Newspaper Page Text
"ys what passed between Flinn and Smith. The application for a mining lease is a simple matter, but Smith went to the auditor's office with a letter of introduction to Flinn asking a favor of him. Nothing like a mining lease was mentioned in it. Flinn and Smith met at the Ryan,went across the street and there was a talk about something. On December 20, 1902, Smith wrote a personal letter to Flinn. The refer ences in it are mysterious. Flinn says he does not understand them. Smith, whose deposition was taken, is not here to explain. Nothing is said about a lease. It does not read like a letter from a man after a lease. If Smith's purpose all this time was to get a lease from the State this letter was unfortunately worded. From the evidence produced I cannot but be lieve that what was going on between Flinn and Smith, and something was, had little reference to a mining lease. Again, Smith's uncomplaining delay was not the action to be expected of a man who had been defrauded of a lease. The first two claims aside, we come to the really important question in the casethe constitutionality of the mining lease law. Section 2 of Article 8 of the consti tution, adopted in 1857, is as follows: "The proceeds of such lands as are or hereafter may be granted by the United States for the use of schools, within each township in this State, shall remain a perpetual school fund to the State, and not more than one third of said lands may be sold in two years, one-third in five years, and one-third in ten years but the lands of the greatest valuation shall be sold first provided, that no portion of said lands shall be sold otherwise than at public sale. The principal of all funds arising from sales, or other disposi tion of lands or other property, granted or intrusted to this State in each township for educational pur poses, shall forever be preserved in violate and undiminished: and the income arising from the lease or sale of said school land shall be distrib uted to the different townships throughout the State, in proportion to the number of scholars in each township between the ages of five and tv\enty-one years, and shall be faith fully applied to the specific objects of the original grants or appropria tions." In 1877 the following amendment was adopted: "Suitable laws shall be enacted by the legislature for the safe investment of the principal of all funds which have heretofore arisen, or which may hereafter arise, from the sale or other disposition of such lands, or the income from such lands accruing in any way before the sale or disposition thereof, in interest-bearing bonds of the United States or of the State of Minnesota, issued after the year one thousand eight hundred and sixty, or of such other State as the legislature may by law from time to time direct." In 1881 this further amendment was adopted: w"All swamp lands now held by the State, or that may hereafter accrue to the State, shall be appraised and sold in the same manner and by the same officers, and the minimum price shall be the same, less one-third, as is provided by law for the appraise ment and sale of the school lands un der the provisions of title one of chap ter thirty-eight of the General Stat utes. The principal of all funds de rived from the sales of swamp lands, as aforesaid, shall forever be pre served inviolate and undiminished. One-half of the proceeds of said prin cipal shall be appropriated to the eommon-schoo fund of the State. The remaining one-half shall be ap propriated to the educational and charitable institutions of the State, in the relative ratio of cost to support said institutions." So far as the constitutional ques tion is concerned it is not thought that a distinction is to be made be tween school lands and swamp lands. Title one of Chapter thirty-eight of the General Statutes, referred to in the last amendment, regulates the dis position of school lands. The State auditor is made commissioner of the land office, and is given charge and supervision of all State lands, with authority to superintend, lease, sell and'dispose of the same in such man ner as may be directed by law and provision is made for their appraise ment and sale at public auction. The specific claim of the State is that the lease is in effect a sale of the lands which it purports to demise and that being so construed it is in contravention of the part of the con stitution which provides that a sale of the State lands must be a public sale. The legislature has full authority to dispose of the public domain in such way as it sees fit, except as it is re strained by the constitution. Had the constitution not provided for a public sale the sale may as well have been private. It is not for the defendants to point to a constitutional authoriza tion of a lease such as that under which they claim. It is for the State to point *o a constitutional prohibi tion of such a lease. In dealing with the public domain rta portion of the demised property, and the possible exhaustion of substan tially all of value in it, it is not a lease the return of the demised prop erty unconsumed and undiminished, and without waste, being, so it is claimed, a necessarily essential fea ture of a lease. About these two propositions the argument has been made arid assum ing that the determination/of these two propositions determines the constitutional question involved, their consideration should first have atten tion, and this involves an examina tion of the law relative to the leasing of mines. Coke summarizes the early English law as follows: "A man hath land on which there is a mine of coals, or of the like, and maketh a lease of the land (without mentioning any mines) for life or for years, the lessee for such mines as were open at the time of the lease made, may dig and take the profits thereof. But he cannot dig for any new mine that was not open at the time of the lease made, for that should be adjudged waste. And if there be open mines and the owner make a lease of the land, with the mines therein, this shall extend to the open mines only, and not to any hidden mine but if there be no open mine, and the lease is made of the land to gether with all mines therein, then the lessee may dig for mines, and en joy the benefit thereof, otherwise those words should be void." Co. Litt. 53b It may be accepted as the settled English'law that the tenant for life or principal or corpus for years, whether by grant, devise or reservation, might work the open mines upon the premises held by him although such working resulted in their exhaustion that such tenant might not open new mines without a grant of such right but that he might open new pits and shafts to work con veniently the old mines. Saunder's case, 5 Co. 12 Huntley v. Russell, 13 Q. B. 572 Astry v. Ballard, Freem. 445 Clavering v. Clavering, 2 P. Wms. 388 Cowley v. Wellesly, 35 Beav. 635 Spencer v. Scurr, 31 Beav. 334 Viner v. Vaughan, 2 Beav. 466 Elias v. Snowdon Slate Quarries Co. 8 Ch. D. 521. Upon the principle that a life tenant might work an open mine a tenant in dower might do so. Stoughton v. Leigh, 1 Taunt. 402. The reason that a demise of land did not pass unopened mines was that a demise without mentioning mines evinced no intent that unopened mines should pass. An intent to give the right to open new mines was given effect. So, if there was a lease of land, with all the mines therein, and there were no open mines, the lessee might open new mines. Clegg v. Rowland, L. R. 2 Eq. 160. We note an occasional case where the ore was taken out under a license and an occasional instance of the sep arate ownership of the surface and the minerals, this coming most fre quently by reservation in a grant but THE PBIKCBTON U^IO^THXriiSDAY, SEPT&BER 28 the legislature is not as one acting under a power of attorney phrased in the language of the constitution. It needs no constitutional grant of power. It is only restrained by a constitutional limitation. There are some matters referred to in the argument which may be dis posed of at the outset. The State claims that ore in place is a part of the land. This is so. It is just as much a part of the land as is standing timber, or coal, oil, slate or any other mineral. The State claims that there may be a separate ownership of the surface the product of the use for which rent of as a lease, of which "merchanta- and the minerals. This is so. There maj be as many separate ownerships title to his mineral by an appropriate ject-matter, the possession of the land as there are separate parts of the land capable of description. The State claims that the so-called mineral contract creates an interest mised in the land. This is so. The interest so created has many of the incidents of real property. A contract relative thereto is within the statute of frauds. It is to be transferred by deed. It is subject to the lien of a judgment and may be sold on execution. The State, however, does not claim anything in particular from the mere fact that an interest in land is granted. It concedes that the legisla ture might constitutionally authorize an ordinary lease of its agricultural lands for any reasonable period, at least so long as it did not offend an other provision of the constitution. If some portion of its lands should be available for town-site purposes, it probably would not claim that the legislature might not lease such lands upon ground-lease. Its claim is sim ply that a mineral lease, contemplting a waste and exhaustion of the body of the land, is not such a lease as the State may make and that it is in effect a sale of a distinct part of the land, that is, of the ore body, which can be made at public sale only. The attorney general and his asso ciates make the issue clear. Their contention involves these proposit ions: 1. That the statutory mineral con tract is a present sale of ore in place, or a sale in the future as the ore is removed, title to it passing for a consideration paid. 2. That since the mineral contract contemplates the consumption of of mining was the substantial work done under a leasing. From the English learn this: 1. That from the very the rights of the man who owned the land, and of the man who took away cases we may was paid, and that the tenant got his use of the demised premises 3. That it was never a circumstnce of significance that the use of the de premises, in accordance with the intent of the parties, and in ac cordance with the nature of the use to which they could be put, resulted in the gradual consumption or even ex haustion of the portion of the land of chief worth. The result of the cases in this coun try is the same. In the early cases the appropriate ness of a lease to govern the relation between the man who owned the land and the one who took minerals from it under a rent or royalty agreement is everywhere evidenced. We note the same rule as to the working of old mines and the opening of new ones. Owings v. Emery, 6 Gill, 260 Gaines v. Mining Co. 33 N. J. Eq. 603 Reed v. Reed, 16 N. J. Eq. 248 Shaw v. Wallace, 25 N. J. L., 453 Griffin v. Fellows, 81^ Pa. St. 114. We note the same rule as to the making of new shafts to reach old mines. Crouch v. Puryear, 1 Rand. 258 Findlay v. Smith, 6 Munf. 134 Gaines v. Mining Co. 33 N. J. Eq. 603. We note the same rule that the widow is dowable in opening mines. Coates v. Cheever, 1 Cow. 460 Billings v. Taylor, 10 Pick. 460 Moore v. Rollins, 45 Me. 493 Lenfers v. Henks, 73 111. 405. We note the same rule that mines which may be worked by the tenant may be worked to exhaustion. Crouch v. Puryear, 1 Rand. 258 Findlay v. Smith, 6 Munf. 134 Neel v. Keel, 19 Pa. St. 323 Westmoreland's Co.'s Appeal, 85 Pa. St. 344 Fairchild v. Fairchild, 9 Atl. R. 255 Koen v. Bartlett, 41 W. Va. 559. When it is once conceded that there exists a right to remove ore from un der the surface there can be no waste, proper mining methods being used. The very use of a mine is in the con sumption and exhaustion of the ore. The taking of ore from the mine is use, not waste. Capner v. Fleming ton Mining Co. 3 N. J, Eq. *467 Vervolen v. Older, 8 N. J. fcq. 981 Mc Cord v. Mining Co. 64 Cal. 134 Ana conda Copper M. Co. v. Butte & Bos ton M. Co. 17 Mont. 519. The suggestion that the transfer of title to the ore mined comes through the appropriate use of the land de mised, for a purpose for which it is fitted to be used and intended by the parties to be used, without reference to the law of sales, finds incidental support in the relationship of co tenancy, where one co-tenant, since he has the right to use the open mine, may acquire title to its product by his use, with no thought of a contract of sale, or of any contract, between himself and his co-tenant. Job v. Poton, L. R. 20 Eq. 84 McCord v. Mining Co. 64 Cal. 154 Russell v. Merchants Bank, 47 Minn. 286: and in the case of an execution debtor who takes ore from an open mine, in a proper way, during the redemption period, Nord v. Carp River Iron Co. 47 Mich. 65 50 Mich. 522. The distinction between money re ceived for mining land sold and re ceipts by way of royalties received for the use of mines therein is of some significance. The former is always the latter is al ways income or profit. Daly v. Beckett, 24 Beav. 635 Brook v. Bod ley, L. R. 4 Eq. 105 Appeal of Bed ford, 126 Pa. St. 117 Raynolds v. Hanna, 55 Fed. R. 783 Koen v. Bart lett, 41 W. Va. 559. The mineral contract there involved contains apt words of demise the words used are, "contract, lease and demise (50) years scribed land are leased continuance of this lease, just the same as though the lands herein leased were owned in fee" by him an annual payment of $100.00 is reserved beginning until such time as it becomes the lessee's duty to remove iron ore and from the time when the lessee is to re- the minerals from it, were worked out move 5,000 tons annually there through the law of tenancy, without the aid of the law of sales. 2. That it was never a conception of the law that the man who took away the mineral got his title through a sale by the owner of the land but Iron Mining Co. 70 Minn. 500. The the theory was that the mineral was is re served a royalty upon a minimum out put of 5,000 tons. In most respects this instrument's the same as that construed in Dia mond Iron Mining Co. v. Buckeye instrument there involved was spoken ble, shipping iron ore" was the sub- being incidental and auxiliary to min ing and removing merchantable ship ping iron ore: and it may be noticed that in the early English and Ameri can cases the land itself was often the principal thing, the mine being inci dental but with the development of mining it has come to be that the mine itself is the principal thing. It is the thing with which the lease has principally to do. It is the part of the land with which the contracting parties are chiefly concerned. It is chiefly the thing for the use of which rent or royalty is paid and the use ot the surface of the land becomes aux iliary to the use of the mineral deposit. The lease involved in the Diamond case made payments as royalty on the minimum output equivalent to an ad vance payment of royalty in the event that the minimum was not taken out. This is not an uncommon provision. There is no such provision in this lease and the State has always con strued the lease to deny the lessee the right to apply payments made on ac count of unmined ore upon ore after wards mined in excess of the mini mum. The reason why the lessee must pay the $1,250.00 per year, regardless of whether he takes 5,000 tons of ore, and may not treat it as advance roy alty, is, so the argument is made, that this is the sum which he by contract pays for the right to mine, and not what he pays for ore in place. It is in the nature of rent. He has during the year just what he pays for. the right to minethe use of the mine and the defendants contend that the fact that there is first an annual 'dead rental of $100.00. and later of $1,250.00, evidences a lease and nega tives a sale. Swan v. Bond, (Kan.), 56 Pac. R. 141: Flynn v. Whitehurst Coal Co. 72 la. 739. That an instrument such as the one here involved is a lease finds support in adjudged cases so numerous that it would be tedious even to cite them. It is more than a license, and it is not a sale of ore in place or as removed. It is just a lease: and for hundreds of years the term "lease," in legal nomenclature, has been used to define just such a relation as is created by the statutory mineral contract. In fact, outside of Pennsylvania, and perhaps not even there, practically no ease is to be found suggesting that such an instrument is either more or less than a lease. If the State's attack upon the min eral tease law must fail if it does not sustain the two propositions which it advances, first, that the mineral con tract is a sale of the ore in place, or as removed, and not a lease, title passing upon consideration paid, and, second, that it is an essential feature of a lease that the demised premises be returned at the end of the term with the corpus unconsumed and undimin ished, then its attack has failed for neither of these propositions, whether viewed from an historical or logical standpoint, or from the point of view of the present dead weight of author ity, is sound. If the determination of these propositions determines the con stitutionality of the lease law it is constitutional. It may be, however, that all this talk about a sale of ore in place, or as removed, and about the consump tion and exhaustion el the land through mining operations, is of less importance than has been attached to it and that finally we come back to a proposition which suggests itself upon the first reading of the constitution, that is, whether a mining lease for fiftv for a term of fifty the following de which premises for the purpose of exploring for, mining, taking out and removing therefrom, the mer chantable, shipping iron ore:" it is for a determinate period there is a provision for termination by the grantee: there is a provision for for feiture there is a provision for re entry by the State the grantee agrees to surrender possession at the termin ation of the lease upon termination of the lease the grantee may remove tools, etc., but may not impair sup ports and timbering in the mine the grantee has possession but the State reserves the right to enter upon the premises to inspect the same or meas ure ores the State reserves the right to sell the timber thereon, with the right in the vendee to enter thereon and remove the same the grantee has the right to construct buildings, build roads, dig ditches, drains, etc. the grantee agrees to pay taxes "upon the land so leased during the years is a grant of so substantial an interest in land that from a practi cal, common-sense point of view should be held impliedly prohibited by the constitutional requirement of a public sale, It seems that an argu ment of this nature may be made upon the construction of the constitution and it is something aside from the two propositions discussed. The analogy drawn by counsel for the State between a disposition of standing timber, which under the statute must be at public sale, and the disposition of ore by lease, is of much force but not conclusive. The differ ences are many and they suggest them selves without enumeration. There are two resemblances at once appar ent. One is that in each an interest in land is created. The other is that the result in each is a consumption of the corpus of the land. As already suggested the fact that an interest in land is created is not claimed to be a controlling factor. Nor does the fact that the operation under a mineral contract results in the consumption of the corpus make a lease the less a it lease. We have already seen that land is corpus, and that the profit coming from it by way of a royalty for the working of a mine in it, which the tenant has the right to work, is income. If we pursue the investiga tion further we find that standing tim ber, as between the life tenant and the reversioner, has from the earliest times been treated as corpus. Bate man v. Hotchkin, 31 Beav. 486 Tooker v. Annesley, 5 Sim. 235 Waldo v. Waldo, 7 Sim. 261 Stone braker v. Zolliakoffer, 52 Md. 154. The distinction between the product of an open mine and the product com ing from the cutting of timber has not escaped judicial observance. Daly v. Beckett, 24 Beav. 114. From this distinction counsel for the defendants adduce an argument in opposition to the analogy between the removal of standing timber and the removal of ore. Their argument is that this dis tinction has always been made, and that it shows a difference in the essen tial nature of timber and of ore ren dering the analogy without force but it is to be noticed that all these cases refer to an open mine which the tenant may work. The analogy drawn by counsel for the State is between stand ing timber and the unopened mine which is corpus and for the purposes of a discussion of the constitutional questions we have unopened mines. The constitution of 1857 provides that "the proceeds of such lands" as may be granted by the United States for the use of schools shall remain a perpetual school fund, "provided, that no portion of said lands shall be sold otherwise than at public sale." It also provides that the principal "arising from sales, or other disposi tion of lands or other property," shall be preserved inviolate, and that "the income arising from the lease or sale of said school lands," shall be distributed to the different townships. The amendment of 1877^ provides that the legislature shall enact suita ble laws for the investment of the funds arising "from the sale or other disposition of such lands, or the in come from such lands accruing in any way before the sale or disposition thereof.'' The amendment of 1881 provides that the swamp lands shall be "ap- praised and sold in the same manner as is provided by law for the appraisement and sale of the school lands" etc., etc. The constitution, in addition to the word "sale." uses the terms, "other disposition," "income from such lands." and "income arising from the lease or sale of said school lands." The constitution of the state of Wis consin has this provision: "Provision shall be made by law for the sale of all the school and uni versity lands after they shall have been appraised and when any por tion of such lands shall be sold and the purchase money shall not be paid at the time of the sale, the commis sioner shall take security by mort gage upon the land sold." The legislature enacted a law pro viding for a sale at public auction, not less than ten per cent, nor more than seventy-five per cent, to be paid in cash, and the balance to be paid in installments at any time within ten years from the time of sale: and it was provided that the title in fee should remain in the State until patent is sued,'and that patent should not issue until full payment of the purchase price. A sale in accordance with the terms of the statute was upheld. It was held that the "sale" contemplated by the constitution was a sale in fee and the court said that the "nature of the sale provided for under the statute differed from the one contemplated by the constitution, and to which the constitutional inhibition applies." Smith v. Mariner, 5 Wis. 551. The disposition authorized by the leisla ture was a contract for a sale of real estate creating an interest in the land. It was an interest which could be mortgaged. Dodge v. Silverthorn, 12 Wis. 644: Jarvis v. Dutcher, 16 Wis. 307. And it was suggested that it was an interest subject to dower. Mowry v. Wood, 12 Wis. 415. Manifestly, if the meaning given to the word "sale" is correct, the sale of the State's agricultural lands on a cash payment of fifteen per cent and forty years time on the balance, with interest at four per cent, would have to be supported on a construction something like this, except for the use of more comprehensive words in the constitution, such as "other disposi tion and these words do give a broader meaning than the word "sale," and may authorize a lease. Hill v. Sumner, 132 U. S. 118 Phelps v. Harris, 101 U. S. 370 United States v. Gratiot, 39 U. S. 526. If the word "sale" as used in our con stitution is construed to mean a sale in fee as in the Wisconsin constitu tion it may not unreasonably be argued that a lease is a disposition not repugnant to the constitution, even without the words "other dispo sition and with these words the ar gument is even stronger. In ascertaining the meaning of the constitution it is to be observed that at the time of the adoption of the con- stitution a lease was~an entirely com monplace means whereby the use of an ore-bed was granted upon the con sideration of a rent or royalty gradu ated in accordance with the amount of the use. The taking of ore from the land by virtue of a lease is so the natural way of doing that we expect it. The removal of standing timber under an instrument drawn in the terms of a lease is so unnatural a way of doing that we would marvel at it. And it may be argued with a degree of reasonableness that the legislature having unlimited authority to dispose of the public domain, except as pro hibited by the constitution, and the prohibition being against a sale, ex cept a public one, might authorize a lease of minerals. It is said that a court should not declare a statute unconstitutional un less its repugnancy to the fundamental law is so clear as to leave no reason able doubt or hesitation upon the judicial mind. This rule of construc tion is perhaps more often invoked to support a conclusion reached than to aid in reaching one: but in a sound sensible sense it is true that an act of the legislature is to be set aside only after grave and painstaking con sideration. And why should this not be so? The legislature is a co-or dinate department of the State govern ment. It is the only body charged with the making of laws. Proposed legislation is submitted to the scru tiny of its judiciary committees. They view it with the constitution in mind. The chief executive withholds his ap proval if, in his judgment, or in the opinion of the attorney-general, it offends the constitution. They are all as intent as are the courts in yielding obedience to the constitution: and statutes enacted under such safe guards eome before the courts with a presumption of validity. Courts may surrender their unquestioned pre rogative of declaring statutes to be in violation of the constitution: but they must not do so flippantly. If the constitutionality of the min eral lease law had been questioned in 1889, when it was new, able lawyers might reasonably have differed. An argument against its constitutionality could have been made. Courts might have hesitated and the decision of an appellate court, either for or against the constitutionality of the act, would have received respecful consideration in any sister state passing upon a like question. If the trial court were now in the position that a trial court would have been in in 1889 in passing upon the question it would become it to hesitate long and deliberate seri ously before pronouncing the statute invalid but we do not occupy the position of a court sitting in 1889. The statute has been in force for six teen years and during that time things have been done under it. Rights have been administered. There has been a practical construction and this prac tical construction we may with pro priety call to our aid in seeking" the meaning of the constitution. There could have been no strictly contemporaneous construction of the constitution, for the constitution ante dated by more than thirt\ years the first mineral lease law, and this law was some eight years subsequent to the constitutional amendment of 1881 relative to State swamp lands but the fact that ever since the State has had occasion to legislate with refer ence to its mineral lands it has been assumed by the three departments of the State government that authority existed under the constitution to authorize their leasing, and that there has been a general acquiescence by the people in such construction, is en titled to just weight in determining what is the proper construction. The State seeks to set aside a grant which it has made. Its ground is that its legislature was in the wrong, was acting in direct contravention of the constitution when it authorized the grant and that its executive depart ment, in executing leases and con tracts, and in receiving the considera tion for them, and in receiving royal ties coming from them, has all the time been acting without constitu tional authority. When the State seeks to avoid the grant upon a con struction making such grant void be cause beyond legislative power it is proper for one whose title is assailed to urge in support of a construction in favor of the validity of his lease that the legislature for fifteen years has legislated upon the assumption that it had authority, and that there has been a general acquiescence in the existence of such power by the people and by ail the departments of the government that the executive depart ment for fifteen years has executed leases and received revenues upon the assumption that the legislature had constitutional power to authorize leases, and that its acts have passed unquestioned and that the judicial department has construed the law, de termining private rights under it, and defining the duties of the land com missioners in its administration, with out questioning its administration, without questioning its constitutional validity. Chapter 22 laws of 1889, contains the first mineral lease law. The min eral lease law was amended by chap- is**/i 2 r, 1