United States v. Essley

• Decision Date: 08 November 1960
• Docket Number: 6335.,No. 6334,6334
• Parties: UNITED STATES of America, Appellant, v. Irene ESSLEY, Appellee. Irene ESSLEY, Cross-Appellant, v. UNITED STATES of America, Cross-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

284 F.2d 518 (1960)

UNITED STATES of America, Appellant, v. Irene ESSLEY, Appellee.

Irene ESSLEY, Cross-Appellant, v. UNITED STATES of America, Cross-Appellee.

Nos. 6334, 6335.

United States Court of Appeals Tenth Circuit.

November 8, 1960.

Hugh Nugent, Atty., Dept. of Justice, Washington, D. C. (Perry W. Morton, Asst. Atty. Gen., Robert S. Rizley, U. S. Atty., Tulsa, Okl., and Roger P. Marquis, Atty., Dept. of Justice, Washington, D. C., with him on the brief), for appellant and cross-appellee.

F. Paul Thieman, Jr., Tulsa, Okl., for appellee and cross-appellant.

Before MURRAH, Chief Judge, and BRATTON and PICKETT, Circuit Judges.

PICKETT, Circuit Judge.

Acting under the provisions of Section 17 of the Mineral Leasing Act of 1920, as amended, Ch. 599, 49 Stat. 674, 676, the Secretary of the Interior issued to the defendant, Irene Essley, four noncompetitive oil and gas leases on tracts of public lands in Colorado. Each lease was for a period of five years, and contained a provision requiring that the lessee should pay "a rental of 50 cents for each acre or fraction thereof for the first lease year, and a rental of 25 cents for each subsequent lease year * * *; Provided, That * * * no rental is required for the second and third lease years. * * *" The leases were issued in late 1944 and early 1945, and, with one exception,¹ no rental payments were made after the first year.

In 1959, the United States brought this action to recover rentals of 25 cents per acre for the 4th and 5th years of three of the leases, and for only the 5th year of the other lease. The defendant pleaded the Oklahoma statute of limitations, and also that the leases required the payment of only 25 cents for the 4th and 5th years of their terms, and not 25 cents per acre. On stipulated facts, the trial court held that the Oklahoma statute of limitations was not applicable, but construed the leases as requiring the payment of 25 cents per lease for the 4th and 5th years, and entered judgment in favor of the United States for a total amount of $2.93. Both parties have appealed. The Government's appeal presents the question of the rentals due for the 4th and 5th years of the lease terms, and the cross-appeal questions the trial court's action in holding that the Oklahoma statute of limitations was inapplicable.

It is well established in this circuit, and elsewhere, that in interpreting a written contract, the court should, as far as possible, place itself in the position of the parties at the time of its execution, and then, from a consideration of the instrument itself, its purposes and the circumstances surrounding its execution, ascertain the intention of the parties. Roosevelt Materials Co. v. Nolan Brothers, Inc., 10 Cir., 264 F.2d 807; Liberty Nat. Bank & Trust Co. v. Bank of America Nat. Trust & Sav. Ass'n, 10 Cir., 218 F.2d 831; Nevada Half Moon Min. Co. v. Combined Metals Reduction Co., 10 Cir., 176 F.2d 73, certiorari denied 338 U.S. 943, 70 S.Ct. 429, 94 L.Ed. 581; Leal v. American Bonding Co. of Baltimore, 10 Cir., 159 F.2d 782; New York Cas. Co. v. Sinclair Ref. Co., 10 Cir., 108 F.2d 65; Uinta Tunnel, Min. & Transp. Co. v. Ajax Gold Min. Co., 8 Cir., 141 F. 563. The intention of the parties is not to be deduced from any specific provision or fragmentary part of the instrument, but from its entire context. Utex Exploration Co. v. Garwood, 10 Cir., 246 F.2d 547; Phillips Petroleum Co. v. McCormick, 10 Cir., 211 F.2d 361; F. W. Woolworth Co. v. Petersen, 10 Cir., 78 F.2d 47; Uinta Tunnel, Min. & Transp. Co. v. Ajax Gold Min. Co., supra.

Section 17 of the Mineral Leasing Act of 1920, as amended, provided that "such leases shall be conditioned upon the payment by the lessee * * * in advance of the rental to be fixed in the lease of not less than 25 cents per acre per annum * * *." The Regulations adopted by the Secretary of the Interior provided that the first year's rental should be 50 cents per acre, and the rental for succeeding years should be 25 cents per acre, with the second and third years' payments waived. 5 Fed.Reg. 2864 (1940), (now 43 C.F.R. § 192.80).² The authorities are in agreement that unless the contract discloses a contrary intention, an existing statute will be read into it to the same effect as an express provision. Home Building & Loan Ass'n v. Blaisdell, 290 U.S. 398, 54 S.Ct. 231, 78 L.Ed. 413; Northern Pacific Ry. Co. v. Wall, 241 U.S. 87, 36 S.Ct. 493, 60 L.Ed. 905; Armour Packing Co. v. United States, 209 U.S. 56, 28 S.Ct. 428, 52 L.Ed. 681; Meyer v. City of Eufaula, Okl., 10 Cir., 154 F.2d 943.

The statute and the regulations were also made part of the leases by specific reference. The leases recited that they were entered into under, pursuant and subject to the terms and provisions of the Mineral Leasing Act "which is made a part hereof." The lessee agreed to abide by and conform to any and all reasonable regulations of the Secretary of the Interior then or thereinafter in force, "all of which regulations are made a part of this lease; Provided, that such regulations are not inconsistent with any express and specific provision hereof; * * *."

The first sentence of the rental section of the leases provided that the first year's rental should be 50 cents per acre, and also fixed the payments to be paid for subsequent years. It would be wholly unrealistic to hold that the rentals for subsequent years provided for in the same sentence were limited to a total payment of 25 cents per lease because the term "per acre" was not included there. To hold otherwise would, except for the first year, require the same rental on leases irrespective of the amount of land leased.³ Furthermore, the Secretary of the Interior was without authority to lease for less than 25 cents per acre. Considering the leases as a whole, together with the Mineral Leasing Act of 1920, as amended, and the Regulations adopted pursuant thereto, it is too clear for any doubt that the parties intended the rentals for the 4th and 5th years to be 25 cents per acre, and not 25 cents per tract of land.⁴

With respect to the defense that the action is barred by the Oklahoma statute of limitations, it is a well established rule that, without a clear manifestation of Congressional intent, the United States is not bound by state sta...