Case Law Land

8/8/2019 Case Law Land

1/41

U.S. Supreme Court

U S v. DETROIT TIMBER & LUMBER CO., 200 U.S. 321 (1906)

200 U.S. 321

UNITED STATES, Appt.,v.

DETROIT TIMBER & LUMBER COMPANY et al.No. 106.

MARTIN-ALEXANDER LUMBER COMPANY et al., Appts.,v.

UNITED STATES.

No. 165.

Nos. 106, 165.Argued December 7, 1905.Decided February 19, 1906.

[200 U.S. 321, 322] These are cross appeals from a decree of the circuit court of appeals for theeighth circuit, affirming in part and erversing in part a decree of the circuit court for the westerndistrict of Arkansas.

The bill was filed on April 5, 1902, by the United States against the Detroit Tamber & Lumber Company, the Martin- [200 U.S. 321, 323] Alexander Lumber Company, and a number of individual defendants. The object of the bill was to set aside patents to 44 tracts of land, issued tothe individual defendants, and all conveyances, contracts, and leases from them purporting toconvey title to or a right to cut and remove timber from the lands, and also for an accounting of the timber cut and removed from the lands by the two companies, and judgment therefor.

The charge was that the lands were entered under the timber act of June 3, 1878 (20 Stat. at L.89, chap. 151), and in fraud of its provisions, in that the purchase money was advanced by theMartin- Alexander Company under contracts with the entrymen that after the entries they shouldconvey to it all the standing timber thereon. The Martin- Alexander Company denied that therewere any such contracts, and the Detroit Company in addition pleaded that it was a bona fide

purchaser from the former company. It appeared from the testimony that for some time prior toJanuary 14, 1901, the Martin-Alexander Company owned and operated a sawmill plant in thevicinity of these lands; that most, if not all, of the entrymen were its employees; that it furnishedall the money for the purchase prices of these lands, as well as for the expenses connected withthe entries, and that after the entries the entrymen, with three exceptions, executed conveyancesto it of all the standing timber. Fifty- eight and one half per cent of the stock of the Martin-Alexander Company belonged to E. B. Martin, while A. V. Alexander controlled the remainder,which was owned by himself, his wife, and J. O. Means.


2/41

On January 14, 1901, the Detroit Company purchased the entire property of the Martin-Alexander Company for $60,000 cash and an assumption of its obligations, amounting to$17,456.79. Prior to May 9, 1901, patents were issued for all the lands, thirteen having beenissued before January 14, 1901. After the purchase from the Martin-Alexander Company theDetroit Company obtained deeds of the lands from the patentees of twenty-seven of the tracts.

[200 U.S. 321, 324] The circuit court found that the transactions between the entrymen and theMartin-Alexander Company were not in conflict with the statute, that there were no agreements between them and it prior to the entries in respect to conveyances of the standing timber, and thatthere was only the mere expectation on the part of the company that it would be able to purchasethe timber. Thereupon it dismissed the bill. 124 Fed. 393. The court of appeals, reviewing thetestimony, held that there were contracts between the parties making the entries and the Martin-Alexander Company prior to the entries, and that therefore those entries were in fraud of the act,

but it also found that the purchase by the Detroit Company was in good faith, and that thereforethat company was entitled to protection in its purchase. It ordered the bill dismissed as to the 27tracts for which patents had been issued and conveyances made to the Detroit Company. As tothe seventeen which had not been conveyed, it ordered a decree canceling the patents, but

dismissing the bill so far as respects any relief claimed against the Detroit Company. 67 C. C. A.1, 131 Fed. 668.

Messrs. Marsden C. Burch, Fred A. Maynard, and Solicitor General Hoyt for the United States.[200 U.S. 321, 325] Messrs. W. E. Hemingway, James F. Read, Thomas C. McRae, U. M. Rose,and George B. Rose for the lumber companies.

Statement by Mr. Justice Brewer:

[200 U.S. 321, 328] Mr. Justice Brewer delivered the opinion of the court:

The able and elaborate opinions of both the circuit court and the court of appeals relieve us frommuch labor. There are two questions of fact: First, whether the parties making the entries had, prior to acquiring title from the government, made any agreement with the Martin- Alexander Company for a conveyance of an interest in the properties, or were seeking to acquire title solelyfor their own benefit. Second, whether [200 U.S. 321, 329] the Detroit Company was a purchaser in good faith from the Martin- Alexander Company. With reference to the first question, thecircuit court was of the opinion that there were no agreements between the parties. The court of appeals was of a different opinion, and held that the entries were made in pursuance of suchagreements. This is a case in equity, and while in such a case questions of fact are always open toconsideration by an appellate court, great respect is paid to the conclusions of the trial court inrespect to them. Certainly, if the circuit court and the court of appeals had agreed, we should bevery loath to disturb their conclusion. Differing as they do in the present case, we have examinedthis question, and agree with the court of appeals. The entire management of these entries was inthe hands of an agent of the Martin-Alexander Company. It furnished the moneys, both for the

purchase prices and all expenses; and it is not easy to believe that it did all this on a mereexpectation that, after the entries had been made, it could purchase the timber. It is a much morereasonable conclusion that it had an understanding with the parties making the entries respecting

purchases and prices. It is quite likely that the entrymen were not conscious of wronging thegovernment, and thought that if it received the full price demanded, that was enough. The


3/41

testimony of one witness suggests at least that they may have been advised that there was nocontract unless it was in writing, and that hence they could conscientiously take the oath requiredin connection with an entry. So, without casting any imputation of intentional perjury on those

parties, we agree with the court of appeals that the testimony points strongly to the fact that theentries were in pursuance of an understanding or agreement with the Martin-Alexander Company

that, as it was advancing all the money, the entrymen should convey to it the standing timber at afixed price.

With reference to the second question of fact, the circuit court made no finding, having disposedof the case by its conclusion in respect to the first. The court of appeals found [200 U.S. 321, 330]that the Detroit Company was a purchaser in good faith from the Martin- Alexander Company.Here, too, we have examined the testimony, and are satisfied that the conclusion of the court of appeals was correct. A brief statement of the salient facts may be not unimportant. Theheadquarters of the Detroit Company were in St. Louis, of the Martin-Alexander Company insouthwest Arkansas. They dealt at arm's length. On December 20, 1900, Alexander, of theMartin-Alexander Company, applied to U. L. Clark, presidernt of the Detroit Company, at St.

Louis, to purchase Martin's interest in the Martin-Alexander Company. Clark declined, statingthat the Detroit Company would make no purchase of a fractional interest in the property.Thereupon it was arranged that he should make an examination with a view to the purchase of the entire property. The Detroit Company's inspector was sent to Arkansas to examine the lands.Clark himself went down in the January following, and, after receiving the report of theinspector, terms of sale were, on January 14, agreed upon; $60,000 cash and the assumption of the Martin-Alexander Company's debts. The $60,000, by agreement between the stock-holdersof the Martin-Alexander Company, were divided, $34,850 to Martin, $24,850 to Mrs. Alexander,$150 to A. V. Alexander, and $150 to J. O. Means. Martin and Means were paid at once; thedebts were also promptly paid. Alexander desired to take stock in the Detroit Lumber Companyin lieu of the money coming to his wife and himself. Clark was not then authorized to make sucharrangement, but subsequently the stock of the Detroit Lumber Company was increased and theAlexanders were paid in full in that stock. The entire property of the Martin- Alexander Company, included in which were the sawmill, tram and logging roads, these timber contractsand other like contracts, and also all stock on hand, was, at the time of the purchase,-January 14,-turned over to the Detroit Lumber Company, which thereafter continued the business. TheMartin-Alexander Company had no deeds of the lands in controversy, but simply contracts for the timber [200 U.S. 321, 331] thereon, and, in order to be relieved from the necessity of keepingaccounts with respect to the different tracts, the Detroit Company proceeded to obtain deedsfrom twenty-seven of the patentees, paying on an average $25 apiece therefor, which was a fair

price for the lands after the timber had been cut off. It had no knowledge or intimation that therewas anything wrong in the titles until the last of September or the first of October, 1901,-morethan four months after the government had issued its patents for all the lands,-when it received anotice to that effect from a government inspector.

Now we remark that there is no intimation in the testimony that the purchase price was not paid by the Detroit Company in cash and stock as agreed upon, no suggestion that the price was anunreasonable one. There was nothing strange or unnatural in the contract between the companies;on the contrary, it was one which might well be entered into by parties situated as these were.But it is contended by the government that if the Detroit Company had examined with care the


4/41

books of the Martin-Alexander Company, and the papers which it turned over as evidences of itstitles, it would have perceived that the timber contracts were made shortly after the issue of thefinal receiver's receipts, that the parties making the contracts were all or nearly all employees of the Martin-Alexander Company, to whom moneys had been advanced, and with each of whoman account was being kept; that it was its duty to critically examine these matters in order to be

sure that the titles which it was acquiring were good. In their brief, counsel for the governmentsay:

'We claim that the law as laid down in Hawley v. Diller, 178 U.S. 476 , 44 L. ed. 1157,20 Sup. Ct. Rep. 986, that one who takes title before the issuance of patent cannot claimto be a bona fide purchaser, made it the duty of the Detroit Company to make the mostsearching inquiry, at least as to all of the timber contracts except the thirteen for which

patents to the land had issued.'

We do not understand the law to be as stated, or that one who enters into an ordinary andreasonable contract for the [200 U.S. 321, 332] purchase of property from another is bound to

presume that the vendor is a wrongdoer, and that, therefore, he must make a searching inquiry asto the validity of his claim to the property. The rule of law in respect to purchases of land or timber is the same as that which obtains in other commercial transactions, and such a rule as isclaimed by counsel would shake the foundations of commercial business. No one is bound toassume that the party with whom he deals is a wrongdoer, and if he presents property, the title towhich is apparently valid, and there are no circumstances disclosed which cast suspicion uponthe title, he may rightfully deal with him, and, paying full value for the same, acquire the rightsof a purchaser in good faith. Jones v. Simpson, 116 U.S. 609 -615, 29 L. ed. 742-744, 6 Sup. Ct.Rep. 538. He is not bound to make a searching examination of all the account books of thevendor nor to hunt for something to cast a suspicion upon the integrity of the title.

It is further said that the written contract of sale from the Martin- Alexander Company to theDetroit Company was not executed till March 1, 1901, and that on the 14th of January, 1901,Martin resigned his position as president of the Martin-Alexander Company, and Clark, the

president of the Detroit Company, was elected president of the former company; that, as thechief executive of that company, he was charged with knowledge of all that the company knew,and that therefore, before the written contract was entered into, he and the Detroit Company hadconstructive notice of the wrongful character of these timber contracts. But that is a mere evasivetechnicality. The bill charges and the answer admits the sale on January 14, and the facts, asdisclosed by the testimony, are that Martin desired to leave at once on receipt of his money, andreturn to his home in Illinois; that Clark was put in his place as president to enable the Martin-Alexander Company to close up its outstanding affairs. The real contract between the parties wasentered into before Clark became president, and all that was afterwards done was simply to putin writing the terms of the contract which had been [200 U.S. 321, 333] agreed upon. Equity looksat the substance, and not at the mere form in which a transaction takes place. The rule in respectto constructive notice was thus stated in Wilson v. Wall, 6 Wall. 83, 91, 18 L. ed. 727, 730:

'A chancellor will not be astute to charge a constructive trust upon one who has actedhonestly and paid a full and fair consideration without notice or knowledge. On this pointwe need only refer to Sugden on Vendors, p. 622, where he says: 'In Ware v. Egmont, 4


5/41

De G. M. & G. 460, the Lord Chancellor Cranworth expressed his entire concurrence inwhat, on many occasions of late years, had fallen from judges of great eminence on thesubject of constructive notice, namely, that it was highly inexpedient for courts of equityto extend the doctrine. When a person has not actual notice, he ought not to be treated asif he had notice, unless the circumstances are such as enable the court to say, not only

that he might have acquired, but also that he ought to have acquired it, but for his grossnegligence in the conduct of the business in question. The question, then, when it issought to affect a purchaser with constructive notice, is not whether he had the neans of obtaining, and might, by prudent caution, have obtained the knowledge in question, butwhether not obtaining was an act of gross or culpable negligence."

And, again, in Townsend v. Little, 109 U.S. 504, 511 , 27 S. L. ed. 1012, 1014, 3 Sup. Ct. Rep.357:

'Constructive notice is defined to be in its nature no more than evidence of notice, the presumption of which is so violent that the court will not even allow of its being

controverted. Plumb v. Fluitt, 2 Anstr. 432; Kennedy v. Green, 3 Myl. & K. 699. . . . Assaid by Strong, J., in Meehan v. Williams, 48 Pa. 238, what makes inquiry a duty is sucha visible state of things as is inconsistent with a perfect right in him who proposes to sell.See also Holmes v. Stout, 4 N. J. Eq. 492; M'Mechan v. Griffing, 3 Pick. 149, 15 Am.Dec. 198; Hanrick v. Thompson, 9 Ala. 409.'

In the light of these authorities we see nothing which casts any imputation on the conduct of theDetroit Company, or [200 U.S. 321, 334] that tends to show that it was not a purchaser in absolutegood faith.

Now, what is the law conrolling under these circumstances? Much reliance is placed by the

government on Hawley v. Diller, 178 U.S. 476 , 44 L. ed. 1157, 20 Sup. Ct. Rep. 986, which,affirming prior cases, holds that an entryman under the timber act acquires only an equity, andthat a purchaser from him cannot be regarded as a bona fide purchaser within the meaning of theact. But the Detroit Company purchased 27 tracts after the issue of the patents therefor. And inmaking these purchases it dealt not with the Martin-Alexander Company, but directly with the

patentees. While the amounts paid were small, yet, as counsel for the government admit in their brief that 'the land without the timber is of no value,' there can be no suggestion of inadequacy of price. As, also, it had no knowledge or suspicion of wrong in the titles, it is, as to these tracts,strictly and technically, within the language of the act, a bona fide purchaser. If it be contendedthat, by virtue of the contracts for the sale of timber, it had acquired some interest in the lands

prior to the issue of patents, it is sufficient to say that, by the doctrine of relation, the patents,when issued, became operative as of the dates of the entries. It is true that this doctrine is but afiction of law, but it is a fiction resorted to whenever justice requires. It is that principle by whichan act done at one time is considered to have been done at some antecedent time. It is a doctrineof frequent application, designed to promote justice. Thus, a sheriff's deed takes effect, not of itsdate, but of the time when the lien of the judgment attached. The ordinary railroad land grantshave been grants in proesenti, and under them the title has been adjudged to pass, not at thecompletion of the road, but at the date of the grant. Leavenworth, L. & G. R. Co. v. UnitedStates, 92 U.S. 733 , 23 L. ed. 634; St. Paul, M. & M. R. Co. v. Phelps, 137 U.S. 528 , 34 L. ed.


6/41

767, 11 Sup. Ct. Rep. 168; St. Paul & P. R. Co. v. Northern P. R. Co. 139 U.S. 1 , 35 L. ed. 77,11 Sup. Ct. Rep. 389; United States v. Southern P. R. Co. 146 U.S. 570 , 36 L. ed. 1091, 13 Sup.Ct. Rep. 152. A patent from the United States operates to transfer the title, not merely from thedate of the [200 U.S. 321, 335] patent, but from the inception of the equitable right upon which it is

based. Shepley v. Cowan, 91 U.S. 330 , 23 L. ed. 424. Indeed, this is generally true in case of the

merging of an equitable right into a legal title. Although the patents in this case were not issueduntil after the sales of the timber, yet, when issued, they became operative as of the date of theoriginal entries. This doctrine has frequently been recognized by this and other courts. Landes v.Brant, 10 How. 348, 13 L. ed. 449; French v. Spencer, 21 How. 228, 16 L. ed. 97; Stark v. Starr,6 Wall. 402, 18 L. ed. 925; Lynch v. Bernal, 9 Wall. 315, 19 L. ed. 714; Gibson v. Chouteau, 13Wall. 92, 20 L. ed. 534; Simmons v. Wagner, 101 U.S. 260 , 25 L. ed. 910; Jackson ex dem. DeForest v. Ramsay, 3 Cow. 75, 15 Am. Dec. 242; Welch v. Dutton, 79 Ill. 465; Ormiston v.Trumbo, 77 Mo. App. 310. In the first of these cases it was said (p. 372, L. ed. p. 459):

'To protect purchasers, the rule applies, 'that where there are divers acts concurrent tomake a conveyance, esate, or other thing, the original act shall be preferred; and to this

the other acts shall have relation,'-as stated in Viner's Abr. title Relating, 290. . . . Cruiseon Real Property, vol. 5, pp. 510, 511, lays down the doctrine with great distinctness. Hesays: 'There is no rule better founded in law, reason, and convenience than this: that allthe several parts and ceremonies necessary to complete a conveyance shall be takentogether as one act, and operate from the substantial part by relation'. . . . Applying thedoctrine of relation, and taking all the several parts and ceremonies necessary to completethe title together, 'as one act,' then the confirmation of 1811 and the patent of 1845 must

be taken to relate to the first act,-that of filing the claim in 1805.'

In Simmons v. Wagner, p. 261, L. ed. p. 911:

'Where the right to a patent has once become vested in a purchaser of public lands, it isequivalent, so far as the government is concerned, to a patent actually issued. Theexecution and delivery of the patent after the right to it has become complete are the mereministerial acts of [200 U.S. 321, 336] the officers charged with that duty. Barney v. Dolph,97 U.S. 652 , 24 L. ed. 1063.'

See also United States v. Freyberg, 32 Fed. 195, a case in the circuit court for the eastern districtof Wisconsin, in which it was held by Judge Dyer that an action brought by the government torecover for timber cut from land which had been entered as a homestead, but the full equitabletitle of which had not then passed to the entryman, either by the required occupation of the

premises or by a commuting of the homestead to a pre-emption entry-an action maintainable atthe time it was commenced- was defeated by the issue of the final receiver's receipt and theconsequent perfection of a full equitable title.

Counsel for the government deny the application of this principle in the present case on theground, first, that it gives vitality and validity to a wrongful acquisition of title from thegovernment. They say that equity is never founded on a wrong, and that because the originalentries were wrongful the doctrine of relation will not be applied. But this is a clear misunderstatnding of the purpose and scope of the doctrine of relation. If the original entries


7/41

were rightful, there is no need of its application, for the patents would pass perfect titles. Theequity is founded on the rightful conduct of the purchaser, and not on the wrongful conduct of the entrymen. It upholds the purchaser in his honest purchase notwithstanding the wrongfulcharacter of the entries. This is akin to the ordinary rule in respect to a bona find purchaser.Equity sustains the title in spite of the fact that his grantor may have wrongfully obtained it, and

upholds it because of his rightful conduct.Counsel also say that the question is settled by the decision in Hawley v. Diller, supra, relyingupon the second paragraph in the headnotes:

'An entryman under this act acquires only an equity, and a purchaser from him cannot beregarded as a bona fide purchaser within the meaning of the act of Congress unless he

become [200 U.S. 321, 337] such after the government, by issuing a patent, has parted withthe legal title.'

There are two or three answers to this contention. In the first place, the headnote is not the work

of the court, nor does it state its decision,- though a different rule, it is true, is prescribed bystatute in some states. It is simply the work of the reporter, gives his understanding of thedecision, and is prepared for the convenience of the profession in the examination of the reports.In the second place, if the patent referred to in that headnote is a patent issued upon a wrongfulentry, no such fact appeared in the case, because no patent was issued upon the entry charged tohave been wrongful, but after that entry had been canceled, a patent was issued to Diller on anew entry. If it refers to some other patent than one issued upon a wrongful entry, it has no

pertinency, for the doctrine of relation never carries a patent back to the date of any other entrythan that upon which it is issued. And finally, the headnote is a misinterpretation of the scope of the decision.

With reference to the other tracts and the denial of any relief, by accounting or otherwise, againstthe Detroit Company, it is contended that as prior to the issue of a patent, the Land Departmentcould have set aside the entries on account of the fraudulent contracts, the courts will now grantthe same relief; and further, that inasmuch as the patents are by this decree canceled and the titlerestored to the government, the Detroit Company must be regarded as a wrongdoer in respect tothe timber which it took from the lands prior to the decree, and an accounting should have beenordered. But this ignores the fact that the Detroit Company acted in good faith, and purchased thetimber from those having an apparently perfect equitable title thereto. It becomes necessary toinquire what is the significance of a final receiver's receipt and the effect of a cancelation by theLand Department of such a receipt. The receipt is an acknowledgment by the government that ithas received full pay for the land, that it holds the legal title in trust for the entryman, and will indue course issue to [200 U.S. 321, 338] him a patent. He is the equitable owner of the land. It

becomes subject to state taxation, and under the control of state laws in respect to conveyances,inheritances, etc. Carroll v. Safford, 3 How. 441, 11 L. ed. 671; Witherspoon v. Duncan, 4 Wall.210, 18 L. ed. 339; Simmons v. Wagner, supra; Winona & St. P. Land Co. v. Minnesota, 159U.S. 526 , 40 L. ed. 247, 16 Sup. Ct. Rep. 83; Cornelius v. Kessel, 128 U.S. 456 , 32 L. ed. 482,9 Sup. Ct. Rep. 122; Hastings & D. R. Co. v. Whitney, 132 U.S. 357 , 33 L. ed. 363, 10 Sup. Ct.Rep. 112; Benson Min. & Smelting Co. v. Alta Min. & Smelting Co. 145 U.S. 428 , 36 L. ed.762, 12 Sup. Ct. Rep. 877.


8/41

Indeed, in some of the opinions of this court, emphasizing the value of a receiver's receipt, thereare expressions which seem to underestimate the significance of a patent. Wisconsin C. R. Co. v.Price County, 133 U.S. 496, 510 , 33 S. L. ed. 687, 694, 10 Sup. Ct. Rep. 341; Deseret Salt Co.v. Tarpey, 142 U.S. 241, 251 , 35 S. L. ed. 999, 1002, 12 Sup. Ct. Rep. 158. For it must beremembered that the latter is the instrument which passes the legal title, and that until it is issued

the legal title remains with the government, and is subject to investigation and determination bythe Land Department. Barden v. Northern P. R. Co. 154 U.S. 288, 326 , 38 S. L. ed. 992, 1001,14 Sup. Ct. Rep. 1030; Michigan Land & Lumber Co. v. Rust, 168 U.S. 589, 592 , 42 S. L. ed.591, 592, 18 Sup. Ct. Rep. 208; Guaranty Sav. Bank v. Bladow, 176 U.S. 448 , 44 L. ed. 540, 20Sup. Ct. Rep. 425. But while, until the issue of the patent the land is under the control of theLand Department, which, upon proper investigation and for sufficient reasons, may set aside thecertificate of entry, yet this power of the Land Department cannot arbitrarily be exercisedwithout notice to the entryman, and if improperly exercised the rights of the entryman may beenforced in the courts after the patent has issued to other parties. Guaranty Sav. Bank v. Bladow,supra. It is true, as against the government, and while the title remains in the government, he maynot be able to enforce his equity, because no action can be maintained against the government

except upon contract, express or implied. United States v. Jones, 131 U.S. 1 , 33 L. ed. 90, 9 Sup.Ct. Rep. 669. But while he may not sue on his equity, he may protect that equity when sued bythe government. It is sometimes said that a legal title with an equity is paramount to an equityalone; but this is not strictly true unless the equities are equal, for sometimes a superior equity[200 U.S. 321, 339] may be adjudged paramount to a legal title and an inferior equity. Garland v.Wynn, 20 How. 8, 15 L. ed. 801; Lytle v. Arkansas, 22 How. 193, 16 L. ed. 306; Lindsey v.Hawes, 2 Black, 554, 17 L. ed. 265; Wirth v. Branson, 98 U.S. 118 , 25 L. ed. 86; 2 Pom. Eq.Jur. 678, and following. But we need not stop to inquire what rights the Detroit Company willhave after a patent has issued. It is enough now to hold that it can defend its equities against thesuit of the government.

It is a mistake to suppose that for the determination of equities and equitable rights we must look only to the statutes of Congress. The principles of equity exist independently of, and anterior to,all congressional legislation, and the statutes are either annunciations of those principles or limitations upon their application in particular cases. In passing upon transactions between thegovernment and its vendees we must bear in mind the general principles of equity, and determinerights upon those principles, except as they are limited by special statutory provisions. Andclearly, upon those principles, a party purchasing an equitable right is entitled to be protected inhis purchase so far as it can be done without trespassing upon the rights of other parties. Thestatute provides that if an entry is wrongfully made, it may, prior to patent, be set aside by theLand Department, the entryman forfeiting the money which he has paid. In other words, by theaction of the Department the equitable title is canceled and restored to the government. It thenhas both the full title to the land and the money which had been paid for it. And this is the

penalty which is imposed for the wrongful entry. Certainly, when the government retains the full price which it has placed upon the land and also recovers the land itself, it is abundantlycompensated for any wrong which has been attempted by the entryman. And a party who dealswith such entryman-relying upon the evidences of his entry, which are in all respects in formgood and sufficient, and are an acknowledgment by the government officials of a rightful entry-is justly entitled to the consideration of a court of equity. In this case, finding [200 U.S. 321, 340]the entryman holding apparently valid equitable titles to the lands, it entered into contracts with


9/41

them for the purchase of the timber. It cut and removed the timber-all in good faith. It isequitable that, having thus acted in good faith, it should not be held to account for the timber which it has already paid for and cut and removed in reliance upon these contracts. Thegovernment has every dollar which it would have received in case of a perfectly valid entry, andhas also recovered the land. Surely it is not just for it to ask further payment, and from a party

who dealt in good faith with the entrymen, relying upon the titles which it had created. If theDetroit Company has taken some timber from the land, it has once paid for it and ought not to becompelled to pay a second time, and to the government, which has already received full pay for the land, timber and all. It is inequitable to give to the government not merely the land and the

price which it charged for the land, but also the value of the timber obtained by the DetroitCompany. It is doubling the penalty which the statute imposes, or, if not doubling, at least,largely increasing it.

We think the decision of the Court of Appeals was right, and it is affirmed.

Mr. Justice Harlan and Mr. Justice McKenna dissent.

New

U.S. Supreme Court

HUGHES v. WASHINGTON, 389 U.S. 290 (1967)

389 U.S. 290

HUGHES v. WASHINGTON.CERTIORARI TO THE SUPREME COURT OF WASHINGTON.

No. 15.Argued November 6, 1967.

Decided December 11, 1967.

Petitioner's predecessor in title received from the Federal Government a grant of ocean-frontrealty in what is now the State of Washington. The State asserts that when it acquired statehoodin 1889, its new constitution denied ocean-front property owners any further rights in accretion

that might be formed between their property and the ocean. The trial court upheld petitioner'scontention that the right to accretion remained subject to federal law and that she was the owner of the accreted lands. The State Supreme Court reversed, holding that state law controlled andthat the State owned the lands. Held: This question is governed by federal law, under which agrantee of land bounded by navigable water acquires a right to accretion formed along the shore;and the petitioner, who traces her title to a federal grant prior to statehood, is the owner of theseaccretions. Pp. 291-294.


10/41

67 Wash. 2d 799, 410 P.2d 20, reversed and remanded.

Charles B. Welsh argued the cause for petitioner. With him on the briefs was John Gavin.

Harold T. Hartinger, Assistant Attorney General of Washington, argued the cause for respondent.

With him on the brief were John J. O'Connell, Attorney General, and J. R. Pritchard and John R.Miller, Assistant Attorneys General.

Assistant Attorney General Weisl argued the cause for the United States, as amicus curiae,urging reversal. With him on the brief were Solicitor General Marshall, Robert S. Rifkind, Roger P. Marquis and George S. Swarth.

MR. JUSTICE BLACK delivered the opinion of the Court.

The question for decision is whether federal or state law controls the ownership of land, calledaccretion, gradually [389 U.S. 290, 291] deposited by the ocean on adjoining upland property

conveyed by the United States prior to statehood. The circumstances that give rise to the questionare these. Prior to 1889 all land in what is now the State of Washington was owned by the UnitedStates, except land that had been conveyed to private parties. At that time owners of property

bordering the ocean, such as the predecessor in title of Mrs. Stella Hughes, the petitioner here,had under the common law a right to include within their lands any accretion gradually built up

by the ocean. 1 Washington became a State in 1889, and Article 17 of the State's newconstitution, as interpreted by its Supreme Court, denied the owners of ocean-front property inthe State any further rights in accretion that might in the future be formed between their propertyand the ocean. This is a suit brought by Mrs. Hughes, the successor in title to the original federalgrantee, against the State of Washington as owner of the tidelands to determine whether the rightto future accretions which existed under federal law in 1889 was abolished by that provision of

the Washington Constitution. The trial court upheld Mrs. Hughes' contention that the right toaccretions remained subject to federal law, and that she was the owner of the accreted lands. TheState Supreme Court reversed, holding that state law controlled and that the State owned theselands. 67 Wash. 2d 799, 410 P.2d 20 (1966). We granted certiorari. 385 U.S. 1000 (1967). Wehold that this question is governed by federal, not state, law and that under federal law Mrs.Hughes, who traces her title to a federal grant prior to statehood, is the owner of these accretions.

While the issue appears never to have been squarely presented to this Court before, we think the path to decision [389 U.S. 290, 292] is indicated by our holding in Borax, Ltd. v. Los Angeles, 296U.S. 10 (1935). In that case we dealt with the rights of a California property owner who heldunder a federal patent, and in that instance, unlike the present case, the patent was issued after statehood. We held that

"[t]he question as to the extent of this federal grant, that is, as to the limit of the landconveyed, or the boundary between the upland and the tideland, is necessarily a federalquestion. It is a question which concerns the validity and effect of an act done by theUnited States; it involves the ascertainment of the essential basis of a right asserted under federal law." 296 U.S., at 22 .


11/41

No subsequent case in this Court has cast doubt on the principle announced in Borax. See alsoUnited States v. Oregon, 295 U.S. 1, 27 -28 (1935). The State argues, and the court below held,however, that the Borax case should not be applied here because that case involved no questionas to accretions. While this is true, the case did involve the question as to what rights wereconveyed by the federal grant and decided that the extent of ownership under the federal grant is

governed by federal law. This is as true whether doubt as to any boundary is based on a broadquestion as to the general definition of the shoreline or on a particularized problem relating to theownership of accretion. See United States v. Washington, 294 F.2d 830, 832 (C. A. 9th Cir.1961), cert. denied, 369 U.S. 817 (1962). We therefore find no significant difference betweenBorax and the present case.

Recognizing the difficulty of distinguishing Borax, respondent urges us to reconsider it. Boraxitself, as well as United States v. Oregon, supra, and many other cases, makes clear that a disputeover title to lands owned by the Federal Government is governed by federal law, [389 U.S. 290,293] although of course the Federal Government may, if it desires, choose to select a state rule asthe federal rule. Borax holds that there has been no such choice in this area, and we have no

difficulty in concluding that Borax was correctly decided. The rule deals with waters that lap both the lands of the State and the boundaries of the international sea. This relationship, at this particular point of the marginal sea, is too close to the vital interest of the Nation in its own boundaries to allow it to be governed by any law but the "supreme Law of the Land."

This brings us to the question of what the federal rule is. The State has not attempted to arguethat federal law gives it title to these accretions, and it seems clear to us that it could not. A longand unbroken line of decisions of this Court establishes that the grantee of land bounded by a

body of navigable water acquires a right to any natural and gradual accretion formed along theshore. In Jones v. Johnston, 18 How. 150 (1856), a dispute between two parties owning landalong Lake Michigan over the ownership of soil that had gradually been deposited along theshore, this Court held that "[l]and gained from the sea either by alluvion or dereliction, if thesame be by little and little, by small and imperceptible degrees, belongs to the owner of the landadjoining." 18 How., at 156. The Court has repeatedly reaffirmed this rule, County of St. Clair v.Lovingston, 23 Wall. 46 (1874); Jefferis v. East Omaha Land Co., 134 U.S. 178 (1890), 2 andthe soundness of the principle is scarcely open to question. Any other rule would leave riparianowners continually in danger of losing the access to water which is often the most valuablefeature of their property, and continually [389 U.S. 290, 294] vulnerable to harassing litigationchallenging the location of the original water lines. While it is true that these riparian rights areto some extent insecure in any event, since they are subject to considerable control by theneighboring owner of the tideland, 3 this is insufficient reason to leave these valuable rights atthe mercy of natural phenomena which may in no way affect the interests of the tideland owner.See Stevens v. Arnold, 262 U.S. 266, 269 -270 (1923). We therefore hold that petitioner isentitled to the accretion that has been gradually formed along her property by the ocean.

The judgment below is reversed, and the case is remanded to the Supreme Court of Washingtonfor further proceedings not inconsistent with this opinion.

Reversed and remanded.MR. JUSTICE MARSHALL took no part in the consideration or decision of this case.


12/41

Footnotes

[ Footnote 1 ] Jones v. Johnston, 18 How. 150 (1856); County of St. Clair v. Lovingston, 23Wall. 46 (1874).

[ Footnote 2 ] In Ker & Co. v. Couden, 223 U.S. 268 (1912), Mr. Justice Holmes, writing for theCourt, held that under the governing Spanish law, lands added to the shore by accretion in thePhilippines belonged to the public domain rather than to the adjacent estate.

[ Footnote 3 ] It has been held that a State may, without paying compensation, deprive a riparianowner of his common-law right to utilize the flowing water, St. Anthony Falls Water Power Co.v. Water Comm'rs, 168 U.S. 349 (1897), or to build a wharf over the water, Shively v. Bowlby,152 U.S. 1 (1894). It has also been held that the State may fill its tidelands and thus block theriparian owner's natural access to the water. Port of Seattle v. Oregon & W. R. Co., 255 U.S. 56(1921).

MR. JUSTICE STEWART, concurring.

I fully agree that the extent of the 1866 federal grant to which Mrs. Hughes traces her ownershipwas originally measurable by federal common law, and that under the applicable federal rule her

predecessor in title acquired the right to all accretions gradually built up by the sea. For me,however, that does not end the matter. For the Supreme Court of Washington decided in 1966, inthe case now before us, that Washington terminated the [389 U.S. 290, 295] right to oceanfrontaccretions when it became a State in 1889. The State concedes that the federal grant in questionconferred such a right prior to 1889. But the State purports to have reserved all post-1889accretions for the public domain. Mrs. Hughes is entitled to the beach she claims in this caseonly if the State failed in its effort to abolish all private rights to seashore accretions.

Surely it must be conceded as a general proposition that the law of real property is, under our Constitution, left to the individual States to develop and administer. And surely Washington or any other State is free to make changes, either legislative or judicial, in its general rules of real

property law, including the rules governing the property rights of riparian owners. Nor areriparian owners who derive their title from the United States somehow immune from thechanging impact of these general state rules. Joy v. St. Louis, 201 U.S. 332, 342 . For if theywere, then the property law of a State like Washington, carved entirely out of federal territory,would be forever frozen into the mold it occupied on the date of the State's admission to theUnion. It follows that Mrs. Hughes cannot claim immunity from changes in the property law of Washington simply because her title derives from a federal grant. Like any other property owner,

however, Mrs. Hughes may insist, quite apart from the federal origin of her title, that the Statenot take her land without just compensation. Chicago, B. & Q. R. Co. v. Chicago, 166 U.S. 226,236 -241.

Accordingly, if Article 17 of the Washington Constitution had unambiguously provided, in 1889,that all accretions along the Washington coast from that day forward would belong to the Staterather than to private riparian owners, this case would present two questions not discussed by theCourt, both of which I think exceedingly difficult. First: Does such a prospective change in state


13/41

[389 U.S. 290, 296] property law constitute a compensable taking? Second: If so, does theconstitutional right to compensation run with the land, so as to give not only the 1889 owner, butalso his successors - including Mrs. Hughes - a valid claim against the State?

The fact, however, is that Article 17 contained no such unambiguous provision. In that Article,

the State simply asserted its ownership of "the beds and shores of all navigable waters in the stateup to and including the line of ordinary high tide, in waters where the tide ebbs and flows, and upto and including the line of ordinary high water within the banks of all navigable rivers andlakes." In the present case the Supreme Court of Washington held that, by this 1889 language,"[l]ittoral rights of upland owners were terminated." 67 Wash. 2d 799, 816, 410 P.2d 20, 29.Such a conclusion by the State's highest court on a question of state law would ordinarily bindthis Court, but here the state and federal questions are inextricably intertwined. For if it cannotreasonably be said that the littoral rights of upland owners were terminated in 1889, then theeffect of the decision now before us is to take from these owners, without compensation, landdeposited by the Pacific Ocean from 1889 to 1966.

We cannot resolve the federal question whether there has been such a taking without first makinga determination of our own as to who owned the seashore accretions between 1889 and 1966. Tothe extent that the decision of the Supreme Court of Washington on that issue arguably conformsto reasonable expectations, we must of course accept it as conclusive. But to the extent that itconstitutes a sudden change in state law, unpredictable in terms of the relevant precedents, nosuch deference would be appropriate. For a State cannot be permitted to defeat the constitutional

prohibition against taking property without due process of law by the simple [389 U.S. 290, 297]device of asserting retroactively that the property it has taken never existed at all. Whether thedecision here worked an unpredictable change in state law thus inevitably presents a federalquestion for the determination of this Court. See Demorest v. City Bank Co., 321 U.S. 36, 42 -43. Cf. Indiana ex rel. Anderson v. Brand, 303 U.S. 95 . The Washington court insisted that itsdecision was "not startling." 67 Wash. 2d 799, 814, 410 P.2d 20, 28. What is at issue here is theaccuracy of that characterization.

The state court rested its result upon Eisenbach v. Hatfield, 2 Wash. 236, 26 P. 539, but thatdecision involved only the relative rights of the State and the upland owner in the tidelandsthemselves. The Eisenbach court declined to resolve the accretions question presented here. Thisquestion was resolved in 1946, in Ghione v. State, 26 Wash. 2d 635, 175 P.2d 955. There theState asserted, as it does here, that Article 17 operated to deprive private riparian owners of post-1889 accretions. The Washington Supreme Court rejected that assertion in Ghione and held that,after 1889 as before, title to gradual accretions under Washington law vested in the owner of theadjoining land. In the present case, 20 years after its Ghione decision, the Washington SupremeCourt reached a different conclusion. The state court in this case sought to distinguish Ghione:The water there involved was part of a river. But the Ghione court had emphatically stated thatthe same "rule of accretion . . . applies to both tidewaters and fresh waters." 26 Wash. 2d 635,645, 175 P.2d 955, 961. I can only conclude, as did the dissenting judge below, that the statecourt's most recent construction of Article 17 effected an unforeseeable change in Washington

property law as expounded by the State Supreme Court.


14/41

There can be little doubt about the impact of that change upon Mrs. Hughes: The beach she hadevery [389 U.S. 290, 298] reason to regard as hers was declared by the state court to be in the

public domain. Of course the court did not conceive of this action as a taking. As is so often thecase when a State exercises its power to make law, or to regulate, or to pursue a public project,

pre-existing property interests were impaired here without any calculated decision to deprive

anyone of what he once owned. But the Constitution measures a taking of property not by what aState says, or by what it intends, but by what it does. Although the State in this case made noattempt to take the accreted lands by eminent domain, it achieved the same result by effecting aretroactive transformation of private into public property - without paying for the privilege of doing so. Because the Due Process Clause of the Fourteenth Amendment forbids suchconfiscation by a State, no less through its courts than through its legislature, and no less when ataking is unintended than when it is deliberate, I join in reversing the judgment. [389 U.S. 290, 299]

New

U.S. Supreme Court

SUMMA CORP. v. CALIFORNIA EX REL. LANDS COMM'N, 466 U.S. 198(1984)

466 U.S. 198

SUMMA CORP. v. CALIFORNIA EX REL. STATE LANDS COMMISSION ET AL.CERTIORARI TO THE SUPREME COURT OF CALIFORNIA

No. 82-708.

Argued February 29, 1984Decided April 17, 1984

Petitioner owns the fee title to the Ballona Lagoon, a narrow body of water connected to amanmade harbor located in the city of Los Angeles on the Pacific Ocean. The lagoon became

part of the United States following the war with Mexico, which was formally ended by theTreaty of Guadalupe Hidalgo in 1848. Petitioner's predecessors-in-interest had their interest inthe lagoon confirmed in federal patent proceedings pursuant to an 1851 Act that had beenenacted to implement the treaty, and that provided that the validity of claims to California landswould be decided according to Mexican law. California made no claim to any interest in thelagoon at the time of the patent proceedings, and no mention was made of any such interest inthe patent that was issued. Los Angeles brought suit against petitioner in a California state court,alleging that the city held an easement in the Ballona Lagoon for commerce, navigation, fishing,

passage of fresh water to canals, and water recreation, such an easement having been acquired atthe time California became a State. California was joined as a defendant as required by state lawand filed a cross-complaint alleging that it had acquired such an easement upon its admission to


15/41

the Union and had granted this interest to the city. The trial court ruled in favor of the city andState, finding that the lagoon was subject to the claimed public trust easement. The CaliforniaSupreme Court affirmed, rejecting petitioner's arguments that the lagoon had never beentideland, that even if it had been, Mexican law imposed no servitude on the fee interest by reasonof that fact, and that even if it were tideland and subject to servitude under Mexican law, such a

servitude was forfeited by the State's failure to assert it in the federal patent proceedings. Held:

California cannot at this late date assert its public trust easement over petitioner's property, when petitioner's predecessors-in-interest had their interest confirmed without any mention of such aneasement in the federal patent proceedings. The interest claimed by California is one of suchsubstantial magnitude that regardless of the fact that the claim is asserted by the State in itssovereign capacity, this interest must have been presented in the patent proceedings or be barred.Cf. Barker v. Harvey, 181 U.S. 481 ; United States v. Title Ins. & Trust [466 U.S. 198, 199] Co.,265 U.S. 472 ; United States v. Coronado Beach Co., 255 U.S. 472 . Pp. 205-209.

31 Cal. 3d 288, 644 P.2d 792, reversed and remanded.

REHNQUIST, J., delivered the opinion of the Court, in which all other Members joined exceptMARSHALL, J., who took no part in the decision of the case.

Warren M. Christopher argued the cause for petitioner. With him on the briefs were Henry C.Thumann, Zoe E. Baird, William M. Bitting, and Steven W. Bacon.

Deputy Solicitor General Claiborne argued the cause for the United States as amicus curiaeurging reversal. With him on the brief were Solicitor General Lee, Assistant Attorney General

Dinkins, Dirk D. Snel, and Richard J. Lazarus. Nancy Alvarado Saggese, Deputy Attorney General of California, argued the cause for respondents. With her on the brief for respondent State of California were John K. Van DeKamp, Attorney General, and N. Gregory Taylor, Assistant Attorney General. Gary R. Netzer,Ira Reiner, and Norman L. Roberts filed a brief for respondent City of Los Angeles. *

[ Footnote * ] Edgar B. Washburn and Nancy J. Stivers filed a brief for the California Land TitleAssociation as amicus curiae urging reversal.

Briefs of amici curiae urging affirmance were filed for the National Audubon Society et al. by

Palmer Brown Madden and Linda Agerter; and for Amigos de Bolsa Chica by Lynda Martyn.Briefs of amici curiae were filed for the State of Texas by Jim Mattox, Attorney General, DavidR. Richards, Executive Assistant Attorney General, and Jim Mathews, R. Lambeth Townsend,and Ginny Agnew, Assistant Attorney General; and for the Pacific Legal Foundation by RonaldA. Zumbrun and John H. Findley.

JUSTICE REHNQUIST delivered the opinion of the Court.


16/41

Petitioner owns the fee title to property known as the Ballona Lagoon, a narrow body of water connected to Marina del Rey, a manmade harbor located in a part of the city of [466 U.S. 198, 200]Los Angeles called Venice. Venice is located on the Pacific Ocean between the Los AngelesInternational Airport and the city of Santa Monica. The present case arises from a lawsuit

brought by respondent city of Los Angeles against petitioner Summa Corp. in state court, in

which the city alleged that it held an easement in the Ballona Lagoon for commerce, navigation,and fishing, for the passage of fresh waters to the Venice Canals, and for water recreation. TheState of California, joined as a defendant as required by state law, filed a cross-complaintalleging that it had acquired an interest in the lagoon for commerce, navigation, and fishing uponits admission to the Union, that it held this interest in trust for the public, and that it had grantedthis interest to the city of Los Angeles. The city's complaint indicated that it wanted to dredge thelagoon and make other improvements without having to exercise its power of eminent domainover petitioner's property. The trial court ruled in favor of respondents, finding that the lagoonwas subject to the public trust easement claimed by the city and the State, who had the right toconstruct improvements in the lagoon without exercising the power of eminent domain or compensating the landowners. The Supreme Court of California affirmed the ruling of the trial

court. City of Los Angeles v. Venice Peninsula Properties, 31 Cal. 3d 288, 644 P.2d 792 (1982).In the Supreme Court of California, petitioner asserted that the Ballona Lagoon had never beentideland, that even if it had been tideland, Mexican law imposed no servitude on the fee interest

by reason of that fact, and that even if it were tideland and subject to a servitude under Mexicanlaw, such a servitude was forfeited by the failure of the State to assert it in the federal patent

proceedings. The Supreme Court of California ruled against petitioner on all three of thesegrounds. We granted certiorari, 460 U.S. 1036 (1983), and now reverse that judgment, holdingthat even if it is assumed that the Ballona Lagoon was part of tidelands subject by Mexican lawto the servitude described by the Supreme [466 U.S. 198, 201] Court of California, the State's claimto such a servitude must have been presented in the federal patent proceeding in order to survivethe issue of a fee patent. 1 [466 U.S. 198, 202]

Petitioner's title to the lagoon, like all the land in Marina del Rey, dates back to 1839, when theMexican Governor of California granted to Augustin and Ignacio Machado and Felipe andTomas Talamantes a property known as the Rancho Ballona. 2 The land comprising the RanchoBallona became part of the United States following the war between the United States andMexico, which was formally ended by the Treaty of Guadalupe Hidalgo in 1848. 9 Stat. 922.Under the terms of the Treaty of Guadalupe Hidalgo the United States undertook to protect the

property rights of Mexican landowners, Treaty of Guadalupe Hidalgo, Art. VIII, 9 Stat. 929, atthe same time settlers were moving into California in large numbers to exploit the mineral wealthand other resources of the new territory. Mexican grants encompassed well over 10 million acresin California and included some of the best land suitable for development. H. R. Rep. No. 1, 33dCong., 2d Sess., 4-5 (1854). As we wrote long ago: [466 U.S. 198, 203]

"The country was new, and rich in mineral wealth, and attracted settlers, whose industryand enterprise produced an unparalleled state of prosperity. The enhanced value given tothe whole surface of the country by the discovery of gold, made it necessary to ascertainand settle all private land claims, so that the real estate belonging to individuals could beseparated from the public domain." Peralta v. United States, 3 Wall. 434, 439 (1866).


17/41

See also Botiller v. Dominguez, 130 U.S. 238, 244 (1889).

To fulfill its obligations under the Treaty of Guadalupe Hidalgo and to provide for an orderlysettlement of Mexican land claims, Congress passed the Act of March 3, 1851, setting up acomprehensive claims settlement procedure. Under the terms of the Act, a Board of Land

Commissioners was established with the power to decide the rights of "each and every personclaiming lands in California by virtue of any right or title derived from the Spanish or Mexicangovernment . . . ." Act of Mar. 3, 1851, 8, ch. 41, 9 Stat. 632. The Board was to decide thevalidity of any claim according to "the laws, usages, and customs" of Mexico, 11, while parties

before the Board had the right to appeal to the District Court for a de novo determination of their rights, 9; Grisar v. McDowell, 6 Wall. 363, 375 (1868), and to appeal to this Court, 10.Claimants were required to present their claims within two years, however, or have their claims

barred. 13; see Botiller v. Dominguez, supra. The final decree of the Board, or any patent issuedunder the Act, was also a conclusive adjudication of the rights of the claimant as against theUnited States, but not against the interests of third parties with superior titles. 15.

In 1852 the Machados and the Talamantes petitioned the Board for confirmation of their titleunder the Act. Following a hearing, the petition was granted by the Board, App. 21, and affirmed by the United States District Court on appeal, [466 U.S. 198, 204] id., at 22-23. Before a patentcould issue, however, a survey of the property had to be approved by the Surveyor General of California. The survey for this purpose was completed in 1858, and although it was approved bythe Surveyor General of California, it was rejected upon submission to the General Land Officeof the Department of the Interior. Id., at 32-34.

In the confirmation proceedings that followed, the proposed survey was readvertised andinterested parties informed of their right to participate in the proceedings. 3 The property ownersimmediately north of the Rancho Ballona protested the proposed survey of the Rancho Ballona;

the Machados and Talamantes, the original grantees, filed affidavits in support of their claim. Asa result of these submissions, as well as a consideration of the surveyor's field notes andunderlying Mexican documents, the General Land Office withdrew its objection to the proposedocean boundary. The Secretary of the Interior subsequently approved the survey and in 1873 a

patent was issued confirming title in the Rancho Ballona to the original Mexican grantees. Id., at101-109. Significantly, the federal patent issued to the Machados and Talamantes made nomention of any public trust interest such as the one asserted by California in the present

proceedings.

The public trust easement claimed by California in this lawsuit has been interpreted to apply toall lands which were [466 U.S. 198, 205] tidelands at the time California became a State,irrespective of the present character of the land. See City of Long Beach v. Mansell, 3 Cal. 3d462, 486-487, 476 P.2d 423, 440-441 (1970). Through this easement, the State has an overriding

power to enter upon the property and possess it, to make physical changes in the property, and tocontrol how the property is used. See Marks v. Whitney, 6 Cal. 3d 251, 259-260, 491 P.2d 374,380-381 (1971); People v. California Fish Co., 166 Cal. 576, 596-599, 138 P. 79, 87-89 (1913).Although the landowner retains legal title to the property, he controls little more than the nakedfee, for any proposed private use remains subject to the right of the State or any member of the

public to assert the State's public trust easement. See Marks v. Whitney, supra.


18/41

The question we face is whether a property interest so substantially in derogation of the feeinterest patented to petitioner's predecessors can survive the patent proceedings conducted

pursuant to the statute implementing the Treaty of Guadalupe Hidalgo. We think it cannot. TheFederal Government, of course, cannot dispose of a right possessed by the State under the equal-footing doctrine of the United States Constitution. Pollard's Lessee v. Hagan, 3 How. 212 (1845).

Thus, an ordinary federal patent purporting to convey tidelands located within a State to a privateindividual is invalid, since the United States holds such tidelands only in trust for the State.Borax, Ltd. v. Los Angeles, 296 U.S. 10, 15 -16 (1935). But the Court in Borax recognized that adifferent result would follow if the private lands had been patented under the 1851 Act. Id., at 19.Patents confirmed under the authority of the 1851 Act were issued "pursuant to the authorityreserved to the United States to enable it to discharge its international duty with respect to landwhich, although tideland, had not passed to the State." Id., at 21. See also Oregon ex rel. StateLand Board v. Corvallis Sand & Gravel Co., 429 U.S. 363, 375 (1977); Knight v. United StatesLand Assn., 142 U.S. 161 (1891). [466 U.S. 198, 206]

This fundamental distinction reflects an important aspect of the 1851 Act enacted by Congress.

While the 1851 Act was intended to implement this country's obligations under the Treaty of Guadalupe Hidalgo, the 1851 Act also served an overriding purpose of providing repose to landtitles that originated with Mexican grants. As the Court noted in Peralta v. United States, 3 Wall.434 (1866), the territory in California was undergoing a period of rapid development andexploitation, primarily as a result of the finding of gold at Sutter's Mill in 1848. See generally J.Caughey, California 238-255 (2d ed. 1953). It was essential to determine which lands were

private property and which lands were in the public domain in order that interested parties coulddetermine what land was available from the Government. The 1851 Act was intended "to placethe titles to land in California upon a stable foundation, and to give the parties who possess theman opportunity of placing them on the records of this country, in a manner and form that will

prevent future controversy." Fremont v. United States, 17 How. 542, 553-554 (1855); accord,Thompson v. Los Angeles Farming Co., 180 U.S. 72, 77 (1901).

California argues that since its public trust servitude is a sovereign right, the interest did not haveto be reserved expressly on the federal patent to survive the confirmation proceedings. 4 Patentsissued pursuant to the 1851 Act were, [466 U.S. 198, 207] of course, confirmatory patents that didnot expand the title of the original Mexican grantee. Beard v. Federy, 3 Wall. 478 (1866). Butour decisions in a line of cases beginning with Barker v. Harvey, 181 U.S. 481 (1901),effectively dispose of California's claim that it did not have to assert its interest during theconfirmation proceedings. In Barker the Court was presented with a claim brought on behalf of certain Mission Indians for a permanent right of occupancy on property derived from grants fromMexico. The Indians' claim to a right of occupancy was derived from a reservation placed on theoriginal Mexican grants permitting the grantees to fence in the property without "interfering withthe roads, crossroads and other usages." Id., at 494, 495. The Court rejected the Indians' claim,holding:

"If these Indians had any claims founded on the action of the Mexican government theyabandoned them by not [466 U.S. 198, 208] presenting them to the commission for consideration, and they could not, therefore, . . . `resist successfully any action of thegovernment in disposing of the property.' If it be said that the Indians do not claim the


19/41

fee, but only the right of occupation, and, therefore, they do not come within the provision of section 8 as persons `claiming lands in California by virtue of any right or title derived from the Spanish or Mexican government,' it may be replied that a claim of aright to permanent occupancy of land is one of far-reaching effect, and it could not well

be said that lands which were burdened with a right of permanent occupancy were a part

of the public domain and subject to the full disposal of the United States. . . . Surely aclaimant would have little reason for presenting to the land commission his claim to land,and securing a confirmation of that claim, if the only result was to transfer the naked feeto him, burdened by an Indian right of permanent occupancy." Id. at 491-492.

The Court followed its holding in Barker in a subsequent case presenting a similar question, inwhich the Indians claimed an aboriginal right of occupancy derived from Spanish and Mexicanlaw that could only be extinguished by some affirmative act of the sovereign. United States v.Title Ins. & Trust Co., 265 U.S. 472 (1924). Although it was suggested to the Court that Mexicanlaw recognized such an aboriginal right, Brief for Appellant in United States v. Title Ins. & TrustCo., O. T. 1923, No. 358, pp. 14-16; cf. Chouteau v. Molony, 16 How. 203, 229 (1854), theCourt applied its decision in Barker to hold that because the Indians failed to assert their interest

within the timespan established by the 1851 Act, their claimed right of occupancy was barred.The Court declined an invitation to overrule its decision in Barker because of the adverse effectof such a decision on land titles, a result that counseled adherence to a settled interpretation. 265U.S., at 486 . [466 U.S. 198, 209]

Finally, in United States v. Coronado Beach Co., 255 U.S. 472 (1921), the Government arguedthat even if the landowner had been awarded title to tidelands by reason of a Mexican grant, acondemnation award should be reduced to reflect the interest of the State in the tidelands whichit acquired when it entered the Union. The Court expressly rejected the Government's argument,holding that the patent proceedings were conclusive on this issue, and could not be collaterallyattacked by the Government. Id., at 487-488. The necessary result of the Coronado Beachdecision is that even "sovereign" claims such as those raised by the State of California in the

present case must, like other claims, be asserted in the patent proceedings or be barred.

These decisions control the outcome of this case. We hold that California cannot at this late dateassert its public trust easement over petitioner's property, when petitioner's predecessors-in-interest had their interest confirmed without any mention of such an easement in proceedingstaken pursuant to the Act of 1851. The interest claimed by California is one of such substantialmagnitude that regardless of the fact that the claim is asserted by the State in its sovereigncapacity, this interest, like the Indian claims made in Barker and in United States v. Title Ins. &Trust Co., must have been presented in the patent proceeding or be barred. Accordingly, the

judgment of the Supreme Court of California is reversed, and the case is remanded to that courtfor further proceedings not inconsistent with this opinion.

It is so ordered.JUSTICE MARSHALL took no part in the decision of this case.

Footnotes


20/41

[ Footnote 1 ] Respondents argue that the decision below presents simply a question concerningan incident of title, which even though relating to a patent issued under a federal statute raisesonly a question of state law. They rely on cases such as Hooker v. Los Angeles, 188 U.S. 314(1903), Los Angeles Milling Co. v. Los Angeles, 217 U.S. 217 (1910), and Boquillas Land &Cattle Co. v. Curtis, 213 U.S. 339 (1909). These cases all held, quite properly in our view, that

questions of riparian water rights under patents issued under the 1851 Act did not raise asubstantial federal question merely because the conflicting claims were based upon such patents.But the controversy in the present case, unlike those cases, turns on the proper construction of the Act of March 3, 1851. Were the rule otherwise, this Court's decision in Barker v. Harvey,181 U.S. 481 (1901), would have been to dismiss the appeal, which was the course taken inHooker, rather than to decide the case on the merits. See also Beard v. Federy, 3 Wall. 478(1866). The opinion below clearly recognized as much, for the California Supreme Court wrotethat "under the Act of 1851, the federal government succeeded to Mexico's right in the tidelandsgranted to defendants' predecessors upon annexation of California," 31 Cal. 3d, at 298, 644 P.2d,at 798, an interest that "was acquired by California upon its admission to statehood," id., at 302,644 P.2d, at 801. Thus, our jurisdiction is based on the need to determine whether the provisions

of the 1851 Act operate to preclude California from now asserting its public trust easement.The 1839 grant to the Machados and Talamantes contained a reservation that the grantees mayenclose the property "without prejudice to the traversing roads and servitudes [servidumbres]."App. 5. According to expert testimony at trial, under Las Siete Partidas, the law in effect at thetime of the Mexican grant, this reservation in the Machados' and Talamantes' grant was intendedto preserve the rights of the public in the tidelands enclosed by the boundaries of the RanchoBallona. The California Supreme Court reasoned that this interest was similar to the common-law public trust imposed on tidelands. Petitioner and amicus United States argue, however, thatthis reservation was never intended to create a public trust easement of the magnitude nowasserted by California. At most this reservation was inserted in the Mexican grant simply to

preserve existing roads and paths for use by the public. See United States v. Coronado BeachCo., 255 U.S. 472, 485 -486 (1921); Barker v. Harvey, supra; cf. Jover v. Insular Government,221 U.S. 623 (1911). While it is beyond cavil that we may take a fresh look at what Mexican lawmay have been in [466 U.S. 198, 202] 1839, see United States v. Perot, 98 U.S. 428, 430 (1879);Fremont v. United States, 17 How. 542, 556 (1855), we find it unnecessary to determine whether Mexican law imposed such an expansive easement on grants of private property.

[ Footnote 2 ] The Rancho Ballona occupied an area of approximately 14,000 acres and includeda tidelands area of about 2,000 acres within its boundaries. The present-day Ballona Lagoon isvirtually all that remains of the former tidelands, with filling and development or naturalconditions transforming most of much larger lagoon area into dry land. Although respondent LosAngeles claims that the present controversy involves only what remains of the old lagoon, a fair reading of California law suggests that the State's claimed public trust servitude can be extendedover land no longer subject to the tides if the land was tidelands when California became a State.See City of Long Beach v. Mansell, 3 Cal. 3d 462, 476 P.2d 423 (1970).

The Mexican grantees acquired title through a formal process that began with a petition to theMexican Governor of California. Their petition was forwarded to the City Council of LosAngeles, whose committee on vacant lands approved the request. Formal vesting of title took


21/41

place after the Rancho had been inspected, a Mexican judge had completed "walking the boundaries," App. 213, and the conveyance duly registered. See generally id., at 1-13; UnitedStates v. Pico, 5 Wall. 536, 539 (1867).

[ Footnote 3 ] It is plain that the State had the right to participate in the patent proceedings

leading to confirmation of the Machados' and Talamantes' grant. The State asserts that as a"practice" it did not participate in confirmation proceedings under the 1851 Act. Brief for Respondent California 16, n. 17. In point of fact, however, the State and the city of Los Angeles

participated in just such a proceeding involving a rancho near the Rancho Ballona. See In reSausal Redundo and Other Cases, Brief for General Rosecrans and State of California et al., andResolutions of City Council of Los Angeles, Dec. 24, 1868, found in National Archives, RG 49,California Land Claims, Docket 414. Moreover, before the Mexican grant was confirmed,Congress passed a statute specially conferring a right on all parties claiming an interest in anytract embraced by a published survey to file objections to the survey. Act of July 1, 1864, 1, ch.194, 13 Stat. 332.

[ Footnote 4 ] In support of this argument the State cites to Montana v. United States, 450 U.S.544 (1981), and Illinois Central R. Co. v. Illinois, 146 U.S. 387 (1892), in support of its proposition that its public trust servitude survived the 1851 Act confirmation proceedings. WhileMontana v. United States and Illinois Central R. Co. v. Illinois support the proposition thatalienation of the beds of navigable waters will not be lightly inferred, property underlyingnavigable waters can be conveyed in recognition of an "international duty." Montana v. UnitedStates, supra, at 552. Whether the Ballona Lagoon was navigable under federal law in 1850 isopen to speculation. The trial court found only that the present-day lagoon was navigable, App.to Pet. for Cert. A-52, while respondent Los Angeles concedes that the lagoon was not navigablein 1850, Brief for Respondent Los Angeles 29. The obligation of the United States to respect [466U.S. 198, 207] the property rights of Mexican citizens was, of course, just such an internationalobligation, made express by the Treaty of Guadalupe Hidalgo and inherent in the law of nations,see United States v. Moreno, 1 Wall. 400, 404 (1864); United States v. Fossatt, 21 How. 445,448 (1859).

The State also argues that the Court has previously recognized that sovereign interests need not be asserted during proceedings confirming private titles. The State's reliance on New Orleans v.United States, 10 Pet. 662 (1836), and Eldridge v. Trezevant, 160 U.S. 452 (1896), in support of its argument is misplaced, however. Neither of these cases involved titles confirmed under the1851 Act. In New Orleans v. United States, for example, the Board of Commissioners in thatcase could only make recommendations to Congress, in contrast to the binding effect of a decreeissued by the Board under the 1851 Act. Thus, we held in that case that the city of New Orleanscould assert public rights over riverfront property which were previously rejected by the Boardof Commissioners. New Orleans v. United States, supra, at 733-734. The decision in Eldridge v.Trezevant, supra, did not even involve a confirmatory patent, but simply the question whether anoutright federal grant was exempt from longstanding local law permitting construction of a leveeon private property for public safety purposes. While the Court held that the federal patent didnot extinguish the servitude, the interest asserted in that case was not a "right of permanentoccupancy," Barker v. Harvey, 181 U.S., at 491 , such as that asserted by the State in this case.[466 U.S. 198, 210]


22/41

U.S. Supreme Court

U S v. CORONADO BEACH CO, 255 U.S. 472 (1921)

255 U.S. 472

UNITED STATESv.

CORONADO BEACH CO. (two cases).

Nos. 524 and 525.Argued March 1 and 2, 1921.

Decided March 28, 1921.

[255 U.S. 472, 473] Mr. Assistant Attorney General Garnett, for the United States.

[255 U.S. 472, 482] Mr. Peter F. Dunne, of San Francisco, Cal., for Coronado Beach Co.

[255 U.S. 472, 485]

Mr. Justice HOLMES delivered the opinion of the Court.

These cases arise out of a proceeding brought by the United States under the Act of July 27,1917, c. 42, 40 Stat. 247 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, 1867ddd), for the double

purpose of ascertaining the rights of private parties in North Island in the harbor of San Diego,California, and of condemning the whole of said island for public purposes after the value of such rights has been fixed and paid into Court. The proceeding was begun by a bill in equityagainst the Coronado Beach Company. In its answer that Company alleged title to the wholeisland, and after a hearing obtained a decree in its favor, subject to the question of the rights of the United States brought up by the appeal in No. 525. The case then was transferred to the lawside, the value of the plaintiff's island was assessed by a jury, and a judgment was entered thatupon payment of $5,000,000 into Court within thirty days the United States might have a finalorder of condemnation. The writ of error in 524 presents the questions raised in this stage of thecase.

The title of the Coronado Beach Company is derived from a Mexican grant of May 15, 1846, toone Carillo, a Mexican citizen, the Company having succeeded to his rights. At this point it isnecessary to mention only that Carillo is given the right to enclose the land 'without prejudice to

the crossings, roads, and servitudes.' The grant was under a law of August 18, 1824, by the fifth[255 U.S. 472, 486] section of which--

'If, for the defence or security of the nation, the Federal Government should find itexpedient to make use of any portion of these lands for the purpose of constructingwarehouses, arsenals, or other public edifices, it may do so, with the approbation of theGeneral Congress, or during its recess with that of the Government Council.' Hall, Lawsof Mexico, 148, 492.


23/41

The United States interprets this as a reservation of power against all persons, as one of theservitudes to which the Carillo grant was subject, and as a sovereign right to which it succeededwhen the land became territory of the United States. We cannot accept so broad an interpretation.We need not repeat the discussion in Arguello v. United States, 18 How. 539, wherein it was laiddown that the first eight sections apply wholly to colonists and foreigners. The decision

immediately concerned the fourth section of the law, but the ground for the construction given toit was that the others obviously were limited as stated and that there was no reason for giving tothe fourth a greater scope. Moreover the second section states that--

'The objects of this law are those national lands which are neither private property nor belong to any corporation or pueblo and can therefore be colonized.' United States v.Yorba, 1 Wall. 412.

It is hardly credible that section five should have been intended to reserve the right to displace private owners, and wholly incredible that it reserves the right to do so without compensation,especially when it is noticed that by the law of April 6, 1830, the value of lands taken for

fortification, &c., is to be credited to the States. Camou v. United States, 171 U.S. 277, 284 , 285S., 18 Sup. Ct. 855; Hall, Laws of Mexico, 108, 291.

The more serious questions arise on the writ of error and concern primarily the extent of thegrant; the main dispute being whether the Company owns the tide lands in front of the upland of the island. Carillo's petition states as its ground that he is in want of proper land for the breedingof [255 U.S. 472, 487] cattle and horses and asks the grant for a cattle farm of the island or

peninsula in question, bounded substantially as in the subsequent grant, viz.: on the north by theEstero of San Diego towards the town, east by the end of the rancho of Don Augustin Meliso,south by the sea, and west by the bay or anchorage for ships, as explained by the map which goeswith the espediente. On April 20, 1852, Billings and others then holding the title petitioned the

Commissioners to settle Private Land Claims, appointed under the Act of March 3, 1851, c. 41; 9Stat. 631, to confirm to them this tract of land. The petition was rejected by the Board but onappeal the title was declared good and confirmed by the District Court of the United States. Thedecree stated the boundaries on the north, east and south as in the original grant, and 'west by theanchorage for ships according to the documents of title and map to which reference is had.' Thisdecree was filed on January 12, 1857; on May 7, 1867, after an appeal to this Court had beendismissed, there was a substitution of Peachy and Aspenwall as parties, and on June 11, 1869, a

patent was issued reciting the decree, a return with a plat of a survey approved under section 13of the Act of 1851, and giving and granting to them the land described in the survey. TheMexican map is not in the record and is not material since the plat accompanying the patent of the United States shows the line marking the 'Anchorage for Ships,' which includes the tide landsin dispute.

The jurisdiction of the decree and the validity of the patent so far as they cover the tide lands isdenied by the United States, a special reason being found in the fact that California became aState in 1850 and thereby acquired a title to the submerged lands before the date of the decree.But the title of the State was subject to prior Mexican grants. The question whether there wassuch a prior grant and what were its boundaries were questions that had to be decided in the

proceedings for confirmation and there was [255 U.S. 472, 488] jurisdiction to decide them as well


24/41

if the decision was wrong as if it was right. The title of California was in abeyance until thoseissues were determined, as the decree related back to the date of the original grant. The petitioner asked a confirmation of the tract conveyed to Carillo. The grant to Carillo was bounded 'west bythe anchorage for ships' and although it well may be that in view of the purpose set out in his

petition and the circumstances the grant could have been construed more narrowly, that was a

matter to be passed upon and when the decree and the patent went in favor of the grantee it is toolate to argue that they are not conclusive against the United States. It is said that the field notes,not put in evidence at the trial, show that the deep water line was not surveyed, but was takenfrom the Coast Survey maps. But however arrived at it was adopted by the United States for itsgrant and it cannot now be collaterally impeached. Knight v. United Land Association, 142 U.S.161 , 12 Sup. Ct. 258; San Francisco v. Le Roy, 138 U.S. 656 , 11 Sup. Ct. 364; Beard v. Federy,3 Wall. 478. It was suggested that the bill might be regarded as a direct attack upon the patent;

but this probably was an afterthought and in any event the attack would be too late. Act of March3, 1891, c. 561, 8; 26 Stat. 1099 ( Comp. St. 5114); United States v. Chandler-Dunbar Water Power Co., 209 U.S. 447, 450 , 28 S. Sup. Ct. 579.

A subordinate objection is urged to the admission of maps or drawings showing the adaptabilityof the island to a great system of improvements possible if the Coronado Beach Company ownedthe submerged land. It is urged that such improvements were speculative, remote, and not shownto be commercially practicable. But the drawings were admitted only to illustrate the opinion of the witness as to value and were explained as meaning no more. If the reasons for his opinionwere inadequate they detracted from the weight of his testimony but were not inadmissible onthat account. [255 U.S. 472, 489] Finally it is contended that the Government took only the upland.But the Act of 1917 provides for the taking of 'the whole of North Island' and for 'thedetermination and appraisement of any rights private parties may have in said island,' and the billfollows the act and prays that if the defendant company has any right to the tract or any partthereof the right 'and the whole thereof' may be 'appraised and condemned.' We discover no error in the proceedings below.

Decree and judgment affirmed

Mr. Justice CLARKE took no part in the decision of this case.

New

U.S. Supreme Court

UNITED STATES v. JIM, 409 U.S. 80 (1972)

409 U.S. 80


25/41

UNITED STATES v. JIM ET AL.APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF

UTAH

No. 71-1509.

Decided November 20, 1972 *

[ Footnote * ] Together with No. 71-1612, Utah et al. v. Jim et al., on appeal from the samecourt.

A statute enlarged the class of beneficiaries of certain royalties from oil and gas leases in theAneth Extension of the Navajo Indian Reservation in Utah by providing that the funds be used to

benefit all Navajo Indians residing in San Juan County rather than only those residing in theAneth Extension, as provided in an earlier statute. Held: As the earlier statute did not createconstitutionally protected property rights in the residents of the Aneth Extension, the statutory

change did not constitute a taking of property without just compensation.Reversed.

PER CURIAM.

The motion of the Navajo Tribe of Indians for leave to file a brief as amicus curiae in No. 71-1509, is granted.

These cases are here on appeal from a judgment of the District Court for the District of Utah thatdeclared an Act of Congress to be unconstitutional. Jurisdiction in this Court is conferred by 28

U.S.C. 1252 and 2101 (a).In 1933, the Congress withdrew certain lands in Utah, known as the "Aneth Extension," from the

public domain and added them to the Navajo Reservation. Though no oil or gas was believed to be located on these lands, it was provided that should such mineral resources be produced incommercial quantities, "37 1/2 per centum of the net royalties accruing therefrom derived fromtribal leases shall be paid to the State of Utah: Provided, That said 37 1/2 per centum of saidroyalties shall be expended by the State of Utah in the tuition of Indian children [409 U.S. 80, 81]in white schools and/or in the building or maintenance of roads across the lands described insection 1 hereof, or for the benefit of the Indians residing therein." 47 Stat. 1418. The remaining62 1/2% of the royalties generated by any such tribal mineral leases were, by implication, to goto the Navajo tribe.

After the passage of the Act, oil and gas were discovered on the Aneth Extension, and royaltieswere divided pursuant to the statute. The State of Utah created an Indian Affairs Commission tomanage and expend the funds received by the State under the Act. As time went on, the languageof the 1933 Act came to create administrative problems regarding the expenditure of the fundschanneled through the State. A report of the Senate Committee on Interior and Insular Affairsnoted in 1967 that the word "tuition" in the 1933 Act had created uncertainty as to the breadth of


26/41

the educational program the State was authorized to finance from the royalty funds. The reportalso noted a difficulty in discerning precisely who was properly a beneficiary of the funds, since"many Navajo families do not live permanently within the lands set aside in 1933, but move back and forth between this area and other locations." S. Rep. No. 710, 90th Cong., 1st Sess., 2(1967).

To make the administration of these funds more flexible and to spread the benefits of theroyalties more broadly among the Navajo community, the Congress enacted a statute in 1968that directed the State to expend the 37 1/2% of royalties "for the health, education, and generalwelfare of the Navajo Indians residing in San Juan County." 82 Stat. 121. This statutory changeexpanded the pool of beneficiaries substantially, and a class action was brought on behalf of theresidents of the Aneth Extension, seeking inter alia a declaration that the statute was anunconstitutional taking of property without just compensation. The District Court concluded thatthe [409 U.S. 80, 82] 1933 Act vested certain property rights in the plaintiffs, and held the 1968Act, with its changed pool of beneficiaries, to be unconstitutional. 1

The judgment of the District Court is in error. Congress in 1933 did not create constitutionally protected property rights in the appellees. The Aneth Extension was added to a tribal reservation,and the leases which give rise to mineral royalties are tribal leases. It is settled that "[w]hatever title the Indians have is in the tribe, and not in the individuals, although held by the tribe for thecommon use and equal benefit of all the members." Cherokee Nation v. Hitchcock, 187 U.S.294, 307 ; Delaware Indians v. Cherokee Nation, 193 U.S. 127, 136 . To be sure, the 1933 Actestablished a pattern of distribution which benefited the appellees more than other Indians on the

Navajo Reservation. 2 But it was well within the power of Congress to alter that distributionals

Case Law Land

Documents

Transcript of Case Law Land