Taylor v. Salt Creek Consol. Oil Co.

• Decision Date: 15 November 1922
• Docket Number: 6122.
• Parties: TAYLOR v. SALT CREEK CONSOL. OIL CO. et al.
• Court: U.S. Court of Appeals — Eighth Circuit

285 F. 532

TAYLOR v. SALT CREEK CONSOL. OIL CO. et al.

No. 6122.

United States Court of Appeals, Eighth Circuit.

November 15, 1922

Harvey Riddell, of Denver, Colo., for appellant.

Paul P Prosser, of Denver, Colo. (Dines, Dines & Holme, Tyson S Dines, John D. Clark, and Frederick D. Anderson, all of Denver, Colo., on the brief), for appellees.

Before LEWIS and KENYON, Circuit Judges, and YOUMANS, District Judge.

KENYON Circuit Judge.

This is an appeal from the judgment and decree of the District Court of the United States for the District of Wyoming dismissing appellant's bill of complaint which was filed May 6 1921, in the district court of Natrona county, Wyo., against the Salt Creek Consolidated Oil Company, the Midwest Oil Company, the Midwest Refining Company, William Hanley, Eula I. Hammond and Willa B. Hammond. Parties will be designated as in the trial court.

The cause was removed from the state court to the District Court of the United States for the District of Wyoming.

August 8, 1921, the cause was dismissed as to defendants Eula I. Hammond and Willa B. Hammond. No service has been secured on defendant William Hanley. The motion to dismiss was on the ground that the petition failed to set forth facts sufficient to constitute a valid cause of action in equity as against the defendants, and also that said petition discloses upon its face that plaintiff was guilty of laches. Other reasons were set forth in the motion, but these were the two main ones. The court sustaining the motion, which is in the nature of a general demurrer, the facts contained in the complaint and well pleaded are to be taken as true for the purposes of this appeal, and such facts are substantially as follows:

In 1899 certain persons located the northeast quarter of section 3, township 39 north, range 79 west of the sixth principal meridian, Natrona county, Wyo., as an oil placer claim. The rights, if any, secured by such location were transferred to defendant William Hanley and to one J. B. Bradley. In March, 1912, said Hanley and Bradley met with plaintiff, Taylor, at the Brown Hotel in Denver for the purpose of considering and agreeing upon a plan for the exploitation of said land for oil. It was then and there agreed between plaintiff, Taylor, and said Hanley and Bradley that the three would jointly go into the business of exploiting and developing such land for oil, and that they then formed what was in effect a mining partnership for said purpose. That certain apparatus was purchased and paid for by Hanley and set up on the land under the supervision of Bradley on or about June 1, 1912, and at such date the drilling operations commenced. On July 7, 1912, oil in large quantities was struck on the premises and a large flow of oil subsequently therefrom was produced in amount beyond the control of those engaged in the drilling. At no time did Hanley draw upon Taylor for Taylor's proportion of the expense, and no money was paid by Taylor, but he was ready and willing at all times to pay his part. Defendant Hanley excluded Taylor at all times from any participation in the working of said premises and from any participation in the profits arising therefrom.

April 4, 1914, Taylor filed his petition against Hanley, Bradley, the Midwest Oil Company and others in the district court of Natrona county, Wyo., seeking to enforce his rights in the profits arising from the operations on said land. This cause was removed to the United States District Court for the District of Wyoming. An answer was filed by all defendants except the Midwest Oil Company; it being stipulated as to that company that its answer need not be filed until the further progress of the case. This case was pending in the United States District Court of Wyoming until on or about May 15, 1916, when the same was dismissed by the court without prejudice to the institution of a new suit.

September 27, 1909, the President of the United States issued an order withdrawing certain public oil land from location, and the land hereinbefore described was included in the list of lands. In a suit instituted by the United States against the Midwest Oil Company in the United States Court for the District of Wyoming, the court determined that said 'withdrawal order' was invalid, and that decision had not been reversed at the time Taylor commenced his action against Hanley on the 4th day of April, 1914. February 23, 1915, the Supreme Court of the United States reversed the decision of the United States District Court of Wyoming and held said withdrawal order valid.

On the 28th day of August, 1915, the United States filed a bill in equity in the United States District Court for the District of Wyoming against Hanley, the Midwest Oil Company, and the Midwest Refining Company et al., for the purpose of obtaining a decree that the lands hereinbefore described were lawfully withdrawn from mineral location by reason of said federal order of September 27, 1909. This cause seems to have been pending in the court until April 18, 1921. Both the case of Taylor v. Hanley and the case of the United States v. Hanley et al. were for a considerable period pending in the same court at the same time. At the time of the institution of the action by the government, August 28, 1915, it was ordered by the court, pursuant to stipulations, that the oil taken from the land be disposed of and the proceeds deposited in the bank subject to the order of the court. Plaintiff, Taylor, did not intervene in said action.

September 4, 1915, a corporation called the New Bradford Oil Company was organized under the laws of the state of Wyoming. J. B. Bradley conveyed his interest in said aforedescribed lands to the New Bradford Oil Company, and Hanley likewise conveyed his interest to the New Bradford Oil Company. The deed from Hanley to the New Bradford Oil Company was in pursuance of a contract between Hanley and the persons who subsequently formed the defendant Salt Creek Consolidated Oil Company, and it is claimed that the contract was made for the benefit of said company. The defendant Salt Creek Consolidated Oil Company was organized as a corporation of the state of Maine on or about the 8th of September, 1919, and was authorized to do business in the state of Wyoming. October 1, 1919, the New Bradford Oil Company conveyed all its right, title, and interest in and to said land to the Salt Creek Consolidated Oil Company. A large amount of money arising from the proceeds of the oil produced from said land was impounded in the bank under order of court.

In 1920 Congress enacted what was called the 'Leasing Bill,' the same being approved February 25, 1920 (41 Stat. 437). Under the provisions of section 18a of said bill offers of compromise and settlement with the United States could be made in controversies involving the validity of oil placer claims. In July, 1920, the Salt Creek Consolidated Oil Company, Willa B. Hammond, and Eula I. Hammond made an offer of compromise and settlement. Plaintiff, Taylor, set up his claim then to one-third of the profits from the oil produced or that might be produced. This compromise offer appears to have been later abandoned.

August 23, 1920, defendant Salt Creek Consolidated Oil Company applied for a lease on the land under the provisions of section 18 of said Leasing Bill. Taylor set up his claim within the time specified by law to a one-third interest in the oil from said land produced or to be subsequently produced. Hearing was had before the Commissioner of the General Land Office, and Taylor's claim was dismissed. Appeal was taken by Taylor to the Secretary of the Interior, and on December 3, 1920, the decision of the Commissioner of the General Land Office was affirmed. After such decision a lease was made and delivered on or about March 10, 1921, to the Salt Creek Consolidated Oil Company, Eula I. Hammond, and Willa B. Hammond, to take effect as of August 23, 1920.

It is claimed further that defendant Midwest Oil Company or defendant Midwest Refining Company has a claim or contract with the Salt Creek Consolidated Oil Company and with the Hammonds under which the Midwest Oil Company and the Midwest Refining Company take the oil produced at a price fixed by said contract.

A number of important questions are raised. It is insisted by defendants that Taylor, Hanley, and Bradley never formed a binding mining partnership; that what they did constituted an executory agreement to form a partnership, and that the same was never launched; that plaintiff's remedy is an action at law for breach of the alleged agreement of partnership; that Hanley and Bradley are indispensable parties; and that the bill of complaint shows on its face that plaintiff was guilty of laches. As our conclusion is that the question of laches is determinative of this case, there is no necessity for considering the others.

The doctrine of laches has been applied by the courts in so many cases that to review even a small percentage of them would unduly extend any opinion. It is to the interest of society that claims against members thereof be prosecuted with due diligence. Hence we have in law statutes of limitation, arbitrary in their operation. In equity we have the doctrine of laches, not arbitrary as statutes of limitation are, but founded on justice and flexible in its application. It is entirely a defense in equity. The circumstances under which the doctrine of laches is applied are so numerous and different that its applicability must depend on the circumstances of each particular case. In Abraham v. Ordway, 158 U.S. 416, 420, 15 Sup.Ct. 894, 895 (39 L.Ed. 1036), the court says:

'Whether equity will interfere in cases of this character must depend upon the special circumstances of each case. Som

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