Davis v. Gray

• Citation: 16 Wall. 203,21 L.Ed. 447,83 U.S. 203
• Parties: DAVIS v. GRAY
• Decision Date: 01 December 1872
• Court: United States Supreme Court

83 U.S. 203

21 L.Ed. 447

16 Wall. 203

DAVIS v. GRAY.

December Term, 1872

APPEAL from the Circuit Court for the Western District of Texas; the case being thus:

The State of Texas had at the times hereinafter named, certain public lands. A general land office was established at the capital of the State for the registration of titles and surveys, and the lands were divided when surveyed into sections of six hundred and forty acres each. One Kuechler was the chief of this office, under the title of the 'Commissioner of the General Land Office.' All certificates for the public lands were issued by this commissioner; and all patents were issued under the seals of the State and the General Land Office, and were required to be signed by the governor and countersigned by the said commissioner. These certificates were evidences of obligation on the part of the State to grant, and give a patent to the holder for a certain amount therein mentioned of the vacant and unreserved public lands of the State; when the certificates are located and surveyed, and the surveys returned to the commissioner and approved by him, a patent, conveying the fee, is executed as above mentioned.

In and about they year 1856, and for many years thereafter the State of Texas, though of great extent, was, as it still is, sparsely inhabited, while its public domain was far from markets, and without connection with the more settled parts of the country; and it was greatly to the interest of the State to attract immigration and capital. To produce this result it became the settled policy of the State to make grants and reservations of public lands to corporations, conditioned upon the construction of certain amounts of railroad within certain times. In pursuance of this policy the Memphis, El Paso, and Pacific Railroad Company, was incorporated February 4th, 1856, by the State of Texas, to build a railroad across the State from the eastern boundary to El Paso, with a land grant of 16 sections to the mile; certificates for 8 sections per mile to be issued on the grading of successive lengths of road, and 8 more per mile upon the complete construction of the same; and a reservation was granted of the alternate or odd sections of land for eight miles on each side of the road, within which the company should have an exclusive right to locate its certificates, while it also had the privilege to locate said certificates on any other unappropriated public lands.

This reservation, of course, was of the greatest value, as it enabled the company to reap the advantage of the enhancement of price which the construction of the road by them would cause in the lands along the line.

In the same year of 1856 the company was organized in reliance on the grants, and especially on the reservation, and duly accepted the same.

There were certain conditions precedent to the vesting of the charter, land grant, and reservation; but they were all complied with, and at a cost to the company for surveys of over $100,000. These and subsequent surveys resulted, for the company, in the official designation of the road line and the centre line of the reservation for some 800 miles, and the 'sectionizing' and numbering of the odd sections of land in said reservation in a belt of country some 250 miles in length and 16 in width; and for the State in the surveying and mapping of the same belt of country and the 'sectionizing' and numbering of the alternate or even sections for the benefit of the State. The company also graded some 65 miles of road westerly from Moore's Landing, In Bowie County, and was interrupted in the work of construction by the rebellion and so-called 'secession' of Texas; but resumed work after the war, and graded between 20 and 30 miles further, from Jefferson in Marion County, in the direction of Moore's Landing.

There were certain conditions subsequent annexed to the charter, viz.: that if the company should not have completely graded not less than 50 miles of their road by the 1st of March, 1861, and at least 50 miles additional thereto within two years thereafter, then the charter of said company should be null and void. The first 50 miles were graded within the required time; the second 50 miles have nover been graded. Within two years after the performance of the first condition, however, the legislature of Texas, by act 'for the relief of railroad companies,' approved February 11th, 1862, enacted, that the failure of any chartered railroad company to complete any section, or fraction of a section, of its road as required by existing laws, should not operate as a forfeiture of its charter, or of the lands to which the said company would be entitled under the provisions of an act entitled 'An act to encourage the construction of railroads in Texas by donation of land,' approved January 30th, 1854; provided that the said company should complete such section, or fraction of a section, as would entitle it to donations of land, under existing laws, within two years after the close of the war between the Confederate States and the United States of America. Within the two years after the close of the war, the provisional legislature, by act of November 13th, 1866, enacted, 'that the grant of 16 sections of land to the mile to railroad companies heretofore or hereafter constructing railroads in Texas shall be extended, under the same restrictions and limitations heretofore provided by law, for 10 years after the passage of this act;' and by article 12, section 33 of the present constitution of Texas, while declaring that the legislatures which sat from March 18th, 1861, to August 6th, 1866, were without constitutional authority, yet enacted that such declaration should not affect, prejudicially, private rights which had grown up under such acts, and that though the legislature of 1866 was only provisional, its acts were to be respected, so far as they were not in violation of the Constitution and laws of the United States.

By act of July 27th, 1870, the Southern Transcontinental Railroad Company was incorporated, and it was enacted, in terms, that it might 'purchase the rights, franchises, and property of the Memphis, El Paso, and Pacific Railroad Company, heretofore incorporated by the State.'

The land grant was limited to fifteen years from the 4th of February, 1856, but this time had not yet expired, and by an act of November 13th, 1866, for the benefit of railroad companies, it was enacted, that this grant of 16 sections of land to the mile to railroads theretofore or thereafter constructing railroads in Texas, should be extended under the same restrictions and limitations theretofore provided by law, for ten years after the passage of this act.

The land reservation was conditioned upon certain surveys: 1. It was to be surveyed from the eastern boundary of Texas, as far as the Brazos River, within four years from March 1st, 1856. 2. The centre line of the reserve was to be run and plainly designated from the Brazos to the Colorado within fifteen months from February 10th, 1858. 3. The whole reservation was to be surveyed within ten years from February 10th, 1858. 4. The company was to have a connection with some road leading to the Mississippi River or the Gulf of Mexico, within ten years from February 10th, 1858. The first and second of these conditions were fulfilled within the times limited. The legislature, by act approved January 11th, 1862, enacted that 'the time of the continuance of the present war between the Confederate States and the United States of America shall not be computed against any internal improvement company in reckoning the period allowed them in their charters, by any law, general or special, for the completion of any work contracted by them to do.'

This act the company considered extended the time for the performance of the third and fourth conditions till the 10th of June, 1873.

In the years 1867 and 1868 the company executed two series of bonds, known as land grant bonds, amounting in the aggregate to the par value of $10,000,000 in gold, and also executed and delivered to one Forbes and others, trustees as aforesaid, two mortgages to secure said bonds, by one of which they mortgaged all lands actually acquired or thereafter to be acquired by said company by grading, construction, and equipping the first 150 miles of the road of said company, from Jefferson in Marion County to Paris in Lamar County, and by the other of which they mortgaged the like property for the second 150 miles, from Paris to Palo Pinto in Palo Pinto County. These bonds were put on the bourse in Paris, France, and sold for value to the extent of $5,343,700 of their par value, mostly in small lots, and to persons of limited means. The grants, guarantees, and assurances by the State of Texas to said company of the said franchises, and especially of said land grant and land reservation, were recited in said mortgages, and were also announced and repeated to the purchasers personally, and by advertisement and prospectus, and the purchasers took the bonds relying on said grants, and upon the exclusive right of the company to locate certificates within the territory so reserved.

The bonds not being paid the Circuit Court for the Western District of Texas, on motion of Forbes, trustee under the mortgage, on the 6th of July, 1870, enjoined the railroad company from disposing of any of its effects, and put the road into the hands of one John A. C. Gray, as receiver:

'To take possession of the moneys and assets, real and personal; roadbed, road, and all property, whatsoever, of the said Memphis, El Paso, and Pacific Railroad Company, wheresoever the same may be found, with power under the special order of the court, from time to time to be made, to manage, control, and exercise all the franchises, whatsoever, of said company, and, if need be, under the direction of the court, to sell, transfer, and convey the road, roadbed, and other property of said...