A claim by the Louisiana to 5 percent of the net proceeds of the
sales of the lands of the United States, under § 5 of the Act of
February 20, 1811, c. 21, 2 Stat. 641, and a claim by the same
state to the proceeds of the sale by the United States of swamp
lands growing out of the provisions of the acts of September 28,
1850, c. 84, 9 Stat. 519, and March 2, 1855, c. 147, 10 Stat. 634,
are claims against which the United States can set off the amount
due to them by the state on matured coupons on bonds known as the
Indian Trust bonds, issued by the state.
Under § 1069 of the Revised Statutes, the Court of Claims had no
jurisdiction of so much of the claim to the 5 percent fund as was
credited to the state on the books of the Treasury Department more
than six years before the bringing of the suit
The case is stated in the opinion of the Court.
MR. JUSTICE BLATCHFORD delivered the opinion of the Court.
This is an appeal by the United States from a judgment of the
Court of Claims awarding to the State of Louisiana the sum of
$43,572.71.
There are claims of two kinds involved in the suit. The first
claim arises under act Feb. 20, 1811, c. 21, 2 Stat. 641, which
authorized the inhabitants of Louisiana to form a constitution and
a state government. The fifth section of that act provided as
follows:
"That five percentum of the net proceeds of the sales of the
lands of the United States, after the first day of January, shall
be applied to laying out and constructing public roads and levees
in the said state as the legislature thereof may direct."
The second claim arises under §§ 1, 2, and 4 of the Act
Page 127 U. S. 183
of Sept. 28, 1850, c. 84, 9 Stat. 519, and §§ 1, 2, act March 2,
1855, c. 147, 10 Stat. 634. Sections 1, 2, and 4 of the act of 1850
read as follows:
"That to enable the State of Arkansas to construct the necessary
levees and drains to reclaim the swamp and overflowed lands
therein, the whole of those swamp and overflowed lands made unfit
thereby for cultivation which shall remain unsold at the passage of
this act shall be, and the same are hereby, granted to said
state."
"SEC. 2. That it shall be the duty of the Secretary of the
Interior, as soon as may be practicable after the passage of this
act, to make out an accurate list and plats of the lands described
as aforesaid and transmit the same to the governor of the State of
Arkansas, and at the request of said governor, cause a patent to be
issued to the state therefor, and on that patent the fee simple to
said lands shall vest in the said State of Arkansas, subject to the
disposal of the legislature thereof,
provided however that
the proceeds of said lands, whether from sale or by direct
appropriation in kind, shall be applied exclusively, as far as
necessary, to the purpose of reclaiming said lands by means of the
levees and drains aforesaid."
"SEC. 4. That the provisions of this act be extended to, and
their benefits be conferred upon, each of the other states of the
union in which such swamp and overflowed lands, known and
designated as aforesaid, may be situated."
Section 1 of the act of 1855 provided that the President should
cause patents to be issued to purchasers or locators who had made
entries of public lands claimed as swamp lands, prior to the issue
of patents to the state, as provided for by § 2 of the act of 1850,
except in certain specified cases. Section 2 of the same act
provided as follows:
"That upon due proof, by the authorized agent of the state or
states, before the Commissioner of the General Land Office, that
any of the lands purchased were swamp lands within the true intent
and meaning of the act aforesaid, the purchase money shall be paid
over to the said state or states."
The state alleged in its petitions in the Court of Claims (for
there were two suits, which were consolidated) that the moneys due
to it under the act of 1811, instead of being paid
Page 127 U. S. 184
over to it by the United States, had been unlawfully credited
upon certain bonds alleged to have been issued by the state, and
claimed to be held by the United States as an investment of certain
Indian trust funds; that, as to the acts of 1850 and 1855, moneys
were due to the state thereunder, which had been legally
ascertained and certified, but instead of being paid over to the
state, had been credited on bonds of the same kind, and that the
sums referred to as being ascertained and found due to the state
were trust funds, to be devoted to specific purposes under the
provisions of the acts granting them to the state.
The United States, in addition to a general traverse, put in a
special plea of set-off alleging that the state was indebted to the
United States in the amount of interest which had accrued on bonds
issued by the state and held by the United States.
The Court of Claims found as facts (1) that of the 5 percent
found as facts (1) that of the 5 percent act of 1811 there remains
due from the United States to the state, as credited on the books
of the Treasury Department, the following sums: May 8, 1879,
$13,602.71; June 8, 1882, $63,47; February 7, 1884, $22,773.51;
making a total of $36,439.69, and that of the swamp land fund
accruing to the state under the acts of 1850 and 1855 there remains
due from the United States to the state, as credited on the books
of the Treasury Department, the following sums: May 26, 1886,
$3,803.02; September 9, 1886, $1, 110; May 2, 1887, $1,730.41; May
4, 1887, $489.59; making a total of $7,133.02; (2) that the First
Comptroller of the Treasury, at the dates stated in finding 1,
admitted and certified the above sums to be due to the state on
account of the 5 percent fund and the indemnity for swamp lands
purchased by individuals within the state, but directed those
amounts to be credited on moneys due the United States, as stated
in finding 3, and that it does not appear that the state
authorities had knowledge of this proceeding; (3) that the United
States own coupon bonds issued by the state, amounting to $37,000,
payable in 1894, known as the "Indian Trust Bonds," and also hold
and own overdue
Page 127 U. S. 185
coupons attached to those bonds, representing the interest from
May 1, 1874, to November 1, 1887, amounting to $31,080. The court
gave a judgment in favor of the claimant for the total of the two
amounts of $36,439.69 and $7,133.02, namely, $43,572.71.
The contention of the United States in the Court of Claims was
that under § 1069 of the Revised Statutes, which provides that
every claim against the United States cognizable by that court
shall be forever barred unless the petition setting forth a
statement thereof is filed in the court within six years after the
claim first accrues, the court had no jurisdiction in respect to
the sum of $13,602.71 credited on the books of the Treasury
Department on the 8th of May, 1879, as a part of the 5 percent
fund, because the first of the two petitions was not filed until
February 1, 1887. Deducting this sum of $13,602.71 from the
$43,572.71 would leave the sum of $29,970, and it was contended by
the United States that the claim for this sum was more than covered
by the set-off of the $31,080, due by the state on the coupons on
the Indian trust bonds.
The Court of Claims held that the two funds in question in the
Treasury of the United States were trust moneys, to be held for
special purposes at first by the United States, and by the state
after a transfer to it; that the trust had not been disavowed or
annulled by Congress; that it became the duty of the executive
officers of the United States, in charge of the funds, to hand them
over to the state as a succeeding trustee; that the credit given to
the state in the Treasury Department, on its indebtedness to the
United States, for the amount of the coupons on the Indian trust
bonds, was without authority of law; that consequently the funds
were free from liability to the set-off, and that the claim of the
state to the $13,602.71 was not barred by § 1069 of the Revised
Statutes.
The provisions of the Swamp Land Act of 1850 have been before
this Court in several cases. In
Emigrant Co. v. County of
Wright, 97 U. S. 339, at
October term, 1877, the State of Iowa had, by statute, granted the
swamp lands to the counties of the state in which they might be
found, with an injunction
Page 127 U. S. 186
that the lands and their proceeds should be appropriated to
reclaiming the swamp lands, and if, when this was accomplished,
anything was left, to building roads and bridges over the same, and
lastly, the remainder to be used in building roads and bridges in
other parts of the county. By subsequent legislation of the state,
the counties were authorized to depart from this injunction and to
use the lands for public buildings and internal improvements, but
the assent of the majority of the voters of the county to such
purpose was required. The state also authorized the sale of all the
lands to any person or corporation by a written contract, to be in
like manner submitted to the vote of the county, but the sale was
to be subject to the proviso that the vendee should take the lands
subject to all the provisions of the act of Congress of 1850.
Wright County, with the assent of a majority of the voters of the
county, having contracted in writing with the Emigrant Company to
sell to it all the swamp lands in the county, and the claim of the
county for indemnity against the United States for swamp lands
which had been sold by the United States, and having executed a
deed of a quantity of the lands to the company, the county filed a
bill in equity to set aside the contract and deed, and obtained a
decree to that effect in the circuit court. In the opinion of this
Court, delivered by MR. JUSTICE MILLER, the proposition urged by
the plaintiff in the suit was considered -- namely that the
contract was void on its face because it contemplated a diversion
of the fund in violation of the original grant. As regarded that
proposition, the Court said:
"It is not necessary to decide it in this case, and we do not
decide that the contract is, for that reason alone, void. But we
are of opinion that any purchaser of these lands from the county,
or of the claim of the county to indemnity, must be held to know
that, in the hands of the county, they were impressed with an
important public trust, and that in examining into the fairness and
honesty of such a purchase, this consideration constitutes an
important element of the decision."
The Court then proceeded in its opinion to hold that the
contract must be rescinded because of what amounted to fraud in the
manner in which it was
Page 127 U. S. 187
procured -- namely that the officers and citizens of the county
were ignorant of the nature and value of what they were selling;
that the vendee was well informed in regard to both, and withheld
such information unfairly from the officers of the county, and that
there was a provision in the contract
"for a diversion of the fund to other purposes, a gross
inadequacy of consideration, and a successful speculation at the
expense of the rights of the public."
Questions arising under the same act of Congress of 1850 and the
same legislation of Iowa came before this Court again at October
term, 1879, in
Emigrant Co. v. County of Adams,
100 U. S. 61. In
that case, the County of Adams had made a contract with the
Emigrant Company to convey to it the county's swamp lands and claim
for indemnity against the United States on account of swamp lands
which had been sold by the United States, and had given a deed in
pursuance of the contract. It afterwards filed a bill to rescind
the contract and the deed, and obtained in the circuit court a
decree to that effect, which this Court reversed. The case was
twice argued here. In the opinion of the Court, delivered by MR.
JUSTICE BRADLEY, it was stated that there was no sufficient proof
that the contract was procured by false and fraudulent
representations. It was also said of the act of 1850 that by it the
lands "were granted to the several states in which they lie, for a
purpose expressed on the face of the act, and that purpose was
to enable the state to construct the necessary levees and
drains to reclaim them.'" The opinion added:
"Our first view was, that this trust was so explicit and
controlling as to in validate the scheme finally devised by the
Legislature of Iowa for the disposal of the land and under which
the contract in question was made. But on more mature reflection,
after hearing additional argument, we are satisfied that such a
result did not necessarily follow."
The opinion then referred to the act passed by the Legislature
of Iowa in 1858, by which it was declared that it should be
competent and lawful for the counties owning swamp and overflowed
lands to devote the same, or the proceeds thereof, either in whole
or in part to the erection of public buildings for the
Page 127 U. S. 188
purpose of education, for the building of bridges, roads, and
highways, and for building institutions of learning, or for making
railroads through the county or counties to which such lands
belonged. The opinion then proceeded:
"The contract in dispute was made under this law, and our first
impression was that it introduced a scheme subversive of the trust
imposed upon the state by the act of Congress; that its effect was
to devote the lands and proceeds thereof to purposes different from
those which the original grant was intended to secure; that it
threw off or endeavored to throw off all public responsibility in
relation to the trust, and hence that the scheme itself and the
contract based upon it were void. But a reconsideration of the
subject has brought us to a contrary conclusion. The argument
against the validity of the scheme is that it effects a diversion
of the proceeds of the lands from the objects and purposes of the
congressional grant. These were declared to be to enable the state
to reclaim the lands by means of levees and drains. The proviso of
the second section of the act of Congress declared that the
proceeds of the lands, whether from sale or direct appropriation in
kind, should be applied exclusively, as far as necessary, to these
purposes. This language implies that the state was to have the full
power of disposition of the lands, and only gives direction as to
the application of the proceeds, and of this application only 'as
far as necessary' to secure the object specified. It is very
questionable whether the security for the application of the
proceeds thus pointed out does not rest upon the good faith of the
state, and whether the state may not exercise its discretion in
that behalf without being liable to be called to account, and
without affecting the title to the lands disposed of. At all
events, it would seem that Congress alone has the power to enforce
the conditions of the grant, either by a revocation thereof or
other suitable action, in a clear case of violation of the
conditions. And as the application of the proceeds to the named
objects is only prescribed 'as far as necessary,' room is left for
the exercise by the state of a large discretion as to the extent of
the necessity. In the present case it is not shown, by allegations
in the bill or
Page 127 U. S. 189
otherwise (if such a showing would be admissible), that any
necessity existed for devoting the proceeds of the lands in
question to the purposes of drainage. No case is shown as the basis
of any complaint, even on the part of the general government, much
less on the part of the County of Adams, which voluntarily entered
into the arrangement complained of. Our conclusion, therefore, is
that this objection to the validity of the contract cannot
prevail."
The opinion then overruled the other grounds urged in favor of
the plaintiff, reversed the decree below, and directed a decree to
be entered dismissing the bill, without prejudice to the right of
the county to bring an action at law for any breach of the terms of
the contract.
The provisions of the Swamp Land Act of 1850 and of the Iowa
statutes in regard to the swamp lands were again considered by this
Court in
Mills County v. Railroad Companies, 107 U.
S. 557, at October term, 1882, the opinion of the Court
being delivered by MR. JUSTICE BRADLEY. In that case, reference was
made to
Emigrant co. v. County of Wright, supra, and it
was said that the contract there "was declared to be void for
actual fraud of the grossest character," and that the question as
to whether the disposition of the lands operated as a diversion of
the fund, in violation of the original grant, was not fully
considered. The opinion also referred to the case of
Emigrant
Co. v. County of Adams, supra, and quoted a large part of the
extract above given from the opinion in that case, and then
added:
"Upon further consideration of the whole subject, we are
convinced that the suggestion then made, that the application of
the proceeds of these lands to the purposes of the grant rests upon
the good faith of the state and that the state may exercise its
discretion as to the disposal of them, is the only correct view. It
is a matter between two sovereign powers, and one which private
parties cannot bring into discussion. Swamp and overflowed lands
are of little value to the government of the United States, whose
principal interest in them is to dispose of them for purposes of
revenue, whereas the state governments, being concerned in their
settlement and improvement, in the opening up of roads and other
public works through them, in the
Page 127 U. S. 190
promotion of the public health by systems of drainage and
embankment, are for more deeply interested in having the disposal
and management of them. For these reasons, it was a wise measure on
the part of Congress to cede these lands to the states in which
they lay, subject to the disposal of their respective legislatures,
and, although it is specially provided that the proceeds of such
lands shall be applied 'as far as necessary' to their reclamation
by means of levees and drains, this is a duty which was imposed
upon and assumed by the states alone when they accepted the grant,
and whether faithfully performed or not is a question between the
United States and the states, and is neither a trust following the
lands nor a duty which private parties can enforce as against the
state."
These views were confirmed in the case of
Hagar v.
Reclamation District, 111 U. S. 701,
111 U. S. 713,
at October term, 1883, where it was said of the Swamp Land Act of
1850 that the appropriation of the proceeds of the sale of the
lands rested solely in the good faith of the state, and that its
discretion in disposing of them was not controlled by the condition
mentioned in the act, as neither a contract nor a trust following
the lands was thereby created.
In the case of
Louisiana v. United States, 22 Ct.Cl.
284, the State of Louisiana sued the United States for claims
arising under the Five Percent Act of 1811, and under the Swamp
Land Acts of 1850 and 1855, and had a judgment for both claims
amounting to $71,385.83, which was affirmed by this Court in
United States v. Louisiana, 123 U. S.
32. In that case, the United States interposed the
defense of the limitation of six years, as to the swamp land claim.
The Court of Claims held that the action of the Commissioner of the
General Land Office, under § 2 of the act of 1855, in determining,
on proof by the agent of the state, that any of the swamp land had,
within the meaning of the act, been sold by the United States, so
as to bring into force the requirement that the purchase money
should be paid over to the state was necessary to a right of action
for the money on the part of the state, and that, as such action in
that case did not occur more than
Page 127 U. S. 191
six years before the bringing of the suit, the limitation
prescribed by § 1069 of the Revised Statutes did not apply. A
set-off or counterclaim was interposed in that case by the United
States, they alleging that the amount due by citizens of the State
of Louisiana to the United States for the direct tax levied by the
Act of August 5, 1861, 12 Stat. 292, was a proper subject of
set-off against the claim of the state in the suit. This contention
of the United States was overruled by the Court of Claims on the
ground that the state had never assumed the payment of the tax
assessed under the act of 1861. On the appeal to this Court by the
United States,
123 U. S. 123 U.S.
32, it was said, in the opinion of the Court, delivered by MR.
JUSTICE FIELD, that the statute of limitations did not seem to have
any application to the demand arising upon the swamp land acts, and
that, as the Commissioner of the General Land Office had not found
and certified the amount due to the state from the sales of swamp
lands until the 30th of June, 1885, and the suit was commenced in
September, 1886, the limitation of the statute did not apply to the
case. It was further held that the state was not liable for the
taxes assessed under the Act of August 5, 1861, against the real
property of private individuals in the state, and that the Court of
Claims had jurisdiction of the action. Therefore the judgment was
affirmed.
In accordance with the views of this Court in the cases above
cited, it must be held that the proceeds of the swamp lands are not
subject to a property trust, either in the hands of the United
States or in those of the state, in such sense that the claim of
the United States upon the state for the overdue coupons on the
Indian trust bonds, involved in the present case, cannot be set off
against the claim of the state to the swamp land fund.
Under the act of 1850, the swamp lands are to be conveyed to the
state as an absolute gift, with a direction that their proceeds
shall be applied exclusively, as far as necessary, to the purpose
of reclaiming the lands. The judgment of the state as to the
necessity is paramount, and any application of the proceeds by the
state to any other object is to be taken as
Page 127 U. S. 192
the declaration of its judgment that the application of the
proceeds to the reclamation of the lands is not necessary. By the
second section of the act of 1855, it is provided that the purchase
money received by the United States for the swamp lands sold by
them shall be paid over to the state. There is nothing in these
provisions of the character of a property trust, and nothing to
prevent the application by the state of the swamp land fund to
general purposes. If the power exists anywhere to enforce any
provisions attached to the grant, it resides in Congress, and not
in the court.
The same views apply to the provision as to the 5 percent fund,
in the act of 1811, that it shall be applied to laying out and
constructing public roads and levees in the state, "as the
legislature thereof may direct," and, as to both the 5 percent fund
and the swamp land fund, we are of opinion that neither of them is
of such a character that the debt due to the United States by the
State of Louisiana for the overdue coupons on the Indian trust
bonds cannot be set off against the fund which is in the hands of
the United States. This being so, it follows that the limitation of
§ 1069 of the Revised Statutes is a bar against the recovery of the
item of $13,602.71 of the 5 percent fund, credited May 8, 1879, and
that the amount of the set-off of $31,080, for coupons falling due
up to November 1, 1887, on the Indian trust bonds, is a valid
set-off against the remaining $29,970, and is more than sufficient
to extinguish that item.
It results from these views that
The judgment of the Court of Claims must be reversed and the
case be remanded to that court with a direction to enter a judgment
in favor of the United States.