United States v. Eaton Shale Co., Civ. A. No. C.-4139.
| Citation | 433 F. Supp. 1256 |
| Decision Date | 25 May 1977 |
| Docket Number | Civ. A. No. C.-4139. |
| Parties | UNITED STATES of America, Plaintiff, v. EATON SHALE COMPANY, the Heirs of Rea L. Eaton, Carol H. Eaton, Benjamin H. Eaton, Nancy Eaton Cone, Mary Eaton Porter, Gaar I. Potter, Roderick B. Potter, Patricia P. Coyne, Gertrude I. Potter, John W. Savage, Joan L. Savage, Thomas E. Prather, William C. Prather, Robert Latham, and John H. Latham, Defendants. |
| Court | U.S. District Court — District of Colorado |
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Gerald S. Fish, Dept. of Justice, Washington, D. C., Albert V. Witham, Sp. Asst. U. S. Atty., James P. Gatlin, Asst. U. S. Atty., Denver, Colo., for plaintiff.
Jay W. Tracey, Jr., Patrick M. Westfeldt, Randy L. Parcel, M. Julia Hook, Holland & Hart, Peter H. Holme, Jr., A. Edgar Benton, Holme, Roberts & Owen, Denver, Colo., for defendants.
The United States of America seeks to invalidate and cancel United States Land Patent No. 1131391 on the grounds that the six mining claims upon which the patent was premised did not exist at the time of the issuance of the patent. Involved are 960 acres of patented lands in Garfield County, Colorado. The patent, issued in 1951, embraced oil shale placer mining claims described as Gem Nos. 3, 4, 5, 6, 9 and 10.
Alternative grounds for relief include prayers that the present holder of the patent pay to the government the current value of the lands covered by the patent, or that a constructive trust be imposed on monies received by the original patentee. The government also raises a constructive trust theory with regard to title to the patented land.
Defendant Eaton Shale Company (Eaton) is the current owner of the mineral interest in the lands. Eaton acquired ownership of the patent in 1953. It claims issuance of a valid patent to the original patentee and marketable title in its predecessors in title.
For the reasons outlined below, we hold that the patent in question is valid.
The government filed this suit on July 11, 1972, to invalidate Patent No. 1131391, which had been issued on March 19, 1951, to patentee Delos D. Potter (deceased). The government has named a number of individuals, as well as Eaton, as defendants herein. Some of the individual defendants are (a) heirs of Potter, or heirs of Rea L. Eaton, who once owned an interest in the lands, and (b) owners of oil and gas royalties and surface rights.
The government seeks to have the patent declared void as to oil shale placer claims Gem Nos. 3, 4, 5, 6, 9 and 10, and to have those claims reconveyed to it either directly or by way of a constructive trust. In the alternative, the government seeks to impress a monetary trust upon the estate of Potter, and successor estates of his heirs, and to have the defendants declared jointly and severally liable for the current value of those lands. At trial, the court dismissed the action as it relates to the estates of Potter and of his heirs. The estates of Rea L. Eaton and of his heirs, and the surface owners were also dismissed from this case.
The government's claim of invalidity is based, in part, upon a contest decision dated December 9, 1931, by the Commissioner of the General Land Office (the predecessor agency of the Bureau of Land Management), in which the Commissioner purported to have declared oil shale placer claims Gem Nos. 1 through 10, inclusive, null and void (Contest No. 12013). The remainder of the government's case relies upon an unrecorded quit claim deed, dated January 12, 1929, from DeBeque Shale Oil Company (DeBeque) to the United States of America. The deed is located in the file for the Contest proceeding. It is unrefuted that the deed was never recorded in the real estate records in Garfield County, Colorado. The government contends that the deed conveyed Gem Nos. 3, 4, 5, 6, 9 and 10 to the United States.
The government further contends that in issuing the patent to the Gem claims, officials of the Department of Interior acted without authority (Tr. 347). In its concluding oral argument, the government argued, (Tr. 353-354).
Thus, the government maintains that a void patent was issued by mistake, as the issuance was beyond the jurisdictional authority of the issuing official; further, plaintiff argues that the patent is void for having been issued without legal authority, and is, therefore, subject to cancellation.
1. The real property in question came under government ownership in 1848 by virtue of the Treaty of Guadalupe Hidalgo between the United States and Mexico (9 Stat. 922).
2. In 1872, Congress adopted the General Mining Laws which, as amended from time to time since 1872, provide in 30 U.S.C. § 21, et seq. for the unhindered exploration and occupation of valuable mineral deposits in land belonging to the United States and, at the claimant's option, for acquisition by patent of such deposits and the lands in which they are found.
3. (a) Thereafter and until enactment of the Mineral Leasing Act on February 25, 1920, oil shale deposits found in these public domain lands were subject to entry and appropriation through the location of placer mining claims under the Placer-Claim Provisions of the General Mining Laws.1
(b) The Mineral Leasing Act withdrew oil shale from the operation of the mining laws and made it subject to government leasing. However, the Act did not impair the effectiveness and validity of oil shale placer mining claims in existence on February 25, 1920, and thereafter maintained in compliance with the laws under which they were initiated. 41 Stat. 451 (1920), 30 U.S.C. § 193 (1964).
4. Pursuant to the mining laws, on January 16, 1918 the Gem Claims were located by Joseph Bellis and seven other individuals as oil shale placer mining claims.
5. In 1919, by mesne conveyances, DeBeque acquired all of the Gem Claims, including those involved in this suit, i. e., Gem Nos. 3, 4, 5, 6, 9 and 10.
6. The quit claim deed executed by DeBeque on January 12, 1929, purportedly conveyed the six claims in question to the government.
7. (a) In 1929, Louis C. Mackel, Assistant Mining Engineer, General Land Office of Interior, was engaged in examining oil shale placer mining claims. He had the responsibility of preparing reports containing the results of his examinations and including recommendations for departmental action to contest the claims.
(b) On January 10, 1929, J. L. Hurt, who was then President of DeBeque wrote a note to Mackel stating:
"Dear Sir: Enclosed please find quit claim deed as per your request."
The note is in Field Division File No. 44881-2, and was in that file when it was obtained from the Federal Records Center, Denver, Colorado, in late 1973. The handwritten note was on a fragment of a letter or memorandum containing the signature of W. W. Platt, then secretary of DeBeque. The letter of transmittal is dated two days before the date of execution and acknowledgment of the deed.
(c) Mackel wrote a mineral report, dated January 23, 1929, containing the results of his investigation of the Gem Claims in question.
(d) The quit claim deed attached to Mackel's mineral report was transmitted to the Commissioner of the General Land Office, Washington, D. C., with a memorandum of January 26, 1929, from Ralph D. Kelley, Chief of Field Division, General Land Office (GLO). Mackel's report refers to the deed as follows:
(e) Kelley approved and transmitted Mackel's report to the Commissioner of the General Land Office. He stated that "Engineer Mackel has obtained a quit claim deed from the owners, conveying to the United States Gem Nos. 3, 4, 5, 6, 9 and 10," and recommended "that the deed of reconveyance be accepted and recorded."
(f) The claims contest was instituted in 1929. The 1929 quit claim deed is contained in the Contest File. The sole basis of the contest, however, was that the claimant had failed to perform assessment work on each of the Gem Nos. 1-10 in furtherance of the claim, as required by the Mineral Leasing Act. On September 1, 1972, the Mackel report, Kelley's memorandum, and the unrecorded quit claim deed were physically situated and paginated in proper form in BLM files.
8. The quit claim deed was never formally accepted by the government or its agents, and was not recorded in the appropriate County records, as provided by the Colorado land recording laws. During the relevant period, the deed remained unrecorded, and did not appear in the abstract of title submitted by the patent applicant in 1949. However, the physical existence and location of the quit claim deed were known to, and considered by, the Bureau's adjudicators and attorneys who approved the claims for patent.2 It is clear that the patent was issued by Interior on March 19, 1951, with complete factual knowledge regarding the quit claim deed. Interior did not consider the unrecorded Gem quit claim deed as evidence of an intention of Eaton's predecessor in title to abandon the claim. No action was taken by Interior in regard to the quit claim deed, even though Interior's records, in several areas, made mention of the deed, and Interior's files were themselves the repository of the unrecorded deed.
9. On May 15, 1929, the Notice of Contest Charges, designated 12013, was mailed by the United States to...
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