Com. v. Henderson County

• Citation: 371 S.W.2d 27
• Parties: COMMONWEALTH of Kentucky et al., Appellants, v. HENDERSON COUNTY, Kentucky, et al., Appellees. OHIO RIVER OIL COMPANY, Inc., Appellant, v. HENDERSON COUNTY, Kentucky, et al., Appellees. Henry B. WALKER et al., Appellants, v. HENDERSON COUNTY, Kentucky, et al., Appellees.
• Decision Date: 22 March 1963
• Court: United States State Supreme Court (Kentucky)

Page 27

371 S.W.2d 27

COMMONWEALTH of Kentucky et al., Appellants, v. HENDERSON COUNTY, Kentucky, et al., Appellees.

OHIO RIVER OIL COMPANY, Inc., Appellant, v. HENDERSON COUNTY, Kentucky, et al., Appellees.

Henry B. WALKER et al., Appellants, v. HENDERSON COUNTY, Kentucky, et al., Appellees.

Court of Appeals of Kentucky.

March 22, 1963.

Rehearing Denied Oct. 25, 1963.

John B. Breckinridge, Atty. Gen., Troy D. Savage, H. N. McTyeire, Asst. Atty. Gen., Frankfort, for the Commonwealth and others.

Funk, Chancellor & Marshall, Chat Chancellor, Frankfort, for Ohio River Oil Co., Inc.

L. Allen Rhoads, Henderson County Atty., Henderson, and Byron, Sandidge, Holbrook & Craig and Morton Holbrook, Owensboro, for Henderson County.

B. M. Westberry, Crittenden County Atty., Marion, for Crittenden county.

J. D. Ruark Union County Atty., Morganfield, for Union County.

Shelby Denton, Daviess County Atty., Owensboro, for Daviess County.

H. G. Black, Hancock County Atty., Hawesville, for Hancock County.

S. H. Monarch Breckinridge County Atty., Hardinsburg, for Breckinridge County.

Walker & Walker and Henry B. Walker, Jr., Evansville, Ind., Palmore & Mitchell, Henderson, and Dailey & Fowler, Frankfort, for Henry B. Walker and others.

John K. Knodell, Jr., Mattoon, Ill., for Humble Oil & Refining Co.

Alfred A. Kiltz, Mt. Vernon, Ind., pro se and for Ray Ryan and others.

William T. Carroll, Owensboro, for Farm Bureau Oil Co., Inc.

MILLIKEN, Judge.

The discovery of oil and gas about ten years ago under the bed of the Ohio River between the thread of the stream and the Indiana shore lured the usual developers whose rights are at stake in this litigation. Essentially there are three classes of parties: (1) the counties bordering the area and their lessees; (2) those claiming under patents of the river bed north of the thread of the stream; and (3) the Commonwealth claimants under a lease executed by the State Property & Building Commission. The trial court judgment sustained the claims of the counties and their lessees, found the patents void, and concluded that the State Property & Building Commission had no legal authority over the land in question. It is conceded that the sovereign jurisdiction of Kentucky covers the area and that the determination of the issues presented turns on the interpretation and applicability of certain Kentucky Statutes.

This litigation began eight years ago in the United States District Court for the Western District of Kentucky where that Court construed the principal Kentucky Statutes involved in a way directly opposite to the State Court construction in the presently appealed, later judgment. Walker v. Felmont, 136 F.Supp. 584 (W.D.Ky., 1955). The United States District Court judgment was reversed by the United States Court of Appeals for the Sixth Circuit, not on its merits, but upon the ground that the Federal Courts should decline to pass judgment on the important statutory questions presented until the courts of the State had an opportunity to pass upon them which, in a sense, involve the public policy of the State. Walker v. Felmont, 240 F.2d 912 (Sixth Circuit, 1957). After a denial of certiorari by the United States Supreme Court in 1959, Walker, Trustee v. Felmont Oil Company, 361 U.S. 840, 80 S.Ct. 61, 4 L.Ed.2d 78, the United States District Court issued its final order dismissing the action which eventuated in the present action in the Henderson Circuit Court whose judgment is here appealed.

The historical incidents underlying the establishment of the north or northwest low watermark of the Ohio River as to the boundary of Kentucky are set out in great detail in two decisions of the United States Supreme Court. Handly's Lessee v. Anthony, 5 Wheat. 374, 18 U.S. 374, 5 L.Ed. 113, decided at the February term, 1820, with opinion by Chief Justice Marshall, and State of Indiana v. State of Kentucky, 136 U.S. 479, 10 S.Ct. 1051, 34 L.Ed 329, decided at the October term, 1889, with opinion by Mr. Justice Field. It is pointed out in those cases that even prior to the adoption of the United States Constitution, the Virginia Legislature authorized its congressional delegation to cede to the central government what was then referred to as the Northwest Territory and that such a cession was actually made by formal deed of March 1, 1784. It is further shown by those decisions that the cession of the Northwest Territory to the central government left all of the Ohio River to its northern or northwestern low watermark within the territorial confines of that part of Virginia which later became Kentucky through the admission of this Commonwealth into the Union in 1792.

Furthermore, it has been established that an individual Kentucky landowner whose lands border on the Ohio River owns only to the thread of the river, while the ownership of the Commonwealth of Kentucky in its sovereign capacity extends to the low watermark on the northern or northwestern side of the river. Berry v. Snyder, 66 Ky. 266; Miller v. Hepburn, 71 Ky. 326; Louisville Bridge Company v. City of Louisville, 81 Ky. 189; Ware v. Hager, 126 Ky. 324, 103 S.W. 283; Bedford-Nugent Company v. Herndon, 196 Ky. 477, 244 S.W. 908; McGill v. Thrasher, 221 Ky. 789, 299 S.W. 955; City of Covington v. State Tax Commission, 231 Ky. 606, 21 S.W.2d 1010; Louisville Sand & Gravel Company v. Ralston, Ky., 266 S.W.2d 119; Handly's Lessee v. Anthony, 5 Wheat. 374, 18 U.S. 374, 5 L.Ed. 113; State of Indiana v. State of Kentucky, 136 U.S. 479, 10 S.Ct. 1051, 34 L.Ed. 329.

The decision of this case turns on the construction and application of three statutes: KRS 56.190 and 56.320, which we shall refer to as the Patent Statutes; KRS 56.220, which we shall call the County Leasing Statute; and KRS 56.463, the Building Commission Statute. Regardless of their respective origins, each was re-enacted in 1942 when the Kentucky Revised Statutes were adopted, and each is currently effective unless we find that a repeal or modification by implication has occurred.

In summary, the Patent Statutes (KRS 56.190-56.320) prescribe that the patenting of any 'vacant and unappropriated' land may be had by applying to the county court of the county where the land lies and paying the price fixed therefor 'into the county treasury.' The Building Commission Statute (KRS 56.463) authorizes the Commission:

'(1) To determine the comparative needs and demands of the various state agencies * * *.

'(2) To purchase, lease or rent such real estate as the department (Commission) may find to be necessary for use by the state or any state agency * * *.

'(3) To sell and convey any real estate owned by the state or by any state agency, found by the department (Commission) not to be needed for public use or to have become unsuitable for such use. * * *

'(6) To lease any real estate or any part thereof, now owned or hereafter acquired by the state or by any state agency, * * * when the department (Commission) finds as a matter of fact that the real estate or any part thereof is not needed for state purposes * * *.'

The only statute dealing specifically with land in the Ohio River north of the thread of the stream is the County Leasing Statute (KRS 56.220) which declares in toto:

'All that portion of the bed of the Ohio River, lying north of the thread of the stream, except accretions to islands privately owned, is declared to be vacant and unappropriated land, and the county court of each county bordering on the Ohio River may use or lease the river bed for county purposes, upon such terms and conditions as to it seem beneficial to the county. Any contract of leasing made by any such county court of such river bed for any sand and gravel rights for or on behalf of the county, conveys full right and title to the lessee to the exclusive use of all sand and gravel deposits in the river bed to the extent embraced in the lease.'

We shall refer to the three categories of claimants as the (1) patentees, (2) the Commission, and (3) the counties.

I. The Patentees

Both the United States District Court and the Henderson Circuit Court concluded that the patentees' claims had to be denied, the latter court adopting the detailed opinion of the Federal Court on this issue, a course which we too shall follow in part. In its detailed opinion (Walker v. Felmont, 136 F.Supp. 584), the Federal Court declared:

'In their complaint the Patentees allege complete compliance with the laws of Kentucky providing for the appropriation of vacant and unappropriated lands and assert the validity of certain patents issued in 1938 to portions of the Ohio River bed north of the thread of the stream. These patents, signed by the Governor and Secretary of State and bearing the Seal of the Commonwealth of Kentucky, are filed with the record. The attack on the validity of these patents centers on the contention that the patent statutes as construed by the Court of Appeals of Kentucky apply only to uplands and do not permit the acquisition of the northern half of the bed of the Ohio River by patent proceedings.

'The question of whether or not the northern bed of the Ohio River is subject to patent was directly considered by the Court of Appeals of Kentucky in 1907 in the case of Ware v. Hager, 126 Ky. 324, 103 S.W. 283. Chapter 136 of the Act of 1893 of the Kentucky Legislature, being Sections 4702-4705 of the Kentucky Statutes, Carroll's First Edition, 1903, was the law then in effect dealing with vacant and unappropriated land. The court construed this Act of 1893 as not authorizing the acquisition of the northern bed of the river by patent. In so holding the court said:

"While the state owns the land to the northern shore of the river, we do not think it has ever provided for the taking up of the river bed between the thread of the stream and the northern shore as vacant land. The proceeding in question was instituted under chapter 127, Ky.St.1903. Section 4702, which is the first section of...