Where there are doubts whether a clause be a covenant or
condition, courts will incline against the latter, and, as a
general principle, a court of equity is reluctant to lend its aid
to enforce a forfeiture. The provisos in the Land Grant Act of July
25, 1866, as amended June 25, 1868, and April 10, 1869, and in the
Act of May 4, 1870, to the effect that the lands granted must be
sold by railroad companies
Page 238 U. S. 394
only to actual settlers in quantities not exceeding 160 acres to
each and at a price not exceeding two dollars and fifty cents per
acre, are not conditions subsequent, the violation of which result
in forfeiture of the grants, but are covenants which are
enforceable. This suit, under such circumstances, becomes one to
enforce the covenants, and not to annul the patents.
The fact that the actions of the railroad companies in
connection with the lands granted were known to the government
officials and that no action was taken by the government in regard
thereto does not amount to an estoppel against the government so
that it cannot now enforce the covenants.
Acts of Congress granting lands are laws as well as grants, and
are operative until repealed; the fact that the conditions imposed
in the grant were not applicable to the character of the lands
furnishes no excuse for antagonistic action, even though it might
justify nonaction pending further legislation.
The delay in the assertion of a right is not conclusive against
its existence, although there may be argument in it.
Under the acts involved, there was a complete grant to the
railroad company with power to sell limited only as prescribed, and
cross-complainants and intervenors who have set up alleged rights
in the lands by reason of settlement thereon cannot sustain their
claims thereto. Nor can there be an absolute right to purchase and
settle on lands where there is no compulsion to sell.
The words "actual settlers" indicate no particular individuals,
and the uncertainty of the expression prevents any individual from
being a
cestui que trust to enforce the condition of the
statute.
In construing land grant statutes, the courts cannot, even at
the instance of the government, give a greater sanction to them
than Congress intended, nor can the courts give to any parties
rights which the statutes did not confer upon them.
As the conditions contained in the grant are enforceable, the
railroad company is enjoined from further violating them, but as
conditions have changed since the grant was made, the company is
further enjoined from making any disposition of the land or cutting
or removing the timber thereon until Congress shall have a
reasonable opportunity to provide for their disposition by
legislation, and in case after six months Congress shall not have
acted, the company may apply to the district court for a
modification of the decree.
This writ brings up for review a decision of the United States
District Court for the District of Oregon decreeing
Page 238 U. S. 395
the forfeiture of the unsold portion of certain lands granted by
Congress to certain railroad companies, and quieting the title of
the United States thereto.
In consequence of a memorial presented to it, Congress, on April
30, 1908, adopted a joint resolution which authorized and directed
the Attorney General of the United States to institute and
prosecute any and all suits in equity, actions at law, or other
proceedings, to enforce any rights or remedies of the United States
arising and growing out of either of the following acts of
Congress, to-wit: "An Act Granting Lands to Aid in the Construction
of a Railroad and Telegraph Line from the Central Pacific Railroad
in California, to Portland, in Oregon," approved July 25, 1866, 14
Stat. 239, c. 242, as amended by the Acts approved June 25, 1868,
15 Stat. 80, c. 80, and April 10, 1869, 16 Stat. 47, c. 27, and "An
Act Granting Lands to Aid in the Construction of a Railroad and
Telegraph Line from Portland to Astoria and McMinville, in the
State of Oregon," approved May 4, 1870, 16 Stat. 94, c. 69.
The Attorney General was empowered to assert all rights and
remedies existing in favor of the United States, including the
claim on behalf of the United States that the lands granted by such
acts, or any part of the lands, have been or are forfeited to the
United States by reason of any breaches or violations of the terms
or conditions of either of such acts which may be alleged or
established in such suits, actions, or proceedings.
The resolution declared that it was not intended to determine
the right of the United States to any such forfeiture or
forfeitures, but to fully authorize the Attorney General to assert
on behalf of the United States, and the court or courts before
which such suits, actions, or proceedings might be instituted or
pending, to entertain, consider, and adjudicate the claim and right
of the United States to such forfeiture or forfeitures, and, if
found, to enforce the same. 35 Stat. 571.
Page 238 U. S. 396
Being so authorized, the United States brought this suit as
complainant against the Oregon & California Railroad Company,
the Southern Pacific Company, Stephen T. Gage (individually and as
trustee), the Union Trust Company (individually and as trustee),
John L. Snyder, and certain others as defendants, to declare
forfeited to the United States lands of the Oregon & California
Railroad Company aggregating 2,300,000 acres which inured to the
predecessors in interest of the company under the acts of Congress
referred to in the resolution.
The bill set forth the acts of Congress and alleged that it was
expressed that neither the amendatory Act of April 10, 1869, nor
the Act of 1866 should be construed to entitle more than one
company to the grant of land, and that following such provision,
which was in the Act of 1869, there was 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."
That the Act of May 4, 1870, also contained the provision
(§ 4) that the lands granted thereby, excepting only such as
were necessary for depots and other needful uses in operating the
road, should
"be sold by the company only to actual settlers, in quantities
not exceeding one hundred and sixty acres or a quarter section to
any one settler, and at prices not exceeding two dollars and fifty
cents per acre."
The bill also detailed the organization of companies and the
steps taken by them to avail themselves of the grants and
accomplish the purpose for which they were made; the steps and
proceedings in the construction of the roads contemplated; the
issue of patents for the lands granted; the amount of land sold and
unsold and wherein
Page 238 U. S. 397
and by what acts there had been breaches of provisions of the
acts above set forth, which were alleged to have been conditions
subsequent, and that, by such breaches, the grants had become
forfeited. The bill likewise detailed the various steps and the
proceedings whereby the Oregon & California Railroad Company
became the owner of the grants, the connection of the defendants,
Southern Pacific Company, Gage, and the Union Trust Company
therewith, and the rights they asserted therein.
It was alleged that each of the other defendants (other than the
railroad company, the Southern Pacific Company, Gage, and the Union
Trust Company) asserted an interest in the lands, created, as they
alleged, by actual settlement in good faith upon certain of the
unsold lands, not exceeding one quarter section, with intention of
making a permanent home thereof, and had applied to the railroad
company to purchase the same; that the said defendants had
instituted suits against the railroad company, Gage, and the Union
Trust Company to compel a sale and conveyance of the lands to them;
that, unless enjoined, they would prosecute their suits to final
judgments, and that they were hence made parties to this suit in
order that they might be so enjoined, and, if the court so order,
be permitted to set forth their respective claims for
adjudication.
The bill prayed a forfeiture of the unsold lands and that the
title of the government thereto be quieted, or, if such relief be
denied, that the lands be adjudged subject to purchase by actual
settlers in quantities not exceeding 160 acres to any one purchaser
and at a price not exceeding $2.50 per acre; that a receiver be
appointed to sell the lands and account for the proceeds "as the
court shall direct."
If such relief be denied, that a mandatory injunction issue
requiring the railroad company to offer for sale and to sell the
lands as required by the grants. And the
Page 238 U. S. 398
bill also prayed that all of the defendants be enjoined from
asserting any right, title, or interest in and to the lands, or
committing waste thereon, and for an accounting of all moneys
received from the sale of lands or timber.
The persons who asserted interests acquired by actual settlement
were made parties to this suit and the causes consolidated, and
Snyder and others filed cross-complaints herein setting up their
alleged rights. And there were about 6,000 other persons who by the
court was permitted as interveners to present their claims for
consideration and adjudication. They are represented in the record
by the petition and papers of B. W. Nunnally and others.
The cross-complainants alleged that they were actual settlers
upon the lands granted by the Act of May 4, 1870, long prior to the
institution of any suit or the assertion of any claim of forfeiture
by the government, and the petitions in intervention averred that
the petitioners were applicants to purchase lands granted by that
act or the Act of July 25, 1866, and both cross-complaints and
petitions respectively alleged in substance that the lands were
granted in trust to the respective grantee companies for actual
settlers or those who should become such, and alleged respectively
tender of the purchase price, demand for conveyances, and the
refusal of the railroad company to accept the tender or make the
conveyances. And both cross-complainants and interveners asserted a
prior right to the extent of the land demanded by them,
respectively; denied that the grants had become forfeited, and
resisted the relief prayed by the government. They adopted in all
other particulars the allegations of the bill, and relied upon them
as the basis of their respective claims; prayed that the railroad
company be decreed to hold in trust the legal title to the land
respectively claimed by them, that their several rights be
established and enforced, and that the railroad company
Page 238 U. S. 399
be directed to convey to each of them the tract of land applied
for by each, and for general relief.
Demurrers were sustained to the cross-complaints and to the
petitions in intervention. Demurrers to the bill were overruled.
186 F. 861. Joint and several answers were then filed by the
railroad company, the Southern Pacific Company, and Gage. The Union
Trust Company answered separately. These companies, when referred
to collectively, will be called defendants.
The answers admitted most of the allegations of the bill and
denied others; alleged facts in resistance to the construction of
the government of the acts of Congress and to the relief prayed,
justified the alleged breaches of the conditions or covenants of
the grants, and set up laches, waiver of the breaches, and statutes
of limitation.
A great deal of testimony was taken, but the case was
practically submitted and a decree entered upon a stipulation of
facts made by the government and defendants. It of itself is quite
voluminous, but we deem only certain of its facts material.
By the Act of July 25, 1866,
supra (14 Stat. 239, c.
242), Congress authorized and empowered the California & Oregon
Railroad Company, which had been organized under a statute of the
State of California, and such company, organized under the laws of
Oregon, as the legislature of that state should designate, to
construct and maintain a railroad and telegraph line between the
City of Portland, in Oregon, and the Central Pacific Railroad in
California, as follows: the California & Oregon Company to
construct that part of the railroad and telegraph line within the
State of California, beginning at a point to be selected by the
company on the Central Pacific Railroad in Sacramento Valley and
running thence northerly through the Sacramento and Shasta Valleys
to the northern boundary of the state. The Oregon company to
construct the part in Oregon from Portland south
Page 238 U. S. 400
through certain designated valleys to the southern boundary of
Oregon, to connect with the part constructed by the first-named
company. Whichever company first completed its respective part of
the road from the designated terminus to the boundary line between
the states was authorized to continue construction until the parts
should meet and connect, and the whole line of railroad and
telegraph should be completed.
Section 2 of the act granted to the companies, their successors
and assigns,
"for the purpose of aiding in the construction of said railroad
and telegraph line, and to secure the safe and speedy
transportation of the mails, troops, munitions of war, and public
stores over the line of said railroad, every alternate section of
public land, not mineral, designated by odd numbers, to the amount
of twenty alternate sections per mile (ten on each side) of said
railroad line."
In case of deficiency in the original sections granted, other
lands might be selected in lieu thereof. Upon the filing of the
survey of the railroad, the lands granted were to be withdrawn from
public sale so far as located within the limits designated. And it
was provided that the lands granted should be applied to the
building of the said road within the states respectively, wherein
they were situated, and that the lands reserved by the government
should not be sold except at double the minimum price of public
lands, with provisions for sale to actual settlers under the
preemption and the homestead laws.
Section 3 granted to the companies the right of way through the
public lands "for the construction of said railroad and telegraph
line" 100 feet in width on each side of the road, including grounds
for stations, etc., and the right to take from the public lands
materials for the construction of the road.
Section 4 provided that, when 20 or more consecutive
Page 238 U. S. 401
miles of any portion of the railroad and telegraph line should
be ready for the service contemplated, commissioners should be
appointed by the President to examine the same, and if it should
appear that 20 miles had been completed and equipped in all
respects as required by the act, and the commissioners should so
report under oath to the President of the United States, patents
should issue to the companies or either of them, as the case might
be, to the extent of the completed section, and successively as 20
or more miles should be constructed, until the entire railroad and
telegraph line authorized by the act should be constructed, and
patents to the lands granted should be issued.
Section 5 expressed that the grants were made upon the condition
that the companies should keep the railroad and telegraph in repair
and use and transport the mails and despatches for the government
when required to do so by any department thereof; that the
government should have the preference in the use of the railroad
and telegraph at reasonable rates not exceeding those paid by
private parties, and that the road should remain a public highway
for the use of the government, free of toll or other charges upon
the transportation of the property or troops of the United States,
and at the cost and charge of the corporation or companies.
Section 6 required assent to that act to be filed in the
Department of the Interior within one year after the passage of the
act, and that the first section of 20 miles should be completed
within two years and 20 miles in each year thereafter, and the
whole on or before July, 1, 1875, and the road to be of the same
gauge as the Central Pacific Railroad of California, and be
connected therewith.
Section 7 required the roads to be operated and used as one
connected and continuous line, and afford to the government and the
public equal advantages and facilities as to rates, time, and
transportation.
Page 238 U. S. 402
Section 8 provided that for failure to file assent to the act or
to complete the road as required the act should be null and void,
"and all the lands not conveyed by patent to said company or
companies, as the case may be at the date of such failure, shall
revert to the United States." And it was provided if the road and
telegraph should not be kept in repair and fit for use, the United
States might put the same in repair and use, and might devote the
income of the road and telegraph line to repay all expenditure
caused by the default of the companies or either of them, or might
fix pecuniary responsibility not exceeding the value of the lands
granted.
Section 9 provided that, wherever the word "company" or
"companies" was used in the act, it should be construed to embrace
the words "their associates, successors, and assigns" the same as
if the words had been inserted or thereto annexed.
Sections 10 and 11 are not material to be quoted. And § 12
provided that Congress might at any time, having due regard for the
right of the companies, "add to, alter, amend, or repeal" the
act.
To avail of the grant, the Oregon Central Railroad Company was
incorporated October 6, 1866. It projected its road from Portland
to Forest Grove, thence southerly on the westerly side of the
Willamette River, and became known as the "West Side Company," and
its railroad line as the "West Side Line."
The Legislature of Oregon, by joint resolution adopted October
10, 1866, designated the Oregon Central as the road to receive the
land grant. (There were certain steps in the organization of the
company not important.)
The assent of the company to the Act of 1866 was filed in the
office of the Secretary of the Interior, and subsequently (August
20, 1868) a map of survey of its projected line.
April 22, 1867, certain persons, contending that the
Page 238 U. S. 403
West Side Company had not been lawfully incorporated or
organized, and designing to secure the grants and other benefits
under the Act of 1866, caused proceedings to be taken, intending to
organize under the general laws of Oregon the Oregon Central
Railroad Company of Salem, and so named in its articles of
incorporation. It projected its line of railroad on the easterly
side of the Willamette River, and became known as the "East Side
Company" and its railroad line as the "East Side Line."
In furtherance of its design, it procured from the Legislature
of Oregon on October 20, 1868, the adoption of a joint resolution
which declared that the West Side Company was not properly
incorporated and was incapable of receiving the grant, and
designated the Oregon Central Railroad Company organized at Salem
on April 22, 1867, "as the company entitled to receive the lands in
Oregon, and the benefits and privileges conferred by the said Act
of Congress." Oregon Sess.Laws 1868.
Controversy arose between the companies as to which was entitled
to the benefits of the Act of 1866, which controversy continued
until about January, 1870.
The controversy was carried to Congress, and on April 10, 1869,
Congress passed an act which amended § 6 of the Act of 1866 so
as to allow any railroad company theretofore designated by the
legislature of Oregon to file its assent to the Act of 1866 within
one year from the date of the amending act, and providing that
nothing therein contained should impair any rights theretofore
acquired by any railroad company; but declaring that neither the
Act of 1866 nor the amending act should be construed to entitle
more than one company to a grant of land.
"
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. "
Page 238 U. S. 404
On June 8, 1869, the East Side Company adopted a resolution
which recited the Act of July, 1866, its designation by the
Legislature of Oregon as the company to receive the grant, the
passage of the Act of April 10, 1869, and concluded as follows:
"This company, the Oregon Central Railroad of Salem, Oregon, . .
. do hereby accept all the provisions, rights, privileges, and
franchises of said Act of July 25, 1866, . . . and of all acts
amendatory thereof, and upon the conditions therein specified, and
do hereby give our assent and the assent of such company
thereto."
A certified copy of the resolution was filed in the office of
the Secretary of the Interior June 30, 1869, and in the following
October, a map of survey of location of the first 60 miles of the
projected line. On December 24th following, the company completed
the first 20 miles within the prescribed time, and the same was
examined and approved by commissioners appointed therefor pursuant
to the provisions of § 4 of the Act of 1866.
March 16, 1870, the Oregon & California Railroad Company was
incorporated, and, on March 29, 1870, the East Side Company
assigned to it all of its property, including the land grant, with
present and future rights under the Act of July, 1866, and acts
amendatory thereof and supplemental thereto, and by virtue of any
act or resolution of the Legislature of Oregon, and by the action
of its stockholders the East Side Company was dissolved and its
stock cancelled.
Resolutions were adopted by the Oregon & California Railroad
Company accepting the transfer and also a resolution accepting the
Act of 1866 and amendments thereto, and "all the benefits and
emoluments therein or thereof granted, and upon the terms and
conditions therein specified," and authorizing its assent to be
filed with the Secretary of the Interior and a copy of the deed of
assignment from the Oregon Central Railroad Company. This
Page 238 U. S. 405
was done, and since the date of the transfer (March 29, 1870),
the Oregon & California Railroad Company has assumed and still
assumes itself to be the successor of the East Side Company and of
all its rights under the Company and of all its rights under the
acts of Congress.
The West Side Company abandoned all claims under the Act of 1866
and solicited and obtained from Congress, by the Act of May 4,
1870, a grant of other lands. The act recited (§ 1) that, for
the purpose of aiding in the construction of a railroad and
telegraph line from Portland to Astoria, and from a suitable point
of junction near Forest Grove to the Yamkill River, near
McMinnville, in the State of Oregon, there is granted to the Oregon
Central Railroad Company, now engaged in constructing the said
road, and to their successors and assigns, the right of way through
the public lands, and the right to take materials from the public
lands and necessary lands for depots, etc., not exceeding 40 acres
at any one place, and also 20 alternate sections per mile of the
public lands, not mineral, excepting coal or iron lands, designated
by odd numbers, not disposed of or reserved or held by valid
preemption or homestead rights at the time of the passage of the
act.
There was the usual provision for selecting other lands in case
of deficiency; the survey of the lands along the line of the
railroad; the segregation of lands upon the survey and location of
20 or more miles of road, and for the disposition of the lands
reserved by the government within the limits of the grant only to
actual settlers at double the minimum price for such lands.
The issuance of patents was provided (§ 3) upon the
completion and equipment of 20-mile sections of the railroad.
By § 4 it was enacted:
"That the said alternate sections of land granted by this act,
excepting only such as are necessary for the company to reserve for
depots, stations,
Page 238 U. S. 406
side tracks, wood yards, standing ground, and other needful uses
in operating the road shall be sold by the company only to actual
settlers, in quantities not exceeding one hundred and sixty acres
or a quarter section to any one settler, and at prices not
exceeding two dollars and fifty cents per acre."
It was provided (§ 5) that the company should, by mortgage
or deed of trust to two or more trustees, appropriate and set apart
the net proceeds of the lands as a sinking fund, to be kept
invested in United States bonds or other safe securities for the
purchase from time to time of the first mortgage construction bonds
on the road, depots, etc., and that no part of the funds should be
applied to any other purpose until all of the bonds should have
been purchased or redeemed or cancelled.
An assent to the act was required to be filed with the Secretary
of the Interior (§ 6), and it was expressed that the grant was
upon the condition that 20 miles or more of the road should be
completed within two years, and the entire road and telegraph line
within six years from the date of the act.
In this act, Congress, by the words "Oregon Central Railroad
Company," referred to the West Side Company.
On July 20, 1870, the West Side Company filed its assent to the
act in the office of the Secretary of the Interior.
During the year 1870, the Oregon & California Railroad
Company procured, by mortgage bonds, approximately $8,000,000, and
during the year 1871 the West Side Company in the same way procured
about $1,000,000. With the funds thus procured, the lines of
railroad contemplated by the Act of 1866 and the Act of May 4,
1870, respectively, were prosecuted continuously until about
January, 1873.
As stated, the East Side Company completed the construction of
the first 20 miles of its railroad, and the Oregon & California
Railroad Company, after the assignment and transfer to it, as
stated, continued construction
Page 238 U. S. 407
in 1870, 1871, and 1872 for a distance of approximately 197
miles, and the West Side Company, with the funds procured by it in
1871, constructed its line under the Act of 1870 from Portland to
McMinnville, a distance of approximately 47 miles. There was no
other construction by the West Side Company, and the lands
contiguous to the line of road from Forest Grove to Astoria were
forfeited by Act of Congress of January 31, 1885.
Financial vicissitudes came to both companies, and construction
was suspended. It was never resumed by the West Side Company, and
the East Side Company, under its new name of Oregon &
California Railroad Company, finally became, by the assignment of
the West Side Company, the owner of the grants under both acts.
The consideration of the conveyance was the payment of the debts
of the West Side Company. Since the date of the conveyance, the
Oregon & California Railroad Company has assumed and still
assumes itself to be the successor of the West Side Company in and
to all of the rights, franchises, and property granted or intended
to be granted by the Act of May 4, 1870.
Further financial difficulties impeded the construction of the
road, and these were met by the various processes detailed in the
stipulation of facts, and which we omit except as referred to in
the opinion. Among these were a cancellation of the stock of the
company and a reissue secured by a trust deed, of which Stephen T.
Gage became the only surviving trustee, an issue of bonds, the
trust deed to the Union Trust Company, leases to the Southern
Pacific Company, and the final control by that company through
stock ownership of all of the properties and land grants. That
company thereafter administered the land grants. These transactions
were alleged as breaches of the conditions which, it is contended,
were constituted by the provisos in the respective acts given
above, providing for the sale of the granted lands to actual
settlers.
Page 238 U. S. 408
163,430.28 acres of the granted lands were sold by the Oregon
& California Railroad Company prior to May 12, 1887, nearly all
of which were sold to actual settlers, in small quantities,
although in a few instances the quantities exceeded 160 acres to
one purchaser and the prices were slightly in excess of $2.50 an
acre. A rapidly increasing demand for the lands in large quantities
and at increased prices commenced about 1889 or 1890, and has
continued ever since. From 1894 to 1903, some of the granted lands
were sold to persons not actual settlers in quantities and at
prices exceeding the maximum designated in the provisos, and in
several instances in quantities of from 1,000 to 20,000 acres to
one purchaser at prices ranging from $5 to $40 an acre, and in one
instance a sale of 45,000 acres at $7 an acre to a single
purchaser. About 5,306 sales were made, aggregating 820,000 acres,
of which sales about 4,930 were for quantities not exceeding 160
acres and 376 sales in quantities exceeding 160 acres to one
purchaser, aggregating 524,000 acres. The latter sales were to
persons other than actual settlers and for other purposes than
settlement and at prices in excess of $2.50 an acre, and
approximately 478,000 acres were sold since 1897 and approximately
370,000 of the 524,000 were sold to 38 purchasers in quantities
exceeding 2,000 acres to each purchaser. Approximately three
fourths of all sales made since 1897 were made by contracts
providing for the payment of the purchase price in from five to ten
annual payments and execution of conveyance upon final payment, a
considerable number of which contracts were pending when this suit
was brought.
On January 1, 1903, the company withdrew from sale all of its
lands and refused to accept offers for any of them, asserting that
they were timber lands and unsuitable for settlement. At the time
the answer was filed, there remained unsold 2,360,492.81 acres, of
which 2,075,616.45 acres were theretofore patented under the land
grant
Page 238 U. S. 409
acts, and 284,876.36 at that time remained unpatented, all of
which are claimed by the company under the land grants.
Since January, 1903, over 4,000 persons have applied to purchase
certain of the unsold lands, claiming that they desire to do so for
the purpose of settling and establishing homes thereon, and each
applicant stated that he was willing and able to tender at the rate
of $2.50 per acre therefor. Until about the year 1890 or 1891,
there was substantially no demand for the granted lands except for
the purpose of settlement, and nearly all of the sales prior to the
year 1894 were made for settlement and to settlers.
Prior to 1894, the company maintained an immigration bureau to
induce settlement upon the lands, and the greater part of the sales
made after that year were to persons not settlers, and for prices
exceeding $2.50 per acre.
It was testified that the gross amount of lands that inured to
the Oregon & California Railroad Company under both the East
Side and the West Side grants was 3,182,169.57, and it was
stipulated that, between the years 1871 and 1906, there were
patented under the East Side grant 2,745,786.68 acres and between
the years 1895 and 1903 there were patented under the West Side
grant 128,618.13 acres, leaving unpatented 307,764.76 acres.
At the time the answer was filed, there remained unsold of the
granted lands 2,360,492.81 492.81 acres, of which 2,075,616.45
acres were theretofore patented to the Oregon & California
Railroad Company under the land grants and 284,876.36 thereof at
that time remained unpatented, all of which unsold lands are
claimed by the railroad company under and by virtue of the grants.
The reasonable value of said unsold lands exceeds the sum of
$30,000,000. There is a table attached to the answer showing the
net amount received by the railroad company to be, after
Page 238 U. S. 410
all disbursements, $2,495,094.03. (The bill, as we have seen and
shall presently more at length refer to, prays a forfeiture of the
unsold lands only.)
Pursuant to the rules and regulations of the Interior
Department, all of the patents were issued to and based upon
applications in writing therefor from time to time filed in the
appropriate land office of the United States by the Oregon &
California Railroad Company as the "successor and assign" of the
East Side Company and the West Side Company, respectively. Each
application was accompanied by an affidavit which alleged, among
other things, the following:
"The said lands are vacant, unappropriated, are not interdicted
mineral, nor reserved lands, and are of the character contemplated
by the granting act"
under which the patents were applied for.
The stipulation sets out the creation of an Auditor of Railroad
Accounts, and subsequently the creation of a Commissioner of
Railroads and his duties by various acts of Congress until 1904,
when the bureau was terminated and the duties, files, and records
thereof were transferred to the Secretary of the Interior, and
that, from 1879 to and including 1903, reports were made of the
transactions of the Land Department of the Oregon & California
Railroad Company upon blanks furnished by such bureau. The details
of the reports are given, which show many sales of the lands in
excess of $2.50 per acre.
The bureau, it is stipulated, made annual reports to the
Secretary of the Interior which were embodied in his annual reports
to the President, and by the President forwarded to Congress, where
they were referred to appropriate committees and printed as
executive documents.
There reports show the administration of the grants by the
company, the number of acres received under the grants, the number
sold and at what prices, some of which exceeded $2.50 per acre, and
that the price asked for lands not sold was in excess of that sum
per acre.
Page 238 U. S. 411
After stating the case as above, MR. JUSTICE McKENNA delivered
the opinion of the Court.
A direct and simple description of the case would seem to be
that it presents for judgment a few provisions in two acts of
Congress which neither of themselves nor from the context demand
much effort of interpretation or construction. But the case has
never been considered as having that simple directness. A bill
which occupies 78 pages of the record (exclusive of exhibits), the
allegations of which were iterated and reiterated by
cross-complainants and interveners and added to, and an answer that
admitted or
Page 238 U. S. 412
traversed their averments with equal volume and circumstance,
constituted the case for trial. Seventeen volumes of testimony,
each of many pages, were deemed necessary to sustain the case as
made. It is certain, therefore, that no averment has been omitted
from the pleadings, no fact from the testimony, that has any
bearing on the case; the industry of counsel has neglected no
statute or citation, and their ability no comment or reason that
can elucidate or persuade. As we proceed, it will be seen that we
have rejected some contentions. It is not the fault of counsel if
we have misunderstood them.
Yet, with all the research -- it may be, on account of it -- the
contestants have not preserved an exact alignment, and have shown
no preference as to the company in which contentions are made or
opposed.
The government contends that the provisos -- we so designate
them and shall so refer to them -- though they differ in technical
language, constitute conditions subsequent, and that, by the
alleged breaches indicated, the lands became forfeited to the
United States. The railroad company and other defendants contend
that the provisos constitute restrictive and unenforceable
covenants. The cross-complainants insist that a trust was created
for actual settlers, and the interveners urge that the trust has
the broader scope of including all persons who desire to make
actual settlement upon the lands.
This curious situation is presented: the government joins with
the railroad in opposing the contentions of the cross-complainants
and interveners. Both of the latter unite with the government in
contesting the position of the railroad, but join with the railroad
against the government's assertion of forfeiture. The
cross-complainants attack the claim of the interveners, and the
State of Oregon, through its Attorney General, without definitely
taking sides in the controversies, declares it to be to the
interest of the state, and expresses the hope, that the lands
Page 238 U. S. 413
now withdrawn by the railroad shall be
"subject to settlement and improvement as contemplated by the
provisions of the grant in order not only that those vast areas of
the state may be improved, but also that the lands may not be
withdrawn from taxation, thus depriving the state, and especially
the eighteen counties in which they are situated, of a large
proportion of their resources from direct taxation."
The interest and hope expressed seem like a prayer against the
government's contentions.
There is something more in these opposing contentions than a
wrangle or medley of interests, and we are admonished that the
words of the provisos, simple and direct as they are of themselves,
take on, when they come to be applied, ambiguous and disputable
meaning. It may be said at the outset that, if ambiguity exists,
there may be argument in it against some of the contentions.
However, without anticipating, let us consider the provisos, and
we repeat them to have them immediately under our eyes. The first
is contained in the Act of April 10, 1869. That act was expressed
to be an amendment of the Act of 1866, and to relieve from the
effect of the expiration of the time for filing assent to the Act
of 1866, and to give "such filing of assent, if done within one
year from the passage of the" amending act, the same force and
effect to all intents and purposes as if it had been filed within
one year after the passage of the Act of 1866. Then came this
proviso, which was preceded by another not necessary to quote:
"
And provided further, That the lands granted by the
act aforesaid 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."
The Act of May 4, 1870, making the grant to the West Side
Company, provides in § 4 that the lands granted, excepting
only such as are necessary for depots and other needful uses in
operating the road, "shall be sold by the
Page 238 U. S. 414
company to actual settlers," the quantities and the price being
designated as in the Act of 1869.
These, then, are the provisos which are submitted for
construction. The contention of the government is as we have seen,
and it lies at the foundation of its assertion of forfeiture of the
grant, that they constitute conditions subsequent.
The argument to support the contention is based first on the
general considerations that experience had demonstrated to the
country the evils of unrestricted grants, and that the bounty of
Congress had been perverted into a means of enriching "a few
financial adventurers," and that lands granted for national
purposes "were disposed of in large blocks to speculators as well
as to development companies organized by officers of the railroad
companies." Informed by such experience, in substance is the
contention, and solicited by petition and moved by the reasoning of
some of its members, Congress changed its policy of unqualified
bounty, and, while not refusing to contribute to the aid of great
enterprises, sought to prevent the perversion of such aid to
selfish and personal ends, and to promote the development of the
country by the disposition to actual settlers of the lands granted.
And, it is insisted, efficient means were adopted to secure the
purpose by making the provisos conditions subsequent, with the
sanction of forfeiture for violation.
These general considerations are supplemented by a special and
technical argument. The provisos and their context, it is said,
show the general characteristics of conditions -- that is, they
make the estate granted and its continuance to depend upon the
doing of something by the grantee, and that the proviso in the Act
of 1869 is expressed in apt and technical words, by the use of
which, it is further contended, it is established by authority that
an estate upon condition is necessarily created. cases are cited,
and the following is quoted from page 121 of Sheppard's
Page 238 U. S. 415
Touchstone:
"That, for the most part, conditions have conditional words in
their frontispiece and do begin therewith, and that amongst these
words there are three words that are most proper, which in and of
their own nature and efficacy, without any addition of other words
of reentry in the conclusion of the condition, do make the estate
conditional, as
proviso, ita quod, and
sub
conditione. . . . But there are other words, as
si, si
contingat, and the like, that will make an estate conditional
also, but then they must have other words joined with them and
added to them in the close of the condition, as that then the
grantor shall reenter, or that then the estate shall be void, or
the like."
And words of such determining effect, it is urged, introduce and
give meaning to the proviso in the amendatory Act of 1869.
But it will be observed there are no such controlling words in
the provision for the sale to actual settlers in the Act of May 4,
1870 -- that is, in the grant to the West Side Company -- and the
government is confronted by the rule which it quotes, that in such
cases there must be "words of reentry" or a declaration "that then
the estate shall be void, or the like." The government therefore
varies and relaxes the rule it invokes, and admits that the sense
of a law or terms of an instrument may be found in other words than
the quoted technical ones if the intention is made clear.
It is not necessary to review the cases cited respectively to
sustain and oppose the contending arguments. The principles
announced in the cases are rudimentary, and may be assumed to be
known, and the final test of their application to be the intention
of the grantor.
These principles will be kept in mind in our consideration of
the acts of Congress involved, and, besides, that there may be a
difference in rigor between public and private grants, and that
this Court has especially said that railroad land grants have the
command, and necessarily, therefore, the effect, of law.
Page 238 U. S. 416
The government reinforces its contention, as we have seen, with
what it considers a change of policy in legislation, and in effect
insists that restrictions upon the disposition of the lands granted
became more dominant in purpose than the building of the roads, to
aid which it was admitted the lands were necessary. The argument is
hard to handle, as indeed are all arguments which attempt to assign
the exact or relative inducements to conjoint purposes. In the
first grants to railroads, there were no restrictions upon the
disposition of the lands. They were given as aids to enterprises of
great magnitude and uncertain success, and which might not have
succeeded under a restrictive or qualified aid. However, a change
of times and conditions brought a change in policy, and while there
was a definite and distinct purpose to aid the building of other
railroads, there was also the purpose to restrict the sale of the
granted lands to actual settlers. These purposes should be kept in
mind, and in their proper relation and subordination.
We shall be led into error if we conclude that, because the
railroad is attained, it was from the beginning an assured success,
and that it was a secondary, and not a primary, purpose of the acts
of Congress. There is much in the argument of the defendants that
the aid to the company was part of the national purpose, which this
Court has said induced the grants to the transcontinental railroads
(
91 U. S. 91 U.S.
79;
99 U. S. 99 U.S. 48;
United States v. Stanford, 161 U.
S. 412). And we may say that the policy was justified by
success. Empire was given a path westward, and prosperous
commonwealths took the place of a wilderness.
But such success had not been achieved when the grant of 1866
was made, nor in full measure when the Acts of 1869 and 1870 were
passed, and it may be conceded that they were intended to continue
and complete such national purpose, and that it was of the first
consideration, but the
Page 238 U. S. 417
secondary purpose was regarded and provided for in the provisos
under review. Both purposes must be considered. It may be that it
was not expected that actual settlers would crowd into "the vast,
unpeopled territory," but the existence of such settlers at some
time must have been contemplated. Both purposes, we repeat, were to
be subserved, and how to be subserved is the problem of the
case.
There is certainly a first impression against a forfeiture being
the solution of the problem, or that there was necessity for it. A
forfeiture of the grant might have been the destruction of the
enterprise, and settlement postponed or made impossible to any
useful extent by the inaccessibility of the lands. And forfeiture
was, besides, beset with many practical difficulties as a remedy.
When, indeed, would it be incurred? The obligation of the provisos
and the remedy for their breach were coincident. The refusal of the
demand of the first actual settler (if there could be such without
the consent of the railroad), or of the first applicant for
settlement, would subvert the scheme of the acts of Congress. It
cannot be that the grants were intended to be so dependent and
precarious and the enterprises so menaced with peril, and, it might
be, brought to disaster.
Are the contingencies fanciful? Such character may be asserted
of any conjecture of what might have occurred, but which did not,
and yet to construe a statute, we must realize its inducements and
aims, solving disputes about them by a consideration of what might
accomplish or defeat such aims. The acts under review conferred
rights, as well as imposed obligations, and it could not have been
intended that the latter should be so enforced as to defeat the
former. We have given an instance of how this might be done by
regarding the provisos as conditions subsequent. Another instance
may be given. In its argument at bar, the government insisted that
it was the duty of
Page 238 U. S. 418
the railroad company to have provided the machinery for
settlement, and, by optional sales, guarded by probational
occupation of the lands, to demonstrate not only initial, but the
continued, good faith of settlers, and that the omission to do so
was, of itself, a breach of the provisos and incurred a forfeiture
of the grants. But when did such obligation attach? Before or after
the construction of the road -- construction in sections or
completely? The contention encounters the government's admission
that there was no obligation imposed upon the railroad to sell. And
we have the curious situation (which is made something of by
cross-complainants and interveners in opposition to the
government's contention) of the right of settlers to buy, but no
obligation on the railroad to sell, and yet a duty of providing for
sales under an extreme and drastic penalty. We may repeat the
question: might not such consequences have ended the enterprise,
making it and its great purpose subordinate to local settlement?
Indeed, might not both have been defeated by the inversion of their
purposes?
The omission to institute a plan of settlement and sale is not
alleged in the bill as a breach of the provisos. The first breach
alleged is the trust deed to Stephen T. Gage, and the next the
trust deed to the Union Trust Company. But these deeds manifestly
were but forms of security, even if they went too far and were not
binding to the extent of their excess. The government admits that
the grants were intended to be used as a basis of credit, and we
have argument again against a forfeiture by the dilemma to which
the railroad might be brought in its attempt to comply with all the
provisions of the act as well as with the provisos. If it failed to
complete the road within the time required, the granting act was to
become "null and void" (upon which we shall presently comment). If
it made efforts to complete the road by using the grants as a means
of credit, it might forfeit them.
Page 238 U. S. 419
But there is a better argument than what may be deduced from the
solution of perplexing difficulties or the conjecture of possible
contingencies. It will be observed that there was an explicit
provision in the Act of 1866 that, upon the failure of the
companies to file assent to the act and to complete the road as and
within the time required, the act should "be null and void," and
the lands not patented at the time of such failure should "revert
to the United States." And it was provided that, if the road should
not be "kept in repair and fit for use," Congress, by legislation,
might put the same in that condition and repay its expenditures
from the road's income, or fix pecuniary responsibility upon the
company not exceeding the value of the lands granted.
Congress therefore had under consideration remedies for
violations of the provisions of the act, and adjusted them
according to what it considered the exigency. As a penalty for not
completing the road as prescribed, Congress declared only for a
reversion of the lands not then patented; for not maintaining it in
repair and use, Congress reserved the right temporarily to
sequester the road, and yet for a violation of the provision for
sale to settlers, it is urged that Congress condemned to forfeiture
not only the lands then unpatented, but those patented. Mark the
difference. Was noncompletion of the road of less consequence than
settlement along its line? -- not necessarily complete settlement,
but any settlement -- the refusal, it might be, of the acceptance
of a single offer of settlement, or even, as it is contended, of
making provision for settlement, being of greater consequence and
denounced by more severe penalty than the declared conditions --
that is, assent to the act, completion of the road, and its
maintenance. This is difficult, if not impossible, to believe.
It appears, therefore, that the acts of Congress have no such
certainty as to establish forfeiture of the grants as their
sanction, nor necessity for it to secure the accomplishment
Page 238 U. S. 420
of their purposes, either of the construction of the road or
sale to actual settlers, and we think the principle must govern
that conditions subsequent are not favored, but are always strictly
construed, and where there are doubts whether a clause be a
covenant or condition, the courts will incline against the latter
construction -- indeed, always construe clauses in deeds as
covenants, rather than as conditions, if it is possible to do so. 2
Washburn on Real Prop. 4. And this because "they are clauses of
contingency on the happening of which the estates granted may be
defeated." And it is a general principle that a court of equity is
reluctant to (some authorities say never will) lend its aid to
enforce a forfeiture.
By this conclusion, do we leave the provisos meaningless and the
government without remedy for their violation? There is no argument
in a negative answer. From the defects of a provision, we can
deduce nothing, nor on account of them substitute one of greater
efficacy.
But must the answer be in the negative, and, by rejecting the
contention of the government, are we compelled to accept that of
the railroad company? -- or we may say those of the railroad
company, for the contentions are many, some of which preclude the
application of the provisos, some of which assert their invalidity,
and others limit their application.
If not first in order, at least in more immediate connection
with the contention of the government is the contention that the
provisos are not conditions subsequent, but simple covenants, and,
it is said, restrictive and negative only, and therefore not
enforceable. In support of the contention, all of the uncertainties
or asserted uncertainties of the provisos are marshaled and
amplified. We can only enumerate them. There is uncertainty, it is
asserted, in the legal measure of duty, therefore of its
performance -- for whom to be performed and when; nor is the time
or condition of settlement prescribed, whether
Page 238 U. S. 421
by the standard of the homestead or preemption laws; nor by what
test or by what tribunal contests between applicants to purchase
are to be determined; no compulsion of sale at any time, to any
person, in any quantity; no mutuality in the covenant; no assurance
that settlers will apply, and no obligation assumed by them. And
the conclusion is deduced that the actual settlers clauses, viewed
even as covenants, were either impossible of performance or
repugnant to the grants, and therefore void.
The arraignment seems very formidable, but is it not entirely
artificial? It is stipulated that, prior to 1887, more than 163,000
acres of the granted lands were sold, nearly all of which were sold
to actual settlers, in small quantities. If the sale of 163,000
acres of land encountered no obstacle in the enumerated
uncertainties, we cannot be impressed with their power to obstruct
the sale of the balance of the lands. The demonstration of the
example would seem to need no addition. But, passing the example,
as it may be contended to have some explanation in the character of
the lands so disposed of, the deduction from the asserted
uncertainties is met and overcome by the provisos and their
explicit direction. They are, it is true, cast in language of
limitation and prohibition; the sales are to be made only to
certain persons, and not exceeding a specified maximum in
quantities and prices. If the language may be said not to impose
"an affirmative obligation to people the country," it certainly
imposes an obligation not to violate the limitations and
prohibitions when sales were made, and it is the concession of one
of the briefs that the obligation is enforceable, and that, even
regarding the covenant as restrictive, the
"jurisdiction of a court of equity, upon a breach or threatened
breach of the covenant, to enforce performance by enjoining a
violation of the covenant cannot be doubted."
Apposite cases are cited to sustain the admission, and in answer
to the contention of the government that it could
Page 238 U. S. 422
recover no damages for the breach, and hence had no enforceable
remedy but forfeiture, it is said:
"But the jurisdiction of a court of equity in such cases does
not depend upon the showing of damage. Indeed, the very fact that
injury is of public character and such that no damage could be
calculated is an added reason for the intervention of equity."
And cases are adduced. We concur in the reasoning, and give it
greater breadth in the case at bar than counsel do. They would
confine it, or seem to do so, to the compulsion of sales of land
susceptible of actual settlement, and assert that the evidence
established that not all of the lands, nor indeed the greater part
of them, have such susceptibility. But neither the provisos nor the
other parts of the granting acts make a distinction between the
lands, and we are unable to do so. The language of the grants and
of the limitations upon them is general. We cannot attach
exceptions to it. The evil of an attempt is manifest. The grants
must be taken as they were given. Assent to them was required and
made, and we cannot import a different measure of the requirement
and the assent than the language of the act expresses. It is to be
remembered the acts are laws as well as grants, and must be given
the exactness of laws.
If the provisos were ignorantly adopted, as they are asserted to
have been; if the actual conditions were unknown, as is asserted;
if but little of the land was arable, most of it covered with
timber and valuable only for timber, and not fit for the
acquisition of homes; if a great deal of it was nothing but a
wilderness of mountain and rock and forest; if its character was
given evidence by the application of the timber and stone act to
the reserved lands; if settlers neither crowded before nor crowded
after the railroad, nor could do so; if the grants were not as
valuable for sale or credit as they were supposed to have been and
difficulties beset both uses -- the remedy was obvious.
Page 238 U. S. 423
Granting the obstacles and infirmities, they were but promptings
and reasons for an appeal to Congress to relax the law; they were
neither cause nor justification for violating it. Besides, we may
say that there is controversy about all of the asserted facts and
conclusions.
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, and we pass
to the other contentions of the company.
It is contended (1) that Congress was without lawful authority
on April 10, 1869, to annex a new condition, by amendment or
otherwise, to the grant made by the Act of 1866 as amended by the
Act of June 25, 1868 (the latter extended the time to complete the
first and subsequent sections of the road and the completion of the
whole road). We do not think it is necessary to follow the
involutions of the argument by which the contention is attempted to
be supported. It is asserted that the California & Oregon
Railroad Company filed its assent within one year and completed the
first section of 20 miles within two years after the passage of the
Act of July 25, 1866, and that the Oregon Central Railroad Company
(East Side Company) was not in default on April 10, 1869. The
assertions came very late. Had they been made at that early time,
questions would have been presented whose solution we need not
conjecture. The West Side Company preceded the East Side Company,
and on October 10, 1866, received the designation from the Oregon
Legislature as the road entitled to receive the grant of 1866. The
East Side Company started its existence on April 22, 1867, and in
1868 attacked the legality of the incorporation of the other
company, and procured the revocation of the designation of that
company, and the designation of itself by the legislature. The
controversy for precedence and rights continued. It was carried to
Congress, and the
Page 238 U. S. 424
Act of April 10, 1869, was passed. Subsequently came
compromises, and the Act of May 4, 1870. By the latter act, and in
acceptance of its grant and provisions, the West Side Company took
the west side of the Willamette River. The East Side Company took
the east side of the river, and on June 8, 1869, by resolution,
accepted the provisions of the Act of 1866
"and of all acts amendatory thereof, and upon conditions therein
specified, and do hereby give our assent and the assent of such
company thereto."
It was not then thought, as it is now asserted, that the Act of
1869 annexed new and invalid conditions, nor was there such
assertion afterwards. The East Side Company, on March 29, 1870,
assigned its rights under the Act of 1866 and the acts amendatory
thereof and supplemental thereto to the present company, the Oregon
& California Railroad Company, and then dissolved. The Oregon
& California Railroad Company accepted the transfer and by
resolution accepted the Act of 1866 and amendments thereto and "all
the benefits and emoluments therein and thereof granted, and upon
the terms and conditions therein specified," and authorized the
assent to be filed in the office of the Secretary of the
Interior.
It is too late to declare such formal and repeated action to
have been unnecessary. Every advantage was obtained, and while
enjoying the benefit of it, the obligations of it cannot be denied.
Had there been an assertion of rights against the Act of 1869, and
had there been an immediate rejection of its provisions and
obligations, the question in the present case would not now be
submitted for solution. It is possible to suppose that no patents
to lands would have been issued, or, at any rate, the government's
attention would have been challenged to the assertion of rights
which it might have contested from a position of supreme
advantage.
(2) It is contended that, if sales were made under the
Page 238 U. S. 425
limitations of the provisos the breaches were acquiesced in, and
for this the action and knowledge of the officers of the government
are adduced -- indeed, the knowledge of Congress itself, and
reciting what was done under the grants, counsel say:
"It is a story of mortgages and sales, executory contracts and
conveyances, and a stream of government patents flowing in between.
These things were known of all; they were matters of common
knowledge, notoriety, of public record; the railroad knew them; the
people knew them, the government knew them."
And cases are cited which, it is contended, establish that such
circumstances might work an estoppel even against the government,
which, when it appears in court, it is contended, is bound like
other suitors, and certainly establish that, for more than forty
years, in the view of the executive officers, the provisos were not
conditions subsequent. Granting their strength in that regard,
granting they have some strength in every regard, they have not
controlling force, considering the provisos as simple covenants.
And they cannot be asserted as an estoppel. No one was deceived --
at least no one should have been deceived; no action was or should
have been induced by them that could plead ignorance of the
provisions and immunity from their responsibility. The recited
conduct had explanation and notice in the opinions of the
Department of the Interior. They are entirely consistent with the
belief expressed by Mr. Ballinger, then Commissioner, afterwards
Secretary of the Interior, that their enforcement was a matter for
the courts, not for executive or legislative action.
Mr. Ballinger, in a communication to a member of the House of
Representatives, expressed the view that,
"as soon as the title vested in the company [and it was his view
that it had vested by the construction of the railroad],
jurisdiction over the lands passed from the executive branch of the
government, and the enforcement of the
Page 238 U. S. 426
provision [the sale of lands to actual settlers] rests with the
courts, through appropriate action by either the settlers entitled
to purchase, or by the government, acting through the Department of
Justice."
And a doubt was expressed of the power of Congress to compel
compliance with the provision. This was the position of the
Department in 1907. It was not new or sudden. It was the repetition
of the declaration of a much earlier time.
In an early day of the grant -- 1872 -- a communication was
addressed by the then Attorney General to the Commissioner of the
Land Office, accompanied by a letter from the president of the
European & Oregon Land Company (this company was made a trustee
of the lands granted under the Acts of 1866 and 1869 to secure a
bond issue of the company), in which it was stated that the board
of trustees of the company, in accordance with a legal opinion
given to it, had ordered that persons who had become actual
settlers between July 25, 1866, and April 10, 1869, should have the
privilege of purchasing according to the proviso, "but, as to all
others, the company was not legally restricted from selling on
liberal terms, for cash or credit at reasonable rates." A request
was made for an approval of the construction, and that the company
be authorized "to sell on such terms as may be reasonable and just
to all parties without any restrictions." This letter was submitted
to the then Secretary of the Interior, Mr. Delano, who replied
"that the proviso means just what it says," "that the lands be sold
to actual settlers only" in the designated quantities and for the
designated prices; that the legislative intention was plainly to
prevent the lands being held for speculative prices or disposed of
to others than actual settlers, and that to construe the proviso as
requested would in his "judgment entirely defeat such
intention."
It being objected that the case was not submitted for decision
or opinion, the Secretary replied that it was so
Page 238 U. S. 427
regarded, and that the opinion could not be formally withdrawn.
He, however, expressed his willingness at any time, on application,
to reopen the case and to hear all arguments which the company
might desire to present. The opportunity was never taken advantage
of, but the company proceeded upon its own construction of the
proviso.
These views explain the attitude of the Department and give
different color and meaning to its action than those assigned to it
by the railroad company, and if the company disagreed with or
defied the Department, it cannot claim to have been deceived. The
views of the department were no doubt the views of Congress, and
its action and reluctance to prejudge are exhibited in the
resolution of April 30, 1908, under which this suit was brought. It
refused, as we have seen, to determine peremptorily the rights of
the United States or to anticipate judicial action.
We may observe again that the acts of Congress are laws as well
as grants, and have the constancy of laws as well as their command,
and are operative and obligatory until repealed. This comment
applies to and answers all the other contentions of the railroad
company based on waiver, acquiescence, and estoppel, and even to
the defenses of laches and the statute of limitations. The laws
which are urged as giving such defenses and as taking away or
modifying the remedies under review have no application. It would
extend this opinion too much to enter upon their discussion.
A word of comment may be made upon one of the acts adduced as
constituting a waiver of the breaches of the covenants -- that is,
upon the Act passed August 20, 1912 (37 Stat. 320, c. 311), it
being supplemental to the joint resolution of April 30, 1908,
supra. It was passed after this suit was commenced, and
brought forward with the other acts by an amendment to the answer.
Counsel assert
Page 238 U. S. 428
of it substantially as alleged in the answer that it
"is a recognition of the nonsettlement character of the lands
involved, and that such lands, at the time they were sold to the
so-called innocent purchasers described in forty-five suits brought
by the United States against said purchasers and these defendants
in this Court, are unfit for settlement and were so unfit for
settlement, and could not be sold to actual settlers at the time
they were sold by the company to such purchasers."
We have answered the contention so far as it depends upon the
character of the lands. The character of the lands furnished no
excuse. It might have justified nonaction, but it did not justify
antagonistic action. Moreover, the act, while it authorized
compromises with purchasers from the company, explicitly excluded
the application of the provision to lands in the present suit, and
declared that it should create no "rights or privileges whatever in
favor of any of the defendants therein," and that nothing in the
act should condone any of the breaches of the conditions or
provisions of the granting acts, nor be a waiver of any cause of
action or remedy of the United States on account of any such breach
or breaches or of any right or remedy existing in favor of the
United States.
*
With the provisos as conditions subsequent out of the way, the
suit remains one to enforce a continuing covenant. It is not a suit
to vacate and annul patents.
Page 238 U. S. 429
(3) There is a special contention, given the pretension of a
separate brief, that the "sinking fund Act of Congress of May 7,
1878, ratified the transfer of the California & Oregon Railroad
and its land in California to the Central Pacific Company, and
operated to abrogate the "settlers clause" contained in the Acts of
April 10, 1869, and May 4, 1870." The argument to support the
contention is that the Central Pacific Railroad Company became,
with the consent of Congress, the owner of the California &
Oregon Railroad (to avoid confusion, this company must be kept
distinct from the defendant Oregon & California Railroad) in
1870, and that, after such transfer and date, it became impossible
for the latter company to sell the lands for the prescribed price,
or for any other price, or to settlers in any quantities, "for the
reason that the company had parted with its title to the entire
grant, and this was recognized, approved, and validated by the
United States." The contention seems to be directed more to the
settlers clause viewed as a condition subsequent than to it
considered as a covenant. It is, however, said that the clause "has
been entirely abrogated by said legislation and the acts of the
government." We are not impressed by the contention. It seems to be
a tardy claim in the case, and is the dare of an extreme ingenuity
against the admissions and averments of the answers and many
assertions which the record contains of ownership of and dominion
over the lands by the Oregon & California Company and of their
disposition by it. Indeed, it is opposed to the whole scheme of the
suit and the defenses to it and to the stipulation of the parties.
It there appears that, after the designated date, patents were
applied for and issued to the Oregon & California Railroad
Company, defendant herein, for 323,078.68 acres of land, over
163,000 acres of which were sold by that company to actual
settlers. Indeed, all of the activities in the administration of
the grants were those of the Oregon & California
Page 238 U. S. 430
Railroad. It made contracts and executed deeds for particular
parcels; it made trust deeds for the whole of them; it went into
receivership and emerged from it to resume its activities, and made
the reports to Congress upon which it bases the acquiescence of the
government in the breaches of the provisos.
It is true that there appears in the stipulation the confusion
of a statement that there was an amalgamation and consolidation of
the Central Pacific, Western Pacific, and Oregon Central Railroad
Companies into the Central Pacific Company, and that, at the time
the articles of amalgamation and consolidation were filed (June 23,
1870), the California & Oregon Railroad Company "was the owner
of all unsold lands in California" granted by the Act of July 25,
1866; that, from the date of filing such articles of amalgamation
and consolidation, the Central Pacific Railroad Company remained
owner of all of the lands granted by the Act of 1866 and two other
acts which made grants to the latter company until 1899, when what
remained unsold of the lands were granted to the Central Pacific
Railway. But it is stipulated that the statements
"concerning the ownership and conveyance of the lands granted by
said acts of Congress are made subject to the terms and provisions
of said acts of Congress respectively, and all rights of the United
States thereunder -- the title to said lands not being an issue in
the suit at bar."
Why these facts were stipulated it is hard to guess, but it is
certain they cannot be given effect against all other facts
stipulated. It will be observed the stipulation is concerned only
with the California & Oregon Railroad, not with the defendant
Oregon & California Railroad. The explanation of the government
is therefore correct that the Oregon part of the grant was by the
grant itself treated as substantially distinct from the California
part, and that the Oregon part has always been claimed, used, and
enjoyed by defendant, the Oregon &
Page 238 U. S. 431
California Railroad Company or its predecessors in title, and
never by the Central Pacific.
The provisos of the act having been thus established as
covenants, not conditions subsequent, between the government and
the defendants, and their continuing obligation determined, we are
brought to the consideration of the rights of the
cross-complainants and interveners thereunder.
It may be said that, in some of the aspects of our discussion,
there was implication against their contentions, but it also may be
said there is implication upon the railroad company. Undoubtedly
the provisos expressed the policy of the settlement of the lands
and a sale to settlers, but the cross-complainants and interveners
assert a right more definite -- a trust, indeed, and personal of
compulsory obligation upon the railroad company to be enforced in
individual suits.
Snyder and 63 others, alleging themselves to be
actual
settlers upon specified lands, brought suits nearly a year before
the present suit was commenced. They were brought into this suit,
and are now here as cross-complainants. They pray that the grants
be declared to be grants in trust, and ask for protection,
"whatever form of decree may be entered." They further ask
"that receivers or trustees be appointed, whose duty it shall be
to formulate, with the approval of the district court, suitable
rules and regulations for the sale of all the lands here involved,
in accordance with the acts of Congress making the grants."
They deny having anything in common with the interveners, and,
as we have seen, vigorously attack the claim of the government for
a forfeiture of the grants.
The interveners concur with the cross-complainants that the acts
created a trust, but assert that they have a broader extent. In
other words, and as their counsel express it, the intention of
Congress was to create a trust
Page 238 U. S. 432
in the granted lands for the benefit of those who might desire
to acquire title thereto -- that is, not actual settlement was the
condition of purchase, but an intention to settle, with the
qualification to do so.
Here, then, is a conflict between the asserted beneficiaries of
the asserted trust -- whether actual settlers, as
cross-complainants contend, or applicants for settlement, as the
interveners insist. The distinction would seem to be real, and
cannot be confounded. The word "actual" expresses a settlement
completed, not simply contemplated or possible. Upon the express
words of the provisos, it would seem that interveners' claims to be
beneficiaries of the trust, if there is a trust, must be
refuted.
The cross-complainants present arguments of more difficulty,
supported by appealing considerations. "Actual settlers" are the
words of the provisos, and we may assume actual settlers were
contemplated and sales of the lands were restricted to them; but
how were actual settlers to be ascertained, any by whom? And was
there compulsion or option as to sales? There could not be an
absolute right to settle or purchase unless there was an absolute
compulsion to sell. The acts of Congress omit regulation. Their
language is not directive; it is restrictive only. With this
exception, the grant is unqualified. The lands were granted to aid
in the construction of the road, and while it is a certain
inference that disposition of them was contemplated, necessarily
there was conferred a discretion as to time. There was certainly no
limitation of it expressed.
The contending considerations we have already stated and their
respective weights, and decision must necessarily turn upon a
judgment of the purposes of the granting acts, and in what manner
they were intended to be accomplished, not of the provisos alone.
There is plausibility in the argument which represents that, if the
provisos
Page 238 U. S. 433
be held to give to the railroad a discretion of sale, the choice
of time and settlers, their requirement is impotent, and, instead
of securing settlement, would prevent it; instead of devoting the
lands to development, retain them in monopoly and a kind of
mortmain.
We feel the strength of the argument, but cannot yield to it.
There are countervailing ones. We have already indicated that
nothing can be deduced from the imperfections of the granting acts.
Indeed, the argument of cross-complainants, like a great many other
contentions in the case, get their plausibility from the abuses of
the granting acts, not their uses. We have seen that in the early
days of the grants, settlements were normally made and the
railroad, in the exercise of its discretion, responded to such
settlement by sales to settlers.
There was no embarrassment then in the selection of settlers and
no question by anybody that there was a discretion of sale on the
part of the railroad company. A denial came later, and the
assertion of a peremptory right against the company of settlement
and purchase, both to be acquired by an intrusion upon the
company's possession, if it can be said to have had possession. Of
course, the delay in the assertion of a right is not conclusive
against its existence. There is, however, argument in it, and if it
may be said that settlers were not in such numbers and urgency as
to bring their rights to attention and assertion, a conjecture may
be engendered that some other purpose than the acquisition of homes
had led to a denial of rights which no one theretofore had
questioned. It is asserted that not a desire of settlement, but the
rise in the price of lumber, has created an eager demand for the
lands.
There are, however, further considerations. By the acts of 1866
and 1870, it is provided that, upon the survey and location of the
roads, the government shall withdraw from sale the granted lands,
and the provision would
Page 238 U. S. 434
seem to withdraw the lands from the specific operation of the
land laws, and certainly from a complete analogy to them. The
public land laws had test of the qualification of settlers under
them; they had also the machinery of proof and precaution. When the
granted lands were withdrawn from those laws and primarily devoted
to another purpose, they were committed to another power, to be
administered for such purpose, and a discretion in the exercise of
the power, within the restriction imposed, was necessarily
conferred. This purpose we have sufficiently estimated. Nor need we
pause to consider the differences between charitable trusts and
other trusts, the class, not individual interest, which the former
must have, as it is contended, and the certainty in the
beneficiaries which the cases have assigned to the latter. And
certainly the words "actual settlers" indicate no particular
individuals. They describe a class or body of individuals without
habitation or name. As Judge Wolverton, in his opinion in the
district court (186 F. 861, 910), said:
"There could be no actual settler until an actual habitation was
established upon some specific parcel of this land. Logically, no
one is a
cestui que trust under the theory until and
unless he becomes such a settler. This is a palpable demonstration
of the uncertainty as to the beneficiary, for who, of the vast
concourse of humanity, is going to come and claim the right and
privilege of settling upon the land?"
We cannot construe the grants as confined or encumbered by
rights so indefinite.
There was a complete and absolute grant to the railroad company
with power to sell, limited only as prescribed, 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 add, it might choose
Page 238 U. S. 435
the time for selling or its use of the grants 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, divested of the obligations
of the provisos.
To use the grant for credit might become, indeed, did become, a
necessity. The construction of the road halted for funds. They were
raised by trust deeds, as we have seen. The accomplishment of the
purpose of the grants determines, we repeat, against the creation
of a trust.
In conclusion, we cannot refrain from repeating that the case in
its main principles is not in great compass. It has been given
pretension and complexity by the happening of the unforeseen, the
lapse of time, change of conditions, and the contests of interests.
These, however, are but accidents, giving perplexity and prolixity
to discussion. Judgment is independent of them. It is determined by
the simple words of the acts of Congress not only regarded as
grants, but as laws, and accepted as both; granting rights, but
imposing obligations -- rights quite definite, obligations as much
so. The first had the means of acquisition, the second of
performance, and, as we have pointed out, whatever the difficulties
of performance, relief could have been applied for, and, it might
be, have been secured, through an appeal to Congress. Certainly
evasion of the laws or the defiance of them should not have been
resorted to.
Nor can their obligation be magnified by looking backwards, by
the results achieved, rather than when they were only hoped for, by
conditions of which there was not even prophecy.
We have seen that one company failed under the burdens which it
assumed. The other company took it up and struggled for years under
it and its own burden. It may, indeed, have finally succeeded by a
disregard of
Page 238 U. S. 436
the provisos. It might, however, have succeeded by a strict
observance of them. We are not required to decide between the
suppositions. We can only enforce the provisos as written, not
relieve from them.
For the same reason, we cannot, at the instance of the
government, give a greater sanction to them than Congress intended,
nor give to cross-complainants and interveners a right which the
granting acts did not confer upon them.
Rejecting, then, the contention of the government and the
contentions of the cross-complainants and interveners, and
regarding the settlers clauses as enforceable covenants, what shall
be the judgment? A reversal of the decree of the district court, of
course, and clearly an injunction against further violations of the
covenants. There certainly should be no repetition of them. What
they were the record exhibits.
We need not comment on them, or point out how opposed they were
to the covenants, how antagonistic to the policy and purpose of the
government expressed in the covenants. The contrast of a sale to a
single purchaser of 160 acres (the maximum amount) with a sale of
1,000, 2,000, 20,000, and 45,000 acres to a single purchaser needs
no emphasis, nor the contrast of a use of the lands to establish
homes with their use for immediate or speculative enterprises.
In view of such disregard of the covenants, and gain of illegal
emolument, and in view of the government's interest in the exact
observance of them, it might seem that restriction upon the future
conduct of the railroad company and its various agencies is
imperfect relief; but the government has not asked for more.
In its bill, it has distinguished between the sold and unsold
lands and between the respective rights and interest, vested,
contingent, or expectant, in them, and while it is asserted that
all have become forfeited, only the unsold
Page 238 U. S. 437
lands and the rights and interest in them are included in this
suit. And the reason is given that the purchasers were many, the
names and places of residence of only a few of them were known, and
the names of the others could not have been ascertained in time to
make them parties to the suit. Besides, that such purchases and
interests were made and acquired under greatly varying
circumstances, and that it would be inequitable to make a few
purchasers representatives of all, and to make all parties would
postpone and might ultimately defeat the public interests. That
therefore this suit was brought, it is alleged, to determine the
rights and remedies as to the unsold lands, and that subsequently
other suits will be instituted as to the sold lands, rights and
remedies as to them being in effect reserved.
Therefore, the decree in this suit shall be without prejudice to
any other suits, rights, or remedies which the government may have
by law or under the joint resolution of April 30, 1908,
supra, or under the Act of Congress passed August 20,
1912,
supra.
However, 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 government alleged in its bill that more than 1,000 persons
had made application to purchase from the railroad company in
conformity to the covenants. In answering, the defendants averred
that such applications were made by persons who desired to obtain
title on account of the timber, and not otherwise, and for the
purpose of speculation only, and not in good faith as actual
settlers. And it was averred that the lands were chiefly and in
most instances solely of value because of the timber thereon, and
were not fit for actual settlement. And, further, that the lands
capable of actual settlement and the establishment of
Page 238 U. S. 438
homes thereon at no time
"exceeded (approximately) 300,000 acres, consisting of small and
widely separated tracts, all of which were sold to actual settlers
or persons claiming to be such during construction and prior to
completion, respectively, of said railroads, in quantities of 160
acres or less to a single purchaser at prices not exceeding $2.50
per acre."
A great deal of testimony was introduced, consisting not only of
that of witnesses, but of maps, photographs, reports, and
publications, which tended to establish the asserted character of
the lands. And there was evidence in rebuttal. We cannot pause to
determine the relative probative force of the opposing testimonies.
It is, however, clear, even from the government's summary of the
evidence, that lands which may be fit for cultivation have a
greater value on account of the timber which is upon them. Besides,
for our present purpose, we may accept the assertion of defendants,
and we have seen that Congress extended the timber and stone act to
the reserved lands, and, by the Act of August 20, 1912,
supra, it has withdrawn from entry or the initiation of
any right whatever under any of the public land laws of the United
States the lands which might revert to the United States by reason
of this suit.
This, then, being the situation resulting from conditions now
existing, incident, it may be, to the prolonged disregard of the
covenants by the railroad company, the lands 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
authorizing the cutting or removal of 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
Page 238 U. S. 439
and at the same time secure to the defendants all the value the
granting acts conferred upon the railroads.
If Congress does not make such provision, the defendants may
apply to the district court within a reasonable time, not less than
six months, from the entry of the decree herein, for a modification
of so much of the injunction herein ordered as enjoins any
disposition of the lands and timber until Congress shall act, and
the court in its discretion may modify the decree accordingly.
Decree reversed and cause remanded to the district court for
further proceedings in accordance with this opinion.
MR. JUSTICE McREYNOLDS took no part in the consideration and
decision of the case.
*
"Sec. 6. That nothing in this act contained, nor action taken
pursuant to the provisions of this act, shall be construed as a
condonation of any of the breaches of any of the conditions or
provisions annexed to any of the grants designated in said joint
resolution approved April thirtieth, nineteen hundred and eight,
nor as a waiver of any of said conditions or provisions, nor as a
waiver of any right of forfeiture in favor of the United States on
account of any breach or breaches of any of said conditions, nor as
a waiver of any cause of action or remedy of the United States on
account of any breach or breaches of any of said conditions or
provisions, nor as a waiver of any other rights or remedies
existing in favor of the United States."
