Chapman v. Santa Fe Pac. R. Co.

• Decision Date: 15 November 1951
• Docket Number: No. 10303.,10303.
• Citation: 198 F.2d 498
• Parties: CHAPMAN, Secretary of Interior, et al. v. SANTA FE PAC. R. CO. et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

198 F.2d 498 (1951)

CHAPMAN, Secretary of Interior, et al. v. SANTA FE PAC. R. CO. et al.

No. 10303.

United States Court of Appeals District of Columbia Circuit.

Argued April 27, 1950.

Decided November 15, 1951.

Dissenting Opinion March 4, 1952.

Writ of Certiorari Denied June 2, 1952.

Wilma C. Martin, Attorney, Department of Justice, Washington, D. C., with whom Asst. Atty. Gen. A. Devitt Vanech and Roger P. Marquis, Attorney, Department of Justice, Washington, D. C., were on the briefs, for appellants.

Frederick Bernays Wiener, Washington, D. C., with whom Lawrence Cake and Alvin Olaf West, Washington, D. C., were on the brief, for appellees.

Before STEPHENS, Chief Judge, and CLARK and WILBUR K. MILLER, Circuit Judges.

Writ of Certiorari Denied June 2, 1952. See 72 S.Ct. 1058.

CLARK, Circuit Judge.

The appellee, Santa Fe Pacific Railroad Company (hereafter referred to as Santa Fe), is a corporation created by Act of March 3, 1897, c. 374, 29 Stat. 622. The defendants are Oscar L. Chapman, Secretary of Interior, and Marion Clawson, Director of the Bureau of Land Management. The Santa Fe is the successor to the Atlantic and Pacific Railroad Company (hereafter referred to as the Atlantic and Pacific). The land grant was made to the latter under the Act of July 27, 1866, c. 278, 14 Stat. 292, and Santa Fe is fully vested with all the rights of the Atlantic and Pacific granted under the said Act in and to the lands thereby granted.

Congress, by the Act of July 27, 1866, granted the right of way through the public domain for the building of a railroad from Missouri to the Pacific Coast. To aid the construction, the Atlantic and Pacific was granted the odd-numbered sections of public lands for 40 miles either side of its projected line; this area is described as the "place" limits. The Act also granted the right to select within an additional 10 mile limit known as the "indemnity" limits, sufficient lands to make up any deficiency in the "place" limits arising from homestead entries, preemptions, mineral lands, etc.

On March 12, 1872, the Atlantic and Pacific filed with the Secretary of Interior a map of definite location, and thereafter the railroad was constructed. As of the date of filing this map, as stipulated by both parties, the rights to the lands granted became fixed and determined. United States v. Northern Pacific Ry. Co., 1921, 256 U.S. 51, 41 S.Ct. 439, 65 L.Ed. 825.

On February 3, 1886, the Atlantic and Pacific contracted to sell 1,000,000 acres at 50¢ per acre to the Aztec Land and Cattle Company, Limited (hereafter referred to as Aztec). This 1,000,000 acres comprised all the odd-numbered sections within certain described boundaries. Part of the land being sold was within the "place" limits, and at least 98,690.83 acres were within the "indemnity" limits of the grant. The stated consideration of $500,000 was paid by Aztec to Atlantic and Pacific.

In 1886 and 1894 the Atlantic and Pacific conveyed as much land as was then surveyed to Aztec. On August 17, 1898, the above mentioned 98,690.83 acres together with other lands were withdrawn by executive proclamation for a forest reserve described as the Black Mesa Reserve, pursuant to Section 24 of the Act of March 3, 1891, c. 561, 26 Stat. 1095, 1103, 16 U.S.C.A. § 471.

On November 7, 1905, Santa Fe, as successor to Atlantic and Pacific, and in settlement of the claim of Aztec for so much of the said lands as had not at the time been conveyed to Aztec, executed a deed to Aztec which recited that Atlantic and Pacific had previously conveyed to Aztec 576,701.91 acres of the lands described in the above contract dated February 3, 1886. It further stipulated that Aztec was entitled to an additional 423,298.09 acres, and remised, released and quitclaimed to Aztec all right, title and interest of the Santa Fe, as successor to the Atlantic and Pacific, in and to approximately 423,270.35 acres described in the said deed, which included the before-mentioned 98,690.83 acres.

On April 11, 1921, United States v. Northern Pacific Ry. Co., supra, was decided by the Supreme Court, and at pages 66-67 of 256 U.S., at page 442 of 41 S.Ct., Mr. Justice Van Devanter stated: "* * * after the company earned the right to receive what was intended by the grant it was not admissible for the government to reserve or appropriate to its own uses lands in the indemnity limits required to supply losses in the place limits. Of course, if it could take part of the lands required for that purpose, it could take all and thereby wholly defeat the provision for indemnity. But it cannot do either. The `substantial right' conferred by that provision (Weyerhauser v. Hoyt, supra 219 U.S. 380, 31 S.Ct. 300, 55 L.Ed. 258), cannot be thus cut down or extinguished. (Sinking Fund Cases, supra 99 U.S. 700, 25 L.Ed. 496)."

The executive proclamation of August 17, 1898, was not effective to withdraw the lands which included the 98,690.83 acres and the rights of Santa Fe were unimpaired up to and including the time this decision was rendered.

Now, on September 18, 1940, Congress enacted and the President approved the Transportation Act of 1940, c. 722, 54 Stat. 898. Section 321(b) of Title III, Part II, of the Act, 54 Stat. 954, 49 U.S.C.A. § 65, provided certain rate benefits for those land grant railroads which released within a specified period any claims to lands they might have against the United States. This Section further stipulated: "Nothing in this section shall be construed as requiring any such carrier to reconvey to the United States lands which have been heretofore patented or certified to it, or to prevent the issuance of patents confirming the title to such lands as the Secretary of the Interior shall find have been heretofore sold by any such carrier to an innocent purchaser for value or as preventing the issuance of patents to lands listed or selected by such carrier, which listing or selection has heretofore been fully and finally approved by the Secretary of the Interior to the extent that the issuance of such patents may be authorized by law." Emphasis supplied.

On December 18, 1940, pursuant to the provisions of Section 321(b) of the Transportation Act, and of the regulations of the Secretary of the Interior thereunder, Santa Fe filed a release of "* * * any and all claims of whatever description to lands, interests therein, compensation or reimbursement therefor on account of lands or interests granted, claimed to have been granted, or claimed should have been granted by any act of the Congress to Santa Fe Pacific Railroad Company or to any predecessor in interest in aid of the construction of any portion of its railroad."

This release was accepted and approved by the Secretary of Interior on March 1, 1941.

On June 26, 1942, the Santa Fe filed selections in the form prescribed by the Secretary of Interior of the land previously sold to Aztec. Those selections were denied and rejected by the Commissioner of the General Land Office on the ground that "* * * the land had not been ascertained and identified so that the railroad acquired any interest in specific land which it could convey prior to the filing of its release and that, therefore, its transferee is not protected under the saving clause of Section 321(b) of the Transportation Act."

On May 1, 1943, the Santa Fe appealed to the Secretary of Interior from the decision of the Commissioner of the General Land Office rejecting the said selections and after an adverse ruling moved for a rehearing which was denied.

On March 16, 1944, Santa Fe filed its complaint in the present suit, seeking an injunction restraining the Secretary from rejecting the selection of lands and the application for the patent, and praying for a writ in the nature of mandamus directing him to proceed to determine the right of Santa Fe to have patented the lands in question, notwithstanding the release. Both plaintiff and defendant moved for summary judgment and the lower court granted the plaintiff's motion and denied that of the defendant. On appeal to this court we held in Krug, Sec. of Int., v. Santa Fe Pac. R. Co., 1946, 81 App.D.C. 288, 158 F.2d 317, 320, that the decision as to the defendant's motion was correct, but that the lower court should not have granted the plaintiff's motion for a summary judgment. In holding that the Secretary of Interior's motion for summary judgment was properly denied we stated: "While it is true that, as a general rule, selection is necessary to vest any right to specific indemnity land in the grantee, the Supreme Court has long recognized an exception where there is a deficiency of indemnity land to satisfy losses in place."

This was in effect what the Supreme Court held in United States v. Northern Pacific Ry. Co., supra.

The appellants first contend that the release given by Santa Fe is not excepted from the operation of the Transportation Act since Santa Fe had no "title" to the lands which could have been sold to Aztec and confirmed by patent. It is obvious that if the railroad did have a title which it could sell that the lands sold are excepted from the release. The Santa Fe does not contend that it had legal title to the lands it sold. What then was the Santa Fe's interest? The Supreme Court has consistently treated the right to select "place" lands as a vested interest, and, further, it has also treated the right to choose "indemnity" lands in lieu of "place" lands as just such a vested interest. These vested interests arise from the contract between the parties. United States v. Northern Pacific Ry. Co., supra. This vested interest, in the last analysis, consisted of nothing more than the right to choose or select lands. Being assured by this right the Santa Fe's predecessor sold its right to select 1,000,000 acres of land. Before that sale the Santa Fe could have selected for itself after the land had been surveyed, but after the sale Santa Fe was bound to exercise its choice for...