United States v. Swope

• Court: U.S. Court of Appeals — Eighth Circuit
• Writing for the Court: LEWIS, Circuit , and MUNGER and FARIS
• Citation: United States v. Swope, 16 F.2d 215 (8th Cir. 1926)
• Decision Date: 27 November 1926
• Docket Number: No. 7247.,7247.
• Parties: UNITED STATES v. SWOPE, State Commissioner of Public Lands, et al.

16 F.2d 215 (1926)

UNITED STATES v. SWOPE, State Commissioner of Public Lands, et al.

No. 7247.

Circuit Court of Appeals, Eighth Circuit.

November 27, 1926.

John W. Wilson, U. S. Atty., of Albuquerque, N. M. (H. S. Bowman, Asst. U. S. Atty., of Santa Fé, N. M., on the brief), for the United States.

Sam G. Bratton, of Santa Fé, N. M. (Fred E. Wilson, of Albuquerque, N. M., and William A. Gillenwater, of Clovis, N. M., on the brief), for appellees.

Before LEWIS, Circuit Judge, and MUNGER and FARIS, District Judges.

MUNGER, District Judge.

This is an appeal from a decree denying the plaintiff's application for a permanent injunction. The United States, as plaintiff, brought a suit, alleging that the United States had granted to New Mexico a large quantity of the public lands, in trust for designated purposes, and that the defendants, as state officers, were making expenditures, in violation of the trust, out of the funds derived from these lands. The defendants admitted the expenditures, but denied a violation of the trust. The case was submitted to the court upon the pleadings, and the court found that the expenditures were lawful, and dismissed the bill, which had prayed for an injunction against the further use of the funds.

The use, of which the plaintiff complained, was authorized by the statutes of New Mexico. Sections 5178-5264, Stats. Ann. New Mexico, 1915. By this act, a state land office was created, in charge of an officer known as the commissioner of public lands, intrusted with the management and disposition of the lands owned by the state. By section 5183, 20 per cent. of the income derived from any state lands (except certain lands granted by an act of Congress for the payment of bonds issued by Grant and Santa Fé counties) was constituted a fund, known as the "state lands maintenance fund." By section 5184, all salaries and expenses of the state land office are to be paid from the state lands maintenance fund. The plaintiff's bill complains that, out of the funds derived from these lands, expenditures have been made for an audit of the accounts of the commissioner of public lands, for the purchase of an automobile for his use, for furniture, fixtures, and supplies for his office, for advertising in newspapers, for cruising of forest lands owned by the state, for expenses of officers in attending meetings, and for the fees of attorneys appearing on behalf of the state officers in this suit. It should be noted that there is no claim that any of these expenditures are excessive, nor that they were not for the benefit of the lands granted or the fund derived from them. The plaintiff's claim is that the lands were granted by the United States to the state of New Mexico for designated uses, and that the state cannot legally use any portion of the lands or their proceeds for the purpose of paying any expense of the administration of the trust.

By the Act of Congress approved June 21, 1898 (30 Stat. 484) a grant was made to the territory of New Mexico of a large amount of public lands for designated purposes. Provision was made therein for the leasing of some of this land and for the sale of other portions, and an express authorization was made for the payment, out of the proceeds of the leases or sales, of the costs and expenses incurred in the leasing, sale, management, and protection of the lands and leases (section 10). On June 20, 1910, Congress passed an act (36 Stat. 557) to enable the people of New Mexico to form a state, and in pursuance of this act a state was formed and admitted into the Union. In this act a further grant of public lands was made for purposes named, a confirmation was given of some prior grants, and provisions for some prior grants were repealed. Section 10 of this act contains this provision:

"A separate fund shall be established for each of the several objects for which the said grants are hereby made or confirmed, and whenever any moneys shall be in any manner derived from any of said land the same shall be deposited by the state treasurer in the fund corresponding to the grant under which the particular land producing such moneys were by this act conveyed or confirmed. No moneys shall ever be taken from one fund for deposit in any other, or for any object other than that for which the land producing the same was granted or confirmed. The state treasurer shall keep all such moneys invested in safe interest-bearing securities, which securities shall be approved by the Governor and secretary of state of said proposed state, and shall at all times be under a good and sufficient bond or bonds conditioned for the faithful performance of his duties in regard thereto as defined by this act and the laws of the state not in conflict herewith.

"Every sale, lease, conveyance, or contract of or concerning any of the lands hereby granted or confirmed, or the use thereof or the natural products thereof, not made in substantial conformity with the provisions of this act shall be null and void, any provision of the constitution or laws of the said state to the contrary notwithstanding.

"It shall be the duty of the Attorney General of the United States to prosecute in the name of the United States and its courts such proceedings at law or in equity as may from time to time be necessary and appropriate to enforce the provisions hereof relative to the application and disposition of the said lands and the products thereof and the funds derived therefrom."

There was no express provision in this act of Congress authorizing the payment of any expenses of the state in the management of the lands or its proceeds. The plaintiff claims (1) that the Act of June 20, 1910, superseded the Act of June 21, 1898, so that the lands granted are held under the terms of the Enabling Act and not under the terms of the prior act; (2) and that the absence of a provision in the Enabling Act authorizing the payment of expenses incurred, when such a deduction was permitted in the prior act, and (3) the enumeration of the specific purposes for which the grant was made, manifest the intention of Congress that no expenses of the state might be charged against the land or its proceeds. It is conceded that the grant of lands was upon an express trust. The rule of construction of such trusts is that the absence of a provision for the payment of the reasonable and proper costs and expenses of administering the trust does not throw such expense upon the shoulders of the trustees, but the trustees have an inherent equitable right to be reimbursed for such expenses incurred. In Worrall v. Harford, 8 Ves. Jr. 2, 8, Lord Eldon said:

"It is in the nature of the office of a trustee, whether expressed in the instrument or not, that the trust property shall reimburse him all the charges, and expenses incurred in the execution of the trust."

In Attorney General v. Mayor of Norwich, 2 My. & Cr. 406, 424, 40 Eng. Rep. 702, Lord Cottenham said:

"Independently of the provisions of this section, I apprehend it to be quite clear, according to the rule which applies to all cases of trust, that if necessary expenses are incurred in the execution of a trust, or in the performance of the duties thrown on any of the parties, and arising out of the situation in which they are placed, such parties are entitled, without any express provision for that purpose, to make the payments required to meet those expenses out of the funds in their hands belonging to the trust. Such is the rule of this court, and such also is the rule at common law. The cases of The King v. Inhabitants of Essex, 4 T. R. 591, and The King v. Commissioners of Common Sewers, 1 Barn. & Adol. 232, establishing the principle at law, are more applicable to this question than most of the cases in this court usually referred to as authorities upon this subject. The defendants in those two cases were public officers, who having public duties to perform, under the authority of acts of Parliament, were held to be entitled to pay expenses legitimately and properly incurred, out of the funds of which they were by acts of Parliament constituted trustees. The rule, therefore, both at law and in this court, certainly does not require any special provision to be made for the case, provided the expenses are such as have been legitimately and properly incurred by the persons intrusted with the administration of the fund."

This is the general rule of the English courts (Heriots Hospital v. Ross, 12 Cl. & Fin. 507, 512, 515; Godfrey v. Watson, 3 Atk. 517, 518; Caffrey v. Darby, 6 Ves. Jr. 488, 497; How v. Godfrey, Finch's Reports, 361, 362; In re Ormsby, 1 B. & B. 189, 190; Lewin on Trusts 11th Ed. 770), as well as of the courts of this country (Trustees v. Greenough, 105 U. S. 527, 532, 26 L. Ed. 1157; Central Railroad v. Pettus, 113 U. S. 116, 123, 5 S. Ct. 387, 28 L. Ed. 915; Meddaugh v. Wilson, 151 U. S. 333, 343, 14 S. Ct. 356, 38 L. Ed. 183; Tevander v. Ruysdael (C. C. A.) 299 F. 746, 748; 3 Pom. Eq. Jur. (3d Ed.) §§ 1084, 1085; 2 Perry on Trusts 6th Ed. § 910).

The trust was imposed upon New Mexico by the act of Congress, but the same rule of construction applies to both public and private grants. "The best construction of a statute is to construe it as near to the rule and reason of the common law as may be, and by the course which that observes in other cases. Where a statute directs anything to be done generally, and does not appoint any special manner, it is to be done according to the course of the common law." 2 Suth. Stat. Const. (2d Ed.) §§ 454, 455: "In the construction of the laws of Congress, the rules of the common law furnish the true guide." Rice v. Railroad Co., 1 Black, 358, 374, 17 L. Ed. 122. United States v. Sanges, 144 U. S. 310, 311, 12 S. Ct. 609, 36 L. Ed. 445; Potter's Dwarris on Statutes, 185; 36 Cyc. 1145.

The question involved, so far as it relates to grants of public lands made to the states, has not often been before the courts, but it...