The Oregon-California Railroad Grants (Acts of July 25, 1866, as
amended, and May 4, 1870) made no distinction between land covered
with timber and other land, nor between the timber or other
incidents and the land itself; title to all was vested in the
railroad company for transmission to actual settlers upon the terms
prescribed by the acts. The substantial interest granted the
company was the right to exact not more than $2.50 per acre in so
disposing of the lands.
Oregon & California R. Co. v.
United States, 238 U. S. 393,
discussed and followed.
While the railroad company could use the lands as a basis of
credit, it could not by trust deed convey an interest in either
land or timber exempt from the obligations imposed by the granting
acts or the power of the government to compel their
performance.
The granting acts being not mere instruments of conveyance, but
laws reserving the right of alteration or repeal, Congress, to
overcome a situation largely due to breaches of obligation by the
railroad company which made the original scheme impracticable, had
power without the company's consent to resume the title and provide
for disposition of the land by the government under conditions
assuring the company the equivalent of its interest in the grants
-- not more than $2.50 per acre.
The "Chamberlain-Ferris Act" of June 9, 1916, c. 137, 39 Stat.
218, examined and found to accord with the power of Congress and
the principles laid down by this Court in
Oregon &
California R. Co. v. United States, 238 U.
S. 393.
The former decision of this Court having directed an injunction
to hold the land and timber intact until Congress should have
reasonable opportunity to make new provisions for disposing of them
consistently with the interest of the railroad company, and an act
having been passed accordingly after entry of the decree in the
district court, this Court, upon a review of the decree based on an
alleged
Page 243 U. S. 550
departure from its former mandate, may properly determine the
validity of the act as a matter involved in the decree's
execution.
Under Rule 24, costs in this Court are not allowable in cases
where the United States is a party.
Where the United States obtained a decree declaring railroad
land grants forfeited for breaches of obligation by the railroad
company and upon appeal the decree was reversed because the
obligations broken were not conditions subsequent, but statutory
covenants, and relief against the company by injunction was decreed
accordingly, costs of the litigation in the district court were
properly awarded by that court to the United States.
The case is stated in the opinion.
MR. JUSTICE McKENNA delivered the opinion of the Court.
This is the second appearance of the case in this Court. It is
on certificate from and certiorari to the Circuit Court of Appeals
for the Ninth Circuit, to which court it was taken by appeal to
review a decree of the District Court for the District of Oregon,
entered in fulfillment of the mandate of this Court.
The decree of the district court was reversed, and the
Page 243 U. S. 551
present controversy is as to what our mandate required. As
expressing their different views of it, the government and the
railroad company -- we shall so refer to the defendants, except
where a distinction is necessary -- submitted forms of decrees to
the district court. The court adopted the decree submitted by the
government, and that action is assigned as error.
The case as made in this Court on its first appearance is
reported in
238 U. S. 238 U.S.
393-438, and contains all of the elements for the decision of the
questions now presented. Before detailing those elements, we may
say preliminarily that the difference between the decree entered
and that proposed by the railroad company was in the extent of the
restraint upon the company in the disposition of lands granted in
aid of the construction of certain railroads and telegraph lines.
The acts making the grants contained the provision that the lands
granted should be sold to actual settlers only, in quantities not
greater than one quarter section to one purchaser, and for a price
not exceeding $2.50 an acre.
The decree restrained the railroad company from selling "to any
person not an actual settler on the land sold to him," with
limitation of quantity and price stated,
"and from selling any of the timber on said lands, or any
mineral or other deposits therein, except as a part of and in
conjunction with the land on which the timber stands or in which
the mineral or other deposits are found, and from cutting or
removing or authorizing the cutting or removal of any of the timber
thereon, or from removing or authorizing the removal of mineral or
other deposits therein, except in connection with the sale of the
land bearing the timber or containing the mineral or other
deposits."
The decree as proposed by the railroad company omitted the
injunction against selling the timber and mineral deposits.
Page 243 U. S. 552
Upon these differences in the proposed and entered decree the
railroad company bases its contention that the latter is not in
accordance with the mandate of this Court, and in support of it it
has presented elaborate arguments to establish a distinction
between lands and the timber on them and the mineral deposits in
them, and that the command of the acts of Congress to sell the
lands did not include the timber or deposits. In other words, it is
contended that the acts of Congress gave the railroad company "the
right of an owner by absolute grant to the use of the timber on his
land" and to avail himself of the minerals therein, and that
therefore the restraint that the district court put upon the
railroad company was in excess of the mandate.
"It was what this Court has termed an 'intermeddling' with
matters outside of the scope of the mandate. It proceeded to
determine that the railroad had no right to use the timber upon its
lands while they were still unsold and in its possession and
occupancy; it determined that the railroad company could not even
make a clearing in anticipation of a sale to some settler, or dig
out a ton of coal, and it adjudged that the owner of the land had
no right in the timber or the coal except to pass it, as part of
the realty, when it sold the land to a settler at $2.50 an
acre."
The complaint is graphic. Its attempted justification is the
assertion of a grant in absolute ownership. Such ownership is the
foundation of the railroad company's contention, and on this
foundation it builds its argument, and upon the insistence that the
lands having been granted, necessarily as incidents to them the
timber and minerals on and within them were granted. An immediate
and sufficient answer to the contention would seem to be that the
grant was not absolute, but was qualified by a condition in favor
of settlers, and that, if the "lands" granted had such incidents,
the "lands" directed to be sold to actual settlers were intended to
have such incidents. That is,
Page 243 U. S. 553
if the "lands" granted carried by necessary implication all that
was above the surface and all below the surface to the railroad
company, they carried such implication to the actual settler. In
other words, what "lands" meant to the railroad company, they meant
to the settler, embraced within his right to purchase and acquire.
We are not disposed, however, to rest upon this summary answer, but
will consider with more particularity our mandate.
It is not necessary to trace the title of the lands to the
railroad company. It is sufficient to say that the source of the
title was an act of Congress approved July 25, 1866, c. 242, 14
Stat. 239, as amended by the acts approved June 25, 1868, c. 80, 15
Stat. 80; April 10, 1869, c. 27, 16 Stat. 47, and May 4, 1870, c.
69, 16 Stat. 94, which acts granted lands to aid in the
construction of certain railroads and telegraph lines. The Act of
1869 contained this proviso:
"
And provided further, That the lands granted by the
act aforesaid [Act of 1866] shall be sold to actual settlers only,
in quantities not greater than one quarter section to one
purchaser, and for a price not exceeding two dollars and fifty
cents per acre."
There was a like provision in the Act of 1870.
The government brought suit against the railroad company,
alleging that these provisos constituted conditions subsequent,
charging breaches of the conditions by the company, and praying for
a forfeiture of the unsold lands.
The railroad company denied that the provisos were to be so
construed, and alleged that they constituted restrictive and
unenforceable covenants, and set up other defenses.
The district court adopted the view of the government as to the
provisos, and entered a decree forfeiting the lands, and the case
came here for review.
The contentions of the government and the railroad company were
repeated in this Court, and it was, besides,
Page 243 U. S. 554
contended that the provisos only applied to lands susceptible of
actual settlement and cultivation, and did not include timber
lands. [
Footnote 1]
We rejected the contention of the government; we rejected in
part the contention of the railroad company, saying:
"Our conclusions, then, on the contentions of the government and
the railroad company are that the provisos are not conditions
subsequent; that they are covenants and enforceable."
But how enforceable? And what was the remedy for breaches? --
and breaches there were, many, gross, and determined. It was
certainly not intended to be decided that these breaches, with all
of their consequences, were to be put out of view, and the railroad
company only enjoined against future breaches. Yet this, in effect,
is the contention, and it is attempted to be supported by certain
language in the opinion. Before quoting it, we may say in general
that much that is cited from it must be considered in reference to
the controversies which were presented, and that the granting acts
and their provisos were necessarily construed as of the time of
their passage. Action under them and the breaches of them came
afterwards, and a consideration of the remedies to which the
government was entitled. Keeping this comment in mind, we can more
easily understand the language of the opinion in description of the
grant and in regard to the relief that was awarded the
government.
As to the grant, this was said -- and it is much insisted
on:
"There was a complete and absolute grant to the railroad company
with power to sell, limited only as prescribed,
Page 243 U. S. 555
and we agree with the government that the company"
"might choose the actual settler; might sell for any price not
exceeding $2.50 an acre; might sell in quantities of 40, 60, or 100
acres, or any amount not exceeding 160 acres."
And we added:
"It might choose the time of sale or its use of the grant as a
means of credit, subject ultimately to the restrictions imposed,
and we say 'restrictions imposed' to reject the contention of the
railroad company that an implication of the power to mortgage the
lands carried a right to sell on foreclosure, devested of the
obligations of the provisos."
This declares the meaning of the words of the acts, taken by
themselves. It points out the power of the railroad company, and
that it was "limited only as prescribed." It does not point out the
remedy of the government if the limit prescribed was transcended.
For that, we must look to other parts of the opinion. We took pains
to declare that the principles of the case were "not in great
compass," that circumstances had given "perplexity and prolixity to
discussion," but had not confused the simple words of the acts of
Congress, regarded either as grants or as laws, and that they were
both, and, as both, they conferred rights quite definite and
imposed obligations as much so -- the first having the means of
acquisition; the second of performance. And we gave emphasis to
them as laws and the necessity of obedience to them as such, the
remission of their obligation to be obtained "through appeal to
Congress," and not by an evasion of them or a defiance of them.
The evasions and defiance we showed, and the extent to which
they transcended the policy and purpose of the government expressed
in the covenants. We contrasted the requirement of the grants of a
sale to an actual settler of 160 acres (maximum amount) with sales
of 1,000, 2,000, 20,000, and 45,000 acres to single purchasers, and
the use of the lands for homes with their use for immediate
Page 243 U. S. 556
or speculative enterprises. The relief the government was
entitled to, we said, was not satisfied by preserving its rights to
the lands sold, and we further said that
"an injunction simply against future violations of the
covenants, or, to put it another way, simply mandatory of their
requirements, will not afford the measure of relief to which the
facts of the case entitle the government."
The reason was expressed. The government alleged, to show a
disregard of the covenants, that more than 1,000 persons had
applied to purchase lands from the railroad company in conformity
with the covenants. The company, replying, said the applications
were not made in good faith for settlement, but for speculation,
the lands being valuable only for their timber, and not being fit
for settlement, and further alleged that at no time had the lands
fit for actual settlement exceeded 300,000 acres, in widely
separated tracts, and had been sold during the construction of the
road and prior to its completion to actual settlers in the
prescribed quantities and at the prescribed price.
We have seen that other sales were made in quantities in excess
of that prescribed by the statute, and not for settlement at prices
from $5 to $40 an acre, and that, at the time the answer was filed,
there remained unsold over 2,000,000 acres, the reasonable value of
which was $30,000,000. There was no intimation that the lands did
not include the timber, and it was not only recognized but asserted
that the lands were more valuable for the timber than for
settlement.
Our judgment took care of the situation. It preserved the
remedies of the government for past violations of the granting acts
and recognized that new dispositions were necessary to secure the
rights that had accrued to the government. We said that, owing to
the
"conditions now existing, incident, it may be, to the prolonged
disregard of the covenants by the railroad company, the lands
Page 243 U. S. 557
invite now more to speculation than to settlement, and we think
therefore that the railroad company should not only be enjoined
from sales in violation of the covenants, but enjoined from any
disposition of them whatever or of the timber thereon, and from
cutting or removing any of the timber thereon, until Congress shall
have a reasonable opportunity to provide by legislation for their
disposition in accordance with such policy as it may deem fitting
under the circumstances, and at the same time secure to the
defendants all the value the granting acts conferred upon the
railroads."
The design of this and its adequacy would seem to need no
comment. It was intended to be a guide to the district court --
indeed, a direction of the decree of the court. The decree complied
with the direction.
See Southern Oregon Co. v. United
States (Circuit Court of Appeals, Ninth Circuit, decided Feb.
13, 1917).
Congress, in the execution of the policy it deemed fitting under
the circumstances, as expressed in our opinion, enacted what is
called the Chamberlain-Ferris Act of June 9, 1916 (39 Stat. 218, c.
137). [
Footnote 2] The validity
of the
Page 243 U. S. 558
act is challenged, and both sides invite a determination of the
challenge. The validity of the law may be said not to be involved.
The appeal is from the decree, and, that being determined to be
right, the appeal, it may be urged, is satisfied, the questions it
presents decided. It, however, may be considered important in the
execution of the decree, for we have seen that the granting acts
were laws as well as grants, had the strength and operation of
laws,
Page 243 U. S. 559
subject to amendment if the right of amendment existed or
accrued. There was a reservation in them of the right of alteration
or repeal, and if it could not be exerted to take back what had
been granted and had vested, it could be exerted to accomplish the
remedy which the court adjudged to the government for the violation
by the railroad company of the provisions of the grants. It is no
answer to the exertion of the power and remedy to say that the acts
of Congress were initially complete and absolute grants. It is to
be borne in mind that they carried with them covenants to be
performed, and necessarily an obligation to perform them, with
remedies for breaches of performance. Such was our judgment, as we
have seen, and the judgment was adapted to the conditions created
by the breaches, and for this, legislation was deemed
necessary.
But the railroad company says that the legislation directed was
to have its consent, and that such consent "was essential to the
valid resumption or alteration of its vested rights," and that this
was what this Court meant when it said that any legislation in the
premises by Congress should "secure to the defendants all the value
the granting acts conferred upon the railroads."
We have already answered the contentions. The railroad company,
by pushing into view the rights conferred by the granting acts and
putting out of view the wrongs committed by it, can easily build an
argument upon and invoke the inviolability of vested rights, and to
say that its consent was necessary to legislation is to say that it
could dictate the remedy for its wrongs, preclude or embarrass the
policy of the government.
The interest that the granting acts conferred upon the railroad
company was $2.50 an acre. That secured to it, "all the value the
granting acts conferred" upon it was secured. It is true it had the
right of sale, selection of time, and settler. If these were
rights, they were also aids
Page 243 U. S. 560
to the duty of transmitting the lands to settlers, and, the duty
having been violated, they became unsuitable to the conditions
resulting and obstructions to the relief which had accrued to the
government. In other words, by the conduct of the railroad company,
the policy of the granting acts had become impracticable of
performance, and the new conditions -- the lands inviting more to
speculation than to settlement -- demanded other provision than
that prescribed by the granting acts. This was the declaration and
direction of our judgment, and the Chamberlain-Ferris Act is the
execution of it.
The Union Trust Company was one of the defendants in the suit,
and is one of the parties here. It was heard by its own counsel at
the bar and through brief. In the main, its argument is the same as
that of the railroad company, varied somewhat in detail, and
asserts that it has not only the rights of the railroad, but,
"in
addition and
especially, that, even if it
be possible for the government now to take away rights once
conveyed to the railroad, it cannot take them
except subject to
the lien of the mortgage."
So far as the rights of the trust company coincide with those of
the railroad company, we have considered them, and they cannot be
greater than those of that company. The railroad company, it is
true, could use the lands as a basis of credit, but only to the
extent of its interest in them, subject to the performance of its
obligations and the power of the government to exact their
performance.
We were careful to observe this subordination. We expressed the
extent of the interest that the railroad company received and that
"it might choose the time for selling or its use of the grant as a
means of credit," but, we also said, "subject ultimately to the
restrictions imposed." And further, we said
"'restrictions imposed' to reject the contention that an
implication of the power to mortgage the lands carried a right to
sell on foreclosure, devested of the obligations of the provisos.
"
Page 243 U. S. 561
The case was responded to as it was presented, and no phase of
it was omitted in presentation or response that could influence its
judgment. Of what was in the minds of counsel, determining and
urging their contentions, of what was in the mind of the court in
response to the contentions, the opinion leaves no doubt, and that,
after the fullest consideration of all that was involved of rights
and remedies, the judgment was pronounced.
A distinction is now attempted to be made between a sale of the
lands and the use of the lands, including in the use of them the
right to cut the timber upon them and extract minerals (coal and
iron) from them. Such use, it is asserted, is a necessary incident
of ownership, and that such use was not intended to be taken away
nor could it have been taken away by our judgment.
To answer the contentions would be mere repetition of what we
have said. The distinction now made between the lands and their use
is but the contention urged on the first appeal and rejected --
that the provisos only applied to lands susceptible of actual
settlement, and not to timber lands. The distinction then was
between the lands; now, between their constituting elements, and
for the same reason: to give to the railroad company and the trust
company what the granting acts did not give; or, rather, gave for
the purpose of transmission to actual settlers. This transmission
becoming impracticable, other disposition of the lands, including
all that is signified by the word, was adjudged.
The Trust Company also attacks the Chamberlain-Ferris Act and is
assisted in the attack by a "friend of the court." The attacks have
the same basis as that which we have noticed -- that is, the rights
of the railroad company are asserted to be vested and inviolable.
The contention gets a semblance of strength from the ability of
counsel. To yield to it would be in effect to declare that
covenants violated are the same as covenants performed --
Page 243 U. S. 562
wrong done the same as rights exercised -- and, by confounding
these essential distinctions, give to the transgression of the law
what its observance is alone entitled to.
The decree of the district court taxed costs against the
railroad company, and this is assigned as error. The amount is
stated to be $6,249.02. So far as this sum includes costs on the
former appeal, we think there was error. The railroad company was
compelled to appeal from the decree against it. The decree was
reversed, and no costs were awarded for or against it, and could
not have been under Rule 24 of this Court. The rule gives costs to
the prevailing party in certain cases. The provision, however, does
not "apply to cases where the United States are a party; but in
such cases no costs shall be allowed in this Court for or against
the United States." Our mandate was in accordance with the rule,
and the decree should not have awarded costs to the United States.
To that extent, it is erroneous and should be modified by deducting
the costs which were incurred in this Court; and, so modified, it
is affirmed.
MR. JUSTICE McREYNOLDS took no part in the consideration and
decision of this case.
[
Footnote 1]
There were cross complainants and interveners, the first
asserting that the provisos created trusts in favor of actual
settlers, and the second that the trust had the scope of including
all persons who desired to make actual settlements upon the lands.
The decree of the district court and the decision here were adverse
to both contentions, and this case has no further concern with them
or with those who made them.
[
Footnote 2]
The provisions of the act, so far as they affect the railroad,
may be summarized as follows:
It recites, among other things, that this Court had ordered that
the railroad company be enjoined from "making further sales of
lands in violation of the law," and further enjoined from
"making any sales whatever of either the lands or the timber
thereon until Congress should have a reasonable opportunity to
provide for the disposition of said lands,"
etc., and enacts that the title to so much of the lands as had
not been sold by the railroad prior to July 1, 1913, be and the
same is hereby revested in the United States, excepting right of
way and lands in actual use by the railroad for depots, sidetracks,
etc. (§ 1). The lands shall be divided into three classes: power
sites, timber lands, and agricultural lands (§ 2). The timber shall
be sold by the Secretary of the Interior at such times and in such
manner as may seem best, and the lands from which it is removed
shall thereafter be classed as agricultural lands (§ 4). The lands
classed as agricultural shall be subject to entry under the
homestead laws, but patents shall not issue until the lands have
been cultivated for three years (§ 5). The Attorney General is
authorized to institute proceedings against the railroad company
and others to have determined the amount of moneys already received
by the railroad company or its predecessors on account of sales,
etc., of the granted lands, and which should be charged against it
as part of the "full value" secured to the grantees under the
granting acts as heretofore interpreted by this Court. In making
such determination, the court shall take into consideration all
moneys received from sales of lands or timber, forfeited contracts,
rent, timber depredations, and interest on contracts, or from any
source relating to the lands, and also the value of the timber from
the lands and used by the grantees or their successors. In such
suits, the court shall also determined the amount of taxes on the
lands paid by the United States, as provided in § 9 of the act, and
which should have been paid by the railroad, and the amounts thus
determined shall be treated as money received by the railroad
company (§ 7). The title to all moneys arising out of the granted
lands and now on deposit to await the final outcome of the suit
commenced by the United States in pursuance of the joint resolution
of April 30, 1908, is hereby vested in the United States, and the
United States is subrogated to all rights and remedies of the
obligee or obligees under any contract for the purchase of timber
on the grant lands (§ 8). Provision is made for the payment by the
United States of accrued taxes on the lands revested by the act (§
9). The proceeds of the timber and the lands shall be deposited in
the Treasury of the United States, and be paid to the railroad or
the lien holders as the fund accumulates, and at the end of ten
years an appropriation shall be made from the general funds of the
Treasury of the United States to pay any balance which may be due
to the railroad (§ 10). The profits derived from the transaction
shall be paid one quarter to the State of Oregon and one quarter to
the counties where the lands are situated, while one half shall be
retained by the government (§ 10).