Russell v. Texas Company, 14983.

• Decision Date: 21 January 1957
• Docket Number: No. 14983.,14983.
• Citation: 238 F.2d 636
• Parties: Theodore B. RUSSELL, Appellant, v. The TEXAS COMPANY, a corporation, Frederick T. Manning Drilling Company, a corporation, and The Northern Pacific Railway Company, a corporation, Appellees. The TEXAS COMPANY, a corporation, Appellant, v. Theodore B. RUSSELL, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

238 F.2d 636 (1956)

Theodore B. RUSSELL, Appellant, v. The TEXAS COMPANY, a corporation, Frederick T. Manning Drilling Company, a corporation, and The Northern Pacific Railway Company, a corporation, Appellees.

The TEXAS COMPANY, a corporation, Appellant, v. Theodore B. RUSSELL, Appellee.

No. 14983.

United States Court of Appeals Ninth Circuit.

November 24, 1956.

Rehearing Denied January 21, 1957.

COPYRIGHT MATERIAL OMITTED

Ralph J. Anderson, Stanley P. Sorenson, Helena, Mont., J. R. Vaughn, Los Angeles, Cal., for appellant.

H. J. Coleman, Cale Crowley, Coleman, Jameson & Lamey, Billings, Mont., Walter Will, Denver, Colo., for appellee and cross appellant, The Texas Co.

Cale Crowley, H. J. Coleman, Coleman, Jameson & Lamey, Billings, Mont., M. L. Countryman, Jr., St. Paul, Minn., Robert P. Davidson, Billings, Mont., for appellee, Northern P. Ry. Co.

Before STEPHENS and BONE, Circuit Judges, and HALBERT, District Judge.

HALBERT, District Judge.

Plaintiff-appellant, Russell, claims title to certain real property, which will be referred to in this opinion as section 23. Russell's predecessors in interest acquired their interest in this property from the Northern Pacific Railway Company, defendant-appellee herein, through a contract followed by a warranty deed executed in 1918. In both the contract and the deed was a reservation of mineral rights by the grantor.¹ The Texas Company, defendant-appellee and cross-appellant herein, has been conducting extensive operations on section 23 since 1952 under an oil and gas lease granted by Northern Pacific Railway Company. The Texas Company has also made use of the surface of section 23 in connection with operations carried on by it on lands other than section 23.

Russell, as plaintiff, instituted this action seeking relief under three causes of action. The first cause of action is tantamount to a quiet title action designed to have the mineral reservation by the Northern Pacific Railway in the 1918 deed, and the subsequent oil and gas lease to The Texas Company adjudged void, and at the same time have the alleged clouds, thereby created, removed. By the second and third causes of action, Russell seeks to recover damages from The Texas Company for its use of the surface of section 23 in connection with its operations on section 23 and on adjacent lands.²

First Cause of Action

I. Russell's Appeal from the Judgment in Favor of Northern Pacific

Russell's first cause of action is predicated upon the theory that the Acts of Congress granting to the Northern Pacific Railroad Company the lands, of which section 23 is a part, so limited the interest, which the Company acquired, that it was not at liberty to reserve the mineral rights in a subsequent conveyance.

The original granting act of 1864, 13 U. S. Statutes at Large, Ch. 217, p. 365, gave to the Northern Pacific Railroad Company the right to acquire a patent to certain lands in aid of its construction of a line from Lake Superior to the Puget Sound. The 1864 Act, inter alia, suspended the Company's power to mortgage the lands granted thereunder. In 1870, Congress passed a Resolution which removed the mortgage restriction and granted additional lands in Oregon and Washington to the Company. This Resolution included a proviso clause which, in essence, required the Company to open up the lands "hereby granted" to settlement and pre-emption at the expiration of five years after the completion of the line if such lands had not, before that time, been mortgaged, sold or otherwise disposed of, 16 U. S. Statutes at Large, Res. 67, p. 378.³

It is Russell's contention that the 1864 Act gave to Northern Pacific something less than a fee, in that the power to mortgage was withheld. He reasons that since the 1870 Resolution removed this restriction, there was, in effect, a regrant of the 1864 lands at the time the Company chose to exercise its newly acquired power to mortgage, so that these lands came within the meaning of the words, "hereby granted," in the proviso clause. Russell then argues that since section 23, in particular, was subject to settlement and pre-emption, it was not susceptible to a mineral reservation by the Northern Pacific.

The District Court, sitting without a jury, found contrary to Russell's contention on this first cause of action and upheld the validity of the mineral reservation and the oil lease. No memorandum was filed in connection with this finding, but the record reveals that Judge Murray, who heard the case, felt that United States v. Northern Pacific Railway Co., 1940, 311 U.S. 317, 61 S.Ct. 264, 85 L.Ed. 210, was determinative of the issue.⁴ On this first cause of action the trial court entered judgment in favor of Northern Pacific Railway Company. Russell claims this was error and appeals from that portion of the judgment.

It is fundamental that in actions to quiet title or to remove a cloud on title, the plaintiff must succeed on the strength of his own title, and not on the weakness of the defendant's title, Williams v. Baker, 17 Wall. 144, 84 U.S. 144, 21 L. Ed. 561; Moodey v. Dale Consolidated Mines, 9 Cir., 81 F.2d 794, certiorari denied 299 U.S. 549, 57 S.Ct. 11, 81 L.Ed. 404; and Hinton v. Staunton, 124 Mont. 534, 228 P.2d 461.

Appellant in the case at bar would have us declare void a mineral reservation which appears expressly in the very deed through which he, himself, claims title. He asserts no independent source of title. On the contrary, he insists that the express recitals in the deed to his predecessor in title (of which he had notice) were ineffective irrespective of the intentions of the parties to the conveyance or the bargain into which they entered. Even if we were to resort to hypothesizing, it would, indeed, be difficult for us to imagine a more obvious case of estoppel.

The appellant would have us remove him from this curious position by applying the rule stated in Oregon & C. R. Co. v. United States, 1915, 238 U.S. 393, 35 S.Ct. 908, 59 L.Ed. 1360, to the facts of the instant case. In that case, the government brought an action against the railroad company to enforce certain covenants which Congress imposed on it by way of proviso in the Acts which granted to the Company the land involved in the controversy. By accepting the grant, the Company covenanted to sell the land at a specified time to actual settlers only, at a stipulated price per acre. The Company sought to defend against the government's action for breach of this covenant on such grounds as waiver, acquiescence, and estoppel. The Supreme Court in an opinion by Mr. Justice McKenna held that such defenses were not available against the government in an action to enforce a clear Congressional mandate.

Can the appellant in the case at bar bring himself within the effect of this Rule? We think not. Even assuming arguendo that appellant's theory is sound and that Congress did in 1870 impose a mandatory duty on the Northern Pacific to convey a full fee title to the land here involved, with no reservations, appellant has indicated no authority by which he is enabled to enforce that mandate. Nor has he attempted, if indeed it were possible, to classify himself as a third party beneficiary or a cestui que trust with respect to this land. To overlook a distinction so obvious is to vault the appellant into a status which he has not acquired. In such legal gymnastics we will not indulge.

The law is clear that where the grantee of surface rights or his successors in interest seek to remove the cloud of the grantor's mineral reservation, it must be established that the grantee's rights to the interest reserved flow from an independent source of title, See 31 C. J.S., Estoppel, § 38(f), p. 218. Where, however, the surface owner claims title to the mineral rights, which his grantor expressly reserved to himself, on the theory that his grantor had no right to make such a reservation, the owner of the surface is estopped from asserting that the mineral rights thereby passed to him in the instrument of conveyance, Morse v. Smyth, D.C.1918, 255 F. 981; Wier v. The Texas Co., 5 Cir., 1950, 180 F.2d 465. This doctrine has been enunciated in as many ways as there are individual factual situations to justify its application.⁵ Estoppel, in the nature of an equitable concept, is designed to protect the reliances and expectations of innocent persons from detrimental devastation by those who by assent and recognition have induced those reliances and expectations. Whenever the invocation of a rule results in the denial of a remedy, caution implicitly governs discretion. Caution must give way to reasoned judgment, however, where, as in the case at bar, the facts so overwhelmingly justify the application of the doctrine. To disregard its applicability in this case would be to invite a miscarriage of justice.

Even if we felt constrained to recognize the right of Russell to raise the question of the validity of the mineral reservation by virtue of the two granting acts, we are convinced that the holding in United States v. Northern Pacific Railway Co., 1940, 311 U.S. 317, 61 S.Ct. 264, 85 L.Ed. 210, is determinative of this issue.

For the reasons given we are of the view that the trial court ruled correctly on this first cause of action.

Second and Third Causes of Action

The damages which Russell seeks to recover from The Texas Company in his second and third causes of action are based on the following:

(A) The reasonable value of the use of the surface of section 23 including the use of water, rock and roads thereon in connection with operations on adjacent lands, from September 3, 1952, to October 30, 1952 The latter is the date on which a revocable license to continue such use was accepted by The Texas Company..

(B) The sums alleged to be due under a revocable license commencing on October 30, 1952, which obligated The Texas Company to pay Russell $150.00 a day for the continued use of section 23 in connection with...