McKenna v. Wallis

• Decision Date: 20 April 1965
• Docket Number: No. 19631.,19631.
• Citation: 344 F.2d 432
• Parties: Patrick A. McKENNA, Appellant, v. Floyd A. WALLIS and Pan American Petroleum Corporation, Appellees. PAN AMERICAN PETROLEUM CORPORATION, Appellant, v. Floyd A. WALLIS, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

344 F.2d 432 (1964)

Patrick A. McKENNA, Appellant, v. Floyd A. WALLIS and Pan American Petroleum Corporation, Appellees.

PAN AMERICAN PETROLEUM CORPORATION, Appellant, v. Floyd A. WALLIS, Appellee.

No. 19631.

United States Court of Appeals Fifth Circuit.

January 21, 1964.

Rehearing Denied April 20, 1965.

E. L. Brunini, Jackson, Miss., Courtney Whitney, Jr., Washington, D. C., G. P. Hewes, III, Brunini, Everett, Grantham & Quin, Jackson, Miss., for Patrick A. McKenna.

Mettery I. Sherry, Jr., Percy Sandel, Lloyd J. Cobb, New Orleans, La., William P. Hardeman, Houston, Tex., Cobb & Wright, Joseph V. Ferguson, II, New Orleans, La., for Pan American Petroleum Corp.

C. Ellis Henican, New Orleans, La., H. M. Holder, Shreveport, La., for Floyd A. Wallis.

Before RIVES and WISDOM, Circuit Judges, and BOOTLE, District Judge.

RIVES, Circuit Judge.

These actions, involving common questions of law and fact, were consolidated in the district court and decided pursuant to an opinion reported at 200 F.Supp. 468. They involve rights asserted separately by Patrick A. McKenna and Pan American Petroleum Corporation in an oil and gas lease from the United States to Floyd A. Wallis covering 826.87 acres of exceedingly rich "mud lumps" at the mouth of the Mississippi River in Plaquemines Parish, Louisiana.

The lease was issued to Wallis on December 19, 1958, effective January 1, 1959. The lease was of public domain land, that is land in which title vested in the United States because of its sovereignty pursuant to the Mineral Leasing Act of 1920, now appearing as Title 30 U.S.C.A. § 181 et seq., as distinguished from acquired land, that is land which was once privately owned and then acquired by the United States, the leasing of which is pursuant to the Mineral Leasing Act for Acquired Lands of August 7, 1947, now appearing as Title 30 U.S. C.A. § 351 et seq.

The claims both of McKenna and of Pan American were based upon events occurring prior to the issuance of the lease to Wallis. McKenna claimed that Wallis and he were joint venturers in acquiring the lease, and that he was entitled to an undivided one-third interest in the lease. Pan American claimed that Wallis had entered into an agreement granting Pan American the option to acquire the lease thereafter issued to Wallis. The district court decided that neither McKenna nor Pan American acquired any interest in the lease upon what the court referred to as a very narrow issue, saying:

"The issue is very narrow under the Louisiana rule that all `contracts applying to and affecting\' `oil, gas, and other mineral leases\' must be reduced to writing. LSA-C.C. Arts. 2275, 2440, 2462, via LSA-R.S. 9:1105. Having failed to obtain new written agreements, each of the plaintiffs is compelled to rely on a single instrument. McKenna\'s claim is imprisoned in the letter agreement of December 27, 1954-January 3, 1955; Pan American\'s claim is confined to the language of the March 3, 1955 option. Except as it throws light on their original intent, the conduct of the parties after those dates is irrelevant. Any new understandings reached in 1956, 1957, 1958 or 1959 are unenforceable in the absence of a writing. Nor does it matter whether Wallis obtained his lease by breaching his trust, as alleged. If the claimants acquired an interest in the lease, it is under the written instruments, not by virtue of any subsequent estoppel."

McKenna v. Wallis, E.D.La.1961, 200 F.Supp. 468, 471, 472.

We think that the district court committed fundamental error in applying Louisiana statutes and law to determine rights in a lease on public domain land which were and are subject only to the sovereignty of the United States. The principle as to which law, state or federal, applies was stated long ago in Wilcox v. Jackson ex dem. McConnel, 1839, 38 U.S. (13 Peters) 498, 516, 10 L.Ed. 264:

"We hold the true principle to be this, that whenever the question in any court, state or federal, is, whether a title to land which had once been the property of the United States has passed, that question must be resolved by the laws of the United States; but that whenever, according to those laws, the title shall have passed, then that property, like all other property in the state, is subject to the state legislation; so far as that legislation is consistent with the admission that the title passed and vested according to the laws of the United States."

Subsequent decisions have made it clear that "title" as used in that principle includes not only the legal title, but also the equitable title, indeed, the entire bundle of rights going to make up ownership. Whether the lease from the United States to Wallis was in part for the benefit of McKenna or of Pan American or of both are questions to be determined by federal law.

Irvine v. Marshall, et al., 1858, 61 U.S. (20 How.) 558, 15 L.Ed. 994, requires the application of federal law until both legal and equitable titles have passed from the United States. The United States was not a party to that litigation, but the Court recognized in clear and unmistakable terms that the United States owed a duty, to be performed both through its General Land Office and through its federal courts, to see that the equitable title as well as the legal title to public lands was vested in the proper person who proved his right under the federal law. The opinion emphasized the doctrine of resulting trusts which may have application to the facts of this case:

"With respect to resulting trusts, and the jurisdiction and duty of the courts of the United States to enforce them, the opinion of this court has been emphatically declared; and so declared in a case of peculiar force and appositeness, because it related to the acts of an agent in the entry and survey of lands, and is in its principal features essentially the same with the cause now under consideration. We allude to the case of Massie v. Watts, reported in the 6th vol. of Cranch, p. 143 148, 3 L.Ed. 181. This was a suit in equity in the Circuit Court of the United States for the district of Kentucky, to compel the conveyance of land from an agent to his principal, upon the ground that the agent had withdrawn an entry on lands made in the name of his principal, had caused an entry and survey to be made in his own name, and had thereby obtained a legal title to this land. In decreeing the relief sought by the complainant, this court, expounding the law by the Chief Justice (pp. 169, 170 of 6 Cranch, 3 L.Ed. 181), said: `If Massie (i. e., the agent) really believed that the entry of O\'Neal (his principal), as made, could not be surveyed, it was his duty to amend it, or to place it elsewhere. But if in this he was mistaken, it would be dangerous in the extreme — it would be a cover for fraud which could seldom be removed, if a locator alleging difficulties respecting a location might withdraw it, and take the land for himself. But Massie, the agent of O\'Neal, has entered the land for himself, and obtained a patent in his own name. According to the clearest and best-established principles of equity, the agent who so acts becomes a trustee for his principal. He cannot hold the land under an entry for himself, otherwise than as a trustee for his principal.\' This exposition of the equity powers of the courts of the United States as applicable to resulting trusts — a power inseparable from the cognizance over frauds, one great province of equity jurisprudence — is conclusive.

"With respect to the power of the Federal Government to assert, through the instrumentality of its appropriate organs, and administration of its constitutional rights and duties, and with regard to such an assertion as exemplified in the management and disposition of the public lands, and the titles thereto, the interpretation of this court has been settled too conclusively to admit of controversy." 20 How. at 565, 566, 61 U.S. at 565, 566, 15 L.Ed. 994.

The principles of law announced in repeated opinions of the Supreme Court seem to us clearly to lead to the conclusion that as to the original patent, lease or other grant from the United States, federal law controls in determining title in its broadest sense, including strictly legal title, trust rights and any and all equitable or beneficial interests. Gibson v. Chouteau, 1871, 80 U.S. (13 Wall.) 92, 101, 102, 20 L.Ed. 534; Sparks v. Pierce, 1885, 115 U.S. 408, 413, 6 S.Ct. 102, 29 L.Ed. 428; Van Brocklin v. State of Tennessee, 1886, 117 U.S. 151, 168, 6 S.Ct. 670, 29 L.Ed. 845; Widdicombe v. Childers, 1888, 124 U.S. 400, 405, 8 S.Ct. 517, 31 L.Ed. 427;¹ Felix v. Patrick, 1892, 145 U.S. 317, 328, 12 S.Ct. 862, 36 L.Ed. 719; United States v. Colorado Anthracite Co., 1912, 225 U.S. 219, 223, 32 S.Ct. 617, 56 L.Ed. 1063; Buchser v. Buchser, 1913, 231 U.S. 157, 161, 34 S.Ct. 46, 58 L.Ed. 166; Ruddy v. Rossi, 1918, 248 U.S. 104, 106, 107, 39 S.Ct. 46, 63 L.Ed. 148; see also other cases cited in 73 C.J.S. Public Lands § 209, and 42 Am.Jur., Public Lands, § 37.

Indeed the same principle was recognized by the Supreme Court of Louisiana in the early case of Kittridge v. Breaud, La., 1843, 4 Rob. 79, 39 Am.Dec. 512, as follows:

"And the principle is well recognized in our jurisprudence, as well as in that of the courts of the United States, that where an equitable right, which originated before the date of the patent, whether by the first entry or otherwise, is asserted, it may be examined into: Brush v. Ware, 15 Pet. 93 10 L.Ed. 672; Bouldin v. Massie, 7 Wheat. 122 149 5 L.Ed. 414."

The Mineral Leasing Act itself makes clear that, as a part of the public policy of the United States directed at opposing the monopoly of federally-owned mineral deposits, the Bureau of Land Management must examine into the qualifications of the real lessee and of any assignee of a mineral lease or of a part interest. See sections 181 and 184 of 30 U.S.C.A. Those provisions leave no room for operation of any State law.

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