Court Opinion

ID: 9527569
Source: CourtListenerOpinion
Date Created: 2023-08-07 03:31:37.37177+00
Date Added: 2024-06-11T13:25:54.420001
License: Public Domain

HAWTHORNE, Justice
(dissenting).
In this case a majority of this court has concluded that plaintiff Bollinger is entitled to cancellation of an oil and gas lease executed by him and now held by the Texas Company because of the failure of the Texas Company to pay production royalties for the period between September, 1952, and November, 1953. I do not think there is any justification for the cancellation of the lease under the facts of this case.
The well drilled by the Texas Company was completed as a producer of gas and distillate in August of 1952. In November of 1952 the Texas Company began the payment to plaintiff of shut-in royalties under *653the provision of the lease that in the event a gas well is completed from which production is not being sold, lessee may pay as royalties to the parties entitled to royalties under the lease a monthly amount equal to one-twelfth of 'the annual delay rental fixed by the contract. These monthly payments were continued until November of 1953, were received and retained by the plaintiff, and amounted to $920.92. During the period of time here involved, the Texas Company sold some of the gas from this well to oil and gas operators in the vicinity for use as rig fuel, but even during part of this period of time, that is, between May and October of 1953, the well was actually closed in and no production was had from it. It is for failure to pay production royalties on the gas thus sold that the majority of the court has concluded the lease should be cancelled. The total amount due as production royalties for this period is $345.25. In spite of the fact that the company had already remitted to plaintiff $920.92 as shut-in royalties, when plaintiff’s attorneys declared the lease forfeited, it offered to pay the amount of these production royalties for the same period of time, but plaintiff refused to accept this payment.
Thus it will be seen that the shut-in royalties actually paid and received by plaintiff exceeded by $575.67 the amount due for production royalties, and that he received this amount over the amount due him as production royalties. Under these circumstances I think that the . lessee fully satisfied its obligation to pay royalties on production when the payments so .made were more than the amounts actually due, although they may have been designated by lessee as shut-in royalties.
I concede that if the payments of shut-in royalties were not as great as, or greater than, the amount actually due as production royalties, then we would have an entirely different case, and under our decision in Melancon v. Texas Company, 230 La. 593, 89 So.2d 135, plaintiff here would be entitled to a cancellation of the lease.
As has been said by this court, royalties due under a lease are placed in the rent category, and a lessee is bound to pay his rent or forfeit his lease. As pointed out above, the lessor in the instant case has actually been paid more as rent than he says he is entitled to receive, although the lessee has designated such payments as shut-in royalties instead of as production royalties. Upon a failure of the plaintiff to show that the mere designation of the . payments as shut-in royalties instead of as production royalties harmed or prejudiced him in any way or that-he lost any rights under the law, I can see no justification for the cancellation of the lease in this case.
Rehearing denied.
HAMITER, J., dissents from the refusal of the application for rehearing.