Illinois Central Railroad Company v. Illinois/Dissent Shiras

Mr. Justice SHIRAS, dissenting.

That the ownership of a state in the lands underlying its navigable waters is as complete, and its power to make them the subject of conveyance and grant is as full, as such ownership and power to grant in the case of the other public lands of the state, I have supposed to be well settled.

Thus it was said in Weber v. Commissioners, 18 Wall. 57, 65, that, 'upon the admission of California into the Union upon equal footing with the original states, absolute property in, and dominion and sovereignty over, all soils under the tide waters within her limits, passed to the state, with the consequent right to dispose of the title to any part of said soils in such manner as she might deem proper, subject only to the paramount right of navigation over the waters, so far as such navigation might be required by the necessities of commerce with foreign nations or among the several states, the regulation of which was vested in the general government.'

In Hoboken v. Railroad Co., 124 U.S. 657, 8 Sup. Ct. Rep. 643,-a case in many respects like the present,-it was said: 'Lands below high-water mark on navigable waters are the absolute property of the state, subject only to the power conferred upon congress to regulate foreign commerce and commerce between the states, and they may be granted by the state, either to the riparian proprietors or to a stranger, as the state may see fit;' and accordingly it was held 'that the grant by the state of New Jersey to the United Companies by the act of March 31, 1869, was intended to secure, and does secure, to the respective grantees, the whole beneficial interest in their respective properties, for their exclusive use for the purposes expressed in the grants.'

In Stevens v. Railroad Co., 34 N. J. Law, 532, it was declared by the court of errors and appeals of New Jersey that it was competent for the state to grant to a stranger lands constituting the shore of a navigable river under tide water below the tide-water mark, to be occupied and used with structures and improvements.

Langdon v. Mayor, etc., 93 N. Y. 129, 155, was a case in which it was said by the court of appeals of New York: 'From the earliest times in England the law has vested the title to, and the control over, the navigable waters therein, in the crown and parliament. A distinction was taken between the mere ownership of the soil under water and the control over it for public purposes. The ownership of the soil, analogous to the ownership of dry land, was regarded as jus privatum, and was vested in the crown. But the right to use and control both the land and water was deemed a jus publicum, and was vested in parliament. The crown could convey the soil under water so as to give private rights therein, but the dominion and control over the waters, in the interest of commerce and navigation, for the benefit of all the subjects of the kingdom, could be exercised only by parliament. In this country the state has succeeded to all the rights of both crown and parliament in the navigable waters and the soil under them, and here the jus privatum and the jus publicum are both vested in the state.'

These citations might be indefinitely multiplied from authorities both federal and state.

The state of Illinois, by her information or bill of complaint in this case, alleges that 'the claims of the defendants are a great and irreparable injury to the state of Illinois as a proprietor and owner of the bed of the lake, throwing doubts and clouds upon its title thereto, and preventing an advantageous sale or other disposition thereof;' and in the prayer for relief the state asks that 'its title may be established and confirmed; that the claims made by the railroad company may be declared to be unfounded; and that the state of Illinois may be declared to have the sole and exclusive right to develop the harbor of Chicago by the construction of docks, wharves, etc., and to dispose of such rights at its pleasure.'

Indeed, the logic of the state's case, as well as her pleadings, attributes to the state entire power to hold and dispose of, by grant or lease, the lands in question; and her case is put upon the alleged invalidity of the title of the railroad company, arising out of the asserted unconstitutionality of the act of 1869, which act made the grant, by reason of certain irregularities in its passage and title, or, that ground failing, upon the right of the state to arbitrarily revoke the grant, as a mere license, and which right she claims to have duly exercised by the passage of the act of 1873.

The opinion of the majority, if I rightly apprehend it, like wise concedes that a state does possess the power to grant the rights of property and possession in such lands to private parties, but the power is stated to be in some way restricted to 'small parcels, or where such parcels can be disposed of without detriment to the public interests in the lands and waters remaining.' But it is difficult to see how the validity of the exercise of the power, if the power exists, can depend upon the size of the parcel granted, or how, if it be possible to imagine that the power is subject to such a limitation, the present case would be affected, as the grant in question, though doubtless a large and valuable one, is, relatively to the remaining soil and waters, if not insignificant, yet certainly, in view of the purposes to be effected, not unreasonable. It is matter of common knowledge that a great railroad system, like that of the Illinois Central Railroad Company, requires an extensive and constantly increasing territory for its terminal facilities.

It would seem to be plain that, if the state of Illinois has the power, by her legislature, to grant private rights and interests in parcels of soil under her navigable waters, the extent of such a grant, and its effect upon the public interests in the lands and waters remaining, are matters of legislative discretion.

Assuming, then, that the state of Illinois possesses the power to confer by grant, upon the Illinois Central Railroad Company, private rights and property in the lands of the state underlying the waters of the lake, we come to inquire whether she has exercised that power by a valid enactment, and, if so, whether the grant so made has been legally revoked.

It was contended, on behalf of the state, that the act of 1869, purporting to confer upon the railroad company certain rights in the lands in question, did not really so operate, because the record of proceedings in the senate does not show that the bill was read three times during its passage, and because the title of the bill does not sufficiently express the purpose of the bill, both of which are constitutional requisites to valid legislation.

It is unnecessary to discuss these objections in this opinion, because the court below held them untenable, and because the opinion of the majority in this court adopts the reasoning and conclusion of the court below in this regard.

It was further contended, on behalf of the state, that, even if the act of 1869 were a valid exercise of legislative power, yet the grant thereby made did not vest in the railroad company rights and franchises in the nature of private property, but merely conferred upon the company certain powers for public purposes, which were taken and held by the company as an agency of the state, and which accordingly could be recalled by the state whenever, in her wisdom, she deemed it for the public interest to do so, without thereby infringing a contract existing between her and the railroad company.

This is a question that must be decided by the terms of the grant, read in the light of the nature of the power exercised, of the character of the railroad company as a corporation created to carry out public purposes, and of the facts and circumstances disclosed by the record.

It must be conceded, in limine, that in construing this grant the state is entitled to the benefit of certain well-settled canons of construction that pertain to grants by the state to private persons or corporations, as, for instance, that, if there is any ambiguity or uncertainty in the act, that interpretation must be put upon it which is most favorable to the state; that the words of the grant, being attributable to the party procuring the legislation, are to receive a strict construction as against the grantee; and that, as the state acts for the public good, we should expect to find the grant consistent with good morals and the general welfare of the state at large, and of the particular community to be affected.

These are large concessions, and of course, in order to defeat the grant, they ought not to be pushed beyond the bounds of reason, so as to result in a strained and improbable construction. Reasonable effect must be given to the language employed, and the manifest intent of the enactment must prevail.

By an act of congress approved September 20, 1850, (9 St. p. 466,) the right of way not exceeding 200 feet in width through the public lands was granted to the state of Illinois for the construction of a railroad from the southern terminus of the Illinois & Michigan Canal in that state (at La Salle) to Cairo, at the confluence of the Ohio and Mississippi rivers, with a branch from that line to Chicago, and another, via the city of Galena, to Dubuque, in the state of Iowa. A grant of public lands was also made to the state to aid in the construction of the railroad and branches, which by the terms of the act were to 'be and remain a public highway for the use of the government of the United States, free from toll or other charge upon the transportation of any property or troops of the United States.' It was also provided that the United States mail should at all times be transported on the said railroad, under the direction of the post-office department, at such price as the congress might by law direct.

This act of congress was formally accepted by the legislature of the state February 17, 1851. Laws 1851, pp. 192, 193. Seven days before the acceptance-February 10, 1851-the Illinois Central Railroad Company was incorporated for the purpose of constructing, maintaining, and operating the railroad and branches contemplated in the act of congress.

By the second section of its charter the company was authorized and empowered 'to survey, locate, construct, complete, alter, maintain, and operate a railroad, with one or more tracks or lines of rails, from the southern terminus of the Illinois & Michigan Canal to a point at the city of Cairo, with a branch of the same to the city of Chicago, on Lake Michigan, and also a branch via the city of Galena to a point on the Mississippi river opposite the town of Dubuque, in the state of Iowa.'

It was provided in the third section that 'the said corporation shall have right of way upon, and may appropriate to its sole use and control for the purposes contemplated herein, land not exceeding two hundred feet in width through its entire length; may enter upon and take possession of and use, all and singular, any lands, streams, and materials of every kind, for the location of depots and stopping stages, for the purpose of constructing bridges, dams, embankments, excavations, station grounds, spoil banks, turnouts, engine houses, shops, and other buildings necessary for the construction, completing, altering, maintaining, preserving, and complete operation of said road. All such lands, waters, materials, and privileges belonging to the state are hereby granted to said corporation for said purposes; but when owned or belonging to any person, company, or corporation, and cannot be obtained by voluntary grant or release, the same may be taken and paid for, if any damages are awarded, in the manner provided in 'An act to provide for a general system of railroad incorporations,' approved November 5, 1849, and the final decision or award shall vest in the corporation hereby created all the rights, franchises, and immunities in said act contemplated and provided.'

The eighth section had the following provision: 'Nothing in this act contained shall authorize said corporation to make a location of their track within any city without the consent of the common council of said city.'

By the fifteenth section the right of way and all the lands granted to the state by the act of congress before mentioned, and also the right of way over and through lands owned by the state, were ceded and granted to the corporation for the 'purpose of surveying, locating, constructing, completing, altering, maintaining, and operating said road and branches.' There was a requirement in this section (clause 3) that the railroad should be built into the city of Chicago.

By the eighteenth section the company was required, in consideration of the grants, privileges, and franchises conferred, to pay into the treasury of the state, on the first Monday of December and June of each year, 5 per centum of the gross receipts of the road and branches for the six months then next preceding.

The twenty-second section provided for the assessment of an annual tax for state purposes upon all the property and assets of the corporation; and if this tax and the 5 per cent. charge upon the gross receipts should not amount to 7 per cent. of the total proceeds, receipts, or income of the company, it was required to pay the difference into the state treasury, 'so as to make the whole amount paid equal at least to seven per cent. of the gross receipts of said corporation.' Exemption was granted in that section from 'all taxation of every kind, except as herein provided for.'

The act of November 5, 1849, referred to in the third section of the charter, provided a mode for condemning land required for railroad uses, and contained an express provision that upon the entry of judgment the corporation 'shall become seised in fee of all the lands and real estate described during the continuance of the corporation.' 2 Laws 1849, p. 27.

The consent of the common council to the location of the railroad within the city of Chicago was given by an ordinance passed June 14, 1852.

On the 16th of April, 1869, an act was passed by the legislature of Illinois, entitled 'An act in relation to a portion of the submerged lands and Lake Park grounds lying on and adjacent to the shore of Lake Michigan, on the eastern frontage of the city of Chicago.' The third section of this act provided as follows:

'Sec. 3. The right of the Illinois Central Railroad Company, under the grant from the state in its charter, which said grant constitutes a part of the consideration for which the said company pays to the state at least seven per cent. of its gross earnings, and under and by virtue of its appropriation, occupancy, use, and control, and the riparian ownership incident to such grant, appropriation, occupancy, use, and control, in and to the lands submerged or otherwise lying east of the said line running parallel with and four hundred feet east of the west line of Michigan avenue, in fractional sections ten (10) and fifteen, (15,) township and range as aforesaid, is hereby confirmed; and all the right and title of the state of Illinois in and to the submerged lands constituting the bed of Lake Michigan, and lying east of the tracks and breakwater of the Illinois Central Railroad Company for the distance of one mile, and between the south line of the south pier extended eastwardly and a line extended eastward from the south line of lot twentyone, south of and near to the roundhouse and machine shops of said company, in the south division of the said city of Chicago, are hereby granted, in fee, to the said Illinois Central Railroad Company, its successors and assigns: provided, however, that the fee to said lands shall be held by said company in perpetuity, and that the said company shall not have power to grant, sell, or convey the fee to the same, and that all gross receipts from use, profits, leases, or otherwise of said land, or the improvements thereon, or that may hereafter be made thereon, shall form a part of the gross proceeds, receipts, and income of the said Illinois Central Railroad Company, upon which said company shall forever pay into the state treasury, semiannually, the per centum provided for in its charter, in accordance with the requirements of said charter: and provided, also, that nothing herein contained shall authorize obstructions to the Chicago harbor, or impair the public right of navigation, nor shall this act be construed to exempt the Illinois Central Railroad Company, its lessees or assigns, from any act of the general assembly, which may be hereafter passed, regulating the rates of wharfage and dockage to be charged in said harbor; and provided, further, that any of the lands hereby granted to the Illinois Central Railroad Company, and the improvements now or which may hereafter be on the same, which shall hereafter be leased by said Illinois Central Railroad Company to any person or corporation, or which may hereafter be occupied by any person or corporation other than said Illinois Central Railroad Company, shall not, during the continuance of such leasehold estate or of such occupancy, be exempt from municipal or other taxation.' Laws 1869, pp. 245-248.

By this act the right of the railroad company to all the lands it had appropriated and occupied, lying east of a line drawn parallel to and 400 feet east of the west line of Michigan avenue, in fractional sections 10 and 15, was confirmed; and a further grant was made to the company of the submerged lands lying east of its tracks and break water, within the distance of one mile therefrom, between the south line of the south pier extended eastwardly and a line extended eastward from the south line of lot 21.

What is the fair and natural import of the language used?

So long as the act stands in force, there seems to me to exist a contract whereby the Illinois Central Company is to have and enjoy perpetual possession and control of the lands in question, with right to improve the same and take the rents, issues, and profits thereof, provided always that the company shall not have the power to sell or alien such lands, nor shall the company be authorized to maintain obstructions to the Chicago harbor, or to impair the public right of navigation; nor shall the company, its lessees of assigns, be exempted from any act of the general assembly which may be hereafter passed, regulating the rates of wharfage and dockage to be charged in said harbor, and whereby, in consideration of the grant of these rights and privileges, it shall be the duty of the company to pay, and the right of the state to receive, 7 per cent. of the gross receipts of the railroad company from 'use, profits, leases, or otherwise, of said land, or the improvements thereon, or that may be hereafter made thereon.'

Should the railroad company attempt to disregard the restraint on alienating the said lands, the state can, by judicial proceeding, enjoin such an act, or can treat it as a legal ground of forfeiting the grant; or, if the railroad company fails or refuses to pay the per centum provided for, the state can enforce such payment by suit at law, and possibly by proceedings to forfeit the grant. But, so long as the railroad company shall fulfill its part of the agreement, so long is the state of Illinois inhibited by the constitution of the United States from passing any act impairing the obligation of the contract.

Doubtless there are limitations, both express and implied, on the title to and control over these lands by the company. As we have seen, the company is expressly forbidden to obstruct Chicago harbor, or to impair the public right of navigation. So, from the nature of the railroad corporation and of its relation to the state and the public, the improvements put upon these lands by the company must be consistent with their duties as common carriers, and must be calculated to promote the efficiency of the railroad in the receipt and shipment of freight from and by the lake. But these are incidents of the grant, and do not operate to defeat it.

To prevent misapprehension, it many be well to say that it is not pretended, in this view of the case, that the state can part, or has parted, by contract, with her sovereign powers. The railroad company takes and holds these lands subject at all times to the same sovereign powers in the state as obtain in the case of other owners of property. Nor can the grant in this case be regarded as in any way hostile to the powers of the general government in the control of harbors and navigable waters.

The able and interesting statement, in the opinion of the majority, of the rights of the public in the navigable waters, and of the limitation of the powers of the state to part with its control over them, is not dissented from. But its pertinency in the present discussion is not clearly seen. It will be time enough to invoke the doctrine of the inviolability of public rights when and if the railroad company shall attempt to disregard them.

Should the state of Illinois see in the great and unforeseen growth of the city of Chicago and of the lake commerce reason to doubt the prudence of her legislature in entering into the contract created by the passage and acceptance of the act of 1869, she can take the rights and property of the railroad company in these lands by a constitutional condemnation of them. So, freed from the shackles of an undesirable contract, she can make, as she expresses in her bill a desire to do, a 'more advantageous sale or disposition to other parties,' without offense to the law of the land.

The dectrine that a state, by making a grant to a corporation of her own creation, subjects herself to the restraints of law judicially interpreted, has been impugned by able political thinkers, who may perhaps find in the decision of the court in the present case some countenance of their views. But I am unable to suppose that there is any intention on the part of this court to depart from its doctrine so often expressed.

'We have no knowledge of any authority or principle which could support the doctrine that a legislative grant is revocable in its own nature, and held only durante bens placito. Such a doctrine * *  * is utterly inconsistent with a great and fundamental principle of a republican government,-the right of the citizens to the free enjoyment of their property legally acquired.

'A private corporation created by the legislature may lose its franchises by a misuser or nonuser of them, and they may be resumed by the government under a judicial judgment upon a quo warranto to ascertain and enforce the forfeiture. * *  * But that the legislature can repeal statutes creating private corporations, or confirming to them property already acquired under the faith of previous laws, and by such repeal can vest the property of such corporations exclusively in the state, or dispose of the same to such purposes as they may please, without the consent or default of the corporators, we are not prepared to admit; and we think ourselves standing upon the principles of natural justice, upon the fundamental laws of every free government, upon the spirit and the letter of the constitution of the United States, and upon the decisions of most respectable judicial tribunals, in resisting such a doctrine.' Terrett v. Taylor, 9 Cranch, 43.

In Stone v. Mississippi, 101 U.S. 814, Chief Justice Waite, in delivering the opinion of the court, said: 'It is now too late to contend that any contract which a state actually enters into, when granting a charter to a private corporation, is not within the protection of the clause in the constitution of the United States that prohibits states from passing laws impairing the obligation of contracts. The doctrines of Trustees v. Woodward, 4 Wheat. 518, announced by this court more than sixty years ago, have become so imbedded in the jurisprudence of the United States as to make them, to all intents and purposes, a part of the constitution itself.'

The obvious conclusion from the foregoing view of the case is that the act of 1873, as an arbitrary act of revocation, not passed in the exercise of any reserved power, is void; that the decree of the court below should be reversed; and that that court should be directed to enter a decree dismissing the bill of the state of Illinois and the cross bill of the city of Chicago.

I am authorized to state that Mr. Justice GRAY and Mr. Justice BROWN concur in this dissent.