Kinney-Coastal Oil Co. v. Kieffer

277 U.S. 488, 48 S. Ct. 580, 72 L. Ed. 961, 1928 U.S. LEXIS 884
CourtSupreme Court of the United States
DecidedJune 4, 1928
Docket64
StatusPublished
Cited by50 cases

This text of 277 U.S. 488 (Kinney-Coastal Oil Co. v. Kieffer) is published on Counsel Stack Legal Research, covering Supreme Court of the United States primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kinney-Coastal Oil Co. v. Kieffer, 277 U.S. 488, 48 S. Ct. 580, 72 L. Ed. 961, 1928 U.S. LEXIS 884 (1928).

Opinion

Mr. Justice Van Devanter,

after making the foregoing statement of the case, delivered the opinion of the Court.

The findings of fact by the district court before described have such support in the evidence that they should *504 be accepted by us. Two were accepted by the circuit court of appeals, as shown in the quotation before made from its opinion, and the others were not considered. Those not considered are equally well supported.

The chief question presented is whether the act of 1914 prescribes an exclusive remedy at law applicable to the situation disclosed and thus prevents the plaintiffs from suing in equity, as held by the circuit court of appeals.

The acts of 1914 and 1920 are to.be read together— each ,as the complement of the other. So read they disclose an intention to divide oil and gas lands into two estates for the purposes of disposal — one including the underlying oil and gas deposits and the other the surface — and to make the latter servient to the former, which naturally would be suggested by their physical relation and relative ’ values. The act of 1914, in providing for the disposal of the surface, directs that there be a reservation of the oil and gas deposits,." together with the right to prospect for, mine and remove the same,” meaning, of course, the right to use so much of the surface as may be necessary for such operations. And the act of 1920, in providing for the leasing of the oil and gas deposits, provides (§ 29) for a reservation of the surface “in so far as said surface is not necessary for the use of the lessee in extracting and removing the deposits.” In effect therefore a servitude is laid on’ the surface estate for the benefit of the mineral estate to the end, as thé acts otherwise show, that the United States may realize, through the separate leasing, a.proper return from the extraction and removal of the minerals..

The lease held by the plaintiffs and the homestead patent issued to Kieffer were drafted in keeping with the acts thus understood. In both the required reservations are plainly expressed. Under the lease the plaintiffs have the right to extract and remove the oil and gas, as also the appurtenant right to use the surface so far as may *505 be necessary. In the homestead patent these rights are distinctly excepted and reserved from the estate thereby granted. Their exercise involves no taking of anything granted by the patent. Nor is the one who under the patent owns the surface, with those rights reserved, entitled to compensation for the minerals taken or the use made of the surface. The only compensation which he rightfully may demand is, as the act of 1914 says, for “ damages caused ” by the mining operations. The sentence next preceeding that in which these words occur makes it fairly plain that they refer to damages to crops and improvements,” and the title to the act, coupled with the reference to “ crops ” shows that “ agricultural ” im-. provements are the kind intended. Certainly it is not intended to include improvements placed on the land, after the mining operations are under way, for purposes plainly incompatible with the right to proceed with those operations until the oil and gas are exhausted. It well may be that, if the operations are negligently conducted and damage is done thereby to the surface estate, there will be liability therefor. But such liability will ensue, not from admissible mining operations and use of the surface, but from the inadmissible negligence causing the damage.

By this suit the plaintiffs are not seeking to acquire a right to use the surface but to protect from wrongful obstruction and. impairment the right which they already have. Nor are they seeking to enforce their right to enter and begin naming operations. More than a year before the suit was begun they entered, took in mining equipment and supplies, erected houses for their workmen, began drilling for oil and gas and at large cost completed a producing well — all with the knowledge and acquiescence of Kieffer, then the sole surface claimant. After their operations were thus under way, Kieffer platted as a town-site the forty acres where they were operating and began *506 actively to sell and contract to sell the lots as platted; and the purchasers began to erect buildings thereon for residential and business purposes. Kieffer was also contemplating, taking like action as to the other forty acres. It was then that the suit was begun. It is directed chiefly, against the sale and use of the surface for townsite pur-' poses and is based on the theory — sustained by the findings made on the proofs.submitted at the trial — that practically the whole eighty acres -is, within the producing structure of the oil field, that use of practically the entire surface is necessary for conducting reasonably efficient operations under the lease and that the sale and occupancy of the surface for townsite purposes will seriously interfere with the plaintiffs’ right to use the same in their mining operations and will obstruct and impede the further prosecution of those operations and thereby subject the plaintiffs to continuing and irreparable injury.

With this understanding of the situation and of the chief object of the suit, we think it plain that the plaintiffs were entitled to the interposition and aid of a court of equity to prevent the threatened, occupancy and use of the surface for purposes incompatible with their right to continue the mining operations under the lease and to make any necessary use of the surface. Certainly they were without the plain, adequate and. complete remedy at law which under § 267 of the Judicial Code precludes resort to a suit in equity.

The circuit court of appeals based its decision on the part of the act of 1914 which — after directing that the patent for the surface estate shall contain a reservation of the underlying oil and gas deposits, with the right' to prospect for, mine and remove the same — provides that lessees of the United States may enter, occupy so much of the surface as may be required, and mine and remove the minerals, “ upon payment of damages caused thereby to the 'owner of-the land, or upon giving a good and suffi *507 dent bond or undertaking therefor in an action instituted" in any competent court to ascertain and fix said damages.”

The plaintiffs take the position that the bond given by the lessee and approved by .the Secretary of the Interior when the lease was issued satisfied that provision. In this the plain words of the provision are neglected.. They call for a bond to be given in a judicial proceeding wherein the damages may be ascertained and fixed. The circuit court of appeals so regárded them.

But we are unable to agree with that court’s ruling that the provision requires that the bond be given and the damage's assessed only in an action at law. The words of the provision are “ an action instituted in any competent court;” and we think the matter is one which the district court was and is competent to deal with in this suit.

It is a general rule that a court of equity, in a suit of which it has and tákes cognizance, may administer complete relief between the parties even though this involves the determination of legal rights which otherwise' would not be within the range of its authority, Camp

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Cite This Page — Counsel Stack

Bluebook (online)
277 U.S. 488, 48 S. Ct. 580, 72 L. Ed. 961, 1928 U.S. LEXIS 884, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kinney-coastal-oil-co-v-kieffer-scotus-1928.