Anderson v. McKay, 11798.

• Decision Date: 25 March 1954
• Docket Number: No. 11798.,11798.
• Parties: ANDERSON et al. v. McKAY, Secretary of Interior.
• Court: U.S. Court of Appeals — District of Columbia Circuit

94 US App. DC 11, 211 F.2d 798 (1954)

ANDERSON et al. v. McKAY, Secretary of Interior.

No. 11798.

United States Court of Appeals District of Columbia Circuit.

Argued November 17, 1953.

Decided March 25, 1954.

Petition for Rehearing Denied May 11, 1954.

Mr. Warren Woods, Washington, D. C., with whom Messrs. Charles B. McInnis and Roger H. Muzzall and Mrs. Irene Kennedy, Washington, D. C., were on the brief, for appellants.

Mr. John F. Cotter, Attorney, Department of Justice, Washington, D. C., with whom Mr. Edmund B. Clark, Attorney, Department of Justice, Washington, D. C., was on the brief, for appellee.

Before EDGERTON, WILBUR K. MILLER and PRETTYMAN, Circuit Judges.

PRETTYMAN, Circuit Judge.

This was a civil action in the United States District Court for the District of Columbia, in which the plaintiffs, Anderson, et al., sought an order directing the Secretary of the Interior to issue to them a patent for certain lands without reservation of mineral rights therein. The District Court granted summary judgment for the defendant Secretary.

The material facts are not in dispute, being largely stipulated. By Acts passed in the 1860's¹ Congress authorized an odd-section grant to a railroad of land within twenty-mile limits of its tracks. The land involved in the present action was a quarter-section within that grant. The railroad never sought or received a patent to this parcel. Nevertheless, in 1879, the railroad sold it to one Warren, from whom the title passed in chain of title to Charles J. Anderson in 1897 and from him to our present appellants, his heirs at law.

It happened that the situation just described occurred in many parts of the West, the railroads selling to unwary purchasers parcels of land within the boundaries of their grants but never patented. The practice became so widespread that in 1887 Congress passed an Act, called the Land Grant Adjustment Act,² Section 5 of which provided:

"That where any said company shall have sold to citizens of the United States, or to persons who have declared their intention to become such citizens, as a part of its grant, lands not conveyed to or for the use of such company, said lands being the numbered sections prescribed in the grant, and being coterminous with the constructed parts of said road, and where the lands so sold are for any reason excepted from the operation of the grant to said company, it shall be lawful for the bona fide purchaser thereof from said company to make payment to the United States for said lands at the ordinary Government price for like lands, and thereupon patents shall issue therefor to the said bona fide purchaser, his heirs or assigns: * * *."

Since 1897 Anderson and his heirs have been in open and exclusive possession of the land. They have occupied, fenced, farmed, and paid taxes on it continuously to the present time. The grant to the railroad was closed out in 1930, and this parcel was not listed under the grant. Thereafter it was shown on the tract books of the General Land Office as vacant.

On March 2, 1936, one Buckholts filed an application for a non-competitive oil and gas lease on this land under the provisions of the Mineral Leasing Acts of 1920 and 1935.³ The 1920 Act authorized leases, and the 1935 Act gave a preference right to the first applicant for a lease of land not within any known geologic structure of a producing oil or gas field. On July 20, 1936, Anderson filed an application to purchase the tract under the above-quoted provision of the Act of 1887. On August 21, 1936, the Commissioner of the General Land Office held Anderson to be entitled to a patent without reservation of mineral rights, upon the payment of the required purchase price and the publishing of notice for the required time, and he denied the application of Buckholts. These rulings were in a document from which we shall quote later. Anderson proceeded to make the required payment and to publish the required notices. On September 18, 1936, Buckholts appealed to the Secretary of the Interior from the decision of the Commissioner. On October 26, 1936, Anderson completed his notices and perfected his right to the issuance of a patent pursuant to the terms of the ruling in his favor. On December 31, 1936, the Secretary reversed the decision of the Commissioner. He held that Anderson was entitled to a patent only with reservation of mineral rights to the United States and that Buckholts was entitled to a non-competitive oil and gas lease. The ground of the Secretary's ruling was that the Act of 1887 had been altered by an Act of 1914⁴ and by the Acts of 1920 and 1935.

Reports concerning the mineral or non-mineral character of the land varied. In 1936 there was no indication that the land was mineral in character. On June 22, 1937, the Geological Survey reported that the land "is in an area which may contain accumulations of oil or gas under favorable structural conditions and offers an opportunity for prospecting operations to determine the nature and worth of the structural features affecting it. Accordingly, it is reported as having a prospective value for oil and gas within the intent of paragraph 12 (c) of the Oil and Gas Regulations." On August 11, 1939, the Secretary advised Anderson that a lease would be issued to Buckholts unless Anderson made an affirmative showing that the land was non-mineral. Anderson attempted to make such a showing, but the Geological Survey held that he had not met the burden. For undisclosed reasons, in 1946 the Geological Survey reported to the General Land Office that no part of the land in question "is within the known geologic structure of a producing oil or gas field." The General Land Office requested another report, and the Geological Survey, on February 26, 1947, iterated that the land was not within the known geologic structure of a producing oil or gas field. On May 1, 1947, the Secretary issued an oil and gas lease to Buckholts, which was assigned by him to the Central Commercial Company.

We examine the rights of the Andersons as of three critical points of time. One such time was when Warren, their predecessor in title, bought the land from the railroad, i.e., in 1879. Another was in the year 1914, after Anderson's purchase in 1897. And the third was when Anderson completed compliance with the terms laid down by the Land Office for a patent, i.e., on October 26, 1936.

The rights of the railroad in the land were prescribed by the Act of 1862, amended in some respects by the Act of 1864. Those Acts dealt with two distinct and different steps — the grant and the patents. The Acts themselves made the grant. The language of Section 3 of the 1862 Act was "That there be, and is hereby, granted to the said company * * * every alternate section of public land, designated by odd numbers, to the amount of five changed by the 1864 Act to ten alternate sections per mile on each side of said railroad, on the line thereof, and within the limits of ten changed by the 1864 Act to twenty miles on each side of said road". Thus the grant was to the odd-numbered sections of land within twenty miles on each side of the railroad tracks. But the tracks were not then built; they were not even located on paper. The Act dealt with the whole line of the Union Pacific Railroad Company, which began in Nebraska and ended at the western boundary of the Nevada Territory and included Iowa and Missouri branches, and the line of the Central Pacific Railroad from the Pacific Coast to the eastern boundary of California. The Act provided (Section 7) that within two years after the passage of the Act (extended one further year by the 1864 Act) the companies should designate "the general route of said road, as near as may be". So, while the grant was to a vast strip of land, part of an area two thousand or more miles long and forty miles wide, it was not then known, and could not then be known, to what land it actually applied.

The grant did not include mineral lands. The statutes expressly provided that mineral lands were excepted from the grant. The 1862 Act provided "That all mineral lands shall be excepted from the operation of this act". The 1864 Act, without deleting the exclusion of mineral lands in the 1862 Act, added this proviso: "And any lands granted by this Act, or the act to which this is an amendment, shall not * * * include any * * * mineral lands, * * *." Thus the railroads had no grant of mineral lands.

The 1862 and 1864 statutes provided that as each forty miles of railroad were completed three commissioners appointed by the President should inspect them and, upon their certificate, patents to the granted sections on each side of the completed strip of track would issue to the railroad. Those patents conveyed the fee simple title to the land. The language of the 1862 statute was: "* * * patents shall issue conveying the right and title to said lands to said company * * *."⁵

The foregoing features of the statutes gave rise to litigation and consequent decisions of the Supreme Court. Barden v. Northern Pacific R. R. Co.⁶ concerned mineral land which was within the geographical limits of a grant to a railroad, identical in all material respects with the grant in the case before us. The land had been entered by Barden as mineral land, quartz lodes having been located on it long after the grant. No patent had issued. The Court held that the specific exception of mineral lands in the statute, being unconditional, applied to mineral lands as such whether known to be so or not. The Court made vivid its view by depicting the different situation which would have existed had a patent been issued. The process of passing upon an application for a patent, said the Court, involved a determination by authorized Government officials that the land was non-mineral and patentable.⁷ After a patent, conveying fee simple title upon that determination, the Government would be estopped from contending to the contrary, absent...