West Dauphin Limited Partnership v. Callon Offshore Production, 725 SO. 2d 944 (Ala. 1998).

John A. Duff, J.D., LL.M., M.A.

The Alabama Supreme Court recently ruled¹ that a tract of submerged land off the coast of Dauphin Island belongs to the state rather than to a succession of private landowners who have paid taxes on the land since 1954. The state high court ruled that tax payments and other acts between the state and the private claimants did not constitute a conveyance of the state lands. In its opinion, the court also highlighted the uniqueness of the state's public trust lands and emphasized the policy of strictly limiting the conveyance of such lands to circumstances where the citizens of the state would realize significant benefits in return.

The dispute over the ownership of the submerged lands arose in 1994 after Callon Offshore Production ("Callon") began drilling operations on offshore tracts leased from the state of Alabama. Pursuant to the lease arrangements, royalties on the oil and gas obtained from the production sites were due and payable to the state. However, West Dauphin Limited Partnership ("West Dauphin") also claimed the right to the royalties, pursuant to their claim of ownership of the submerged lands.

Faced with the prospect of multiple claimants, Callon filed a complaint for a declaratory judgment in Montgomery Circuit Court regarding the legal ownership of the lease tracts. The company also established an interest-bearing escrow account with the court to hold royalty payments pending a final determination on the matter. The state and Callon filed cross-claims stating their ownership claims and Callon moved to have the court enter a summary judgment in favor of the state. The trial court did so and West Dauphin appealed. Upon review, the Alabama Supreme Court revisited the arguments of West Dauphin and the state regarding their respective claims of ownership.
 

West Dauphin's Claims

The West Dauphin group claimed ownership to the submerged lands at issue based on a series of events dating back over sixty years. In 1932, the state promulgated Act No. 147, a statute designed to "enable a private corporation to construct a bridge from the mainland of Mobile County to Dauphin Island."² The Act (later codified at Alabama Code Section 33-7-53) set out conditions which would allow for the conveyance of state submerged lands to private parties making improvements to such lands which would benefit the state.³ Under the terms of the Act, riparian owners would be able to seek title to adjacent submerged lands in return for not only building bridges or causeways, but also for making other improvements.⁴

West Dauphin outlined the extent to which their predecessors in title had dealt with state and local authorities in their move to acquire the adjacent submerged lands. In 1934, the property owners published a notification regarding their application for the right to fill and reclaim submerged lands adjacent to their properties. In 1938, they secured a Certificate of Approval from the State Docks Commission which noted that the owners' intent to reclaim and make improvements to land "is in the public interest." ⁵

The Certificate of Approval granted authority to the owners "to fill in, reclaim, or otherwise improve all tide lands and submerged lands, abutting or in front of their respective riparian holdings."⁶ The West Dauphin group contended that the certificate of approval in conjunction with subsequent dedication of private property by the owners to the Mobile County Chamber of Commerce constituted a quid pro quo (this for that) that supported the conveyance of the submerged lands to the group.

While the facts indicate that the improvements proposed to be made to the submerged lands never came to fruition, West Dauphin quoted paragraph 4 of 33-7-53 as supporting their position, arguing that the very act of "proposing such improvements" warranted conveyance of state submerged lands.⁷ Finally, West Dauphin argued that the state ought to be estopped from raising its claim of ownership in light of the fact that it had accepted tax payments from the group for more than fifty years.
 

The State of Alabama's Response

In response to West Dauphin's contentions, the state argued that when read in its entirety, the statute does not allow for conveyance of state submerged lands unless and until a claimant "actually makes the intended improvements."⁸ They noted that the first paragraph of the statute is controlling and, as such, the phrase in paragraph 4 upon which West Dauphin relied, cannot be read as a distinct means of acquiring state public trust lands^.9

Regarding West Dauphin's claim that a transfer or dedication of private lands in the 1950s constituted the consideration for an exchange of lands, the state responded that any dedication of private lands by West Dauphin was compensated for by a $1 million cash payment from the Mobile Chamber of Commerce.¹⁰
 

The State Supreme Court's Analysis

In assessing the claimants arguments, the Supreme Court agreed with the state that the statute at issue governing conveyances of state tidelands and submerged lands must be read in its entirety. In doing so, West Dauphin's contention that a mere proposal to reclaim and improve submerged lands in exchange for title to them must fail. The court also refused to accept West Dauphin's argument regarding an exchange of lands because the group failed to show that any such exchange was memorialized by a transfer of deeds. Finally, the court addressed the fact that West Dauphin had been paying ad valorem taxes on the land. The justices noted that while in certain rare circumstances the state might be estopped from raising a legal claim of right, no such circumstances existed in the case at hand, particularly in light of the state's claim of title to unique and valuable tidelands. As a result, the state supreme court affirmed the trial court's summary judgment in favor of the state.
 

ENDNOTES

1. A motion for rehearing was denied on December 4, 1998 and the Alabama Supreme Court issued a certificate of judgment on the case on December 22, 1998.

2. West Dauphin Limited at 947, (quoting Letter from Gessner T. McCorvey to John H. Peach, legal advisor to the Governor, October 20, 1932).

3. Ala. Code § 33-7-53 (1998). The statute states that "[i]n order to encourage the building of bridges, causeways and other development work and relief work, the owner of any lands in the State of Alabama abutting on tidelands, the title to which or control of which may now or hereafter be vested in the State of Alabama . . . shall be authorized to acquire such tidelands and to fill, reclaim or otherwise improve same and to fill in, reclaim or otherwise improve the abutting submerged land and to own, use, mortgage and convey the lands so reclaimed, filled or improved, and any improvements thereon . . ."

4. Id. at para. 1.

5. West Dauphin Limited Partnership at 949 (quoting State Docks Commission, Certificate of Approval (October 15, 1938)).

6. Id. at 946.

7. See Ala. Code § 33-7-53(4) (1975).

8. West Dauphin Limited Partnership at 951.

9. Id.

10. Id. at 954.
 

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