Southern Oregon Co. v. United States

241 F. 16, 154 C.C.A. 16, 1917 U.S. App. LEXIS 1730

Opinions

GILBERT, Circuit Judge

(after stating the facts as above). [1] The principal question involved concerns the construction of the first and second provisos of the granting act. The appellant insists that those provisos must be read together with section 5, and that when so read it will appear that the second proviso refers only to sales made during the first five years, and was hot. intended to apply to sales made after the completion of the road. To this we are unable to assent. The terms of the provisos are plain. They express clearly the intention of Congress that the lands granted were to be used for but one purpose, which was the construction of the road, and that they should be sold in quantities not greater than 160 acres, and not to more than one person, and at a price not to exceed $2.50 per acre. Section 5 contains nothing that modifies section 1. It prescribes that, when the Governor shall certify to the Secretary of the Interior that 10 continuous miles of the road are completed, 30 sections of the granted lands may be sold, “and so on from time to time, until said road shall be completed, and if said road is not completed within five years no further sale shall be made, and the lands remaining unsold shall revert to the United States.” None of the provisions of section 5 is repugnant to any of the provisions of section 1, and full force and effect may be given to both.. But the appellant contends that in any view of the proviso it is a covenant only, and is not enforceable against the appellant. The same contention was made, but was denied by the court, in Oregon & Cal. R. R. v. United States, 238 U. S. 393, 35 Sup. Ct. 908, 59 L. Ed. 1360. We think no distinction can be made to the, detriment of the interest of the appellee in the present case between the provisos in the grant involved in that case and those in the grant involved in this.

It is suggested that a material difference is to be found in the fact that in the Oregon & California grant it was provided that the land should be sold to “actual settlers” only, while no such provision is found in the grant in question in this suit, and the argument is made that in the latter grant there is absence of evidence of governmental policy looking to the encouragement of settlers to go upon the land and settle up the country, that actual settlement was neither provided for nor contemplated, and that hence the proviso in the present act lacked the dominant purpose of the proviso in the Oregon & California grant. In the case just cited the Supreme Court said of the provisos there involved: “They are covenants and enforceable.” The provisos in the act here under consideration are likewise “covenants and enforceable.” In that case the court held also that the building of the railroad was the primary purpose of the acts of Congress, and that the secondary purpose was the settling up of the country. The same may be said of the act here under consideration. For what purpose did Congress enact that the land should be sold in quantities not less than 160 acres and at a price not to exceed $2.50 per acre, and that two sales should not be made to one person, if it were not for the purpose, made manifest in all the railroad land grants of that period, to distribute the lands to settlers, to open up the country to settlement and cultivation, as well as to prevent the acquisition by corporations of large tracts of the public domain to be held for speculation and sold at enhanced values? To dispose of the lands according to the terms of the grant would have been, not only to encourage the settlement of the lands sold, but to assist in the settlement of the ungranted sections. As was said in Winona & St. Peter R. R. v. Barney, 113 U. S. 618, 625, 5 Sup. Ct. 606, 610 (28 L. Ed. 1109):

“The policy oí the government was to keep the public lands open at all times to sale and pre-emption, and thus encourage the settlement of the country.”

It is not true, therefore, that when the road was built the government had no further interest in the lands, nor in the disposal of them.

The appellant, as a further reason for holding the proviso void, asserts that the lands could not have been sold in 160-acre tracts. • On the trial certain witnesses for the appellant testified that the great body of the land could not have been sold in 160-acre tracts for any sum. There was much testimony to the contrary, however, and there was evidence that the predecessors in interest of the appellant withdrew the lands from sale, refused applications to purchase, and from the very inception of their rights persistently denied that the lands were subject to the proviso contained in section 1 of the granting act. ' There was evidence that if the appellant and its predecessors in interest had offered the lands for sale, or had made efforts to sell the same in accordance with the terms of the grant, a large portion thereof could have been sold to settlers. As far as this appeal is concerned, however, the question is not important, for under the ruling in the Oregon & California Case it follows that, if the grantee found the terms of the grant impossible of performance, it was not justified in violating the provisions of the act, but its remedy was to apply to Congress for remedial legislation.

[2] The defense, that the appellant is a bona fide purchaser for value has not been sustained. To establish that defense the burden rested upon the appellant to make satisfactory proof of its purchase without notice, its payment of value, and its bona fides. Tobey v. Kilbourne, 222 Fed. 760, 138 C. C. A. 308; Cooper v. United States, 220 Fed. 871, 136 C. C. A. 501; United States v. Brannan, 217 Fed. 849, 133 C. C. A. 559; United States v. De Moines, 142 U. S. 510, 12 Sup. Ct. 308, 35 L. Ed. 1099. That the Wagon Road Company had no power to sell the lands in gross was plainly apparent in the terms of the original grant. The appellant was chargeable with notice - of the provisions of that act, notwithstanding that patents had issued from the United States. Although the patents purported to convey the land in fee, the title was nevertheless subject to the terms of the congressional grant, and indeed each patent recited that it was issued in pursuance of that act. That act was more than a grant. It was a law, and each subsequent purchaser was chargeable with notice of it. Again, each of the mesne conveyances between the Wagon Road Company and the appellant contained the recital that the lands conveyed were part of the lands granted by the act 'of March 3, 1869, to the state of Oregon. In Simmons Creek Coal Co. v. Doran, 142 U. S. 417, 437, 12 Sup. Ct. 239, 246 [35 L. Ed. 1063], the court said that the. purchaser of land “must look to the title papers under which he buys, and is charged with notice of all the facts appearing upon their face, or to the knowledge of which anything there appearing will conduct him. He has no right to shut his eyes or his ears to the inlet of information, and then say he is a bona fide purchaser without notice.” And the answer of the appellant,in this case shows that the appellant, before purchasing, took care and made due inquiries, for it alleges that before purchasing the appellant “carefully examined all legislation by Congress and the state of Oregon affecting the title, and also examined the patents.”

[3] The appellant contends that the government is estopped both by matter in pais and by judgment. The estoppel in .pais is said to consist in the long delay of the government to institute the suit, and its apparent acquiescence in the action of the Wagon Road Company and its grantees in transferring the lands contained in the grant, and in other facts showing that officers- of the government must have known and approved the manner in which the lands had been dealt with. In the Oregon & California Case the court held that the fact that the actions of the grantee of railroad grant lands were known to the government officials, and that no action was taken in regard thereto does not amount to an estoppel against the' enforcement of covenants .in the grant. That decision answers the contention of the appellant here so far as it relates to estoppel in pais. The court therein applied the doctrine of United States v. California & Oregon Eand Co., 148 U. S. 31, 13 Sup. Ct. 458, 37 L. Ed. 354, in which it was held that estoppel exists only where the act relied upon is done by an executive officer or agent specially authorized by Congress. There was no affirmative act of any officer of the government with respect to the title to these lands other than the act of issuing the patents, nor did Congress ever take any action in regard thereto other than to pass the act of 1874 authorizing the issuance of patents.

[4] Of the suits, the bringing of which are said to estop the government from prosecuting the present action, three were commenced in February, 1896, and one in August, 1897. The suits were numbered 2278, 2283, 2284, and 2406. The first suit was brought to recover 40 acres of land which it was alleged had been entered as a homestead prior to the grant, and was therefore not included therein. In the second suit title was alleg'ed to be in the United States, lor the reason that one small tract therein described had been reserved from the grant, and 1,099.59 acres of lands therein described lay without, the limits of the grant. The third suit, which involved 30,044 acres of land, was brought on the theory that the lands were outside the limits of the grant, -and were within the overlap of the prior grant to the Oregon & California .Railroad Company, and were therefore erroneously patented to the Wagon Road Company. The fourth suit was brought to recover $2.50 per acre for the 1,099.59 acres involved in the second suit, on the ground that the patents thereto had been erroneously issued; it being alleged that those lands had been entered under the homestead and pre-emption laws of the United States prior to the grant. It is true that in some of those suits reference was made in the pleadings to the terms of the grant, and in the case last referred to the defendant was required to answer whether any of those lands had been sold, and, if so, to state the particulars of the sales, whether for cash or deferred payments, and to whom sold, and in the relief sought was a prayer that the grant be construed and a decree entered defining the rights of the parties. But there was no judgment in any of the cases which defined such rights, and no question was presented or decided which in any way affects the present litigation.

In suit 2278 it was adjudged that the 40 acres therein involved had not been homesteaded as alleged in the bill. Suit No. 2283 was dismissed on the defendant’s motion after a demurrer had been sustained to the complainant’s replication, and the government had refused to plead further. In suit 2406 the small tract alleged to have been reserved from the operation of the grant was canceled, and the United States obtained a decree against the defendant for $1,099.59, or $1 per acre for the lands alleged to be without the limits of the grant. In none of those cases did the government seek to establish title to-any of the lands herein involved, or to compel the observance of the covenants contained in the grant. The most that can be said for the prior suits is that in some of them the questions which are here involved might have arisen and might have been litigated. But the purpose of those suits was different from the purpose of the present suit, and the causes of action were different. The present suit was brought to enforce the law of the grant, and the covenant of the grantee, and the prior suits operated as an e'stoppel only to the points or questions actually litigated and determined therein. Nesbitt v. River side Independent District, 144 U. S. 610, 12 Sup. Ct. 746, 36 L. Ed. 562.

We find no error. . The decree is affirmed.