Court Opinion

ID: 8024662
Source: CourtListenerOpinion
Date Created: 2022-09-09 02:32:55.394005+00
Date Added: 2024-06-11T16:36:47.163337
License: Public Domain

MR. JUSTICE ANDERSON:
(dissenting).
The two foregoing opinions are contradictory of each other and it is my view that one cannot agree to both of them.
I am convinced that under the circumstances no one, the oil industry, the legislature, or the land board, will be able to determine any future course under said opinions and for that reason I deem it well to express my own views regarding the status of past, present and future oil and gas leases of federal land grants.
I think the land board of the state of Montana should be prevented from making oil and gas leases under the provisions of Chapter 122, Laws of 1953, and to this extent, but not for the same reasons, I agree with the majority opinions.
The present litigation arose out of an effort by the state land board to ignore the provisions of Chapter 122, Laws of 1953, and its attempt to enter into state oil and gas leases under a previous law having to do with the same subject matter. Such a practice is indeed unique and little if any precedent exists for it.
Ordinarily it is the duty and the function of the attorney general and a state board to uphold and carry out the legislative directive. Here in effect the attorney general and the board attempted by their action to veto a legislative Act which power so far as I can determine is and always has been unauthorized in constitutional government.
It would seem to me that this court extends itself too far when it impliedly gives the attorney general and a state board such power. The same power may well carry on down to all state, county and city officers whose duty it is to enforce the laws. Subscribing to such a theory is in my opinion unwise.
I think a state board or the attorney general may, by proper-proceedings, where a grave legal question is presented, see to it that the statute is questioned. But here the procedure seemingly set into motion was to by-pass a judicial determination of Chapter 122, Laws of 1953, and such apparently would have been accomplished if no outside party had intervened.
*473Inasmuch as this court and the court below have passed upon the questions presented, my reactions to them follow:
The issue resolved itself in favor of the relator in the court below. The lower court’s view favored the expression of the 1953 legislature found in Chapter 122, Laws of 1953.
In the instant cause the attorney general originally advanced a great number of theories in support of appellants’ position. However, upon argument, he abandoned all of the appellants’ theories save one, i. e., under the terms of Chapter 122, Laws of 1953, the state will not be able to command the full market value for the disposal of its interest in oil and gas properties as said full market value is provided for by Article XVII, sec. 1, Montana Constitution.
The discussions found in the briefs of the appellants and in an opinion of the attorney general to the effect that Chapter 122 violates the Federal Enabling Act, in respect to the full market value, was not referred to at the time of argument. See Atty. Gen. Opinions, No. 13, Vol. 25.
Apparently the majority of this court, during the delay in rendering its opinion, has forgotten the position taken by the land board at the time of argument and now chooses to bottom it findings upon the interpretation of the amendment to the Federal Enabling Act.
Although the majority of the court is adroit in avoiding the several questions presented by all parties to the issue I nonetheless intend to cover most of the points involved.
The questions regarding the intent and the right to adopt the amendment to the Enabling Act are covered well by the dissenting opinion of Mr. Justice Angstman. My only comment in this respect is that if the records before the Congress meant anything at all, which I think they do, the majority of the court necessarily disregarded said records in order to conclude what it did.

In any event, the language having to do with the federal lands found in the Montana Constitution, for the most part, was obviously borrowed from the language in the Enabling Act and if it can be said the Constitution is violated, necessarily it may usually 
*474
be said that the Federal Enabling Act is also violated.

This business of segregating the state question from the federal question regarding federal land grants for the disposition of state lands or interests therein causes strange results to follow, as I will presently point out.
In his argument the attorney general alludes to the provisions of R. C. M. 1947, sec. 81-1704, as amended by the Laws of 1951, code 61, which law, for all practical purposes, puts a ceiling of 12% per cent as the royalty that the State of Montana, acting-through its land board, can exact under leases of state oil and gas properties.
The appellants pointed out at the time of argument that the full market value cannot be obtained under Chapter 122, Laws of 1953, when R. C. M. 1947, sec. 81-1704, as amended by the Laws of 1951, puts a fixed ceiling upon royalties on oil produced in quantities of less than 3,000 barrels per month per well to be exacted by this state. However, to carry out the appellants ’ argument in this respect to the ultimate by stating that R. C. M. 1947, sec. 81-1704, as amended by the Laws of 1951, makes it impossible, in view of the 1953 law here directly in question, to obtain the “full market value’’ for oil and gas leases, would not be changed in the least if the State of Montana were to use any former leasing Act as appellants contend it should.
In State ex rel. Dickgraber v. Sheridan, 126 Mont. 447, 254 Pac. (2d) 390, this court held that the so-called bonus for oil and gas leases is income or rental as distinguished from a disposition of a part of the corpus of the estate itself and thus capital in nature.
Quoting from the majority opinion in the Diekgraber case regarding respondent’s contentions, this court made the following- findings: “That the oil and gas leases issued on school lands are not leases; that the transactions evidenced by written instruments labeled ‘State of Montana Oil and Gas Lease’ are not lease transactions at all but that, in legal effect such transactions are sales; that any cash moneys paid out of pocket by the successful bidder for a state oil and gas lease that is in excess of the *475stautory minimum of per acre are no part of the ‘annual rental’ on the lease * * * but all such moneys * * * are either (1) ‘royalty,’ (2) ‘bonus’ or (3) ‘the proceeds from the sale and other permanent disposition’ of the particular school lands described in the lease. We find no merit in any of the above contentions so made.” (Emphasis mine.)
It seems wanting to me in view of the fact that the state land board apparently shared the views of the majority of this court in the Dickgraber case, that it did not pursue a course to prevent leases under the provisions of R. C. M. 1947, sec. 81-1704, as amended by the Laws of 1951.
Without the ruling in the Dickgraber case it is at least conceivable that R. C. M. 1947, sec. 81-1704, as amended by the Laws of 1951, might not fall within the inhibitions found in the Enabling Act and the Constitution and full market value for oil and gas leases may be obtained, but with that ruling it is obvious that section 81-1704, as amended, is of itself a violation of both the Enabling Act and the Constitution and as such provides the oil and gas industry with an advantage it was never intended to have.
I did not agree with the ruling in the Dickgraber case when it was made, and I do not agree with it now; nonetheless it is the law of this state and remains such unless expressly overruled.
Either this court was wrong in its intepretation of the applicable provisions of the Enabling Act and the Constitution in the Dickgraber case, or R. C. M. 1947, sec. 81-1704, as amended by the Laws of 1951, clearly violates the Enabling Act and the Constitution of Montana, and whether the state leases its land under the 1953 amendment, supra, or under any former Act will not in any way change the results stemming from the ruling in the Dickgraber case. This statement begs the question, why is that so.
Referring to the above quoted language from the Dickgraber case, the so-called bonus is not for a permanent disposition of the particular land itself or any part thereof but is income in the nature of mere rent.
*476Had this court in the Dickgraber case determined, as Mr. Justice Angstman and I did, that the so-called “bonus” was paid for the right to impair and diminish the fee, then it is conceivable at least that R. C. M. 1947, sec. 81-1704, as amended, could meet the requirements of the Enabling Act and the Constitution having to do with full market value, but with its ruling the court precludes such a result.
The legislature may have had in mind the uncertainty of oil and gas explorations, thus may have intended that the State of Montana exact a part of the market value for the right to diminish the fee at the time the lease is granted and the other part of the market value to be exacted in the nature of a fixed royalty if oil and gas are produced. By such an equation the state may thus receive for itself the best possible return for its oil and gas interests. The legislature, recognizing, and it being a known fact, that a great number of oil and gas prospects prove to be nonproducers, full market value thus is placed upon the exploration itself on the theory of diminution regardless of discovery. The reserved fixed royalty conceivably would be sufficient for the complete assurance to the state of full market value for the whole thereof if discovery follows. The purpose of such an equation may, at least, encourage greater prospecting over a widespread area, all of which may result in the best ultimate benefit to the state. See Bulletin, American Association of Petroleum Geologists, Vol. 37, No. 6, Table III, page 1193.
Under such circumstances the state may have made its best bargain assuring to itself the full market value as is contemplated by the Enabling Act and the Constitution of this state.
Such a formula produces some logic to satisfy the ends sought by the Enabling Act and the Constitution regarding “full market value ’ ’ but when the land board of the State of Montana, by statute, is limited to a fixed “royalty” and no more for gas and oil leases, no logic is convincing which would establish the fact that “full market value” can be obtained from a state land oil and gas venture.
This brings the state, as I see it, into the peculiar dilemma *477which is as follows: In the event the court was wrong in the Diekgraber case, and I think it was, the “permanent school fund” is entitled to be paid, by the people of this state, the amount erroneously paid out as income funds by reason of the Diekgraber case. (This is not a new experience in Montana.) If this court was right in the Diekgraber case, the leases entered into under R. C. M. 1947, sec. 81-1704, as amended by the Laws of 1951, are void (because a royalty fixed is not market value) and must be cancelled forthwith and the money paid to the State of Montana for such leases must be returned to the lessees. State ex rel. Boorman v. State Board of Land Commissioners, 109 Mont. 127, 94 Pac. (2d) 201.
It appeared advisable to me when the Diekgraber decision was rendered that the questions there involved should have been decided upon both the state and federal questions involved and submitted to the United States Supreme Court for its determination because all of the state Acts and constitutional provisions applicable thereto find a source and thus the basis of authority in the Federal Enabling Act.
The confusion which is now apparent leaves the State of Montana and the oil industry in an undesirable quandry as to what should be done with state leases already in existence and state oil and gas lands which may in the future be leased.
I believe that the state land board cannot make leases under the terms of Chapter 122, Laws of 1953, but I believe with equal vehemence that, as the entire leasing laws of Montana now stand and in view of the ruling in the Diekgraber case, supra, no substitute Act may be used in making oil and gas leases as is attempted by the appellants, without running clearly into the inhibitions found in the Federal Enabling Act and the Constitution of Montana.
Although R. C. M. 1947, sec. 81-1704, as amended, was not squarely presented in the proceedings below it was brought to our attention by argument and I think it proper to point out its effect upon other existing statutes and decisions.
The validity of the 1953 laws was challenged by the state land *478board upon the theory that a prior Act having to do with the same subject is valid and thus can be used in making state oil and gas leases. Under the circumstances, the results which follow, if leases are made under a prior law, are questions, the answer to which, this or any other court should give.
No one part of the leasing law of the State of Montana should be torn loose from the rest of the law for the purpose of a determination of its constitutionality, when as is shown, chaos from such a practice may or does result.
Until and unless the differences herein pointed out are set at rest by this court or by higher authority, it is my opinion that the state land board is powerless to make any oil and gas leases with anybody under any existing law now appearing in the Codes of this state.
By reason of the confusion present in the opinions herein rendered, I do not agree that a remittitur should issue forthwith and in this respect Mr. Justice Angstman assures me that he agrees.