Court Opinion

ID: 4143659
Source: CourtListenerOpinion
Date Created: 2017-02-18 03:36:14.108782+00
Date Added: 2024-06-11T13:09:54.078286
License: Public Domain

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     Mr. C. D. Slmmons~;Comptroller
     University of Texas
     Austin, Texas
     Dear Mr. Simmons:
                                Opinion No. O-2716
                                Re: Authority of Board for Lease
                                     of University Ian&s to offer
                                     ana sell gas rights only In
                                     University lands.
             Your letter of October 22, 1940, requests the opinion
     of this department as to whether or not the Board for Lease
     of University Lands Is authorized to offer for sale and to
     sell the gas rights only in certain tracts of UnIversitg lands,
     without offering at the same time to sell oil leases upon
     such land.
             The authority of the Board to offer for sale and to
     sell oil and gas in University lands IS found Ln Chapter 148
     of~the Acts of 1937, Article 2603a, Vernon's Annotated Civil
     Statutes, which Act amends Chapter 282 of the Acts of 1929,
     and Chapter 174 of the Acts of~l931.
               Section 4 of Article 2603a provides, In part, as fol-
     lows:
               "Whenever there shall be such demand for the
           nurchase of 011 and gas in any University land
           as will reasonably insure that said oil and gas
           may be sold advantageously, the Board shall place
           said 011 and gas in said lands on the market in
           separate tracts of such area and extent as the
           Board may determine most suitable for the profita-
           ble marketing thereof, but in no event shall any
           tract in which oil and gas is offered for sale as
           a unit exceed an area of six thousand (6,000) acres.
           The sale of said oil and gas shall be made at
           public auction and shall be held in Austin, Texas,
           at any hour between ten o'clock A.M. and five
           o'clock P.M. The Board shall cause to be adver-
           tised a brief description of the lands upon whlc\
           the oil and gas is proposed to be sold, . . . .
           (Underscoring ours).
Mr. C. D. Simmons, page 2         O-2716

       Section 5,   in part, provides as follows:
       "The oil and gas In each tract shall be offered
   for sale for~a bonus in addition to the stipulated
   royalty. Each tract shall be offered separately.
   Each bid shall be subject to such royalty as is
   specified in the official advertisement preceding
   the sale, but in no event shall be less than one-
   eighth of the grost production of oil and
   the land; . . . .    (Underscorhg ---I--
                                      ours       In
       Section 7 provides:
       "If any one of the bidders at the sale at pub-
   lic auction shall have offered a reasonable and
   proper price for any tract offered not less than
   the price fixed by the Board, the land advertised
   may be leased for 011 and gas purposes under the
   terms of this Act and such regulations as the
   Board may prescribe, not lnconsisteht with the
   provisions of this Act. All bids may be rejected
   by the Board." (Underscoring ours).
       Sectton 8 provides, in part, as follows:
       "(a) If the Board shall determlne that a satis-
   factory bid has been offered for said oil and gas,
   It will make an award to the bidder offering the
   highest price therefor, and a lease shall be executed
   by the Commissioner of the General Lana Office, a
   duplicate copy of such lease to be filed in the
   General Land.Office.
        "(b) The primary term of the lease, as deter-
   mined by the Board prior to the promulgation of
   the advertisement, shall in no case exceed five
   (5 1 wws , and each lease shall provide that the
   lease shall terminate at the exp1ratlon of its
   primary term, and shall provide that if oil ana/
   or gas is being produced in paging quantities from
   the premises before termination of the primary
   term, said lease shall continue in force and ef-
   fect as long as such 011 and/or gas is being so
   produced. The lease shall Include such additional
   provisLons and regulations, not inconsistent with
   the provisions of this Act, as the Board may pre-
   scribe to preserve the interests of the State and
   safeguard the University funds." (Underscoring ours).
       It will be noted that this statute, in Section 4, au-
--      -

       . C. D. Simmons, page 3
     ,‘r                          o -2716

 t,horizesthe Board, in certain circumstances, to place 'oil
 ana gas' on the market; that the tracts In which 'oil and gas'
 is offered for sale shall not exceed 6,000 acres and that the
  'oil and gas' shall be sold at public auction.
        In Section 4, it Is provided that the '011 and gag,'
shall be offered for sale for a bonus; that the royalty shall
not be less than l/Sth of the gross production of 'oil and
gas' in the land.
         Section 7 provides that under certain conditions the
 land advertised may be leased for '011 and gas' purposes.
        In Sectton 8, provision is made for execution of leases
if the Board determines that a satisfactory bid has been of-
fered for said '011 and gas', and that such lease shall pro-
vide that If oil and/or B;as IS being produced in paying
quantities, before termination of the primary term, said lease
shall continue In force and effect so long as such oil and/or
m   is being SO produced.
        We recognize the rule of statutory construction which
permits the word "and!'to be held as having been used in the
disjunctive as well as the conjunctive sense when the purpose
sought to be accomplished by the Legislature is thereby ef-
fected. In Chapter 148, however, the Legislature, while ex-
pressly resorting to use of the phrase and/or in Section 8
(b), where provrsion is made for keeping the lease alive during
the production of either oil or gas, fsFled to use such term
in providing for the offering for sale, the advertisement, the
sale of leases, and the bonus and royalty to be paid. The
fact that the Legislature in one section of the statute used
the definite term "and/or", whereas fn other sections of the
same statute such term was not used, but instead the conjunc-
tive "and" was used Is, to us, highly persuasive against a
construction of the statute in a manner whfch would result in
giving the same meaning to the word "and" in Sections 4, 5 and
7, as must, perforce the express wording of the statute, be
given to the phrase "and/or In Section 8.
        Furthermore, viewing the consequences of the two pos-
sible constructions of the statute, as it Is permissfble to
do when the language used is not entirely plafn - Oriental
Hotel Company~v. Griffiths, 88 Tex. 574, lt is apparent that
if Sections 4, 5 and 7 of the statutes be construed to author-
ize leases for either oil or gas, results wil'lthevebg be oc-
casioned which were plainly not intended by the LegLslature.
To illustrate, - Assume a lease is made for gas only on a tract
of land. In the process of drilling for gas, oil is discover-
ed in paying quantities, which oil flows without the necessity
                                                     -   --.

Mr. C. D. Simmons, page 4         o-2716

of pumping. Under a lease limited to gas alone, no royalty
for the oil produced would be pr+ded   for, nor any. obllga-
tiOns or Covenants on the part OS tne gas lessee With respect
to the production of oil. If, however, oil is produced in
paying quantities, the gas lease, by virtue of the express
provisions of Sectfon 8 (b), is continued l.nforce beyond
its primary term even though gas is not produced in paying
quantltles.
        We think It plain that no such results were intended
by the Legislature., Instead, we believe the~Leglslature~.in-
tended that the oil and the gas In a specific tract of land
should be offered for sale together, not each mineral sep-
arately; that the cash payment - the bonus - should be bid and
paid for both the 011 and gas, not for 011 alone or gas alone;
that the lease should cover both the oil and the gas and, by
virtue of Section 8 (b), that the discovery and continued
productlon of either oil or gas will operate to~contlnue the
lease in force on both 011 and gas for as,long as either oil
or gas is so produced, subject, of course, to the fulfillment
by the lessee of all the covenants and obligations of his
lease.
        Accordingly, you are advised that it is our opinion
that the Board for Lease of University Lands Is not authorized
to offer for sale or to sell the gas only in University lands.
                                  Yours very truly
                                ATTORNEY GENERAL OF TEXAS

                                  By s/Robert E. Kepke
                                       Robert E. Kepke
                                             Assistant
REK:BT:wc

APPROVED OCT 30, 1940
s/Gerald C. Mann
ATTORNEYGENERAL OF TEXAS
Approved OpinLon Commlttee By s/BKB Chairman