delivered the opinion of the Court,
The United States filed a complaint in this Court against the State of'Wyoming and The Ohio Oil Company to establish plaintiff’s title to certain Wyoming lands claimed by the State, and to recover for oil which the
By joint answer, the defendants claimed title in the State, and that both defendants have at all times in good faith believed title to be in the State.
The case was referred to a special master, who heard evidence and argument, and submitted to the Court a report, in which he recommended a decree quieting plaintiff’s title to the lands in question, but denying plaintiff any recovery for the oil heretofore taken. Both plaintiff and defendants have entered exceptions to the adverse parts of the report, and the case is now before us on such exceptions. 2
The lands in dispute are those lying within Section 36, Township 58, Park County, Wyoming. It is conceded that plaintiff originally had title to these lands as part of the public lands of the United States. The master held that the Enabling Act of July 10, 1890, 3 on which defendants rely as the source of their rights, properly construed, would operate to vest title in the State only as of the date that an official survey of the lines of the Section was approved by the Commissioner of the General Land Office, and then only if no inconsistent disposition of the lands had been previously made. The master found, however, that no such survey was made and approved until July 27, 1916. Several months earlier, on December 6, 1915, these lands had been placed in a petroleum reserve by Presidential order. 4
Cоnsistent with the policy first given expression in the Ordinance of 1785, the Federal Government has included grants of designated sections of the public lands for school purposes in the Enabling Act of each of the States admitted into the Union since 1802.
5
This Court has frequently been called upon to construe the provisions and limitations of such grants. It has consistently been held that under the terms of the grants hitherto considered by this Court, title to unsurveyed sections of the public lands which have been designated as school lands does not pass to the State upon its admission into the Union, but remains in the Federal Government until the land is surveyed. Prior to survey, those sections are a part of the public lands of the United States and may be disрosed of by the Government in any manner and for any purpose consistent with applicable federal statutes. If upon survey it is found that the Federal Government has made a previous disposition of the section, the State is then entitled to select lieu lands as indemnity in accordance with provisions incorporated into each of the school-land grants. The interest of the
Defendants contend, however, that regardless of the rule generally applicable in school-grant cases, the provisions оf the Wyoming Enabling Act are such that upon her admission into the Union in 1890, an indefeasible proprietary interest in Sections 16 and 36 in each township, whether surveyed or unsurveyed, vested immediately in the State, except as to such sections as had been disposed of previously by the Federal Government for other purposes. This interest, it is contended, is of such a nature, as to preclude any appropriation or reservation of un-surveyed Sections 16 and 36 by the Federal Government after the date of Wyoming’s admission into the Union. It is defendants’ position, therefore, that the order of the President of the United States issued December 6, 1915, which caused the lands here in issue to be included in Petroleum Reserve No. 41, was not sufficient to defeat the State’s interest, even if it be assumed that a survey of that section had not been completed at that time. We, accordingly, turn our attention to the provisions of the Wyoming Enabling Act which defendants rely upon to support their contentions.
Section 4 of the Enabling Act provides:
“That sections numbered sixteen and thirty-six in every township of said proposed State, and where such sections, or any parts thereof, have been sold or otherwise disposed of by or under the authority of any act of Congress, other lands equivalent thereto. . . are hereby granted to said State for the support of common schools, . . . Provided, That section six of the act of Congress of August ninth, eighteen hundred and eighty-eight, 7 . . . shall apply to the sсhool and university indemnity lands of the said State of Wyoming so far as applicable.”
Defendants first point to the fact that in the granting clause, Congress employed words of present grant. This is said to evince an intention to vest immediately in the State, not only legal title to sections 16 and 36 when surveyed and not otherwise disposed of, but also an indefeasible proprietary interest in the unsurveyed sections of the school lands. We believe that this contention is precluded by earlier decisions of this Court. In
Heydenjeldt
v.
Daney Gold & Silver Mining Co.,
It is significant, also, that three years before the passage of the Wyoming Act, the Secretary of the Interior, in construing the granting clause of the Colorado Enabling Act, which also contains language of present grant, took the position that title to unsurveyed school lands passes to the State only at the date of survey and then only where the Federal Government has made no other disposition of the land prior to that time. 10
Defendants urge, however, that the pertinent language of the Wyoming Enabling Act should be considered in connection with the legislative history оf the Organic Act of 1868,
11
under the authority of which Wyoming was organized into a territory. It is pointed out that § 14 of the Organic Act as originally introduced reserved sections 16 and
We find the argument unconvincing. During the course of the congressional debates which preceded the amending of § 14 of the Organic Act, concern was expressed by certain members of Congress that delaying the reservation for school purposes until the date of survey would leave open the possibility that the most сhoice school lands would be settled upon by squatters, preemp-tors, or homesteaders, prior to survey so as to defeat the reservation of those lands for school purposes. It was apparently to deal with that situation that the amendment was passed. We find nothing in the desire of Congress to preserve the reservation of the school lands against the claim of individual settlers, however, as evincing any intention to strip from the Federal Government the power to deal with those lands in the public interest as authorized by the applicable federal statutes. That Congress did not so intend is indicated by the fact that only four
Defendant’s principal contention, however, is that, regardless of the construction which might be required if the granting clause of the Enabling Act stood alone, that clause, read in connection with § 5 of the Act, gives clear support to their position. Section 5 provides as follows:
“That all lands herein granted for educational purposes shall be disposed of only at public sale, . . .; and such land shall not be subject to preemption, homestead entry, or any other entry under the land laws of the United States, whether surveyed or unsur-veyed, but shall bе reserved for school purposes only.”
Defendants vigorously assert that the phrase “but shall be reserved for school purposes only” completely and irrevocably divested the Federal Government of power
The phrase “but shall be reserved for school purposes only” should nоt be considered apart from the language which immediately precedes it. The clause beginning with the semicolon in the last sentence in the section clearly and explicitly treats the claims of individuals to school lands asserted under the federal land laws and provides that those claims should not prevail against the State. The phrase upon which Wyoming relies should be construed as an affirmation of the State’s interest as opposed to the claims of such individuals. The phrase, however, should not be construed as a limitation on the Federal Government’s powers to deal with such lands in a manner consistent with the applicable federal statutes. The powers of the Federal Government with respect to the public lands, as contrasted to the claims of individuals asserted under the land laws, are nowhere mentioned in the section. We think that in the absence of such language, the section should not be construed as a limitation on those powers. 15
Convincing support for this construction is found both in the legislative history of the language contained in § 5 of the Wyoming Act and in subsequent congressional enactments. Language identical to the last clause of § 5 first appeared as part of § 11 of the Act of February 22,
Additional support for the construction which we have indicated as proper may be found in subsequent congressional enactments. Thus in the Act of February 28, 1891, which became law only seven months after the passage of the Wyoming Enabling Act, Congress clearly revealed its understanding that the Federal Government had retained its powers to reserve and dispose of the un-surveyed school lands. That Act, the pеrtinent language of which is set out in the margin,
23
attempts, among other things, to establish a uniform policy with respect to the granting of lieu lands to the States where upon survey it is found that the designated sections are subject to homestead and pre-emption claims or where the Federal Government has included such sections within a reser
Defendants’ view that, by virtue of the language of the Enabling Act, Congress extinguished the powers of the Federal Government subsequently to dispose of the unsurveyed school sections in the exercise of its governmental functions, admittedly would place Wyoming in a favored position among the school-grant States. Such a result does not accord with the congressional expectation that the school grant should have "equal operation and equal benefit in all the public land States and Territories.” 28 Defendants suggest no special circumstances or peculiar considerations of policy which convincingly indicate a purpose on the part of Congress to place Wyoming on other than an equal footing with other States with respect to the powers of the Federal Government in the unsurveyed school sections.
Furthermore, one of the important recurring problems faced by Congress during the period in which the Wyoming Enabling Act was passed was the necessity of reserving tracts of the public lands to accomplish such important purposes as preserving the national forests and mineral resources, establishing public parks, and the like.
29
Vesting in the State an immediate and irrevocable interest in the school sections before such sections had been identified by survey would be to complicate the performance of the Government’s obligation with respect to the public
It is significant that for a period extending over half a century, the land decisions of the Department of the Interior have consistently taken the position that title to unsurveyed school sections passes to the State only upon completion of the survey, and prior to that time the Federal Government is not inhibited from making such reservations and dispositions of the lands as required by the public interest and as authorized by applicable statutes. Many of those decisions involved statutory language substantially identical to that in the Wyoming Enabling Act. 31 We should be slow at this late date to upset the rulings “. . . of the department of the Government to which is committed the administration of public lands.” 32
For the reasons stated above, we hold that at the date of her admission to the Union, Wyoming acquired no such
We also think that defendants’ reliance on the Coleman survey of 1892 as the basis of an indefeasible equitable right to Section 36 is misplaced, and may be answered briefly.
That survey was undertaken pursuant to a request from the State to the United States Surveyor General that Township 58 be surveyed and subdivided, in order to permit the State to make selections of school lands, and the contract and instructions for the survey so directed. The survey which was then made, however, actually fixed only the boundaries of Township 58, and marked one-mile intervals on those boundaries, but did not subdivide the township. Section 36 lies in the township’s southeast corner, and its southern and eastern boundaries are concurrent with part of the southern and eastern township boundaries, but the northern and western section boundaries remained undetermined. This was not a completed survey of Section 36. 33
Defendants no longer contend that it was. They argue only that it “identified” Section 36, or made it “susceptible of identification by protraction,” sufficiently that the State should in equity be held to have acquired vested rights in the Section as of the date this survey was approved. They claim support for this positiоn in several decisions recognizing that the title of certain western railroads granted lands by the United States vested when the line of route was selected and a plan thereof filed, whether or not the adjacent lands had then been surveyed. 34
For the foregoing reasons, defendants’ exceptions to the master’s findings and conclusiоns in respect to title are overruled.
Having decided that plaintiff has title to Section 36, we now turn to the question of its right to recover a money judgment because of the defendant Company’s oil operations thereon.
It was shown that in 1917, under a lease from the State, the Company entered Section 36 and drilled five wells, some of which are still in production. For the period from the Company’s entry on the land until December 31, 1944,
36
there was evidence of the amount and market value of oil produced and of the capital and operating expenses of this production, each by the month, and of the collateral “steam earnings,” the royalties and taxes paid to the State, and the оverhead expenses allocable to this production, each by the year.
37
For the purpose of proving the bad faith of the trespass, plaintiff offered
This last evidence the master refused to admit. He thought that, in order to recover for a "bad faith” trespass, plaintiff was required to put the question in issue by alleging “bad faith” in the complaint, which it had not done. He also thought that plaintiff’s allegation of defendants’ claim of right in Section 36 was, in effect, an admission of defendants’ good faith. Without having tried the bad faith issue, the master stated that both defendants sincerely believed in their asserted rights, and made a finding of the State’s good faith. From this he concluded that plaintiff’s recovery should be measured by the gross proceeds realized on the operation, less the proper expenses incurred.
From the other evidence heretofore mentioned, the master found that the total amount of the Company’s gross proceeds, including both the value of oil produced and steam earnings, was $168,317.53, and that its total expenses were $232,797.27, including royalties paid in the amount of $17,306.30. 38 He held that all proven elements of the Company’s expenses except royalties were properly deductible. As expenses so allowed had been about $47,000.00 grеater than gross proceeds, the master concluded that plaintiff should recover nothing.
Plaintiff excepts to these findings and conclusions in several respects. First, it maintains that the pleadings properly framed the issue of bad faith, and contends that the master therefore erred in excluding evidence relating to this issue, and in finding that either or both of the defendants had acted innocently.
Thus, in this case, plaintiff’s allegation that defendants claimed rights in Section 36, made as a basis for a prayer to have title quieted in plaintiff, cannot be deemed equivalent to an admission of defendants’ good faith. Plaintiff also alleged its own title, the lack of any right or title in dеfendants, that the Company was there engaged in the production of oil, and that the value of the oil theretofore extracted was in excess of $165,000. It then prayed for a recovery of “the full value of all gas, oil, and other
Second, plaintiff excepts to the master’s failure, even on the present record, to make findings of defendants’ bad faith and to recommend a decree awarding damages accordingly. 42 It urges, as one ground for this exception; that defendants, having the burden of proof on that issue, failed to introduce sufficient evidence to make a prima jade showing of good faith.
For reasons already suggested, we need not consider whether defendants carried that burden. The view that the good faith issue was foreclosed in defendants’ favor was expressed by the master before any evidеnce had been introduced, and consistently throughout the hearing. Even if defendants had doubted the correctness of this view, they were not bound to repudiate it and make an offer of proof of good faith in order to have a trial of the issue if the master should prove to be wrong.
As another ground, plaintiff urges that defendants have at all times since the beginning of this trespass had constructive knowledge of plaintiff’s title, and that either they have “intentionally or negligently failed to ascertain
It is clear, however, that constructive knowledge of the ownеr’s title does not demonstrate defendants’ bad faith as a matter of law. 43 As to whether an intentional or negligent failure to ascertain the true incidence of title alone constitutes bad faith, we need not now decide, as no such fact has been established.
Plaintiff’s alternative contention that we should now enter a finding of defendants’ bad faith for the post-1929 period at least, because as to it “there is positive proof that the Company knew . . . the United States, not Wyoming, owned the land,” may be answered in the same way. Plaintiff proffered evidence of such knowledge, but we cannot say that this evidence amounted to conclusive proof. We think the necessity of trying the issue of defendants’ goоd faith throughout the entire period in dispute, preliminary to determining the measure of plaintiff’s recovery, cannot be avoided.
Third, plaintiff urges and we agree that the master should make special findings — insofar as the parties request, and offer competent evidence to support them — as to the value of the oil produced and the amount and nature of any collateral proceeds from the operation, separately, and as to the amount of each item of income and expense by the month or year. Such action should enable the Court to dispose of the case on the next hearing, regardless of any revisions it might make in the master’s findings, conclusions, or recommended decree.
In its exceptions to the master’s report and its argument here, plaintiff has raised several other questions, the materiality of each of which depends on whether the trespass
The case is recommitted to the master for further proceedings in conformity with this opinion.
So ordered.
Notes
Jurisdiction of this Court is invoked under Article III, § 2, cl. 2, of the Constitution, and § 233 of the Judicial Code (28 U. S. C. § 341).
United States
v.
Texas,
The master’s report was filed October 14, 1946. Plaintiff’s exceptions thereto were filed on November 29 and defendants’ on December 2, 1946. Argument was heard by the Court on April 7, 1947.
26 Stat. 222.
This order was promulgated under authority of the Act of June 25, 1910, 36 Stat. 847.
The Land Ordinance of 1785 provided: “Thеre shall be reserved the lot No. 16, of every township, for the maintenance of public schools within the said township; . . . .” Between 1802 and 1846 the grants were of the 16th section in each township; thereafter, of sections 16 and 36. In some instances additional sections have been granted.
United States
v.
Morrison,
Wisconsin
v.
Lane,
Section 6 of the Act of August 9, 1888, 25 Stat. 393, provides: ' “That where lands in the sixteenth and thirty-sixth sections, in the Territory of Wyoming, are found upon survey to be in the occupancy, and covered by the improvements of an actual pre-emption or homestead settler, or where either of them are fractional in quantity, in whole or in part, or wanting because the townships are fractional or have been or shall hereafter be rеserved for public purposes, or found to be mineral in character, other lands may be selected by an agent appointed by the governor of the Territory in lieu thereof, from the surveyed public lands within the Territory not otherwise legally claimed or- appropriated at the time of selection, . . .
Section 7 of the Nevada Enabling Act, 13 Stat. 30, 32, provides: “That sections numbers sixteen and thirty-six in every township, and where such sections have been sold or otherwise disposed of by any act of congress, other lands equivalent thereto in legal subdivisions of not less than one quarter-section, and as contiguous as may be, shall be, and are hereby, granted to said state for the support of common schools.”
Defendants assert that the Heydenfeldt case cannot be regarded as authority here because in reaching its result in the Heydenfeldt case, this Court relied in part upon circumstances peculiar to Nevada. The same argument was rejected in the Morrison case, supra at 205: “It is also urged that the court emphasized the fact that there had been no sale or disposition of the public lands in Nevada prior to the Enabling Act and therefore that the clause could refer only to future disposition; whereas, in the case of Oregon, there had been earlier provisions for the disposal of the public domain. But Congress used the same phrase substantially in nearly every one of the school grants, and it was the manifest intention to place the States on the same footing in this matter. The same clause, relating to the same subject, and enacted in pursuance of the same policy, did not have one meaning in one grant and a different meaning in another; it covered other dispositions, whether prior or subsequent, if made before the land had been appropriately identified by survey and title had passed.”
State of Colorado, 6 L. D. 412.
15 Stat. 178.
Cong. Globe, 40th Cong., 2d Sess., 2801-2802.
Act of March 1,1872,17 Stat. 32.
See note 7, supra.
Cf.
United States
v.
United Mine Workers of America,
25 Stat. 676.
19 Cong. Rec. 2802; Sen. Journ. 50th Cong., 1st Sess., p. 696. Section 6 of that bill contained the following language: "... ; and such sections shall not be subject to pre-emption or entry, whether surveyed or unsurveyed, but shall be reserved for school purposes only.”
20 Cong. Rec. 806-812.
Mat 948, 951.
Id. at 2104, 2116.
H. R. Rep. No. 39, 51st Cong., 1st Sess., 26.
21 Cong. Rec. 2707.
26 Stat. 796. “Where settlements with a view to pre-emption or homestead have been, or shall hereafter be made, before the survey of the lands in the field, which are found to have been made on sections sixteen or thirty-six, those sections shall be subject to the claims of such settlers; and if such sections, or either of them, have been or shall be granted, reserved, or pledged for the use of schools or colleges in the State or Territory in which they lie, other lands of equal acreage are hereby appropriated and granted, and may be selected by said State or Territory, in lieu of such as may be thus taken by pre-emption or homestead settlers. And other lands of equal acreage are also hereby appropriated and granted, and may be selected by said State оr Territory where sections sixteen or thirty-six are mineral land, or are included within any Indian, military, or other reservation, or are otherwise disposed of by the United States: . . . .”
H. R. Rep. No. 2384, 51st Cong., 1st Sess.
Wyoming
v.
United States,
H. R. Rep. 229, 73d Cong., 1st Sess.; S. Rep. No. 10, 73d Cong., 1st Sess.
48 Stat. 350. Section 5 of the Enabling Act was amended so as to permit the State to lease the school lands for periods of ten years as contrasted to a five year limitation contained in the section as originally enacted.
H. R. Rep. No. 2384, 51st Cong., 1st Sess., 1. S. Rep. No. 502, 51st Cong., 1st Sess., 1.
Thus the same volume of the Statutes at Large containing the Wyoming Enabling Act also contains at least two pieces of such legislation. 26 Stat. 478,650.
See note 7, supra.
South Dakota
v.
Riley,
34 L. D. 657;
State of Montana,
38 L. D. 247;
State of Utah,
53 L. D. 365. And see
F. A. Hyde & Co.,
37 L. D. 164;
State of New Mexico,
52 L. D. 679. Also in accord are decisions in
Utah
v.
Work,
55 App. D. C. 372,
California
v.
Deseret Water, Oil & Irrigation Co.,
R. S. 2395, 43 U. S. C. §751. Barnhurst v. State of Utah, 30 L. D. 314; Harris v. State of Minnesota, Copp L. L. (1875-82) 631.
Cf.
Santa Fe Pac. R. Co.
v.
Lane,
United. States v. Morrison, supra, note 5.
Accounts for the period January 1, 1945, to date of hearing were to be prepared and submitted later, along with those for any subsequent periods for which defendants might be liable.
The total of each of these items for the entire period was as follows: value of oil produced, $167,049.54; steam earnings, $1,267.99; capital expenses, $11S,628.84; operating expenses, $70,083.73; overhead expenses, $22,461.00; taxes, $4,317.40; royalties, $17,306.30. It does not appear what the nature of the so-called “steam earnings” was.
The totals found by the master are the sums of the appropriate individual items which were in evidence, and which were recited in footnote 37. No question was raised as to the accuracy of any of these figures.
See
Martel
v.
Hall Oil Co.,
Liberty Bell Gold Mining Co.
v.
Smuggler-Union M. Co.,
Guffey
v.
Smith,
The measure of damages claimed by plaintiff’s exceptions on the theory about to be stated are, as against the Company, the full proceeds of the oil plus “steam earnings,” and as against the State, the amount of royalties received.
Guffey
v.
Smith, supra,