United States v. Southern Pacific Railroad Company

Citation46 L.Ed. 425,184 U.S. 49,22 S.Ct. 285
Decision Date27 January 1902
Docket NumberNo. 25,25
PartiesUNITED STATES, Appt. , v. SOUTHERN PACIFIC RAILROAD COMPANY, George Loomis, et al
CourtUnited States Supreme Court

This is a continuation of the case which was before this court and decided in 1897. 168 U. S. 1, 42 L. ed. 355, 18 Sup. Ct. Rep. 18. It was brought to quiet the title of the government to some 700,000 acres or land within the limits of the forfeited grant the Atlantic & Pacific Railroad Company, and claimed by the defendants under certain junior grants to the Southern Pacific Railroad Company. The decree in the circuit court quieted, as against the Southern Pacific Company, the title of the government to all the lands. The other defendants asserted title or claimed rights to certain portions of the land by virtue of conveyances from or contracts with the Southern Pacific Company, and the decree provided: 'Nor shall this decree in anywise affect any rights which the defendants, or any of them, other than the said Southern Pacific Railroad Company, now have or may hereafter acquire in, to, or respecting any of the lands hereinbefore described, in virtue of the act of Congress entitle 'An Act to Provide for the Adjustment of Land Grants Made by Congress to Aid in the Construction of Railroads and for the Forfeiture of Unearned Lands and for Other Purposes,' approved March 3, 1887.'

This decree was affirmed by this court so far as the Southern Pacific Company as well as the trustees in its mortgage were concerned, the court saying, in reference to that portion of the decree just quoted (p. 65, L. ed. p. 382, Sup. Ct. Rep. p. 34):

'Instead of leaving undetermined the matters in dispute between the United States and the defendants other than the Southern Pacific Railroad Company, the circuit court should have determined, by its final decree, what rights those defendants have by virtue of the above act of March 3, 1887 (24 Stat. at L. 556, chap. 376), in the lands or any of them now in dispute and claimed by the United States. The effect of the decree is to leave undetermined the question whether the defendants who claim under the Southern Pacific Railroad Company are protected by that or any other act of Congress. The government was entitled to a decree quieting its title to all the lands described in its pleadings, except those, if any, that are protected, in the hands of claimants, by acts of Congress. United States v. Winona & St. P. R. Co. 165 U. S. 463, 41 L. ed. 789, 17 Sup. Ct. Rep. 368; Winona & St. P. R. Co. v. United States, 165 U. S. 483, 41 L. ed. 798, 17 Sup. Ct. Rep. 381. But as the government has not appealed, the decree cannot be reversed for the error of the circuit court in not finally disposing of the issues between the United States and the individual defendants who claim under the Southern Pacific Railroad Company.

'The result is that the decree must be affirmed in all respects as to the Southern Pacific Railroad Company, as well as to the trustees in the mortgage executed by that company, and affirmed also as to the other defendants, subject, however, to the right of the government to proceed in the circuit court to a final decree as to those defendants, and it is so ordered.'

On the return of the mandate to the circuit court the United States dismissed their bill against the defendants other than the railroad company and its mortgage trustee, without prejudice as to all, except certain specified tracts, amounting in the aggregate to about 52,600 acres, of which amount 9,284 were patented by the United States to the Southern Pacific, the patents bearing date March 29, 1876, April 4, 1879, December 27, 1883, and January 9, 1885, and 43,315 remained unpatented. In respect to these tracts the case proceeded to final hearing, which resulted in a decree in favor of the defendants (88 Fed. 832), confirming their title to the lands patented, and adjudging them bona fide purchasers within the meaning of the act of Congress of March 3, 1887, of the lands not patented. From this decree the United States appealed to the court of appeals for the ninth circuit, which affirmed the decree (38 C. C. A. 637, 98 Fed. 45), and thereupon the United States brought the case here on appeal.

Mr. Joseph H. Call for appellant.

Messrs. Maxwell Evarts, M. D. Brainard, and L. E. Payson for appellees.

Mr. Justice Brewer delivered the opinion of the court:

The questions now to be determined arise between the United States and parties holding title or claiming rights to lands by deed from or contract with the railroad company. The title of the company having been adjudged void, the defendants rely upon the acts of Congress of March 3, 1887 (24 Stat. at L. 556, chap. 376), February 12, 1896 (29 Stat. at L. 6, chap. 18), and March 2, 1896 (29 Stat. at L. 42, chap. 39). These acts were passed for the purpose of upholding the titles of parties who in good faith had purchased from railroad companies lands which, though supposed to be part of their grants, proved not to be so. This legislation was fully considered in United States v. Winona & St. P. R. Co. 165 U. S. 463, 41 L. ed. 789, 17 Sup. Ct. Rep. 368; and Winona & St. P. R. Co. v. United States, 165 U. S. 483, 41 L. ed. 798, 17 Sup. Ct. Rep. 381, and any further discussion of its scope is unnecessary. In respect to it we said:

'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.

* * * * *

'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.' P. 481, L. ed. p. 797, Sup. Ct. Rep. p. 373.

In the present case the deeds to the patented lands were executed by the company at different dates, commencing July 23, 1885, and ending July 19, 1892. These lands were apparently within the grant made to the Southern Pacific by the act of March 3, 1871 (16 Stat. at L. 573, chap. 122); that is, they were public lands in the statutory sense of the term along the line of the Southern Pacific as authorized by that act and within the place or indemnity limits of the grant. The road had been constructed, and the Land Department of the United States, the tribunal charged with the duty of administering the public lands, had decided that the company had earned the lands, and had caused patents therefor to be issued to it. No third party claimed title; either the government or the company was the owner. Under those circumstances the purchasers bought the lands; bought them in good faith; paid value for them.

These facts bring the case within the 1st section of the act of March 2, 1896, as heretofore construed by us: '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.'

Against this conclusion it is contended that purchasers with notice that the government questioned the company's title to these lands are not bona fide purchasers. And counsel say that 'in the year 1886 every department of the government began to operate to protect the title of the United States to these lands, and in every public way gave notice to the world of the rights of the government to them,' enumerating the act of Congress of July 6, 1886, forfeiting the grant to the Atlantic & Pacific Company; various rulings of the Interior Department, from that on June 7, 1887 (Gordon v. Southern P. R. Co. 5 Land Dec. 691), to the date of the last deed, to the effect that the lands granted to the Atlantic & Pacific were not operated upon by the subsequent grants to the South- ern Pacific, and were by the forfeiture act restored to the public domain; and the commencement of the several suits by the government to establish its title to these lands and others similarly situated. Counsel also refer to Winona & St. P. R. Co. v. United States, 165 U. S. 483, 41 L. ed. 798, 17 Sup. Ct. Rep. 381, in which it was held that one cannot claim to be a purchaser in good faith from a railroad company if at the time he has notice of facts outside the records of the Land Department disclosing a prior right in some third party.

But we do not think a mere change in the opinions of the officers of the government, as to the validity of the company's title, although made known to parties proposing to purchase from such company, is sufficient to take away from them the protection of good faith. A party may have notice of conflicting claims, and still, in the exercise of an honest judgment as to the rightful owner, buy property and pay for it, and be acting in good faith. So far as suits are concerned, all the decisions of the courts had been, up to the date of the last deed, in favor of the title of the company. Thus the purchasers had not merely the action of the Land Department in issuing the patents, but all past decisions of the courts, justifying their conclusions. The conditions are not like those in Winona & St. P. R. Co. v. United States. That was a suit to cancel a certification of a tract of land made for the benefit of a railroad company, and also a deed from it. The certification was wrongfully made, and the company in fact took no title. The purchaser sought protection under these statutes. Before any certification, or any...

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