Case summary: Commonwealth v. Thomas E. Proctor Heirs Trust (Pa. 2025)

 
On May 31, 2025, the Pennsylvania Supreme Court — at long last — answered the following certified question from the Third Circuit Court of Appeals in Commonwealth v. Thomas E. Proctor Heirs Trust¹2025 Pa. LEXIS 814.:

Whether, on the record provided here, a 1908 tax sale of an unseated parcel of land, induced by the surface owner’s failure to pay taxes on the estate, and made to an agent of the defaulting surface owner, constitutes a title wash, thereby divesting the subsurface owner of his interest in the estate.²Id. at 10.

The court answered in the negative, upholding an old Pennsylvania precedent known as the “Powell Rule,” which provides that “one cannot profit by his own wrong, and build up or acquire a title founded upon his own neglect of duty.”³Id. at 5 (citing Powell v. Lantzy, 34 A. 450, 451 (PA 1896)) Significantly, the Court agreed with the Middle District of Pennsylvania’s application of the Powell Rule, holding that Calvin H. McCauley, Jr.’s 1908 purchase of unseated land at tax sale operated as a redemption of taxes owed, rather than a “title wash” (i.e., a tax sale that extinguishes all prior ownership claims and conveys a clean title to the purchaser).

This holding could significantly impact oil and gas development spanning thousands of acres in the central and northeastern regions of Pennsylvania because it addresses a common title fact pattern. To simplify: in the late 1800s, an owner (here, Thomas E. Proctor and Jonathan A. Hill) sold unseated land to Union Tanning Company, reserving the subsurface rights to minerals, oil, gas, coal, and petroleum. Union Tanning Company then conveyed the land to Central Pennsylvania Lumber Company (“CPLC”). In the early 1900s, CPLC defaulted on its property taxes, resulting in a tax sale. Calvin H. McCauley, Jr. purchased the land at tax sale, and after a few years, conveyed the land back to CPLC for nominal consideration. Decades later, successors in interest to CPLC (here, the “Game Commission”) claimed ownership of the oil and gas estate, arguing that the early tax sale amounted to a “title wash,” which extinguished the severed interest in minerals, oil, and gas and vested it with the surface estate.

The case originated in the United States District Court for the Middle District of Pennsylvania, under diversity jurisdiction, when the Game Commission, seeking to quiet title to 2,500 acres of land in Sullivan and Bradford Counties, sued the Proctor Heirs Trust in 2012. The Middle District treated the 410-acre Josiah Haines warrant⁴In Pennsylvania a “warrant” refers to a land warrant, which is a historical document authorizing a survey of certain acreage but without specifying the exact location. Once warranted lands were surveyed and returned, the Commonwealth would issue a land patent for the acreage surveyed to the warrant applicant or a successor party. Large tracts of land have been historically assessed by reference to their warrant applicant name. as the representative “bellwether” tract for the remainder.  While the parties argued numerous facts and points of law, from this author’s perspective, there was one key factual issue, which once resolved, was likely to be dispositive: whether Calvin H. McCauley, Jr. acted as an agent for CPLC when he purchased the land at tax sale.

After nearly a decade of litigation, the Middle District determined that McCauley acted as CPLC’s agent, and therefore his tax sale purchase was a mere redemption of taxes owed and not a “title wash.” The court further found that under existing tax laws, CPLC had a duty, but not personal liability, to pay ad valorem taxes assessed against its unseated land. Applying the Powell Rule, the court held that CPLC could not obtain better title than it possessed prior to the tax sale, and quieted title to the minerals, oil, and gas in the Proctor Heirs Trust. The Game Commission made an interlocutory appeal to the Third Circuit Court of Appeals on the limited issue of whether CPLC had a legal duty to pay taxes assessed against the surface estate of unseated land. The Third Circuit conducted briefing and heard oral argument, but before issuing a decision and releasing jurisdiction back to the Middle District to determine ownership of the remaining acreage at issue, sought clarification from the PA Supreme Court on the legal effect of McCauley’s purchase.⁵Id. at 5-10.

The PA Supreme Court confirmed that (1) CPLC had a duty, but not personal liability, to pay ad valorem taxes assessed against the Josiah Hanes warrant, and (2) because McCauley acted as CPLC’s agent in the 1908 tax sale, his purchase at tax sale was a mere redemption of taxes owed and not a “title wash.”⁶Id. at 33-34. The Third Circuit will proceed with issuing a decision on the pending appeal and ultimately send the matter back to the Middle District of Pennsylvania to resolve underlying claims relating to the remaining acreage at issue. While further appeals are likely, the Pennsylvania Supreme Court’s decision has likely narrowed their scope.

Law clerk Luke Clark contributed to this article.

Footnotes

• 1
  2025 Pa. LEXIS 814.
• 2
  Id. at 10.
• 3
  Id. at 5 (citing Powell v. Lantzy, 34 A. 450, 451 (PA 1896))
• 4
  In Pennsylvania a “warrant” refers to a land warrant, which is a historical document authorizing a survey of certain acreage but without specifying the exact location. Once warranted lands were surveyed and returned, the Commonwealth would issue a land patent for the acreage surveyed to the warrant applicant or a successor party. Large tracts of land have been historically assessed by reference to their warrant applicant name.
• 5
  Id. at 5-10.
• 6
  Id. at 33-34.