St. Mary Operating Company v. Matthew Joel Guidry

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

06-1495

ST. MARY OPERATING COMPANY

VERSUS

MATTHEW JOEL GUIDRY, ET AL.

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APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT
PARISH OF VERMILION, NO. 81,814
HONORABLE GLENNON P. EVERETT, DISTRICT JUDGE

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ELIZABETH A. PICKETT
JUDGE
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Court composed of Oswald A. Decuir, Elizabeth A. Pickett, and J. David Painter,
Judges.

AFFIRMED.

Charles R. Sonnier
Attorney at Law
P. O. Drawer 700
Abbeville, LA 70511-0700
Counsel for Defendants/Appellants:
The Guidry Living Trust of 1996
Mark B. Guidry
Phyllis B. Guidry
Matthew Joel Guidry

Paul G. Moresi III
Attorney at Law
P. O. Box 1140
Abbeville, LA 70511-1140
Counsel for Defendants/Appellees:
Thomas Guidry
Edith Gaspard Guidry

Pickett, Judge.

The defendants, Matthew, Phyllis, and Mark Guidry, appeal a judgment

of the trial court finding that an act of co-mingling executed by the defendants and

the remaining Guidry heirs and recorded at entry number 9704329 in the Conveyance

Records of Vermilion Parish created a mineral servitude subject to a prescriptive

period of seven years and not a servitude for a fixed term of seven years. We affirm

the judgment of the trial court.

PROCEEDINGS IN THE DISTRICT COURT

The facts in this case and the proceeding in the trial court were explained by

the trial court in a document entitled “RULING”:

This concursus proceeding was instituted by St. Mary Operating
Company seeking instructions relating to distribution of royalties to the
Thomas Guidry heirs, all listed defendant’s [sic] in this suit.

Many facts are not in dispute. The parties executed an act of “Co-
Mingling and Exchange” recorded April 4, 1997 which contained the
following paragraph:

“All of the parties hereto agree that this exchange of
minerals, which creates a mineral servitude, will last a
period of seven (7) years from the date of recordation of
this instrument in the public records of Vermilion Parish,
Louisiana”.

At that time, there was no production or mineral operations on the
tract in question; however, subsequent operations produced oil and gas
from the property prior to April 2004. [The Guidry well, located in
Section 41, Township 13 south, Range 4 East of Vermilion Parish and
bearing Office of Conservation number 24688.]

The question submitted to the Court is whether the mineral
servitude ended April 4, 2004 (7 years from recordation of the co-
mingling instrument) or has it been extended by the clear provisions of
the mineral code [i.e., was the seven year period a fixed term after which
the mineral rights would revert to the land owners or was this simply a
shortening of the ten year prescriptive period provided for in R.S.
31:27].

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There is little dispute among the parties relating to the reasons for
the co-mingling agreement. All acknowledge their belief that their
mother wanted the minerals on all properties donated to remain in
indivision.

Mark and Matthew Guidry take the position that the servitude was
for a fixed term and not subject to interruption as defined in the mineral
code.

They further argue that the language of the instrument is clear and
unambiguous and no parole evidence should be admitted to alter the
agreement. The Court disagrees. Since there is no indication in the
instrument as to whether the laws relating to mineral servitudes were to
be avoided, it is both proper, and necessary, to attempt to determine the
intent of the parties through parole evidence.

After review of the testimony, I am convinced that at the time the
co-mingling instrument was executed no agreement existed on the
question presented to the Court. Some parties never read the instrument
and had little or no knowledge of mineral law at the time. No party
testified that they discussed with other siblings what would happen
should production occur within 7 years, but most assumed they would
continue to receive a proportionate interest in revenue as long as
production continued. Only Matthew and Mark testified they thought
their siblings’ mineral rights would revert to them in seven years
regardless of events in the interim.

The Court was particularly impressed with the testimony of Edith
Gaspard. After notice of the impending termination of her mineral
interest, she confronted her brother Mark. She testified Mark was
surprised by the position taken by St. Mary Operating (favoring his
position) but was not going to object since it was “going his way”. She
also testified he acknowledged the family’s original intent to continue
to share in this production equally. This testimony was never refuted by
Mark when he testified.

As stated earlier, there was no express agreement at the time the
instrument was executed relating to the interrt1ption issue. I do not
believe it was even considered. At the same time, I find there was no
intent on the part of the parties to alter the law relating to mineral
servitudes, except to shorten the period to coincide with what they
believed was their mother’s wishes at the time she donated the
properties to her children. The only logical position is that unless the
parties intend the contrary, the law applies.

Having so found, the Court is of the opinion that unless there is
an agreement to the contrary, the laws specifically relating to minerals

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must apply and the servitude created in the co-mingling instrument
continues to exist as a result of the interruption.

Finally it should be noted that Mark contacted an Attorney and
had the instrument drafted. One could apply the general law that any
ambiguity is to be construed against his interest. However, a better
approach is to hold that in interpreting mineral contracts, the special
laws applicable to minerals should be enforced absent a clear intent to
avoid them.

LAW AND DISCUSSION

Louisiana Revised Statutes, Title 31, contains the state’s Mineral Code. The

section of the Mineral Code at issue in this suit is R.S. 31:74, which states: “Parties

may either fix the term of a mineral servitude or shorten the applicable period of

prescription of nonuse or both. If a period of prescription greater than ten years is

stipulated, the period is reduced to ten years.” In McDermott, Inc. v. M-Electric &

Construction Co., 496 So.2d 1105 (La.App. 4th Cir.1986) our colleagues of the

fourth circuit reminded us of the following:

The Louisiana Supreme Court has recognized the right of parties
to agree to a shorter prescriptive period than that provided by statute
provided certain conditions are met. Leiter Minerals, Inc. v. California
Co., 241 La. 915, 132 So.2d 845 (1961). In Leiter Minerals, supra at
853, the Louisiana Supreme Court set forth the requirements:

Parties to a contract are free to stipulate as they
please so long as their stipulations are not contrary to good
morals or public policy or do not violate some law.
La.Civ.Code Arts. 1764, 1895, 1901; American Cotton
Co-op. Ass’n v. New Orleans & Vicksburg Packet Co., 180
La. 836, 157 So. 733; Mente & Co. v. Roane Sugars, Inc.,
199 La. 686, 6 So.2d 731; Givens v. Washington Nat. Ins.
Co., La.App., 170 So. 810; Morris Buick Co. v. Ray,
La.App., 43 So.2d 83. It has also been recognized in this
state, and by the courts of other states and the Supreme
Court of the United States, that those entering into a
contract may stipulate a different period of prescription or
limitation from that provided by a state statute, and that the
limitation or prescriptive period as thus stipulated, if
reasonable, will be binding upon the parties. Blanks v.
Hibernia Ins. Co., 36 La.Ann. 599; Ray v. Liberty

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Industrial Life Ins. Co., La.App., 180 So. 855; see Order of
United Commercial Travelers of America v. Wolfe, 331
U.S. 586, 67 S.Ct. 1355, 91 L.Ed. 1687 (in the absence of
a controlling statute to the contrary); Hoagland v. Railway
Express Agency, Fla., 75 So.2d 822. See also Wood,
Limitation of Actions, v. I, p. 145, sec. 42 (4th ed. 1916).

Id. at 1111-12.

The courts of our state are guided in their interpretation of R.S. 31:74 by the

Official Comments to that article. The Comments state in part as follows (emphasis

ours):

[T]he supreme court has indicated in Leiter Minerals, Inc. v. California
Co., 241 La. 915, 132 So.2d 845 (1961) that parties may fix a period of
prescription by contract which is different from and less than that which
would normally be imposed by law if they had been silent. . . .

The limitation that parties cannot contract for a prescriptive
period greater than ten years is firmly established in the jurisprudence.
E.g., Hodges v. Norton, supra; Bodcaw Lumber Co. of La. v. Magnolia
Petroleum Co., 167 La. 847, 120 So. 389 (1929); LeBleu v. LeBleu, 206
So.2d 551 (La.App.3d Cir. 1968); Ober v. McGinty, 66 So.2d 385
(La.App.2d Cir. 1953); but see Chicago Mill & Lumber Co. v. Ayer
Timber Co., 131 So.2d 635 (La.App.2d Cir. 1961). The question of
when a contract contrary to this rule has been executed is not solved by
Article 74. In this regard, see the discussion of LeBleu v. LeBleu, supra,
and the discussion of other problems concerning the date of creation of
mineral servitudes following Article 28.

Consideration was given to the matter of establishing rules of
construction to aid the courts in determining whether parties intend to
fix the duration of a mineral servitude or to subject it to a prescriptive
period other than that which would be imposed if the parties were silent.
However, it was determined merely to state some guidelines for
construction in this comment. In the event of silence as to the term of
a mineral servitude, the right created is permanent or perpetual, but it is
subject to loss by accrual of the prescription of nonuse. Parties to an
agreement which does not specify a fixed term or a prescriptive period
other than the legal one are, of course, free to limit the duration of the
rights created or to alter the prescriptive period by subsequent
agreement, subject to the same limitations applicable to the original
instrument.

It is established by Hodges v. Norton, supra, and Bodcaw Lumber
Co. of La. v. Magnolia Petroleum Co., supra, that if a term greater than

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ten years is specified, this fixes the duration of the interest created. It is,
however, still subject to the prescription of nonuse and will expire prior
to the running of the specified term if not used within the legal
prescriptive period.

It is more difficult to construe instruments specifying a period less
than ten years. Unless the creation of a mineral servitude is a part of a
security transaction, it is rare that a party will, in the ordinary situation,
contract for the creation in his favor of an interest with a fixed term less
than ten years. Thus, it is suggested that in the absence of some
expression to the contrary in the instrument in question, the
specification of a period less than ten years for a mineral servitude
should be construed as an agreement on a prescriptive period less than
ten years, and the interest should be considered subject to the rules of
use and thus renewable by exercise of the rights granted or reserved.
Parties are, of course, free to specify that the stated number of years is
the term of the interest and not a prescriptive period.

Appellants argue that the trial court erred in taking testimony as to the intent

of the parties in drafting and executing the co-mingling agreement. In Bown v.

Austral Oil Company, Inc., 322 So.2d 866 (La.App. 3rd Cir.1975), writ denied, 326

So.2d 370 (La.1976) we stated:

The intention of the parties is of paramount importance and must
be determined in accordance with the plain, ordinary and popular sense
of the language used in the agreement and by giving consideration on a
practical, reasonable and fair basis to the instrument in its entirety.

LSA-C.C. Article 1945 provides that agreements have the effect
of law between the parties, who alone can abrogate or modify them, and
that the courts are bound to give effect to all contracts according to the
true intent of the parties when the language is clear and leads to no
absurd consequences.

It is not within the province of the court to alter or make new
contracts for the parties, its duty being confined to the interpretation of
the agreements between the parties, and in the absence of any ground for
denying enforcement, to render them effective. Texas Co. v. State
Mineral Board, 216 La. 742, 44 So.2d 841 (1949).

Id. at 870.

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Further, in Claitor v. Delahoussaye, 02-1632 (La.App. 1 Cir. 5/28/03), 858

So.2d 469, writ denied, 03-1820 (La.10/17/03), 855 So.2d 764, our colleagues of the

first circuit explained as follows:

The general rules of contract interpretation found in articles 2045—
2057 of the Louisiana Civil Code establish that when the words of a
written agreement are clear and explicit and lead to no absurd result, no
further interpretation as to the common intent of the parties can be made.
See Martin Exploration Company v. Amoco Production Company,
93-0349, p. 5 (La.App. 1 Cir. 5/20/94), 637 So.2d 1202, 1205, writ
denied, 94-2003 (La.11/4/94), 644 So.2d 1048. Furthermore, when a
clause in a contract is clear and unambiguous, the letter of that clause
should not be disregarded under the pretext of pursuing its spirit. Id.
When contract terms are susceptible to more than one interpretation, or
there is uncertainty or ambiguity as to the provisions in a contract, or the
intent of the parties cannot be ascertained from the language employed,
parol evidence is admissible to clarify the ambiguity or show the
intention of the parties. In such cases, the agreement shall be construed
according to the intent of the parties. Intent is an issue of fact to be
inferred from all of the surrounding circumstances. Id.

A determination of the existence or absence of an ambiguity in a
contract entails a question of law. An appellate review that is not
founded upon any factual findings made at the trial court level but,
rather, is based upon an independent review and analysis of the contract
within the four corners of the document, is not subject to the manifest
error rule of law. Hawco Mfg. Co., Inc. v. Superior Chain, Inc.,
98-1037, pp. 4-5 (La.App. 1 Cir. 9/24/99), 754 So.2d 1062, 1066. In
such cases, appellate review is simply whether the trial court was legally
correct. Martin Exploration Company, 637 So.2d at 1206.

To determine the meaning of words used in a contract, a court
should give them their generally prevailing meaning. LSA-C.C.
art.2047. If a word is susceptible to different meanings, it must be
interpreted as having the meaning that best conforms to the object of the
contract. LSA-C.C. art.2048. A provision susceptible of different
meanings must be interpreted with a meaning that renders the provision
effective, and not with one that renders it ineffective. LSA-C.C.
art.2049. Furthermore, each provision in a contract must be interpreted
in light of the other provisions so that each is given the meaning
suggested by the contract as a whole. LSA-C.C. art.2050. Doubtful
provisions must be interpreted in light of the nature of the contract,
equity, usages, the conduct of the parties before and after the formation
of the contract, and other contracts of a like nature between the same
parties. LSA-C.C. art.2053.

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Id. at 478.

The co-mingling agreement did not specify if the seven year period prescribed

in the document was an agreement on the prescriptive period or on the term of the

mineral servitude itself. Thus, we find it was not an error for the trial court to look

beyond the four corners of the document in order to ascertain the intent of the parties.

Considering the wording of the document, the testimony of the parties and the

Official Comments to La.R.S. 31:74, we find no error in the ruling of the trial court.

Accordingly, for the reasons stated, we affirm the judgment of the trial court.

All costs of this appeal are assessed against the appellants.

AFFIRMED.

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