Platt v. Union Pacific Railroad Company

APPEAL from the Circuit Court of the United States for the District of Nebraska.

This was a bill in equity filed Sept. 28, 1878, by William H. Platt, to enjoin the Union Pacific Railroad Company from prosecuting an action of ejectment which it brought against him the twenty-third day of that month, for the recovery of a certain quarter-section of land situate in the county of Hall and State of Nebraska, whereof he was in possession, claiming the equitable title thereto. The company answered. The case was heard upon the pleadings, and the bill dismissed. Platt appealed here.

Platt entered upon the land in the year 1874, and thereafter remained in possession. He made improvements thereon, and performed all the conditions which entitled him, as a qualified pre-emptor, to a preference right of purchase, if the land were subject to pre-emption. He duly filed, Sept. 21, 1878, his declaratory statement, made the requisite proofs before the proper officers, paid the receiver of the local land-office $200, being at the rate of $1.25 per acre, and took a receipt therefor.

The land is part of an odd-numbered section, situate within ten miles of the road of the company, and is included in the grant made by the act to aid in the construction of a railroad and telegraph line from the Missouri River to the Pacific Ocean, &c., approved July 1, 1862 (12 Stat. 489), and the amendatory act of July 2, 1864 (13 Stat. 356). The company accepted the grant, located the route of its road and filed a map thereof within the requisite time, and, in order to raise the means necessary to continue and complete the work on its road which was then constructing, issued, April 16, 1867, its coupon bonds to the amount of $10,400,000, payable twenty days after the date thereof, with semi-annual interest. To secure the payment of them it executed and duly acknowledged a certain indenture of that same date, covering the granted lands, which it caused to be recorded in said Hall County before July 1, 1872. The United States issued a patent, bearing date March 26, 1875, to the company for the granted lands not theretofore conveyed to it.

The company refused to accept the money so paid by Platt to the receiver of the land-office.

The bill and answer set up different dates when the road was completed; the first alleging it to be before July, 1869, and the latter Nov. 14, 1874, when it was finally accepted by the government.

The act of 1862 provides as follows:--

'SECT. 3. And be it further enacted, that there be and is hereby granted to the said company, 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 thereon, every alternate section of public land, designated by odd numbers, to the amount of five alternate sections per mile on each side of said railroad, on the line thereof, and within the limits of ten miles on each side of said road, not sold, reserved, or otherwise disposed of by the United States, and to which a pre-emption or homestead claim may not have attached, at the time the line of said road is definitely fixed: Provided, that all mineral lands shall be excepted from the operation of this act; but where the same shall contain timber, the timber thereon is hereby granted to said company. And all such lands so granted by this section which shall not be sold or disposed of by said company within three years after the entire road shall have been completed, shall be subject to settlement and pre-emption like other lands, at a price not exceeding $1.25 per acre to be paid to said company.

'SECT. 4. And be it further enacted, that whenever said company shall have completed forty consecutive miles of any portion of said railroad and telegraph line ready for the service contemplated by this act, and supplied with all necessary drains, culverts, viaducts, crossings, sidings, bridges, turnouts, watering-places, depots, equipments, furniture, and all other appurtenances of a first-class railroad,-the rails and all the other iron used in the construction and equipment of said road to be American manufacture of the best quality,-the President of the United States shall appoint three commissioners to examine the same and report to him in relation thereto; and if it shall appear to him that forty consecutive miles of said railroad and telegraph line have been completed and equipped in all respects as required by this act, then, upon certificate of said commissioners to that effect, patents shall issue conveying the right and title to said lands to said company, on each side of the road, as far as the same is completed, to the amount aforesaid; and patents shall in like manner issue as each forty miles of said railroad and telegraph line are completed upon certificate of said commissioners.'. ..

The amendatory act changes the number of sections per mile granted by the third section of the original act from 'five' to 'ten,' and the limits of the grant from 'ten' to 'twenty,' miles on each side of the road; and declares the company to be entitled to patents, upon the construction and acceptance of each 'twenty' consecutive miles of road.

The act of 1862 provides that upon the completion of forty consecutive miles (changed to twenty by the act of 1864) of said road, bonds of the United States of $1,000 each, bearing six per cent semi-annual interest, due due at thirty years from date, shall be issued by the Secretary of the Treasury to the company, to the amount of sixteen bonds per mile (a larger amount per mile being allowed between certain designated points); and that 'to secure the repayment to the United States, as hereinafter provided, of the amount of the said bonds so issued and delivered to said company, together with all interest thereon which shall have been paid by the United States, the issue of said bonds and delivery to the company shall ipso facto constitute a first mortgage on the whole line of the railroad and telegraph, together with the rolling-stock, fixtures, and property of every kind and description, and in consideration of which said bonds may be issued; and on the refusal or failure of said company to redeem said bonds or any part of them when required so to do by the Secretary of the Treasury, in accordance with the provisions of this act, the said road, with all the rights, functions, immunities, and appurtenances thereunto belonging, and also all lands granted to the said company by the United States which at the time of said default shall remain in the ownership of the said company, may be taken possession of by the Secretary of the Treasury for the use and benefit of the United States: Provided, this section shall not apply to that part of any road now constructed.'

The tenth section of the act of 1864 provides that sect. 5 of the act of 1862 'be so modified and amended that the Union Pacific Railroad Company, the Central Pacific Railroad Company, and any other company authorized to participate in the construction of said road, may, on the completion of each section of said road, as provided in this act and the act to which this act is an amendment, issue their first-mortgage bonds on their respective railroad and telegraph lines to an amount not exceeding the amount of the bonds of the United States, and of even tenor and date, time of maturity, rate and character of interest, with the bonds authorized to be issued to said railroad companies respectively. And the lien of the United States bonds shall be subordinate to that of the bonds of any or either of said companies hereby authorized to be issued on their respective roads, property, and equipments, except as to the provisions of the sixth section of the act to which this act is an amendment, relating to the transmission of despatches and the transportation of mails, troops, munitions of war, supplies, and public stores for the government of the United States. And said section is further amended by striking out the word 'forty' and inserting in lieu thereof the words 'on each and every section of not less than twenty."

The indenture executed by the company to secure its bonds conveys in fee to trustees, upon certain trusts, terms, and conditions, the lands granted to it by the acts of Congress. One condition is, 'that if the said party of the first part shall well and truly pay, or cause to be paid, to the holders of the said bonds, and every of them, the principal sums of money therein mentioned, according to the tenor thereof, with the interest thereon, at the times and in the manner hereinbefore provided, according to the true intent and meaning of these presents, then and from thenceforth this indenture and the estate hereby granted shall cease and determine, and all the right, title, and interest in any and all property hereby conveyed to the parties of the second part, not then disposed of under the powers hereby conferred, shall revert to and vest in the said party of the first part.'

It further provides that the lands shall be under the management and control of the company, to be by it sold or contracted to be sold for such prices and on such terms of payment as shall be mutually agreed upon by the company and the trustees; that the trustees shall, upon payment of the purchase-money of the several tracts which may be sold, receive and apply the same, and the proceeds of all sales made by them of lands so conveyed to them, to the sole and exclusive purpose of the payment of the said coupon bonds, until the same and the whole thereof shall be fully paid and satisfied, and thereafter to reconvey to the company the residue of said lands remaining unsold; that in default of the payment of either the interest or principal of the said coupon bonds, according to the tenor and effect thereof, for the period of six months after demand at the place of payment, the trustees are authorized to enter into and take possession of the lands and foreclose the indenture; that in case of such default for the period of one year, then the principal sum of said bonds is to become due and payable, and the said trustees are authorized to take possession of the lands, foreclose said indenture by selling, at public auction in the city of Omaha or New York, the lands, or so much thereof as may be necessary to pay and discharge said coupon bonds, or so many thereof as are then outstanding and unpaid; and that in case of any sale upon any such foreclosure, or at any public auction, the trustees are empowered to make, execute, and deliver a conveyance of the lands so sold, which shall convey to the purchaser all the rights and privileges of the company in and to the property so sold, to the same extent as the company shall have previously enjoyed and held the same.

The indenture further declares 'that all the provisions of said acts of Congress, so far as they are applicable, are hereby made, and shall be deemed and taken to be, a part of this instrument, and the said provisions in all that concerns the sale and disposal of the said lands hereby conveyed to the parties of the second part are to be observed and strictly and faithfully carried out and fulfilled.'

The company has made no sale or disposition of the land in controversy otherwise than by said indenture, and bonds to the amount of $7,000,000 are still outstanding.

Mr. James Lowndes for the appellant.

The Attorney-General for the United States.

The controlling question is, Had the United States the right to sell, in accordance with the provisions of the pre-emption laws and at the minimum price, the tract of land involved in this controversy? In disposing of it, it is not important to determine at which of the dates alleged by the respective parties the road was completed, as, at the time of the appellant's entry, more than three years had elapsed from the date claimed by the company as that when the road was accepted.

No sale or disposition of the land within the meaning of the act has been made by the company. It may be that 'dispose of' has not such an exact and universally accepted technical meaning as 'sell,' 'exchange,' 'mortgage.' It popularly signifies 'to sell.' Webster's definition is, 'to exercise finally one's power of control over; to pass over into the control of some one else; to alienate; to bestow; to part with; to get rid of.' Worcester's is, 'put out of possession of.'

Every one of these definitions points to a transfer of title and ownership as the essential signification of the word. Its usual technical meaning is 'to sell.' A general devise with power to dispose of carries the fee. 2 Redf. Wills, 334, note. A devise with power of disposition gives power to convey the fee. Lyon v. Marsh, 116 Mass. 232; Ellston v. Schilling, 42 N. Y. 79.

It was not the effect nor the intent of the indenture to transfer the title or the ownership of the lands. Its effect must be determined by the law of the State where the lands are situated (United States v. Crosby, 7 Cranch, 115; Clark v. Graham, 6 Wheat. 577; McGoon v. Scales, 9 Wall. 23); and in deciding upon it this court conforms to the decisions of the State court. Hinde v. Vattier, 5 Pet. 398.

The statutes of Nebraska enact that 'in the absence of stipulations to the contrary the mortgagor of real estate retains the legal title and right of possession thereof' (Gen. Stat. 1873, sect. 55, p. 881); and not only her courts, but those of the respective States where the granted lands lie, hold that a mortgage conveys no title or right of possession. It merely creates a lien to be enforced by action. Kyger v. Ryley, 2 Neb. 20; Chick v. Willetts, 2 Kan. 384; Waterson v. Devoe, 18 id. 223; Drake v. Root, 2 Col. 685; Hyman v. Kelly, 1 Nev. 179; Johnson v. Sherman, 15 Cal. 287; Goodnow v. Ewer, 16 id. 461; Dutton v. Warschauer, 21 id. 609.

The indenture, so far from stipulating that the legal title and right of possession shall not remain in the company, provides that the latter shall have the exclusive control of the lands, and full power and authority to make contracts for the sale of them at such prices as it and the trustees may agree upon. It thus appears that nothing but a lien on the lands was created, which is not a jus ad rem, but simply a charge upon them, binding them with no greater force and effect than an ordinary judgment, or an assessment against them for taxes. The company concedes the non-transfer of them. It alleges, in the action of ejectment, that it is the owner, seised in fee of the tract in question and entitled to the possession thereof.

In ascertaining the meaning of the act subjecting the lands to pre-emption, on the failure of the company to sell or dispose of them within a specific period, we may recur to the history of the times, to the surrounding circumstances, the preceding legislation touching the public domain, and to the apprehended mischief which Congress sought to avert. Rhode Island v. Massachusetts, 12 Pet. 657, 723; Maryland v. Railroad Company, 22 Wall. 105; United States v. Union Pacific Railroad Co., 91 U.S. 72.

These have been considered by this court in Railway Company v. Prescott, 16 Wall. 609, and the case shows that the construction for which the company now contends would, if practically carried out, defeat the settled policy of the government, and exclude from pre-emption an immense body of lands, the settlement of which Congress designed to facilitate and expedite.

If creating the lien on the lands is disposing of them, then the company has complied with the requirement of Congress. The extinguishment of the lien by the payment of the debt would not render them subject to settlement under the pre-emption laws.

Counsel may insist that our construction does not give effect to 'or.' The word does not necessarily imply that the terms between which it is found are alternatives. Worcester remarks that there is no word in the language of more equivocal import. It is often used to connect equivalent expressions. Such is the case here.

The indenture, by providing that the provisions of the act in all that concerns the sale and disposal of the land shall be deemed and taken as a part of the instrument, stipulates, if our construction be correct, that the lands shall, at a given time, be subject to pre-emption at $1.25 per acre. This can work no hardship as the avails of the sales would be paid to the company, and the holders of the bonds purchased them with knowledge of the conditions of the grant.

Platt has met the requirements of the pre-emption laws, and has a complete equitable right to the land. Frisbie v. Whitney, 9 Wall. 187; Hutchings v. Low, 15 id. 77; Shepley et al. v. Cowan et al., 91 U.S. 330; Moore v. Robbins, 96 id. 530. He is, therefore, entitled to relief. The failure of the company to sell within the appointed time vested the legal title to the lands in the United States, or if this court holds that such title still abides in the company, then the latter holds it as the trustee of parties entitled to pre-emption under the acts of Congress, and those acts can be executed only by the officers of the government.

Mr. Sidney Bartlett and Mr. Samuel Shellabarger, contra.

MR. JUSTICE STRONG delivered the opinion of the court.