Source: http://pa.findacase.com/research/wfrmDocViewer.aspx/xq/fac.19590324_0040141.C03.htm/qx
Timestamp: 2016-10-28 23:36:06
Document Index: 684942411

Matched Legal Cases: ['§ 2', '§ 1', '§ 283', '§ 48', '§ 462', '§ 6', '§ 83', '§ 83']

| Proctor v. Sagamore Big Game Club
decided: March 24, 1959.
At stake is the ownership and right to possession of natural gas underlying unseated lands*fn1 known as Warrant 5343 in Elk County, Pennsylvania. A discovery well completed in April 1953 and seven subsequent wells, the last of which was completed in September 1954, demonstrated that these lands had substantial value because of the existence of subsurface natural gas in commercial quantities. The present action followed.
Plaintiffs claim to be either the legal or equitable owners of the natural gas underlying and produced and sold from the lands. Defendants are rival claimants who are alleged to be trespassers. They comprise persons and corporations claiming ownership of the warrant with royalty rights in the gas, a lessee-producer, and a purchaser of the gas. Plaintiffs seek possessory, monetary and injunctive relief, and an adjudication that defendants hold the gas as trustees for plaintiffs. Plaintiffs made timely demand for a trial by jury.*fn2
Preliminarily, it is desirable to say a word about the record upon which our decision will be based. Many of plaintiffs' arguments pertaining to its equitable interest in the gas rest upon unsworn statements by plaintiffs' attorneys as to the contents of documents and the existence of facts detailed in Plaintiffs' Statement of Position and Plaintiffs' Reply to Defendants' Statement of Position. These were filed for use at a pre-trial conference at a time when a trial was in contemplation. These self-serving unverified statements of fact asserted by plaintiffs are not the type of proof which F.R.Civ.P. Rule 56(c), 28 U.S.C. requires for the resolution of a motion for summary judgment. Nor are the unsworn statements concerning the contents of documents adequate under Rule 56(e). Nevertheless, it appears from the position of the defendants at pre-trial, the decision of the Court below, and the brief of the defendants in this Court, that the defendants, both in this Court and in the District Court, were willing to accept as true for the purpose of testing defendants' motion for summary judgment all of the factual statements contained in plaintiffs' statements of position.*fn3 Accordingly, we shall likewise do so.
On June 5, 1893 Proctor acquired title to Warrant 5343 from Bigler, et al. At the time the taxes for 1892 and 1893 had been assessed against the warrant as unseated lands, were unpaid, and constituted a lien upon the warrant. On June 11, 1894 the treasurer of Elk County sold the warrant for the 1892 taxes. G. W. Childs was the purchaser and he received a deed from the treasurer dated June 11, 1894.
The tax sale and the treasurer's deed, if valid, conferred upon Childs a fee simple title. Act of April 3, 1804, P.L. 517, 4 Sm.L. 201, § 2; White v. First National Bank of Emporium, D.C.M.D.Pa.1938, 24 F.Supp. 290, 293. This included not only the surface of the land but subsurface natural gas as well. See Powell v. Lantzy, 1896, 173 Pa. 543, 34 A. 450.*fn4 On June 28, 1898 Childs assigned his tax deed to Elk Tanning Company. The claim of defendants rests upon the tax sale to Childs, the assignment of the tax deed to Elk Tanning Company, and subsequent conveyances and leases.
On October 1, 1894, three months after the tax sale, Proctor purported to convey the same warrant to Elk Tanning Company by a deed which reserved to himself and to his heirs and assigns, all of the natural gas in, upon or under the lands. Plaintiffs base their claim to the natural gas on the title which Proctor acquired from Bigler and on the reservation in Proctor's deed to Elk Tanning Company, even though the latter deed was not executed until three months after the delivery of the tax deed to Childs. Plaintiffs argue that the gas reservation in the Proctor deed was valid because the prior tax deed to Childs was invalid and hence Proctor's title was not divested thereby. The invalidity of the tax deed, plaintiffs say, was due to the failure of the treasurer to acknowledge the tax deed in open court as was required by Section 2 of the Act of April 3, 1804, P.L. 517, 4 Sm.L. 201. This omission is established, plaintiffs assert, by the failure of the "Trial List and Court Minutes" of the Court of Common Pleas of Elk County to make any reference to the acknowledgement. But the silence of the minutes in this regard does not invalidate the sale if in fact the tax deed was acknowledged in open court. The Act of May 5, 1941, P.L. 38, § 1, 21 P.S. § 283 was enacted to make tax titles secure against just such an argument as plaintiffs make.*fn5
It is of no moment that Proctor, in his deed to Elk Tanning Company, reserved the natural gas to himself and to his heirs and assigns. If the tax sale to Childs cut off all of Proctor's legal title to the warrant, including his title to the natural gas, subject only to his right of redemption under Pennsylvania law*fn6 - as we hold that it did - then when Proctor gave his deed to Elk Tanning Company, he had no legal title in the surface to convey to Elk Tanning Company or in the natural gas to reserve to himself. The reservation could not revive in Proctor the legal title which he had lost by the earlier tax sale.
Plaintiffs next contend that even if the treasurer's acknowledgement of the tax deed to Childs was valid and Childs purchased a good legal title thereby, nevertheless Proctor retained an equitable interest in the gas. Plaintiffs say that they "proposed to prove facts" showing an agreement between Proctor and Elk Tanning Company under which the latter assumed to clear Proctor's title to Warrant 5343 of all debts and encumbrances through 1892 and that it did so either by way of payment of the tax or redemption of the warrant from the sale; or alternatively, that Elk Tanning Company failed to carry out its commitment as a result of which the warrant was acquired by it by fraud. The effect of the summary judgment, plaintiffs say, is to deprive them of their right to present to the jury for its determination the issues of payment, redemption and fraud.*fn7
The difficulty with this argument is that there are no facts before us from which the existence of an agreement between Proctor and Elk Tanning Company such as plaintiffs postulate can be found either directly or by implication.*fn8 Plaintiffs' proposal to prove the agreement at the trial is not enough to defeat the summary judgment motion. The liberality of our treatment of the facts included in plaintiffs' statements of their position cannot be stretched to the point where we accept as true what plaintiffs characterize as "the well-founded supposition" that at one time such an agreement existed; particularly as defendants have refused to concede the existence of such an agreement. A party who desires to resist a motion for summary judgment cannot hold back his evidence until trial, but must bring it before the Court when the motion is heard so that it may then be judicially evaluated. Engl v. Aetna Life Ins. Co., 2 Cir., 1943, 139 F.2d 469, 473; 6 Moore Federal Practice, PP. 56.11 (2d Ed.).
But wholly apart from any agreement between Proctor and Elk Tanning Company such as plaintiffs hypothesize, it is at least inferable that the tax sale purchase was simply a means whereby Elk Tanning Company, acting through its president Childs, acquired title to Warrant 5343 in furtherance of a written agreement dated January 25, 1893 between Proctor and other tannery owners, including Childs, to consolidate their businesses and bark lands in United States Leather Company; and that the consolidation was effected by Proctor and the other tanners by conveying their properties, including Warrant 5343, to wholly owned subsidiaries of United States Leather Company, including Elk Tanning Company, in consideration for stock of the latter company.*fn9 The agreement of January 25, 1893 expressly provided that when the bark lands were conveyed, the oil, gas and minerals should be reserved to the grantors. Other evidence tends to confirm this intention. It can be inferred, therefore, that when Childs acquired the tax deed for Elk Tanning Company, the latter acquired title to a larger estate than was intended because of a mutual mistake of law as to the effect of the transaction. If this were so, Elk Tanning Company was unjustly enriched and a constructive trust in the natural gas arose in which Proctor and his successors in interest were the beneficial or equitable owners. Restatement, Restitution §§ 48, 50, 160 (Comment a.), 163; 3 Scott on Trusts §§ 462.5, 465, 466. Pennsylvania has recognized the latitudinous principle that a constructive trust may arise against one who has been unjustly enriched even though he has been guilty of no act of wrongdoing. Dubin Paper Co. v. Insurance Co. of North America, 1949, 361 Pa. 68, 63 A.2d 85, 94, 8 A.L.R.2d 1393.
But even assuming that a constructive trust did arise in Proctor's favor following the tax sale, still plaintiffs are barred from maintaining the action. Plaintiffs' asserted rights came into being in 1894, more than 60 years before the present suit was begun. The District Court held that the action was barred by the Third Section of the Act of April 3, 1804, P.L. 517, 4 Sm.L. 201.*fn10 Whether this statute has application to the type of claim here involved need not be determined. For the five-year period of limitation imposed by the Act of April 22, 1856, P.L. 532, § 6, 12 P.S. § 83 was intended to protect landholders from just such an equitable claim as is here asserted.*fn11 It is a statute of repose which was intended to insure greater certainty of title and make more secure the enjoyment of real estate against a claim based upon an "implied trust". Ross v. Suburban Counties Realty Corporation, 1947, 356 Pa. 126, 51 A.2d 700, 701. The term "implied trust" in 12 P.S. § 83 includes a constructive trust. McKean & Elk Land & Imp. Co. v. Clay, 1892, 149 Pa. 277, 24 A. 211; Johnson v. Hobensack, 1935, 318 Pa. 305, 178 A. 40; Gast v. Engel, 1952, 369 Pa. 137, 85 A.2d 403.