Brief for the United States — Kalmia Realty & Insurance v. United States

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CITATIONS

Cases:

Baltimore Shipbuilding Co. v. Baltimore, 195 U.S. 375. .

Clallam County v. United States, 263 U. S. 341........

Cleveland v. United States, 323 U. S. 329..............

Lee v. Osceola Imp. Dist., 268 U. S. 643...............

New Brunswick v. United States, 276 U. 8. 547.........

United States v. Allegheny County, 322 U. 8. 174.......

United States v. California, 332 U.S. 19...............

United States v. Oregon, 295 U. S.1..................

Utah Power ¢ Light Co. v. United States, 243 U. S.

BE. Se CRS NSE RS as a aed ba had es hie ek tee Ae

Van Brocklin v. State of Tennessee, 117 U. 8. 151.......

West v. Oklahoma Tax Commission, 334 U. 8. 717.......

(1)

AMNIANAAaAs

ND

Yuthe Supreme Court of the Winited States

OcToBER TERM, 1950

No. 247

Katmia ReAaLtty & INSURANCE COMPANY, ET AL.,

PETITIONERS

Vv.

THE UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE FIFTH

CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINION BELOW

The opinion of the Court of Appeals (R. 444) is

reported in 181 F. 2d 598.

JURISDICTION

The judgment of the Court of Appeals was en-

tered May 15, 1950 (R. 445). The petition for a

writ of certiorari was filed August 12, 1950. The

jurisdiction of this Court is invoked under 28

U. 8. C. see. 1254(1). :

QUESTION PRESENTED

Whether in a suit brought by the United States

to quiet its title to land, it was rightly held that

(1)

2

neither the Government’s grantor nor a purchaser

at a sale for delinquent state and county taxes had

any interest therein.

STATEMENT

The United States brought this suit against

Kalmia Realty & Insurance Company and Tom

Hendrix, petitioners here, to quiet title to Missis-

sippi land conveyed to it by Kalmia by two deeds

made December 29, 1933, and a third deed made No-

vember 13, 1941 (KR. 2-26).

The first 1933 deed covered 481 acres in Jones

County (R. 7-11). The second deed of the same

date conveyed approximately 19,587.54 acres in

Wayne County (R. 18-26). The 1941 deed em-

braced 119.3 acres in Jones County (R. 12-17).

Each 1933 deed provided (R. 8-9, 22-23) :

Reserving, however, to the Kalmia Realty

and Insurance Company, its successors and

assigns, for a period of Ten (10) years from

December 24, 1933, with extensions as here-

inafter provided, all oil, gas and other valu-

able minerals deposited in, on or under said

tracts of land, * * *

Provided: That if at the termination of the

said ten year period of reservation it is found

that such oil, gas, and other valuable minerals,

mineral] rights and interests are being operated

or have been operated at any time during the

preceding five years, to commercial advantage,

then and in that event, the said right to mine

and remove said oil, gas, and other valuable

3

minerals, shall extend for a further period of

five years, and further: That the right to mine

and remove oil, gas, and other valuable min-

erals shall extend in periods of five (5) years

whenever operation during the preceding five

years has been for an average of 120 days per

year throughout the period.

* * * * *

Provided: That at the termination of the

ten year period, if not extended, or at the ter-

mination of any extended period, in case the

operation has been carried on for the number

of days and under conditions stated, the right

to mine and remove oil, gas and other valu-

able minerals shall terminate and a complete

fee in the land become vested in the United

Rte ati

The 1941 deed contained a similar reservation

which unless extended, would terminate July 1,

1949 (R. 13-14).

So far as concerns Kalmia, the trial court found

and held (R. 391-399, 421-423) :

Kalmia asserted that Raymond M. Conarro, who

represented the Secretary of Agriculture in the .

negotiations resulting in the 1933 conveyances,

falsely told its representatives that the Secretary

could not permit a reservation of mineral rights

for more than 10 years, and that therefore the 1933

deeds were procured by fraud. But Kalmia had

failed to establish that Mr. Conarro made the state-

ment. (Fdg. 7, R. 394-395.) In any event, since

Kalmia could ascertain the Secretary’s statutory

4

power, it could not rely on any legal representa-

tions made on his behalf (R. 423).

Kalmia further asserted that the lands conveyed

in 1933 were operated to commercial advantage

during the five years immediately preceding De-

cember 24, 1943, and hence that the reservation did

not terminate on that date (Fdg. 5, R. 393). While

Kalmia itself did not prospect for minerals, it

made mineral leases from which it received $15,000

or $16,000. However, its lessees did not produce

oil in commercial quantities, as required by the

deeds, and accordingly the reservation did end on

December 24, 1943. (Fdg. 10, R. 396; Concl. 2,

R. 397.)

So far as concerns Hendrix, the facts were stipu-

lated (R. 400-402) as follows:

For the year 1941 the State of Mississippi and

Wayne County taxed the mineral interest in the

19,587.54 acres conveyed by the second 1933 deed.

The taxes were not paid and Hendrix purchased

at tax sales. Neither he, nor anyone acting for

him, operated the mineral interest to commercial

advantage. The United States has been in ex-

clusive possession of the lands since December 24,

1943, and has granted to others oil and gas leases

thereto.

Upon the basis of the stipulation, the trial court

held (R. 407-412): The State and County could

tax only the interest in the lands which Kalmia

reserved by the 1933 deed. Consequently, the tax

deeds conveyed to Hendrix only that limited in-

terest. Since neither Kalmia nor Hendrix had ever

5

operated the mineral interest to commercial ad-

vantage, the interest had expired on December 24,

1943.

On May 12, 1949, the trial court entered judg-

ment that the United States is the owner in fee

simple of the lands described in the 1933 deeds and

that it is the owner of the land described in the

1941 deed ‘‘subject only to the reservations, excep-

tions, terms and conditions of that deed’’.’ Peti-

tioners, and all claiming under them, were perma-

nently enjoined from asserting to the contrary.

(R. 419-421.)

The Court of Appeals affirmed per curiam (R.

444) saying: ‘‘From the standpoint of both reason

and result, we think that the decision and judg-

ment of the Court below were correct.’’

ARGUMENT

The decisions below are plainly correct, and peti-

tioners present no questions calling for further re-

view. Since the Government’s title depends en-

tirely upon the deeds it obtained from Kalmia, it

is obvious that the question as to the validity and

extent of the Government’s interest can be com-

letely determined by its suit against Kalmia and

lf{endrix, whose interest is derived from Kalmia.

United States v. Oregon, 295 U.S. 1, 12, 24; United

States v. California, 332 U. S. 19, 22-23. There is

1 Since the termination date of the reservation in the 1941

deed, July 1, 1949, had not been reached when the judgment

was rendered on May 12, 1949, the judgment quieting the

Government’s title to the land covered by that deed had to be

“subject” to the reservation.

6

therefore no warrant for petitioners’ contention

(Pet. 20-25) that those to whom the Government,

as the fee-owner, has leased the mineral interests

are indispensable parties.

The judgment against Kalmia is clearly right.

There is no basis in the record for its contention

(Pet. 14-15, 76-78) that the 1933 deeds were in-

duced vy the false statement of a government em-

ployee. For, as the trial court found (R. 394),

Kalmia could not show that the alleged statement

was made. The lower court’s interpretation of

operation to ‘‘commercial advantage’’ under the

reservation (R. 396-7) is also plainly correct.

Equally correct is the injunction against claims

by Hendrix to an interest in the 19,587.54 acres

sold for 1941 delinquent State and County taxes.

Subject to the reservation of mineral rights,

Kalmia conveyed to the United States its entire

right, title and interest in these lands. Upon ex-

piration of the reservation, the United States was

to acquire ‘‘a complete fee in the land”’ (R. 9, 23).

Supra, p. 3. The State and County could not tax

the reversionary interest of the United States.

Van Brocklin v. State of Tennessee, 117 U.S. 151,

179-180; Clallam County v. United States, 263

U.S. 341, 345; Lee v. Osceola Imp. Dist., 268 U.S.

643, 645; United States v. Allegheny County, 322

U.S. 174, 188-189; Cleveland v. United States, 323

U.S. 329, 333. Cf. Utah Power & Light Co. v.

United States, 243 U.S. 389, 403-404. In other

words, they taxed—and subsequently sold to Hen-

7

drix—only Kalmia’s balance of the ten-year term

and the right to have it extended if minerals were

produced in commercial quantities. New Bruns-

wick v. United States, 276 U.S. 547, 556; Baltimore

Shipbulding Co. v. Baltimore, 195 U.S. 375, 382.

Since, as Hendrix stipulated (R. 401), there was

no such production, the reservation expired on

December 24, 1943, and Hendrix no longer had an

interest in the property.

Hendrix’s contention (Pet. 25-73) that there is

question whether the decisions just cited have been

overruled is patently erroneous. West v. Okla-

homa Tax Commission, 334 U.S. 717, 723.?

CONCLUSION

The judgment below is correct and the case does

not warrant review. The petition for a writ of

certiorari should therefore be denied.

Respectfully submitted,

Puiuie B. PERLMAN,

Solicitor General.

A. Devitt VANECH,

Assistant Attorney General.

JOHN F. Corrter,

Attorney.

SEPTEMBER 1950.

2 Contrary to petitioner’s contention (Pet. 43-53), the Weeks

Act does not even hint at a consent by the United States to

state taxation of property acquired by the United States under

its provisions.

YT U. S. GOVERNMENT PRINTING OFFICE: 1950 906536 163