874 F. 2d 816 - Plum Creek Timber Company Inc v. E Lyng F F Vi Jd R

MEMORANDUM*

Appellants Plum Creek Timber Company, Inc. and Burlington Northern Railroad Company (hereinafter referred to collectively as "Burlington") appeal the district court's grant of summary judgment in favor of appellees, the United States Department of Agriculture, the United States Forest Service, and the United States of America (hereinafter referred to collectively as "United States" or "government"), and William R. Pearson Timber, Inc. (hereinafter referred to as "Pearson Timber"). The dispute is over who owns, and has the right to harvest, timber on land conveyed by the United States to Burlington as part of a land exchange. The district court determined by summary judgment that the timber belonged to the United States. We agree and affirm.

In 1981, Burlington and the United States entered into a Land Exchange Agreement ("Agreement"). Under this Agreement, the United States obtained private land in exchange for public land it deeded to Burlington. This was accomplished under the Alpine Lakes Management Act, 16 U.S.C. Sec. 1132 (1982), and the Federal Land Policy and Management Act, 43 U.S.C. Sec. 1716 (1982), which allow the Forest Service to exchange public land for private land located within the Alpine Wilderness and Mt. Baker-Snoqualmie and Wenatchee wilderness areas. Section 1716(b) of the Land Policy and Management Act also provides that in such exchanges the parcels must be of equal value, and any disparity in value may be equalized by the payment of money in an amount up to twenty-five percent of the total land value.

In the exchange at issue, Burlington received 13,492 acres of land and 12,562 acres of timber from the United States, with a total value of $36,100,000. The United States received 17,350 acres of timber and land from Burlington, valued at $37,600,000. Burlington in addition received a cash payment of $1,500,000, reflecting the difference in value of the two parcels.

At the time of the transaction, seven separate timber cutting contracts had been let to third parties by the United States on 930 acres of the public land conveyed by the United States to Burlington. Although the 930 acres were appraised prior to the land swap, the value of the timber on the land was not.

A draft of Schedule B to the Agreement included a description of the land conveyed by the United States to Burlington. This contained a reservation clause pertaining to the timber sale contracts. At the time the Agreement was signed, this reservation clause provided:

4. And also reserving to the grantor [the United States], itself, its successors and assigns for the remainder of the term of each timber sale as described below, the right to cut and remove from the lands as described in each referenced timber sale all timber as specified in such timber sale.

The reservation clause was modified and finalized approximately six months later in June 1982. As modified, it provided:

4. The United States reserves title to the timber designated in the following timber sale areas, including the rights of ingress/egress and such other rights necessary to cut and remove said timber.

[Description of seven tracts omitted.]

The United States will administer existing timber sale contracts, or subsequent contracts in the case of default, to assure that all provisions and obligations therein are completed. Determinations by the Forest Service of Timber Sale contract adjustments or extensions will be narrowly construed.

The United States shall, at [Burlington's] request, release its reserved timber rights prior to the termination of the timber sale contract as the harvest of the reserved timber and post harvest slash disposal and erosion control measures are completed. Such release of reserved timber rights shall be granted in increments no smaller than (40 acre) units or full government lots. The release shall be a Quit Claim Deed in recordable form.

[Burlington] will be responsible for doing and financing all necessary reforestation work on those areas.

Identical language was incorporated into a land patent from the United States to Burlington. Of the seven separate timber cutting contracts on the 930 acres when the Agreement was signed, four contracts were completed. The remaining three contracts were "bought out" by the government for reletting to other contractors pursuant to the Federal Timber Contract Payment Modification Act, 16 U.S.C. Sec. 618 (Supp. III 1985) ("FTCPMA"), enacted three years after the Agreement was signed. These three contracts are at the center of this dispute.

Burlington argues it owns the timber on the tracts covered by the three contracts because these contracts were "bought out" instead of "defaulted." In the alternative, Burlington asserts the government retained title to the timber only for a "reasonable time" to permit removal, a reasonable time passed, and the timber was not removed.

The district court granted the United States' cross-motion for summary judgment. It held that the timber reservation clause unqualifiedly reserved title to the timber to the United States. Based upon this conclusion, it also held that no trespass action against Pearson Timber was available. The court further determined that the statutory "buy out" provisions of the FTCPMA created an "alternative method" for dealing with probable defaults on timber harvesting contracts and did not trigger release of the timber rights.

We have jurisdiction to hear this appeal pursuant to 28 U.S.C. Sec. 1291. Darring v. Kincheloe, 783 F.2d 874 (9th Cir.1986). We review the district court's grant of summary judgment de novo, viewing the evidence in a light most favorable to the nonmoving party, to decide whether there are any genuine issues of material fact and whether the district court properly applied the relevant substantive law. Ashton v. Cory, 780 F.2d 816, 818 (9th Cir.1986).

The scope of a grant of federal land and the construction of federal patents are questions of federal law. United States v. Pappas, 814 F.2d 1342, 1345 n. 8 (9th Cir.1987) (citing United States v. Oregon, 295 U.S. 1, 28 (1935)); United States v. Gates of the Mountains Lakeshore Homes, Inc., 732 F.2d 1411, 1413 (9th Cir.1984). In some situations, however, a federal court may determine, as a matter of federal law, that the United States has consented to the application of state rules of construction to conveyances. Gates, 732 F.2d at 1413.

Congressional intent is the predominant consideration in determining whether state law should be incorporated or a uniform federal law should be fashioned. Mardan Corp. v. C.G.C. Music, Ltd., 804 F.2d 1454, 1458 (9th Cir.1986). Unless Congress expresses a contrary intent, federal patents are construed according to state law. Pappas, 814 F.2d at 1345 n. 8. Application of state law is appropriate when the state law is "neither aberrant nor hostile" to the interests of the United States. Cortese v. United States, 782 F.2d 845, 849 (9th Cir.1986). Washington law by which patents and reservations are construed is not inconsistent with federal law or hostile to federal interests. Accordingly, the district court did not err in applying Washington law to construe the patent.

A land grant from the United States is construed in favor of the government, and nothing passes unless conveyed in clear language. United States v. Union Pacific R.R. Co., 353 U.S. 112, 116 (1957); United States v. State Box Co., 219 F.Supp. 684, 687 (N.D.Cal.), aff'd, 321 F.2d 641 (9th Cir.1963). Any doubts are resolved in the government's favor. United States v. Union Pacific R.R. Co., 353 U.S. at 116.

When interpreting contract or deed provisions, the role of the court is to ascertain and give effect to the parties' intentions and to give words their ordinary meaning. McKillop v. Crown Zellerbach, Inc., 733 P.2d 559, 561 (Wash.App.), review denied, 108 Wash.2d 1015 (1987). Controlling intent is ascertained from the deed as a whole. Id. The district court determined the timber reservation provisions contained in paragraph 4 of the patent, and in modified Schedule B to the Agreement, were divided into four parts--the "title" paragraph, an "administrative" paragraph, a "deed" paragraph and a "reforestation" paragraph--and held the plain language of the "title" paragraph reserved title to the timber to the United States without any limitation.

Burlington argues that the second paragraph of the reservation limits what the government reserved. According to Burlington, the government retained title to the timber only until the expiration of the timber cutting contracts which were in existence at the time the Agreement was signed. It is Burlington's position that in the event any of the timber cutting contracts were terminated, other than by a default, title to the timber was forfeited, it became part of the realty, and passed to Burlington under the terms of the Agreement and the patent. See Layman v. Ledgett, 577 P.2d 970, 971 (Wash.1978) (en banc); Leuthold v. Davis, 355 P.2d 6, 7 (Wash.1960). Burlington alleges a "buy out" under the FTCPMA is an event other than a default and, therefore, title to the timber passed to Burlington.1

We disagree with Burlington's construction of the Agreement and patent. The plain language of the reservation provisions is to the contrary. The first paragraph reserves title to the United States. The second paragraph describes how the timber sale contracts will be administered. The language in the third paragraph of the reservation reinforces the unqualified reservation of title, stating "[t]he United States shall, at [Burlington's] request, release its reserved timber rights prior to the termination of the timber sale contract as the harvest of the reserved timber and post harvest ... measures are completed." (emphasis added).

Burlington argues that if the patent reserves title to the timber to the United States, it does so only for a reasonable time, and that time has expired.

A reservation of a right to cut and remove timber will not be construed as creating a perpetual right unless that intention is clearly expressed. United States v. State Box Co., 219 F.Supp. at 689; see also Layman v. Ledgett, 577 P.2d at 971; Leuthold v. Davis, 355 P.2d at 7-8. Where no time for removal is included in a reservation, the contract is construed to require removal within a reasonable time. State Box Co., 219 F.Supp. at 689; Leuthold, 355 P.2d at 7.

The district court determined the reservation contained no time limitation. The reservation contains no clear expression that a perpetual right of removal was intended. Thus, it would appear that the United States was required to remove the timber within a reasonable time. The determination of what would be a reasonable period of time under the circumstances of this case is a mixed question of law and fact and involves the weighing of numerous factors. See State Box Co., 219 F.Supp. at 689; Johnson v. Layman, 465 P.2d 196, 198 (Wash.App.), review denied, 78 Wash.2d 992 (1970). Burlington did not argue in the district court that the government had failed to remove the timber within a reasonable period of time. It makes this argument and raises this issue for the first time on appeal. We will not review an issue not raised before the district court unless necessary to prevent manifest injustice. Int'l Union of Bricklayers & Allied Craftsman Local 20 v. Martin Jaska, Inc., 752 F.2d 1401, 1404 (9th Cir.1985). "Before this court will address such an issue, the proponent 'must show exceptional circumstances why the issue was not raised below.' " Id. (quoting Taylor v. Sentry Life Insurance Co., 729 F.2d 652, 655-56 (9th Cir.1984) (per curiam)). Burlington has made no such showing of exceptional circumstances. Accordingly, we will not consider its "reasonable time" argument in this appeal. Id.

C. Application of the FTCPMA "Buy Out" Provisions

Because we decide this case based on interpretation of the timber reservation, and determine that by the plain language of the reservation title to the timber was reserved to the United States, we do not reach the question whether a "buy out" under the FTCPMA is the equivalent of a "default".

The district court correctly determined that no cause of action in trespass could lie against Pearson Timber because the United States had title to the timber and consequently Pearson Timber lawfully harvested the timber pursuant to a government contract. We agree and affirm the dismissal of the causes of action against Pearson Timber.

AFFIRMED.