United States v. Ohio Oil Co.

• Decision Date: 22 October 1947
• Docket Number: No. 3412.,3412.
• Parties: UNITED STATES v. OHIO OIL CO.
• Court: U.S. Court of Appeals — Tenth Circuit

163 F.2d 633 (1947)

UNITED STATES v. OHIO OIL CO.

No. 3412.

Circuit Court of Appeals, Tenth Circuit.

September 10, 1947.

Rehearing Denied October 22, 1947.

COPYRIGHT MATERIAL OMITTED

Marvin J. Sonosky, Atty., Department of Justice, of Washington, D. C. (David L. Bazelon, Asst. Atty. Gen., Francis B. Critchlow, Sp. Asst. to Atty. Gen., and Walter H. Williams, Atty., Department of Justice, of Washington, D.C., on the brief), for appellant.

Harold D. Roberts, of Denver, Colo. (Robert E. More, of Denver, Colo., A. M. Gee and Hal W. Stewart, both of Findlay, Ohio, and W. Hume Everett, of Casper, Wyo., on the brief), for appellee.

Before BRATTON, HUXMAN, and MURRAH, Circuit Judges.

MURRAH, Circuit Judge.

Acting under asserted authority of an administrative regulation, as embodied in departmental oil and gas leases, the Secretary of the Interior determined the minimum value for which he would accept payment for royalty oil produced from such leases in the Lance Creek Oil Field in Wyoming, and threatened to institute appropriate proceedings to cancel the leases unless the lessees paid the minimum price fixed and determined by him. The Ohio Oil Company, as one of the lessees, finally paid the difference between 77¢ per barrel, the price for which it sold the royalty oil to the pipeline, and $1.02 exacted by the Secretary, on the condition that the difference be deposited by the Secretary in a trust fund pending judicial determination of the power of the Secretary to determine the minimum value of the royalty oil. This is a test suit brought under the Tucker Act, 28 U.S.C.A. § 41(20), to recover $9,186.96 paid by the Ohio under protest in accordance with the agreement with the Secretary to refund the same if it be judicially determined that the Secretary had no power under the lease agreement to fix and determine the minimum value for the royalty oil.

The pleadings raised the questions: (1) the jurisdiction of the court over the subject matter under the Tucker Act; (2) whether the Secretary of the Interior was authorized to fix and determine the minimum value for which he would accept payment for the royalty oil under the lease in question; and (3) if so, whether the Secretary acted arbitrarily in the exercise of that authority. The trial court sustained its jurisdiction under the Tucker Act, and held that "the Secretary had no legal right to fix a minimum price for its royalty oil and require the lessee to pay that price or submit to a forfeiture of its leasehold rights"; and that his actions were "unlawful, inequitable, arbitrary and unreasonable" 65 F.Supp. 991, 996. The same questions are presented on appeal.

The Tucker Act, under which this suit was brought, confers jurisdiction on the District court "of all claims * * * founded upon the Constitution of the United States or any law of Congress, or upon any regulation of an executive department, or upon any contract, express or implied, with the Government of the United States, or for damages, liquidated or unliquidated, in cases not sounding in tort." The leases in question were originally granted by the Secretary of the Interior under authority of the Mineral Leasing Act of February 25, 1920, 41 Stat. 437, 30 U.S.C.A. § 181 et seq., for a period of twenty years, to expire in 1940, and were extended in 1937 under the authority of the amendatory Acts of 1931 (Pub.No. 853, 46 Stat. 1523) and 1935 (49 Stat. 674). The original leases specifically incorporated the 1920 Act, and the extension agreements incorporated the amendatory enabling acts and the applicable regulations of the Department of the Interior in effect December 1, 1936. It is under the authority of these administrative regulations that the Secretary has asserted the power to fix and determine the minimum value of the royalty oil.

The Government does not deny that the claim in suit arises under a law, regulation or contract, but jurisdiction of the court is challenged on the premise that a claim against the United States is "founded upon" a law, regulation or contract only when the law, regulation or contract relied upon by the claimant creates in him the right to the money claimed, and imposes upon the Government the correlative obligation to pay; that there is nothing in the statute, regulations or contract involved here which creates the right to the money claimed or imposes any obligation upon the Government to pay. The authorities cited in support of this proposition do involve laws of Congress which create the right and impose an obligation to pay the adjudicated claim. See United States v. Hvoslef, 237 U.S. 1, 10, 35 S.Ct. 459, 59 L.Ed. 813, Ann.Cas. 1916 A, 286; McLean v. United States, 226 U.S. 374, 33 S.Ct. 122, 57 L.Ed. 260; Medbury v. United States, 173 U.S. 492, 19 S.Ct. 503, 43 L.Ed. 779; See also United States v. Emery, Bird, Thayer Realty Co., 237 U.S. 28, 35 S.Ct. 499, 59 L.Ed. 825; Christie-Street Commission Co. v. United States, 8 Cir., 136 F. 326. But they do not announce the rule contended for by the Government. Indeed, the suggested distinction between the jurisdictional phrases "arising under" and "founded upon" has been expressly rejected as resting "on the inadmissible premise that the great act of justice embodied in the jurisdiction of the Court of Claims Tucker Act is to be construed strictly and read with an adverse eye." See United States v. Emery, Bird, Thayer Realty Co., supra, citing with approval Christie-Street Commission Co. v. United States, supra 136 F. 331, which announced the rule that "A claim is both founded upon, and it arises under, a provision of a Constitution or of a law which conditions and determines its validity."

We agree, however, that an obligation to pay is an essential ingredient of the court's jurisdiction under the Tucker Act. Indeed, such an obligation is a concomitant of the sovereign's consent to be sued. But we cannot agree that the requisite obligation to pay must necessarily rest in the law, regulation or contract which gives rise to the asserted claim. We think it sufficient for jurisdictional purposes if the validity of a claim is determined by a law, regulation or contract, and there does exist an express obligation to pay the adjudicated claim.

When a dispute arose between the Secretary as lessor and the Ohio as lessee concerning the power and authority of the Secretary under the contract to fix and determine the minimum value of the royalty oil, the disputants entered into a solemn agreement under which the Ohio delivered to the Secretary the amount in controversy, on the condition that it would be deposited in the treasury of the United States in a trust-fund receipt account entitled "unearned moneys, lands (Interior Department) available for refund" as authorized by Section 19 of the Permanent Appropriations Repeal Act, 48 Stat. 1232, 31 U.S.C.A. § 725r. It was agreed that the money should be held in this account "pending a final judicial determination as to the authority of the Secretary of the Interior to require the payment of the money as royalty due under the lease. Should it be finally determined judicially that such authority is not vested in the Secretary, the money held in the trust-fund account, or so much thereof as you may be entitled to receive, will be repaid to your Company." Section 19 of the Permanent Appropriations Act of June 26, 1934, supra, provides in material part that unearned moneys of the Department of the Interior held in official checking accounts of disbursing officers shall be deposited in the treasury of the United States to appropriately designated trust-fund receipt accounts and shall be available for refunds, and for transfer of the earned portions thereof into an appropriate receipt fund titles on the books of the Government.

There can be no doubt of the authority of the Secretary under this Act to accept the conditional payment in accordance with the agreement, and to hold it for refund if it be judicially determined that he had no authority to exact it. Cf. Stitzel-Weller Distillery v. Wickard, 73 App.D.C. 220, 118 F.2d 19. We think this legally binding agreement provides an amply sufficient obligation to pay the adjudicated claim. But there is another equally satisfactory obligation imposed upon the Secretary by Section 96, Title 43 U.S.C.A. 41 Stat. 366, as amended by Section 98a, Title 43 U.S.C.A. 46 Stat. 822. This statute provides in material part that "In all cases where it shall appear to the satisfaction of the Secretary of the Interior that any person has made any payments to the United States under the public land laws in excess of the amount he was lawfully required to pay under such laws, such excess shall be repaid to such person or to his legal representatives."

But the Government says that this obligation is contingent upon a favorable finding by the Secretary, and that there has been no such finding here. After hearing, the Secretary ruled, as a matter of law, that the lease contract gave him authority to determine the reasonable value of the royalty oil, and has acted in pursuance of that asserted authority. This order is final and no other administrative remedies are available. It is admitted that the order is not "free from all judicial review", and we do not suppose that the jurisdiction of the court depends upon whether, under the Secretary's interpretation of the law, the claimant is entitled to the refund, or whether on judicial review his judgment would be sustained. United States v. Laughlin, 249 U.S. 440, 39 S.Ct. 340, 63 L.Ed. 696. We think it correct to say that Section 96, supra, imposes an obligation to pay the claim if it be finally determined that the Secretary had no legal authority to exact the funds.

The gravamen of this suit is the construction of the lease contract and its constituent laws and administrative regulations. If it be construed as contended by the Secretary, the trust funds have been earned and may be transferred to an appropriate...