Nunez v. Superior Oil Co.

Nunez v. Superior Oil Co.

Opinion

 [*1121]  ALVIN B. RUBIN, Circuit Judge:

This suit to cancel mineral leases and to obtain damages incurred as a result of their alleged breach was commenced in Louisiana state court, and removed by the defendant, Superior Oil Company, ¹ [**2]  to federal court on the basis of diversity of citizenship. After a careful consideration of Louisiana law, the experienced trial judge rendered a summary judgment for the defendant. While we conclude that the trial court was correct in its analysis of Louisiana law, we reverse the summary judgment and remand because the plaintiff is entitled to a jury trial of a controlling issue. ²

 [**3]  I.

The objective facts are not in dispute. ³ Adam Nunez and his son, Adam G. Nunez, each owned an undivided one-fourth interest in a piece of property leased to Superior for mineral development. On May 2, 1971, the father died and the son began endorsing his father's royalty checks, with the added notation "by Adam G. Nunez, Administrator, for deposit only to the Estate of Adam Nunez." Over six months later, on October 21, 1971, K. R. Richardson, a senior clerk at Superior, discovered that the endorsement was executed in a representative capacity, and ordered royalty payments to the father stopped. He wrote the son, who is a lawyer, and asked for various documents relating to the father's succession. These documents were supplied, and the company's attorney approved further payments to the administrator of the succession.

Whenever there is any [**4]  change in the division of the royalty from a lease, it is Superior's policy, in accordance with industry custom, to send an agreement to the royalty owners stating how the royalty is to be divided, and to ask them to sign it. The company recognizes that it is not necessary in many cases that a division order be executed;  [*1122]  it was not considered necessary in this case, but it nonetheless follows the practice of mailing a division order in the hope that the lessees will sign it and thus ratify the proposed new apportionment of royalty. Adam G. Nunez stated at oral argument that he never signs division orders; he sees no advantage to him, as a lessor, in doing so and the company has no right to require it. Accordingly, Superior followed its procedure and sent a royalty division order to Adam G. Nunez, as administrator of his father's succession, but he neither signed it nor returned it to the company.

On April 6, 1972, Adam G. Nunez sent Superior a copy of a judgment of possession recognizing him as the sole heir of all his father's property, including the royalty interest, and a letter requesting that payments of his father's interest be made to him. On June 15, 1972, the [**5]  company sent him a second royalty division order; this too was neither signed nor returned.

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