Sun Oil Co. v. Wortman

486 U.S. 717 (1988)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

Sun, (D) a Delaware corporation with its principal place of business in Texas, extracted gas from properties that it leased from Wortman (P). The leases provided that P would receive a royalty, usually one-eighth of the proceeds, from the sale of gas. S sold the gas in interstate commerce at prices that had to be approved by the Federal Power Commission (FPC). D made no royalty payments to P on the increased amounts collected until the FPC approved the increases. P's royalty shares of these increases have been called 'suspended royalty payments' in this litigation. In July 1976, S paid D $1,167,000 in suspended royalty payments after the FPC approved increases that had been collected from July 1974 through April 1976. In April 1978, petitioner paid P $2,676,000 in suspended royalty payments after the FPC approved increases that had been collected from December 1976 through April 1978. P filed a class action on behalf of all landowners to whom D had made or should have made suspended royalty payments, seeking interest on those payments for the period that the payments were held and used by D. The trial court ruled that Kansas law governed all claims for interest, even claims relating to leases in another State and brought by residents of that State. Under the applicable Kansas 5-year statute of limitations, Ps' claims for interest on the suspended royalty payments made in July 1976 were timely. D was found liable and appealed. The Supreme Court of Kansas affirmed. D contends that the United States Constitution's full faith and credit clause (Art IV, 1) and the due process clause of the Constitution's Fourteenth Amendment required application of the statutes of limitations of the states whose substantive law governed Ps' claims, under which the suit would have been barred, and (2) those constitutional provisions mandated interpretations of the other states' substantive law concerning interest that were different from those arrived at by the Kansas courts. The Supreme Court granted certiorari.