Union Oil Co of California v. Smith

Decision Date31 March 1919
Docket NumberNo. 8,8
Citation39 S.Ct. 308,249 U.S. 337,63 L.Ed. 635
PartiesUNION OIL CO. OF CALIFORNIA v. SMITH
CourtU.S. Supreme Court

Messrs. Lewis W. Andrews and Thomas O. Toland, both of Los Angeles, Cal., for plaintiff in error.

[Argument of Counsel from pages 338-341 intentionally omitted] Mr. Justice PITNEY delivered the opinion of the Court.

This case presents, for the first time in this court, the question of the meaning and effect of an act of Congress approved February 12, 1903 (32 Stat. 825, c. 548 [Comp. St. § 4636]), which reads as follows:

'An act defining what shall constitute and providing for assessments on oil mining claims.

'Be it enacted, etc., that where oil lands are located under the provisions of title thirty-two, chapter six, Revised Statutes of the United States, as placer mining claims, the annual assessment labor upon such claims may be done upon any one of a group of claims lying contiguous and owned by the same person or corporation, not exceeding five claims in all: Provided, that said labor will tend to the development or to determine the oil bearing character of such contiguous claims.'

Smith, now defendant in error, being in possession of a placer mining claim known as the 'Schley claim,' comprising a tract of 106 acres of land in the state of California, part of the public domain of the United States, under a location notice posted and recorded by himself and seven other qualified persons who afterwards conveyed their interests to him, and being engaged in the diligent prosecution of work for the purpose of finding oil upon the claim, brought an action in a California state court to determine adverse claims, making the Union Oil Company of California defendant.

Defendant asserted a superior right of possession under a mineral land location of the same ground under the name of the 'Rawley claim,' made by eight qualified associates in the year 1883, many years before plaintiff's location. No discovery of oil or other minerals had ever been made upon the ground by either of the claimants or by any other person. But at the time plaintiff and his associates located it defendant, although not then actually occupying this ground, was in actual occupation of a contiguous claim of 160 acres known as the 'Sampson claim,' upon which it then was drilling and afterwards continued to drill a well for the discovery of oil, the well being 1,000 feet distant from the boundary line of the disputed claim. Defendant claimed the right of possession of five contiguous claims, including the 'Rawley-Schley' and the 'Sampson,' under locations regularly made in all respects save discovery. Defendant pleaded and proved these facts, and also introduced evidence warranting a finding that its boring work on the 'Sampson claim' tended to determine the oil-bearing character of the 'Rawley-Schley claim.'

It was and is defendant's contention that by virtue of the act of 1903 one who has acquired the possessory rights of locators before discovery in five contiguous claims taken up as oil-bearing lands may preserve and maintain an inchoate right to all of them by means of a continuous actual occupation of one, coupled with diligent prosecution in good faith of a sufficient amount of discovery work thereon, provided such work tends also to determine the oil-bearing character of the other claims.

The superior court of the county, and, on appeal, the Supreme Court of the state, overruled this contention and gave judgment in favor of the plaintiff (Smith v. Union Oil Co., 166 Cal. 217, 135 Pac. 966), and the case was brought here by writ of error under section 237, Judicial Code (Act March 3, 1911, c. 231, 36 Stat. 1156), prior to the amendment of September 6, 1916 (39 Stat. 726, c. 448 [Comp. St. § 1214]).

It will be observed that both parties are in the position of prospectors or explorers upon the public domain—locators without discovery; and, in order to appreciate correctly what effect, if any, the act of 1903 has upon their rights, it is important to have in mind what is meant by 'annual assessment labor,' and the part it plays in the operations of miners under the mining laws of the United States.

By section 2319, Rev. Stat. U. S. (Comp. St. § 4614), all valuable mineral deposits in lands belonging to the United States are declared to be——

'free and open to exploration and purchase, and the lands in which they are found to occupation and purchase, by citizens of the United States and those who have declared their intention to become such, under regulations prescribed by law, and according to the local customs or rules of miners in the several mining districts, so far as the same are applicable and not inconsistent with the laws of the United States.'

By section 2320 (section 4615) it is declared:

'No location of a mining claim shall be made until the discovery of the vein or lode within the limits of the claim located.'

By section 2322 (sec. 4618) locators of mining locations on the public domain——

'so long as they comply with the laws of the United States, and with state, territorial, and local regulations not in conflict with the laws of the United States governing their possessory title, shall have the exclusive right of possession and enjoyment of all the surface included within the lines of their locations, and of all veins,' etc.

By section 2324 (section 4620):

'The miners of each mining district may make regulations not in conflict with the laws of the United States, or with the laws of the state or territory in which the district is situated, governing the location, manner of recording, amount of work necessary to hold possession of a mining claim, subject to the following requirements: The location must be distinctly marked on the ground so that its boundaries can be readily traced. * * * On each claim located after the tenth day of May, eighteen hundred and seventy-two, and until a patent has been issued therefor, not less than one hundred dollars' worth of labor shall be performed or improvements made during each year. On all claims located prior to the tenth day of May, eighteen hundred and seventy-two, ten dollars' worth of labor shall be performed or improvements made by the tenth day of June, eighteen hundred and seventy-four, and each year thereafter, for each one hundred feet in length along the vein until a patent has been issued therefor; but where such claims are held in common, such expenditure may be made upon any one claim; and upon a failure to comply with these conditions, the claim or mine upon which such failure occurred shall be open to relocation in the same manner as if no location of the same had ever been made, provided that the original locators, their heirs, assigns, or legal representatives, have not resumed work upon the claim after failure and before such location.'

Section 2325 (section 4622) and section following permit a patent to be obtained for a mineral claim, and regulate the procedure. By section 2325 the applicant for patent is required (among other things) to file 'a certificate of the United States surveyor general that five hundred dollars' worth of labor has been expended or improvements made upon the claim by himself or grantors,' and, upon his compliance with this and other requirements, if after publication of notice for 60 days no adverse claim is filed, or (section 2326 [section 4623]) such claim, having been filed, has proceeded to adjudication in a court of competent jurisdiction with result favorable to the applicant, upon a payment of $5 per acre and proper fees a patent is issued for the claim or such portion thereof as has been decided to be in the rightful possession of the applicant. By section 2329 (section 4628) placer claims are made subject to entry and patent under like circumstances and conditions and upon similar proceedings as are provided for vein or lode claims; the purchase price of placer claims being fixed by section 2333 (section 4632) at $2.50 per acre.

Under this legislation petroleum for many years was regarded as a mineral, although not specially mentioned as such, and claims to oil lands were disposed of by the Land Department under the provisions of law relating to placer claims, with a single exception afterwards overruled. Union Oil Co., 23 L. D. 222, decided August 27 1896; Union Oil Co. (on review) 25 L. D. 351, decided November 6, 1897. It was in order to obviate the effect of the former of these two decisions that Congress passed the act of February 11, 1897 (29 Stat. 526, c. 216 [Comp. St. § 4635]), which declared:

'That any person authorized to enter lands under the mining laws of the United States may enter and obtain patent to lands containing petroleum or other mineral oils, and chiefly valuable therefor, under the provisions of the laws relating to placer mineral claims'

—with a proviso saving petroleum land theretofore filed upon, claimed or improved as mineral but not yet patented. See House Rep. No. 2655, 54th Cong. 2d Sess.; 29 Cong. Rec. pt. 2, p. 1409; Burke v. Southern Pacific R. R. Co., 234 U. S. 669, 678, 34 Sup. Ct. 907, 58 L. Ed. 1527.

Aside from the suggested effect of the act of 1903, it is clear that in order to create valid rights or initiate a title as against the United States a discovery of mineral is essential. Section 2320, Rev. Stat.; Waskey v. Hammer, 223 L. S. 85, 90, 32 Sup. Ct. 187, 56 L. Ed. 359. Nevertheless, section 2319 extends an express invitation to all qualified persons to explore the lands of the United States for valuable mineral deposits, and this and the following sections hold out to one who succeeds in making discovery the promise of a full reward. Those who, being qualified, proceed in good faith to make such explorations and enter peaceably upon vacant lands of the United States for that purpose are not treated as mere trespassers, but as licensees or tenants at will. For since, as a practical matter, exploration must precede the discovery of...

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