Opinion ID: 1614914
Heading Depth: 1
Heading Rank: 3

Heading: Events Occurring After Original Acquisition of Mineral Interests

Text: Notwithstanding the fact that Judge Perez's alleged ownership of at least 97% of the stock in Delta-Louisiana and his personal acquisition of overriding mineral royalties relative to the levee board lands were fully concealed, such that these interests were not to be found in the public records of the parish, [18] he was unable to avoid suspicion of impropriety. [19] During the 1930's and early 1940's, various allegations were made concerning Judge Perez's alleged ownership of Delta-Louisiana and his acquisition of interests in parish mineral lands. Particularly noteworthy were charges made in 1940 by a political opponent, Plaquemines/St. Bernard Parish District Court Judge J. Claude Meraux. Judge Meraux accused Judge Perez of being wrongfully involved in personal acquisitions concerning public mineral lands in the parish. [20] Various newspaper articles chronicled the Meraux and Perez charges and counter charges. The Council and the defendants maintain different positions as to the effect of these public allegations. As will be discussed infra, we find the allegations inapposite to our decision in this case. Suffice it to say that attentive citizens certainly would have been suspicious of Judge Perez's involvement in the leasing of parish mineral lands as early as 1940. In 1940, a new administration came to power in Baton Rouge, upon the election of Governor Sam Jones. In that same year, the Louisiana Legislature, in 1940 La. Acts No. 13, created an entity known as the Crime Commission. The act gave the Crime Commission broad authority to investigate the affairs of political subdivisions of the state. Pursuant to the enabling legislation, financing of the Crime Commission was to come from the General Fund of the State Treasury. [21] Evidently, early subjects of inquiry by the Crime Commission were Judge Perez and the Buras and Grand Prairie levee boards' mineral leases to Delta-Louisiana. On December 11, 1940, Eugene Stanley, Louisiana Attorney General, and a member of the Crime Commission pursuant to 1940 La. Acts No. 13, and J. Bernard Cocke, Orleans Parish District Attorney, filed a Petition for Open Hearing [22] in Criminal District Court for the Parish of Orleans. [23] The Petition alleged that complaint has been made to them that certain oil, mineral, and trapping leases on lands belonging to public bodies and agencies of the State of Louisiana, in the Parishes of Plaquemines and of St. Bernard, have been procured through fraudulent means by corporations and individuals resident of, domiciled in, or having their registered office in the Parish of Orleans.... Judge Perez was described in the petition as the attorney for Delta Development Co., Inc. An extensive subpoena duces tecum was served on Delta through Judge Perez. The subpoena duces tecum directed that Delta produce the following documents: Check book and stubs; canceled checks; Stock book and stubs; mineral leases acquired and executed; Real Estate, mineral and royalty deeds; Moveable property inventory; Bank books, statements and records; Minute books, journals, ledgers, cash books; Papers and correspondence; Accounts Receivable and Accounts Payable; pay rolls; and all other books and papers relative to the business of the corporation. Instead of removing himself and revealing his interests in mineral royalties affecting the parish's public lands, Judge Perez challenged the subpoenas. He appeared personally and as counsel for Delta, urging a variety of defenses. [24] Throughout the time period in which the open hearing proceedings were pending, Judge Perez refused to respond to the subpoena. In a motion filed by attorney Fred Middleton on March 5, 1941, it was alleged that he, Middleton, was and is the only attorney of record for all respondents (including Delta) in the above numbered and entitled proceeding. In the motion, Middleton further requested the court correct its minutes so as to strike from the minutes ... the insertion in said minutes representing Leander H. Perez as counsel for the respondent corporations (including Delta) in these proceedings. That pleading makes it evident that the levee board's attorney, Perez, although at the same time under contract to represent Delta with respect to mineral subleases, had second thoughts about continuing to represent Delta as counsel of record in that litigation. Judge Perez and Delta ultimately prevailed in this Court. The motion to quash, denied in the district court, was effectively granted, and the subpoenas were ordered modified so as to require the production of a reasonable amount of the books and records of the corporation, and the books and records required produced should be particularly described in the writ of subpoena duces tecum. In re Louisiana Coastal Lands, Inc., 197 La. 701, 2 So.2d 184, 188 (1941); Companion case, In re Delta Development Co., 197 La. 712, 2 So.2d 188 (1941). As the defendants note, modified subpoenas were not thereafter issued, and no further action was taken by the petitioners in those proceedings. A likely reason why no further action was taken was the disablement of the Crime Commission. On December 26, 1940, shortly after the Crime Commission's unsuccessful effort to subpoena Delta-Louisiana's corporate records, and just fifteen days after the open hearing petition was filed, eighty-one concerned citizens, represented by Perez and attorney Fred Middleton, sued the Crime Commission. That attack culminated in Stewart v. Stanley, 199 La. 146, 5 So.2d 531 (1941), wherein this Court held that the Crime Commission was not constitutionally funded. Thus, by failing to reveal what he should have revealed, by challenging the subpoenas issued to Delta, and by leading a successful attack to deprive the Crime Commission of public funding, Judge Perez avoided revelation of his ownership of Delta-Louisiana and his personal acquisition of overriding mineral interests on levee board lands. While the open hearing petition was still pending, members of the Grand Prairie and Buras Levee Boards consulted with Attorney General Stanley. Stanley recommended the levee districts hire Messrs. Thomas Furlow and William Blass as special counsel to investigate the mineral affairs and contracts of the respective boards. [25] Thereafter, in resolutions adopted on September 12th and 16th, respectively, the Buras and Grand Prairie Levee Boards alleged the interests of Leander H. Perez, District Attorney, individually and as attorney for some of said parties, [were] adverse to the interests of [the levee boards]. The levee boards further resolved to have Furlow and Blass investigate all contracts and transactions to which this Board was or is a party or on account of which it has paid out money, and all transactions with respect to lands, leases, mineral leases, royalties, rights and interest in which this board has or had any title or right, and in the name and behalf of this Board to institute and prosecute to conclusion any and all suits deemed necessary and proper to recover for this board any lands, leases, mineral leases, royalties, rights, interests, and money to which [they] may be entitled.... The clear import of the resolutions was that Messrs. Furlow and Blass were to investigate possible improprieties involving the leasing of parish mineral lands, a matter which might have been accomplished but for Judge Perez's reaction to that effort. Charged with an affirmative duty to disclose adverse interests, and knowing that Messrs. Furlow and Blass were to be employed to investigate parish mineral leases from which he benefited, Judge Perez, instead of disclosing his conflicts of interest and removing himself as counsel for the boards, filed suit against Furlow and Blass on October 15, 1941. [26] He sought to enjoin Furlow and Blass from acting as attorneys for the levee boards on the grounds that he, Judge Perez, was the regular statutory attorney for the levee boards. His position, inter alia, was that the boards had failed to allege or prove any real necessity to employ special counsel as required by Act 125 of 1912. Notwithstanding Perez's affirmative duty to disclose any adverse interests he may have had, he attempted to divert attention from himself and his own incapacity by alleging in his petition that Furlow and Blass secured the above alleged illegal (levee board) contracts ... as a result of a conspiracy between them to unlawfully attempt to supplant petitioner as District Attorney and the regular attorney and counsel for said ... levee boards ... A restraining order was thereupon granted in favor of Perez. In response to the lawsuit and restraining order, the levee boards, in October, 1941, repealed their earlier resolutions and enacted new resolutions which purportedly clarified their need to retain special counsel. Although the resolutions re-stated that the Board and its statutory attorney had antagonistic interests, the Grand Prairie Levee Board particularly alleged a real necessity existed for the employment of special counsel to: a) recover the Boards' ratable share of severance taxes allocated to the parish, and b) to nullify certain contracts between the Grand Prairie Levee District and Plaquemines Parish such that the Grand Prairie Levee District could recover lands, leases, royalties and money to which the boards have been deprived by reasons of those contracts. [27] After the passage of these resolutions, Judge Perez filed a second lawsuit [28] to enjoin the employment of Furlow and Blass pursuant to these October resolutions. The lawsuits, docket Nos. 1703 and 1717 (25th Judicial District Court), necessarily implied (at the least) that Perez, the boards' regular attorney, was capable of representing the levee boards. [29] In neither lawsuit did Judge Perez's pleadings contain admissions consistent with his affirmative duty to disclose conflicts of interest. In response to Perez's second lawsuit, the Buras, Grand Prairie and Lake Borgne Levee Districts [30] filed three lawsuits against Judge Perez, [31] seeking to enjoin his interference with the employment of the special attorneys. Thus, there were five outstanding lawsuits pending at this point in time. In the first lawsuit, [32] Perez was attempting to enjoin the employment of Furlow and Blass pursuant to the levee boards' September, 1941 resolutions. These September resolutions stated that Perez had interests antagonistic to those of the levee boards such that a real necessity existed to employ Furlow and Blass in order to investigate, inter alia, all mineral leases and royalty payments involving the boards. In the second lawsuit, [33] Perez was attempting to enjoin the employment of Furlow and Blass pursuant to the more narrowly drawn October resolutions which focused on Perez's conflicts in representing the levee boards and their adversary, the police jury. The third, fourth, and fifth lawsuits [34] were attempts by the levee boards to enjoin Judge Perez from interfering with their attempts to employ counsel pursuant to the October resolutions. All five cases were consolidated for trial. During the trial of the consolidated cases, Judge Perez stated he was ready, willing, and capable of representing the levee boards as their attorney. [35] After hearing all available evidence, the trial court granted exceptions of no right and cause of action in favor of Judge Perez, holding in pertinent part: No evidence was submitted to justify the employment of these general counsel ... Ultimately, this Court, in Board of Commissioners v. Perez, 202 La. 655, 12 So.2d 670 (1943), affirmed the dismissal of the three levee board lawsuits. The opinion was in response to appeals by the levee boards in the three cases wherein the employment of Furlow and Blass, pursuant to the narrower October resolutions, was at issue. [36] Nonetheless, the trial court record (of the five consolidated cases) and Supreme Court briefs in Board of Commissioners v. Perez, id ., discussed all five lawsuits and both the September and October resolutions. [37] Judge Perez filed both an Original and Supplemental Brief in this Court. In the Supplemental Brief, he quoted from the transcript wherein he had testified (in the five consolidated proceedings) that he was ready, willing, and able to represent the interests of the levee Boards: I have always stood ready and willing and am capable of representing, these Boards as their attorney; that as testified to by the officers of the Grand Prairie Levee Board, the Buras Levee Board, and the Lake Borgne Levee Board, they have not called upon me for any advice, but they have not notified me or informed me of the date of their meetings.       Yes, I can represent them; and I would advise them honestly, sincerely, and to the best interest of the Parish of Plaquemines, without compensation, because I am the Ex-Officio, the Attorney of the levee boards of the parish. [38] Judge Perez's testimony, for certain, and his briefs to the Supreme Court as well, [39] may have constituted fraud upon the Courts. He full well knew that he was not capable of representing the boards with full vigor and undivided loyalty relative to the investigation of levee board-Perez affairs. But for these assertions, and surely if he had performed his affirmative duty to disclose to his client and the Court his personal conflicts of interest, the Boards would have succeeded in 1941 in employing separate counsel. That, in turn, would in all likelihood have facilitated the investigation and assertion of the Boards' claims which are the subject of this litigation. While the five consolidated suits were being litigated, the Buras Levee Board adopted a third resolution on December 17, 1941. It was this resolution, specifying the suspicions of the boards in particulars which the record in this lawsuit now bears out, which the lower courts relied so heavily upon in their determination that prescription had run. [40] On the same day that the Buras Levee District passed this third resolution, two separate taxpayer suits were filed against the Buras and Grand Prairie Levee Districts, seeking to enjoin them from paying any attorneys employed by the levee boards. [41] Through a supplemental and amended petition in Case No. 1734, the plaintiffs asserted that the Buras Levee Board had adopted the December 17th resolution in a conspiracy to evade prior restraining orders which prohibited the levee board from violating 1912 La. Acts 125. At the trial of the cases filed by the taxpayers, Judge Perez, although not a party to the proceedings nor an attorney of record, was present at the hearing, presumably to represent the parish and the police jury. The record and transcript from the previously discussed injunction proceedings [42] were introduced into evidence in the taxpayer suits. This transcript contained Judge Perez's previous misrepresentations in which he stated he was ready, willing, and capable of representing the levee boards. These misrepresentations were thus specifically used in the taxpayer's suit in response to the Buras Levee Board's December 17, 1941 resolution (wherein the Board contended Perez wrongfully represented Delta and wrongfully received large payments as a direct result of his conflicting interests). In the consolidated taxpayer suits, Judge Henry L. Himel, the same trial court judge who had previously ruled against the levee boards, granted a preliminary injunction restraining the Buras Levee District from paying Messrs. Furlow and Blass, or any other attorneys, ... any compensation or expense money under resolutions of employment adopted by the defendant levee board ... According to Judge Himel, the third resolution adopted by the Buras Levee District (December 17, 1941) was general, and therefore violated 1912 La. Acts No. 125. The record in the taxpayer suits indicated that counsel for the levee boards moved for a devolutive appeal. For reasons not disclosed in the record before us, the appeal was never perfected. On March 16, 1942, only four days after the hearing in the consolidated taxpayer lawsuits and prior to the favorable April, 1942, decision in those suits, Perez empaneled a grand jury which returned indictments against various Grand Prairie and Buras levee board members, Attorney General Stanley, and Messrs. Furlow and Blass. Violators of the provisions of 1912 La. Acts No. 125 [43] were subject to conviction of a misdemeanor. In case No. 781, Walter Blaize and Earl Hingle (Grand Prairie Levee Board members), and Thomas Furlow were indicted for violating the provisions of this act. In Case No. 782, Paul Galmiche, Julien Cadro, and George Treadaway (Buras Levee Board members), and Thomas Furlow were similarly indicted. Thereafter Judge Perez secured felony indictments as well. Purportedly acting pursuant to authority granted him by 1940 La. Acts No. 16, [44] Judge Perez secured indictments against Messrs. Walter Blaize, Eugene Stanley, Frank Tatze (Grand Prairie Levee Board Secretary), and Thomas Furlow, for feloniously conspiring to defraud the Buras Levee District. He secured another similar indictment against Eugene Stanley and Thomas Furlow, this time along with Galmiche, Ernest Hingle (Buras Levee Board secretary) and J. Ben Meyer. Given the record now before us, it is fairly clear that Judge Perez employed these criminal charges to secure advantage in his ongoing legal battles with the levee boards and the attorney general. Contained in the record of the captioned criminal proceedings is a lengthy letter to the Attorney General from Richard Dowling, an attorney for the indicted levee board members. In the correspondence, Dowling asked that the Attorney General supersede Judge Perez in the criminal cases. Dowling recited in great detail much of what is in the record now before this Court, and argued that Judge Perez was misusing the inherent power of his office to prevent the levee boards from investigating his own wrongful acts. [45] The Attorney General, responding to Dowling's correspondence, attempted to supersede Perez in the handling of the criminal cases. Judge Perez fought the attempted supersession. The record does not conclusively show that the Attorney General ever succeeded in superceding Judge Perez. In September of 1944, after Governor Sam Jones had left office, and after Blaize, Earl Hingle, Galmiche, Cadro and Treadaway had apparently been replaced on the levee boards, Judge Perez signed a Nolle Prosequi which served to dismiss the foregoing charges against all of the defendants. Thus, the levee board members, by attempting to investigate Judge Perez's personal interest in the boards' mineral lands, a matter as to which Perez had an affirmative duty to disclose even in the absence of these attempted investigations, were met with criminal indictments and the threat of imprisonment. These criminal charges were pending for more than two years before they were dismissed during the administration of a new governor. Defendants contend that Judge Perez was merely doing his duty by prosecuting the defendants. On the contrary, these criminal charges were thinly veiled attempts to discourage further inquiry into Judge Perez's acquisition of mineral interests in public lands. After this flurry of judicial proceedings in the early 1940's, no similar lawsuits were instituted prior to 1980. Judge Perez and his wife donated their Delta stock to their four children beginning in 1944. In addition, the Perezes donated interests in overriding royalties to the other defendants in this litigation beginning in 1954, it was stipulated. In fact answers to interrogatories filed in the record some months after the exception was tried reveal that the donations by Judge and Mrs. Perez were on the respective dates October 1, 1954, January 1, 1955, October 1, 1958 and January 2, 1959. Mrs. Perez died in 1967. Judge Perez died in 1969. Their four children accepted both successions unconditionally. In 1971, John Eustis died. He had been the husband of Judge Perez's daughter, Joyce. In the Judgment of Possession in John Eustis' succession, unspecific reference is made to the Grand Bay Field and the following is noted: I. Real Estate. A. Community Property ... 6. Overriding royalty interests acquired by unrecorded instruments dated July 7, 1953 and May 25, 1965.       B. Separate Property 1. Undivided royalty interests acquired by unrecorded instruments dated October 1, 1954, January 1, 1955, October 1, 1958 and January 2, 1959.