Jones v. Southern Natural Gas Co.

O’NIELL, Chief Justice. On September 8, 1943, Mrs. Mary Ellis Jones leased to L. M. Calhoun, Jr., for the production of oil, gas and other minerals, a tract of land described as follows: *1053 “The Southeast quarter of the Southwest quarter (SE^ of SW^) and the South half of the Southeast quarter (S^ of SE)4) Section One (1), Township Thirteen (13) North, Range Seven (7) East. The Southwest quarter of the Southwest quarter (SW)4 of SW^), the North half of Southeast quarter of Southwest quarter (W/2 of SE)4 of SWi/i) and the North half of South half of Southeast quarter (Ni/i of Si/2 of SEi/4) Section Six (6). The South half of Southwest quarter of Northwest quarter (S^ of SWy, of NWÍ4), the Southeast quarter of the Northwest quarter (SE% of NW^,) and the Southwest quarter (SW^,) of Section Five (5). The Northeast quarter of the Northwest quarter (NE% of NW)4) Section Eight (8), Township Thirteen (13) North, Range Eight East. All of the above containing in the aggregate Five Hundred Eighteen and Eighty two one-hundredths (518.82) acres, more or less.” The consideration paid by Calhoun for the lease was $518.82 as stated in the lease. It contained the usual declaration that for all of the purposes of the lease the land described should be treated as containing 518.82 acres, even though it might actually contain more or less acreage. The primary term of the lease was ten years. The act contained also the following clause: “If operations for drilling are not commenced on said land on or before one year from this date, the lease shall then terminate as to both parties unless on or before such anniversary date lessee shall pay or tender to lessor or to the credit of lessor in Richland State Bank at Rayville, Louisiana (which bank and its successors are lessor’s agent and shall continue as the depository for all rentals payable hereunder regardless of changes in ownership of said land or the rentals) the sum of Five Hundred Eighteen and 82/100 dollars ($518.82) (herein called rental) which shall cover the privilege of deferring commencement of drilling operations for a period of twelve (12) months. In like manner and upon like'payments or tenders annually the commencement of drilling operations may be further deferred for successive periods of (12) months each during the primary term. The payment or tender of rental may be made by the check or draft of lessee mailed or delivered to lessor or to said bank on or before such date of payment. * * * Lessee, or any assignee hereunder, may at any time execute and deliver to lessor, or to the depository above named, or place of record, a release or releases covering any portion or portions of the premises held by him, and thereby surrender this lease as to such portion or portions, and thereafter the rentals payable by him shall be reduced proportionately.” The lease provided that the rights of either party thereunder might be assigned in whole or in part, and in that connection the act contained the following clause: “In event of assignment of this lease as to a segregated portion of said land, the *1055 rentals payable hereunder shall be apportionable as between the several leasehold owners ratably according to -the surface area of each, and default in rental payment by one shall not affect the rights of other leasehold Owners hereunder.” On July 31, 1944, Calhoun assigned the lease to the Southern Natural Gas Company, so far as it covered the land described as follows: “The South half of Southeast • quarter (Sy> of SE14) Section 1, Township 13 North Range 7 East; The Southwest quarter of Southwest quarter (SWy of SWyj Section 6; The South half of Southwest quarter of Northwest quarter (SVi of SWJ4 of NW^t), the Northwest quarter of Southwest quarter (NWJ4 of SWyjJ and the East half of Southwest quarter (Ei^ of SW%) Section 5; The Northeast quarter of Northwest quarter (NEy of NW%) Section 8, Township 13 North Range 8 East, containing 300 acres, more or less.” On August 24, 1944, the Southern Natural Gas Company mailed its check to the Richland State Bank for $300 accompanied by a blank receipt for the bank to sign, declaring that the check for $300 was in full payment of all delay rentals for the period from September 8, 1944, to September 8, 1945, as per the terms of the oil and gas and mineral lease executed by Mrs. Mary Ellis Jones in favor of L. M. Calhoun, Jr., and subsequently partially assigned to the Southern Natural Gas Company to the extent of 300 acres, more or less, and particularly described in the receipt as follows: “Sy2 of SEi/4 Sec. 1, Twp. 13 North, Range 7 East; SWyj, of SW1/^ Section 6; sy2 of swy of NW%; NWy4 of SW% and Ei/2 of SW14 Sec. 5; NEy4 of NW% Section 8, Township 13 North, Range 8 East.” The receipt contained a citation of the conveyance book and page where the lease was recorded, and concluded with the statement that the $300 was for the credit of Mrs. Mary Ellis Jones. The cashier of the Richland State Bank signed the receipt and retained it in the files of the bank, and returned a copy to the Southern Natural Gas Company. At the same time he mailed a deposit slip for the $300 to Mrs. Jones declaring that the slip was a duplicate and that the amount of $300 was deposited to her credit by the Southern Natural Gas Company. Mrs. Jones’ checking account with the bank was carried in the name of Mrs. W. L Jones. She had no checking account in the name of Mrs. Mary Ellis Jones; but the bank, knowing that Mrs. W. L. Jones and Mrs. Mary Ellis Jones were one and the same individual, placed the deposit of $300 to the credit of Mrs. W. L. Jones.' The duplicate deposit slip which was mailed to her did not contain a description of the 300 acres of land, but the receipt which was sent to the bank by the Southern Natural Gas Company with the check for $300 showed upon its face that if each of the sections referred to contained *1057 the regulation area of 640 acres, the 7% quarter-quarter sections described in the receipt contained exactly 300 acres. Mrs. Jones made no complaint of there being a shortage in the payment of the delay rental but continued to draw against her checking account in which the bank had deposited the $300. On August 11, 1945, the Southern Natural Gas Company again deposited $300 in the Richland State Bank to the credit of Mrs. Mary Ellis Jones, to pay the delay rental for the period from September 8, 1945, to September 8, 1946. The remittance was accompanied by a statement of the Southern Natural Gas Company to the effect that the payment was made for the purpose of continuing in force the mineral lease dated September 8, 1943, executed by Mrs. Jones in favor of L. M. Calhoun, Jr., so far as it covered 300 acres in the sections mentioned in the assignment by Calhoun to the Southern Natural Gas Company. The cashier of the bank signed the receipt which accompanied the remittance and returned the receipt to the Southern Natural Gas Company, and at the same time sent to Mrs. Jones a deposit slip for the $300. For some reason which is not explained in the testimony the bank opened a new account in the name of Mrs. Mary Ellis Jones, instead of depositing the $300 to the credit of the account of Mrs. W. L. Jones, as the bank had done with the first deposit of $300. On September 10, 1945, that is to say, on the second day after the expiration of the time in which the delay rental should have been paid, according to the terms of the lease, Mrs. Jones wrote to the Southern Natural Gas Company saying that inasmuch as the company had failed for two years to pay the amount necessary to keep alive the lease which the company had bought from L. M. Calhoun, Jr., Mrs. Jones requested the company to let her have a release so that she could record it. The company replied that the delay rentals had been paid promptly on the 300 acres on which the lease was assigned by Calhoun to the company; and the company in its reply enclosed photostatic copies of the receipts of the bank, showing that the $300 delay rentals had been paid promptly, for the periods from September 8, 1944, to September 8, 1945, and from September 8, 1945, to September 8, 1946. In the company’s reply to Mrs. Jones the land on which the lease was assigned by Calhoun to the company was described by government subdivisions, showing that there were 71/2 quarter-quarter sections; which showed that the area of the land was exactly 300 acres, and that the delay rental therefore was $300 for each year, if the sections contained the regulation area of 640 acres. Mrs. Jones again wrote to the Southern Natural Gas Company, saying, this time, that the land on which the lease had been assigned by Calhoun to the company contained considerably more than 300 acres, *1059 and that she was making the demand for a cancellation of the lease under the provisions of Act No. 168 of 1920. But she did not inform the company of the amount of the excess area of the land on which the lease was assigned by Calhoun, to the company. On October 1, 1945, the Southern Natural Gas Company, replying to Mrs. Jones’ letter of September 29, furnished her a list of the 7Yz quarter-quarter sections on which Calhoun had assigned the lease to the company, which list showed that the total area described in the assignment was exactly 300 acres, assuming that the sections referred to contained the regulation area of 640 acres. On October 3, 1945, Mrs. Jones replied to the company’s letter of October 1, and in her reply she insisted that the area of the land on which the lease was assigned by Calhoun to the company exceeded 300 acres. But still she did not disclose the extent of the excess of the acreage. She informed the company that according to her lease she should receive $518.82 for the delay rental for each year, and that in fact she had only received $480 from all of the leaseholders. In this last letter of Mrs. Jones she demanded that the company furnish her with a release of the lease on the area described in the assignment by Calhoun to the company within ten days from the date of her first letter. Subsequently, on a date not stated in the letter, Mrs. Jones explained that when she said she had received $480 from all claimants, she did not mean that she had actually received the $480 but meant that that amount had been deposited to her credit in the Richland State Bank, and that she had not accepted any part of it. Evidently, she had reference to the delay rental for the period from September 8, 1945, to September 8, 1946. She stated that although the bank had been designated as her agent for the receipt of the delay rentals, the bank was only authorized to receive the correct amount and could not bind her by receiving a less amount than that which was due her. She stated also that if the company desired to withdraw the “partial payment,” as she called it, from the bank, the company should call upon the bank to return the money. On December 19, 1945, the Southern Natural Gas Company wrote to Mrs. Jones saying that she had' informed the company that the assignment which Calhoun had made to the company covered 322.629 acres instead of 300 acres. The company, in its letter to Mrs. Jones, again described in detail the .subdivisions comprising the so-called 300 acres, described in the assignment which Calhoun had made to the company. In this last letter which the company wrote’ to Mrs. Jones the company stated that in view of her representation that the exact area of the land on which the lease was assigned by Calhoun to the company was 322.629 acres, the company was enclosing in its letter the company’s check payable to her order for $45.-26 to cover the additional rental which she was claiming. In its letter to Mrs. *1061 Jones the company insisted that the payment of the additional $45.26 was not to be construed as an admission that the company had not paid the delay rental in full for each year. That letter was answered by Mrs. Jones’ attorney on January 29, 1946, notifying the Southern Natural Gas Company that all previous offers made by her were thereby withdrawn and that, unless an immediate cancellation of the lease so far as it affected the land on which it had been assigned to the company was furnished, it would be necessary to file suit. The suit was filed on March 1, 1946, and under the provisions of Act No. 168 of 1920, the plaintiff prayed not only that the lease should be adjudged forfeited so far as it affected the land on which it was assigned to the Southern Natural Gas Company (alleged by the plaintiff to contain 322.63 acres), but also that she should recover of and from the defendant $500 for her attorney’s fee under the provisions of Act No. 168 of 1920. The act provides that if a lessee holding a mineral lease shall fail or refuse to furnish the lessor a written cancellation within ten days after demand, and if the lease should be adjudged forfeited, the lessee shall be liable for a reasonable attorney’s fee. The district court gave judgment for the plaintiff, adjudging the lease forfeited so far as it affected the alleged 322.63 acres, and condemning the defendant to pay the plaintiff $500 attorney’s fee. ' The defendant is appealing from the decision. The defendant, in its answer to the suit, contended that the alleged 300-acre tract on which the lease had been assigned to it by Calhoun in fact contained 300.56 acres. Hence the defendant invoked the maxim de minimis non curat lex. It appears that two surveyors testified as witnesses for the plaintiff that they had computed the area of the 7% quarter-quarter sections described in the assignment made by Calhoun to the Southern Natural Gas Company. One of these witnesses testified that his computation showed that the area was 322.82 acres, and the other witnesses testified that his computation showed that the area was 323.23. It appears that these two witnesses computed the area of each quarter-quarter-section by dividing the area of each section, as stated in the legend on the official plat, by the number 16, that being the number of quarter-quarter sections in each section. Another surveyor, as a witness for the defendant, testified that he had made the computation according to the Manual of Instructions for the Survey of the Public Lands of the United States, and that his computation showed that the area of the 7% quarter-quarter sections was exactly 300.56 acres. If we should accept that computation as correct, in comparison with the calculation made by the two surveyors who testified for the plaintiff, we might feel obliged to apply the maxim de minimis non curat lex. On the other hand, if we should accept as correct the area contended for by *1063 the plaintiff, 322.63 acres, we would have some doubt about the application of the maxim, because, accepting that figure as the correct area, the shortage in the payment of the annual rental was 7% per cent of the amount which should have been paid. The rule which is founded upon the maxim de minimis non curat lex is so indefinite that we prefer to rest our decision upon a more substantial basis. We refer to these slight differences in the computations made by the three surveyors, respectively, to demonstrate how likely it was that a mistake might be made in computing the amount of the annual rental on the so-called 300 acres described in the assignment made by Calhoun to the Southern Natural Gas Company. The requirement was that the amount should bear the same ratio to $518.82 as the area of the acreage described in the assignment bears to the total area of 518.82 acres described in the original lease. In that respect this case is different from one where the lessor has stated in the lease, in dollars and cents, the exact amount of the annual rental which must be paid by the lessee, and where there has been no assignment of a segregated part of the land covered by the original lease. The defendant in its answer to this suit pleaded that the plaintiff, by accepting the $300 deposited by the defendant in the Richland State Bank, on August 25, 1944, knowing that the defendant in good faith believed that the amount was sufficient to pay in full the delay rental from September 8, 1944, to September 8, 1945, and by retaining in her bank account the $300 paid by the defendant on August 11, 1945, knowing that the defendant in good faith believed that that amount was sufficient to pay in full the delay rental for the year beginning September 8, 1945, and ending September 8, 1946, was estopped from demanding a forfeiture of the lease for nonpayment of the delay rentals in full. It is argued for the plaintiff that the estoppel cannot prevail in this case because she was, at the time of the payment of the rentals, ignorant of the fact that the amount was insufficient. The important fact, however, is that she knew that the party making the payment believed that the amount was sufficient, and had good reason to believe it was sufficient. If the plaintiff had known that the amount was insufficient and had knowingly accepted the $300 in full payment for the delay rental due to her, she would have been estopped from claiming now the alleged shortage of $22.63. There is nothing to prevent a creditor from accepting from his debtor in full payment of the debt due an amount less than is due, provided, of course, that the acceptance is made with full knowledge that it is not the full amount due, and with the intention that it shall discharge the debt. The defendant in this case is not pleading that the plaintiff became estopped from demanding the alleged shortage, but is pleading that she is estopped from demanding the forfeiture, without having informed *1065 the defendant of the shortage and without having given the defendant an opportunity to correct the mistake. We must bear in mind that this was a mutual mistake, and was one which was very apt to occur. There is ample authority for the proposition that considerations of equity may prevent a forfeiture of a mineral lease where the failure of the lessee to pay the full amount of the delay rentals, or his failure to pay it within the time stipulated, is the result of a mistake on his part, and where the circumstances are such that the mistake is a pardonable one, and particularly where the mistake is a mutual mistake on the part of both the lessor and the lessee. In such cases equity requires that when the lessor learns of the mistake he should promptly inform the lessee of the mistake and give the latter an opportunity to correct it immediately, before he, the lessor, can demand a forfeiture for nonpayment of the rental within the time stipulated. See Monarch Gas Co. v. Roy et al., 81 W.Va. 723, 95 S.E. 789; and Gloyd v. Midwest Refining Co., 10 Cir., 62 F.2d 483. In the latter case the United States Circuit Court of Appeals for the 10th circuit declared: “Oil lease providing for termination on failure to commence well ‘unless’ lessee pays rental automatically terminates upon lessee’s intentional [italics ours] failure to pay stipulated rental within time provided. “ ‘Unless’ ” lease is not automatically terminated by nonpayment of rental within stipulated time, where lessee undertakes in ample time to pay rental through means customarily used, but payment is delayed through accident or mistake, [italics ours.] “Equity will aid enforcement of forfeiture only where to do so conforms with principles of right, justice, and morality.” Our opinion in the present case is in some respects not consistent with some of the pronouncements made in Le Rosen v. North Central Texas Oil Co., Inc., 169 La. 973, 126 So. 442. So far as the two decisions are inconsistent the former henceforth must be considered overruled. The judgment appealed from is annulled and reversed and the plaintiff’s suit is dismissed at her cost, reserving to her the right to claim the allegéd shortage in the payment of the delay rentals.