Southern Pac. Ry. Co. v. United States

• Citation: 186 F. 737
• Decision Date: 06 February 1911
• Docket Number: 1,578.
• Parties: SOUTHERN PAC. RY. CO. v. UNITED STATES.
• Court: U.S. Court of Appeals — Ninth Circuit

186 F. 737

SOUTHERN PAC. RY. CO. v. UNITED STATES.

No. 1,578.

United States Court of Appeals, Ninth Circuit.

February 6, 1911

The appellee in its bill alleged that by the act of Congress approved July 27, 1866 (Act July 27, 1866, c. 278, 14 Stat 292), the Atlantic & Pacific Railroad Company was incorporated and granted lands in California, and that the grant was declared forfeited by act of July 6, 1886 (chapter 637, 24 Stat. 123), for failure to construct the road in aid of which it was made; that section 18 of said act of July 27 1866, authorized the Southern Pacific Railroad Company to construct a railroad from Needles via Mojave to San Francisco, and made that company a grant of lands to aid in the construction thereof; that by the joint resolution of June 28, 1870 (No. 87, 16 Stat. 382), Congress confirmed the authority of the grant; that by section 23 of the Texas-Pacific Act of March 3, 1871 (chapter 122, 16 Stat 579), Congress authorized the Southern Pacific Railroad Company to construct a railroad from Yuma via Los Angeles to Mojave, and made a grant of lands to aid in the construction thereof; that the lands described in Exhibit A and Exhibit B to the bill were granted to the Atlantic & Pacific Railroad Company, and were not granted to the Southern Pacific Railroad Company; that it has been finally adjudged and determined by certain decisions referred to in the bill that all the lands described in those exhibits were restored to the United States by the aforesaid forfeiture act of July 6, 1886; that the Southern Pacific Company never acquired any interest therein; that all said lands so described in Exhibits A and B to the bill were, prior to March 2, 1896, erroneously patented by the United States to the Southern Pacific Company as lands granted to it by the act of March 3, 1871; that the patents thereto were accepted and received by said company under the same error and mistake; that by the act approved March 3, 1887 (Act March 3, 1887, c. 376, 24 Stat. 556 (U.S. Comp. St. 1901, p. 1595)), Congress authorized the Secretary of the Interior to issue new patents to purchasers in good faith from railroad companies, of lands erroneously patented to them; that, in case such companies refused to pay the United States $1.25 per acre for such erroneously patented lands within 90 days after demand thereof, the Attorney General should bring suits to recover on such demanded amounts; that by the act approved February 12, 1896, Congress provided that the amount to be demanded and paid in cases where the railroad company had received from its purchasers less than $1.25 per acre should be the amount paid to it by such purchaser; that by the act approved March 2, 1896, Congress confirmed the title of all such bona fide purchasers, and provided that, upon a proper showing before the Secretary of the Interior, the title of such bona fide purchasers should stand confirmed without suit; that the Secretary should procure suit to be brought to recover $1.25 per acre from the railroad company for the quantity of land thus confirmed; that, upon proper showing in the court, a decree should be entered confirming the title of bona fide purchasers, and against the railroad company for the value of such land at $1.25 per acre; that prior to March 3, 1887, the Southern Pacific Railroad Company sold all lands described in said Exhibits A and B to bona fide purchasers; that the purchaser's title was confirmed by said Act of March 2, 1896; that the value of said lands exceeds $2.50 per acre; that to the extent of $1.25 per acre the Southern Pacific Railroad Company holds the proceeds of said sales in trust for the complainant, the appellee herein; that Exhibit A correctly describes the lands, the acreage thereof, and sets forth the names of the bona fide purchasers thereof, and the dates when their title was confirmed by the Secretary of the Interior under the act of March 2, 1896 (chapter 39, 29 Stat. 42 (U.S. Comp. St. 1901, p. 1603)); that more than 90 days prior to the commencement of the suit the Secretary of the Interior notified the appellant of said confirmations and demanded the proceeds received from such sales not exceeding $1.25 per acre; that on August 5, 1898, by a decree in suit No. 184 between the parties to this suit, it was finally and conclusively adjudged by the United States Circuit Court that the persons named as purchasers in said Exhibit B were bona fide purchasers from the appellant of the lands therein described, and their title thereto was confirmed; that the said confirmation by the Secretary of the Interior of the titles of bona fide purchasers named in Exhibit A and the confirmation by final decree of the Circuit Court of the title of bona fide purchasers named in Exhibit B were made in faith of and pursuant to proof of such sales made and introduced by the appellant in former suits in the United States Circuit Court between the parties to this suit; that therefore the appellant is estopped in this suit from denying said sales and from denying that it holds the proceeds thereof in trust for the appellee to the extent of $1.25 per acre.

The bill further alleged that the determination of the rights of the complainant in the premises involves the construction and interpretation of said acts of Congress and of numerous contracts in writing executed by the appellant to numerous persons, and further involves the establishment and enforcement of a trust in favor of the complainant in the proceeds of said sales and of a lien, 'and, in securing thereon to your orator an accounting from defendant Southern Pacific Railroad Company, there is great complexity involved in determining what tracts of land have been sold or contracted to be sold by said company, and at what price, and to whom, and what amount has been paid by way of principal and interest on each of said tracts to said company, and the good faith of the purchasers of such numerous tracts.'

The prayer of the bill was that the court determine the true construction of said acts and define the rights and obligations of the parties to the bill, and decree that the defendant therein 'holds in trust for your orator the proceeds of all sales of said tracts of land set forth in said Exhibits A and B to the bill, to the extent and amount of $1.25 per acre for all thereof; that such indebtedness be declared a lien upon all funds in the hands of said defendant realized from the sale of said lands; and that the defendant be required to account to and pay over said sums to your orator. ' And the bill prayed that the defendant therein be required to answer certain interrogatories as to the sales or contracts to sell it had made of tracts of the land described in said Exhibits A and B and the names of the purchasers of each tract, the date of sale or contract, form and character of the instrument, giving the agreed price, dates, and amounts of payments of principal and interest. The appellant filed its answer to so much of the bill as sought discovery, and at the same time demurred to the remainder and residue of the bill for want of equity. The demurrer was overruled, and thereafter the appellant filed its answer to the bill, to which the appellee filed its replication, and upon the pleadings and the admitted facts a decree was rendered adjudging that the appellant pay the appellee $40,124.30 with interest thereon at 7 per cent. per annum from March 2, 1896, amounting to $32,861.80, and $38.80, the costs of suit. From that decree the appeal is taken.

Wm. Singer, Jr., D. V. Cowden, E. E. Hull, and Wm. F. Herrin, for appellant.

Robt. T. Devlin, U.S. Atty., and Geo. Clark, Asst. U.S. Atty.

Before GILBERT and ROSS, Circuit Judges, and DE HAVEN, District Judge.

GILBERT Circuit Judge (after stating the facts as above).

The question principally discussed in the briefs and argument of counsel is that of the jurisdiction of the Circuit Court to entertain the bill; the appellant contending that the appellee had a complete and adequate remedy at law. In the bill, jurisdiction in equity is invoked on the grounds of discovery, accounting, the establishment of a trust, and the enforcement of a lien. The bill fails to show, however, that there is a trust or a lien involved. Notwithstanding the allegations of the bill, it is apparent that the appellant is not in the possession of a trust fund realized from the sale of government lands which may be identified and pursued by the appellee and subjected to the payment of the price fixed by Congress as the compensation to be paid therefor. It is apparent also, that no lien exists in favor of the appellee enforceable against property held by the appellant. The jurisdiction in equity must be sustained, if at all, upon the ground of the discovery and accounting prayed for. The bill set forth two exhibits wherein were described the tracts of land which were alleged to have been restored to the United States by the forfeiture act of July 6, 1886, and which lands were alleged to have been sold to bona fide purchasers, and it set forth the names of the purchasers. The discovery which it sought was the enumeration of the sales and contracts of sale made by the appellant of each of the tracts of land described in said exhibits, the name of the purchaser of each tract, the dates of the sales or the contracts of sale, the form and character of the instruments in writing, the price of each tract, and the date and amount of each payment of principal and interest thereon. The appellant answered the bill so far as the discovery was concerned, and disclosed fully all the information so sought. At the same time, it demurred to the remainder of the bill for want of equity, and it now contends that the suit for discovery came to an end upon the filing of a...