Case Information
*1 -h 29, 1939 Hoiiorable BaaoormGiles
Ccumudmione~ of the General Land Office
Austin, Tom
Opinion No. O-523
Be: $ffect of section lo, ch. 271 General~Laws of 1931, cm pro- edsting river bed oil and &as leaBe
Dear M?. Giles
This aoknowledges receipt of and la in reply to your letter
of Maroh 17, 1939,~in which you request the opiuion of this Departmant upmi the~question of irhether or not .%&ion 10 of Chapter 271, General Iawa of 1931, repealed the $2.00 par aore lease remtal provision cm- tained inChapter lkO,GeneralLawa of 3gthLegialature; 1925. Youfur- ther request 0115'opinion aa tovhether or not you ahm.l.d issue a renewal iease to Mrs. Ibnie O'Brien upon the erpiratlm of the present oil. ai~d~ gas lease which she holda covering 398.229 aores in the Trinity River bed in Liberty County, Texas.
As ve understand your letter, on October 5, 1928, permit No. .?724 toprospect for oil and Sac W'iasued to Mre. Ronie W8rien cover- ing the portion of the Trinity River bed in question; On April 30, 1929, after proper proof of the discovery of oil had beti made to your office, ollaud gas lease Iio. I2724 vaa issued to Mrs. IVouie OIBi%n, her heirs and asslgu~, sald,lease having been issued uuder the terms aud provisiona 83, Ads of lgl?, as amended by Ch. 140, Acts of 195, 39th De&siature, which latter statute appears aa Artlole 5344, Verno~'d Civil Anuotated Statutes, said artiole read- as follows:
"Uponthe paymentof$2.00 (two dollars) per aore for eaoh acre in the permit a lease shall be issued for a term of ten (10) years, or less, as may be desired by the applicant, and with the option of a renewal or renewals for au equal or shorter period, end imaedlately after the experaticm (expiration) of the ftiet year after the date of the leaae, the sum of (two) ($2.00) dollars !per acre shallbe paid duringths life of the lease, and in addition thereto, the owner of the $?a80 shallpay a sue of mcey equal to a royalty of one-eighth of the value of the gross productlou of petroleum. The owner of a gas well *2 Honorable Baama Gilas, page
shall pay a royalty of oue-teuth of the value of the metre output of all gas disposed of off the premises; provided, howevm'that the provieiom hereof as to the paymeut of two ($2.00) dollara per acre duriug the lease period md the life of the said lease shall not apply to leasee of bays, marshes, reefs, saltwater lakes or other submerged lands containing as much as 0110 hundred (100) acres but not in excess of five hundred (500) aorea upon whioh 88 many 88 five wella have been drilled, and upon which BIG ex- penditure of as much aa one hundred thousand ($lOO,OOO.OO) dollare haa bs6P.mada. The drilhlng of said wells and the expenditure of said amount to be eatabliahed to the satis- faotion of the commissioner:'of the land office." You attached to your letter a certified copy of the lease issued to Mrs. O'Brien. Such lease ou page,1 thereof recites that a permit to proepeot for oil and gas had bean previouel.y issued to Mm. O'Brien under the provieione of Chapter ~of aii Act of Meroh 16, 1917, and Acts subsequent thereto. Paragraphnumberedlonpage 2 of said oil and gas lease, in part, made aa follows:
"Ynadditlontothetwo dollars par acre already paid on each aore luoluded herein, the owner of the rights herein conveyed shallpryalike aumannuallyhere&%er in advanoe on the mea iutsluded herein, whioh ehallbe paid on orbeforethe expirstion of each year durlug the life of this contract, and In addition thereto, the owner of the rights hereiuoonveyedehallpay to the State ofTezae at theGeneralLendOffice ofTexaa,atAuetiu,Texaa,asum of money equal to a royalty of me-eighth of the value of the gross production of petxoleumaud ehallpay a eumof money equal to ten per cent of the value of all gae cold." You'further state in your letter that the firat yerr lease rental of $2.00 per acm~was paid in 1929 andbike paymeutwaa made in 1930; thatbeginniugwiththethMyearleam rentalthe paymentwas reduced to 25 cants per acre under provleicms of Section 10, Chapter 271, Act of May 29, 1931, and that all. subsequent annual payments have been at the rate of 25 ceuts per acre; that the 10 year period for which the lease was iaaued will expire April 30, 1939, aud that the lessee has writ&u to you making the request that a rem@ be issued.
As the lease in question wan issued on April 30, 1929, when
Chapter Acts of 1917, as mended by Chapter'.lkO, Acts of 1925 was iu foroe, we are of the opinion that the payment of rentals on such lease is governed and controlled by Umpter 140, Acts of 1925. The affect of Chapter 140, Acts of 1925, iu our opinion, is to require a cash payment at the time of the issuance of the lease of $2.00 per acre for each 8Cm included in the original permit, and a further annual rental payment of *3 Hon. Basccm Glles, page
$2.00 per acre during the life of the Lease, ami 2~ additim themt'., the oil aud gas royalty provided in said act shall be paid in case of production. The statute plainly says that *the 8um of $2.00.per acre shell be paid during the life of the lease.' It IS kaiaputabh that the life of the lease in question to Mrs. O'Brien is flared both by the terms of Chapter 140, Acts of 1925, aud by the provlsioue in the lease Itself, at a,period of 10 years frm April 30, 1929, with a right to reuew the same as provided ia Chapter lk0. Therefore, a requirement of the payment of rental of $2.00 per acre during the iife of the lee-x, in our opinion, requires au annual payment or $2.00 per acre for each aud every year that the leaea remains In force, Including any renewal term. We do not believe that the 39th Legislature in euacting Chapter 140, Acts of 1925, whioh chapter expressly ameorda subdlvisiou 2, section 83, Aota of ~~17, .35th Legislature, iutended thereby to re- lease the State% lesaee from the payment of: mmal~rentals~stlpulated by the A& iu case production was secured.' The only ohange which Chap- ter.140, Acts of made in Chapter 83, Acts of 1917, was to insert the word "immediately" in place of the word “annually” which appeared in the 1917 Act end to add a proviso to the 1917 Act which proviso is not relevant to your inquiry mder the facts presented by your letter.
We cauuot esoape the ooncluaionttvrthadthe Legislature
Intended to hbolleh the requinrment of the 1917 Act for the payment of annualrentals in case of produatlou, itwouldhave used lmguege ~hWly iadiaatbg .suoh~an inteutdbn. Such inteMiou 8lfi0 ~0ul.d have been olearly Indicated by the Legialatum by simply strikiug fman the Act the phrase O%hall~be paid during the life of ths Lease*. In the absence of any such aut%ou ou the part of the Legislature, we must, of necessity, hold that the Legislature did not intend to release leas- see8 frm the paymeut of the $2.00 per ame auuual rentals. The proper constructQm o?A.vticle 53J&, in our opfnion,. is that mch article re- quires the paymeut of annual reutsle of $2.00 per aore duriug the eut?ze 1FPe of the leaao emu after produotiou is eszmed.
The further questlou in ~eeeuted bye ym? request for eu opinion aa to the effect of Sectiuz 10, of Chapter 27~1, Acts of 1931, Regular Session of the k?nd Legislature, whfoh appears as Sectiou 10 GE Article 5421a, Vernon'8 Aumtated Civil Statutes $ 1925.
section 10 of Chapter 271 read8 as followa: "The a?eas inoludsd herein shall be leaned for a comlderation, in addition to the oath mouut bid tier+ for,, of not lese than one-eighth (l/8) of the gross pro- dudson of bil, or thr value of 88100, that my be ~pmduced and saved,'and not lasa than one eighth (l/8) of the gross product:ou of gas, or the value of same, aud not Iem than one-eighth (l/8) of the gmae produc,tim of sulphur, or the value of mme that may be pmdumd, that may be prodmed aud *4 Hou. Baecaa'3llee, p4ga (O-523)
sold.off the area and not less thsn one-sirtdenth (l/16) of the value q allothern&wrals thatnmybe pmduoed, aud m additimul mua of twenty-five cents an acre per year for eaohyerrthereafteruutilprdcldctiou is scoured. When pmiuot&n ham beeu mmured In ocmaero i4l quautitiee 4nd the pigment of royalty begins and coutlnues to be paid, the owner shalibe ese.@?frmfurther4unualrentsl~nte orthe 4oreage. The provisl~ of this utiale inrespectto p4ymentm ofrent4laf'tergroduotimmdthe ceeart of pro- duotion eh4llapply to lemes heretofore issuedby 3!e St&J onsnfarea exoept Linda belcmgiugtotha Stata lJuiveraity4nd el.e~aynu.y institutions. Lp productlon 8bxd.d aease and royalty not be paid, the owner of ths lease sh4ll, at the end of the lease year inwhiohthe myaltyaoraedto be paid4ud annu4lly thereafter in rdvanoe, p4y twenty-five oeuta per aore so lcmg aa auohownermydesire tomaintainthe righta acqutid under the lease, not to exceed five (5) yeun from the date of said le4ae."
Youwlllobeerve th4ttha fiualaantenee of Seotiou a0 aboveliiaits the time ftiwhtiha leasewbe keptinforce bywnt ello@ Minti-*oCiacWlto 4perWoffive yem3. In your letter yoti etate that th6 leseee of the pmtioular lease in questiou begrn tha wt of redaced rentals of 25 mute per aore in 1931, or eight yeti ago. Ue think olelrrly tht If Beetlou 10 of"Oh4pter ~looaldbe held to 4pply to the river bed levee-Jn questionwhich MS iseued in 1929, neverthelese, such learn after the yeu wae not entitUddto thebene- fit of the reduced rental proviaicms of Chapter 271.
However, 48 the question 4a to the effeot of Section 10 of
Article 9210 wil.Ldoubtiees often vise in the future witheepeot to riverbed Imae wherethefive ykr limit4tionperlodhrs notekpired,we believe the question of the applkaticm of Chapter 27ltaang moh leases-~ on river beda cau 4ud should be -redatthistimewlthoutrespwtto the expiration ornon-expintiou ofthefive year LimitationperIod~ In determining the effect of Section 10, Article 5b2lc on river bed larsea, two questiona me involved. Fir&, doea Section 10 by ita terma apply to or pnrpcgt to apply to river bed leases? Ebcond, Ff Section10 is con- strudd8as applyiug to or purportfng to apply to river bed leasea, theu d.6 suah statute, so donstrued, conetitutionali' Upon ekaiu3ng the caption Acts of 1931 (Vernou's Annotated Civil Statutes; Artisle .9&2lc), we do not find in 4uy pm% thereof anymenticmccdW4 subject rekat- lng to tha lame, srls or development of river bed arem. The o4ptim ie c&tied to aetrtementthrtthe aotia one to "ragul4te the s4leand leue of lende setapartforthebenefit of the public free aolmolfmd, and to provide for the diepoaitiouandsale ofminerale oontained inall islands, salt w4tere, lakes, bay6, inlets, marshes aud nmfe owned by the State within the jurisdiction of Texae,, endilluueoldpublic free a&ml *5 m. Basoaar Gilee, page
landa both mrveyed aud uumrveyed". . . and "providiug generally the method end meaua for the sale of public, school lauda and the lease and development of the,publio school lend&and ooastal areaa." Upcm exfaain- ing Section lof Chapter 271, whioh motion purports to exummate speci- fioally the lauda aud areaa which are subject to ooutroland sale uoder the proviaio~ of Chapter we find this significant lauguager
"All landsheretofore eet apart to the public free schoolfunda under the Constitutionand 3.&a of Texas, and allofthe uuappropriatedandmmoldpublic daaainrunain- ing in this State of whatevercharacter, except river beds, emdchnneltr,mB iaLradej lakes audbaye, and otherareas withintidewaterlhuits, EQ% aubjeotto aontrolaud sale uuder the provieiona of this Act."
Thw we find t&t the caption of the statute in question fails tonention atanypointthatone of the subjects cf theAotis riverbed8 or leases therecnorthe paynents ofrentala colsaid Uasee.
We further find thatSe&iCp 109 the Aot embaly exoepts riverbeds md~~chanue~ flwn control orsale under the'Aut, It ie not until Section 101P~ebOd9Ofth4Bill~re~hedthtwefipd~menti~mrdeai
lauds other than those expreaaly designated iu Section a~of the Aat ahd even Section 10 of the Aot doea'not expresely refer to river beds or to le4sea thereon. In foot, Seotion 10 of the Act begins with the language, cths~ueaa inoluded herein-shall be leased * * l ", thereby indioating thatSeotionlOvillderl~wit;hthe ueaa apeoifieallyenmaerated in in Section 10 which la susceptible Sectlonlof the Act. The only- atthecons~tlonfhrtrivsrbedarreino~dinSeotiorr10isfoundin that sentence of Section10read5ng aa followw:
"The proviaion~ of this artiole inrespecttopaymenta of rental after produotion and the cessation of prodw3ticn shallapplyto Isames bsreto~ issuedby the State cneny area except lands belonging to the State University aud al&e- mosyn4ry '3lmtitutic4ls.*
In State v. Bradford, 50 S. W. (2),1065, the Suprane Court of Teuaa held tlmt Article 5k16, R. C. S., did not include nor have the effect of'setting apart river beda to the Permanent Free School E'und ofTexas,notwithstandingthe fa&tbatArticle contained the follow- in6 Language:
"AU lads heretofore set apart under the conatltution and lawa of Texas, and all of the unapprolniated public domain radning iu this State ofwhateverobaracter, andwheresoever located, inoludlngeny land&hereafterrecoveredby th? State, except that inaluded in lakes,brys andislende alongthe@ulf of Mexico within tidewater limits, is set apart and granted to thepermenentschoolfundofthe State." *6 “In viev of the impo~e~of this atatter to the State an&thevhole people, the courts of this stat+ have consistently lsla that all grulte with rwpecrt to landa mdernavQablewatemi,suohaa riverbeda a' ohuule~, are t3trtatly oonqtrued agalnnt the grrntse; if there IE any alblguity’ip it will be that, the rot, 0cmBtnled In favar of the 6trta3 ma, tml#ls the act 0oIltaine plainmdunlnietakable lmguage expmsslycou- veying the land under river bade aud ohmnels, it~~vi.Ll not be croMtrued-to 3ncd.uae them. Ih othmr voraa, be- fo~atrtrta~w~bsacmst;Nadtoiaclude~d.lrnder navigablewdxr6,suchasrlverbedn anddmnnels, itvlll havu to be eqa~eed ia plain and poeitivu l@ua@ rrd' notingeneral l&uage.~ Ian&ryP.Robiscap, llOT0r.2~~ 219 S. W..819; 8203 Robe&% V. T-U., 1OlTex. !Yri-, ~0 S. Ii.-7333 City 6f Galveston v. Menu%, 23 Tex. 349; Ro&orough v. Pi&on, 12 Tex. Civ. App. 113, 9 5. W. 791, 43 8. w. 10333 Rynes V. Paakkra'p2 Tear. 49, 45 S.W. 5Q;aolln~.wuser,49 s. w. (26) 69y(notyetrqajeea (in state eqort)l Wiel on water Rlghts im, the me-tern states~, sacticm 893."
In VihiOf'the f-t tlendther the oaptlon ~ttlhe body ofeCha@6r 271, Acts 1931; at any pol.n~mentlosu~ speoifioally river b&k, ipd ilso ia viev ~of the ~fact thit Secti- lof eal(L Aot+lprpressly exoeptn river beds frcm the Luada eubjeot tb cc&r61 or sale under Said hat, we 'fed canpelled to hold, in harmony with Stat. v. Bradford, snpra, thatrlverb4W or leasee~thereon, Ortho pqmentof rentale on snob lerrres, are not affeoted by Section 10, chrpter 271, ma that leaass on f snchrraasmmtbe ocmiaered inthe seurtenumnerm~ if mid Acthadnever been prsaed. . .
33 vv are in error in the conalueion jnst ezpreesea, ena if
river beda qlpld properly be held to be inoldea in Section of Chap- ter 271, we, neverthlese, must con0hae that seation 10 80 0onstraed tronld. not be effeotlve to reduoe fmu $2.00 to 25 centa per acre the rantal~ payable on the river bed lease In question..Thla conclusion la expressed beccke oftheprovieicum of Article 3,Seotion oftheConetitutionof Texss,which, inpart,provides M follows:
* *%o billeroeptgemerrla~~ationbilla ehsll oontdnmore thafi me subject which sImll be expressed In ita title", and that as to any subject which is not expressed in the title of the bill, such act shall be void.
To ocnetrue the body of Se&ion 10, Chapter 271, aa inclnd- lng and apply- to river beds and river bed leases would bring the bod$ of the bill in oonfliotwith the captionthereof adwiththe oonstitu- tirmal proviaim above quoted, and the necessary ree Gould be that such portia of Seoticm 10 u1 applies to river bed lessee would be ancon- et1tut1onal alla void.
Ron. Besom Gllea, pege
Although we entertain serious doubt aa to the oonatitutiou- ality of the pr~~iaion~ in Sectim 10 of Chapter 271, with respect to reduction of rentals to cents per a6re after production on auytract of State laud covered by an oil and gas lease executed prior to 1931, we make no deoiaion of such question in this opinion for the reason that such question is not directly $reaemted by your letter and Is uunecesaary to the opinion erprcssed above.
The oonatruotionwe have given in this opinion to Article 5344 is oontxa5y to the construction given to such Artlole by a former Attor- ney General in an Opinion written by George T. Wll&ong,Asaistant Attonxy General, dated October 2'7, 1931, addressed to Ron. J. Ii. Walker. Acoord- inglysuchopinionand amy other prior opinions whi6hoonstrueArtiole or Section 10 of Article 54210, Venxmfia Annotated Statutes, in cm- flictwith thie opinion me herewith expreaslywithdrawn and overruled.
You are, accordingly, advised that in'the opinion of this De@- ment,~Sectlon 10 of Chapter 271, Acts of 1931, did not repeal the $2.00 per acre lease annualrentalpro~ed in the lease in question, and such act did not reduce such rental to 25 centa per acre. You are further ad- vised-that it ie the opinion of thin Department that a renewal lease dmuld not be fsaued covering the area in question until all accrued rontale at the rata of $2.00 per aore per year are paid in full..
By: Robert E. Kepke /s Robert E. Kepke AEisintant This opinion haa been considered in conference, approved and ordered recorded.
Gerald C. Manu /a G&ald C. Mann Attorney General of Texas