancellation of the lease is sought for failure to pay production royalties for nineteen months without justification. It is contended that the failure in the instant case amounted to an active breach of the lease warranting the cancellation thereof without the necessity of placing lessee in default under the holdings in Melancon v. Texas Company, 230 La. 593, 89 So.2d 135 (1956); Bollinger v. Texas Company, 232 La. 637, 95 So.2d 132 (1957); Bailey v. Meadows, 130 So.2d 501 (La.App.1961); and Pierce v. Atlantic Refining Company, 140 So.2d 19 (La.App.1962). The Court of Appeal so held. We reverse.
Very recently, we summarized the present jurisprudence in Wilson v. Sun Oil Company, 290 So.2d 844 (La.), Docket No. 52,764 on original hearing, handed down August 20, 1973, affirmed on rehearing, 262 La. 1164, 266 So.2d 446, February 18, 1974, as follows:
"Our jurisprudence has developed the rule that failure to pay production royalties under an oil and gas lease for any appreciable length of time without justification amounts to an active breach of such lease which entitles the lessor to a cancellation thereof without the necessity of placing the lessee in formal default. 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.1967), cert. den.; Sellers v. Continental Oil Company, 168 So.2d 435 (La.App.1964); Pierce v. Atlantic Refining Company, 140 So.2d 19 (La.App.1962), cert. den.; Bailey v. Meadows, 130 So.2d 501 (La.App.1961), cert. den.
"However, in cases where the failure to pay production royalties is justified under the facts and circumstances, the breach is considered passive, requiring a putting in default. Broadhead v. Pan American Petroleum Corporation, 166 So.2d 329 (La.App.1964), cert. den.; Fawvor v. United States Oil of Louisiana, Inc., 162 So.2d 602 (La.App.1964), cert. den. See also Alvord v. Sun Oil Company, 271 So.2d 561 (La.App.1972) and Hebert v. Sun Oil Company, 223 So.2d 897 (La.App.1969)."
No precise or exact period of time is considered either reasonable or without justification insofar as application of this rule is concerned. However, implicit in the above decisions is that, in determining whether payment of production royalties has been unjustifiably withheld, the courts must examine the facts and circumstances of each case. Here, the alleged justification for the delay in paying production royalties is based upon a bona fide title dispute. Mire v. Hawkins, 177 So.2d 795 (La.App.1965), affirmed 249 La. 278, 186 So.2d 591 (1966).
This Court indicated that a title dispute could justify delay in payment in the following language in Melancon:
"A justifiable cause for delay in such payment might arise when there is a reasonable dispute as to those entitled to receive the royalties, or the amount due each. "
We have previously indicated that the claimants herein were issue of misce-genous and adulterous unions. At best, they were irregular heirs. Unlike regular heirs who enjoy seizin, and who succeed to ownership of the decedent's estate at the moment of death without benefit of formal proceedings (Article 944 C.C.), the doctrine "Le mort saisit le vif" does not apply to irregular heirs. Succession of Barber, 52 La.Ann. 960, 27 So. 363 (1900); Glenn v. West, 151 La. 522, 92 So. 43 (1922); Succession of Giordano, 188 La. 1057, 178 So. 627 (1938); Wimberly v. King, 179 So. 515 (La.App.1938).
An irregular heir has only a right of action to have himself placed in possession. Such an heir owns no interest in the property until contradictory proceedings are filed with other irregular heirs or claimants and a judgment secured recognizing him as owner. Article 949 Civil Code; Succession of Allen, 44 La.Ann. 801, 11 So. 42 (1892); Glenn v. West, 151 La. 522, 92 So. 43 (1922); Succession of Giordano, 188 La. 1057, 178 So. 627 (1938).
It is argued that Hibbert should have made payment to the estate or succession of Edna Mudd Anderson. Factually, under the peculiar circumstances of this case, there were no legal successors or heirs. Only irregular heirs existed whose claims were litigated over a period of years. No administrator or other succession representative was ever appointed or qualified in the succession proceedings. Even if payment had been made by Hibbert, there was no person qualified to cash these checks. Thus, no one was deprived of the use of the funds during this period of time. We are satisfied that the facts clearly support Hibbert's contention that he did not pay royalties because he simply did not know who owned the land. The protracted litigation which followed is certainly evidence of the serious title dispute which existed and the legal issues which had to be resolved before payment could be made.
Accordingly, we conclude that, under the special facts and circumstances presented here, Hibbert was justified in his failure to pay production royalties during the period in question. This amounted to a passive breach of the lease contract requiring a placing in default. Reconvenors failed to place Hibbert in default.
We reject the Court of Appeal's conclusion that the lessee was not justified in withholding payment of royalties to the named lessor in spite of the title dispute in view of paragraph 9 of the lease.
The provisions of paragraph 9 are solely for the lessee's benefit to relieve him of the unreasonable burden of constantly checking the public records for changes in ownership which may have occurred. See Pearce v. Southern Natural Gas Company, 220 La. 1094, 58 So.2d 396 (1952); Atlantic Refining Co. v. Shell Oil Company, 217 La. 576, 46 So.2d 907 (1950); and Garelick v. Southwest Gas Producing Company, 129 So.2d 520 (La.App.1961).
Our interpretation of this lease provision is that the lessee is protected under the provision not only as to the effectiveness of payments made without benefit of certified evidence of an ownership change, he is also protected against the imposition of any additional burdens resulting from such an ownership change until he receives certified evidence.
We do not find that this provision in the lease required Hibbert to make payment of royalties as here contended.
We also reject the contention that the withholding of royalties by Hibbert violated R.S. 30:105. In Mire v. Hawkins, 177 So.2d 795 (La.App.1965), it was held that this statute has no application where royalties are withheld because of serious unresolved title disputes. The Mire opinion correctly states:
"The plaintiffs do contend that by virtue of LSA-R.S. 30:105, 106, the mineral lessees breached an obligation of law to pay their lessors, the plaintiffs, production royalties due under .the lease. The statutory provisions in question provide, inter alia, that it is unlawful for mineral lessees to withhold payment of royalties due to the lessor under a mineral lease from 'the last record owner.' Here, however, it was necessary to resolve several then-unsettled close questions of law before it could be determined whether indeed the plaintiffs were still 'record owners' by virtue of their apparently prescribed mineral servitudes, and for this reason among others we do not feel the statute was intended to apply to the type of situation instanced by the present facts."
For the reasons assigned, the judgments of the Court of Appeal and the trial court are reversed; the appellees claim for lease cancellation is denied; and the case is remanded to the trial court for action consistent herewith.
BARHAM, J., concurs and dissents in part with reasons.
DIXON, J., dissents in part and concurs in part, joining in Justice BARHAM'S reasons.
CALOGERO, J., concurs.
. This nineteen month period is considered as two periods: the first from December 9, 1961, the production date, until September 10, 1962, the demand for cancellation date; the second from September 10, 1962, until the date of the filing of the concursus proceeding on July 19, 1963. During the second period, the parties were attempting to settle the title dispute. ,
. Paragraph 9 of the lease provides: "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 impose 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. "