Hodges v. Long-Bell Petroleum Company

On Rehearing

McCALEB, Justice.

The facts of this case have been detailed in our original opinion. In short, J. A. Hodges, the owner of a 40-acre tract in Beauregard Parish, along with his mineral lessee and certain royalty owners under the lease, are contesting the ownership of minerals in the tract with Long-Bell Petroleum Company, Inc. and its mineral lessee, Sun Oil Company. Long-Bell Petroleum Company, by merger with Long-Bell Minerals Corporation in 1936, acquired a mineral servitude covering a vast tract of land, in which was included the 40-acre *220tract now owned by plaintiff, Hodges. Prescription on the large mineral servitude had begun to run in 1931, but it was interrupted in 1939 by good faith dry hole drilling and, in 1946 and 1947, by production which has continued ever since. However, no well has ever been drilled on Hodges’ 40 acres by defendants or their predecessors. Hodges acquired his 40-acre tract in 1938 by a deed in which the Long-Bell Farm Land Corporation, the then owner of the land, and the Long-Bell Petroleum Company, Inc., the then owner of the mineral servitude on the large tract which included Hodges’ land, were designated as vendors. Also included as a part of the deed was the following paragraph:

“There is hereby expressly reserved unto The Long-Bell Petroleum Company, Inc., its successors and assigns, all of the oil, gas, and minerals beneath the surface of the land above described, with full and exclusive right and authority to exercise all reasonably necessary means for the prospecting, exploring and developing of such oil, gas and other minerals, including such right of access to the use of the surface of said lands as may be necessary or incidental to this reservation; provided, however, that the vendee, or his heirs or assigns shall not be required to remove any buildings or other improvements placed or made upon said lands, and provided further that in the exercise of said reservation reasonable compensation shall be made for damages caused to said lands and improvements and growing crops thereon, and reasonable rentals shall be paid for such of said lands, if any, as may be used exclusively for such purposes.”

In our original opinion, we held that Long-Bell Farm Land Corporation and Long-Bell Petroleum Company were es-topped by their deed from claiming under the 1931 servitude any mineral rights in the land which they sold to Hodges in 1938. This was based on a finding that the Farm Land Corporation expressly warranted title to the property without expressly excepting from that warranty the charge on the land which was the 1931 servitude, and that Petroleum Company was bound to the same degree under the implied warranty imposed on all vendors by Articles 1764 and 2501 of the Civil Code. We also found that the Petroleum Company was estopped to deny that it was Hodges’ vendor, since it had appeared as such in the deed, and that its reservation of minerals in the deed was not equivalent to a declaration that the 1931 servitude existed as a charge on the property sold.

Defendants’ main contention on rehearing is that there was no warranty by Petroleum Company estopping it from claiming its ownership of the mineral rights or from exercising them. Defendants *222claim that the warranty in the deed was so limited that it excluded any warranty of the minerals, and that there was no implied warranty as to the minerals because the land less the minerals, and not the fee title, was sold.

Defendants are correct in the contention that there was no warranty of the minerals. The minerals were reserved to Petroleum Company and the land was sold subject to the mineral reservation. However, it is not accurate to simply say that Hodges purchased the land less the minerals.1 To be more exact, it should be said that, as between Hodges and his vendors, Hodges purchased the land subject to whatever charges were declared against it in the deed. The mineral reservation was a charge against the land but, under the doctrine of estoppel by warranty, Petroleum Company can assert that charge only to the extent that it was declared. Hence, we must determine the extent of the declaration.

There is a difference between the sale of a tract of land with a reservation of the minerals and the sale of land subject to existing mineral rights in it. The former is accomplished with language of reservation and indicates that something new is being created. A vendee under such mineral reservation is led to believe that the servitude created by it will prescribe at the end of ten years unless there is mineral development within that time on the land sold. On the other hand, the latter form of conveyance, accomplished with language of exception, puts the vendee on notice that there is a pre-existing mineral servitude on the land which may extend beyond the limits of the land purchased, and that prescription on any such servitude may have been interrupted, or may in the future be interrupted, by mineral development on land other than, his own. Hence, language of reservation will suffice to declare one type of charge against the land, but language of exception is necessary to declare the other.

In the case at bar, the vendors used the language of reservation rather than the language of exception, in attempting to reserve minerals by the deed in question, and thereby declared to the vendee, Hodges, that they intended to create a new servitude.*2242 Thus, they are estopped to claim any mineral rights in the property conveyed, if those rights are other than they would have acquired if a new servitude had been created.

It is obvious that Petroleum Company acquired no right to the minerals in the Hodges tract under the reservation which it declared in the deed, because this Court held in Long Bell Petroleum Co. v. Tritico, 216 La. 426, 43 So.2d 782, that the mineral reservation was legally ineffective to create a new servitude. We said in that case that the language of reservation in the deed failed to manifest the intention of Petroleum Company to relinquish its 1931 servitude, which was one of the prerequisites to creating a new servitude under the circumstances. It is also clear from what we have said before that Petroleum Company is estopped to claim any mineral rights in the property if they are based on a charge which is broader than that declared in the deed.

Defendants argue that this conclusion puts them in the position of having lost both sides of the same question, and we must admit that this would be true if the unlimited estoppel applied by us on original hearing is allowed to stand. However, we now feel that our ruling on first hearing, that Petroleum Company was estopped because it did not declare to Hodges the existence of the 1931 servitude, despite the fact that Hodges was informed that his 40-acre land purchase was to be subject to a mineral servitude in favor of Petroleum Company, may have been unwittingly broader than the facts of this case required and a precedent may have been established which we might find difficult of modification in subsequent litigation. Although the alteration of our first opinion which will be set out herein does not change the final outcome of this case, it does show that Petroleum Company retained some rights in the Hodges land under the 1931 servitude.

The main reason for setting out this modification is a feeling that our opinion on first hearing failed to take sufficient cognizance of the fact that Hodges con*226tracted for the establishment of a mineral servitude on his land. Hodges could no more assert a claim that was contrary to his contract than could Petroleum Company. Thus, it would appear to be in keeping with equity and common justice to say that, at least for the ten years that ensued following Hodges’ purchase, he, as vendee, was precluded by his bargain from invoking an estoppel against Petroleum Company in an attempt to prevent it from claiming under any valid servitude in its favor which existed on Hodges’ land during that time. This balancing of equities would produce a result consonant with the expressed intent of the parties by giving some effect to the mineral reservation in the deed, while at the same time following the holdings in Tritico that execution of the deed here in question created no new servitude but allowed the 1931 servitude to remain a charge on the land. A like result can be reached by adopting the suggestion of former counsel for the Petroleum Company, who represented that company in the Tritico case and who have favored us with briefs as amici curiae during the pendency of the rehearing.

Amici curiae assert that the original opinion herein nullifies that part of the Tritico decision which recognizes the validity of the 1931 servitude. Nevertheless, they concede that there is much forcé in our finding that Long-Bell, having failed to disclose to Hodges the existence of the 1931 servitude, should in some measure be held estopped to claim that the 40-acre tract is subject to the servitude at this time. These attorneys are of the view that a limited estoppel might be invoked, i. e., an estoppel which would deny to the Petroleum Company the right of claiming at this time that prescription was interrupted as to Hodges’ land by the drilling operations conducted on other lands embraced in the 1931 servitude, but which would not have denied Petroleum Company its mineral rights on Hodges’ 40 acres under the 1931 servitude for at least 10 years after the sale to Hodges.

We find no merit in the argument that our first opinion in this case is contrary to the ruling in Tritico. The issue there, as aforesaid, was whether a new servitude had been created and it was held that it had not because of the existence of the 1931 servitude. The issue here is not whether the 1931 servitude is in existence. We readily admitted on first hearing that it is still extant, but our conclusion was that the Petroleum Company was estopped from asserting it as Petroleum had not declared it to be a charge on the land in the sale to Hodges.

However, we do feel, as do amici curiae, that the case at bar merits invocation of only a limited estoppel. Whereas Petroleum Company did not specifically disclose the existence of the 1931 servitude, the *228deed of acquisition plainly provided for a reservation of the minerals and Hodges expressly agreed that his land was subjected to a mineral servitude in favor of Petroleum Company. In these circumstances, Hodges is in no position to contend that a mineral servitude, if legally in existence, did not burden his 40-acre tract during the ten year period of time that the law fixes for its life in the absence of usage or acknowledgment. We deduce then that, since Hodges was notified that the minerals were being withheld, he can only claim an estoppel as to those matters which were not disclosed and as to which he did not agree. He, of course, agreed that Petroleum Company was to have the exclusive right to search for minerals on his 40-acre tract over a period of ten years from the date of his purchase. Accordingly, the Petroleum Company was not es-topped from making use of its 1931 servitude during all that time because the servitude was in existence and Hodges consented that the mineral rights retained by Petroleum Company could be so exercised. It matters not, we think, insofar as estoppel is concerned, whether the disclosed rights could have been exercised under a newly created servitude or under one which had been extant prior to the execution of the act of sale.

But it is far different to say that, after the expiration of ten years without user of the 40-acre tract, Petroleum Company is still entitled to claim its mineral rights under the 1931 servitude. Hodges was not informed by the deed that his land was burdened by a servitude covering over 30,000 acres and, hence, he could not have agreed that a mineral reservation affecting his land could be perpetuated by drilling conducted on other property. Since Petroleum Company did not use the minerals under the Plodges tract for ten years, Hodges is no longer prevented by his bargain from invoking the estoppel which we elaborately defined in our original opinion. Thus, the implied warranty of Petroleum Company, as vendor, must operate today to its full extent, and may be invoked by Hodges to estop Petroleum Company from claiming any mineral rights in his 40 acres.3

*230Accordingly, we apply a limited estoppel to the case at hand. This type of estoppel, which has special pertinence to the title or right to property, “is coextensive with, and limited by, the scope of the act or conduct relied on as creating it.” See 31 C.J.S. Estoppel § 150, page 438 and Winn v. Strickland, 151 La. 235, 91 So. 719.

Defendants have made other arguments which need not be given separate consideration as they are so connected and interwoven with the issues of warranty and estoppel that the disposition of those issues necessarily operates as a rejection of these points.

Defendants’ counsel also contend that plaintiffs’ plea of estoppel cannot be maintained because plaintiffs have not shown that they have relied to their detriment on the recitals of Petroleum Company in the deed.

There is no merit in the argument. It is obvious that a vendee’s acceptance of a deed and his concurrent promise to pay for the property constitute a reliance on statements in the deed which is sufficient to form a basis to estop the vendor from claiming against the vendee or his privies anything contradictory to any material fact which he has either stated or failed to declare in the document. In other words, the doctrine serves as a means of keeping a vendor from disputing that he sold what he said he sold or reserved what he said he reserved.

Defendants conclude their argument on rehearing with the contention that, since Petroleum Company’s mineral lessee, Sun Oil Company, was not a party to the Hodges deed and purchased its rights after the Tritico decision, it should not be bound through estoppel by deed or estoppel by warranty.

No authority is cited in support of this proposition and we find no substance in it. Sun Oil Company has acquired no title to the 1931 servitude; it is merely a mineral lessee and its rights are therefore dependent on the rights of its lessor.

In Arnold v. Sun Oil Co., 218 La. 50, 48 So.2d 369, we set out in detail the rights and obligations of lessors and lessees as found in the Civil Code, concluding that a mineral lessee acquires no greater right to the thing leased than his lessor had. It was there recognized that Act 205 of 1938 (R.S. 9:1105) granted to a mineral *232In Arnold v. Sun Oil Co., 218 La. 50, 48 So.2d 369, we set out in detail the rights and obligations of lessors and lessees as found in the Civil Code, concluding that a mineral lessee acquires no greater right to the thing leased than his lessor had. It was there recognized that Act 205 of 1938 (R.S. 9:1105) granted to a mineral

After the Arnold decision, the Legislature amended Act 205 of 1938, but this amendment did not have the effect of changing the essence of the mineral lease contract as set out in the Arnold case. Reagan v. Murphy, 235 La. 529, 105 So.2d 210.

The Legislature did, however, alter the status of a mineral lessee somewhat when it passed Act 7 of the Second Extra Session of 1950 which provided, in part (R.S. 9:2722), that mineral lessees would be protected by and entitled to. rely on the registry laws of Louisiana. But it does not here appear that Sun Oil Company is basing its claim on the public records doctrine. Therefore it must be relegated to the position of an ordinary lessee who has no greater rights than his lessor.

For the reasons assigned, it is ordered that our original opinion, as modified by the views herein expressed, and our original decree are hereby reinstated as the final judgment of this Court.

HAMITER, J., concurs in the result.

. Counsel for defendants appear to be under the impression that it is feasible to create two separate estates—a land estate and a mineral estate—on one tract of land. However, this is not possible in Louisiana. Wemple v. Nabors Oil & Gas Co., 154 La. 483, 97 So. 666. When a landowner in this State sells his land and reserves the mineral rights, he reserves one of the elements of ownership in the form of a servitude, which expires in 10 years if it is not used during that length of time. The extent of this servitude is a matter of contract and can vary extensively from one transaction to the next. Thus, to say that Hodges bought the land less the minerals is a gross oversimplification.

. When the tract involved in the instant case was conveyed to Hodges in 1938, it was carved out of a tract owned by the Farm Land Corporation which contained over 30,000 acres. The 1931 servitude owned by Petroleum Company was essentially co-extensive with this vast tract. Thus, production anywhere on Petroleum Company’s large servitude would interrupt the prescription that was accruing on the whole servitude, including that portion of it covering the Hodges tract. However, the fact that a servitude (charge) of this nature existed on the land conveyed was never communicated to Hodges because language of reservation, and not of exclusion, was used in the deed. It is obvious that the language of the mineral reservation in the deed indicated no more than an attempt to reserve, at the time of the sale, the minerals under the 40 acres being conveyed.

. Our opinion on rehearing is completely in accord with the case of Gaines v. Crichton, 187 La. 345, 174 So. 666, which is the most closely analogous case to the case at bar that can be found in our jurisprudence. In that case a vendor sold a tract of land and reserved one-half the minerals, without mentioning in the deed that J/i2th of the reserved interest reposed in two minors. The minerals were not used for 10 years after the sale, and the vendee of the property sued for cancellation of the mineral reservation. Since at that time prescription could not run against a mineral servitude if one of the owners of it was a minor, the defendant pleaded the outstanding interests of the two minor children as an interruption of prescription. However, the court held that the vendor was es-topped from showing the outstanding interest in the two children because he had sold the property with full “guarantee of title”. The vendee in that case *230could not have disputed the vendor’s right to use Ms servitude during the 10 years following the mineral reservation, nor could he, during that time, have disputed the interest of the two minors, even though it had not been declared in the deed.