8 S.W.2d 646 | Tex. | 1928
Relator George W. Theisen invokes the original jurisdiction of the Supreme Court to secure a mandamus requiring the Commissioner of the General Land Office to issue to him a permit conferring on him the exclusive right to prospect for and develop the petroleum *499 and natural gas upon and within 2560 acres of University land in Crane County.
The facts, plead and admitted, disclose that relator has complied with the requirements of the Act of 1917, authorizing the issuance of oil and gas permits on University and other public lands, under an application filed on the 29th day of March, 1926. The Land Commissioner refused relator's application on the ground that the Act of 1917 had been repealed by Chapter 71 of the Acts of the 39th Legislature, approved March 10, 1925.
The relator, joined by former Attorney General Moody, contests the validity of the Act of 1925, while the University of Texas, by its Board of Regents, as intervenor, urges the refusal of relator's application on the ground that neither the Act of 1917 nor the Act of 1925 authorizes a sale of University land as required by the Constitution, and on the further ground that each act undertakes an unconstitutional diversion of portions of the permanent University fund. The present Attorney General files an argument in support of the validity of the 1917 Act.
Relator also urges his right to the mandamus because the Act of 1925, if valid, does not repeal the terms of the 1917 Act which are relied on as entitling relator to his permit.
The principal question in the case is whether the Acts of 1917 and 1925 violate section 12 of article 7 of the Constitution which reads as follows:
"The land herein set apart to the University fund shall be sold under such regulations, at such times, and on such terms as may be provided by law; and the Legislature shall provide for the prompt collection, at maturity, of all debts due on account of University lands, heretofore sold, or that may hereafter be sold, and shall in neither event have the power to grant relief to the purchasers.
In order to get the full significance of section 12, it must be considered in the light of related sections of article 7.
Section 10 of article 7 commanded the Legislature to organize a university of the first class, as soon as practicable, and to provide for its support, maintenance, and direction.
Section 11 of article 7 provided:
"In order to enable the Legislature to perform the duties set forth in the foregoing Section, it is hereby declared that all lands and other property heretofore set apart, and appropriated, for the establishment and maintenance of "The University of Texas," together with all the proceeds of sales of the same, heretofore made or hereafter *500 to be made, and all grants, donations and appropriations that may hereafter be made by the State of Texas, or from any other source, shall constitute and become a permanent University Fund.
"And the same as realized and received into the Treasury of the State, (together with such sum, belonging to the fund, as may now be in the Treasury) shall be invested in Bonds of the State of Texas, if the same can be obtained, if not, then in United States Bonds, and the interest accruing thereon shall be subject to appropriation by the Legislature to accomplish the purpose declared in the foregoing Section.
"Provided, that the one tenth of the alternate sections of the lands granted to rail-roads, reserved by the state, which were set apart and appropriated to the establishment of the "University of Texas" by an act of the Legislature of February 11, 1858, entitled "An Act to establish The University of Texas," shall not be included in, or constitute a part of the permanent University fund."
Section 15 of Article 7 provided:
"In addition to the lands heretofore granted to the University of Texas, there is hereby set apart, and appropriated, for the endowment, maintenance, and support of said University and its branches, one million acres of the unappropriated public domain of the State, to be designated and surveyed as may be provided by law; and said lands shall be sold under the same regulations, and the proceeds invested in the same manner, as is provided for the sale and investment of the permanent University fund; and the Legislature shall not have power to grant any relief to the purchasers of said lands."
A brief summary will suffice to give an understanding of the terms of the Acts.
The Commissioner of the General Land Office is authorized, by the 1917 Act, to issue to the applicant or his assignee a permit conferring upon him an exclusive right, for a term not to exceed two years, to prospect for and develop petroleum and natural gas within the designated area of "all public school, University and Asylum land and other public lands, fresh water lakes, river beds and channels, islands, bays, marshes, reefs and salt water lakes, belonging to the State and all lands which may hereafter be so owned and all of said lands which have heretofore been sold or disposed of by the State or by its authority with a reservation of minerals or mineral rights therein as well as all lands which may hereafter be sold with the reservation of minerals." The permit is to be issued by the Commissioner on receipt of an application filed with the county clerk *501 if the land is in any surveyed area, or with the county surveyor if the land is in any unsurveyed area, together with a filing fee of one dollar and ten cents per acre and a certain affidavit. Actual work of development must begin within six months from the date of the permit; and upon petroleum or natural gas being developed in commercial quantities before the permit expires, the permittee is required to file a statement showing the development within thirty days, whereupon he becomes entitled to a lease on specified conditions, to be issued by the Commissioner, on application and payment of two dollars per acre. The lease is "for a term of ten years or less, as may be desired by the applicant, and with the option of renewal or renewals for an equal or shorter period, and annually after the first year after the date of the lease the sum of two dollars per acre shall be paid during the life of the lease, and in addition thereto the owner of the lease shall pay a sum of money equal to a royalty of one-eighth the value of the gross production of petroleum." For a gas well the royalty is one-tenth the value of the meter output of the gas disposed of from the premises. The royalties are paid monthly and all proceeds of permits and leases are to be credited to the permanent fund to which the land belongs. The Land Commissioner is given general supervision of the administration of the Act, with authority to adopt, amend and change such rules and regulations as he may consider necessary, provided the same are not inconsistent with the provisions of the Act. It is expressly provided that the issuance of permit or lease shall not prevent the sale of the surface without the minerals. The Act was amended in 1919 but the amendment relates to other public land than University lands.
The Act of 1925 requires that all unsold University land and the minerals in all of said land previously sold or thereafter to be sold with reservation of the minerals shall be subject to sale by the Land Commissioner in accordance with the Act's provisions and under such rules and regulations as may be adopted by the Commissioner in the proper execution of the purposes of the Act, provided that outstanding oil and gas permits and leases shall be unaffected and rights, obligations and penalties attaching thereto shall remain in full force. The Commissioner is authorized to sell oil and gas leases "not less than once each month, when there is land in demand, and at ten o'clock a. m. on the day fixed therefor." The price for the leases is "ten cents per acre in advance for the first year, and twenty-five cents in advance for the second year, and fifty cents per acre in advance each year thereafter until production is secured in paying *502 quantities, but not to exceed five years, and a royalty of one-eighth of the gross production of the oil or the value thereof, produced and saved from the leased premises" delivered into such pipe lines as the lessee may have connected with his well or wells, and a like portion of the gas, and "in addition thereto such sum, if any, that one may pay therefor." After the Commissioner has advertised when the leases will be subject to sale, and has opened the sealed, separate, applications for each tract, the highest price offered secures the lease. A down payment is required of ten cents per acre, together with such additional sum as may be offered. When production in paying quantities is secured, the payment of further rental ceases, and "the payment of royalty begins." On securing paying production of oil or gas, the owner becomes "entitled to an absolute lease which shall run so long as the area produces in paying quantities," subject to performance of the lessee's obligations. Royalty is to be paid to the Land Office for the benefit of the University permanent fund on or before the 20th day of each month.
Bearing in mind the terms of the two acts, let us consider whether they conform to or violate the Constitution.
The two acts are mainly assailed on the ground that they provide for a permit or lease conferring on the permittee or lessee no greater right than a mere license, exercisable at the permittee's or licensee's option, to prospect for oil or gas, when the Constitution mandatorily requires the Legislature to dispose of the University lands by sale only and forbids the grant of a mere optional license.
The acts are further attacked, in the event they should be held to authorize sales of the lands, on the grounds: first, that the acts fail to provide the regulations, times, and terms under which the lands shall be sold; and, second, that the acts unconstitutionally divert portions of the permanent fund of the University by undertaking to authorize sales for considerations other than money.
The Constitution uses identical language with respect to the sale of public free school land as with respect to the sale of University land. Section 4 of article 7 begins, "The lands set apart to the public free school fund shall be sold under such regulations, at such times, and on such terms as may be prescribed by law." The language of section 4 has a definite, settled meaning under carefully considered opinions of judges as great as ever sat on this or any other court. The Court spoke through Chief Justice Gaines when it declared that the makers of the Constitution contemplated in providing that the public school lands be sold that the Legislature should *503
make such provision for the sale thereof "as in the opinion of the lawmaking department would yield the largest sum of money to the fund for which the lands were set apart." Glasgow v. Terrell,
We cannot give a different meaning to the language of section 12 from that ascribed to section 4 of the same article. Hence, it is manifest that the purpose of section 12 was to secure for the University the amplest provision for its establishment, growth and maintenance, by leaving the legislative discretion unrestricted and unhampered in converting the University lands into money through any kind of sales, under such regulations, at such times, and on such terms as the Legislature might prescribe. The language used was wholly inconsistent with the idea that all the lands or all of any tract must be sold as an entirety. In Swenson v. Taylor,
We find no language in section 12 to forbid the Legislature to separately sell the mineral from the State's remaining estate in University lands. Even if the section had contained language raising a doubt about its meaning in this respect, we would have to resolve the doubt so as to uphold the legislative act.
We would look to the common law to arrive at the meaning of the constitutional command that the land be "sold." For, as has so frequently been pointed out, a constitution written and adopted by men who were most familiar with common law customs and principles should be interpreted by giving the words of the constitution the meaning they had under the common law. South Carolina v. United States,
Mr. Lindley traces far beyond the dawn of our present civilization the custom of sales for royalties of minerals, such as tin, iron, and coal, apart from the balance of a tract of land containing same, and points out that the vendee of the minerals acquired an estate in the land subject to the payment of debts.
Discussing the oldest mines in England, once worked by the Romans, Mr. Lindley says: "The right of working the tin mines of Cornwall was conferred upon all free tinners upon the render of a certain portion of the minerals raised to the owner or lord of the soil. This portion was called dish or toll tin, and was usually one-fifteenth of the production. Any tinner was allowed to 'bound' any unappropriated waste lands or enclosed lands which had formerly been Waste subject to this custom. He 'bounded' the same by the delivery of toll tin to the lord of the soil. * * * The bounds might be sold or demised, and were frequently farmed out for a render called farm tin, and were liable for the payment of debts and legacies. The estate was in the nature of a chattel real, and passed to the executor." Lindley on Mines (2d Ed.) sec. 5, pages 9 and 10.
After tracing the custom to realize on minerals by means of separate sales thereof for royalty from ancient England to the American States, Mr. Lindley states: "Under the English law, rights of property in the surface and in the underlying mines might be shown to be in different owners. Nothing was more common than to sell or demise a piece of land excepting the mines. In like manner the different strata of the subsoil might be shown to be the subject of different rights. And there might be also in one mine different minerals which were the property of different persons. Thus, one person might be entitled to the iron, and another to the limestone. When the surface and underlying mines or the different strata of *505 the subsoil were differently owned, they were separate tenements, with all the incidents of separate ownership — a distinct possession and distinct inheritance; and the mines of each stratum might be held in fee simple, or fee tail, or otherwise, as in the case of surface property." Lindley on Mines (2d Ed.), sec. 9, pages 14 and 15.
One of the first acts of the Republic of Texas, (Paschal's Digest, Art. 4402, 5th Ed.), was upheld by the Supreme Court after being construed as reserving to the Republic certain minerals in certain lands on the grant of the remaining estates in such lands. Cowan v. Hardeman,
The Constitution itself expressly recognized that the mineral estate was capable of ownership and of sale separated from other estates in land, when it provided that the State "released to the owner or owners of the soil all mines and minerals that may be in the same." Section 7, article 14, Constitution.
The highest importance is always attached to the nearly contemporaneous construction of a provision of the Constitution by the Legislature, especially where participants in the legislation were framers of the Constitution, and where such construction has been acquiesced in and adhered to for a long term of years. State v. McAlister,
The Supreme Court of the United States, through Chief Justice Taft, says: "This Court has repeatedly laid down the principle that a contemporaneous legislative exposition of the Constitution, when the founders of our government and the framers of our Constitution were actively participating in public affairs, acquiesced in for a long term of years, fixes the construction to be given its provisions." Myers v. United States,
The Legislature, by an Act approved April 12, 1883 (Chapter 88, p. 85), made provision for the sale and lease of lands set apart to the common school, University and asylum funds. Section 14 of the Act provided: "The minerals on all lands sold or leased under this act are reserved by the State for the use of the fund to which *506 the land now belongs." By Act approved April 14, 1883 (Chapter 97, page 100), the Legislature provided for the sale of the minerals in the public school, University and asylum lands in consideration of a mineral royalty, towit: "five per cent of the gross receipts." The Journal of the Constitutional Convention of 1876 and the House and Senate Journals show that several members of the Constitutional Convention participated in the passage through both houses of the Acts of April 12th, 1883, and of April 14th, 1883. Indeed, one of the authors of Article 7 was a member of the House supporting the bill providing for the separate sale for a royalty of minerals in these public lands.
Without reviewing the further history of legislation in Texas, it will suffice to repeat what this Court declared in Cox v. Robison,
Nothing is plainer to us than that, the Constitution having imposed the duty on the Legislature to sell University lands to the best advantage of the University's permanent fund, there was no lack of legislative power to sell the lands containing minerals in the way customarily used to avoid sacrifice of the value of the minerals. Since at the date of the adoption of the Constitution and for prior centuries minerals were usually converted into money by sales working a severance of the mineral estate, consummated by means of writings commonly called leases, for stipulated royalties, the Legislature was plainly empowered to consummate in that manner separate sales of the minerals in the University lands. Any other view would defeat the cardinal purpose of the framers of the Constitution to realize as great a fund as possible from these lands — including their minerals — for the University.
There seems to be nothing in the Constitution preventing the Legislature from realizing money for the public schools or for the University by means of the sale of licenses to explore public school *507 or University lands for minerals, should the Legislature deem it wise to adopt such a policy. But, the question as to whether the Legislature possesses any such power is purely abstract. For, under the thoroughly settled law of this State, the Acts of 1917 and of 1925 operate not to grant mere licenses to explore for minerals but instead they authorize conveyances by the State of minerals in place and hence the Legislature in passing the Acts obeyed the command of the Constitution to sell the University lands.
In order to arrive at a correct understanding of the rights of a permittee or lessee, under the first instrument issued under these Acts, we must consider his rights under the succeeding instrument, since the right to the succeeding instrument vests in him under the very first instrument as completely as the privilege of exploration, though, of course, subject to the conditions imposed by the statutes. The right to explore, to produce, and to appropriate relates back to, and is derived from, the initial permit or lease.
Thus viewing the rights of the permittee or lessee, we find that each Act authorizes the sale, at stipulated prices, of a permit in the one case and of a lease in the other, which invests the permittee or lessee and his assigns, on performance of stated obligations, with the exclusive right to explore certain lands for oil and gas, for a fixed term of years, and upon the discovery of oil or gas in commercial or paying quantities, to produce and appropriate same, so long as profitable production may continue. While the Act of 1917 does not in terms provide that the right of production and of appropriation shall continue as long as oil or gas is produced in paying quantities, as does the 1925 Act, yet the provision of the Act of 1917 for successive lease renewals, at the option of the lessee or his assign, necessarily has the same effect as an express provision that the lease shall remain in force as long as oil or gas may be profitably produced.
Under our interpretation of the Acts, every question raised as to either Act not authorizing a sale of an interest in land was determined by this Court in the case of Stephens County v. Mid-Kansas Oil Gas Company,
In legal effect, the grants authorized by the Acts are not essentially different from the grant in the ordinary oil and gas lease, such as was before the Court in the Stephens County case. The ordinary lease confers first an option to explore for oil or gas, but, after discovery of oil or gas in paying quantities, it confers the right to produce and appropriate the oil or gas. It is immaterial that the right to appropriate the oil or gas under the 1917 and 1925 Acts follows and does not precede the final lease. Because, as already pointed out, the permittee or lessee may compel the execution of the final lease on performing the obligations which the Act imposes on him. Under the ordinary lease, the right to continue to produce and appropriate oil or gas is contingent on performance of similar obligations. It is unthinkable to treat the ordinary lease as conveying minerals in place and to refuse to give that effect to the grants authorized by these Acts.
So far as the immediate question now before the Court is concerned, it was decided in the opinion by Chief Justice Stayton, who was a member of the convention framing the Constitution, when it was determined that the grant of an exclusive right to mine the coal underlying a tract of land was not the grant of an incorporeal right but was the grant of land. Benevides v. Hunt,
The Supreme Court again decided this question adversely to the attack on these statutes in the case of State v. Hatcher,
In Sawyer v. Robison,
We find no tenable ground for striking down the 1925 Act and upholding the 1917 Act. It is argued that the Constitution, in requiring the University lands to be sold, forbids their conversion into anything but money, and that part of the consideration for the oil or gas sold under the 1925 Act may be paid in a fraction of the oil or gas produced. It is unnecessary for us to consider whether an act for the sale of minerals in University lands would be valid if it authorized a part of the consideration to be paid in a mineral which all men know is readily convertible into money instead of in money. For, as we construe the Act of 1925, it just as plainly requires the entire consideration for the leases it authorizes to be paid in money, or its equivalent, as does the Act of 1917. While section 2 of the Act of 1925 specifies as a part of the consideration for the lease "a royalty of one-eighth the gross production of the oil or the value thereof," and makes a similar provision as to gas, yet section 7 mandatorily provides: "Royalty and all other sums shall be due and payable to the State at Austin, Texas, and shall be paid to the Commissioner of the General Land Office and he shall transmitall remittances in the form received to the State Treasurer, who shall credit the permanent University fund with all amounts received from royalty. All payments shall be in the form of cash, bank draft on some State or National Bank in Texas, or post-office, or express money order, or such other form as may be collectible in Austin."
The Legislature could not have more plainly manifested the intent to require the proceeds of these leases to reach the Land Commissioner and the State Treasurer in the form of money or of an accepted and customary medium for the transfer of money. Both Acts authorize mineral sales for money to swell the University's *510 permanent fund, and the considerations exacted comply with constitutional requirements even when strictly construed.
The 1925 Act is challenged as delegating authority which can only be validly exercised by the Legislature to determine when the land shall be sold because the Act provides that sales shall be made "not less than once each month, when there is land in demand, and at ten o'clock a. m. on the day fixed therefor."
As we interpret the Act, the Land Commissioner is mandatorily required to sell oil or gas in any University land upon receipt of a request to place same on sale. The Land Commissioner seems to have uniformly so administered the Act, saying in his answer: "In this connection Respondent avers that he has construed that provision of the Act as being mandatory wherein it is provided that said lands shall be sold 'not less than once each month, where there is land in demand, and at 10 o'clock A. M. on the day fixed therefor' as requiring the Land Commissioner to advertise for sale mineral leases on any of the University lands whenever anyone files an application with him asking that leases on certain lands be sold. Respondent is of the opinion that he has no discretion in the matter, but whenever it is called to his attention in an affirmative manner that there is a demand for leases on certain land it is his duty to advertise the lease or leases for sale and to fix a time when the same shall be sold within not more than one month from the time he was informed that there was a demand for said leases."
Since land or minerals cannot be sold without a purchaser, and since the Legislature has determined that from and after the date the Act of 1925 became effective the oil and gas in any tract for which there was an offer to purchase should be sold on specified terms, within thirty days at 10 o'clock on the day set apart to conclude a sale, the Legislature has completely fulfilled the constitutional requirement of prescribing when this mineral estate in the land shall be sold, and it was plainly competent for the Act to empower the Commissioner to make such regulations as the Act authorized in its mere administration in order that the legislative will might be accomplished. As declared in 12 Corpus Juris, page 840: "While, however, the Legislature may not delegate the exercise of its discretion as to what the law shall be, it may confer discretion in the administration of the law."
The leases under either act accomplish no unconstitutional diversion of the University's permanent fund. They do not authorize the purchaser to take and use seven-eighths or any other mere fractional *511 part of the oil or gas in the land leased. The purchaser instead buys all the oil and gas, for a stipulated price, part of the price being measured by the value of a certain fraction of the produced oil and gas, which is a very different thing from the value of that fraction of the oil and gas in place. The leases convey all the oil and gas in granting the right to find, produce, and appropriate all of them, in consideration of the payment of stipulated sums and also the value of a stated fraction of the oil and gas produced. The oil and gas when appropriated form no part of the University's permanent fund. While in place, before being sold, the oil and gas were potential assets of the fund. Like any other seller, the State, after parting with its title, no longer owns that which it has sold, but the State receives and turns over all the proceeds of sale when it receives and turns into the permanent University fund the royalties and other payments required by the acts. As a result of the sale, the purchaser owns the oil and gas, and the University permanent fund owns the entire proceeds of their sale.
As a matter of course, the State can sell no part or portion of its lands without diminishing the value of what remains. Should the State sell 80 acres out of an 160 acres of uniform value, that which remains would be worth only half the value of the entire tract. But, the State is none the poorer in retaining 80 acres and the proceeds of 80 acres. Exactly the same thing is true when the mineral estate in land is sold separately from the remaining estates, and it belies the experience of mankind throughout the ages to assume that there is any more profitable mode of sale for the realization of the full value of mineral bearing land.
In Barringer and Adams, Mines and Mining, at page 36, it is said:
"The form of the conveyance is unimportant. It makes no difference that it is called a lease, and that its terms are those for leasing real estate. If it shows an intention to convey all of the specified mineral in the particular land, it effects a sale or absolute conveyance thereof.
"If the instrument shows an intent, it is none the less a sale because a term of years is prescribed within which the mineral must be taken out. Nor is the nature of the grantee's estate changed by the fact that he fails to mine during that term. There is in such case a sale to him, not a lease; but a reversion takes place at the end of the term of the grantor. *512
"The fact also that the purchase money depends upon the amount of coal mined is of no moment in determining the nature of the estate. The question is whether all the coal is conveyed; if so, there is a sale thereof."
After the 1925 Act became effective, the Legislature plainly directed that all future sales of University lands or of minerals in such lands should be made in the mode, and under the regulations prescribed by that Act. Such is the express command of Section one of the Act. Such is the necessary effect of the language of section one in specifying what shall be unaffected by the Act. It was proper to include the 1917 Act in the Revised Statutes, as it was proper not to repeal it outright, because it continued in full effect as to certain classes of lands other than University lands.
Relator having made no attempt to comply with the only act which governed the sale of minerals in University lands, at the date of his application, which act is free of constitutional infirmity, the Land Commissioner followed the law in rejecting relator's application for a permit, and the mandamus applied for should be and is refused.