United States v. Pan-American Petroleum Co.

• Decision Date: 07 October 1927
• Citation: 24 F.2d 206
• Court: U.S. District Court — Southern District of California
• Parties: UNITED STATES v. PAN-AMERICAN PETROLEUM CO. et al.

24 F.2d 206 (1927)

UNITED STATES v. PAN-AMERICAN PETROLEUM CO. et al.

District Court S. D. California. N. D.

May 10, 1927.

Supplemental Opinion, October 7, 1927.

Atlee Pomerene, of Cleveland, Ohio, Owen J. Roberts, Sp. Counsel, of Philadelphia, Pa., and Samuel W. McNabb, U. S. Atty., of Los Angeles, Cal., for the United States.

Frederic R. Kellogg, of New York City, Frank J. Hogan and Joseph J. Cotter, both of Washington, D. C., Henry W. O'Melveny, Walter K. Tuller, Charles Wellborn, Olin Wellborn, Jr., Olin Wellborn, III, and Marc F. Mitchell, all of Los Angeles, Cal., Dean Emery, of New York City, and Harold Walker, of Washington, D. C., for defendants.

McCORMICK, District Judge.

The matter at issue herein arises on a motion of plaintiff for entry of final decree in this suit upon the mandate of the Supreme Court of the United States herein which has been received in this court and spread upon its minutes.

It is unnecessary to here review the history of this action or to recount the proceedings therein since the entry of this court's decree on July 11, 1925. It is sufficient to say that such decree was on the 4th day of January, 1926, partly affirmed and partly reversed by the Circuit Court of Appeals for the Ninth Circuit (9 F.2d 761) and the suit remanded here for further proceedings in accordance with the opinion of said Circuit Court of Appeals, and that thereafter, to wit, on February 28, 1927, upon a writ of certiorari, the Supreme Court of the United States (273 U. S. 456, 47 S. Ct. 416, 71 L. Ed. 734), affirmed said decree of said Circuit Court of Appeals and remanded this cause to this court, where it now is for the purpose of obeying said mandate and entering final decree pursuant to such mandate and the opinions of the Supreme Court of the United States and of said Circuit Court of Appeals.

Plaintiff has presented under the rules a proposed final decree in which the defendant companies, respectively, are ordered to pay to plaintiff in the case of the Pan-American Petroleum & Transport Company, which will be hereinafter referred to as the transport company, the sum of $9,889,299.51, and in the case of the Pan-American Petroleum Company, which will be hereinafter referred to as the petroleum company, the sum of $1,556,861.17. It is admitted by the defendant companies that the final decree herein must order the payment of such aggregate amounts of money against the respective companies. Plaintiff also demands interest on the value of the oil, gas, and other petroleum products extracted, taken, received, or removed from the naval oil reserves under the pretended authority of the contracts and leases in suit from the time of the conversion thereof to the date of the entry of the decree herein at the rate of 7 per cent. per annum. Defendants contest such demand to such or any interest at this time; and the questions for decision are whether interest should be allowed and to what extent.

The power of this court to decide the questions is the matter of first importance. The measure of the court's power is the mandate of the Supreme Court. Its pertinent parts read:

"Whereas lately in the United States Circuit Court of Appeals for the Ninth Circuit, in a cause between Pan-American Petroleum Company and Pan-American Petroleum & Transport Company, appellants, and the United States of America, appellee, No. 4651, 9 F.(2d) 761, wherein the decree of the said Circuit Court of Appeals, entered in said cause on the 4th day of January, A. D. 1926, is in the following words, viz.:

"`This cause came on to be heard on transcript of the record from the District Court of the United States for the Southern District of California, Northern Division, and was duly submitted. On consideration whereof, it is now here ordered, adjudged, and decreed by this court that the decree of the said District Court in this cause, so far as it awards affirmative relief to the United States in ordering the cancellation of the leases and contracts and commands the defendants to surrender possession of the lands mentioned in the bill of complaint and enjoins them against trespassing thereon or removing property therefrom is affirmed. That portion of the decree which directs that the defendants be credited with the cost price of the storage facilities for crude oil products at Pearl Harbor and the cost price of the fuel oil contents thereof and the actual expenditures of money in drilling and putting on production any wells drilled under the leases is reversed, and that this cause be, and hereby is remanded to the said District Court for further proceedings in accordance with the opinion of this Court. * * *'

"And whereas, * * * the said cause came on to be heard before the said Supreme Court: * * * It is now ordered, adjudged, and decreed by this court that the decree of the said United States Circuit Court of Appeals in this cause be, and the same is hereby, affirmed; and it is further ordered that this cause be, and the same is hereby, remanded to the District Court of the United States for the Southern District of California."

There is no express order or direction in the mandate for the payment or allowance of any interest to any of the parties to the suit. Neither is this court prohibited by it from allowing interest herein. Its text leaves the question of interest open and unsettled. But it does require us to examine the opinion of the Circuit Court of Appeals and to proceed in accordance with such opinion, and the law is that in such cases the direction to proceed consistently with the opinions of the appellate courts has the effect of making such opinions a part of the mandate as though at length set out therein. See Gulf Refining Co. v. U. S., 269 U. S. 125, 135, 46 S. Ct. 52, 70 L. Ed. 195.

Judge Gilbert, writing for the court in the course of the opinion of the Circuit Court of Appeals in this case, said:

"We are unable to affirm the court below in holding that the United States, in order to obtain the relief which it sought, is required to credit the defendants with the sums which they expended under the leases and contracts, and in holding applicable to the case the maxim that he who seeks equity must do equity."

And further on he stated:

"Here the plaintiff had a remedy at law, but resorted to equity to avoid a multiplicity of suits. It is well settled also that the maxim is not applicable in the case of a suit by the United States to vindicate its dominion over the public lands and to avail itself of substantial rights under statutory provisions."

And later in the opinion appears this language:

"But, in the present case, although the suit is in form a suit to cancel leases of the public domain, the United States is not seeking equity. It is but fulfilling its duty to protect the public domain and to compel compliance with fundamental laws of the United States. To do what the defendants here claim to be equity would be to require the court to exercise functions which belong to the legislative branch of the government, to legalize demands founded upon violations of the laws of the United States, and to make judicial disposition of the public resources of the United States.

"To hold in the present case that the defendants have equities which demand the protection of the court would be to ignore the fundamental distinction between cases brought to determine rights as between the United States and citizens depending upon contracts made under the authority of the laws of the United States and cases in which the contracts have been made without authority of law or in violation thereof."

And finally the opinion continues:

"Credit for moneys expended by the petroleum company in drilling and operating oil wells and making improvements on naval reserve No. 1 could be allowed only on the theory that said corporation committed innocent trespass upon the naval reserve and in good faith expended said money and made said improvements. The mala fides of the trespasses, however, follows from the findings of the court below. That such credits could lawfully be decreed only in a case where the trespass upon the lands was innocently made in good faith is well established."

And in the course of the opinion of the Supreme Court, which must also be considered in elucidation of the mandate, Mr. Justice Butler said:

"The petitioners stand as wrongdoers, and no equity arises in their favor to prevent granting the relief sought by the United States. They may not insist on payment of the cost to them or the value to the government of the improvements made or fuel oil furnished, as all were done without authority and as means to circumvent the law and wrongfully to obtain the leases in question. As Congress had not authorized them, it must be assumed that the United States did not want the improvements made or was not ready to bear the cost of making them. No storage of fuel oil at Pearl Harbor was authorized to be made in excess of the capacity of, or in any places other than, the facilities provided for that purpose pursuant to authorization by Congress. Whatever their usefulness or value, it is not for the courts to decide whether any of these things are needed or should be retained or used by the United States. Such...