United States v. Hayes

• Decision Date: 28 May 1927
• Docket Number: 7166.,7163,No. 7119,7119
• Citation: 20 F.2d 873
• Parties: UNITED STATES v. HAYES et al. SAME v. CIMARRON RIVER OIL CO. et al. RIVERSIDE OIL & REFINING CO. v. SAME.
• Court: U.S. Court of Appeals — Eighth Circuit

20 F.2d 873 (1927)

UNITED STATES v. HAYES et al.

SAME v. CIMARRON RIVER OIL CO. et al.

RIVERSIDE OIL & REFINING CO. v. SAME.

Nos. 7119, 7163, 7166.

Circuit Court of Appeals, Eighth Circuit.

May 28, 1927.

H. B. Martin, Sp. Counsel for Creek Tribe or Nation of Indians, of Tulsa, Okl., and Eustace Smith, Sp. Asst. U. S. Atty. Gen., for the United States.

J. F. Sharp, of Oklahoma City, Okl. (C. M. Oakes, of Tulsa, Okl., and Stuart, Sharp & Cruce, of Oklahoma City, Okl., on the brief), for appellant Riverside Oil & Refining Co.

W. A. Ledbetter, of Oklahoma City, Okl. (H. L. Stuart, R. R. Bell, and E. P. Ledbetter, all of Oklahoma City, Okl.), for various oil companies and individuals who operated oil and gas wells in river beds under orders of District Court.

C. B. Ames, of Oklahoma City, Okl. (B. A. Ames, of Oklahoma City, Okl., J. H. Hill, of Tulsa, Okl., and Ames, Lowe & Cochran, of Oklahoma City, Okl., on the brief), for appellee Texas Co.

J. P. O'Meara, of Tulsa, Okl., and A. E. Graham, of Okmulgee, Okl. (Gray Carroll and M. H. Silverman, both of Tulsa, Okl., on the brief), for appellees Fixico and others.

Streeter B. Flynn, of Oklahoma City, Okl. (Robert M. Rainey, Calvin Jones, and Rainey, Flynn, Green & Anderson, all of Oklahoma City, Okl., on the brief), for appellee Shaffer Oil & Refining Co.

Augustus C. Sewell, of McAlester, Okl. (W. J. Crump and James C. Davis, both of Muskogee, Okl., on the brief), for appellees Mussellem.

R. W. Stoutz, of Tulsa, Okl. (W. E. Disney and John Wheeler, both of Muskogee, Okl., and Anthony P. Nugent, of Kansas, Mo., on the brief), for appellees Rector and others.

W. P. McGinnis, of Tulsa, Okl. (Y. P. Broome and J. C. Wilhoit, both of Tulsa, Okl., on the brief), for appellee Tidal Oil Co.

J. H. Mosier, of Muskogee, Okl., Earl Bohannan, of Oswego, Kan., and H. M. Gray, of Tulsa, Okl., for appellee Parker.

W. H. Wilcox and A. R. Swank, both of Stillwater, Okl., for appellees Way and Potts.

Chas. West, Everett Petry, and West & Petry, all of Tulsa, Okl., for appellees Oklahoma Land, Coal & Petroleum Co. and others.

G. Earl Shaffer, of Tulsa, Okl., for appellee Ellis.

John J. Shea and Thos. F. Shea, both of Tulsa, Okl., for appellees Carney and others.

Shea & Shea, of Tulsa, Okl., for appellees Hello and others.

Before STONE, KENYON, and BOOTH, Circuit Judges.

STONE, Circuit Judge.

In pursuance of the Treaties of 1826 (7 Stat. 286), 1832 (7 Stat. 366), and 1833 (7 Stat. 417), the United States issued a patent, dated August 11, 1852, to the Muscogee or Creek Tribe of Indians to a large body of land which included portions of the Arkansas river and of its tributary, the Cimarron river. This grant was to the Creeks as a nation and not to the individual members of that tribe. Treaty, 7 Stat. 417, 419; patent, paragraphs "Art. III" and "Art. IV" and the granting clause. This grant was in the nature of a defeasible or terminable fee, being "in fee simple * * * so long as they shall exist as a nation, and continue to occupy the country hereby assigned to them." Treaty, 7 Stat. 417, 418; patent, paragraph "Art. III," and the granting clause.

The tribe, as such, occupied this land until the allotment thereof to the individual tribal members, or the sales thereof of lands not so allotted, under the Acts, or Agreements, of March 1, 1901 (31 Stat. 861), and June 30, 1902 (32 Stat. 500). These allotments and these sales were in accordance with a survey made, in advance of the above acts, by the United States for that purpose. This survey did not include the beds of the two rivers but meandered the banks thereof. Some years after such allotments or sales of the lands which bordered these rivers, oil was discovered in the beds of these streams adjacent to such lands.

The state of Oklahoma then made claim to such river bed lands on the basis that these streams were there navigable. In 1912 and 1913, the state granted oil and gas development leases covering various portions of these river bed lands. December 27, 1913, the United States, as guardian and trustee of the tribal property of the Creek Nation, brought two actions in its behalf. One was against the above lessees of such river bed lands of the Arkansas river. The other, against such lessees of river bed lands of the Cimarron river. So far as the question to be determined here is concerned, the two cases moved as companions and a recital of the proceedings in one of them will apply to the other. The final decrees in the two cases were not identical in all respects but were the same in so far as the three appeals to be considered in this opinion are concerned. The same day, the state of Oklahoma filed its intervention laying claim to these river bed lands. The same day, was filed a stipulation executed for complainant and intervener (state of Oklahoma). This stipulation was rather extended and formal but, in brief, provided for development under and in accordance with the terms of the existing leases, for a "supervisory committee" of two named persons (one selected by complainant and one by intervener) to immediately supervise and control such production, for collection of the royalties thereunder and payment of same to a receiver, to be appointed by the court, who should hold such funds to await the final outcome of the action. This stipulation was "entered into for the sole purpose of hastening the development and conservation of the oil and gas underlying the said lands, and for the protection of whomsoever may ultimately be decreed by the court to be the owner of and entitled thereto, said development and conservation being necessary by reason of the oil and gas development and operation on the adjacent uplands." It concluded with the statement that "any person not now a party to this suit who claims an interest in any of the several tracts or parcels of land described in the bill of complaint herein may be made a party to this cause, and receive the benefits of this stipulation upon subjecting himself to the jurisdiction of this court and agreeing to be bound by the provisions hereof."

December 30, 1913, a receiver was appointed upon application of plaintiff and the intervening state of Oklahoma. This action was consented to by several of the defendants who had then filed answers. This order recognized and appointed the "supervisory committee" of two provided for in the above stipulation and decreed that "pending the final determination of this suit," production should proceed under the existing leases made by the state; that the royalties thereunder should be collected and held by the receiver for whomsoever should be adjudged entitled thereto; that separate accounts of production under each lease should be kept and regularly filed; that the lessees should be entitled to keep all proceeds other than royalties free from any claim by plaintiff or "said interveners" and that others might become parties by submitting to the jurisdiction of the court and "agreeing to be bound by the provisions of the said stipulation as filed herein by the complainant and said interveners on the 27th day of December, 1913." Thereafter, numerous parties intervened. These later interveners included allottees of the shore lands adjacent to the river beds under lease, purchasers of unallotted lands so adjacent, grantees of such allottees or of such purchasers, and lessees of such under oil and gas leases covering such upland.

The main issue developed from these actions and the various interventions therein was as to the ownership of these leased river bed lands. At first, this was a triangular contention in which there were three classes, each of which claimed an exclusive title. These were the Creek Nation, the state of Oklahoma and the owners (or their lessees) of the adjacent shore lands. During this litigation, the Supreme Court decided a case (Brewer Oil Co. v. United States, 260 U. S. 77, 86, 43 S. Ct. 60, 67 L. Ed. 140), which determined the nonnavigable character of the Arkansas river above the mouth of the Grand river. As the lands here involved were above the mouth of the Grand river, that decision eliminated the state of Oklahoma as a claimant. The state recognized this situation by filing a formal stipulation that a decree might be taken against it. Thereafter the contest as to title was between the Creek Nation on one side and the landowners on the other. The lessees from the state and, later, the lessees from the receiver, developing these river bed lands, formed a class aligned, in interest, with the state at the outset, but under the above stipulation and receivership it became immaterial to them whether the state or the Creek Nation prevailed as in either situation their rights under the leases were recognized and protected. If the landowners prevailed, these lessees might be faced with the claim that they were trespassers or were liable for larger payments than the royalties stipulated in the leases. Therefore their interests naturally aligned them against the landowners.

The issues were referred to a master, who held extensive hearings and filed a report. The trial court (January 31, 1925) entered the decrees which are the subject of these appeals. Those decrees adjudicated the matters following: The title to the river bed lands; the rights of upland lessees as to the adjacent river bed lands; the status of the leases given by the state or the receiver for operation in the river bed lands; rights of possession in the landowners and the future status of the receivership. The decrees quieted title in the landowners and dismissed the petition filed on the part of the Creek Nation and the intervention of the state. They declared that oil and gas leases given by such landowners should extend to the abutting river bed lands and that all river bed leases given by the state or the receiver be "inoperative from and after this date without prejudice to removal by the lessees of their equipment in accordance with former...