Am. Trust & Sav. Bank of Albuquerque v. Scobee

• Decision Date: 20 February 1924
• Docket Number: No. 2678.,2678.
• Citation: 224 P. 788,29 N.M. 436
• Parties: AMERICAN TRUST & SAVINGS BANK OF ALBUQUERQUEv.SCOBEE ET AL.
• Court: New Mexico Supreme Court

29 N.M. 436

224 P. 788

AMERICAN TRUST & SAVINGS BANK OF ALBUQUERQUE

v.SCOBEE ET AL.

No. 2678.

Supreme Court of New Mexico.

Feb. 20, 1924.

Syllabus by the Court.

A suit to quiet title and to remove a cloud upon the same, brought by the holder of a contract of purchase of state lands, whereby it is sought to set aside and annul the reservation of minerals in such lands contained in such contract, is a suit against the state.

In a suit to remove a cloud upon title, brought by the holder of a contract of purchase of state lands against the lessees of said lands from the state for oil and gas exploration, the state, as lessor, is a necessary party defendant.

Whether sections 5247-5253, Code 1915, authorize a proceeding wherein the power of the commissioner of public lands to reserve the minerals, upon the sale of the same, may be tested, quære.

Appeal from District Court, Otero County; Ed Mechem, Judge.

Action by the American Trust & Savings Bank of Albuquerque, as trustee of an express trust for the benefit of Mayo E. Hickey and others, against M. O. Scobee and others. From an order sustaining demurrers to the complaint, plaintiff appeals. Affirmed.

In a suit to remove a cloud upon title, brought by the holder of a contract of purchase of state lands against the lessees of said lands from the state for oil and gas exploration, the state, as lessor, is a necessary party defendant.

Marron & Wood, of Albuquerque, for appellant.

W. A. Hawkins, Del W. Harrington, and H. H. McElroy, all of El Paso, Tex., and Geo. C. Taylor, of Albuquerque, for appellees.

PARKER, C. J.

One Mayo E. Hickey under date of February 28, 1913, filed application for the purchase of a large tract of state land at $3 per acre, and deposited with the commissioner of public lands the sum of $2,500 to defray the expenses of appraisement and advertising the said land for sale. Such application contained the following provision:

“I further state that the land applied for here is essentially nonmineral land, and this application is not made for the purpose of obtaining title to mineral, coal, oil or gas lands fraudulently, but that the sole object of obtaining title to the land applied for is for grazing and agricultural purposes.”

In pursuance of said application, the commissioner of public lands advertised the said lands for sale by a notice dated March 7, 7, 1913. On June 9, 1913, a sale at public auction of the said lands was had by the commissioner at Alamogordo, and the said M. E. Hickey became the purchaser thereof at the total price of $142,882.26, and paid down one-tenth of the purchase price amounting to $14,288.23. On June 14, 1913, the said Hickey and the said commissioner entered into a written contract for the purchase of the said lands, which contract contains the following provision:

“That this land is being purchased for the purpose of grazing and agriculture only; that while this land herein contracted for is believed to be essentially nonmineral land, should mineral be discovered thereon, it is expressly understood and agreed that this contract is based upon the express condition that the minerals therein shall be and are reserved to the fund or institution to which the land belongs, together with the right of way to the commissioner, or any one acting under his authority, to at any and all times enter upon said land and mine and remove the minerals therefrom without let or hindrance.”

On January 1, 1918, a contract concerning the purchase of these lands was entered into by and between the commissioner and the appellant, the American Trust & Savings Bank of Albuquerque, as trustee, and as successor in interest of the said Hickey, whereby the time for payment of the purchase price was extended for an additional period of time, but the contract is otherwise in the same form as the former contract and contains the same condition in regard to reserving the minerals from the sale.

On August 20, 1919, appellant filed a bill in the district court of Otero county to quiet its title in and to the said lands as against the appellees, to whom the commissioner had in the meantime made oil and gas leases covering portions of the same. The bill is filed upon the theory that the action of the commissioner in inserting the condition or reservation in the contract of the oil, gas, and mineral rights in the said lands, and his action in leasing for oil and gas the said lands to third persons, was in excess of his authority and void, and that the said oil and gas leases constituted a cloud upon the appellant's title, which it sought to have removed and its title quieted. Appellees severally filed demurrers to the complaint, which were sustained by the court in most particulars, and the appellant electing not to plead further, a judgment of dismissal was entered, from which judgment the cause is here upon appeal.

[1] 1. Appellees demurred to the complaint upon the ground that it failed to state a cause of action, and that there was a defect of parties defendant. The demurrer was based upon the proposition that the state was a necessary party under the circumstances pleaded, and, as it had not been made a party, appellant could not maintain the action. Counsel for appellant in opposition to this proposition cites and relies upon Tindal v. Wesley, 167 U. S. 204, 17 Sup. Ct. 770, 42 L. Ed. 137.

In order to prevail in this case, the appellant would be required to establish two things. It must first establish that it has an equitable title in fee to the lands in question, and that consequently the oil and gas leases issued by the state to the appellees are invalid and void. In order to establish that it has an equitable title in fee to the lands, it must show that its contract with the state is another and a different contract than what is shown by its terms. It must show that the state, through its commissioner of public lands, has inserted conditions and reservations in the contract which it had no right to insert. It must go further and show that the oil and gas leases issued to the appellees, in which the state has a direct pecuniary interest, are void and of no effect. How it can be said under such circumstances that the state is not a necessary part to a proceeding in which its rights are directly called in question is hard for us to understand. It is true that a person having title to real estate or personal property may maintain an action against any person claiming to have rights therein under the authority of the state, and may maintain an action against such person notwithstanding the rights of the state may be indirectly involved. Of this class of cases, Tindal v. Wesley, 167 U. S. 204, 17 Sup. Ct. 770, 42 L. Ed. 137, and U. S. v. Lee, 106 U. S. 196, 1 Sup. Ct. 240, 27 L. Ed. 171, are examples. In these cases actions in ejectment were brought against persons in possession of real estate under authority of the state of South Carolina in the former case, and of the United States in the latter. In each of these cases the plaintiff showed good title to the property, and, notwithstanding the claims made by the defendant, the Supreme Court of the United States held that in the one case the action was not against the state, and in the other that it was not against the United States. But in the case at bar the plaintiff cannot show a good equitable title in fee to this land without setting aside and annulling an important reservation inserted...