AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

• The case involves a dispute between the plaintiffs, who are mineral rights owners of the "Runnin’ AZH Com. No. 1 Well," and the defendant, Yates Petroleum Corp., regarding the entitlement to interest on proceeds from the production of the well. The plaintiffs argued they were entitled to interest on the proceeds they received, while the defendant withheld interest based on a clause in the division orders signed by the plaintiffs, which authorized payment without interest if there was a question concerning the plaintiffs’ marketable title (paras 2-3).

Procedural History

• District Court of Chaves County: The district court certified the class and ruled that the agreement in the division order to withhold payment without interest violates Section 70-10-4 of the New Mexico Oil and Gas Proceeds Payment Act, declaring the agreement void and awarding damages to the plaintiffs (para 4).

Parties' Submissions

• Plaintiffs-Appellees: Argued that they are entitled to interest on the proceeds from the well production, despite the clause in the division order, based on the New Mexico Oil and Gas Proceeds Payment Act (N/A).
• Defendant-Appellant: Contended that Section 70-10-4 does not prohibit parties from contractually agreeing to forego interest on payments if the delay in payment results from a question concerning the seller’s marketable title (para 5).

Legal Issues

• Whether a contractual agreement to waive interest on proceeds owed to mineral owners is void under the New Mexico Oil and Gas Proceeds Payment Act (NMSA 1978, Sections 70-10-1 to -6) (para 1).

Disposition

• The Court of Appeals of the State of New Mexico reversed the district court's decision, holding that the Act does not render such a contract void (para 1).

Reasons

• Per VIGIL, J. (KENNEDY and HANISEE, JJ., concurring): The court concluded that the New Mexico Oil and Gas Proceeds Payment Act does not prohibit contractual agreements to waive interest on payments delayed due to questions concerning marketable title. The court emphasized New Mexico's strong public policy favoring the freedom to contract unless contracts clearly contravene law or public morals. It found no explicit language in the Act prohibiting such contractual waivers and noted the Act's allowance for contractual modification of payment periods. The court also referenced the case of Murdock v. Pure-Lively Energy 1981-A, Ltd., which supported the enforceability of division orders waiving interest payments. The decision was based on the interpretation of statutory language, legislative intent, and the principles of contractual freedom, concluding that the contractual waiver of compensatory interest in the division orders does not violate New Mexico public policy and is enforceable (paras 6-26).