United States District Court, M.D. Pennsylvania
COMMONWEALTH OF PENNSYLVANIA, PENNSYLVANIA GAME COMMISSION, Plaintiff
THOMAS E. PROCTOR HEIRS TRUST and MARGARET PROCTOR TRUST, Defendants
Christopher C. Conner, Chief Judge.
of acres of Pennsylvania land are situated above the
Marcellus Shale, an underground sedimentary rock formation
spanning multiple states and containing massive reserves of
natural gas. Experts conservatively value that gas in the
hundreds of billions of dollars. Relatively new methods of
drilling-most notably hydraulic fracturing or
“fracking”-have unlocked the potential to tap
these subsurface gas reserves. To no one's surprise, the
ability to reach this lucrative natural resource has
engendered heated ownership disputes like the one before this
Commonwealth of Pennsylvania, Pennsylvania Game Commission
(“Game Commission”), claims that it owns both the
surface and subsurface rights for numerous tracts of land in
Sullivan and Bradford Counties in northeastern Pennsylvania.
Defendants, Thomas E. Proctor Heirs Trust and Margaret O.F.
Proctor Trust (collectively, “Proctor Trusts”)
disagree, contending that they hold superior title to the
subsurface estates underlying these tracts. A lengthy and
complex legal battle has ensued, culminating in cross-motions
for partial summary judgment regarding a bellwether tract of
land in Bradford County. (Docs. 94, 123). Chief Magistrate
Judge Susan E. Schwab issued an extensive report, (Doc. 155),
recommending that the cross-motions for summary judgment be
denied. Both parties have filed objections to Judge
Factual Background and Procedural
not repeat the comprehensive factual and procedural
background Judge Schwab supplied, (see Doc. 155 at
1-10, 19-24), familiarity with which is presumed. The
following is a consolidated version of undisputed facts most
pertinent to the parties' objections and pending Rule 56
disputes. These factual details primarily relate to the
Josiah Haines warrant-the bellwether tract that is the focus
of cross-motions for partial summary judgment.
1893, Schrader Mining & Manufacturing Company conveyed
the Josiah Haines warrant-located in LeRoy Township, Bradford
County-to Thomas E. Proctor (“Proctor”) and
Jonathan A. Hill (“Hill”). (Doc. 95 ¶ 5).
The following year, Proctor and Hill and their wives deeded
the property to Union Tanning Company (“Union
Tanning”), “reserving” the subsurface
rights to minerals, oil, gas, coal, and petroleum
(hereinafter “mineral rights” or
“subsurface estate”). (Id. ¶¶
8-9). This conveyance effectively severed the surface and
subsurface estates of the Josiah Haines warrant, vesting
those rights in separate owners. In 1903, Union Tanning
conveyed its surface ownership interest in the Josiah Haines
warrant to Central Pennsylvania Lumber Company
(“CPLC”), excepting the rights to certain tree
bark and conveying the property “subject to” all
prior exceptions and reservations. (Id. ¶¶
13-15). In June 1908, Calvin H. McCauley, Jr.
(“McCauley”), purchased the Josiah Haines warrant
at the Bradford County treasurer's sale (hereinafter
“tax sale” or “treasurer's sale”)
when the property was sold to recover unpaid taxes for 1907.
(Id. ¶¶ 23, 25). Exactly what
interest-whether only surface rights or both the surface and
subsurface estates-this 1908 tax sale conveyed is the
gravamen of the instant dispute.
December 1910, McCauley and his wife-in consideration of a
recited payment of $1.00-quitclaimed all interest in numerous
properties, including the Josiah Haines warrant, to CPLC.
(Id. ¶ 31). Finally, in 1920, CPLC conveyed its
interest in the warrant to the Game Commission,
“subject to” the prior 1894 Proctor and Hill
mineral rights exception and any exceptions or reservations
in the 1903 deed from Union Tanning to CPLC. (Id.
1980, Proctor's heirs, who comprise the Proctor Trusts,
have been leasing the Josiah Haines warrant for oil and gas
development. (Id. ¶¶ 46-47). The Proctor
Trusts and the Game Commission now seek to quiet title to the
subsurface estate of the warrant, asking the court to enter
judgment as a matter of law as to ownership thereof.
Review of a Magistrate Judge's Report and
party objects to a magistrate judge's report and
recommendation, the district court must review de
novo the challenged portions of the report. 28 U.S.C.
§ 636(b)(1)(C); Brown v. Astrue, 649 F.3d 193,
195 (3d Cir. 2011); Local Rule of Court 72.3. Uncontested
portions of the report are reviewed for “clear error on
the face of the record.” Clouser v. Johnson,
40 F.Supp.3d 425, 430 (M.D. Pa. 2014) (quoting Cruz v.
Chater, 990 F.Supp. 375, 375-78 (M.D. Pa. 1998) (quoting
Fed.R.Civ.P. 72(b) advisory committee's note to 1983
summary adjudication, the court may dispose of those claims
that do not present a “genuine dispute as to any
material fact” and for which a jury trial would be an
empty and unnecessary formality. Fed.R.Civ.P. 56(a). The
burden of proof tasks the non-moving party to come forward
with “affirmative evidence, beyond the allegations of
the pleadings, ” in support of its right to relief.
Pappas v. City of Lebanon, 331 F.Supp.2d 311, 315
(M.D. Pa. 2004); see also Celotex Corp. v. Catrett,
477 U.S. 317, 322-23 (1986). The court is to view the
evidence “in the light most favorable to the non-moving
party and draw all reasonable inferences in that party's
favor.” Thomas v. Cumberland County, 749 F.3d
217, 222 (3d Cir. 2014). This evidence must be adequate, as a
matter of law, to sustain a judgment in favor of the
non-moving party on the claims. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 250-57 (1986); Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
587-89 (1986). Only if this threshold is met may the cause of
action proceed. See Pappas, 331 F.Supp.2d at 315.
are permitted to resolve cross-motions for summary judgment
concurrently. See Lawrence v. City of Philadelphia,
527 F.3d 299, 310 (3d Cir. 2008); see also Johnson v.
Fed. Express Corp., 996 F.Supp.2d 302, 312 (M.D. Pa.
2014); 10A Charles Alan Wright et al., Federal Practice and
Procedure § 2720 (3d ed. 2015). When doing so, the court
is bound to view the evidence in a light most favorable to
the non-moving party with respect to each motion.
Fed.R.Civ.P. 56; Lawrence, 527 F.3d at 310 (quoting
Rains v. Cascade Indus., Inc., 402 F.2d 241, 245 (3d
parties' numerous objections to Judge Schwab's
report can be distilled into several fundamental
disagreements: first, whether Judge Schwab was
correct in determining that there is a genuine dispute of
material fact as to the character- seated or unseated-of the
land constituting the Josiah Haines warrant when assessed in
1907 and sold at the 1908 tax sale; second, whether
there is a material factual dispute regarding an agency
relationship between the 1908 tax-sale purchaser (McCauley)
and CPLC; third, whether language in the 1920 deed
prevented the Game Commission from obtaining title to the
subsurface estate; and fourth, whether federal due
process concerns affect the validity of the 1908 tax
sale.We address these intricate disputes
Character of the Land
Game Commission's claim to the subsurface estate
underlying the Josiah Haines warrant relies entirely on the
premise that the 1908 tax sale “washed” the title
and rejoined the previously severed surface and subsurface
estates, thereby giving good title to the entire warrant to
McCauley, the tax-sale purchaser. According to the Game
Commission, Herder Spring's endorsement of the
title-wash phenomenon squarely answers the ownership claims
in this case. The Game Commission contends that because the
warrant was unseated and assessed as such, and because there
is no evidence that Proctor and Hill reported their
subsurface interest for separate assessment to the Bradford
County commissioner, the warrant was properly assessed as a
whole in 1907 and sold as a whole at the 1908 treasurer's
Proctor Trusts counter that there is ample evidence that the
Josiah Haines warrant was actually seated in character when
it was assessed for 1907 taxes. Thus, it was improperly sold
as unseated at the 1908 treasurer's sale. According to
the Proctor Trusts, the 1908 treasurer's sale was void
because of this error, and the sale did not divest Proctor
and Hill of their subsurface rights. Judge Schwab found that
there is a genuine dispute of material fact regarding the
character of the land when classified as unseated by the
county assessor in 1907, precluding summary judgment.
analysis of this classification dispute is informed by
Pennsylvania's historical treatment of land as seated and
unseated. Prior to 1947, Pennsylvania's real property
taxing practices varied depending on whether land was
noticeably occupied or developed (“seated”) or
wild and undeveloped (“unseated”). Herder
Spring, 143 A.3d at 363-64. This distinction directly
impacted the parcel owner's potential tax liability.
Owners of seated land could be held personally liable for the
taxes assessed on their plot. Id. at 364. Because
unseated land was deemed to be in its natural condition and
owners often resided in another county or state, taxes for
unseated lands were “imposed on the land itself”;
owners were not held personally responsible. Id.;
Northumberland County v. Phila. & Reading Coal &
Iron Co., 131 F.2d 562, 565-66 (3d Cir. 1942). The
county in which the unseated land was located, consequently,
could sell that land at a treasurer's sale to recover any
unpaid taxes- “the logical method of collection.”
See Northumberland County, 131 F.2d at 565-66.
land assessors were responsible for “travers[ing] the
county” to determine whether land was seated or
unseated and for reporting such distinctions to the county
commissioner for taxation purposes. Herder Spring,
143 A.3d at 364; see also McCall v. Lorimer, 4 Watts
351, 353 (Pa. 1835). It was the duty of the assessor to
designate the land as seated if the assessor found
“such permanent improvements as indicate a personal
responsibility for the taxes, ” and, if no such
improvements were evident, to designate the land as
“unseated.” Hutchinson v. Kline, 49 A.
312, 313 (Pa. 1901) (per curiam); Dolph v.
Everhart, 19 A. 431, 432-33 (Pa. 1890). Hence, the
distinction between seated and unseated land was in the
“eye of the assessor.” Hutchinson, 49 A.
at 313; Stoetzel v. Jackson, 105 Pa. 562, 567
prompt a “seated” designation, the appearance of
the land itself must have indicated a visible
“substantial occupancy.” See Rosenburger v.
Schull, 7 Watts 390, 394 (Pa. 1838). Substantial
occupancy was evidenced by regular and continuous use of the
land. Watson v. Davidson, 87 Pa. 270, 270 (1878);
see George v. Messinger, 73 Pa. 418, 422-23 (1873).
Importantly, neither actual residence nor developments made
to increase the value of the land were prerequisites to
seating a tract. Watson, 87 Pa. at 271, 274. Land
could be seated if the property was used for
resource-extraction endeavors like lumbering or mining, so
long as the landowner or agent “carrie[d] on the
business for so long a time and in such a manner
continuously, from year to year, as to show an actual and
permanent occupancy of the tract.” Id. at 274;
see Herder Spring, 143 A.3d at 363 (citing Robert
Grey Bushong, Pennsylvania Land Law, Vol. 1 §
469(II) at 500-01 (1938)).
Game Commission's Objection
Game Commission objects to Judge Schwab's determination
that a genuine dispute of material fact exists as to the
character of the land for the 1907 assessment. The Game
Commission contends that evidence offered by the Proctor
Trusts is insufficient as a matter of law to find the Josiah
Haines warrant seated in 1907, and that Judge Schwab erred by
holding otherwise. We disagree.
Judge Schwab noted, the Proctor Trusts have proffered
competent evidence that significant bark-peeling and
lumbering activities occurred on the Josiah Haines warrant in
1905, 1906, and 1907. In 1905, tanbark was harvested
from 60 acres of the warrant, yielding 300, 900 net tons of
bark and 189, 500 feet of hemlock lumber. (Doc. 95 ¶
18). The following year, tanbark was harvested from 201
acres, producing 1, 000, 000 net tons of bark. (Id.
¶ 19). Finally, in 1907, tanbark was harvested from
149.5 acres, yielding 104, 300 net tons of bark.
(Id. ¶ 20).
both parties fail to observe is that, when these annual
bark-peeling figures are added together, they equal 410.5
acres-the exact acreage of the Josiah Haines warrant.
(See, e.g., Doc. 97-1 at 43; Doc. 98-1 at
70, 71, 92, 101). In other words, by 1907, CPLC had stripped
the entire Josiah Haines warrant-section by
section-of all its hemlock bark. This conclusion is
buttressed by CPLC's plat “No. 15, ” which
divides the warrant into three distinct sections and
indicates that a different portion was “peeled as
of” 1905, 1906, and 1907, resulting in the whole
warrant being peeled by 1907. (See Doc. 104-7 at 2).
It is likewise corroborated by the December 9, 1920 affidavit
of A.R. Spicer, “First Vice President” and
“General Land & Timber Superintendent” of
CPLC, who averred that “all of the Hemlock bark has
been removed from” the “410.5” acres
comprising the Josiah Haines warrant. (Doc. 98-1 at 100-01).
true that the Proctor Trusts have provided little in the way
of describing how the land may have appeared to an assessor
following CPLC's bark-peeling activities. Nonetheless,
scholars have indicated that hemlock peeling could have
substantial effects on the character of the land. As
explained by Hugh O. Canham, emeritus professor of forest and
resource economics at the S.U.N.Y. College of Environmental
Science and Forestry, the common method of harvesting tanbark
was to cut down the hemlock trees, strip their bark, and
leave the wood-which was less desirable than pine-to
“rot in the forest.” Canham, Hemlock and
Hide: The Tanbark Industry in Old New York,
supra note 5. This process resulted in
“clearcut” hemlock forests and “denuded
hillsides, with rotting hemlock trees stripped of their
bark[.]” Id. “Each acre of these woods
produced only twelve cords of bark, meaning that the average
tannery consumed more than one hundred acres each year.
Immense waste resulted, as the strippers took only the bark,
leaving the bared logs to rot in the woods.” Robert
Kuhn McGregor, Changing Technologies and Forest
Consumption in the Upper Delaware Valley, 1790-1880, 32
J. Forest Hist. 69, 77 (1988). Indeed, tanneries'
extensive hemlock-bark consumption “devastated large
portions of the region's forests.” Id.
Additionally, due to the dusk-to-dawn nature of peeling work,
bark peelers would “set up camps in the forest”
during the peeling season, harvesting tanbark and sending it
off to tanneries via horse-drawn wagons or sleds. Canham,
Hemlock and Hide: The Tanbark Industry in Old New
York, supra note 5.
little doubt that a reasonable juror could find that when the
Josiah Haines warrant was assessed for taxes in 1907, the
appearance of the land to the eye of the assessor would have
implicated a “seated” designation. There is
significant evidence regarding “actual and permanent
occupancy of the tract, with the use thereof, ” such
that the assessor's classification of the tract as
unseated could reasonably be questioned. See Watson,
87 Pa. at 270, 274. The Game Commission's argument that
the facts in this case differ from those in
Messinger and Watson is unavailing. Under
Pennsylvania law, what matters is not the type of improvement
or business being carried on, but “the permanent
occupancy and possession with the means afforded thereon for
the collection of taxes.” Id. at 274. We
cannot say that timber removal coupled with sustained and
comprehensive bark-peeling activities on the Josiah Haines
warrant would be insufficient to seat the land. Judge
Schwab's determination on this account is not erroneous.
Permissibility of the Classification
the Proctor Trusts can assert this argument to attack the
1908 treasurer's deed over a century after the assessment
and tax sale is a different matter. After exhaustive review
of relevant state and federal cases, as well as the
legislative history of the applicable statute, we conclude
that the Proctor Trusts' challenge is foreclosed by law.
starting point is the critical statute at issue, the Act of
June 3, 1885 (“Act of 1885” or “the
Act”), which provides:
All sales of seated or unseated lands within this
commonwealth which shall hereafter be made for arrearages of
taxes due thereon, shall be held, deemed and taken to be
valid and effective irrespective of the fact whether such
lands were seated or unseated at the time of the assessment
of such taxes. Provided, That nothing in this act contained
shall validate or authorize the sale of any land which was in
fact seated at the time of the assessment of the taxes
thereon, in any case where there was sufficient personal
property on the premises to pay all the taxes assessed
thereon, liable under the laws of this commonwealth to have
been seized therefor.
72 Pa. Stat. and Cons. Stat. Ann. § 5933. The first
sentence of the Act generally puts an end to attacking the
validity of tax sales based on “the fact” of
whether the land was really seated or unseated at the time of
its assessment. Its phrasing is clear and unambiguous.
However, the second sentence-the exception to the general
rule-has injected needless confusion into state and federal
Northumberland County v. Philadelphia and Reading Coal
& Iron Co., 131 F.2d 562 (3d Cir. 1942), the court
of appeals examined this exception in the context of a
corporate-reorganization bankruptcy appeal; the case did not
involve validity of a tax-sale title. The debtor coal company
claimed that, because land which it had owned but had failed
to pay taxes on for years 1937 and 1938 had been assessed as
unseated, it was not liable for those taxes and was not
obligated to pay them as an administrative expense.
Northumberland County, 131 F.2d at 563-64. The
county rejoined that, although placed on the unseated list,
the land was “in fact seated” and the county had
evidence to prove it; thus, the coal company was obligated to
pay the county approximately $174, 000 in overdue taxes.
Id. at 564. The court described the question ...