Hammond v. Oregon & C.R. Co.

• Decision Date: 09 November 1920
• Court: Oregon Supreme Court
• Parties: HAMMOND ET AL. v. OREGON & C. R. CO.

193 P. 457

98 Or. 1

HAMMOND ET AL. v. OREGON & C. R. CO.

Supreme Court of Oregon

November 9, 1920

In Banc.

Appeal from Circuit Court, Multnomah County; J. P. Kavanaugh, George W. Stapleton, and Robert Tucker, Judges.

Action by Andrew B. Hammond and Charles J. Winton against the Oregon & California Railroad Company, a corporation. From a judgment dismissing the action, plaintiffs appeal. Reversed, and cause remanded.

This is an appeal from a judgment of the circuit court sustaining the general demurrer of the defendant to plaintiffs' complaint and dismissing the action. By the complaint a cause of action is set out upon the ground that the defendant agreed to sell and convey to the plaintiffs 45,972.43 acres of land for which the plaintiffs agreed to pay, and did pay as the purchase price the sum of $321,807.01; and the defendant, because of an adverse claim of the United States was unable to convey the lands as it had agreed, and the plaintiffs were required to pay to the United States the sum of $2.50 per acre, or a total sum of $114,932.50, in order to secure a confirmation of their titles. This confirmation was secured under remedial legislation of Congress enacted for the purpose, pursuant to which patents for the lands were issued to plaintiffs on the ground that they were purchasers in good faith from the railroad company.

The present case of Hammond and Winton is different from the case of Booth-Kelly Lumber Co. v. Oregon & California Ry Co., 193 P. 463. In the case at bar the plaintiffs do not seek to recover from the railroad company the full purchase price paid for the land, but the sum of $2.50 per acre, which they were required to pay the United States to perfect their titles to the land.

The complaint alleges, in substance, the following: About August 16, 1901, the plaintiffs, Hammond and Winton, entered into a written contract with the railroad company, which is set out at length in the complaint, by the terms of which the railroad company agreed to sell and convey, and the plaintiffs agreed to purchase at a price of $7 per acre, some 45,000 acres of land, the exact acreage and the exact description to be agreed upon later between the parties. By the terms of the contract, one-tenth of the purchase price was payable, and was paid at the time of the execution of the contract, and the balance of the principal, with interest at the rate of 6 per cent. per annum, was payable in nine equal annual installments. The lands so agreed to be sold were selected and identified by a supplementary agreement dated July 26, 1902, and the acreage and purchase price were fixed in the amounts above stated. The plaintiffs duly made full payment of the succeeding installments of the purchase price together with interest thereon, all according to the contract terms, and made payment of the final installment on August 16, 1910. Upon such final payment the defendant became bound to convey the lands to the plaintiff, but the defendant has neglected, failed, and refused to convey the same, or any part thereof. The complaint then sets out the legislation of Congress making the land grants to aid in the construction of the Oregon and California Railroad. Reference is first made to the act of July 25, 1866 (14 Stat. 239) granting lands in aid of the so-called "East Side Line," and the provision of the act of April 10, 1869 (16 Stat. 47), which extended the time for construction under the act of July 25 1866, and which contains the following provision:

"That the lands granted by the act aforesaid [meaning the said act of Congress approved July 25, 1866] shall be sold to actual settlers only, in quantities not greater than one-quarter section to one purchaser, and for a price not exceeding two dollars and fifty cents per acre."

The complaint then refers to the act of Congress of May 4, 1870 (16 Stat. 94), which made the grant for the so-called "West Side Line," and which contains a provision relative to the sale of lands similar to that contained in the act of April 10, 1869, supra.

The allegations are continued thus: The defendant became the beneficiary of these two grants, and all of the lands which were the subject of the contract of sale to plaintiffs, except one tract of 160 acres, fell within the grant of May 4, 1870. That tract fell within the grant of July 25, 1866, and pursuant to the terms of these grants all of the lands in question were patented by the United States to the defendant. Long before the making of the contract between the parties the defendant had made large numbers of sales of lands granted by the acts of July 25, 1866, and May 4, 1870, to persons who were not actual settlers, in quantities greater than one-quarter section to one purchaser and for prices exceeding $2.50 per acre, and thereafter, and on April 30, 1908, Congress adopted a joint resolution (35 Stat. 571), authorizing the Attorney General to institute suits for the purpose of enforcing a forfeiture in favor of the United States with respect to the lands included in the two grants. On January 23, 1909, in pursuance of the joint resolution of April 30, 1908, the United States commenced a suit in the Circuit Court for the District of Oregon against Messrs. Hammond and Winton and the Oregon & California Railroad Company to enforce a forfeiture of the lands thus sold to the plaintiffs. Before the commencement by the United States of the suit last mentioned it had commenced another suit against the railroad company to recover a large quantity of lands, exceeding 2,000,000 acres, granted by the acts of 1866 and 1870, and remaining unsold, known as suit No. 3340, which reference is here given for the reason that this suit is thus designated in the act of Congress of August 20, 1912, later referred to.

Suits similar to the one against Hammond and Winton were commenced about the same time against other persons who had purchased lands from the railroad company.

The complaint then sets out the provisions of the act of Congress approved August 20, 1912 (37 Stat. 320, c. 311), which authorized the Attorney General to enter into a compromise with any purchaser of the granted lands against whom suit had been brought under the joint resolution of April 30, 1908, and it was provided that such compromise should require the entry of a decree of forfeiture against such purchaser, and that within six months of the entry of such decree the purchaser should be entitled, on payment of the sum of $2.50 per acre to the United States, to receive a patent for the lands covered by such decree. It is further alleged: On August 16, 1910, when the plaintiffs made final payment to the railroad company of the purchase price under the contract of August 16, 1901, the title to the lands so purchased was unmerchantable and unmarketable because of the provisions of the Acts of 1866 and 1870, and because of the pendency of the suits of the United States above mentioned, and it was necessary for the plaintiffs, in order to confirm their title to the lands so purchased from the railroad company, to apply to the Attorney General for a compromise under the act of August 20, 1912, to pay to the United States the sum of $2.50 per acre, and to receive from the United States its patent for the lands. About March 3, 1913, the plaintiffs applied to the Attorney General for such compromise, and in accordance with the rules and regulations adopted by the Attorney General under the act of August 20, 1912, the plaintiffs, Hammond and Winton, were required to show that they purchased the lands in good faith, and without knowledge of the provisions of the granting acts prescribing the conditions of the sale of the lands, and the plaintiffs, by due proof, satisfied the Attorney General, as the fact was, that they purchased the lands in good faith, and without any knowledge whatsoever as to the conditions relating to the sale of the lands, and, further, that all of the lands had been patented to the railroad company at the time of the purchase, and that none of the patents conveying the lands prescribed any limitations on the sale thereof. The Attorney General held and determined that these plaintiffs were purchasers of the lands in good faith, and he entered into a stipulation with these plaintiffs for the entry of a decree in the District Court of the United States for the District of Oregon in the suit there pending for the entry of a decree forfeiting the title of the lands to the United States, and providing that the plaintiffs should be entitled, upon payment of $2.50 per acre, to receive a patent for the lands from the United States under the act of August 20, 1912. Upon the entry of such decree the plaintiffs paid to the United States the sum of $2.50 per acre on account of the 45,972.43 acres purchased by them from the railroad company, making the amount of $114.932.50, and there was thereupon issued to them, under the act of August 20, 1912, the patent of the United States. This was not a voluntary payment, but the plaintiffs were compelled to make the payment to avoid being ousted from the lands, and in order to acquire a valid title to the lands, and the payment was made solely because of the failure and neglect of the defendant to convey to the plaintiffs a valid title in accordance with the agreement of August 15, 1901. The complaint concludes with a prayer for judgment in the sum plaintiffs have been damaged, namely, $114,932.50, with interest at the rate of 6 per cent. from April 26, 1913.

To this complaint the defendant interposed a general demurrer, which was sustained, and upon this order judgment of dismissal was entered. By the act of Congress, of August 20, 1912, it was provided that all claims of forfeiture asserted by the Attorney General in suits brought by him under the...