United States v. Winona & St. Peter Railroad Company/Opinion of the Court

There are other matters disclosed in the record, such as the claim at one time asserted by the St. Paul & Sioux City Railroad Company to these lands or a part of them, the litigation between the two companies, and the final decision by this court, also certain transactions between the railroad company and a land company, and the litigation resulting therefrom, together with a series of conveyances by the railroad and the land company of the lands. But, in view of the conclusions to which we have come upon the facts stated, we deem it unnecessary to cumber the record with any detailed mention of those matters.

These facts appear: First. The railroad company has constructed its road, and has earned the land grant. Second. It has received no more land than congress, by the act referred to, proposed to grant to aid in the construction of the road. Third. At the time that the lands were certified to the state for its benefit, they were not subject to any homestead or pre-emption entry. They were free from all claims other than those of the railroad company itself, and were, except as subject to such claims, in the fullest sense public lands, and within the jurisdiction of the land department. Fourth. Up to March 2, 1885 (when Railway Co. v. Dunmeyer, 113 U.S. 629, 5 Sup. Ct. 566, was decided by this court), the uniform ruling of the land department had been that the title to railroad lands became settled at the time the line of the railroad was surveyed, staked out, and marked on the face of the earth, and not at the time of the filing of the map of definite location in the land department; that a homestead entry, though apparently regular and valid, was open to question by the railroad company, and if shown to have been fraudulent or irregular in inception, or that it had been abandoned before the right of the company attached, was held not to except the land from the grant; and also that a pre-emption claim existing at the time of the attaching of a railroad grant, if subsequently abandoned and not consummated,-even though in all respects legal and bona fide,-did not defeat the grant, but upon the failure of such claim the land covered thereby inured to the grant as of the date when it became effective. Fifth. Under such rules of construction, the land in controversy was all properly certified to the state for the benefit of the railroad company. Sixth. The lands were sold and conveyed by the railroad company to parties who paid full value and bought in good faith, believing the title which the railroad company assumed to convey to be perfect.

It is in the light of these facts that the scope and effect of the legislation of congress is to be considered and determined. There is certainly much of equity in the contention of the appellees. The railroad company has constructed the road, in aid of whose construction congress made this grant. Even though retaining all these tracts, it has failed to receive as large an amount of land as congress proposed to give. With full performance on its side, it has not received all that congress proffered. Of course, in entering upon its work, it took all the chances of failure of title of any particular tract, and therefore has no legal ground of complaint; and yet it may with reason say that, though it must be content with such lands as the government at the time of the filing of the map of definite location could rightfully convey, it ought not to be deprived of any which the government did convey, and could convey without wrong to any one, and which were embraced in the description of the lands which congress proposed to give. No individual is wronged by permitting this certification to stand. No pre-emptor or person seeking to enter any tract as a homestead has been deprived of his rights or privileges by virtue of this certification. The land was free from all individual claims. It was within the absolute control of congress. It belonged to the government, and it is only in the assertion of a technical rule of construing land grants, first declared by this court long after the certification, that the government now asks to have that set aside, and the title to these lands restored. No fraud or wrong is imputable to the company; no effort to secure a misconstruction by the land department; but only an acceptance of the then settled rule of construction, and the taking of the lands which, under such construction, it was entitled to receive. Conceding that that construction was erroneous, yet it was one made by the officers of the department charged with the duty of administering the grant, and determining what lands did and what did not pass,-the only tribunal to which the company could then apply, and upon whose rulings it was bound to act. Many years have passed since the certification, and since the company, in reliance upon the title it believed it had acquired, has disposed of the lands, and other parties have become interested in, and have dealt with, the lands as private property. Contracts have been entered into, suits maintained (carried even to this court), and decrees and judgments entered and rendered in full reliance upon the title supposed to have been conveyed. Surely, after such a lapse of time, and after so many transactions in and in respect to these lands, the appellees are justified in saying that they have large claims upon the equitable consideration of the courts.

The first section of the act of 1887 directs the secretary of the interior to adjust all railroad land grants in accordance with the decisions of this court; and the second, that upon such adjustment the attorney general shall commence the proper proceedings to cancel all patents, certification, or other evidences of title erroneously issued. If these two sections were all the legislation of congress bearing upon the subject, it might be difficult to sustain the conclusions of the lower courts, or to deny to the government the relief sought by this bill; for, by the construction placed upon such railroad grants in Railway Co. v. Dunmeyer, supra, and other cases, these lands did not pass under the railroad grant, because at the time of the filing of the map of definite location they were on the records of the department claimed under homestead and preemption entries. The lapse of time would be no bar, for statutes of limitation cannot be invoked against the government.

But these sections are not all the legislation. Congress evidently recognized the fact that, notwithstanding any error in certification or patent, there might be rights which equitably deserved protection, and that it would not be fitting for the government to insist upon the letter of the law in disregard of such equitable rights. In the first place, it has distinctly recognized the fact that when there are no adverse individual rights, and only the claims of the government and of the present holder of the title to be considered, it is fitting that a time should come when no mere errors or irregularities on the part of the officers of the land-department should be open for consideration. In other words, it has recognized that, as against itself in respect to these land transactions, it is right that there should be a statute of limitations; that when its proper officers, acting in the ordinary course of their duties, have conveyed away lands which belonged to the government, such conveyances should, after the lapse of a prescribed time, be conclusive against the government, and this notwithstanding any errors, irregularities, or improper action of its officers therein.

Thus, in the act of 1891 (26 Stat. 1093), it provided that suits to vacate and annul patents theretofore issued should only be brought within five years, and that, as to patents thereafter to be issued, such suits should only be brought within six years after the date of issue. Under the benign influence of this statute, it would matter not what the mistake or error of the land department was, what the frauds and misrepresentations of the patentee were, the patent would become conclusive as a transfer of the title, providing only that the land was public land of the United States, and open to sale and conveyance through the land department. The act of 1896 extended the time for the bringing of suits for patents theretofore issued for five years from the passage of that act. It is true that these appellees cannot avail themselves of these limitations, because this suit was commenced before the expiration of the time prescribed, and we only refer to them as showing the purpose of congress to uphold titles arising under certification or patent by providing that after a certain time the government (the grantor therein) should not be heard to question them.

But limitation was not only protection given. The act of 1896 (29 Stat. 42), which extended the period of limitation, followed such extension with this provision: 'But no patent to any lands held by a bona fide purchaser shall be vacated or annulled, but the right and title of such purchaser is hereby confirmed.' It is true this act was passed after the commencement of this suit,-indeed, after the decision by the court of appeals,-but it is none the less an act to be considered. There can be no question of the power of congress to terminate, by appropriate legislation, any suit brought to assert simply the rights of the government. This suit was instituted by the attorney general in obedience to the direct command of congress, as expressed in the act of 1887, and congress could at any time prior to the final decree in this court direct the withdrawal of such suit; and it accomplishes practically the same result when, by legislation within the unquestioned scope of its powers, it confirms in the defendants the title to the property which it was the purpose of the suit to recover. So, if this act of 1896, taken by itself alone, or in conjunction with preceding legislation, operates to confirm the title apparently conveyed by the certification to the state for the benefit of the railroad company, that necessarily terminates this suit adversely to the government, and compels an affirmance of the decisions of the lower courts without the necessity of any inquiry into the reasons advanced by those courts for their conclusions. We are of the opinion that congress intended by the sentence we have quoted from the act of 1896 to confirm the title which in this case passed by certification to the state. It not only declares that no patents to any lands held by a bona fide purchaser shall be vacated or annulled, but it confirms the right and title of such purchasers. Given a bona fide purchaser, his right and title is confirmed, and no suit can be maintained at the instance of the government to disturb it.

It is earnestly contended by the government that the present holders of the title are not 'bona fide purchasers'; that that term has a fixed and well-defined meaning, as announced in the frequent decisions of this and other courts; that, as said in 2 Pom. Eq. Jur. § 745, 'the essential elements which constitute a bona fide purchaser are therefore three,-a valuable consideration, the absence of notice, and presence of good faith' (U.S. v. California & O. Land Co., 148 U.S. 31, 42, 13 Sup. Ct. 458); that while two of these essential elements may be found, to wit, a valuable consideration and the presence of good faith, the third, the absence of notice, is lacking; that all men are conclusively presumed to know the law, and that, as the true rule of construction in reference to these grants was laid down by this court, the purchasers were bound to know such true rule; that the records of the land office disclosed the existence of these homestead entries and pre-emption filings, and therefore they who purchased from the railroad company knew, or at least were chargeable with knowledge, of the fact that those lands could not rightfully have been certified to the railroad company, but were excepted from the terms of the grant, and in fact remained the property of the government. It is further insisted that, as congress, in this statute, used this well-understood expression, it intended only the protection of such parties as came within the scope of this settled meaning. It is said that the only cases to be covered by this provisions were those in which the state or the railroad company, by presentation to the land office, before the filing of the map of definite location, of a forged relinquishment by the pre-emptor, or one having made a homestead entry, or by some other fraudulent representations, secured a certification or patent to the tracts, and thereafter sold and conveyed to one who purchased in ignorance of the fraud.

We are unable to agree with this contention of counsel for several reasons. In the first place, the situation as it was known to exist makes against any such narrow construction. While instances of such fraudulent conduct on the part of the state to which the lands were certified, or the company to which the lands were patented, might exist, yet, in the nature of things, they would be few and hardly worth the special notice of congress; while, on the other hand, the fact that there had been a difference between the land department and the courts, one construction obtaining in the former prior to the decisions by the latter, and the further fact that, by this difference of construction, many tracts had been erroneously certified or patented, must have been well known to congress, and naturally, therefore, a subject for its legislation. Further, there was no need of any legislation to protect a 'bona fide purchaser.' This had been settled by repeated decisions of this court,-U.S. v. Burlington & M. R. R. Co., 98 U.S. 334, 342; Colorado Coal & Iron Co. v. U.S., 123 U.S. 307, 313, 8 Sup. Ct. 131, reaffirmed in U.S. v. California & O. Land Co., 148 U.S. 31, 42, 13 Sup. Ct. 458,-for in each of those cases it was decided that, although a patent was fraudulently and wrongfully obtained from the government, if the land conveyed was within the jurisdiction of the land department, the title of a bona fide purchaser from the patentee could no be disturbed by from the patentee could not be disturbed by unnecessary if that which is now claimed by counsel for the government is all that was intended by congress. We do not mean to assert that, because legislation to cover such a contingency was unnecessary, therefore the language used by congress necessarily implies something other and different, because, of course, it may have been that congress intended nothing but a simple declaration of the law as it was known to exist. At the same time, the fact that under one construction it was needless raises a presumption that something more was intended, and that congress had in view the protection of other parties than were already protected by general law.

But we need not rest on these inferences and presumptions. Other provisions of the acts of 1887 and 1896 make clear the intent of congress. Section 3 of the act of 1887 provides that, if the homestead or pre-emption entry of any bona fide settler has been erroneously canceled on account of any railroad grant, it may be reinstated, provided he has not located another claim or made an entry in lieu of the one so canceled, and also did not voluntarily abandon such entry. By this section, congress provided for a reinstating of the title of one deprived thereof by an erroneous ruling of the land department, but at the same time limited the right of reinstating to cases in which the original entryman had not voluntarily abandoned his entry, or had not since that time made a new entry. In other words, it was limiting the restoration of the title of the original entryman to cases in which he had a continuing and present equitable right to recognition. As to all other cases, congress reserved the determination of the equities between the government, the railroad company, and purchasers from the latter, and in subsequent sections it made provision for the adjustment of such equities.

Section 4 of the same act, expressly referring to all other lands erroneously certified or patented to any railroad company, provides that citizens who had purchased such lands in good faith should be entitled to the lands so purchased, and to patents therefor issuing directly from the United States, and that the only remedy of the government should be an action against the railroad company for the government price of similar lands. It will be observed that this protection is not granted to simply bona fide purchasers (using that term in the technical sense), but to those who have one of the elements declared to be essential to a bona fide purchaser, to wit, good faith. It matters not what constructive notice may be chargeable to such a purchaser if, in actual ignorance of any defect in the railroad company's title, and in reliance upon the action of the government in the apparent transfer of title by certification or patent, he has made an honest purchase of the lands. The plain intent of this section is to secure him the lands, and to reinforce his defective title by a direct patent from the United States, and to leave to the government a simple claim for money against the railroad company. It will be observed that the technical term 'bonds fide purchaser' is not found in this section, and while it is provided that a mortgage or pledge shall not be considered a sale, so as to entitle the mortgagee or pledgee to the benefit of the act, it does secure to every one who in good faith has made an absolute purchase from a railroad company protection to his title, irrespective of any errors or mistakes in the certification or patent.

Section 5 of the same act applies to cases in which no certification or patent has issued, and yet the lands sold by the railroad company are the numbered sections prescribed in its grant, and coterminous with the construced portions of its road; and it is there provided that, where the lands so sold by the company 'are for any reason excepted from the operation of the grant to said company,' the purchaser may obtain title directly from the government by paying to it the ordinary government price of such lands. It is true the term used here is 'bona fide purchaser,' but it is a bona fide purchaser from the company, and the description given of the lands, as not conveyed, and 'for any reason excepted from the operation of the grant,' indicates that the fact of notice of defect of title was not to be considered fatal to the right. Congress attempted to protect an honest transaction between a purchaser and a railroad company, even in the absence of a certification or patent. These being the provisions of the act of 1887, the act of 1896, confirming the right and title of a bona fide purchaser, and providing that the patent to his lands should not be vacated or annulled, must be held to include one who, if not in the fullest sense a 'bona fide purchaser,' has, nevertheless, purchased in good faith from the railroad company.

We have been referred in the arguments of this and other cases to the debates in congress, and to the reports of the committees of the two houses to whom the bills were referred as confirmatory of the conclusions we have reached; but it is unnecessary to consider any of the evidence derived from these sources, if, indeed, it is open to consideration, for the language of the two acts is clear, and fully discloses the intent of congress. Our conclusion is that these acts operate to confirm the title to every purchaser from a railroad company of lands certified or patented to or for its benefit, notwithstanding any mere errors or irregularities in the proceedings of the land department, and notwithstanding the fact that the lands so certified or patented were, by the true construction of the land grants, although within the limits of the grants, excepted from their operation, providing that he purchased in good faith, paid value for the lands, and providing, also, that the lands were public lands, in the statutory sense of the term, and free from individual or other claims.

If it be suggested that under the scope of these acts, though the suit must fail so far as it is one to set aside and cancel the certification, it may yet be maintained against the defendant railroad company for the value of the lands so erroneously certified, and that the decree should be modified to this extent, it is sufficient to say that-First, the government has not asked any such decree; second, that it may be doubtful whether, for the mere purpose of recovering money, an action at law must not be the remedy pursued; but, lastly and chiefly, that it does not appear from this record either that the railroad company received an excess of lands, or has even received (these lands included) the full quantity of lands promised in the grant; and, further, that it does not appear that there were not within the granted or indemnity limits lands which the company might have rightfully received but for this erroneous certification. It will hardly be contended that if, simply through a mistake of the land department, these lands were certified when at the time other lands were open to certification which could rightfully have been certified, and which have since been disposed of by the government to other parties, so that there is now no way of filling the grant, the government can, nevertheless, recover the value of the lands so erroneously certified. In other words, the mistake of the officers of the government cannot be both potent to prevent the railroad company obtaining its full quota of lands, and at the same time potent to enable the government to recover from the company the value of lands erroneously certified. Our conclusion, therefore, is that, upon the record as it is presented, the decree of the court of appeals was right, and it is affirmed.