421 F.2d 92 (9th Cir. 1970), 23572, United States v. Georgia-Pacific Co.

Docket Nº:23572.
Citation:421 F.2d 92
Party Name:UNITED STATES of America, Plaintiff-Appellant, v. GEORGIA-PACIFIC COMPANY, Defendant-Appellee.
Case Date:January 08, 1970
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

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421 F.2d 92 (9th Cir. 1970)

UNITED STATES of America, Plaintiff-Appellant,



No. 23572.

United States Court of Appeals, Ninth Circuit.

January 8, 1970

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William M. Cohen (argued), Asst. Atty. Gen., Land & Natl. Res. Div., Dept. of Justice, Shiro Kashiwa, Asst. Atty. Gen., Howard O. Sigmond, Roger P. Marquis, Dept. of Justice, Washington, D.C., Sidney I. Lezak, U.S. Atty., Joseph E. Buley, Asst. U.S. Atty., Portland, Or., for appellant.

Norman J. Wiener (argued), Helen F. Althaus, Robert S. Miller, of King, Miller, Anderson, Nash & Yerke, Portland, Or., for appellee.

Before HAMLEY and HUFSTEDLER, Circuit Judges, and LEVIN, [a1] District judge.

GERALD S. LEVIN, District Judge:

This suit was instituted by the United States Government to secure declaratory

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relief and specific performance of an agreement entered into in 1934 between the Government and a predecessor in interest of the Georgia-Pacific Corporation. The Government brought suit in 1967 pursuant to 28 U.S.C. § 2201. The trial court had original jurisdiction under 28 U.S.C. § 1345. This court has jurisdiction under 28 U.S.C. § 1291. From a judgment in favor of Georgia-Pacific and denying equitable relief to the Government, the Government has taken this appeal.

The facts of the case are as follows: Coos Bay Lumber Company, hereafter referred to as 'Lumber Company', owned certain timberlands in 1934, consisting of approximately 58,900 acres in Coos and Douglas Counties, Oregon, both within and without the northern exterior boundaries of the Siskiyou National Forest as it existed in 1934. Those timberlands are known as the 'Eden Ridge Tract'.

In 1933 Oregon's economy and lumber industry were in a depressed condition. In the 1930's many timber owners in the Northwest abandoned cutover lands to eliminate further payment of ad valorem taxes. When the lands were thus abandoned, the counties foreclosed the tax liens and provided fire protection to the lands and also offered the lands for sale at tax foreclosure sales. Sometimes small landholders located and attempted to establish homesteads in isolated, fertile valleys of the area. These homesteads located in forest areas tended to increase fire hazards.

In 1933, the president of Lumber Company proposed to representatives of the Forest Service that the Government extend the boundaries of the Siskiyou National Forest to include all of the Eden Ridge Tract and that Lumber Company would thereafter convey to the Government its forest lands in the Eden Ridge Tract after the forest growth thereon had been harvested. In 1934, a document (hereafter referred to as the '1934 Document') was executed under seal incorporating the above proposal. The signatories thereto were Lumber Company, the then owner of the lands, and the then Acting Regional Forester of the United States Forest Service, Region 6.

By letter dated April 20, 1934, Senator McNary asked for the Forest Service's comments on a letter dated April 16, 1934, from John D. Goss concerning a proposed bill which resulted in the passage by Congress of Public Law 131, referred to hereafter. The Forest Service replied on April 25, 1934. Letters from Goss and from Acting Regional Forester Sherman recommended passage of the bill and referred to Lumber Company's proposed agreement to donate cutover forest land if the boundaries of the forest were extended to include Lumber Company land.

The boundaries of the Siskiyou National Forest were thereupon extended to include all the lands described in Schedule 'B' of the 1934 Document. 1

The 1934 Document was recorded on June 10, 1935, in Douglas County, Oregon. By this unambiguous Document, the Lumber Company assumed a continuing duty to convey lands to the Government as they were cut over. As consideration, the Government extended the boundaries of the Siskiyou National Forest, thus giving the Lumber Company additional fire protection. This is what the Lumber Company wanted in exchange for this duty to convey these lands over a period of time, and that is what it received. When the Lumber Company entered into this bargain, it thought that there would be added fire protection for it since it was within the boundaries of the National Forest. The 1934 Document created a clear binding contract. Congress performed its function of acceptance and at the same time,

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by changing the boundaries of the Siskiyou National Forest, provided consideration for the contract.

From 1936 through 1941, Lumber Company conveyed to Government a total of 9,356.82 acres of land within the exterior boundaries of the Siskiyou National Forest. Of the lands conveyed, 2,938.37 acres of land were from those described in Schedule 'A' of the 1934 Document, being within the original boundary of the Siskiyou National Forest, and 6,418.45 acres of land were from those described in Schedule 'B' of the 1934 Document, being within the boundaries of the Siskiyou National Forest as extended by the Act of June 13, 1935, 49 Stat. 338.

Lumber Company conveyed the lands remaining in its ownership in the Eden Ridge Tract to Timber Company, together with other lands, by Deed dated July 10, 1956. 2 Georgia-Pacific acquired title to the lands from Timber Company by Deed dated December 17, 1962.

From 1934 through April 4, 1958, Lumber Company or its successors did not complete cutting and slash disposal on any quarter section or a portion thereof in the Eden Ridge Tract except for lands previously conveyed to Government as set forth herein.

Public Land Order (P.L.O.) 1610, 23 Fed.Reg. 2340, dated April 4, 1958, was issued after the exterior boundaries of the Siskiyou National Forest were extended by the Act of June 13, 1935. This Order retracted the northern boundary of the Forest, excluding lands described in Schedule 'B' of the 1934 Document (except for lands previously conveyed) then owned by Georgia-Pacific, and re-establishing the northern boundary as it was before the 1935 extension. The maps of the Forest were changed and the personnel of the Forest Service then began acting as if this was no longer part of the National Forest. For all practical purposes it was not and is not a part of the National Forest.

Over the years the Government made no claim upon Lumber Company or its successors to convey any land under the 1934 Document. No assertion of ownership or other rights in the land was made until 1961 (with the exception of 1958, when Government, inferentially at least, asserted some ownership interest by discontinuing negotiations for a land exchange). During the same period of time, Government, without interference, allowed Georgia-Pacific to manage this timberland at a very considerable expense, meanwhile adding a great deal of value to it.

Based on the foregoing facts, the district court found that the 1934 Document was a valid contract, but whose purposes and objectives were frustrated by the retraction of the boundaries of the Siskiyou National Forest in 1958, thereby terminating the duty of Georgia-Pacific to convey any cutover lands pursuant to the 1934 Document. The district court found the 1958 retraction to constitute a failure of consideration, rendering the 1934 Document void and unenforceable. 3 We affirm the decision of the district court but on grounds other than those upon which its decision is based. The grounds upon which the decision of this court is founded are discussed hereafter.

Equitable Estoppel

Equitable estoppel is a doctrine adjusting the relative rights of parties based upon consideration of justice and good conscience. Smale & Robinson, Inc. v. United States, 123 F.Supp. 457, 463 (S.D.Cal.1954) ;

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Peoples National Bank v. Manos Brothers, Inc., 226 S.C. 257, 84 S.E.2d 857, 870, 45 A.L.R.2d 1070 (1954); 3 Pomeroy, Equity Jurisprudence §§ 801, 802 (5th ed. Symons 1941); 28 Am.Jur.2d Estoppel and Waiver § 28, at 629. Pomeroy has defined equitable estoppel as having the effect of absolutely precluding a party, both at law and equity

'from asserting rights which might perhaps have otherwise existed, either of property, of contract, or of remedy as against another person, who has in good faith relied upon such conduct, and has been led thereby to change his position for the worse, and who on his part acquires some corresponding right, either of property, of contract, or of remedy.'

3 Pomeroy § 804, at 189. See also Dickerson v. Colgrove, 100 U.S. 578, 580, 25 L.Ed. 618 (1879); Bankers Trust Co. v. Pacific Employers Insurance Co., 282 F.2d 106, 112 (9th Cir. 1960). Equitable estoppel prevents a party from assuming inconsistent positions to the detriment of another party, Lebold v. Inland Steel Co., 125 F.2d 369, 375 (7th Cir. 1941) or, as stated in Bigelow, Law of Estoppel 603 (6th ed. Carter 1913), "He who keeps silent when duty commands him to speak shall not speak when duty commands him to keep silent." See also 31 C.J.S. Estoppel § 108, at p. 548.

Equitable estoppel is a rule of justice which, in its proper field, prevails over all other rules. City of Chetopa v. Board of County Com'rs., 156 Kan. 290, 133 P.2d 174, 177 (1943). An equitable estoppel will be found only where all the elements necessary for its invocation are shown to the court. The test in this circuit was reiterated in Hampton v. Paramount Pictures Corp., 279 F.2d 100, 104, 84 A.L.R.2d 454 (9th Cir. 1960):

'Four elements must be present to establish the defense of estoppel: (1) The party to be estopped must know the facts; (2) he must intend that his conduct shall be acted on or must so act that the party asserting the estoppel has a right to believe it is so intended; (3) the latter must be ignorant of the true facts; and (4) he must rely on...

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