[255 U.S. 489, 490] Messrs. John W. Lacey and D. A. Preston, both of Cheyenne, Wyo., for appellants.
Mr. Assistant Attorney General Nebeker, for the United States.
Mr. Justice VAN DEVANTER delivered the opinion of the Court.
This is a suit by the United States to establish title in it to 80 acres of land and to the proceeds of oil taken therefrom. The District Court rendered as decree dismissing the bill on the merits, which the Circuit Court of Appeals reversed (United States v. Ridgely, 262 Fed. 675), and the defendants bring the case here.
One of the defendants, the state of Wyoming,1 claims under a lieu selection, made in 1912, and the other defendants under a lease from the state, made in 1916. It is against the selection and the lease that the United States seeks to establish title.
By the Act of July 10, 1890, c. 664, 4, 26 Stat. 222, Congress granted to the state for the support of common schools certain lands in place (sections 16 and 36 in each township), with exceptions not material here; and by the Act of February 28, 1891, c. 384, 26 Stat. 796, amending 2275, 2276, Rev. Stat. (Comp. St. 4860, 4861), the state was invited and entitled, in the event any of the designated lands in [255 U.S. 489, 494] place after passing under the school grant should be included within a public reservation, to waive its right thereto and select in lieu thereof other lands of equal acreage from unappropriated nonmineral public lands outside the reservation and within the state. See California v. Deseret Water, etc., Co., 243 U.S. 415 , 37 Sup. Ct. 394; Payne v. New Mexico, 255 U.S. 367 , 41 Sup. Ct. 333, 65 L. Ed. --. Other laws of general application (sections 441, 453, 2478, Rev. Stat. [Comp. St. 681, 699, 5120]) required that the selections be made under the direction of the Secretary of the Interior.
In 1907 a tract in place which had passed to the state under the school grant was included within a public reservation, called the Big Horn National Forest. On April 4, 1912, the state-through its Governor, Joseph M. Carey, and its Land Commissioner, S. G. Hopkins-filed in the proper local land office a selection list waiving its right to that tract and selecting in lieu thereof other land of the same area from public lands within the state and outside the forest reserve. The land so selected included the 80 acres now in controversy. At that time the state had a perfect title to the tract in the reserve and the land selected in lieu thereof was vacant, unappropriated, and neither known nor believed to be mineral. The list fully conformed to the directions on the subject issued by the Secretary of the Interior and was accompanied by the requisite proofs and the proper fees. Notice of the selection was regularly posted and published, proof thereof was duly made and the state paid the publisher's charge. Thus, as the Circuit Court of Appeals said, 'the state did everything necessary to show a perfect title to the land relinquished and perfect relinquishment thereof to the government, and everything that was required either by statute or regulation of the Land Department' in selecting the lieu land instead of the relinquished tract.
No objection was called forth by the notice and in [255 U.S. 489, 495] regular course the local officers transmitted the list and other papers to the General Land Office with a certificate stating that no adverse filing, entry or claim to the selected land was shown by the records in their office and that the filing of the list was allowed and approved by them. The list remained in the General Land Office awaiting consideration by the Commissioner for up wards of three years. In the meantime, on May 6, 1914, two years after the selection, the selected land, with other lands aggregating more than 88,000 acres, was included in a temporary executive withdrawal as possible oil land under the Act of June 25, 1910, c. 421, 36 Stat. 847 (Comp. St. 4523-4525). On April 29, 1915, the Commissioner, coming to consider the selection, declined to approve it as made and called on the state either to accept a limited-surface right-certification of the selected land or to show that it still was not known or believed to be mineral. The state declined to accede to either alternative and insisted that its rights should be determined as of the time when the waiver and selection were made and that, applying that test, it became invested with the equitable title to the selected land two years prior to the temporary withdrawal and at a time when that land plainly was neither known nor believed to be mineral. The Commissioner thereupon ordered the selection canceled,-not because it was in any respect objectionable when made, but on the theory that he was justified in rejecting it by reason of the subsequent withdrawal and subsequent oil discoveries in that vicinity. The state appealed to the Secretary of the Interior, and, on October 25, 1916, he affirmed the Commissioner's action.
In the meantime, on May 24, 1916, the state had given to the defendant Ridgely a lease permitting him to drill the selected land for oil, and the lease had been assigned to the defendant oil company. There was no oil discovery, nor any drilling, on the selected land up [255 U.S. 489, 496] to the time the lease was given; but thereafter the oil company began drilling and at large cost carried the same to discovery and successful production. This was four years after the selection.
The question presented is whether, considering that the selection was lawfully made in lieu of the state-owned tract contemporaneously relinquished, and that nothing remained to be done by the state to perfect the selection, it was admissible for the Commissioner and the Secretary to disapprove and reject it on the ground that the selected land was withdrawn two years later under the Act of June 25, 1910, and still later was discovered to be mineral land; that is, to be valuable for oil. Or, putting it in another way, the question is whether it was admissible for those officers to test the validity of the selection by the changed conditions when they came to examine it, instead of by the conditions existing when the state relinquished the tract in the forest reserve and selected the other in its stead.
In principle it is plain that the validity of the selection should be determined as of the time when it was made, that is, according to the conditions then existing. The proposal for the exchange of land without for land within the reserve came from Congress. Acceptance rested with the state and of course would be influenced and controlled by the conditions existing at the time. It is not as if the selection was merely a proposal by the state which the land officers could accept or reject. They had no such option to exercise, but were charged with the duty of ascertaining whether the state's waiver and selection met the requirements of the congressional proposal and of giving or withholding their approval accordingly. The power confided to them was not that of granting or denying a privilege to the state, but of determining whether an existing privilege conferred by Congress had been lawfully exercised; in other words, [255 U.S. 489, 497] their action was to be judicial in its nature and directed to an ascertainment and declaration of the effect of the waiver and selection by the state in 1912. If these were valid then-if they met all the requirements of the congressional proposal, including the directions given by the Secretary-they remained valid notwithstanding the subsequent change in conditions. Acceptance of such a proposal and full compliance therewith confer vested rights which all must respect. Equity then regards the state as the owner of the selected tract and the United States as owning the other; and this equitable ownership carries with it whatever of advantage or disadvantage may arise from a subsequent change in conditions whether one tract or the other be affected. Of course the state's right under the selection was precisely the same as if in 1912 it had made a cash entry of the selected land under an applicable statute, for the waiver of its right to the tract in the forest reserve was the equivalent of a cash consideration. And yet it hardly would be suggested that the Commissioner or the Secretary on coming to consider the cash entry could do otherwise than approve it, if at the time it was made the land was open to such an entry and the amount paid was the lawful price.
The conclusion which we deem plain in principle is fully sustained by prior adjudications. In Benson Mining Co. v. Alta Mining Co., 145 U.S. 428, 431 , 12 S. Sup. Ct. 877, 878 (36 L. Ed. 762), which presented the question of when under the public land laws a right to the land becomes vested, it was said:
And again ( 145 U.S. 432 , 12 Sup. Ct. 879. 36 L. Ed. 762):
In Colorado Coal & Iron Co. v. United States, 123 U.S. 307, 328 , 8 S. Sup. Ct. 131, 141 (31 L. Ed. 182), a title obtained through preemption cash entries was assailed on the ground that the land was shown by subsequent discoveries to be mineral; but the attack failed; the court saying:
In United States v. Iron Silver Mining Co., 128 U.S. 673, 683 , 9 S. Sup. Ct. 195, 199 (32 L. Ed. 571), a title acquired through an application for a placer patent was sought to be annulled on the ground that subsequent mining disclosed that the land was lode land; but the title was sustained, the court observing:
Particularly in point is Shaw v. Kellogg, 170 U.S. 312 , 18 Sup. Ct. 632, which related to what is called Baca tract No. 4. Congress had accorded to the heirs of Luis Maria Baca the right to relinquish their claim to a large body of land in New Mexico and to select [255 U.S. 489, 499] instead 'an equal quantity of vacant land, not mineral,' in not exceeding five tracts in that territory. As here, there was no provision for a patent. The original claim was relinquished and the lieu selection made conformably to directions given by the Land Department, the selected land being represented as vacant and not known to be mineral. Afterwards the selection of a part of tract No. 4 was called in question on the ground that it was shown by subsequent discoveries to be mineral. This court sustained the selection and said ( 170 U.S. 332 , 18 Sup. Ct. 641):
In Leonard v. Lennox, 181 Fed. 760, 104 C. C. A. 296, a contention that an application for a nonmineral final entry, even if regularly presented and based on full compliance with the law, should be disallowed and rejected where the land subsequently is discovered to be mineral (coal) was [255 U.S. 489, 500] overruled by the Circuit Court of Appeals of the Eighth Circuit, the court saying (181 Fed. 764, 104 C. C. A. 300):
The last expression on this subject in this court is found in Payne v. New Mexico, 255 U.S. 367 , 41 Sup. Ct. 333, 65 L. Ed. --, where it was held in respect of a state lieu selection like the one in question here that the Commissioner and the Secretary in acting thereon are required to give effect to the conditions existing when it was made, that if it was valid then they are not at liberty to disapprove or cancel it by reason of a subsequent change in conditions and that in this regard the statute under which the selection was made does not differ from other land laws offering a conveyance of the title to those who accept and fully comply with their terms.
The Land Department uniformly has ruled that the states acquire a vested right in all school sections in place which are not otherwise appropriated, and not known to be mineral, at the time they are identified by the survey-or at the date of the grant where the survey precedes it- regardless of when the matter becomes a subject of inquiry and decision, and that this right is not defeated or affected [255 U.S. 489, 501] by a subsequent mineral discovery. California v. Poley, 4 Copp's L. O. 18; Abraham L. Minor, 9 Land Dec. 408; Rice v. California, 24 Land Dec. 14; United States v. Morrison, 240 U.S. 192, 207 , 36 S. Sup. Ct. 326; United States v. Sweet, 245 U.S. 563, 572 , 38 S. Sup. Ct. 193. And as respects cash entries and entries under the pre-emption, homestead, desert land and kindred laws the Land Department always has ruled that if, when the claimant has done all that he is required to do to entitle him to receive the title, the land is not known to be mineral he acquires a vested right which no subsequent discovery of mineral will divest or disturb. Harnish v. Wallace, 13 Land Dec. 108; Rea v. Stephenson, 15 Land Dec. 37; Reid v. Lavallee, 26 Land Dec. 100, 102; Aspen Consolidated Mining Co. v. Williams, 27 Land Dec. 1, 17; Diamond Coal & Coke Co. v. United States, 233 U.S. 236, 240 , 34 S. Sup. Ct. 507. And this rule has been applied by that department, although not uniformly, to selections made in lieu of relinquished lands in public reservations. Thus in Kern Oil Co. v. Clarke, 30 Land Dec. 550, where a lieu selection under the Act of June 4, 1897, c. 2, 30 Stat. 36, was under consideration, the Secretary of the Interior said (page 556):
Again (page 560):
And again (page 564):
That view was repeated and applied in many other departmental decisions dealing with lieu selections. But afterwards the Secretary, conceiving that the decisions of this court in Wisconsin Central R. R. Co. v. Price County, 133 U.S. 496 , 10 Sup. Ct. 341, and Cosmos Exploration Co. v. Gray Eagle Oil Co., 190 U.S. 301 , 24 Sup. Ct. 860, justified him in so doing, ruled that [255 U.S. 489, 503] no right attached under such a selection unless and until it was approved by him and therefore that, even though the selection was lawfully made, he possessed a discretion to reject it and give effect to an intervening change in conditions, as where a new claimant settled upon the land or sought to make entry of it while the selection was pending.
Under this changed ruling the Secretary rejected several selections lawfully made by one Daniels and awarded and patented the land to others. Daniels then brought suits against the patentees charging that by the selections he acquired the equitable title, that his selections were rejected and the patents issued through a misapprehension of the law, and therefore that the patentees took the legal title in trust for him. Ultimately the suits came to this court, and after a full review the changed ruling of the Secretary was disapproved and Daniels' contention sustained. Daniels v. Wagner, 237 U.S. 547 , 35 Sup. Ct. 740, L. R. A. 1916A, 1116, Ann. Cas. 1917A, 40. The substance of the decision was that as the selections were lawful when made 'it was the plain duty' of the Secretary to approve them; that the contrary view found no justification in Cosmos Exploration Co. v. Gray Eagle Oil Co., supra; and that the real authority and duty of the Secretary in dealing with such selections were pointed out in Weyerhaeuser v. Hoyt, 219 U.S. 380, 387 , 388 S., 31 Sup. Ct. 300, 303 (55 L. Ed. 258) where it was said:
As the Circuit Court of Appeals in the present case, like the Secretary in the other, regarded the decisions in the Wisconsin Central Case and the Cosmos Case as showing that no right attaches under a lieu selection unless and until approved by the Secretary, it is well to point out just what was involved in those cases; for it then will be apparent that there was no purpose in either to go to the length suggested.
The Wisconsin Central Case was a suit to enjoin the collection of a tax levied on land which at the time was covered by a pending indemnity selection under a railroad land grant. The Commissioner of the General Land Office had reported that the company already had received indemnity lands largely in excess of the losses for which it was entitled to indemnity, and the company was disputing that report. Until that controversy was determined it could not be known whether the company was entitled to an approval of the selection. In that situation the United States had such an interest in the land as made it nontaxable. Whether the selection was valid or otherwise was primarily a question for the Secretary of the Interior to determine. Ultimately he held it valid, but not until after the tax was levied-indeed, after the suit was brought. The suit involved the validity of the tax, and nothing more. Its purpose was not to control the action of the Secretary by a writ of mandamus of injunction, nor to determine the title as between the United States and the company or between the company and a grantee of the United States. True, the court, after commenting on the difference between the granted lands in place and the indemnity lands as respects the mode of identification, very broadly stated that an indemnity selection to be effective required the approval of the Secretary; but it was not meant by this that the Secretary arbitrarily could [255 U.S. 489, 505] defeat the right of selection by withholding his approval, nor that if through a mistake of law he rejected a selection which was valid at the time it was made the company would be remediless. There was no occasion to consider those questions, nor could they properly be determined without the presence of parties not then before the court. And that the court did not intend its words to be taken so broadly is illustrated by the fact that it cited with approval the case of Saint Paul & Sioux City R. R. Co. v. Winona & Saint Peter R. R. Co., 112 U.S. 720, 733 , 5 S. Sup. Ct. 334, 341 ( 28 L. Ed. 872), wherein an indemnity selection lawfully made, but disapproved by the Secretary, was sustained against an adverse certification on the ground that 'this erroneous decision of his' did not deprive the selector 'of rights which became vested by its selection of those lands.'
The Cosmos Case was a suit by a lieu land selector to establish his title as against others who were claiming under placer mining locations. The selection was not accompanied by proof that the land was not then occupied adversely, although that was required. Within the time prescribed by the regulations the mining claimants filed in the Land Office verified protests assailing the regularity and validity of the selection, setting up locations of the selected land made under the placer mining law prior to the selection and alleging that the lands 'were not subject to selection' because 'the same was mineral land and was included within' the mining locations. The protests were entertained and, with the selection, were pending when the suit was begun, which was shortly after the protests were filed. The suit was brought on the theory that by the selection the selector acquired 'the full, complete and equitable title' to the selected land, notwithstanding he had not submitted any proof of nonoccupancy, and that the protests were not such as could be entertained or investigated by the Land Department. That case and another (Riverside Oil Co. v. Hitchcock, 190 U.S. 316 , 23 Sup. Ct. 698), [255 U.S. 489, 506] wherein a writ of mandamus was sought against the Secretary by another lieu land selector, were heard and disposed of as related cases, and the decision in one should be read in connection with that in the other. The full substance of the decision in the Cosmos Case is in the following excerpt from the opinion ( 190 U.S. 315 , 24 Sup. Ct. 860):
There are general expressions in the opinion, which separated from the rest, might be taken as declaring that no right vests under a lieu selection unless the Secretary approves it; but that such a ruling was intended is refuted by the opinion as a whole, and particularly by the statements therein that the power of the Secretary is not to be exercised arbitrarily and that his 'decision of any legal question would not, of course, be binding on the courts' should the question properly arise in future litigation. The general expressions were relied upon in Daniels v. Wagner as interpretative of the decision and this court answered:
Besides, it was adjudged in the Daniels Case that a lieu selection which is lawful at the time it is made does invest the selector with equitable rights which he may enforce in an appropriate way where the Secretary through an error of law rejects the selection. And that ruling was reaffirmed and applied in Payne v. Gentral Pacific Ry. Co., 255 U.S. 228 , 41 Sup. Ct. 314, 65 L. Ed. --, and Payne v. New Mexico, 255 U.S. 367 , 41 Sup. Ct. 333, 65 L. Ed.--.
The only exception to the general rule before stated respecting the time as of which the character of the land-whether mineral or nonmineral- is to be determined is one 45 L. Ed. --. railroad land grants. From the beginning the Land Department, by reason of the terms of those grants and the restrictive interpretation to which they are subjected, uniformly has construed and treated them as requiring that the character of the land be determined as of the time when the patent issues. In 1890 Secretary Noble, in declaining to disturb this construction and practice, pointed out the reasons which had led the Department to make a distinction in this regard between those grants and other land laws, and said:
In 1893 the matter came before this court and the construction and practice of the Land Department were sustained. Barden v. Northern Pacific R. R. Co., 154 U.S. 288 , 14 Sup. Ct. 1030. As the opinion in that case shows, the court recognized that the mineral land exception in other land laws simply operates to exclude from sale, etc., 'land known at the time to be mineral,' and was careful to explain that its decision related to 'grants in aid of [255 U.S. 489, 508] railroads' and to 'no other grants.' The grounds on which the decision was put were: (a) That the railroad land grants, besides being confined in the granting clause to lands 'not mineral,' contain provisos declaring in words or effect 'that all mineral lands be, and the same hereby are, excluded from the operation of this' grant; (b) that such grants, although expressly requiring that the question whether the lands are otherwise excepted be determined as of the time the map of definite location is filed, contain no such provision in respect of the exception of mineral land; (c) that it was well understood that many years would necessarily elapse between the filing of the map and the time when by construction of the road the grantee would be entitled to patents, and as the grants covered great areas, in one instance nearly equal to that of Ohio and New York, it hardly could have been intended to arrest mineral development in those areas in the meantime; (d) that such grants 'must be strictly construed,' and 'if they admit of different meanings, one of extension and one of limitation, they must be accepted in a sense favorable to the grantor'; and (e) that the long prevailing construction and practice of the Land Department ought not to be disturbed. Plainly the decision in that case is without bearing here, save as it recognizes that rights under other land laws are to be tested by a different rule. And this is emphasized by the fact that in Shaw v. Kellogg, supra, where the selection of Baca tract No. 4 was involved, the court distinguished the Barden Case, and applied the general rule before stated. And it is of further significance that this court has recognized that the legislation of Congress designed to aid the common schools of the states is to be construed liberally rather than restrictively. Beecher v. Wetherby, 95 U.S. 517 , 526; Johanson v. Washington, 190 U.S. 179, 183 , 23 S. Sup. Ct. 825
Of the executive withdrawal of the land two years after [255 U.S. 489, 509] the lieu selection was lawfully made, it suffices to say, following the recent decision in Payne v. Central Pacific Ry. Co., 255 U.S. 228 , 41 Sup. Ct. 314, 65 L. Ed. --, that the act of 1910, under which the withdrawal was made, is confined to 'public lands,' that by the selection this land had ceased to be public, and that the act could not be construed to embrace it without working an inadmissible interference with vested rights.
It results that the Secretary erred in matter of law in rejecting the selection and that the District Court rightly entered a decree for the defendants. See Cornelius v. Kessel, 128 U.S. 456, 461 , 9 S. Sup. Ct. 122; United States v. Detroit Timber Co., 200 U.S. 321, 338 , 26 S. Sup. Ct. 282. The decree of the Circuit Court of Appeals is accordingly
[ Footnote 1 ] The state was not made a party at first, but afterwards at its own request was admitted as a defendant to enable it to defend the lieu selection.