Title Matters – Vol. July 2013

Title Matters is a monthly service presented by LAILTA solely to its members.

This month however we are sharing our Title Matters newsletter with non-members as well as part of our membership drive for 2013-14.  If you would like to belong to LAILTA, fill out the membership application. You may also be interested in attending the National Association Annual Convention and can register at the seminars page.

Thank you,
Ben Marshall, President LAILTA
Bulldog Title Insurance Agency, L.L.C.
1810 Roselawn Avenue
Monroe, La. 71201
Phone: (318)361-0061    Fax: (318)361-0062

This Month’s article presented by:
Benjamin A. Luke, Attorney at Law, LLC
P.O. Box 427
643 North Main St.
Marksville, LA 71351
Phone: (318) 253.6565
Fax: (318) 253.6511
E-mail: ben@benlukelaw.com
Web: www.benlukelaw.com

Succession Representatives: No Consent Needed for Granting Mineral Leases

Davis v. Prescott, 47,799 (La. App. 2 Cir. 2/27/13),___So.3d___. (copy attached)

In August 2006, Edward Thomas Davis died leaving five surviving children as well as a tract of immovable property in Claiborne Parish. Elmer E. Prescott III, decedent’s son-in-law, was appointed independent executor of the estate. On June 19, 2007, without first informing the legatees, Prescott, as the independent executor of the estate, granted a three- year mineral lease on the property to a third party.  In March 2008, the succession was closed and Steven M. Davis and his four siblings were place in possession of the property.

Subsequently, Davis filed suit against Prescott, arguing, inter alia, that Prescott breached his fiduciary duty as an executor by granting a mineral lease without first obtaining Davis’s permission.  After a trail, the court found Prescott liable for $69,436 for failing to obtain consent from all legatees prior to granting a mineral lease greater than one year on the property.  The court later signed an amended judgment correcting a clerical error changing the damages award to $40,000. Prescott appealed.

Reversing the trial court’s decision, the Louisiana 2nd Circuit Court of Appeal held that La. C.C.P. Art. 3226 does not require a succession representative to obtain a legatee’s consent prior to entering a mineral lease on succession property for greater than one year.  Specifically, the appellate court held that the first paragraph of article 3226, which the trial court relied on, does not apply to the granting of mineral leases.  Rather, the second and third paragraphs of Article 3226, added by Acts 1974, No. 131, §1, govern the treatment of mineral leases, and nowhere in these paragraphs is there a requirement to obtain the consent of the heirs or legatees.

            In reaching its holding, the court reasoned that the language in the second paragraph of Article 3226, stating that a court “may authorize the granting of mineral leases on succession property” and that “the leases may be for a period of greater than one year as may appear reasonable to the court,” indicated legislative intent to treat mineral leases differently than surface leases.  The court found that is the Legislature had intended for requirement of obtaining an heir’s consent to apply to mineral leases, there would be no need for the additional verbiage in the second paragraph.

The court next reasoned that the history of the law pertaining to a succession representative’s authority to lease mineral rights indicated that the Legislature never intended the requirement for a legatee’s consent deriving from the first paragraph of article 3226 to apply to a succession representative’s authority to grant mineral leases on succession property.  The court explained that obtaining consent of interested legatees or heirs has never been required in order to grant mineral leases on succession property.  Specifically, prior to a 1974 amendment, the language of Article 3226 specifically stated that obtaining such consent did not apply to the granting of mineral leases, and present language Article 3226 did nothing to alter these longstanding requirements. On the contrary, the court concluded that the present language serves to perpetuate them.

Accordingly, the court held that the trial court erred in relying on the first paragraph of this article to the exclusion of the second paragraph, which specifically pertains to the leasing of mineral rights. Because Article 3226 does not require a succession representative to obtain a legatee’s consent prior to entering a mineral leases on succession property for greater than one year, the court reversed the judgment of the trial court in favor of Prescott.

*Citing Christina Peck Samuels, LA Bar Journal

As a service for LAILTA members and subscribers, you can expect an email each month with a short discussion on  matters of interest to the real estate attorney and title agent.  This is a monthly service, except for the months in which seminars are scheduled.  LAILTA will email you recent cases of interest, notes on legislation and reminders of seldom thought of statutes and rules that affect our day to day work. 

LAILTA is a non-profit trade association that represents the interests of independent title insurance agents and independent real estate settlement professionals from across the State of Louisiana. It was created by independent land title agents who seek to represent independent and locally owned businesses from the title insurance, abstracting, surveying, and real estate community.

Louisiana Association of Independent Land Title Agents

4980 Bluebonnet Blvd., Ste. A, Baton Rouge, Louisiana 70809