United States v. Northern Pacific Ry. Co.
311 U.S. 317 (1940)

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U.S. Supreme Court

United States v. Northern Pacific Ry. Co., 311 U.S. 317 (1940)

United States v. Northern Pacific Railway Co.

Nos. 3 and 4

Argued March 4, 5, 1940

No. 3, reargued October 15, 16, 1940

Decided December 16, 1940

311 U.S. 317

Syllabus

1. In a suit under the Act of June 25, 1929, for an accounting, etc., between the United States and the Northern Pacific Railway Company, with respect to the land grants made by the United States to that company's predecessor, decision on the following propositions of the Government, each advanced as a defense to

Page 311 U. S. 318

any relief for the company, are reserved, eight Justices who heard the case being equally divided in opinion concerning them, viz.:

(a) That the obligations of the United States under the Act of July 2, 1864, were avoided by the alleged failure of the grantee to obtain bona fide subscriptions to its stock and payments thereon, as the Act required. P. 311 U. S. 335.

(b) That the grantee failed to build its whole railroad as required by that Act, inasmuch as it did not locate or construct it between Wallula and Portland, a distance of 225 miles, but instead secured running rights over tracks of another company connecting those two places. P. 311 U. S. 336.

(c) That the grantee, by diverting to the building and support of allegedly unjustified and unprofitable branch lines, funds which it should have used to complete its main line, broke its contract with the United States, and thereby lost the right to make further lieu selections of land. P. 311 U. S. 336.

(d) That the grantee broke its contract with the United States by refusing to open land granted it by the Resolution of 1870 to settlement and preemption at $2.50 per acre, and is therefore not entitled to any relief in this case. P. 311 U. S. 337.

(e) That, through unauthorized preliminary withdrawals of place and indemnity lands made by the Secretary of the Interior in the interest of the grants, the grantee and its successor received benefits, lands, and values to which they were not entitled, precluding any award to the railroad company in this case. P. 311 U. S. 339.

(f) That foreclosures and reorganizations affecting the railroad company and its property debarred the company from selecting more lieu lands. P. 311 U. S. 340.

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2. Under the Act of July 2, 1864, and the Joint Resolution of May 31, 1870, granting land to the Northern Pacific Railroad Company, land in the indemnity limits was not subject to selection, in lieu of land lost in the place limits, until identified as odd-numbered sections by an official survey; nor could mineral land be selected. P. 311 U. S. 342.

3. In determining the existence and extent of deficiencies in these grants on the dates of withdrawals by the Government of land in the indemnity limits for forestry and other purposes, tracts unsurveyed or classified as mineral are not to be counted as then available for selection by the railroad. P. 311 U. S. 342.

Page 311 U. S. 319

4. The fact that, by the terms of the granting Acts, the land in the indemnity limits was, before survey, subject to be taken by preemptors and settlers, whereby ultimate satisfaction of the grants might be defeated, did not justify the government in reserving such land to itself, and thus rendering it impossible for the company to obtain it. United States v. Northern. Pacific Railway Co.,256 U. S. 51. P. 311 U. S. 344.

5. The right of the railroad company, under the Act of June 25, 1929, to be indemnified for deficiencies in its grants caused by governmental reservations of land within the indemnity limits does not depend upon proof being made by the company that, but for the withdrawals, it would have selected tracts so reserved, and what tracts it would have selected. P. 311 U. S. 346.

The company's right of selection, to the extent of the deficiencies in the grants, remained available as to the withdrawn lands provided the lands selected were such as are defined in the grants. The Government's contention that no one can say how soon the lands would have been surveyed and selected if they had not been withdrawn and reserved, or what areas would have been taken up by settlers and preemptors if there had been no withdrawals or surveys, does not avail to abrogate or qualify the company's right to exercise its privilege of selection notwithstanding the withdrawals. Moreover, the argument ignores the repeal of the preemption laws by the Act of March 3, 1891. P. 311 U. S. 347.

6. The Indian Treaties of September 17, 1851 (Fort Laramie), and October 17, 1855 (Blackfeet), which purport to "reserve" vast tracts of the Indian Country, did not create technical reservations, but merely demarked the areas to be occupied by the respective tribes, the object being to promote peace among them and between them and the United States. The status of the land as "Indian Country," owned by the United States subject to the Indian right of occupancy, was not altered. P. 311 U. S. 347.

7. Land along the definite location of the Northern Pacific where it traversed areas described in these treaties was not "reserved" within the meaning of § 3 of the Act of 1864, and the undertaking of the United States to extinguish the Indian title (§ 2 of that Act) applied not only to the right-of-way, but also to the lands in the place and indemnity limits. P. 311 U. S. 348.

8. The allegations of the Government bill do not support its contention that the railroad company should be charged in this case with a large amount of land alleged to have been obtained illegally,

Page 311 U. S. 320

as a result of the company's having adopted an unnecessarily circuitous route between certain points of its line in the Territory of Washington. P. 311 U. S. 349.

9. The Railroad was entitled, under the Act of 1864 and the Resolution of 1870, to make selections of land in the second indemnity limits in Montana in lieu of place sections lost to it as a result of the creation, in 1868, out of country described in the Treaty of 1851, supra, of the Crow Reservation -- a typical Indian Reservation. P. 311 U. S. 352.

10. The addition of lands in the Railroad's indemnity limits to the Northern Cheyenne Indian Reservation in Montana, by Executive Order of March 19, 1900, confirmed by Act of Congress of June 3, 1926, was a withdrawal of such lands as a "Government reservation" and for "governmental purposes" within the intent of the Act of June 25, 1929, and, within the meaning of that Act, such lands were, on June 5, 1924, lands embraced within the exterior boundaries of a Government reservation, for which the Railroad is entitled to claim compensation. P. 311 U. S. 353.

11. Lands in the Northern Pacific indemnity limits which, after being reserved by the Government for forestry and other purposes, were filed upon by homesteaders before June 5, 1924, and were patented to them after that date, are lands for which the Act of June 25, 1929, awards indemnity, as lands which, on June 5, 1924, were embraced in a Government reservation and which, in the event of a deficiency of the Railroad's grants on the date of withdrawal for governmental purposes, "would be, or were" available for selection. P. 311 U. S. 354.

2. Under the Act of February 26, 1895, Government Commissioners undertook to examine and to classify as mineral or non-mineral all lands within the place and indemnity limits of the Northern Pacific Railroad in four land districts of Montana and Idaho, and made their reports, which were accepted and approved by the Secretary of the Interior. In lieu of place sections so classified as mineral, the Railroad obtained patents for much indemnity land, and in this suit claims credit for more. The Government alleges, and the Railroad denies, that the Commissioners were persuaded by fraudulent practices of the Railroad to classify, as mineral, lands of little value, so that the Railroad could select more valuable tracts in lieu.

Held:

(1) Under the Act of June 25, 1929, this issue of fraud should go to trial. P. 311 U. S. 355.

Page 311 U. S. 321

(2) Although it was alleged, and found by the court below, that the Commissioners could not possibly examine and classify the lands within the time limited by the Act of 1895, their reports and the approval and acceptance of them by the Secretary of the Interior, create a prima facie showing in favor of the classification and of the Railroad's indemnity selections based thereon. P. 311 U. S. 358.

(3) The burden of proving the fraud alleged is on the United States. P. 311 U. S. 358.

(4) The United States is not barred by laches or estoppel from asserting and proving the alleged fraud, and from having the Railroad charged with any lands or values received as a result of it. P. 311 U. S. 358.

13. The "agricultural" land which the Railroad was entitled to select under the Act of 1864 in lieu of mineral land is such land as, by Land Office practice and public land laws, would have been available to individuals for clearing and subsequent cultivation, or for grazing, or for any other purpose commonly classified by the Land Office as coming within the preemption and homestead laws; but it does not include land valuable solely for timber. P. 311 U. S. 358.

14. The United States is liable to account to the Railroad for lands in indemnity limits which the Railroad could have selected if and when surveyed, had they not been withdrawn by the Government. P. 311 U. S. 364.

15. Inasmuch as, under the Act of 1929, the Railroad's right to compensation depends upon the availability of lands on the dates of the withdrawals for governmental purposes, the claim of the Government that subsequent restorations of withdrawn lands to the public domain, sufficient in area to make up the deficiency created by the withdrawals, defeated the Railroad's claim to choose lands within the withdrawal areas, is not sustained in the light of the facts. P. 311 U. S. 365.

16. For any financial detriment to the United States or financial benefit to the company that the Government may prove to have resulted from the action of the Department of the Interior in prematurely withdrawing lands in the place and indemnity limits from settlement and preemption, the company should be charged, and the United States credited, under § 6 of the Act of June 25, 1929. P. 311 U. S. 366.

17. The proviso of the Resolution of 1870, requiring that granted lands be opened by the company to settlement and preemption,

Page 311 U. S. 322

applies only to the additional lands granted by that Resolution, and not to lands acquired under the grant of 1864. P. 311 U. S. 367.

18. The company was not a trustee of such lands for the United States, either in its own right or in behalf of possible settlers. It results that the Government cannot call upon the company to account as a trustee for the proceeds of sale of the lands. P. 311 U. S. 368.

19. The proviso of the Resolution of 1870 required the company to open the lands granted by the Resolution to preemption and settlement at the expiration of five years from the completion of the entire road in 1887, whether the lands were then subject to mortgage or not; its failure so to do was a breach of its contract with the United States, and the Government is entitled to prove, if it can, any damage to it, or advantage to the company, which resulted from this breach of contract. P. 311 U. S. 368.

20. The company's right to receive patents for indemnity lands outside of the reserves for which selections were filed with the Department of the Interior prior to June 5, 1924, cannot be attacked in this suit upon the ground that the bases were fraudulently classified as mineral, for the reason, amongst others, that the bill prays no affirmative relief in respect of such alleged fraudulent classification. P. 311 U. S. 369.

21. The Government objected to a part of the decree below directing that the company receive patents to certain indemnity lands selected prior to June 5, 1924, basing the objection on the ground that the company had not assigned bases for selections. Held, that the point is not open for argument, it not having been preserved in the record. P. 311 U. S. 370.

22. The Resolution of 1870, in authorizing location and construction of the Northern Pacific line from Portland to Tacoma "under the provisions and with the privileges, grants and duties provided for in its [the company's] act of incorporation," made a new grant with place and indemnity limits of the same width as those prescribed for the railroad built under the charter Act of 1864. P. 311 U. S. 372.

23. The Land Office construed the Resolution of 1870 as requiring the laying down of second indemnity limits for the Portland-Tacoma line. P. 311 U. S. 375.

24. Such grants are not quantity grants, but grants of lands "in place" or by description. P. 311 U. S. 375.

25. The lands in place limits, granted to the Northern Pacific under the Act of 1864 in aid of its "Cascade Line," which are embraced

Page 311 U. S. 323

also in the place limits of the grant made to the same company by the Resolution of 1870 in aid of the later Portland-Tacoma line, are not lands "granted or disposed of by the United States" prior to the later grant for which the company was entitled, by that Resolution, to make indemnity selections. P. 311 U. S. 376.

Affirmed in part; reversed in part.

These were cross-appeals under a special Act of May 22, 1936, from a decree of the District Court, in a suit brought by the Attorney General pursuant to an Act of June 25, 1929, to determine all controversies between the United States and the Northern Pacific Railway Company and to obtain an accounting, etc., in respect of the land grants made to that company's predecessor in aid of the construction of the railroad. The Bill named as parties defendant Northern Pacific Railway Company, Northern Pacific Railroad Company, "Northern Pacific Railroad Company, as reorganized in 1875," Northwestern Improvement Company, Bankers Trust Company, Guaranty Trust Company, and City Bank Farmers Trust Company. The Guaranty Trust Company disclaimed.

Page 311 U. S. 324

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