Source: https://supreme.justia.com/cases/federal/us/331/440/
Timestamp: 2019-04-24 21:55:58+00:00

Document:
1. Title to lands within a section granted to the State as school lands by the Wyoming Enabling Act of July 10, 1890, but which, prior to completion of an official survey, were included in a petroleum reserve by a Presidential order promulgated under authority of the Act of June 25, 1910, held not to have vested in the State. Pp. 331 U. S. 443-455.
(a) The Wyoming Enabling Act, though containing words of present grant, did not vest in the State, immediately upon admission into the Union, an indefeasible proprietary interest in the unsurveyed section, of such nature as precluded disposition by the Federal Government for other purposes. Pp. 331 U. S. 444-446.
(b) Nothing in the legislative history of § 14 of the Organic Act of 1868, nor of other Acts passed prior to the Wyoming Enabling Act, supports the State's claim to title in this case. Pp. 331 U. S. 446-448.
(c) The words "but shall be reserved for school purposes only" in § 5 of the Enabling Act, together with the words of present grant in § 4, are not to be construed as immediately vesting in the State an indefeasible interest in the granted lands, nor as a limitation on the Federal Government's power to deal with such lands in a manner consistent with applicable federal statutes. Pp. 331 U. S. 448-455.
2. The State cannot be deemed to have acquired an indefeasible equitable right to the section on the basis of a survey which was incomplete. Pp. 331 U. S. 455-456.
4. The plaintiff's exception to the master's failure, even on the present record, to make findings of the defendants' bad faith and to recommend a decree awarding damages accordingly cannot be sustained. Pp. 331 U. S. 459-460.
5. The good faith issue having been foreclosed in defendants' favor by the master before any evidence had been introduced and consistently throughout the hearing, it was not incumbent upon the defendants to make an offer of proof of good faith in order to have a trial of the issue if the master should be found to have been wrong. P. 331 U. S. 459.
6. Constructive knowledge of the owner's title does not demonstrate a trespasser's bad faith as a matter of law. P. 331 U. S. 460.
7. Upon the record in this case, it is necessary to try the issue of defendants' good faith throughout the entire period in dispute, as the basis for determining the measure of plaintiff's recovery. P. 331 U. S. 460.
8. The master should make special finding -- so far as the parties request them, and adduce competent evidence to support them -- as to the value of the oil produced and the amount and nature of any collateral proceeds from the operation, separately, and as to the amount of each item of income and expense by the month and year. P. 331 U. S. 460.
This was an original suit in equity in this Court, brought by the United States against the Wyoming and the Ohio Oil Company, to quiet title in the United States to certain lands in Wyoming and to recover for oil removed from the lands by the Company under a lease from the State. The case was referred to a special master. Upon exceptions by the plaintiff and the defendants to the master's report, the case is recommitted to him for further proceedings in conformity with the opinion of this Court, p. 331 U. S. 461.
By joint answer, the defendants claimed title in the State, and that both defendants have at all times in good faith believed title to be in the State.
Defendants' exceptions to the master's findings and conclusion relating to title give expression to two basic contentions: first, that the Enabling Act immediately vested in the State an indefeasible right to whatever lands would be found on later survey to lie within Section 36; second, that a so-called Coleman survey of 1892 identified Section 36 sufficiently to create then in the State an indefeasible equity, which ripened into full legal title when the complete survey was made and approved in 1916. These contentions will be further elaborated and discussed in order.
Defendants contend, however, that, regardless of the rule generally applicable in school grant cases, the provisions of the Wyoming Enabling Act are such that, upon her admission into the Union in 1890, an indefeasible proprietary interest in Sections 16 and 36 in each township, whether surveyed or unsurveyed, vested immediately in the State, except as to such sections as had been disposed of previously by the Federal Government for other purposes. This interest, it is contended, is of such a nature, as to preclude any appropriation or reservation of unsurveyed Sections 16 and 36 by the Federal Government after the date of Wyoming's admission into the Union. It is defendants' position, therefore, that the order of the President of the United States issued December 6, 1915, which caused the lands here in issue to be included in Petroleum Reserve No. 41, was not sufficient to defeat the State's interest, even if it be assumed that a survey of that section had not been completed at that time. We accordingly turn our attention to the provisions of the Wyoming Enabling Act which defendants rely upon to support their contentions.
. . . are hereby granted to said State for the support of common schools, . . . Provided, That section six of the act of Congress of August ninth, eighteen hundred and eighty-eight [Footnote 7] . . . shall apply to the school and university indemnity lands of the said Wyoming so far as applicable."
immediately vesting in the State title to sections of the school lands unsurveyed at the date of admission. [Footnote 9] In United States v. Morrison, 240 U. S. 192, 240 U. S. 205, this Court stated: "We regard the decision in the Heydenfeldt case as establishing a definite rule of construction."
"when the lands in the said territory shall be surveyed under the direction of the government of the United States, preparatory to bringing the same into market. . . ."
During the course of the debates on the bill, § 14 was amended to eliminate the phrase quoted above, so that, as finally enacted, the Organic Act made a present reservation of the lands for school purposes. [Footnote 12] It is not defendants' contention that § 14 of the Organic Act must necessarily prevail over the provisions of the Enabling Act. It is urged, however, that, as a guide to construction, the legislative history of § 14 of the Organic Act clearly indicates an intention on the part of Congress to vest in Wyoming, at the date of its admission as a State, immediate interests in all school lands, whether surveyed or unsurveyed, such as to defeat any subsequent attempts by the Federal Government to reserve the sections for other purposes.
years after the passage of the Organic Act, Congress reserved a large tract of the public lands in Wyoming for the Yellowstone National Park. [Footnote 13] In the Enabling Act, it was specifically provided that Wyoming was not entitled to indemnity for sections 16 and 36 in the townships included within the Yellowstone reservation. Even as to the rights of individual settlers on the school lands, Congress pursued no consistent course. Although the amendment to § 14 of the Organic Act apparently was passed to protect the right of the Territory to the school lands against the claim of such individuals, Congress, in the Act of August 9, 1888, [Footnote 14] gave recognition to the claims of homesteaders and preemptors established prior to survey and granted to the Territory the right to select other portions of the public lands in lieu thereof. We conclude, therefore, that nothing in the legislative history of the acts passed before the Wyoming Enabling Act gives support to the State's claim to title in this case.
"That all lands herein granted for educational purposes shall be disposed of only at public sale . . . , and such land shall not be subject to preemption, homestead entry, or any other entry under the land laws of the United States, whether surveyed or unsurveyed, but shall be reserved for school purposes only."
to dispose of or to deal with any sections 16 and 36 of the public lands in the State not sold or otherwise disposed of prior to the passage of the Enabling Act. This phrase, read in connection with the language of present grant in § 4, it is asserted, reveals a clear intention to vest immediately in the State an indefeasible interest in all such lands. We do not believe that the language should be so construed.
Defendants' view that, by virtue of the language of the Enabling Act, Congress extinguished the powers of the Federal Government subsequently to dispose of the unsurveyed school sections in the exercise of its governmental functions, admittedly would place Wyoming in a favored position among the school grant States. Such a result does not accord with the Congressional expectation that the school grant should have "equal operation and equal benefit in all the public land States or Territories." [Footnote 28] Defendants suggest no special circumstances or peculiar considerations of policy which convincingly indicate a purpose on the part of Congress to place Wyoming on other than an equal footing with other States with respect to the powers of the Federal Government in the unsurveyed school sections.
lands. That Congress intended such complication seems most unlikely when it is observed that the policy underlying the grant of lands to the State for school purposes could be achieved without producing that result. Thus, § 4 of the Enabling Act makes provision for indemnification to the State where the designated school sections are disposed of for other purposes by authorizing the selection of lands by the State in lieu thereof. Section 6 of the Act of August, 9, 1888, [Footnote 30] which was incorporated into § 4 of the Enabling Act "so far as applicable," specifically provides for the selection of lieu lands where the school sections "have been or shall hereafter be reserved for public purposes."
interest in the lands in issue that could not be defeated by the inclusion of those lands in a petroleum reserve by the Federal Government acting prior to survey.
We also think that defendants' reliance on the Coleman survey of 1892 as the basis of an indefeasible equitable right to Section 36 is misplaced, and may be answered briefly.
We find no merit in this argument. The railroad land grant cases are not a propos. Not only do they deal with statutes different from the one before us in the present case, but also they have nothing to do with the identification of unsurveyed lands by the protraction of partial surveys. In the Morrison case, [Footnote 35] this Court held a completed but unapproved survey inadequate to vest any rights to school lands. A fortiori, defendants are not benefited by the Coleman survey.
For the foregoing reasons, defendants' exceptions to the master's findings and conclusions in respect to title are overruled.
Having decided that plaintiff has title to Section 36, we now turn to the question of its right to recover a money judgment because of the defendant Company's oil operations thereon.
evidence tending to show that defendants knew of plaintiff's claim to the land and realized its superiority over their own claim at least as early as 1929.
This last evidence the master refused to admit. He thought that, in order to recover for a "bad faith" trespass, plaintiff was required to put the question in issue by alleging "bad faith" in the complaint, which it had not done. He also thought that plaintiff's allegation of defendants' claim of right in Section 36 was, in effect, an admission of defendants' good faith. Without having tried the bad faith issue, the master stated that both defendants sincerely believed in their asserted rights, and made a finding of the State's good faith. From this he concluded that plaintiff's recovery should be measured by the gross proceeds realized on the operation, less the proper expenses incurred.
From the other evidence heretofore mentioned, the master found that the total amount of the Company's gross proceeds, including both the value of oil produced and steam earnings, was $168,317.53, and that its total expenses were $232.797.27, including royalties paid in the amount of $17,306.30. [Footnote 38] He held that all proven elements of the Company's expenses except royalties were properly deductible. As expenses so allowed had been about $47,000.00 greater than gross proceeds, the master concluded that plaintiff should recover nothing.
Plaintiff excepts to these findings and conclusions in several respects. First, it maintains that the pleadings properly framed the issue of bad faith, and contends that the master therefore erred in excluding evidence relating to this issue and in finding that either or both of the defendants had acted innocently.
petroleum products extracted from said land by the defendants or either of them." In the answer, besides claiming title and oil rights, defendants averred their good faith belief that they had such rights, which plaintiff traversed in a reply. We have no doubt that these pleadings put the question of defendants' good faith in issue. Obviously, the master's statement in his report that the defendants believed in their asserted rights is unwarranted on the present record. We conclude, therefore, that the master erred in excluding any competent evidence material to the good faith issue, and in finding that either or both defendants acted in good faith.
Second, plaintiff excepts to the master's failure, even on the present record, to make findings of defendants' bad faith and to recommend a decree awarding damages accordingly. [Footnote 42] It urges, as one ground for this exception, that defendants, having the burden of proof on that issue, failed to introduce sufficient evidence to make a prima facie showing of good faith.
For reasons already suggested, we need not consider whether defendants carried that burden. The view that the good faith issue was foreclosed in defendants' favor was expressed by the master before any evidence had been introduced, and consistently throughout the hearing. Even if defendants had doubted the correctness of this view, they were not bound to repudiate it and make an offer of proof of good faith in order to have a trial of the issue if the master should prove to be wrong.
from the readily available public records who owned the land," or they have acted "will full knowledge that the section belonged to the United States."
It is clear, however, that constructive knowledge of the owner's title does not demonstrate defendants' bad faith as a matter of law. [Footnote 43] As to whether an intentional or negligent failure to ascertain the true incidence of title alone constitutes bad faith, we need not now decide, as no such fact has been established.
Plaintiff's alternative contention that we should now enter a finding of defendants' bad faith for the post-1929 period at least, because, as to it, "there is positive proof that the Company knew . . . the United States owned the land," may be answered in the same way. Plaintiff proffered evidence of such knowledge, but we cannot say that this evidence amounted to conclusive proof. We think the necessity of trying the issue of defendants' good faith throughout the entire period in dispute, preliminary to determining the measure of plaintiff's recovery, cannot be avoided.
Third, plaintiff urges, and we agree, that the master should make special findings -- insofar as the parties request, and offer competent evidence to support them -- as to the value of the oil produced and the amount and nature of any collateral proceeds from the operation, separately, and as to the amount of each item of income and expense by the month or year. Such action should enable the Court to dispose of the case on the next hearing, regardless of any revisions it might make in the master's findings, conclusions, or recommended decree.
was committed in good faith. Obviously, such questions must remain moot until this issue is decided.
The case is recommitted to the master for further proceedings in conformity with this opinion.
Jurisdiction of this Court is invoked under Article III, § 2, cl. 2, of the Constitution, and § 233 of the Judicial Code, 28 U.S.C. § 341. United States v. Texas, 143 U. S. 621.
The master's report was filed October 14, 1946. Plaintiff's exceptions thereto were denied on November 29, and defendants' on December 2, 1946. Argument was heard by the Court on April 7, 1947.
This order was promulgated under authority of the Act of June 25, 1910, 36 Stat. 847.
The Land Ordinance of 1785 provided: "There shall be reserved the lot No. 16, of every township, for the maintenance of public schools within the said township. . . ." Between 1802 and 1846, the grants were of the 16th section in each township; thereafter, of sections 16 and 36. In some instances, additional sections have been granted. United States v. Morrison, 240 U. S. 192, 240 U. S. 198.
Wisconsin v. Lane, 245 U. S. 427; United States v. J. S. Stearns Lumber Co., 245 U. S. 436; United States v. Morrison, supra; Minnesota v. Hitchcock, 185 U. S. 373; Heydenfeldt v. Daney Gold & Silver Mining Co., 93 U. S. 634. And see Wyoming v. United States, 255 U. S. 489, 255 U. S. 500-501.
"That where lands in the sixteenth and thirty-sixth sections, in the Territory of Wyoming, are found upon survey to be in the occupancy, and covered by the improvements of an actual preemption or homestead settler, or where either of them is fractional in quantity, in whole or in part, or wanting because the townships are fractional or have been or shall hereafter be reserved for public purposes, or found to be mineral in character, other lands may be selected by an agent appointed by the governor of the Territory in lieu thereof, from the surveyed public lands within the Territory not otherwise legally claimed or appropriated at the time of selection. . . ."
"That sections numbers sixteen and thirty-six in every township, and, where such sections have been sold or otherwise disposed of by any act of congress, other lands equivalent thereto in legal subdivisions of not less than one quarter-section, and as contiguous as may be, shall be, and are hereby, granted to said state for the support of common schools."
"It is also urged that the court emphasized the fact that there had been no sale or disposition of the public lands in Nevada prior to the enabling act, and therefore that the clause could refer only to future disposition, whereas, in the case of Oregon, there had been earlier provisions for the disposal of the public domain. But Congress used the same phrase substantially in nearly every one of the school grants, and it was the manifest intention to place the states on the same footing in this matter. The same clause, relating to the same subject and enacted in pursuance of the same policy, did not have one meaning in one grant and a different meaning in another; it covered other dispositions, whether prior or subsequent, if made before the land had been appropriately identified by survey and title had passed."
State of Colorado, 6 L.D. 412.
Cong.Globe, 40th Cong., 2d Sess., 2801, 2802.
Act of March 1, 1872, 17 Stat. 32.
Cf. United States v. Unites Mine Workers of America, 330 U. S. 258; Guarantee Title & Trust Co. v. Title Guaranty & Surety Co., 224 U. S. 152, 224 U. S. 155.
19 Cong.Rec. 2802; Sen.Journ.50th Cong., 1st Sess., p. 696. Section 6 of that bill contained the following language: " . . . and such sections shall not be subject to preemption or entry, whether surveyed or unsurveyed, but shall be reserved for school purposes only."
H.R. Rep. No. 39, 51st Cong., 1st Sess., 26.
"Where settlements with a view to preemption or homestead have been, or shall hereafter be made, before the survey of the lands in the field, which are found to have been made on sections sixteen or thirty-six, those sections shall be subject to the claims of such settlers, and if such sections, or either of them, have been or shall be granted, reserved, or pledged for the use of schools or colleges in the State or Territory in which they life, other lands of equal acreage are hereby appropriated and granted, and may be selected by said State or Territory in lieu of such as may be thus taken by preemption or homestead settlers. And other lands of equal acreage are also hereby appropriated and granted and may be selected by said State or Territory where sections sixteen or thirty-six are mineral land, or are included within any Indian, military, or other reservation, or are otherwise disposed of by the United States. . . ."
H.R. Rep. No. 2384, 51st Cong., 1st Sess.
Wyoming v. United States, 255 U. S. 489; State of Wyoming, 27 L.D. 35.
H.R. Rep. 229, 73d Cong., 1st Sess.; Sen.Rep. No. 10, 73d Cong., 1st Sess.
48 Stat. 350. Section 5 of the Enabling Act was amended so as to permit the State to lease the school lands for periods of ten years, as contrasted to a five-year limitation contained in the section as originally enacted.
H.R. Rep. No. 2384, 51st Cong., 1st Sess., 1. Sen.Rep. No. 502, 51st Cong., 1st Sess., 1.
Thus, the same volume of the Statutes at Large containing the Wyoming Enabling Act also contains at least two pieces of such legislation. 26 Stat. 478, 650.
South Dakota v. Riley, 34 L.D. 657; State of Montana, 38 L.D. 247; State of Utah, 53 L.D. 365. And see F. A. Hyde & Co., 37 L.D. 164; State of New Mexico, 52 L.D. 679. Also in accord are decisions in Utah v. Work, 55 App.D.C. 372, 6 F.2d 675; Thompson v. Savidge, 110 Wash. 486, 188 P. 397.
California v. Deseret Water, Oil & Irrigation Co., 243 U. S. 415, 243 U. S. 421.
R.S. § 2395, 43 U.S.C. § 751. Barnhurst v. State of Utah, 30 L.D. 314; Harris v. Minnesota, Copp.L.L. 631 (1875-1882).
Cf. Santa Fe Pac. R. Co. v. Lane, 244 U. S. 492; St. Paul & Pac. R. Co. v. Northern Pac. R. Co., 139 U. S. 1; Grinnell v. Chicago, Rock Island & Pac. R. Co., 103 U. S. 739.
Accounts for the period January 1, 1945, to date of hearing were to be prepared and submitted later, along with those for any subsequent periods for which defendants might be liable.
The total of each of these items for the entire period was as follows: value of oil produced, $167,049.54; steam earnings, $1,267.99; capital expenses.$118,628.84; operating expenses, $70,083.73; overhead expenses, $22,461.00; taxes, $4,317.40; royalties, $17,306.30. It does not appear what the nature of the so-called "steam earnings" was.
The totals found by the master are the sums of the appropriate individual items which were in evidence, and which were recited in footnote 37 No question was raised as to the accuracy of any of these figures.
See Martel v. Hall Oil Co., 1927, 36 Wyo. 166, 178, 253 P. 862, 864, 255 P. 3; United States v. St. Althony R. Co., 192 U. S. 524; Pine River Logging & Improvement Co. v. United States, 186 U. S. 279; Wooden-Ware Co. v. United States, 106 U. S. 432; United States v. Homestake Mining Co., 117 F. 481; Winchester v. Craig, 33 Mich. 205; Livingstone v. Rawyards Coal Co., 5 L.R. App.Cas. 25 (H.L.1880); Summers, Oil and Gas, §§ 23, 24.
Liberty Bell Gold Mining Co. v. Smuggler-Union M. Co., 203 F. 795, 802, cert. denied, 231 U.S. 747; Elkhorn-Hazard Coal Co. v. Kentucky River Coal Corp., 20 F.2d 67, 71.
Guffey v. Smith, 237 U. S. 101; Benson Mining & Smelting Co. v. Alta Mining Co., 145 U. S. 428. Cf. Hall Oil Co. v. Barquin, 33 Wyo. 92, 137, 237 P. 255, 270.
The measure of damages claimed by plaintiff's exceptions on the theory about to be stated are, as against the Company, the full proceeds of the oil plus "steam earnings," and as against the State, the amount of royalties received.
Guffey v. Smith, supra, at 237 U. S. 118.

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