Santa Fe Pacific R. Co. v. Secretary of Interior

Decision Date09 October 1987
Docket NumberNo. 84-5440,84-5440
Citation830 F.2d 1168
PartiesSANTA FE PACIFIC RAILROAD COMPANY, et al., Appellants, v. SECRETARY OF the INTERIOR.
CourtU.S. Court of Appeals — District of Columbia Circuit

Appeal from the United States District Court for the District of Columbia (Civil Action No. 83-01939).

Richmond F. Allan, with whom Edward Weinberg, Washington, D.C., was on brief, for appellants.

John A. Bryson, Atty., Dept. of Justice, with whom Robert L. Klarquist, Atty., Dept. of Justice, Washington, D.C., was on brief, for appellee.

Before ROBINSON, and GINSBURG, Circuit Judges, and WEIGEL *, Senior District Judge.

Opinion for the Court filed by Circuit Judge SPOTTSWOOD W. ROBINSON, III.

SPOTTSWOOD W. ROBINSON, III, Circuit Judge:

The Department of the Interior denied an application by Santa Fe Pacific Railroad Company (Santa Fe) for a patent covering 14,632.72 acres of land in Arizona. 1 This ruling was upheld by the District Court 2 and Santa Fe appeals. We find that the Department and the District Court misconstrued a provision of a 1955 statute known as the Recordation Act, 3 which required the registration of certain unperfected rights to land. We accordingly reverse.

I. BACKGROUND

In order to "secure the safe and speedy transportation of the mails, troops, munitions of war, and the public stores" 4 to the West, Congress passed a series of statutes in the mid-nineteenth century giving railroad companies rights to public land adjacent to their lines. 5 One such statute, typical of efforts to attract westward development by land grants, was enacted in 1866. 6 This statute incorporated the Atlantic and Pacific Railroad Company (A & P), the predecessor of Santa Fe, 7 and bestowed upon it a right of way to construct a railroad and telegraph line along a route of its choosing from Springfield, Missouri, to the Pacific coast. 8 The statute also created two strips of territorial land, one on each side of the line, and gave A & P "every alternate section of public land, not mineral, designated by odd numbers, to the amount of twenty alternate sections per mile." 9 The boundaries of grants of this kind have come to be known as "place limits," and in exchange for this land Congress reserved the use of the line for the benefit of the United States on whatever terms it saw fit to impose. 10

Congress recognized, however, that in some instances earlier rights, such as homestead claims, would prevail over the railroad's interest in place lands. The statute thus conferred a right of substitution in those situations, providing that "other lands shall be selected by said company in lieu thereof, under the direction of the Secretary of the Interior," from an additional area of public land bounded by what are known as "indemnity limits"--two additional strips, each ten miles wide, adjoining the place-limit strips. 11 Thus, to the extent that any deficiency in land within the place limits remained in consequence of superior rights, land within the indemnity limits was to be made available to A & P. 12

In 1872, A & P filed a plat with the Secretary of the Interior designating the location of its line, thereby establishing its right to place land. 13 Because preexisting claims took precedence over some of the place land, A & P, in 1887, chose 1,244,160 acres of indemnity land. The selection was rejected, however, because the Department of the Interior had not surveyed the land within the indemnity limits, which, according to the Department, rendered it "not subject to selection" at that time. 14 Nonetheless, A & P began to contract with other parties to sell its interests in land granted to it by the 1866 Act. One such transaction ripened into a sale of 21,488 acres within Yavapai County, Arizona, within the indemnity limits--the land now in dispute--to the predecessors of Perrin Properties, Inc., 15 which was consummated by a deed duly recorded in Arizona. 16 Ten years later, this land was included in Prescott National Forest. 17

In 1914, Perrin petitioned the Department for an order compelling Santa Fe, the successor to A & P, to select the indemnity lands that had been sold to Perrin's predecessors in compliance with the terms of the 1896 contract of sale. 18 The Department, noting in passing that some of this land still had not been surveyed, ruled that it had no jurisdiction to adjudge a contract dispute between private parties. 19

No further legal activity by the parties occurred prior to 1940, when Congress passed the Transportation Act 20 to alleviate the growing burden on railroads from supplying the Government with transportation at below-market rates. 21 This legislation allowed railroads that had received land grants from the Government to aid in the construction of their lines to charge the Government full commercial rates, on the condition that the railroads released any claim against the Government arising under railroad-construction acts. 22 The Act stated specifically, however, that it was not to be construed 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." 23

Santa Fe took advantage of this statute by filing a release of its claims. 24 As required by the Department's regulations, Santa Fe listed all of its sales to innocent purchasers for value, including the 1896 deed to predecessors of Perrin. 25 The Department accepted and approved both the release and the list. 26

Yet another hiatus in the activities of the parties, this one lasting 28 years, followed the filing of the release. During the interim, in 1955, Congress passed the 1955 Recordation Act, which required reporting within two years of certain unperfected claims to land, including "lieu selection ... right[s]." 27 The land sold to Perrin's predecessors was not registered under the Act.

In 1969, Perrin asked for a cash payment from the Department for the land in issue. 28 The Bureau of Land Management's rejection of this request was affirmed in 1973 by the Interior Board of Land Appeals on the ground that any selection right A & P and Santa Fe successively had with respect to indemnity land terminated when the release was filed by Santa Fe under the 1940 Act. 29 By the Department's reasoning, Perrin was not an innocent purchaser within the meaning of that Act because its predecessor in interest had not purchased title to the land but merely an inchoate right to acquire land, 30 and the release Santa Fe filed in 1940 extinguished the right asserted by Perrin. 31

In 1977, Santa Fe applied for a patent to the land claimed by Perrin. 32 The Bureau denied the application for the same reason it had disapproved the cash payment requested by Perrin in 1969. 33 The Board added, however, that Santa Fe's right to indemnity land would have vested had such lands been sufficient to make up for the shortfall in place lands, and would not have been affected by the 1940 release filing. 34

Santa Fe appealed to the Board of Land Appeals, which rejected the Bureau's ruling that Santa Fe's right to the land had been forfeited by the 1940 release of claims. The Board held instead that there had been a deficiency in the indemnity lands to make up for losses in place lands, that the right to the land in controversy had vested, and that this right had been conveyed to Perrin's predecessors in title. 35 The Board denied the application for a patent, however, because Perrin's claim had not been reported pursuant to the Recordation Act. 36

Santa Fe sought review of this decision in the District Court, 37 which affirmed both the result and the reasoning of the Board. 38 An appeal was then taken to this court.

II. NATURE OF APPELLANT'S PROPERTY RIGHT

The parties agree that Santa Fe's interest in the land in suit vested, and that Perrin was an innocent purchaser for value within the meaning of the 1940 Act. Consequently, the only question before us is whether that interest fell within the purview of the Recordation Act. If the property involved here is encompassed by the Recordation Act, it has been extinguished by the failure to register the claim with the Department. Before examining the Recordation Act itself, however, we briefly examine the nature of the interest asserted by Perrin and the manner in which it arose.

The 1866 Act granted A & P the right to select land within the place limits. The right attached automatically to land within a given distance from the track, and the Supreme Court has several times held that no selection was essential to acquisition of title. 39 If there was a deficiency in land within the place limits because of preexisting rights, a selection from land within the indemnity limits ordinarily would become necessary. 40 But the courts have on several occasions ruled that if the land within the indemnity limits was itself insufficient to make up for deficiencies in place land, no selection was necessary, since all land within those limits had to be used to make up the losses in place land. 41 These cases clearly hold that a right attaches to "specific land within the indemnity limits" without any need for selection. 42

This principle was applied in favor of Santa Fe in earlier litigation before this court involving different indemnity lands. In Chapman v. Santa Fe Pacific Railroad, 43 the Aztec Land and Cattle Company had bought 98,690.83 acres of land within an indemnity belt from A & P. Santa Fe's release under the Transportation Act of 1940 listed Aztec as an innocent purchaser for value. 44 When Santa Fe made selections, they were turned down by the Department on the ground that "the land had not been ascertained and identified." 45 According to the Department, Santa Fe had not acquired any interest in specific land which it could convey prior to filing of its release. 46

On appeal, this court soundly rejected the...

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