1. Title to lands within a section granted to the State as
school lands by the Wyoming Enabling Act of July 10, 1890, but
which, prior to completion of an official survey, were included in
a petroleum reserve by a Presidential order promulgated under
authority of the Act of June 25, 1910, held not to have vested in
the State. Pp. 331 U. S.
(a) The Wyoming Enabling Act, though containing words of present
grant, did not vest in the State, immediately upon admission into
the Union, an indefeasible proprietary interest in the unsurveyed
section, of such nature as precluded disposition by the Federal
Government for other purposes. Pp. 331 U. S.
(b) Nothing in the legislative history of § 14 of the Organic
Act of 1868, nor of other Acts passed prior to the Wyoming Enabling
Act, supports the State's claim to title in this case. Pp.
331 U. S.
(c) The words "but shall be reserved for school purposes only"
in § 5 of the Enabling Act, together with the words of present
grant in § 4, are not to be construed as immediately vesting in the
State an indefeasible interest in the granted lands, nor as a
limitation on the Federal Government's power to deal with such
lands in a manner consistent with applicable federal statutes. Pp.
331 U. S.
2. The State cannot be deemed to have acquired an indefeasible
equitable right to the section on the basis of a survey which was
incomplete. Pp. 331 U. S.
3. On the claim of the United States to recover for oil taken
from public lands, the pleadings in this case put in issue the
defendants' good faith, and the master erred in excluding evidence
relating to this issue and in finding that either or both of the
defendants had acted innocently. Pp. 331 U. S.
4. The plaintiff's exception to the master's failure, even on
the present record, to make findings of the defendants' bad faith
and to recommend a decree awarding damages accordingly cannot be
sustained. Pp. 331 U. S.
5. The good faith issue having been foreclosed in defendants'
favor by the master before any evidence had been introduced and
consistently throughout the hearing, it was not incumbent upon the
defendants to make an offer of proof of good faith in order to have
a trial of the issue if the master should be found to have been
wrong. P. 331 U. S.
Page 331 U. S. 441
6. Constructive knowledge of the owner's title does not
demonstrate a trespasser's bad faith as a matter of law. P.
331 U. S.
7. Upon the record in this case, it is necessary to try the
issue of defendants' good faith throughout the entire period in
dispute, as the basis for determining the measure of plaintiff's
recovery. P. 331 U. S.
8. The master should make special finding -- so far as the
parties request them, and adduce competent evidence to support them
-- as to the value of the oil produced and the amount and nature of
any collateral proceeds from the operation, separately, and as to
the amount of each item of income and expense by the month and
year. P. 331 U. S.
This was an original suit in equity in this Court, brought by
the United States against the Wyoming and the Ohio Oil Company, to
quiet title in the United States to certain lands in Wyoming and to
recover for oil removed from the lands by the Company under a lease
from the State. The case was referred to a special master. Upon
exceptions by the plaintiff and the defendants to the master's
report, the case is recommitted to him for further proceedings in
conformity with the opinion of this Court, p. 331 U. S. 461
MR. CHIEF JUSTICE VINSON delivered the opinion of the Court.
The United States filed a complaint in this Court against the
Wyoming and The Ohio Oil Company to establish plaintiff's title to
certain Wyoming lands claimed by the State, and to recover for oil
Page 331 U. S. 442
Company has taken from the lands under a lease from the State.
By joint answer, the defendants claimed title in the State, and
that both defendants have at all times in good faith believed title
to be in the State.
The case was referred to a special master, 325 U.S. 833, who
heard evidence and argument and submitted to the Court a report in
which he recommended a decree quieting plaintiff's title to the
lands in question but denying plaintiff any recovery for the oil
heretofore taken. Both plaintiff and defendants have entered
exceptions to the adverse parts of the report, and the case is now
before us on such exceptions. [Footnote 2
The lands in dispute are those lying within Section 36, Township
58, Park County, Wyoming. It is conceded that plaintiff originally
had title to these lands as part of the public lands of the United
States. The master held that the Enabling Act of July 10, 1890,
] on which
defendants rely as the source of their rights, properly construed,
would operate to vest title in the State only as of the date that
an official survey of the lines of the Section was approved by the
Commissioner of the General Land Office, and then only if no
inconsistent disposition of the lands had been previously made. The
master found, however, that no such survey was made and approved
until July 27, 1916. Several months earlier, on December 6, 1915,
these lands had been placed in a petroleum reserve by Presidential
order. [Footnote 4
Page 331 U. S. 443
Defendants' exceptions to the master's findings and conclusion
relating to title give expression to two basic contentions: first,
that the Enabling Act immediately vested in the State an
indefeasible right to whatever lands would be found on later survey
to lie within Section 36; second, that a so-called Coleman survey
of 1892 identified Section 36 sufficiently to create then in the
State an indefeasible equity, which ripened into full legal title
when the complete survey was made and approved in 1916. These
contentions will be further elaborated and discussed in order.
Consistent with the policy first given expression in the
Ordinance of 1785, the Federal Government has included grants of
designated sections of the public lands for school purposes in the
Enabling Act of each of the States admitted into the Union since
1802. [Footnote 5
] This Court
has frequently been called upon to construe the provisions and
limitations of such grants. It has consistently been held that,
under the terms of the grants hitherto considered by this Court,
title to unsurveyed sections of the public lands which have been
designated as school lands does not pass to the State upon its
admission into the Union, but remains in the Federal Government
until the land is surveyed. Prior to survey, those sections are a
part of the public lands of the United States, and may be disposed
of by the Government in any manner and for any purpose consistent
with applicable federal statutes. If, upon survey, it is found that
the Federal Government has made a previous disposition of the
section, the State is then entitled to select lieu lands as
indemnity in accordance with provisions incorporated into each of
the school land grants. The interest of the
Page 331 U. S. 444
State vests at the date of its admission into the Union only as
to those sections which are surveyed at that time and which
previously have not been disposed of by the Federal Government.
Defendants contend, however, that, regardless of the rule
generally applicable in school grant cases, the provisions of the
Wyoming Enabling Act are such that, upon her admission into the
Union in 1890, an indefeasible proprietary interest in Sections 16
and 36 in each township, whether surveyed or unsurveyed, vested
immediately in the State, except as to such sections as had been
disposed of previously by the Federal Government for other
purposes. This interest, it is contended, is of such a nature, as
to preclude any appropriation or reservation of unsurveyed Sections
16 and 36 by the Federal Government after the date of Wyoming's
admission into the Union. It is defendants' position, therefore,
that the order of the President of the United States issued
December 6, 1915, which caused the lands here in issue to be
included in Petroleum Reserve No. 41, was not sufficient to defeat
the State's interest, even if it be assumed that a survey of that
section had not been completed at that time. We accordingly turn
our attention to the provisions of the Wyoming Enabling Act which
defendants rely upon to support their contentions.
Section 4 of the Enabling Act provides:
"That sections numbered sixteen and thirty-six in every township
of said proposed State, and where such sections, or any parts
thereof, have been sold or otherwise disposed of by or under the
authority of any act of Congress, other lands equivalent
Page 331 U. S. 445
. . . are hereby granted to said State for the support of common
schools, . . . Provided,
That section six of the act of
Congress of August ninth, eighteen hundred and eighty-eight
] . . . shall apply
to the school and university indemnity lands of the said Wyoming so
far as applicable."
Defendants first point to the fact that, in the granting clause,
Congress employed words of present grant. This is said to evince an
intention to vest immediately in the State not only legal title to
section 16 and 36 when surveyed and not otherwise disposed of, but
also an indefeasible proprietary interest in the unsurveyed
sections of the school lands. We believe that this contention is
precluded by earlier decisions of this Court. In Heydenfeldt v.
Daney Gold & Silver Mining Co., 93 U. S.
, decided some thirteen years before the passage of
the Wyoming Act, this Court construed the granting clause of the
Nevada Enabling Act, which contains language substantially
identical to that of § 4 of the Wyoming Act, [Footnote 8
] as not
Page 331 U. S. 446
immediately vesting in the State title to sections of the school
lands unsurveyed at the date of admission. [Footnote 9
] In United States v. Morrison,
240 U. S. 192
240 U. S. 205
this Court stated: "We regard the decision in the
case as establishing a definite rule of
It is significant also that, three years before the passage of
the Wyoming Act, the Secretary of the Interior, in construing the
granting clause of the Colorado Enabling Act, which also contains
language of present grant, took the position that title to
unsurveyed school lands passes to the State only at the date of
survey, and then only where the Federal Government has made no
other disposition of the land prior to that time. [Footnote 10
Defendants urge, however, that the pertinent language of the
Wyoming Enabling Act should be considered in connection with the
legislative history of the Organic Act of July 25, 1868, [Footnote 11
] under the authority of
which Wyoming was organized into a territory. It is pointed out
that § 14 of the Organic Act as originally introduced reserved
sections 16 and
Page 331 U. S. 447
36 in each township for school purposes at the time
"when the lands in the said territory shall be surveyed under
the direction of the government of the United States, preparatory
to bringing the same into market. . . ."
During the course of the debates on the bill, § 14 was amended
to eliminate the phrase quoted above, so that, as finally enacted,
the Organic Act made a present reservation of the lands for school
purposes. [Footnote 12
is not defendants' contention that § 14 of the Organic Act must
necessarily prevail over the provisions of the Enabling Act. It is
urged, however, that, as a guide to construction, the legislative
history of § 14 of the Organic Act clearly indicates an intention
on the part of Congress to vest in Wyoming, at the date of its
admission as a State, immediate interests in all school lands,
whether surveyed or unsurveyed, such as to defeat any subsequent
attempts by the Federal Government to reserve the sections for
We find the argument unconvincing. During the course of the
Congressional debates which preceded the amending of § 14 of the
Organic Act, concern was expressed by certain members of Congress
that delaying the reservation for school purposes until the date of
survey would leave open the possibility that the most choice school
lands would be settled upon by squatters, preemptors, or
homesteaders prior to survey, so as to defeat the reservation of
those lands for school purposes. It was apparently to deal with
that situation that the amendment was passed. We find nothing in
the desire of Congress to preserved the reservation of the school
lands against the claim of individual settlers, however, as
evincing any intention to strip from the Federal Government the
power to deal with those lands in the public interest as authorized
by the applicable federal statutes. That Congress did not so intend
is indicated by the fact that only four
Page 331 U. S. 448
years after the passage of the Organic Act, Congress reserved a
large tract of the public lands in Wyoming for the Yellowstone
National Park. [Footnote 13
In the Enabling Act, it was specifically provided that Wyoming was
not entitled to indemnity for sections 16 and 36 in the townships
included within the Yellowstone reservation. Even as to the rights
of individual settlers on the school lands, Congress pursued no
consistent course. Although the amendment to § 14 of the Organic
Act apparently was passed to protect the right of the Territory to
the school lands against the claim of such individuals, Congress,
in the Act of August 9, 1888, [Footnote 14
] gave recognition to the claims of
homesteaders and preemptors established prior to survey and granted
to the Territory the right to select other portions of the public
lands in lieu thereof. We conclude, therefore, that nothing in the
legislative history of the acts passed before the Wyoming Enabling
Act gives support to the State's claim to title in this case.
Defendant's principal contention, however, is that regardless of
the construction which might be required if the granting clause of
the Enabling Act stood alone, that clause, read in connection with
§ 5 of the Act, gives clear support to their position. Section 5
provides as follows:
"That all lands herein granted for educational purposes shall be
disposed of only at public sale . . . , and such land shall not be
subject to preemption, homestead entry, or any other entry under
the land laws of the United States, whether surveyed or unsurveyed,
but shall be reserved for school purposes only."
Defendants vigorously assert that the phrase "but shall be
reserved for school purposes only" completely and irrevocably
divested the Federal Government of power
Page 331 U. S. 449
to dispose of or to deal with any sections 16 and 36 of the
public lands in the State not sold or otherwise disposed of prior
to the passage of the Enabling Act. This phrase, read in connection
with the language of present grant in § 4, it is asserted, reveals
a clear intention to vest immediately in the State an indefeasible
interest in all such lands. We do not believe that the language
should be so construed.
The phrase "but shall be reserved for school purposes only"
should not be considered apart from the language which immediately
precedes it. The clause beginning with the semicolon in the last
sentence in the section clearly and explicitly treats the claims of
individuals to school lands asserted under the federal land laws,
and provides that those claims should not prevail against the
State. The phrase upon which Wyoming relies should be construed as
an affirmation of the State's interest, as opposed to the claims of
such individuals. The phrase, however, should not be construed as a
limitation on the Federal Government's powers to deal with such
lands in a manner consistent with the applicable federal statutes.
The powers of the Federal Government was respect to the public
lands, as contrasted to the claims of individuals asserted under
the land laws, are nowhere mentioned in the section. We think that,
in the absence of such language, the section should not be
construed as a limitation on those powers. [Footnote 15
Convincing support for this construction is found both in the
legislative history of the language contained in § 5 of the Wyoming
Act and in subsequent Congressional enactments. Language identical
to the last clause of § 5 first appeared as part of § 11 of the Act
of February 22,
Page 331 U. S. 450
1889, [Footnote 16
Enabling Act for the States of Washington, Montana, North Dakota,
and South Dakota. A bill authorizing the admission of South Dakota
and containing language similar to that later included in § 5 of
the Wyoming Act was first passed by the Senate. [Footnote 17
] When the bill came before the
House for consideration, an amendment was approved which struck out
all the provisions of the Senate bill following the enacting clause
and substituted a bill calling for the admission of Washington,
Montana, North Dakota, and South Dakota. [Footnote 18
] As finally passed by the House, the
substitute bill provided that rights of settlers to the school
lands should be preserved where settlements were made prior to
survey or before approval of the Act of admission. [Footnote 19
] The conference committee,
however, rejected those provisions, and the Act as passed included
language similar to that in the original Senate bill and identical
to that later incorporated into the Wyoming Act, providing that the
claims of the States to the school sections should prevail over
those of the individual settlers. [Footnote 20
] It will be observed that the conflict
between the provisions in the House bill and the Senate bill
related to the competing interests of the States and the individual
settlers. Nothing in this history indicates that, by accepting the
alternative provided in the Senate bill and resolving the conflict
in favor of the States, Congress intended also to extinguish the
powers of the Federal Government, theretofore exercised, with
respect to the
Page 331 U. S. 451
unsurveyed sections of the school lands. Nor is there any
evidence that Congress intended such a departure from previous
practice when it incorporated an identical clause into § 5 of the
Wyoming Act. Indeed, the House Committee Report states that the
Enabling Act gives to Wyoming "the usual land grants," [Footnote 21
] and the manager of the
bill in the House of Representatives during the course of the
debates made a similar statement. [Footnote 22
Additional support for the construction which we have indicated
as proper may be found in subsequent Congressional enactments.
Thus, in the Act of February 28, 1891, which became law only seven
months after the passage of the Wyoming Enabling Act, Congress
clearly revealed its understanding that the Federal Government had
retained its powers to reserve and dispose of the unsurveyed school
lands. That Act, the pertinent language of which is set out in the
margin, [Footnote 23
attempts, among other things, to establish a uniform policy with
respect to the granting of lieu lands to the States where upon
survey it is found that the designated sections are subject to
homestead and preemption claims or where the Federal Government has
included such sections within a reservation
Page 331 U. S. 452
or has disposed of them in some other way. It should be observed
that, when dealing with the right of the States to select lieu
lands where homestead and preemption claims are involved, Congress
first inserted language in the Act designed to create in
individuals holding such claims rights superior to those of the
States to the school sections upon which settlement before survey
has been made. But, in dealing with the selection of lieu lands
where the Federal Government prior to survey has included the
designated school sections in a reservation or has otherwise
disposed of them, Congress did not find it necessary first to
create the power in the Federal Government to make such
reservations or dispositions. Rather, on the apparent assumption
that such powers had been retained by the Federal Government and
were presently existing, Congress merely provided for the selection
of lieu lands by the States where, upon survey, it is found that
those powers have been exercised. It is apparent that Congress
intended that the Act of 1891 should apply to Wyoming as well as to
the other school land States. [Footnote 24
] Indeed, Wyoming, on at least two previous
occasions, so contended, and succeeded in obtaining benefits under
the Act. [Footnote 25
need not now consider the effect of the Act of 1891 insofar as it
may be inconsistent with the provisions of the Wyoming Enabling
Act, for it is our view that, with respect to the problem of this
case, no inconsistency exists. It is not without significance also
that, in 1934, Congress, after having been fully apprised of the
administrative construction of the school land provisions of the
Wyoming Enabling Act, [Footnote
] which is in accord with the construction which we have
made, amended § 5
Page 331 U. S. 453
of that Act but reenacted all the provisions of that section
which are pertinent to the present case. [Footnote 27
Defendants' view that, by virtue of the language of the Enabling
Act, Congress extinguished the powers of the Federal Government
subsequently to dispose of the unsurveyed school sections in the
exercise of its governmental functions, admittedly would place
Wyoming in a favored position among the school grant States. Such a
result does not accord with the Congressional expectation that the
school grant should have "equal operation and equal benefit in all
the public land States or Territories." [Footnote 28
] Defendants suggest no special
circumstances or peculiar considerations of policy which
convincingly indicate a purpose on the part of Congress to place
Wyoming on other than an equal footing with other States with
respect to the powers of the Federal Government in the unsurveyed
Furthermore, one of the important recurring problems faced by
Congress during the period in which the Wyoming Enabling Act was
passed was the necessity of reserving tracts of the public lands to
accomplish such important purposes as preserving the national
forests and mineral resources, establishing public parks, and the
like. [Footnote 29
in the State an immediate and irrevocable interest in the school
sections before such sections had been identified by survey would
be to complicate the performance of the Government's obligation
with respect to the public
Page 331 U. S. 454
lands. That Congress intended such complication seems most
unlikely when it is observed that the policy underlying the grant
of lands to the State for school purposes could be achieved without
producing that result. Thus, § 4 of the Enabling Act makes
provision for indemnification to the State where the designated
school sections are disposed of for other purposes by authorizing
the selection of lands by the State in lieu thereof. Section 6 of
the Act of August, 9, 1888, [Footnote 30
] which was incorporated into § 4 of the
Enabling Act "so far as applicable," specifically provides for the
selection of lieu lands where the school sections "have been or
shall hereafter be reserved for public purposes."
It is significant that, for a period extending over half a
century, the land decisions of the Department of the Interior have
consistently taken the position that title to unsurveyed school
sections passes to the State only upon completion of the survey,
and, prior to that time, the Federal Government is not inhibited
from making such reservations and dispositions of the lands as
required by the public interest and as authorized by applicable
statutes. Many of those decisions involved statutory language
substantially identical to that in the Wyoming Enabling Act.
We should be slow that its late date to upset the rulings " . .
. of the department of the Government to which is committed the
administration of public lands." [Footnote 32
For the reasons stated above, we hold that, at the date of her
admission to the Union, Wyoming acquired no such
Page 331 U. S. 455
interest in the lands in issue that could not be defeated by the
inclusion of those lands in a petroleum reserve by the Federal
Government acting prior to survey.
We also think that defendants' reliance on the Coleman survey of
1892 as the basis of an indefeasible equitable right to Section 36
is misplaced, and may be answered briefly.
That survey was undertaken pursuant to a request from the State
to the United States Surveyor General that Township 58 be surveyed
and subdivided in order to permit the State to make selections of
school lands, and the contract and instructions for the survey so
directed. The survey which was then made, however, actually fixed
only the boundaries of Township 58, and marked one-mile intervals
on those boundaries, but did not subdivide the township. Section 36
lies in the township's southeast corner, and its southern and
eastern boundaries are concurrent with part of the southern and
eastern township boundaries, but the northern and western section
boundaries remained undetermined. This was not a completed survey
of Section 36. [Footnote
Defendants no longer contend that it was. They argue only that
it "identified" Section 36, or made it "susceptible of
identification by protraction," sufficiently that the State should,
in equity, be held to have acquired vested rights in the Section as
of the date this survey was approved. They claim support for this
position in several decisions recognizing that the title of certain
western railroads granted lands by the United States vested when
the line of route was selected and a plan thereof filed, whether or
not the adjacent lands had then been surveyed. [Footnote 34
Page 331 U. S. 456
We find no merit in this argument. The railroad land grant cases
are not a propos.
Not only do they deal with statutes
different from the one before us in the present case, but also they
have nothing to do with the identification of unsurveyed lands by
the protraction of partial surveys. In the Morrison case,
] this Court
held a completed but unapproved survey inadequate to vest any
rights to school lands. A fortiori,
defendants are not
benefited by the Coleman survey.
For the foregoing reasons, defendants' exceptions to the
master's findings and conclusions in respect to title are
Having decided that plaintiff has title to Section 36, we now
turn to the question of its right to recover a money judgment
because of the defendant Company's oil operations thereon.
It was shown that, in 1917, under a lease from the State, the
Company entered Section 36 and drilled five wells, some of which
are still in production. For the period from the Company's entry on
the land until December 31, 1944, [Footnote 36
] there was evidence of the amount and market
value of oil produced and of the capital and operating expenses of
this production, each by the month, and of the collateral "steam
earnings," the royalties and taxes paid to the State, and the
overhead expenses allocable to this production, each by the year.
] For the
purpose of proving the bad faith of the trespass, plaintiff
Page 331 U. S. 457
evidence tending to show that defendants knew of plaintiff's
claim to the land and realized its superiority over their own claim
at least as early as 1929.
This last evidence the master refused to admit. He thought that,
in order to recover for a "bad faith" trespass, plaintiff was
required to put the question in issue by alleging "bad faith" in
the complaint, which it had not done. He also thought that
plaintiff's allegation of defendants' claim of right in Section 36
was, in effect, an admission of defendants' good faith. Without
having tried the bad faith issue, the master stated that both
defendants sincerely believed in their asserted rights, and made a
finding of the State's good faith. From this he concluded that
plaintiff's recovery should be measured by the gross proceeds
realized on the operation, less the proper expenses incurred.
From the other evidence heretofore mentioned, the master found
that the total amount of the Company's gross proceeds, including
both the value of oil produced and steam earnings, was $168,317.53,
and that its total expenses were $232.797.27, including royalties
paid in the amount of $17,306.30. [Footnote 38
] He held that all proven elements of the
Company's expenses except royalties were properly deductible. As
expenses so allowed had been about $47,000.00 greater than gross
proceeds, the master concluded that plaintiff should recover
Plaintiff excepts to these findings and conclusions in several
respects. First, it maintains that the pleadings properly framed
the issue of bad faith, and contends that the master therefore
erred in excluding evidence relating to this issue and in finding
that either or both of the defendants had acted innocently.
Page 331 U. S. 458
An agreed premise is found in the rule that one who "willfully"
or "in bad faith" trespasses on the land of another, and removes
minerals, is liable to the owner for their full value computed as
of the time the trespasser converted them to his own use, by sale
or otherwise, but that an "innocent" trespasser, who has acted "in
good faith," my deduct from such value the expenses of extraction.
] It is also
clear that, when suit is brought for the value of minerals
wrongfully removed from the plaintiff's land, and the trespass and
conversion are established, the burden of pleading and proving good
faith is on the defendant. [Footnote 40
] The "good faith" contemplated by these rules
is something more than the trespasser's assertion of a colorable
claim to the converted minerals. [Footnote 41
Thus, in this case, plaintiff's allegation that defendants
claimed rights in Section 36, made as a basis for a prayer to have
title quieted in plaintiff, cannot be deemed equivalent to an
admission of defendants' good faith. Plaintiff also alleged its own
title, the lack of any right or title in defendants, that the
Company was there engaged in the production of oil, and that the
value of the oil theretofore extracted was in excess of $165,000.
It then prayed for a recovery of "the full value of all gas, oil,
Page 331 U. S. 459
petroleum products extracted from said land by the defendants or
either of them." In the answer, besides claiming title and oil
rights, defendants averred their good faith belief that they had
such rights, which plaintiff traversed in a reply. We have no doubt
that these pleadings put the question of defendants' good faith in
issue. Obviously, the master's statement in his report that the
defendants believed in their asserted rights is unwarranted on the
present record. We conclude, therefore, that the master erred in
excluding any competent evidence material to the good faith issue,
and in finding that either or both defendants acted in good
Second, plaintiff excepts to the master's failure, even on the
present record, to make findings of defendants' bad faith and to
recommend a decree awarding damages accordingly. [Footnote 42
] It urges, as one ground for
this exception, that defendants, having the burden of proof on that
issue, failed to introduce sufficient evidence to make a prima
showing of good faith.
For reasons already suggested, we need not consider whether
defendants carried that burden. The view that the good faith issue
was foreclosed in defendants' favor was expressed by the master
before any evidence had been introduced, and consistently
throughout the hearing. Even if defendants had doubted the
correctness of this view, they were not bound to repudiate it and
make an offer of proof of good faith in order to have a trial of
the issue if the master should prove to be wrong.
As another ground, plaintiff urges that defendants have at all
times since the beginning of this trespass had constructive
knowledge of plaintiff's title, and that either they have
"intentionally or negligently failed to ascertain
Page 331 U. S. 460
from the readily available public records who owned the land,"
or they have acted "will full knowledge that the section belonged
to the United States."
It is clear, however, that constructive knowledge of the owner's
title does not demonstrate defendants' bad faith as a matter of
law. [Footnote 43
] As to
whether an intentional or negligent failure to ascertain the true
incidence of title alone constitutes bad faith, we need not now
decide, as no such fact has been established.
Plaintiff's alternative contention that we should now enter a
finding of defendants' bad faith for the post-1929 period at least,
because, as to it, "there is positive proof that the Company knew .
. . the United States owned the land," may be answered in the same
way. Plaintiff proffered evidence of such knowledge, but we cannot
say that this evidence amounted to conclusive proof. We think the
necessity of trying the issue of defendants' good faith throughout
the entire period in dispute, preliminary to determining the
measure of plaintiff's recovery, cannot be avoided.
Third, plaintiff urges, and we agree, that the master should
make special findings -- insofar as the parties request, and offer
competent evidence to support them -- as to the value of the oil
produced and the amount and nature of any collateral proceeds from
the operation, separately, and as to the amount of each item of
income and expense by the month or year. Such action should enable
the Court to dispose of the case on the next hearing, regardless of
any revisions it might make in the master's findings, conclusions,
or recommended decree.
In its exceptions to the master's report and its argument here,
plaintiff has raised several other questions, the materiality of
each which depends on whether the trespass
Page 331 U. S. 461
was committed in good faith. Obviously, such questions must
remain moot until this issue is decided.
The case is recommitted to the master for further proceedings in
conformity with this opinion.
Jurisdiction of this Court is invoked under Article III, § 2,
cl. 2, of the Constitution, and § 233 of the Judicial Code, 28
U.S.C. § 341. United States v. Texas, 143 U.
The master's report was filed October 14, 1946. Plaintiff's
exceptions thereto were denied on November 29, and defendants' on
December 2, 1946. Argument was heard by the Court on April 7,
26 Stat. 222.
This order was promulgated under authority of the Act of June
25, 1910, 36 Stat. 847.
The Land Ordinance of 1785 provided: "There shall be reserved
the lot No. 16, of every township, for the maintenance of public
schools within the said township. . . ." Between 1802 and 1846, the
grants were of the 16th section in each township; thereafter, of
sections 16 and 36. In some instances, additional sections have
been granted. United States v. Morrison, 240 U.
, 240 U. S.
Wisconsin v. Lane, 245 U. S. 427
United States v. J. S. Stearns Lumber Co., 245 U.
; United States v. Morrison, supra; Minnesota
v. Hitchcock, 185 U. S. 373
Heydenfeldt v. Daney Gold & Silver Mining Co.,
93 U. S. 634
And see Wyoming v. United States, 255 U.
, 255 U. S.
Section 6 of the Act of August 9, 1888, 25 Stat. 393,
"That where lands in the sixteenth and thirty-sixth sections, in
the Territory of Wyoming, are found upon survey to be in the
occupancy, and covered by the improvements of an actual preemption
or homestead settler, or where either of them is fractional in
quantity, in whole or in part, or wanting because the townships are
fractional or have been or shall hereafter be reserved for public
purposes, or found to be mineral in character, other lands may be
selected by an agent appointed by the governor of the Territory in
lieu thereof, from the surveyed public lands within the Territory
not otherwise legally claimed or appropriated at the time of
selection. . . ."
Section 7 of the Nevada Enabling Act, 13 Stat. 30, 32,
"That sections numbers sixteen and thirty-six in every township,
and, where such sections have been sold or otherwise disposed of by
any act of congress, other lands equivalent thereto in legal
subdivisions of not less than one quarter-section, and as
contiguous as may be, shall be, and are hereby, granted to said
state for the support of common schools."
Defendants assert that the Heydenfeldt
case cannot be
regarded as authority here, because, in reaching its result in the
case, this Court relied in part upon
circumstances peculiar to Nevada. The same argument was rejected in
at 240 U. S.
"It is also urged that the court emphasized the fact that there
had been no sale or disposition of the public lands in Nevada prior
to the enabling act, and therefore that the clause could refer only
to future disposition, whereas, in the case of Oregon, there had
been earlier provisions for the disposal of the public domain. But
Congress used the same phrase substantially in nearly every one of
the school grants, and it was the manifest intention to place the
states on the same footing in this matter. The same clause,
relating to the same subject and enacted in pursuance of the same
policy, did not have one meaning in one grant and a different
meaning in another; it covered other dispositions, whether prior or
subsequent, if made before the land had been appropriately
identified by survey and title had passed."
State of Colorado,
6 L.D. 412.
15 Stat. 178.
Cong.Globe, 40th Cong., 2d Sess., 2801, 2802.
Act of March 1, 1872, 17 Stat. 32.
See note 7
Cf. United States v. Unites Mine Workers of America,
330 U. S. 258
Guarantee Title & Trust Co. v. Title Guaranty & Surety
Co., 224 U. S. 152
224 U. S.
25 Stat. 676.
19 Cong.Rec. 2802; Sen.Journ.50th Cong., 1st Sess., p. 696.
Section 6 of that bill contained the following language: " . . .
and such sections shall not be subject to preemption or entry,
whether surveyed or unsurveyed, but shall be reserved for school
20 Cong.Rec. 806-812.
at 948, 951.
at 2104, 2116.
H.R. Rep. No. 39, 51st Cong., 1st Sess., 26.
21 Cong.Rec. 2707.
26 Stat. 796.
"Where settlements with a view to preemption or homestead have
been, or shall hereafter be made, before the survey of the lands in
the field, which are found to have been made on sections sixteen or
thirty-six, those sections shall be subject to the claims of such
settlers, and if such sections, or either of them, have been or
shall be granted, reserved, or pledged for the use of schools or
colleges in the State or Territory in which they life, other lands
of equal acreage are hereby appropriated and granted, and may be
selected by said State or Territory in lieu of such as may be thus
taken by preemption or homestead settlers. And other lands of equal
acreage are also hereby appropriated and granted and may be
selected by said State or Territory where sections sixteen or
thirty-six are mineral land, or are included within any Indian,
military, or other reservation, or are otherwise disposed of by the
United States. . . ."
H.R. Rep. No. 2384, 51st Cong., 1st Sess.
Wyoming v. United States, 255 U.
; State of Wyoming,
27 L.D. 35.
H.R. Rep. 229, 73d Cong., 1st Sess.; Sen.Rep. No. 10, 73d Cong.,
48 Stat. 350. Section 5 of the Enabling Act was amended so as to
permit the State to lease the school lands for periods of ten
years, as contrasted to a five-year limitation contained in the
section as originally enacted.
H.R. Rep. No. 2384, 51st Cong., 1st Sess., 1. Sen.Rep. No. 502,
51st Cong., 1st Sess., 1.
Thus, the same volume of the Statutes at Large containing the
Wyoming Enabling Act also contains at least two pieces of such
legislation. 26 Stat. 478, 650.
See note 7
South Dakota v. Riley,
34 L.D. 657; State of
38 L.D. 247; State of Utah,
53 L.D. 365.
And see F. A. Hyde & Co.,
37 L.D. 164; State of
52 L.D. 679. Also in accord are decisions in
Utah v. Work,
55 App.D.C. 372, 6 F.2d 675; Thompson v.
110 Wash. 486, 188 P. 397.
California v. Deseret Water, Oil & Irrigation Co.,
243 U. S. 415
243 U. S.
R.S. § 2395, 43 U.S.C. § 751. Barnhurst v. State of
30 L.D. 314; Harris v. Minnesota,
Cf. Santa Fe Pac. R. Co. v. Lane, 244 U.
; St. Paul & Pac. R. Co. v. Northern Pac.
R. Co., 139 U. S. 1
Grinnell v. Chicago, Rock Island & Pac. R. Co.,
103 U. S. 739
United States v. Morrison, supra, note 5
Accounts for the period January 1, 1945, to date of hearing were
to be prepared and submitted later, along with those for any
subsequent periods for which defendants might be liable.
The total of each of these items for the entire period was as
follows: value of oil produced, $167,049.54; steam earnings,
$1,267.99; capital expenses.$118,628.84; operating expenses,
$70,083.73; overhead expenses, $22,461.00; taxes, $4,317.40;
royalties, $17,306.30. It does not appear what the nature of the
so-called "steam earnings" was.
The totals found by the master are the sums of the appropriate
individual items which were in evidence, and which were recited in
No question was
raised as to the accuracy of any of these figures.
See Martel v. Hall Oil Co.,
1927, 36 Wyo. 166, 178,
253 P. 862
864, 255 P. 3
United States v. St. Althony R. Co., 192 U.
; Pine River Logging & Improvement Co. v.
United States, 186 U. S. 279
Wooden-Ware Co. v. United States, 106 U.
; United States v. Homestake Mining Co.,
117 F. 481; Winchester v. Craig,
33 Mich. 205;
Livingstone v. Rawyards Coal Co.,
5 L.R. App.Cas. 25
(H.L.1880); Summers, Oil and Gas, §§ 23, 24.
Liberty Bell Gold Mining Co. v. Smuggler-Union M. Co.,
203 F. 795, 802, cert. denied,
231 U.S. 747;
Elkhorn-Hazard Coal Co. v. Kentucky River Coal Corp.,
F.2d 67, 71.
Guffey v. Smith, 237 U. S. 101
Benson Mining & Smelting Co. v. Alta Mining Co.,
145 U. S. 428
Cf. Hall Oil Co. v. Barquin,
33 Wyo. 92, 137, 237 P. 255
The measure of damages claimed by plaintiff's exceptions on the
theory about to be stated are, as against the Company, the full
proceeds of the oil plus "steam earnings," and as against the
State, the amount of royalties received.
Guffey v. Smith, supra,
at 237 U. S.