Court Opinion

ID: 9599203
Source: CourtListenerOpinion
Date Created: 2023-08-22 01:15:56.373407+00
Date Added: 2024-06-11T09:42:13.136189
License: Public Domain

MR. JUSTICE ANGSTMAN,
(dissenting).
I concur generally with what is said in the dissenting opinion of MR. JUSTICE ANDERSON but desire to add the following:
I agree with what is said in the majority opinion on the general subject of the history of the legislation bearing upon the disposal of school lands thought to contain oil or gas.
There is but one narrow question involved on the appeal. That question is: What is meant by the phrase in see. 11 of the Enabling Act that “the proceeds from the sale and other permanent disposition of any of the said lands and from every part thereof, shall constitute permanent funds for the support and maintenance of the public schools”.
Likewise and bearing upon the question is the fact that both section 11 of the Enabling Act and section 1 of Article XVII of the Montana Constitution provide: “none of such land, nor any estate or interest therein, shall ever be disposed of except in pursuance of general laws providing for such disposition, nor unless the full market value of the estate or interest disposed of, to be ascertained in such manner as may be provided by law, be paid or safely secured to the state”.
It is my opinion that an oil and gas lease operates to dispose *475of an estate or interest in real estate. It is tlie only method recognized by which to dispose of oil bearing lands covered by the Enabling Act. It is so provided in R. C. M. 1947, secs. 81-901 and 81-902. The latter section in speaking of oil bearing lands provides in part: “All such deposits are reserved from sale except upon a rental and royalty basis as provided by law. ’ ’ There is implicit in that statement a legislative declaration that there is a sale when they are disposed of on a rental and royalty basis. The situation is exactly the same as a lease of land containing mineral in place and this court has held that such a lease constitutes a sale of real estate. McLaren Gold Mines Co. v. Morton, 124 Mont. 382, 224 Pac. (2d) 975.
In my opinion the premium or bonus involved here represents proceeds from the sale of lands or proceeds from a permanent disposition of such lands or some part thereof.
The question of the meaning of the word bonus in connection with an oil lease was discussed in the case of Work v. United States ex rel. Mosier, 261 U. S. 352, 43 S. Ct. 389, 391, 67 L. Ed. 693, where the court said: “The bonus which was the result of bidding for desirable and profitable oil and gas leases secured for the members of the Osage Tribe the just value of the use of their property which the fixing of royalties in advance by the President was not adapted to give them. It was in effect a supplement-to the royalties already determined. It was really part of the royalty or rental in a lump sum or down payment. We do not see how it can be classified as anything else.”
That the bonus is not rental seems plain because it is not paid annually. The Legislature of Montana contemplated that rentals shall be paid annually. R. C. M. 1947, see. 81-1703.
The cash bonus or premium negatives the idea that it is paid for the use of the surface of the ground for oil drilling purposes. The bonus or premium was the bidder’s estimate of the value of the property for oil producing purposes. It was the bidders’ method of placing a value — though speculative and uncertain in character — upon the oils underneath the ground. It constituted in effect supplemental royalty if oil was produced, and *476the bidders’ estimate of what he could afford to pay as a lump sum, down payment on the hope and prospect that he would find oil. The amount on any given tract of land depended, as the trial judge held, upon the location of the land, the geological structures, and the belief on the part of the bidder, that the land was valuable for the purpose of exploration for oil.
"While there may be distinguishing features in the following cases on immaterial matters, in essence they support the result which I have reached as stated above. Sheppard v. Stanolind Oil & Gas Co., Tex. Civ. App., 125 S. W. (2d) 643; State ex rel. Attorney General v. Hatcher, 115 Tex. 332, 281 S. W. 192; Commissioner of Internal Revenue v. Clarion Oil Co., 80 U S. App. D. C. 41, 148 F. (2d) 671; Alexander v. King, 10 Cir., 46 F. (2d) 235, 74 A. L. R. 174; School District No. 23 v. Commissioner of Land Office, 166 Okl. 226, 27 Pac. (2d) 149; Barnes v. Keys, 36 Okl. 6, 127 Pac. 261, 45 L. R. A., N. S., 178; State v. Snyder, 29 Wyo. 163, 212 Pac. 758.
The majority opinion holds that the meaning of the word bonus is that given in R. C. M. 1947, sec. 81-1704.
The bonus here in question is not a bonus after production. It is a bonus or premium bid for the land in excess of the minimum of 75‡ per acre and is paid in a lump sum and not annually. The amount of the bid depends upon the bidder’s notion of the amount of oil beneath the surface. It has nothing to do with the rental value of the surface of the land, unconnected with the subsurface contents of the land.
There is authority holding that all of the money paid for an oil and gas lease constitutes proceeds from the sale of land which must be placed in the permanent fund. School District No. 23 v. Commissioners of Land Office, supra.
I think if that question had been urged here a showing might have been made that even a part of the 75‡ per acre should be placed in the permanent fund.
In other words if the 75‡ per acre, in fact, exceeds the value of the use of the surface of the land for purposes of exploration for oil and gas to the extent of such excess it should go into the *477permanent fund. Since no question was raised as to the 75^ per acre and since no record is before us from which we can tell how much of the 75^ per acre is for the value of the use of the surface of the land for exploration purposes, uninfluenced by prospects of oil underneath the surface, I accept the position of both parties that the whole of it may properly be considered as rental.
The suggestion in the specially concurring opinion of MR. JUSTICE FREEBOURN that the premium if not rental is “other actual income” within the meaning of the Enabling Act, I think is unsound because that conclusion would apply as well to royalty. And the fact that oil is never produced is no different than upon a sale of real estate where the down payment is forfeited by failure to meet subsequent installments of the purchase price.
In such a case the down payment is part of the permanent fund as for a sale even though the sale is not finally consummated.
I think for the reasons herein stated as well as those stated in the opinion of MR. JUSTICE ANDERSON, the judgment of the trial court was right and should be affirmed.