Miller v. Hurley

• Decision Date: 19 December 1927
• Docket Number: 1394
• Citation: 37 Wyo. 344,262 P. 238
• Parties: MILLER v. HURLEY [*]
• Court: Wyoming Supreme Court

262 P. 238

37 Wyo. 344

MILLER v. HURLEY ^[*]

No. 1394

Supreme Court of Wyoming

December 19, 1927

Rehearing Denied January 31, 1928.

APPEAL from District Court, Hot Springs County; CYRUS O. BROWN Judge.

Action by Henry A. Miller against F. E. Hurley to contest right to state land under lease. Judgment for defendant, and plaintiff appeals.

Affirmed.

John T Bottom, for appellant.

Preferential rights, on ground of citizenship, are not involved, all parties interested being non-residents of the state; the action of the Board was against sound public policy, Greenwood Pub. Pol. pp. 1, 2; Const. Art. 18 Sec. 1, 3, 5. The statutes require leases to be granted in a manner as shall inure to the greatest benefit and revenue to the state, § 706, § 712 C. S. The Act of Admission limits leases to five years. State v. Board, 20 Wyo. 162; Campbell v. Co. (Ariz.) 212 P. 381. The trial court erred in not assuming full jurisdiction in determining the controversy de novo; Cooper v. McCormick, 10 Wyo. 379. The term "de novo" means a second trial, 18 C. J. 486, Karcher v. Green (Del.) 32 A. 225; Estes v. Co., 49 Colo. 378; Haney v. Welty, (Wyo.) 162 P. 932. Appellant should be granted full relief on appeal. Bucknum v. Johnson (Wyo.) 127 P. 904; Baker v. Brown, 74 P. 94; Paul v. Armstrong, 1 Nev. 82; Kennedy v. Hamer, 19 Cal. 374. Appellant's bid was accepted by the Commissioner and ratified by the Board, and there was no authority to accept a higher bid. State v. Board, 191 P. 1073; Webster v. French, 11 Ill. 254.

A. M. Gee and Hal W. Stewart, for respondent.

Appellee had a preference right under Sec. 712 C. S. The case was in fact tried de novo in the District Court; the State Land Board is solely an administrative one, Sec. 695 C. S.; Farm Invest. Co. v. Carpenter, 9 Wyo. 110. In the absence of fraud, decisions made within the discretionary powers of the Board are not reviewable; Davis v. Campbell (Ariz.) 206 P. 1078; Walls v. Land Board, 254 P. 481; Whiteman v. Severance (Minn.) 49 N.W. 255; State v. Board, 191 P. 1073; Cooper v. McCormick, 10 Wyo. 379; Baker v. Brown, 74 P. 94. The Board has power to adopt reasonable rules and regulations, 699 C. S.; State v. Board, supra, Cooper v. McCormick, supra. The evidence shows that if the lease had not been renewed appellee would have lost a large part of his investment, which was in excess of $ 90,000.00. The decision of the District Court should be affirmed.

TIDBALL, District Judge. BLUME, Ch. J., and KIMBALL, J., concur.

OPINION

TIDBALL, District Judge.

This case involves a contest between appellant and appellee over the leasing of state school lands situate in Hot Springs County. On June 8th, 1914, the State, through its proper land board, issued an operator's lease covering the lands in question to appellee, for a period of five years. This lease would have expired five years later, but by order of the board dated June 4th, 1919, the lease was extended to June 19th, 1919, to obtain a geological report. On the latter date, another operator's lease was granted to appellee for a period of five years.

On June 19th, 1914, appellee, F. E. Hurley, filed application with the Commissioner of Public Lands for a renewal of said lease, claiming the preferred and superior right thereto under the laws, regulations and policy adopted and followed by the State of Wyoming; and in support thereof claimed that he was a taxpayer of the State of Wyoming and a resident citizen of the State of Wyoming, and that he had caused thirty-nine standard wells to be drilled upon said lands at a cost of $ 277,726.76, and had expended in necessary surface equipment in the completion and operation of said thirty-nine wells and the operation of the lease the sum of $ 50,881.94, and had paid to the State of Wyoming in royalty in excess of $ 600,000.00; that the reasonable and conservative value of the material and surface equipment upon said lease, essential and necessary for the present and continued operation thereof, was $ 125,160.95. In said application a renewal of the existing lease was requested and in addition thereto the applicant requested that the royalty for the ensuing five years on light oil be fixed at not to exceed twenty-five percent and the royalty on the black oil, seventeen and one-half percent.

On June 18th, 1924, appellant, Henry A. Miller, addressed a letter to the Commissioner of Public Lands making application for an operating lease on the land here involved, offering to pay a royalty of thirty-three and one-third percent for all of the oil and gas produced from said lands and agreeing to pay for the improvements as required by law. In this letter he enclosed a certified check in the sum of ten thousand dollars. This letter was sealed in an envelope addressed to the State Land Commissioner, Cheyenne, Wyoming, and marked a "Bid for State Land, to be opened June 19, 1924."

On June 20th, 1924, at nine o'clock, A. M., the Commissioner opened the sealed envelope and marked the same "Application No. 39141" and on that day the Commissioner rendered his decision on the conflicting applications for lease by rejecting the application of Henry A. Miller and granting the application of F. E. Hurley on the basis of thirty-three and one-third percent royalty on all oil and gas and allowed thirty days in which to appeal.

From this decision Henry A. Miller appealed to the State Board of Land Commissioners on July 21st, 1924. And from this decision F. E. Hurley also appealed, insofar as said decision fixed a royalty on black oil at thirty-three and one-third percent.

On August 30th, 1924, the respective parties hereto appeared before the State Board of Land Commissioners at which time a hearing was held before said board upon the appeals from the decision of the Commissioner, and after the conclusion of the same the board took the matter under advisement. Again, on November 6th, 1924, the matter of the conflicting applications of the respective parties hereto was before the State Board of Land Commissioners for consideration, and on that date said board approved the decision of the Commissioner allowing the lease to F. E. Hurley at Thirty-three and one-third percent royalty and rejected the application of Henry A. Miller.

From this decision, Henry A. Miller gave notice of appeal to the District Court of Hot Springs County, Wyoming, under the provisions of Chapter 60, Wyoming Compiled Statutes of 1920.

On October 27th, 1925, the cause came on regularly for trial in the District Court of Hot Springs County, Wyoming, at which time testimony was offered by the respective parties hereto in addition to the testimony that was offered at the hearing before the State Board of Land Commissioners on August 30th, 1924; and thereafter, and on January 23rd, 1926, the trial judge rendered judgment in favor of F. E. Hurley, appellee, and Miller has appealed to this court.

The evidence produced at the trial in the District Court shows that the terms and covenants of both leases held by appellee on the lands in question over a period of ten years had been carried out and the lands embraced therein had been developed by appellee in a manner satisfactory to the board. During that period, thirty-nine producing wells had been completed at a cost of over $ 275,000; the oil had been marketed at the prevailing market prices; the light oil sand had been fully developed as far as the drilling of wells was concerned, and one black oil well had been completed and was producing, and two further offset wells for the production of black oil were being drilled, these black oil wells being of great depth, from 3900 to 4200 feet, and costing $ 92,000 and upward per well to drill.

The evidence further showed that appellee's company (The Ohio Oil Company) had tested nineteen structures in Wyoming, only two of which had proved commercially productive; that it has been the policy of the state land board over a long period of time to renew leases at the expiration thereof when the lessee had abided by the terms of his lease; and that the appraised value of the equipment on the lease in question at the time of its installation was over $ 125,000. It further appeared that appellant and his associates, Bonfils, Mrs. Tammen, and the Children's Hospital, all of Denver, Colorado, had never developed any unproven Wyoming structures to production; that shortly before the expiration of the lease on the lands in question, in June, 1924, the appellant had gone to the Commissioner of Public Lands and inquired of him about vacant state lands available for oil drilling, and was then told by the Commissioner that there was plenty of such lands; that appellant then informed the Commissioner that he was looking only for proven lands and had no desire to acquire leases on unproven territory; that the land board had known at all times that appellee represented The Ohio Oil Company.

At the hearing before the land board, appellant requested that the lease in question be auctioned off to the highest bidder, in case the board did not grant it to him outright. This request was denied by the board.

Other facts developed both at the hearing before the land board and during the trial in the District Court, but we deem the above a sufficient statement for the purposes of this decision. The judgment of the District Court was for appellee and affirming the action of the land board.

As we understand appellant's contentions in this court, he bases his request for a reversal of the District Court's decision upon four propositions, as follows:

1. Appellee's lease expired on June 18th, 1924, and the application for renewal made on June 19th was after the expiration of the former lease, and hence appellee lost whatever rights he may have had to a renewal,...