Bybee v. Oregon & C. Railroad Company/Opinion of the Court

Two questions are presented by the record in this case: First, whether the defendant lost the power to take possession of its right of way by its failure to construct its road within the time limited by the acts of congress; and, Second, whether it is estopped to claim that it took nothing under its deed from the plaintiff, and may set up a separate and independent title in itself.

1. By section 2 of an act of congress approved July 25, 1866, entitled '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,' (14 St. 239,) there was granted to such company organized under the laws of Oregon, as the legislature of said state should thereafter designate, to aid in the construction of its road, 'every alternate section of public land, not mineral, designated by odd numbers, to the amount of twenty alternate sections per mile,' not otherwise disposed of by the United States, with the right to select from the odd sections, within 10 miles beyond the limits of the granted lands, other lands in lieu of any which might have been so disposed of prior to the location of the line; and by section 3 there was granted to it the right of way through the public lands, to the extent of 100 feet in width on each side of said railroad, where it might pass over the public lands, including all necessary grounds for stations, etc.

By section 6 the companies were required to file their assent to the act within one year; to complete the first 20 miles within two years, and at least 20 miles in each year thereafter, and the whole on or before the 1st of July, 1875.

Section 8 provided that in case the company should not complete the same as provided in section 6, 'this act shall 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 any such failure, shall revert to the United States;' but by a subsequent act of June 25, 1868, (15 St. 80,) the time for completing the road was extended to July 1, 1880.

That the company did not complete its road by the time limited by the act of 1868, namely July 1, 1880, is conceded by both parties, and is evident from the fact that the defendant took this deed from the plaintiff on December 3, 1883, wherein, for the consideration of $250, it was agreed that the defendant might enter upon plaintiff's water-ditch, and construct and operate its railroad and telegraph line over the same. Indeed, it appears to have been a matter of such common knowledge in the state of Oregon that the road was not constructed until after 1880 that the court below was inclined to take judicial notice of the fact.

The act making the grant in aid of this road does not, in its words of conveyance, differ materially from a large number of similar acts passed by congress in aid of the construction of roads in different parts of the west, which have been considered by this court as taking effect in praesenti, although the particular lands to which the grant is applicable remain to be selected and identified when the road is located, and the map is filed with the secretary of the interior. The act then operates as a grant of all odd-numbered sections within the limits, except so far as they may have been in the ean time 'granted, sold, reserved, occupied by homestead settlers, pre-empted, or otherwise disposed of.' And in all the cases in which the question has been passed upon by this court, the failure to complete the road within the time limited is treated as a condition subsequent, not operating ipso facto as a revocation of the grant, but as aughorizing the government itself to take advantage of it, and forfeit the grant by judicial proceedings, or by an act of congress, resuming title to the lands. Thus, in Schulenberg v. Harriman, 21 Wall. 44, the act of congress granting the lands provided in what manner the sales should be made, and enacted that if the road were not completec within 10 years no further sales should be made, and the lands should revert to the United States. That was decided to be no more than a provision that the grant should be void if the condition subsequent were not performed. Said Mr. Justice FIELD in that case: 'It is settled law that no one can take advantage of the non-performance of a condition subsequent annexed to an estate in fee but the grantor or his heirs, or the successors of the grantor if the grant proceed from an aftificial person; and, if they do not see fit to assert their right to enforce a forfeiture on that ground, the title remains unimpaired in the grantee. * *  * And the same doctrine obtains where the grant upon condition proceeds from the government; no individual can assail the title it has conveyed on the ground that the grantee has failed to perform the conditions annexed.' The doctrine of this case was approved and reapplied to a similar grant to the St. Joseph & Denver City Railroad, in Van Wyck v. Knevals, 106 U.S. 360, 1 Sup. Ct. Rep. 336. In Railway Co. v. McGee, 115 U.S. 469, 473, 6 Sup. Ct. Rep. 123, it was said by Chief Justice WAITE to have been often decided 'that lands granted by congress to aid in the construction of railroads do not revert after condition broken until a forfeiture has been asserted by the United States, either through judicial proceedings instituted under authority of law for that purpose, or through some legislative action legally equivalent to a judgment of office found at common law.' 'Legislation to be sufficient must manifest an intention by congress to reassert title and to resume possession. As it is to take the place of a suit by the United States to enforce a forfeiture, and judgment therein establishing the right, it should be direct, positive, and free from all doubt or ambiguity.' The manner in which this forfeiture shall be declared is also stated in U.S. v. Repentigny, 5 Wall. 211, 267; Farnsworth v. Railroad Co., 92 U.S. 49, 66; McMicken v. U.S., 97 U.S. 204, 217.

An effort is made to distinguish this case from Schulenberg v. Harriman, in the fact that the act not only declares that the lands, 'shall revert to the United States,' but that the act itself 'shall be null and void,' from which it is argued that it was the intention of congress that the failure to complete the road should operate ipso facto as a termination of all right to acquire any further interest in any lands not then patented. It is true that the language of this statute differs somewhat from that ordinarily employed by congress in connection with similar grants; but the declaration that the lands 'shall revert to the United States' is practically equivalent to a declaration that the act granting such lands shall cease to be operative if the company fail to complete its road within a specified time, or, as Mr. Justice FIELD puts it in Schulenberg v. Harriman: 'The provision in the act of congress of 1856, that all lands remaining unsold after ten years shall revert to the United States if the road be not then completed, is no more than a provision that the grant shall be void if a condition subsequent be not performed.' The title to the land having vested in the company by virtue of the grant, the provision that it shall complete the road within a certain number of years doe no t cease to be a condition subsequent by declaring that the act shall be null and void, if the condition be not complied with.

And the law is well settled that it is only the grantor, or those in privity with him, who can take advantage of the forfeiture. Indeed, the provision that 'this act shall be null and void' is immediately followed by words indicating that it is only to a limited extent-that is, so far only as lands not already patented are concerned the nullity of the act extends, the language being: 'This act shall 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 any such failure, shall revert to the United States.' As to lands theretofore patented the act continued in full force and effect. As remarked by the learned judge or the court below: 'It is to become 'null' only so far as to allow the grantor to presume the grant on a failure to comply with the condition, and then only as to the lands remaining unpatented or unearned; and, but for this qualification, the grant might have been wholly resumed or forfeited for any failure to comply with the condition, even in the construction of the last mile. And this construction of the section is in harmony with the general purpose of the act and the policy of congress in making the grant.' A condition that would put it beyond the power of the company to build the last mile of its road by the aid of the granted lands is manifestly so harsh and unjust that the breach of such condition ought not to be treated as a forfeiture, unless the language of the act be so clear and unambiguous as to admit of no other reasonable construction.

Counsel for plaintiff has called our attention to several cases decided by the court of appeals of New York which doubtless have a bearing upon this question, but which, when carefully examined, are readily distinguishable. In re Brooklyn, etc., Ry. Co., 72 N. Y. 245; Transit Co. v. City of Brooklyn, 78 N. Y. 524; Hotel Co. v. Hersee, 79 N. Y. 454; Farnham v. Benedict, (N. Y.) 13 N. E. Rep. 784. In these cases the legislative act did not avoid the grant upon the non-performance of the condition subsequent, but declared that the corporate existence and powers of the company to act were at an end. In other words, it fixed a time for the expiration of the charter, and, when that time arrived, the corporation lost its power to act or do any business beyond such as was necessary in the process of winding up. It was not so much a case of forfeiture as of loss of legal entity, or, as expressed in the language of the court of appeals in the case in 78 N. Y., 'in case of non-compliance, the act itself ceases to have any operation, and all the powers, rights, and franchises thereby granted were deemed forfeited an terminated. There was to be not merely a case of forfeiture, which could be enforced by an action instituted by the attorney general, but the powers, rights, and franchises were to be taken and treated as forfeited and terminated. At the end of the time limited the corporation was to come to an end, as if that were the time limited in its charter for its corporate existence.'

More directly in point is the case of Oakland R. Co. v. Oakland, etc., R. Co., 45 Cal. 365. In this case an act of the legislature granting a corporation the right of way to lay a street-railroad track provided 'that, if the provisions of this act are not complied with, then the franchise and privileges herein granted shall utterly cease to be forfeited.' A breach of this condition was held ipso facto to forfeit the franchises of the corporation. A distinction was drawn in this case between forfeitures at common law, which did not operate to divest the title of the owner until by proper judgment in a suit instituted for that purpose the rights of the state had been established, and a forfeiture declared by statute, in which case the title to the thing forfeited vests immediately in the state upon the happening of he event for which the forfeiture is declared.

The doctrine of these cases has not been universally accepted, however, and in several states, notably in Massachusetts, it has been distinctly repudiated. Thus, in Briggs v. Canal Co., 137 Mass. 71, the act of incorporation of a canal company provided that, if a certain amount were not expended in the actual construction of the canal within four months from the passage of the act, the 'corporation shall thereupon cease to exist;' and further, that, if a certain other amount were not deposited by the company with the treasurer of the commonwealth within the same time, the corporation should thereupon cease to exist. It was declared in the opinion of the court to be 'too well settled to admit of discussion that a corporation can be judicially determined to have ceased to exist only in a suit to which the commonwealth is a party. The act of incorporation is a contract between the commonwealth and the corporation. Whether the corporation has complied with the conditions is a question of fact to be judicially determined. The commonwealth may waive a strict compliance with the terms of the act, and may elect whether it will insist upon a forfeiture, if there has been a breach of condition;' citing a number of prior cases in the same state.

In Bank v. Dawson, 13 La. 497, an act for the incorporation of a bank provided that upon the suspension or refusal of payment in specie for more than 90 days 'the charter shall be ipso facto forfeited and void.' But it was held that until the forfeiture was judicially decreed, neither the forfeiture nor the cause could be inquired into in another suit, nor could the existence of the corporation be questioned incidentally or collaterally. To the same effect is the case of Railroad Co. v. Rainey, 7 Cold. 420. In this case it was held that if an act of incorporation fixes a definite time in which the charter shall expire, when the time for this expiration arrives the corporation is dissolved. But if its continuance beyond a fixed time is made to depend upon the performance of a given conditition, the non-performance of the condition is a mere ground of forfeiture. 'This, however, can only be taken advantage of by the state in a proceeding in the nature of a quo warranto, and the existence of the corporation can never be collaterally called in question.' It is not, indeed, always easy to determine whether a condition be precedent or subsequent. It must depend wholly upon the intention of the parties as expressed in the instrument, and the facts surrounding its execution. If the condition does not necessarily precede the vesting of the estate, or if, from the nature of the act to be performed, and the time required for its performance, it is evident that the intention of the parties is that the estate shall vest, and the grantee shall perform the act after taking possession, then the condition is treated as subsequent, and there is no forfeiture without a re-entry by the grantor, or, in the case of the state, without some action on its part manifesting an intention to resume its title. In the case under consideration, the act, as already stated, takes effect as a present grant, and the provision for a forfeiture in case the company fails to complete its road is clearly a condition subsequent.

Upon the whole, we think there is nothing to distinguish this case from Schulenberg v. Harriman, and that the learned judge of the court below was correct in holding that the railroad company had not forfeited its right to construct its road by failure to complete the same within the time limited.

The distinction between a right of way over the public lands, and lands granted in aid of the construction of the road, is important in this connection. As to the latter, the rights of settlers or others who acquire the lands by purchase or occupation between the passage of the act and the actual location and identification of the lands, are preserved unimpaired, while the grant of the right of way issub ject to no such condition; and in the construction given by this court to a similar grant in Railroad Co. v. Baldwin, 103 U.S. 426, a person subsequently acquiring any part of such right of way takes it subject to the prior right of the railroad company. As remarked by the court in that case, (page 430:) 'If the company could be compelled to purchase its way over any sections that might be occupied in advance of its location, very serious obstacles would be imposed to the progress of the road. For any loss of lands by settlement or reservation other lands are given; but for the loss of the right of way by these means no compensation is provided, nor could any be given by the substitution of another route.'

The only title which the plaintiff seems to have had to the land in question was by virtue of an appropriation or occupation of the same under the act of July 26, 1866, 'granting the right of way to ditch and canal owners over the public lands, and for other purposes.' 14 St. 251. But as his occupation dates only from May, 1879, long after the defendant company had become entitled to its right of way over these lands by virtue of the act of July 25, 1866, his claim was clearly subordinate to that of the railroad company. Under this act the plaintiff acquired no right to any portion of the public lands until his actual taking possession of the same for the purpose of constructing a ditch, and in so doing he took the risk of encroaching upon the right of way which the railroad company might thereafter select for the purposes of their road. This very question arose in the supreme court of California, in the case of Doran v. Railroad Co., 24 Cal. 245, in which the court observed (page 259) that 'the grant by congress of the right of way over any portion of the public land to which the United States have title, and to which private rithts have not been attached under the laws of congress, vests in the grantee the full and complete right of entry for the purpose of enjoying the right granted, and no person claiming in his own right any interest in the lands car prevent the grantee from entering in pursuance of his grant, or can recover damages that may necessarily be occasioned by such entry.' We regard this exposition of the law as sound, and the case as exactly in point in this connection.

2. With regard to the question of estoppel, the complaint alleges that the defendant went into possession of that portion of the plaintiff's ditch across which its road was constructed, under a deed from plaintiff and his tenant in common, for a consideration of $250 paid, and assented to the condition therein contained against impairing or destroying said ditch, the only right conveyed being a license 'to enter on said ditch and construct and operate its road over the same,' upon such condition. The contention of the plaintiff is that in receiving this deed and entering into possession the relation of landlord and tenant was created between them, and not that of vendor and vendee, so far as the doctrine of estoppel is concerned. But as the deed was the conveyance of a perpetual right for a solid consideration therein expressed, and there was no covenant for the payment of any rent, nor for the redelivery of possession, we think it should be regarded a § creating the relation of grantor and grantee between the parties thereto. We have already found that the title of the company to its right of way upon the location of its route related back to the date of the act, and hence that when it took possession of the land in question plaintiff had no title thereto which he could set up against the company. Had the defendant not accepted the deed from the plaintiff, it might, under our ruling upon the first point, have treated him as a trespasser. The real question, then, is whether the defendant is placed in a worse position by having accepted the deed from a party who had no title to the premises he assumed to conver,-the defendant having taken the conveyance under a mistaken view of thelaw applicable to the case.

It is conceded that, as a general principle, the grantee in a deed of conveyance is not estopped to deny the title of his grantor, and, unless this case be an exception to this rule, it will necessitate an affirmance of this judgment. The rule was first applied by this court in the case of Blight's Lessee v. Rochester, 7 Whear. 535, in favor of the grantee, who was permitted to show that the person from whom he derived title was an alien, and, under the laws then existing, incapable of transmitting by inheritance the title to lands in this country. In Merryman v. Bourne, 9 Wall. 592, it was stated that the vendee 'holds adversely to all the world, and had the same right to deny the title of his vendor as the title of any other party;' and in Robertson v. Pickrell, 109 U.S. 608, 3 Sup. Ct. Rep. 407, it was held, in an elaborate opinion by Mr. Justice FIELD, that defendants, who held under a deed of a life-estate, were not estopped from setting up a superior title. Cases in the state courts to the same effect are Comstock v. Smith, 13 Pick. 116; Osterhout v. Shoemaker, 3 Hill, 518; Clee v. Seaman, 21 Mich. 287; and Sparrow v. Kingman, 1 N. Y. 242.

Upon the other hand, there are doubtless some exceptions to the rule, arising out of circumstances which would render the repudiation of the grantor's title 'a breach of good faith and common honesty' on the part of the grantee. Thus he cannot refuse to pay the consideration named in his deed, nor probably to perform any other strictly personal covenant; nor, as remarked by the court in Robertson v. Pickrell, can the grantee, in a contest with another, while relying solely upon the title conveyed to him, question its validity when set up by the latter. In other words, he cannot assert that the title obtained from his grantor, or through him, is sufficient for his protection, and not available to his contestant. Where both parties assert title from a common grantor, and no other source, neither can deny that such grantor had a valid title when he executed his conveyance. Thus in Wilcoxon v. Osborn, 77 Mo. 621, it was stated that the rule was not applicable to a case where the only title asserted by the grantee was the precise title he had acquired from the grantor, nor to a case where both parties claimed from a common source, and the title was identical in that source. In that case a county, having received the purchase money for a tract of swamp land, caused a deed to be made to the purchaser by the county commissioner. On the same day the county made a loan of school funds, taking as security a mortgage on the land. Subsequently the county caused the mortgage to be foreclosed. The defendant derived title through this foreclosure. It was held, as against the heirs of the original purchaser, that the defendant was estopped to deny the validity of the commissioner's deed. So, in Phelan v. Kelley, 25 Wend. 389, it was held that where a person having a possessory title to lands dies in possession, leaving several children, his heirs at law, who succeed to such possession, it was not competent for one of such heirs, who had obtained the exclusive possession of the whole of the premises, to defeat a recovery by his co-heirs of their proportional parts or shares, by setting up a title acquired from the owners of the land; that to avail themselves of such title, they must first surrender possession to their co-heirs, and then bring ejectment. And in a number of cases it has been held that where one takes by descent as a co-heir or tenant in common he cannot show, in an action of ejectment by his co-heir, that his ancestor had no title. Jackson v. Streeter, 5 Cow. 529; Proprietors of Braintree v. Battles, 6 Vt. 395.

But the consequences of treating this case as an exception to the general rule are somewhat serious. If, as we hold, the defendant had the prior right to this land, it was under no obligation to treat with the plaintiff, or pay him for the disturbance of his possession which was unlawful as against the company. Has it by this deed disqualified itself forever from asserting the right that it would have possessed had it not done this? We think not. Assuming, as some of the cases indicate, that before disputing the title of his grantor the grantee is bound to surrender his possession taken under the deed, such requirement is obviously inapplicable to a case like this, where the only possession consists in the disturbance of a water-right or ditch claimed by the plaintiff by the construction of the road across such ditch. It could only be restored by the destruction of the road and the rebuilding of the ditch; in other words, by the surrender of possession under the deed, and a repudiation of the entire transaction, when it is admitted that the defendant could set up its prior title and proceed against the plaintiff as a trespasser. But this would be a useless and expensive formality, and we think the rule that forbids a tenant from disputing his landlord's title without first surrendering his possession has no application to a case like this. It may be said in general that the doctrine of estoppel exists only where there is an obligation to restore the possession of the land upon certain contingencies; such, for instance, as exist between landlord and tenant, or mortgagor and mortgagee. In such cases the occupant is considered to have pledged his faith to return the possession of the land which he occupies, and will not be permitted to do anything to impair the title of him from whom he has received it. 3 Washb. Real Prop. 98; Gardner v. Greene, 5 R. I. 104; Osterhout v. Shoemaker, 3 Hill, 513.

In this case the defendant not only did not agree to resurrender possession to the plaintiff, but it accepted the deed with this covenant or condition, for which it received no consideration, and we do not consider it a breach of good faith upon the part of the defendant to set up this fact; nor ought it to be put in a worse position by having accepted this deed, and paid $250 therefor, than it would have occupied had it refused altogether to treat with the plaintiff. The deed was evidently delivered and received by these parties under a misapprehension of their legal rights, and it would be manifestly unjust to hold the defendant forever estopped from asserting the invalidity of the covenant into which it had inadvertently entered.

The judgment of the court below must be affirmed.