Sartor v. Arkansas Natural Gas Corp.

Background

Landowners in Richland Parish, Louisiana leased their land for natural gas in 1927 and were to receive one-eighth of the gas value but not less than three cents per 1,000 cubic feet. The landowners sued, claiming the wellhead market price had been higher than three cents in earlier years. A jury later found higher prices for a later period, but the defendant gas company won a summary judgment as to the earlier period, and the case reached the Supreme Court on the proper use of summary judgment.

Reasoning

The Court focused on whether there was any genuine factual dispute about the wellhead market price before March 20, 1930. It held summary judgment is only proper when no real factual dispute exists and the moving party is entitled to judgment as a matter of law. The company’s support relied mostly on affidavits from interested industry witnesses and a stipulation and bulletin, while the landowners pointed to prior verdicts, a stipulation showing some higher payments, and an affidavit from their counsel. Because credibility and the weight of competing evidence were matters for a jury, the Court ruled the summary judgment was improper and reversed.

Real world impact

The reversal sends the disputed earlier claim back for trial, keeping jury fact-finding in disputes over gas royalty valuation. It preserves the ability of landowners to challenge wellhead pricing and limits ending such claims solely by affidavits from interested industry witnesses. The decision does not finally resolve the amount due; a trial must still determine the facts.

Dissents or concurrances

Chief Justice Stone (joined by Justice Reed) dissented, arguing the papers showed sales at three cents or less, pipeline prices were not probative of wellhead value, and summary judgment was appropriate and should be affirmed.