Standard Oil Co. of California v. United States, 8985.

Citation107 F.2d 402
Decision Date02 January 1940
Docket NumberNo. 8985.,8985.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)






Oscar Lawler, of Los Angeles, Cal., Donald R. Richberg, of Washington, D. C., Eugene Prince, of San Francisco, Cal., and Wm. H. Burges, of El Paso, Tex., for appellant and cross-appellee, Standard Oil Co. of California.

Ray W. Hays, of Fresno, Cal., for appellants and cross-appellees Carman, Fairbank, et al.

John W. Preston, Sp. Counsel for the United States, of Los Angeles, Cal., and Annette Abbott Adams, Asst. Sp. Counsel for United States, of San Francisco, Cal. for appellee and cross-appellant.

Earl Johnson, of Los Angeles, Cal., and Edward D. Landels, of San Francisco, Cal., for California Land Title Ass'n, amici curiae.

Before GARRECHT, MATHEWS, and HEALY, Circuit Judges.

HEALY, Circuit Judge.

The United States brought suit against the Standard Oil Company of California and others to quiet its title to Section 36, Township 30 South, Range 23 East of Mt. Diablo Meridian in California. The bill prayed also for an accounting and for other relief. After a trial to the court a decree was entered quieting title in the Government and awarding damages in the sum of $6,214,102.42. From this decree a number of the defendants, including the Standard Oil Company, have appealed. The United States, asserting error in the amount awarded, prosecutes a cross appeal.

The earlier history of the litigation is to be found in West v. Standard Oil Co., 278 U.S. 200, 49 S.Ct. 138, 73 L.Ed. 265, and need not be repeated. The controversy had its beginning in 1914 when the Secretary of the Interior, upon the report of a field representative, initiated departmental proceedings charging that the section — a part of the school grant of sections 16 and 36 under the act of March 3, 1853, 10 Stat. 244 — was known to be mineral at and prior to its survey.1

After the decision in West v. Standard Oil Co., supra, the departmental contest, which had been renewed on amended charges by order of Secretary Work (51 L.D. 141), proceeded before a substitute register, and there were extended hearings at various places in California. At their conclusion the register dismissed the charges and his action was affirmed by the Commissioner of the General Land Office. The United States appealed to the Secretary, who ultimately rendered a decision finding as a fact that the section was known to be mineral in character at the time of the approval of the survey, and holding that title thereto remained in the United States. 55 I.D. 121, 532. This suit followed.

On the trial below the court declined to receive further testimony but admitted in evidence the record and testimony in the land office contest. It held that the Secretary's decision as to the known mineral character of the land was conclusive if supported by evidence. The land office record was read and considered for the purpose only of determining whether there was evidence in support of the finding there made. The Standard contends that the court's examination went no further than to see whether the record contained any evidence to support the Secretary's conclusion. However, it is clear from the opinion below (D.C., 21 F.Supp. 645, 653), as well as from the findings, that the court was satisfied that the Secretary's decision was based on substantial evidence. Cf. Consolidated Edison Co. v. National Labor Relations Board, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126.

Appellants demanded a trial de novo of the issue of known mineral character, and the argument here revolves largely around the contention that the trial court was in error in declining to make an independent determination of the fact. The position of the Standard is that the proceeding in the department was purely informative, having no purpose or effect other than to guide the Secretary in determining whether the facts warranted court action.2 In any event, it is contended, the known mineral character of the land is a judicial question which the court must determine for itself — even though the determination be made on the land office record. On the latter point, the Standard stresses the observation in West v. Standard Oil Co., supra, to the effect that if the land was not known to be mineral as of the approval of the survey, the legal title passed to the state on that date. It is argued, chiefly on the authority of Hardin v. Jordan, 140 U.S. 371, 11 S.Ct. 808, 838, 35 L.Ed. 428, Borax Consolidated Ltd. v. Los Angeles, 296 U.S. 10, 56 S.Ct. 23, 80 L. Ed. 9, and Crowell v. Benson, 285 U.S. 22, 52 S.Ct. 285, 76 L.Ed. 598, that if title to the land had passed out of the United States the department had no jurisdiction over it, and that the question whether or not title had passed is a jurisdictional question not determinable by the executive department except for the purpose of governing its own conduct in the administration of its functions.

1. Administrative Authority Of The Secretary.

It may serve better to understand the difficulty which this branch of the appeal presents if we dispose first of some difficulties it does not present. The cases on which counsel rely are of no help in the resolution of the controversy, for they had to do with situations foreign to the one before us. General expressions used in them must necessarily be read in the light of the facts with which the court dealt.

In Hardin v. Jordan, supra, the holding was that an unrestricted grant by the United States of its public lands bounded on a lake or pond is to be construed, as to its effect, according to the law of the state in which the land lies. The situs of the land for which patent had issued was in Illinois, and under the law of that state the grantee took ratably to the center of the lake. In a later patent the land office attempted to convey the submerged land, treating the earlier patent as a transfer of title to the margin only of the lake. It was held that since the earlier patent, as construed under local law, had operated to transfer the title, the department lost jurisdiction over the land and had no authority to dispose of it again. The case presents no recognizable analogy. Moreover, it was directly held in West v. Standard Oil Co., supra, that the department retained jurisdiction over the parcel here in dispute.

In Borax Consolidated Ltd. v. Los Angeles, supra, the court was dealing with a controversy between one claiming title to tide lands and one claiming title under patent from the United States. If the lands were in fact tide lands they were not public lands and never had been, but had always been the property of the state. It was held that the jurisdiction of the department extends only to the public lands and that it has none over tide lands. Hence, if the lands were of the latter description the department was powerless to convey them. Here, however, we have to do confessedly with a grant of public lands; and as to the continued jurisdiction of the department over the disputed tract, see, again, West v. Standard Oil Co., supra.

In Crowell v. Benson, supra, the constitutional right of the citizen involved was his right to be free from the burden of liability without fault, unless the facts brought him within the reach of Congressional power under Art. III, sec. 2 of the Constitution, U.S.C.A. No analogous constitutional right is in jeopardy in the present instance. The disposal of the public lands is not a subject over which the "judicial power" of the United States is extended. It is a field in which the authority of the Congress is supreme. Lee v. Johnson, 116 U.S. 48, 6 S.Ct. 249, 29 L.Ed. 570; Art. IV, sec. 3, clause 2, of the Constitution, U.S.C.A. Where Congress grants public lands to a state, reserving those known to be mineral as of the approval of the survey, it is thought that there is no constitutional impediment to its delegating to any instrumentality it may select the authority of determining, as a fact, what lands fall within the excluded class. Compare Shields v. Utah & Idaho R. Co., 305 U.S. 177, 59 S.Ct. 160, 83 L.Ed. 111. The state or its transferees obviously have no constitutional right to demand the property on terms differing from those imposed. Their claim to the land does not derive from the Constitution. Nor is the power of Congress, under the broad authorization of that document, so limited as to require the fact-finding agency to make its determination at or prior to the approval of survey.

The problem, then, as we understand it, is not what authority Congress may confer upon the Secretary, but what authority it has conferred in relation to the administration of this grant. If Congress has clothed the Secretary with general authority to administer the grant, and if his decision of fact in this instance was made within the scope of such authority, there can be no doubt that his decision is conclusive on the courts, in the absence, at any rate, of fraud or imposition. The holdings to this effect are too numerous for citation, but among those apposite are Catholic Bishop of Nesqually v. Gibbon, 158 U.S. 155, 15 S.Ct. 779, 39 L.Ed. 931; Cameron v. United States, 252 U.S. 450, 40 S.Ct. 410, 64 L.Ed. 659; St. Louis Smelting & Refining Co. v. Kemp, 104 U. S. 636, 26 L.Ed. 875; Wright v. Roseberry, 121 U.S. 488, 7 S.Ct. 985, 30 L.Ed. 1039; Burke v. Southern Pacific R. Co., 234 U.S. 669, 34 S.Ct. 907, 58 L.Ed. 1527; Johnson v. Drew, 171 U.S. 93, 99, 18 S.Ct. 800, 43 L.Ed. 88. Of course, in order to give conclusive effect to his decision, the Secretary's power in the premises must be exercised within the limits of due process, that is, after notice and hearing and upon evidence. Cameron v. United States, supra; Crowell v. Benson, supra; Shields v. Utah & Idaho R. Co., supra. Compare Iron...

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