Corvallis Sand & Gravel Co. v. State Land BoardCorvallis Sand & Gravel Co. v. State Land Board
Lead Opinion
This is a suit in equity brought by Corvallis Sand & Gravel Co., a corporation, to enjoin the State of Oregon, acting by and through the State Land Board, from prosecuting an action of ejectment commenced by the state against the corporation. The state demurred to the complaint on the ground that its allegations “do not constitute an equitable defense to the allegations of the ejectment action brought by the State of Oregon”; the trial court overruled the demurrer and, the state refusing to plead further, a decree was entered in favor of the plaintiff. The state appeals.
The complaint in the ejectment action alleges that the state, by virtue of its sovereignty, is now, and at all times since the state’s admission into the Union, has been the owner of the bed of the Willamette Eiver lying within Benton and Linn Countiеs in a location particularly described; that the defendant Corvallis Sand & Gravel Co. now wrongfully withholds, and for six years immediately prior to the filing of the complaint, has wrongfully and continuously withheld, possession of such real property from the state and that the reasonable value of the annual use of said real property was $50,000. Judgment was asked for the immediate possession of such property and damages in the sum of $300,000.
The plaintiff, (hereinafter referred to as the corporation) in the suit before us, instead of filing a pleading in the ejectment action, filed a complaint in equity, the allegations of which may be summarized as follows: The corporation denies that the state owns the real property in question or has been damaged as alleged in the ejectment aсtion; it alleges that as a result of an avulsive change in the channel of the Willamette Eiver, in November of 1909, a new channel was formed, which flowed over land held in private ownership and said avulsive channel underwent further changes as the result of extensive excavations made therein from 1913 to 1918; that about 1920 the predecessor of the corporation commenced operation of a sand and gravel business on the avulsive channel and the corporation claims ownership “of the present bed of the Willamette River below high water marks” in the location in controversy; that such sand and gravel business has been conducted by the corporation and its predecessors continuously, openly and notoriously since the year 1920; such business at the present time grosses $1,000,000 per year, has a capital value in excess of $500,000, employs as many as 100 persons, has an annual payroll in excess of $400,000, and supplies 50 per cent of the sand and gravel used in construction in the vicinity of Corvallis and obtains most of its materials from said channel. There follow allegations intended to show laches on the part of the state in bringing the ejectment action, to wit: The state has been aware of the operation of the corporation and its predecessor since prior to 1933 and of the corporation’s claim of private ownership of such channel; prior to filing the ejectment action the state, through the State Land Board, filed two suits to establish its claim of ownership to the channel, the first, in 1958, resulting in an involuntary nonsuit “because the plaintiff hаd failed to prove its case,” and the second, in 1960, resulting in voluntary dismissal by the state. Furthermore facts are alleged to show prejudice to the corporation resulting from the long delay of the state in asserting its rights — the expense of litigation, the payment of taxes by the corporation on the real property in dispute, and the difficulty of establishing, so long after the event, the facts surrounding the formation of the avulsive channel. The prayer is for a decree perpetually enjoining the state from prosecuting the ejectment action or prosecuting any legal action in the premises or maiding any claim whatsoever to the portion of the bed of the Willamette River in question.
A procedural question will be decided before going to 'the merits. Since the amendment
The question was passed upon in Hopka v. Forbes,
“The filing of a cross-bill by a defendant in a law action, interposing an equitable defense to the action, is no longer permissible under our code. By chapter 95, Laws of 1917, cross-bills were especially abolished and the procedure existing prior thereto was very much simplified by the amended statute.”
See, also, Hughes v. Flier et ux.,
A ruling to the contrary in Churchill v. Meade,
Treating the complaint, however, as though the affirmative defense of laches was set forth in an equitable answer filed pursuant to the statute, we are of the opinion that such defense is not аvailable to the corporation. Ejectment is an action at law and laches is available only against a party seeking the aid of equity. It is an application of the doctrine that equity aids only the vigilant or, as stated by Pomeroy, “in some of its applications it may properly be regarded as a special form of the yet more general principle, He who seeks equity must do equity.” 2 Pomeroy’s Equity Jurisprudence (5th ed) 169-170, §418. “Laches is a doctrine peculiarly applicable to suits in equity”: Idem, 172, §419, Note 7, citing numerous cases. This court has never applied the doctrine of laches as a defense to an action at law. The case of State ex rel. Security Savings & Trust Co. v. School District No. 9,
“* * * Issuing from a court of chancery and commanding a return of a nature foreign to the ' writs of the courts of law, it follows that by the common law quo warranto was an authorized process for the assertion of a remedy in its nature equitable, namely, the disclosure by defendant of the claim under which he exercises the franchise in ' question.
“The statute of Oregon gives a remedy in lieu of the common law writ of quo warranto and calls that remedy an action at law. It is in truth merely a statutory proceeding for the exercise of the equitable right to compel disclosure as above mentioned, as well as to determine whether the franchise in question is being legally exercised.”148 Or at 285-286 .
By this decision the
In a few states where law and equity are merged the doctrine under consideration does not apply. But, as we held in Gellert v. Bank of California Nat. Assn.,
But even on'the assumption that the plea of laches would be otherwise available to the corporation the negligence of public' officers in bringing the ejectment action cannot, for the reasons now to he stated, preclude the state from obtaining the relief to which it claims to be entitled in a case of this character.
We will now review our decisions touching this question. In two suits brought by the state to cancel deeds to swampland issued by it, the defense of laches was sustained: State v. Warner Valley Stock Co.,
“Although it may be conceded that lapse of time will not bar the state through its attorney-general from successfully prosecuting a quo warranto proceeding where the rights of the state are involved, this doctrine has no application where the writ is sued out by a private relator. In such a case, unreasonable delay on the part of the relator may properly preclude him from maintaining the proceeding.”
Similarly in State ex rel. Hallgarth v. School District No. 23 we said that State ex rel. Teegarden v. Union High School and State ex rel. Weatherford v. Hayworth “are two recent instances in which this court held that laches bars the state, when it is acting upon the relation of a private party, from challenging the validity of a school district.” (Italics added.)
Further, this court held in City of Pendleton v. Holman,
On the other hand, we have held that laches was not a bar to a suit by the state to escheat property of a deceased person: State v. Vincent,
“As stated, appealing defendants interpose the objection that plaintiff has been guilty of laches. By the weight of authority, the defense of laches is not available against the government, state or national, in a suit by it to enforce a public right or to protect a public interest: 21 C. J., Subject: Equity, page 217, section 216, and authorities cited in note 94. It cannot be gainsaid that by this suit the state seeks to enforce a public right and protect a public interest.”152 Or at 214 .
The same doctrine was enunciated in In re Estate of Moore,
We have alsо held that laches may not be employed as a defense in a disbarment proceeding brought by the Oregon State Bar, which is “an instrumentality of the Judicial Department of the government of the State of Oregon”: ORS 9.010; In re J. Kelly Farris,
Laches is akin to estoppel. In Rohde v. State Industrial Acc. Com.,
“Public policy, to prevent loss to the state through the negligence of public officers, forbids the application of the doctrine of estoppel to the state, growing out of the conduct and representations of its officers. On the same ground that the government is excused from the consequence of laches, it should not be affected by the negligence or even willfulness of any one of its officers. (Citations omitted.)”108 Or at 438-439 .
In Johnson v. Tax Commission,
Counsel for the corporation rely on the Warner Valley ease, but we think their reliance is misplaced. The deeds there sought to be cancelled were given, the first in 1883, the last in 1899. The suit was commenced in 1907. Until 1903 the statutes of limitation were expressly made applicable to the state, Deady’s Code § 13. In that year the statute was amended by providing that limitations should not apply to the state or other public corporations, Oregon Laws 1903, page 18. Such has been the law ever since. OIíS 12.250. The only cause of suit in the Warner Valley case held to be barred by laches involved the deed issued in 1883. Statutes of limitation, of course, do not govern in suits in equity, but may be applied by analogy, and that is what the court did. The case was before the court on demurrer to the complaint and the court held: “More than the statutory period of limitation had elapsеd since its [the 1883 deed’s] execution when this suit was commenced, and thus it appears prima facie that plaintiff is guilty of laches, such as will bar the suit, unless excuse for the delay is shown.”
When, therefore, the court in 1918, 15 years after the statutes of limitation ceased to be applicable to the state, cited the Warner Valley case in State of Oregon v. Hyde, supra, to the following statement: “We are committed to the principle that the doctrine of laches is applicable to the state”:
Nor is there anything in Warner Valley to justify the conclusion that it stands for the proposition that the State of Oregon in holding and administering its public lands acts in a purely nongovernmental capacity. The basis of the decision has been stated and there is no suggestion in the briefs of counsel or the opinion of the court that this question was even considered. There
By the great iveight of authority in this country the defense of laches is nоt available against the government, state or national, in a suit by it to enforce a public right or protect a public interest, State v. Vincent, supra; 30A CJS 34, Equity § 114. Such a suit, it is held by the Supreme Court of the United States, is one to establish the government’s title to, or right in, public lands. United States v. California,
“* * * And even assuming that Government agencies have been negligent in failing to recognize or assert the claims of the Government at an earlier date, the great interests of the Government in this ocean area are not to be forfeited as a result. The Government, which holds its interests here as elsewhere in trust for all the people, is not to be deprived of those interests by the ordinary court rules designed particularly for private disputes over individually owned pieces of property; and officers who have no authority at all to dispose of Government property cannot by their conduct cause the Government to lose its valuable rights by their acquiescence, laches, or failure to act.”332 US at 39-40 .
The principle that lands of the United States are held in public trust and that the government is therefore not estopped by the negligence of its officers to assert its title to such lands has been stated in numerous other eases by thе Supreme Court of the United States: United States v. San Francisco,
We are brought thus to the determination of the question whether the State of Oregon, in holding and dealing with the lands underlying the navigable waters within its boundaries, does so in its governmental or in a merely proprietary capacity. These lands were never granted away by the United States during the period of territorial government, but were “held as a whole for the purpose of being ultimately administered and dealt with for the public benefit by the State” after it should “have become a completely organized community.” Shively v. Bowlby,
Accordingly, we said in Winston Bros. Co. v. State Tax Com.,
“* * * although the title passed to the state by virtue of its sovereignty, its rights were merely . those of a trustee for the public. In its ownership thereof, the state represents the people, and the ownership is that of the people in their united sovereignty, while the waters themselves remain public so that all persons may use the same for navigation and-fishing. These lands are held in trust for the public uses of navigation and fishery, * * *. Being subject to this trust, they are publici ju,ris; in other words, they are held for the use of the people at large. * * *”156 Or at 511 .
It was thereforе concluded that the state can make no sale or disposal of the soil underlying its navigable waters so as to prevent the use by the public of such waters for the purposes of navigation and fishing. See, also, Cook v. Dabney,
The concept of a twofold interest of the state — jus publicum and jus privatum — in the tidelands and the lands underlying the navigable waters derives from the ancient prerogative of the Crown, Gould on Waters (3d edj § 17. So far as it relates to the submerged lands the doctrine seems to have been abandoned by what was said in the Winston Bros, case, above quoted. “In its ownership thereof” we said “the state represents thе people, and the ownership is that of the people in their united sovereignty, while the waters themselves remain public so that all persons may use the same for navigation and fishing.”
“Upon the admission of this state into the Union, the state of Oregon acquired title to all of the lands lying between the ordinary high water mark and the low water mark of all navigable streams affected by the ebb and flow of the tide which are located within its borders. It acquired these lands in its proprietary capacity and became the absolute owner of them and entitled to sell and disposе of them as it saw fit and, as we have seen, the lands bordering upon the Willametteriver below high water mark and above low water mark were granted to the owners of the adjacent land. At the same time, that this state was admitted into the Union it acquired title, not in a proprietary capacity but . in its sovereign capacity, that is to say as trustee for the public, to all of the bed of navigable streams Within its borders. These it could not sell or dispose of or grant the right to make any use of them which would impair or impede navigation. It could and did grant the right to the owners of the land lying above the low water mark to extend wharves between the low water mark and the navigable parts . of the river, but this was wholly in aid of commerce and to afford access for the loading and unloading of cargoes, аnd the transportation of passengers, and other articles of commerce.
“Now, it must be obvious to every one that no person could acquire title by adverse possession to ' any submerged land lying between the low water mark of a navigable river and the navigable waters, for to do so would be to acquire title by adverse possession against the state. Hence, plaintiff’s claim that he has acquired title by adverse possession to a part of the bed of the Willamette river lying below the low water mark and fronting on the property of the Security Savings and Trust company is untenable. The right to navigate these waters is the privilege of every one and the right is common in all and exclusive in no one.
* # * *. *
“* * * The title to the soil underlying the water, that is to the bed of the river itself, is vested in the state аnd is held by the state in its sovereign capacity as trustee for the public and the adverse possession of no person however long continued can divest it of its title.”131 Or at 560-561, 562 .
The reasons adduced for this holding apply equally to the claim that laches may be employed as a clefense against the state’s action of ejectment. ment .of the beds of navigable rivers. Except for. statutes: enacted in 1874 and 1876,
This conclusion accords with the legislative treat-
In 1920 the Legislature authorized the State -Land Board, to lease the beds of navigable rivers for the purpose of removing-gravel, rock and sand therefrom, the net-proceeds of such leases -to be paid over to the irreducible .school fund: Oregоn-Laws 1920, ch 32. This statute, with amendments not-now material, is. still in effect: ORS 274.530. It was enacted, as we-said in Salem Sand & Gravel Co. v. Olcott,
As stated, provision was made in 1963 for the sale of the beds of navigable rivers, both tidal and non-tidal: ORS 274.005 ( 5); 274.915. We express no. opinion as to the validity of this statute. According to the allegations of the complaint -the corporation and its predecessors in interest have been taking gravel from the disputed channel since 1920,’ that is, for 45 years prior to the filing of the ejectment action. During 43 of those years no private person could have acquired title to any portion of the bed of the Willamette River by conveyance from the state. It ought not to be held that
In State Land Board v. Lee,
We are of the opinion that the court erred in overruling the demurrer to the complaint.
One other thing remains to be said. It is argued that in any event the demurrer was properly sustained because it admits allegations of the complaint to the effect that the channel of the river flows over private property as the result of an avulsive change in 1909. We have elected to treat the complaint as though it were an equitable answer under the statute. The allegations referred to would have no place in such an answer, but in conformity with the statutory procedure should be separately pleaded, just as the issues made by them would be separately tried out when the equitable defense failed. We have, therefore, considered it prоper to ignore purely legal defensive matter in the complaint and to determine only the validity of the equitable defense of laches. .
The decree is reversed and the suit dismissed without prejudice to the corporation’s right to enter a plea to the state’s complaint in ejectment and to further proceedings in that action conformable to this opinion.
Notes
Blue v. City of Union,
“* * * Now, no matter how great nor how numerous may be the difficulties in distinguishing between these capacities, it is established law that when a corporation exercises a purely corporate and proprietary or private function, such for example, as the maintenance and operation of a municipal wharf or airport or public utility, or water system, from which it derives a revenue, it is subject to suit without statutory authority, the same as any individual similarly engaged * *159 Or at 11-12 .
It was not the mere fact that the municipality derived a revenue from the activity, but the particular type of activity which was determinative of the question whether a municipality was engaged in a governmental or proprietary undertaking.
These statutes were given effect in Pacific Elevator Co. v. Portland,
“The restrictions upon the state conveying land subjacent to the waters of navigable rivers should, we think, generally speaking, apply to lands under navigable waters, or below ordinary low-water mark, or the bed proper of a river as distinguished from its bank or shore as in thе Chicago Waterfront case.”65 Or at 402 .
Dissenting Opinion
dissenting.
Plaintiff’s suit to enjoin the state’s action of ejectment is, in substance, a defensive maneuver resting upon the theory that the state’s delay in bringing its action constitutes laches. The principal question is, then, whether the defense of laches can be asserted against the state. There is ample authority in Oregon as well as elsewhere for the general proposition that the defense of laches is available against the state under proper circumstances.
The battle line having been so drawn, the parties then narrow their argument'to the issue of whether the state’s assertion of its interest in the bed of a navigable stream is the assertion of a public or of a proprietary right. The issue is even more narrowly drawn because plaintiff concedes that rights such as the right of navigation, of fishing, of recreational use of various kinds are public rights, but contends that the right of the state to dispose of the bed of a navigable stream or the gravel therefrom is a proprietary right.
It is now well established that “no satisfactory test has been devised for distinguishing governmental from proprietary functions.” 2 Harper & James, Torts § 29.6, pp. 1621-22 (1956). As the authors observe, all of the functions of government “are — or should be— for the public benefit.” The immunity of government from suit should not be determined then by attempting to fit the case into one of two categories, whether governmental-proprietary, public-private, or jus publicum-jus privatum. Rather, it is necessary to ascertain in each case the interest of the public on one hand and the interest of the person asserting a claim against it on the other, and after weighing these interests decide which of them should, under the circumstances, be given preference. Sometimes the choice is not difficult to make.
«* * * [0]ne cannot readily see why the government in its business and property dealings should not be subject to the same rules of fairness that the courts apply to others engaging in such dealings. The problem that invites inquiry is: To the extent that the government engages in activities which have a private counterpart, why should the government be immune from a principle of fairness that has been developed to guide the determination of issues between private parties'?”
In the present case the real controversy is over the right to the gravel in the channel in question, a type of property which is dealt with by the state in the same manner as such property is dealt with by private persons. Therefore the state .should not be given preferential treatment, and the disposition of this case should be controlled by the same “principle of fairness” that would be applicable in litigation between private
I believe that there are such circumstances in the present case. Since the state demurred to plaintiff’s complaint, the facts relevant to the defense of laches must be garnered from the complaint. The recitation of the facts in plaintiff’s complaint can be read to mean that plaintiff had a basis for asserting a claim to the channel in question on the ground that an avulsive movement of the river had occurred; that the state as early as 1933 knew that plaintiff and its predecessor were claiming private ownership in the channel; that the plaintiff has expended a large sum of money in the construction of its plant; and that due to the state’s delay in bringing suit the evidence establishing plaintiff’s claim is no longer available. These facts are sufficient to establish the defense of laches.
A subsidiary problem remáins to be disposed of. It is argued plaintiff must lose because the state cannot be sued without its consent. Plaintiff’s suit, viewed apart from the state’s action of ejectment, would be barred by that proscription. But plaintiff’s suit is not to be so considered; it is a defensive maneuver made neсessary by the state’s ejectment action. Plaintiff and defendant are essentially in the same posture here as the parties were in State v. Shinkle,
Apparently the majority would deny relief to plaintiff even though laches could be asserted against the state; this on the ground “that laches may not be used as a defense against a claim purely legal.” If a defendant has an equitable basis for barring recovery by the plаintiff, it is difficult to understand why it should make any difference whether the proceeding he seeks to bar was brought in a court of equity or in a court of law. Although we have retained the distinction between equity and law jurisdiction, it is not necessary to extend the distinction unreasonably.
• The majority opinion also holds that even if Corvallis Sand & G-ravel Co. had an equitable defense'to the ejectment action, it could not be asserted in a separate suit but would have to be raised by answer. ORS 16.460 provides that
“(2) In an action at law where the defendant is entitled to relief, arising out of facts requiring the interposition of a court of equity, and material to his defense, he may set such matter up by answer, without the necessity of filing a complaint on the equity side of 'the court; and * * (Emphasis added.)
It seems clear from this language that the legislature did not intend to prohibit-the rаising of an equitable defense by cross bill, if a party chooses to do so.
“It will be noted that the language of the new enactment is permissive and not mandatory. It allows but does not compel the litigant to' interpose in the action at law equitable defenses. -This construction is apparent when we read that when the equitable matter is interposed the case shall proceed as a suit in equity until the equitable issues are determined. The effect of this statute is not to change the operation of the old rule giving a party an election to try out his defenses at law and, if unsuccessful, to urge his grounds for equitable relief by a proper suit. It may be said by a figure of speech that the statute opens a new door into chancery through the law- courts, whereas before, the entry must have been by a direct suit in that forum. As before, it is a matter of election with the litigant whether he . shall initiate his equitable defense in the law action or by an original suit.”'92 Or at 632-33 .
Later, in Hopka v. Forbes,
We should hold that the defense of laches in the present case was properly raised-by plaintiff’s suit to enjoin the state’s action of ejectment.
Thus in State of Oregon v. Hyde,
See also, Withers v. Reed,
See In re Estate of Moore,
® Plaintiff relies upon the distinction frequently made between the jus publicum and the jus privatum.
In those cases where the choice is not difficult the governmental-proprietary rubric may serve the intended policy function. It gives no guidance, however, in cases like the present one where the choice involves a more subtle balancing of public and private interests.
The power of the state to sell land is provided for, e.g., in ORS 273.420, ORS 274.040, and ORS 274.&15.
See Whitney v. Fox,
“* * * one of the grounds upon which courts of equity refuse relief where the plaintiff is guilty of laches is the injustice of imposing upon the defendant the necessity of making proof of transactions long past, in order to protect himself in the enjoyment of rights which, during a considerаble period, have passed unchallenged by his adversary, with full knowledge of all the circumstances.”
It has been said that the party raising the equitable defense in. a separate suit must also be seeking affirmative equitable relief in addition to the injunction restraining the action at law. See 4 Pomeroy, Equity Jurisprudence § 1369 at 990 (5th Ed 1941). I see no reason for this requirement and I do not adopt it. Pomeroy, supra, rejects the suggested distinction between a pure defense and one which also seeks affirmative relief. However, even if-the requirement were. adopted, the prayer in plaintiff’s complaint could be construed as a request that its title be quieted though plaintiff regarded its action as “wholly defensive.”
Concurrence Opinion
specially concurring.
I concur solely upon the ground that laches is only a defense against a party seeking equitable relief and is not available as a defense to a law action of ejectment.