Court Opinion

ID: 8180314
Source: CourtListenerOpinion
Date Created: 2022-09-09 22:33:20.780447+00
Date Added: 2024-06-11T16:40:09.454080
License: Public Domain

Raymond, Judge,
dissenting:
I can not concur in the decision of the majority of this Court which, in affirming the judgment of the Circuit Court of Kanawha County, deprives the defendant of an investment of more than one-half million dollars, which it made in good faith in reliance upon the validity of the lease executed by officers and representatives of the Department of Natural Resources and the Public Land Corporation with the defendant on September 1, 1962 and under which the defendant, openly and certainly with the knowledge of all the State officials composing the Public Land Corporation, conducted operations from September 1, 1962 until February 27, 1967, a period of more than four years, without any question as to the validity of the lease being raised by any representative of the Department of Natural Resources or any representative of the Public Land Corporation. During that period of time and until the present action was instituted on August 14, 1967, the defendant paid and the State received and still retains more than $120,000.00 for coal produced and for timber cut and removed by the defendant in the development of the land covered by the lease. The majority admits that the doctrine of equitable estoppel, which in my judgment *64clearly applies in this case, is an equitable doctrine, yet the decision of the majority in holding the lease to be null and void without giving consideration to the resulting enrichment of the State and the exceptionally heavy loss to the defendant has given judicial sanction to the gross inequity suffered by the defendant.
As stated in the majority opinion, the material facts are not disputed. It is also true, as set forth in the majority opinion, that the Public Land Corporation, not the Department of Natural Resources, is vested with the title to the real estate here involved. It is also undisputed that Lane, the then Director of the Department of Natural Resources, and the then secretary and member of the Public Land Corporation was in full charge of the affairs of the Land Corporation which apparently seldom met and instead entrusted its every day transactions to the secretary. I can not agree with the statement in the majority opinion that the record does not disclose that the Public Land Corporation by any act or omission misled the defendant either by inducing it to enter into the lease or by inducing it to spend the money pursuant to the lease, or that great harm would result to the Panther State Forest, a public recreation area of the State, from mining operations under the lease.
The record shows that in connection with the execution of the lease it bore an unsigned stamp of approval as to form of Attorney General Robertson, a member of the Public Land Corporation, and subsequently on January 10, 1963, a form of modification of the lease was endorsed by an Assistant Attorney General in behalf of the Attorney General. It is likewise unreasonable to assume, as does the majority, that the other members of the Public Land Corporation, who are the Governor, as its Chairman, the Commissioner of Agriculture, and the Director of the Engineering Experimental Station at the West Virginia University did not know of the existence of and the operations under the lease.
As stated, it is clear that the Attorney General knew about it and, of course, Lane, who negotiated it and collected the *65royalties for a period of more than four years, knew about it, yet despite these undisputed facts, the defendant was never informed that there was any question concerning the validity of the lease until it received a letter dated February 27, 1967, from Samsell, who had succeeded Lane as Director of the Department of Natural Resources, in which two of the stated reasons for terminating the lease were that the mine operations conducted under it were not in the best interest of the State or compatible with the use of the Panther State Forest and that the defendant had violated the terms of the lease. Neither of those reasons is sustained by the record.
This operation was clearly a proprietary operation upon the part of the State. In my judgment the action of the Public Land Corporation, with the apparent knowledge of all its members of the existence of the lease and the operations under it, in failing to register any objection to the operations of the defendant and in permitting it to make an investment of more than one-half million dollars, which also must have been known to the members of the land corporation, and permitting its secretary to receive in excess of $120,000.00 in the form of royalties which were accepted and are still retained by the State, clearly operated to estop the land corporation to deny the validity of the lease. Though, as stated by the majority and as established by numerous court decisions, the doctrine of equitable estoppel should be applied cautiously, in my opinion, if the doctrine should ever be applied in any situation, equity requires its application to the admitted facts in the case at bar.
It is also true, as stated in the majority opinion, that as a general rule estoppel may not be invoked against a governmental unit when functioning in its governmental capacity. The rule, however, is different when a governmental unit, including the State, is acting in its proprietary capacity. The question whether equitable estoppel may be asserted against the State when acting in its proprietary capacity has not been determined in any prior decision of this Court of which I am aware or which research has revealed. Statements in the opinion in Cawley v. The Board of Trustees of the Firemen’s *66Pension or Relief Fund of the City of Beckley, 138 W.Va. 571, 76 S.E.2d 683, and The City of Beckley v. Wolford, 104 W.Va. 391, 140 S.E. 344, which involve the question of estoppel as applied to municipalities, indicate that when a governmental unit acts in its proprietary capacity, equitable estoppel may be invoked against such governmental unit. The opinion in the Cawley case contains this statement: “When the action relates to a proprietary function, equitable estoppel may be invoked against municipalities.”
There is ample text and case authority for the proposition that when a governmental unit, including the State, acts in a proprietary capacity, equitable estoppel may be invoked against it.
In 31 C.J.S., Estoppel, Section 138a, is this quotation from United States v. Lawrence County, District Court of Pennsylvania, 173 F. Supp. 307, reversed on other grounds, 280 F.2d 462, affirmed, 364 U.S. 628, 81 S. Ct. 357, 5 L. Ed. 2d 363: “An equitable estoppel ordinarily may not be invoked against a government or public agency functioning in its governmental capacity; but where the elements of an estoppel are present it may be asserted against the government when acting in its proprietary capacity.” In 28 Am. Jur. 2d, Estoppel and Waiver, Section 133, after stating that there is authority to the effect that in a proper case estoppel may be applied against a governmental agency, is this language: “A governmental agency may be held estopped as right and justice require where the act or contract relied on as creating the estoppel was within its corporate powers, although the method of exercising the power was irregular or unauthorized.”
In Section 6, Annotations, 1 A.L.R.2d page 346, the text is: “Assuming, however, the presence of all the prerequisites for the application of the doctrine of estoppel as between individuals, under some circumstances the public or the United States or the state may be held estopped if an individual would have been held estopped; as when acting in a proprietary or contractual capacity; * * * .” See also *67The Falcon, 19 F.2d 1009; People v. Gustafson, 53 Cal. App. 2d 230, 127 P.2d 627; The Alexander Company v. City of Owatonna, 222 Minn. 312, 24 N.W.2d 244; State v. Horr, 165 Minn. 1, 205 N.W. 444; State ex rel. Caldwell v. Lincoln Street Railway Company, 80 Neb. 333, 114 N.W. 422; State ex rel. Upper Scioto Drainage and Conservancy District v. Tracy, 125 Ohio St. 399, 181 N.E. 811; Powell v. Board of Commissioners of Police Insurance and Annuity Fund of State, 210 S. C. 136, 41 S.E.2d 780, 1 A.L.R.2d 330; Strand v. State, 16 Wash. 2d 107, 132 P.2d 1011; Chicago, St. Paul, Minneapolis and Omaha Railway Company v. Douglas County, 134 Wis. 197, 114 N.W. 511, 14 L.R.A., N.S., 1074.
In the opinion in State v. Horr, 165 Minn. 1, 205 N.W. 444, is this statement: “It is the law that, when a state makes itself a party to an action or to a contract in its proprietary capacity, it is subject to the law of estoppel.” The above quotation is supported by the citation of numerous decisions. The opinion also contains this language: “Estoppel rests upon principles of universal justice and commands the observance of honest dealing.”
In State ex rel. Upper Scioto Drainage and Conservancy District v. Tracy, 125 Ohio St. 399, 181 N.E. 811, the court held that the state, by participating in a proceeding through one of its departments acting within the scope of its departmental powers concerning lands as to which the state exercised a proprietary function, was estopped to claim that the law under which the proceeding was brought was unconstitutional or violative of a compact between the United States and the State of Ohio. In the opinion the court said: “The state can no more ‘eat its pie and have it’ than can the ordinary corporation or individual.”
In Powell v. Board of Commissioners of Police Insurance and Annuity Fund of State, 210 S. C. 136, 41 S.E.2d 780, 1 A.L.R.2d 330, the court held that a state may be subject to the doctrine of estoppel in its contractual relations, and that the rule is a well-established one in American courts generally, and in the opinion used this quotation from 31 *68C.J.S., Estoppel, Section 140: “It has been broadly stated that there can be no estoppel against the United States or a state. Nevertheless, subject to limitations and exceptions * * * it is well established that in a ‘proper case’ the doctrine of equitable estoppel may apply as against the federal and state governments, and that under circumstances which would estop a private individual an estoppel may be asserted against the United States, a state, or a state agency, commission, or officer.”
Under the foregoing authorities I would hold that the State, acting by the Public Land Corporation which had the authority to make the lease, is estopped to deny the validity of the lease.
In my opinion the lease is a valid instrument, binding upon the Land Corporation and the defendant, for the additional reason that even though the record fails to show that the execution of the lease by Lane, as Secretary of the Public Land Corporation, was expressly authorized, it has been ratified by the action of the Land Corporation in accepting and retaining the royalties provided by the lease, at the direction of Lane, as Director of the Department of Natural Resources, and as Secretary of the Public Land Corporation. It is clear to me that the payment of these royalties as required by the Director of the Department of Natural Resources constituted payment to the Public Land Corporation which by Section 15, Article 1, Chapter 20, Code, 1931, as amended, was continued “as an activity of the department of natural resources.”
In view of that provision of the statute, unlike the majority, I have no trouble in reaching the obvious conclusion that the payment of the royalties and their retention as required by the Director of the Department of Natural Resources and the Secretary of the Public Land Corporation enured to the benefit of the Public Land Corporation, and there is nothing in the record to indicate that such payments were not applied to its use and benefit. In short, on this point, it is my considered opinion that the State should not be permitted to accept *69the benefits of this lease and then successfully contend that it is not bound by it.
For the reasons stated in this dissenting opinion I would reverse the judgment of the Circuit Court of Kanawha County and hold the lease to be valid and binding upon the Public Land Corporation.
I am authorized to state that Judge Caplan concurs in the views expressed in this dissenting opinion.