Railway Company v. Prescott

Supreme Court of the United States1872-12

16 Wall. 60383 U.S. 60321 L. Ed. 3731872 U.S. LEXIS 1189SCDB 1872-136

Summary · law.co

Holding. The Court reversed the state court's judgment and remanded the case, holding that unpatented railroad grant lands for which survey costs have not been paid cannot be subjected to state taxation and sale because the railroad company's title remains incomplete and contingent on the fulfillment of federal conditions, and permitting state taxation would defeat both the government's retained right to recover survey expenses and Congress's policy of opening undisposed grant lands to actual settlers.

A railroad company received a land grant under federal legislation that was amended in 1864 to extend the grant's boundaries and impose a new requirement: before the government could issue a patent transferring title to any granted lands, the company had to pay the costs of surveying, selecting, and conveying those lands into the federal treasury. The company failed to make these prepayments and did not complete construction of its rail line. A state subsequently sought to tax and sell some of the granted lands for unpaid taxes. The company challenged the state's authority to do so.

The central legal question was whether the company held sufficient interest in the unpatented lands to permit state taxation and sale. The Court held that the company's interest remained incomplete and contingent because two critical conditions precedent had not been satisfied: payment of survey costs and the company's obligation to either sell the lands within a specified period or allow them to open to settlement by actual settlers at the government's minimum price. Because these material obligations remained unfulfilled, the company had not acquired the equitable title necessary to subject the lands to state taxation.

The Court also emphasized that permitting a state tax sale would undermine two significant federal policies embedded in the grant statute: the government's reserved right to recover survey expenses, and Congress's deliberate policy of preventing the railroad from monopolizing vast public lands indefinitely. Allowing state taxation would circumvent the congressional mandate that unsold railroad lands eventually become available to pioneer settlers at government prices, a provision the Court recognized as serving both public welfare and individual opportunity.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether the 1864 amendment's requirement to prepay survey costs applies to all granted lands or only extended lands
Whether a railroad company acquires sufficient equitable title to permit state taxation of unpatented grant lands when survey costs remain unpaid
Whether state taxation would defeat federal reserved rights and congressional policy regarding public land settlement

Procedural posture

The case originated in state court, where a state sought to enforce a tax sale on railroad grant lands; the railroad company appealed to the federal court system challenging the state's authority.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Mr. Justice MILLER

delivered the opinion of the court.

The original act of 1862 was amended in 1864 by extending the limits of the grant on each side of the road, and by several other provisions.

A question is raised whether the provision in the twenty-first section of the amendatory statute of 1864 — by which it is declared that before any of the lands granted by the act should be conveyed-to the company, the cost of surveying, selecting, and conveying said lands should first be paid-into the Treasury of the United States by the company or party-in interest — requires this prepayment of the cost of surveying for the lands granted by the original act, or-is limited to the lands acquired by the extension of the grant.

Looking to the whole scope of the amended act, and to the provision that the money so paid was to constitute a fund for the continuance and completion of the entire surveys along the road where none had been made, we are of opinion that no patent could rightfully issue in any case until the cost of survey had been paid. None of the road had been built when the amendatory act was passed. No right had vested in any tracts of laud, and the power, as well as intent, of Congress to require such payment cannot be contested.

While we recognize the doctrine heretofore laid down by this court, that lands sold by the United States may be taxed before they have parted with the-legal title by issuing a patent, it is to be understood as applicable.to cases where, the right to the paten’t is complete, and the equitable title is fully vested in the party without anything more to be paid, or aiiy act to be done going to the foundation of his right.

The present case does not fall within that principle. .

Two important acts remain to be done, the failure to do which may wholly defeat-the right of the company to a patent for these lands.

The first is the payment of the costs of surveying. It-is admitted that this has never been done in the present case. If the company have such an intérest in these lands that they cau be sold b;y the State under her power of taxation, then the title is divested out of the government without its consent, and the right to recover the money expended in the surveys is defeated. As the government retains the legal title until the company or some one interested in the same grant or title shall pay these expenses, the State cannotlevy taxes on the land, and under such levy sell and make a title which might in any event defeat this right of the Federal government reserved in the act by which the inchoate grant was made.

Another important and .declared purpose of Congress would be equally d.efeated by the title thus acquired under the tax sale, if it were valid.

It is wisely provided, that these lands shall not be used by the company as a monopoly of indefinite duration. The policy of the government has been for years to encourage settlement on the public land by the pioneers of emigration,:and to this end it has passed many laws for their benefit. This-policy not only favors the actual settler, but it is to the interest of-those who, by purchase, own adjacent lands, that all of it should be open to settlement and cultivation. Looking to this policy, and to. the very large quantity of lands granted by this statute to. a single corporation, Congress declared that if the company did not sell those lands within a time limited by the act they should then, without further action of the company, or of Congress, be open to the actual settler under the same laws which govern the right of preemption on government lands, and at the same price. Anyone who has ever lived in a community where large bodies of lands are withheld from use, or occupation, or frorp sale except at exorbitant prices, will recognize the value of this provision. It is made for the public good, as well as for that of the actual settler. To permit these lands to pass under a title derived from the State for taxes would certainly defeat this intent of Congress. It makes no difference in the force of the principle, that the money paid by the settler goes to the company. The lands which the act of Congress declares shall be open to pre-emption and.sale are withdrawn from pre-emption and sale by a tax title and possession under it, and it is no answer to say that the company which might have paid the taxes gets the price paid by the settler.

For these reasons we think that though the line of the road had been built and approved.by the President, so far as-to authorize the company to obtain a patent for this land, •if they had paid the cost of survey and the expenses of making-the conveyance, yet the neglect to do this and the contingent right of offering the land to actual settlers at the minimum price asked for its lands by the government, forbid the State to embarrass these rights by a sale-for taxes.

Judgment reversed, and the .case remanded to the State court with instructions to proceed in conformity to this opinion.