Untitled Texas Attorney General Opinion

- ., E OENEY GENERAL TEXAS June 1, 1959 Honorable Bill Allcorn Opinion No. WW-636 Commissioner, Qeneral Land Office Re: Whether rentals were due Austlh 14, Texas December 4, 1958 on certain submerged lands leases ln,the Gulf of Mexico dated December 4, 1953 if the lessees de- sired to have the running of primary terms suspended under Article 54211, VCS, and re- Dear Mr. CommlssionePt lated questions. In your opinion request you refer to the pending "Tidelands" litigation and to Attorney ffeneral'sOpinion No. WW-540 regarding the suspension of leases covering submerged tracts In the Gulf of Mexico beyond three (3) geographic miles under the provisions of Article 54211, VCS, as amended.* You state: "A question'has now arisen concerning the payment of rentals on leases executed December 4, 1953, which would have expired December 4, 1958 but for the fact that the running of the primary terms thereof were suspended as of November 7, 1957," the date the suit was filed and which was approximately 13 months prior to the December 4, 1958 rental date. In your opinion request after referring to Opinion No. WW-540, and setting forth certain facts, you propound three questions, which are in'substance: (1) In view of the commencement of litigation on November 7, 1957, were rentals due December 4, 1958 on submerged lands leases in the Gulf of Mexico executed December 4, 1953 If the lessees desired to have the running of the *(Acts 1941, h7th Leg., p. 140~5,ch. 637, sec. 1, as amended Acts 1951, 52nd Leg., P. 750, ch. 406, sec. 1) . Honorable Bill Allcorn, Page 2 (Opinion No. WW-636) primary terms thereof suspended under the provisions of Article 54211? (2) If such rentals are not paid are such leases subject to forfeiture by the Commissioner under the provisions of Article 5372, VCS? (3) Is the primary term of such a lease (as well as obligations thereunder) suspended as to that portion lying more than three (3) geo- graphic miles seaward from the ordinary low- water mark or outer limit of inland water, as indicated in Opinion No. NW-540? You also state that paragraph 2 of each of the leases In question provides in part: "2 . On or before one year from the date of this lease and annually thereafter for each of the following years during the life of this lease, the lessee shall pay to the Commissioner of the General Land Office, Austin, Texas, an annual rental of Two Dollars ($2.00) per acre; provided that when royalties paid during any year during the life of this lease equal or exceed the annual rental, no annual rental will be due for the fol- lowing year; otherwlse, there shall be due and payable on or before the anniversary date hereof Two Dollars ($2.00) per acre, less the amount of royalties paid during the preceding year." Your questions will be answered in sequence: In view of the commencement of litigation November 7, 1957, were rentals due December 4, 1958 on submerged lands leases In the Gulf of Mexico axecuted December 4, 1953 if the leasues desired to have the ;,unningof the primar,'terms thereof suspended under the p&#cvisionsof Article ,42li? Rentals were due on Decembe-~4, 1958 on leases dated December +, 1953 if the lessees desired to &ve the primary terms suspended .tnderArticle 54211, VCS. You ytate In substance that some of tlielessees take the position that no rentals were due December 4, ~$58 Honorable Bill Allcorn, Page 3 (Opinion No. W-636) because Article 54211 refers to rentals which "accrue" during the period of litigation and that since-rental payments have been made no further rentals will "accrue' during the litigation, and therefore the leases are to remain in effect without further payment. In our opinion that view fails to take into account the further and deci- sive wording of the statute which is underscored below: "Provided further, that the lessee shall pay all annual delay rentals and any royalties which accrue during the period of litigation the same as during any other period of the extended pri- mary term." In our opinion the statute requires rental pay- ments not only during, but after, the primary term in consideration for keeping the lease alive but suspended. Otherwise, the phrase "during any other period of the extended primary term" would be meaningless. A statute should be construed so as to accomplish a purpose or result, and the object of statutory construc- tion is to enforce and give effect to legislative intent. (39 Tex 5ur ,&atuteg Sec. 87, p. 160 et seq.) Here, the intent is expressed plainly. "Extended" both by court decisions and dictionary definition means to stretch or draw out; to lengthen or p-o- low, either in spa-e or time; to protrac;, or to continue (Webs;erts New Internatio.>alDictionar?r.2nd Edition, Una- $%E;; ~0. K & T K C fT kex& & N 0 Rv. Co'.* 17L ; ti..jhing v. In&.b~tan~~'o~*Town of LA.,ied, H' 92 At1 2d 330, l-48Me. 24,; State v. Zozzaro, 20 At1 2d 73i, 128 Conn. 169; West Madison Stat, Bank v. Mudd, 250 Ill. A.PP. 258; dane namelware Comoan v. Smi~L.+168 Tenn. 203, 76 S.W.2d 644 ,v 18 Loeffler v. '.2d%62. In enacting Article 54211, as amended, it is ap- parent that the Legislature had in mind the fact that litiga- tion can be protracted. It was providing for the eventuality that the litigation could well extend beyond the primary term, but, for the protection of the State it provided for a con- tinuance in the payment of rentals during the extended term, and for the protection of the lessees it provided for the rentals to be held in suspense and subject to refund to the lessees if the State was unsuccessful in the litigation. It is difficult to conceive how the Legislature could have en- acted a more just statute protecting, as it does, both the State and the lessees. Honorable Bill Allcorn, Page 4 (Opinion No. W-636). Paragraph 2 of the leases, quoted above, evidences that the Land Commissioner followed the Legislative intent, and the lessees are, of course, bound by the terms of the leases they received. That paragraph refers to the "life" of the lease. Under the circumstances the "life" of the lease can be extended by compliance with Article 54211. If the lessees choose not to pay the annual rental (which does not appear to be an "annual delay rental" in the tradi- tional sense) to effectuate the suspension then the leases may be forfeited. (2) If such rentals are not paid are such leases sub- ject to forfeiture by the Commissioner under the provisions of Article 5372, VCS? ANSWER: Assuming that the leases In question were executed under and by virtue of Title 86, chapter 4, RCS, then if the rentals referred to were not paid such leases are sub- ject to forfeiture by the Commissioner under the provisions of Article 5372, VCS (Acts 2nd C.S. 1919, p. 249) for the reasons set forth in our answer to question No. 1. (3) Is the primary term of a lease (as well as obli- gations thereunder) suspended as to that portion of a lease lying more than three geographic miles seaward from the ordinary low-water mark or outer limit of inland waters, as indicated in Opinion No. W-540? ANSWER: If a portion of a lease lies more than three (3) geographic miles seaward from the low-water mark or from the outer limits of inland waters oi'fthe coast of Texas, and a portion lies landward of that line, the obligations of the lessees, under Article 54211, are not suspended as to the portion lying landward of that line, but the primary terms and other lease obligations are suspended as to that portion lying seaward of such line except that the lessees must continue to pay annual delay rentals or royalties on the seaward portion. The statute in question reads in part as follows: "The running of the primary term of any oil, gas or mineral lease. . .which may hereafter Honorable Bill Allcorn, Page 5 (OpInionNo. NN-636) become involved in litigation. . .shall be suspended, and all obliaatlons imposed by such leases shall be set at rest during the period of such litigation . . *provided. . .that the lessees shall pay all annual delay rentals or any royalties which accrue during the period of litigation. . .' (Emphasis supplied.) SUMMARY As to submerged lands leases in the Gulf of Mexico involved in the "Tidelands" litigation* as to which four prior rental payments had been made and which would have expired December 4, 1958, but for the fact that about 13 months prior thereto the running of the primary terms was con- ditionally suspended under Article 54211 as of November 7, 195 , (date last "Tide- lands" suit was filed7 such leases could be continued in effect during the lltiga- Won under that Statute if, and only If, such lesseesmade annual rental payments December 4, 1958 and continue to make annual rental payments in tue future during the period of litigation (whether during, or after, the ordinary primary terms of the leases throughout the period of the 'ex- ) primary terms. Non-payment of such tended' rentals subjects the leases to forfeiture by the Commissioner under Article 5372, vcs. If a portion lies more than three (3) geographic miles seaward from the ordinary low-water mark or from the outer limits of inland waters off the coast of Texas in the Gulf of Mexico, and a portion lies landward of that line, the obligations of the lessee (under Article j&211, 3s amended) are not suspentiedas to the portion lying landward of that line, but the primary term and other lease obligations are suspended as to that portion lying seaward of such line except * (United States v. Louisiana, et al, U.S. Sup. Ct. No. 10 Original,October Term 1958, now set for argument October 12, 1959.) Honorable Bill Allcorn, Page 6 (Opinion No. WW-636) the lessee must continue to pay rentals and royalties on the seaward portion as stated in Opinion No. WW-540, to which reference is here made. Very truly yours, WILL WILSON Attoqey General of 'Texas v -.- S N. LUDLUFi-- V First Assistant JNL:bct APPROVED: OPINION COMMITTEE: Geo. P. Blackburn, Chairman James H. Rogers Grundy Williams John Wildenthal, Jr, APPROVED FOR THE ATTORNEX GENERAL By: W. V. Geppert