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U.S. Supreme Court

United States v. Southern Pacific Co., 251 U.S. 1 (1919)

United States v. Southern Pacific Company

No. 179

Argued March 5, 6, 1919

Decided November 17, 1919

251 U.S. 1


Lands valuable for oil and known to be so at the time of their selection by and patent to the Southern Pacific Railroad Company under the granting Act of July 27, 1866, c. 278, 14 Stat. 292, were excepted from the grant as mineral lands, and a patent for such lands, issued in reliance upon representations that the lands were not mineral, made by the company's officials when they believed the fact was otherwise, is subject to be set aside in a suit by the United States. Pp. 251 U. S. 7 et seq.

In order to establish the character of lands, in this connection, as lands valuable for oil, it is not necessary that they shall have been demonstrated to be certainly such by wells actually drilled thereon and producing oil in paying quantities after a considerable period of pumping; it suffices if the conditions known at the time of patent, as to the geology, adjacent discoveries, and other indicia upon which men prudent and experienced in such matters are shown to be accustomed to act and make large expenditures, were such as reasonably to engender the belief that the lands contained oil of such quality and in such quantity as would render its extraction profitable and justify expenditures to that end. P. 251 U. S. 12.

In this case, the conditions evincing oil value in this sense persisted chanroblesvirtualawlibrary

Page 251 U. S. 2

after the date of patent, and the Court therefore doe not consider the question whether, if such conditions were proven illusory by subsequent drilling, the demonstration would support the patent. P. 251 U. S. 14.

A report of a special agent that lands embraced in a railroad selection were nonmineral, but made in another connection and not relied on by the railroad company in renewing the selection or considered by the land officers in approving it and issuing patent, cannot avail against proof that the lands were known by the company to be valuable for oil; nor is it of value as evidence of their nonmineral character if based on a superficial examination by one who was neither a geologist nor familiar with oil mining. Id.

249 F.7d 5, reversed.

The case is stated in the opinion. chanroblesvirtualawlibrary

Page 251 U. S. 6

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