Source: https://supreme.justia.com/cases/federal/us/260/545/
Timestamp: 2019-04-26 04:23:46+00:00

Document:
1. The order of December 15, 1908, whereby, to conserve the public interests and in aid of contemplated legislation, specified public lands in Louisiana were "withdrawn from settlement and entry, or other form of appropriation," was within the power of the Executive. P. 260 U. S. 553. United States v. Midwest Oil Co., 236 U. S. 459.
2. The words "other form of appropriation" in this order include appropriations by mining locations. P. 260 U. S. 553.
3. The ejusdem generis rule is a rule of construction resorted to only as an aid in ascertaining the meaning of doubtful words and phrases; it will not be so employed as to render general words in a statute meaningless by assigning them to a genus fully occupied by the specific terms employed. P. 260 U. S. 553.
and equipping and operating the wells by means of which it was extracted. P. 260 U. S. 555.
5. A specific finding of fact, made by a master after seeing and hearing the witnesses, and supported by evidence, will be accepted here. P. 260 U. S. 556.
6. Location of one hundred and sixty acres of oil land by an association of eight persons and lease of the tract on the same day to a corporation, in pursuance of an understanding had prior to the location, is not fraudulent under the federal mining laws. P. 260 U. S. 557.
7. A general rule of state statutory law for measuring damages in cases of conversion is binding on the federal courts sitting in the state in suits in equity involving title to land there situate and seeking to restrain continuing trespasses upon it, in which damages for conversion of oil wrongfully extracted from the land are claimed as an incident to the equitable relief. P. 260 U. S. 557.
8. The enforcement of such a statute in an equity suit does not trammel or impair the equity jurisdiction of the federal courts. P. 260 U. S. 558.
9. Revised Statutes, § 721, providing that the laws of the states shall be rules of decision in trials at common law in the courts of the United States, is merely declarative of the rule that would exist in its absence, and does not by implication exclude such laws as rules of decision in equity suits. P. 260 U. S. 558.
10. Where some of a number of joint trespassers extract oil from land (in Louisiana) and pay royalties thereon to the others who share none of the cost of mining, all are liable to the landowner for the amount of the royalties without, any deduction of expenses, but a decree against all for the royalties and against the operating trespassers for the net proceeds of the oil extracted, insofar as it allows a double recovery of the royalties, is erroneous. P. 260 U. S. 559.
273 F. 135, 142, reversed.
Appeals from decrees of the circuit court of appeals affirming with modifications decrees of the district court in suits brought by the United States to confirm its title to various tracts of public land in Louisiana, to restrain continuing trespasses, and to secure accountings for the value of oil and gas wrongfully extracted.
on appeal in the circuit court of appeals, and argued together here.
The United States, as plaintiff, brought separate suits in equity in the United States District Court for the Western District of Louisiana against the several groups of appellants (defendants in the bills) to have its title to various parcels of land confirmed, possession thereof restored, and defendants enjoined from setting up claims thereto, extracting oil or other minerals therefrom, or going upon or in any manner using the same. There was in addition a prayer for an accounting in respect of the oil and gas removed from the lands by the defendants. The cases were referred to a master, and, upon his report, the district court entered decrees in favor of the plaintiff in all the cases, from which appeals were taken by defendants and cross-appeals by plaintiff to the circuit court of appeals. That court affirmed the decrees generally, but reversed the trial court insofar as it had allowed drilling and operating costs as a credit against the value of the oil extracted and converted by the defendants, respectively. 273 F. 135, 142. The cases come here by appeal.
"To secure the public interests, and, in aid of such legislation as may hereafter be proposed or recommended, the public lands in townships 15 to 23 north and ranges 10 to 16 west, Louisiana meridian, Natchitoches Land Office, Louisiana, are, subject to existing valid claims, withdrawn from settlement and entry, or other form of appropriation."
land by the respective groups of defendants or persons in privity with them. These locations, it will be assumed for the purposes of the case, complied with the requirements of the laws relating to the acquisition of mining rights. Before the locations were made, the question had been submitted by some of the defendants to counsel learned in the law, who advised that the President was without authority to make the withdrawal, and that the order, in any event, did not include appropriations of lands valuable for their deposits of mineral substances. All the locations, it is claimed, were made by the defendants in the honest belief that the order not only was made without authority, but that it did not purport to preclude appropriations under the mining laws.
Whatever legitimate doubts existed at the time of the locations respecting the validity of the executive order were resolved by the subsequent decision of this Court in United States v. Midwest Oil Co., 236 U. S. 459, where it was held that a similar order, issued in 1909, was within the power of the executive. Upon the authority of that case, the order here in question must be held valid.
the oil and gas which the lands were thought to contain pending investigation and congressional action, and this purpose would have been subverted by appropriations of the nature here involved quite as much as by other forms. We conclude, therefore, that the mining locations here relied upon fell clearly within the withdrawal order and consequently were prohibited by it.
The trial court so decided, but, following the report of the master, held that these locations were made in moral good faith, and that, under the laws of Louisiana, where the lands are situated, the defendants were liable only for the value of the oil after deducting therefrom the cost of drilling, equipping, and operating the wells, through and by means of which the oil was extracted. It was to reverse this latter holding that the cross-appeals were prosecuted. The circuit court of appeals reversed the district court in this particular upon the ground that the defendants' mistake, if any, was one of law, and constituted no excuse, and that the Louisiana law could have no application, since the suit was one in equity, to be governed by general principles and not by local laws or rules of decision.
"fruits produced by the thing belong to its owner, although they may have been produced by the work and labor of the third person . . . on the owner's reimbursing such person his expenses."
owner to enrich himself at the expense of another, even though he be in bad faith. This applies to all the expenses to which the possessor has been subjected."
Martel v. Jennings-Heywood Oil Syndicate, 114 La. 351, 359. The decisions of the Supreme Court of Louisiana have settled the rule that, under the provisions of this article of the Louisiana Civil Code, in awarding damages to the owner of property from which oil has been extracted, the cost of production must be first deducted from the value of the oil produced, even though the defendant went into possession in technical bad faith but in moral good faith. Cooke v. Gulf Refining Co., 135 La. 610, 618, and cases cited.
The defendants here, it is true, took possession of the lands in violation of the withdrawal order, but they did so in the honest, though mistaken, belief that the order was wholly without authority. Some of them had legal advice from competent counsel to that effect. It is common knowledge that the validity of the withdrawal order in question, as well as the later order of 1909, was in grave doubt until the decision of this Court in United States v. Midwest Oil Co., supra. Not only was a substantial opinion to be found among members of the profession that the order was invalid, but the decision here was by a divided Court. In view of these circumstances, we think it fair to conclude that the mining locations by defendants and the occupation and use of the lands thereunder were in moral good faith within the meaning of the Louisiana Code and decisions. New Orleans v. Gaines, 131 U. S. 191, 131 U. S. 218. The circuit court of appeals suggested doubts respecting the honesty of defendants' motives in seeking or in acting upon advice of counsel, but we cannot ignore the finding of the master explicitly to the effect that the locators proceeded in "moral good faith." His finding was made after hearing and seeing the witnesses and, having support in the evidence, will be accepted here. See Adamson v. Gilliland, 242 U. S. 350, 242 U. S. 353.
The Norvell case is sought to be distinguished from the others. It appears that the location covered one hundred and sixty acres, and was made by an association of eight persons. The lands were leased to the Gulf Refining Company upon the same day in pursuance of an understanding had prior to the location. But there is nothing in the federal mining laws which renders such a transaction fraudulent, and a careful reading of the evidence discloses nothing in the circumstances which would make the Louisiana statute as to the measure of damages inapplicable.
Was the lower court right in its conclusion that the Louisiana law was not applicable in an equity suit?
conferred by the statute of a state, or to add to or to take from a contract that which is made a part of it by the law of the state, except where the law impairs the obligation of a contract previously made."
"It is undoubtedly true that the United States courts, sitting as courts of equity, have a freedom of action in this respect which they do not possess as courts of common law, and that, as a general proposition, the equity jurisdiction of the federal courts cannot be limited or restrained by a state. Green v. Creighton, 23 How. 90; Payne v. Hook, 7 Wall. 430; Ridings v. Johnson, 128 U. S. 212; Mississippi Mills v. Cohn, 150 U. S. 202. But these decisions relate to the practice, the impairing of jurisdiction, rather than to the determination of the rights of parties after jurisdiction has been acquired."
Here, while the suit is one in equity, the statute and decisions relied upon have nothing to do with the general principles of equity or with federal equity jurisdiction, but simply establish a measure of damages applicable alike to actions at law and suits in equity. The case presented by the bills is primarily one involving title to land and seeking an injunction against continuing trespasses. The conversion of the oil, for which damages are sought, is incidental and dependent. The entire cause of action is therefore local (Ellenwood v. Marietta Chair Co., 158 U. S. 105), and the matter of damages within the controlling scope of state legislation. See Mullins Lumber Co. v. Williamson & Brown Land & Lumber Co., 255 F. 645, 647. The enforcement of such a statute in an equity suit in no manner trammels or impairs the equity jurisdiction of the national courts.
excludes such laws as rules of decision in equity suits. The statute, however, is merely declarative of the rule which would exist in the absence of the statute. Bank of Hamilton v. Dudley, 2 Pet. 492, 27 U. S. 525; Bergman v. Bly, 66 F. 40, 43. And it is not to be narrowed because of an affirmative legislative recognition in terms less broad than the rule. The rule that an affirmative statute, without a negative express or implied, does not take away the common law (Potter's Dwarris 68; Sedgwick Statutory Construction 29, 30) affords an analogy. See Bailey v. Commonwealth, 11 Bush (Ky.) 688, 691; Johnston v. Straus, 26 F. 57, 69.
"He to whom property is restored must refund to the person who possessed it, even in bad faith, all he had necessarily expended for the preservation of the property."
The general purpose and principle of that provision and of the provision which is relied upon in the instant case are the same.
who received the royalties were obviously not entitled to retain them, and having incurred no expense in connection with the mining operations, were liable for the entire amount and the defendants who paid the royalties were jointly liable as co-wrongdoers. A joint judgment against all was therefore proper. In the Mason case, however, the net value of the oil extracted exceeded in amount the royalties paid. The gross value was $67,732.94, the drilling and operating cost was $34,067.13, which, being deducted, left the net value of $33,665.81. Royalties were paid by the producer, the Gulf Refining Company, to its codefendants, amounting to $11,294.20. The master found and the district court held that the Gulf Refining Company was liable for the $33,665.81, and that the recipients of the royalties and the Gulf Refining Company were liable in solido for the additional sum of $11,294.20, making the total judgment $44,960.01. We think this was erroneous. For reasons already stated, plaintiff was entitled to recover the amount of the royalties without deduction in any event, but it was not entitled to recover them twice, and this is clearly the effect of the decree, the amount of which should be reduced to $33,665.81.
The district court reserved the question of the adjustment of equities among the several defendants in respect of the royalties, and no doubt an opportunity will be afforded by that court for its presentation and consideration. As to the rights of the respective defendants in that matter, however, we express no opinion.
The decrees of the circuit court of appeals are reversed and those of the district court are affirmed in all the cases, except that the decree in the Mason case is modified by reducing the amount to $33,665.81 -- $22,371.61 against the Gulf Refining Company and $11,294.20 against that defendant and the respective royalty recipients in solido -- and, as so modified, it is affirmed.

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