United States v. Northern Pac. Ry. Co., E-4389.

• Decision Date: 28 August 1941
• Docket Number: No. E-4389.,E-4389.
• Citation: 41 F. Supp. 273
• Parties: UNITED STATES v. NORTHERN PAC. RY. CO. et al. NORTHERN PAC. RY. CO. et al. v. UNITED STATES.
• Court: U.S. District Court — District of Washington

41 F. Supp. 273

UNITED STATES v. NORTHERN PAC. RY. CO. et al.

NORTHERN PAC. RY. CO. et al. v. UNITED STATES.

No. E-4389.

District Court, E. D. Washington, N. D.

August 28, 1941.

Norman Littell, Asst. Atty. Gen., and E. E. Danly and Robert E. Mulroney, Sp. Assts. to Atty. Gen., for plaintiff.

L. B. da Ponte, General Counsel, of St. Paul, Minn., Robert S. Macfarlane, Western Counsel, of Seattle, Wash., and F. J. McKevitt, District Counsel, of Spokane, Wash., for defendants Northern Pac. Ry. Co.

Alfred N. Hueston, of New York City, for defendant Bankers Trust Co.

John B. Marsh, of New York City, for defendant City Bank Farmers Trust Co.

Thomas Boylan, of Philadelphia, Pa., and R. L. Edmiston, of Spokane, Wash., for intervenors Chas. E. Schmidt, et al.

SCHWELLENBACH, District Judge.

This case is now before this Court on mandates from the Supreme Court of the United States dismissing the appeal of the defendants and on the appeal of the plaintiff remanding the cause to this Court for further proceedings as indicated in the Opinion of the Court filed December 16, 1940. That opinion is reported in 311 U.S. at page 317, 61 S.Ct. 264, 85 L.Ed. 210.

There has been filed with this Court a petition for leave to intervene by one Charles E. Schmidt and others claiming to be stockholders of the Northern Pacific Railroad Company. The prayer of that petition is in six parts and it may be stated briefly that the purpose of the petition is to ask this Court to reopen and try a long-standing controversy between the petitioners as stockholders of the Northern Pacific Railroad Company and the defendant Northern Pacific Railway Company.

It is the understanding of the Court that it is the intention of counsel for plaintiff and defendants to present to the Court a stipulation of settlement of the controversies arising in this litigation and to ask the Court to sign the decree set forth in its entirety in said stipulation. (See note at end of this opinion.) The Court's information in reference thereto comes from a letter transmitted by the Attorney General on April 11, 1941, to the Vice President of the United States. This letter with its appendages has been printed as Senate Document No. 48 of the 77th Congress, 1st Session. (See note at end of this opinion.) That document was filed in this Court on June 12, 1941, by the petitioners for intervention attached to a petition asking the Court to temporarily suspend hearing on the above-described stipulation.

Since the petition for intervention is to be argued on its merits, I will not discuss it at this point further than to say that should it be granted, it is apparent that for the present the Court could not consider the above-described stipulation or the proposed decree. Consequently, it seems logical that the Court should first hear argument on the petition for intervention before considering the stipulation or the proposed decree.

Should the petition for intervention be denied, it would then become the duty of the Court to take up for consideration the the stipulation entered into and the decree which is proposed. While, under ordinary circumstances, the Court would welcome the opportunity to sign a decree compromising and settling the differences between respective parties to a piece of litigation based upon a stipulation of the parties without argument, it is my belief that, in this case, it is the Court's duty to require a complete discussion of all of the features of the settlement and the proposed decree before signing the decree. There are a number of reasons for this:

First: The public nature and the public importance of the controversy involved in this litigation.

Second: The fact that this litigation arose out of and was commenced as a result of an Act of the Congress of the United States.

Third: The amount of money and property involved in the litigation.

Fourth: The complexity of the litigation.

In order that counsel may understand the position which the Court takes and the reasons for it, I deem it advisable to discuss the case with a reasonable amount of detail.

Mr. Justice Roberts, writing the opinion of the Supreme Court, succinctly but exhaustively reviewed the litigation and the history of the events leading up to it. That being true, I feel the following brief statement will suffice:

In the Act of July 2, 1864, 13 Stat. 365, the Northern Pacific Railroad Company was authorized to lay out, locate, construct and maintain a railroad and telegraph line from a point on Lake Superior to Puget Sound with a branch to a point at or near Portland, Oregon. The Act was detailed in its requirements of the Company as to time of commencement and location of construction and completion. In aid of the construction, there was granted to the Company certain sections of land on each side of the line through the territories and states through which construction was proposed. The Act concluded with a reservation by Congress of power "at any time, having due regard for the rights of said Northern Pacific Railroad Company", to "add to, alter, amend, or repeal" the Act.

On May 31, 1870, a Resolution was passed by Congress, 16 Stat. 378, which revised the method of financing and further authorized the location and construction of the main road via the Valley of the Columbia River to Puget Sound and of a branch from the main line across the Cascade Mountains to Puget Sound. This Resolution made a similar grant of land in connection with the authorized additional construction.

Numerous controversies arose between the Northern Pacific Railroad Company and its successor — Northern Pacific Railway Company — and the United States between that time and 1924. Finally, on June 5, 1924, acting upon the recommendation of the President and the Secretary of Agriculture and the Secretary of the Interior, the Congress passed a joint resolution directing the Secretary of the Interior to withhold approval of any adjustment of the Company's land grants and the issuance of further patents and appointed a joint committee of Congress to investigate the whole problem. 43 Stat. 461. After almost five years of study the committee recommended the passage of a bill authorizing the Attorney General to institute an action by which "a final and complete determination of the respective rights of the United States and the Northern Pacific Railway Co. to the end that the grants shall be finally adjusted and the interests of the United States and the grantee shall be fully protected" might be secured. 46 Stats. 41, 43 U.S.C.A. §§ 921-929. On pages 332, 333 and 334 of Vol. 311 U.S., 61 S.Ct. 264, on page 271, 85 L.Ed. 210, the Supreme Court in its opinion made a detailed analysis of this Act.

Thereupon and in accordance with the provisions of the Act, the Attorney General commenced this action by filing a bill in this Court. For the purpose of this statement it seems sufficient for me to say that in its bill, the plaintiff prayed that title to all of the land in the controversy should be quieted in the United States Government and the United States should be compensated by a money judgment for the value of lands which it claimed to have been erroneously patented to the defendants. The relief asked in the answers filed by the defendants, briefly stated, was a dismissal of the action by the Government, an assertion of its title in certain lands and a claim for a money judgment against the plaintiff on lands of which it contended it had been unlawfully denied. The decree of Judge Webster in this case determined that the Railway Company was entitled to compensation for 1,453,061.02 acres of land; that the Company was entitled to patents to 428,986.68 acres of other lands and that the plaintiff was entitled to compensation for 65,829.77 acres found to have been erroneously patented to one of the defendant companies. Both parties appealed to the Supreme Court under the provisions permitting a direct appeal in the Act of Congress of May 22, 1936, 43 U.S.C.A. § 925 note. Due to the fact of Mr. Justice Murphy's previous participation in the litigation as Attorney General, the cases were considered by only eight Justices of the Supreme Court. As heretofore stated, the decision of that Court was rendered and the opinion filed on December 16, 1940. It seems to me necessary that at this point we consider in detail that opinion which the Supreme Court rendered.

In its discussion concerning the law of the case, the Supreme Court broke down the case into 20 separate points. It seems to me that an understanding of the Supreme Court's opinion requires a grouping of the 20 points into 5 classifications as follows:

First: Points 1-6, inclusive, which consist of contentions by plaintiff as to breach of covenant by defendants so substantial in their nature that if they were upheld by the Court, judgment would necessarily be entered in favor of the plaintiff and against the defendant. Upon these 6 points the Justices who heard the case were equally divided. No opinion was expressed upon them.

Second: In this group, points number 7 and 8 were considered. They involved claims by the Government which, if sustained, would have precluded recovery by the defendants. On these points the Court sustained the position of the trial court and ruled against the plaintiff.

Third: This group consists of points 9, 10, 11, 12, 15, 16 and 19. They involve contentions of the Government going to the quantum of the award. In each point the Supreme Court sustained the position of the trial court and overruled the Government's contentions.

Fourth: This group consists of points 13, 14, 17 and 18. These points also are classified by the Supreme Court as involving contentions of the Government which go to the quantum of the award. As to these points, the decree of the trial court is reversed and they are remanded to the trial court for further action.

Fifth: This classification involves only point 20 under which the Supreme Court...