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    SOUTHERN PAC R CO v. BELL, 183 U.S. 675 (1902)

    U.S. Supreme Court

    SOUTHERN PAC R CO v. BELL, 183 U.S. 675 (1902)

    183 U.S. 675

    No. 20.

    Argued and Submitted December 5, 6, 1901.
    Decided January 13, 1902.

    This was a complaint in the nature of a bill in equity filed by the Southern Pacific Railroad Company in the superior court of Fresno county, California, against Isaac T. Bell, praying to be declared the rightful owner of a certain quarter section of land in that county, and that it be adjudged that the defendant Bell holds the legal title to said land in trust for the plaintiff, and requiring him to convey the same to it free of all encumbrances.

    The facts of the case, as set forth in the complaint, are substantially as follows: By 'An Act Granting Lands to Aid in the Construction of a Railroad and Telegraph Line from the States of Missouri and Arkansas to the Pacific Coast' (14 Stat. at L. 292, chap. 278), such road being incorporated under the name of The Atlantic & Pacific Railroad Company, there was granted to such railroad company--

    By 18 of the same act authority was given to the Southern Pacific Railroad Company, incorporated under the laws of California, 'to connect with the said Atlantic & Pacific Railroad, formed under this act, at such point near the boundary line of the state of California, as they shall deem most suitable for a railroad line to San Francisco, and shall have a uniform gauge and rate of freight or fare with said road; and in consideration thereof, to aid in its construction, shall have similar grants of land, subject to all the conditions and limitations herein provided, and shall be required to construct its [183 U.S. 675, 677]   road on the like regulations, as to time and manner, with the Atlantic & Pacific Railroad herein provided for.'

    On November 26, 1866, the plaintiff accepted the terms and conditions of the charter and grant of July 27, 1866, as above set forth, and on January 3, 1867, duly fixed the general route of its line of road, designating the same by a plat thereof filed in the office of the Commissioner of the General Land Office. This plat and designation having been duly approved and accepted by the Commissioner and Secretary of the Interior on March 22, 1867, all the odd-numbered sections of land lying with in 30 miles of the railroad, as shown upon the plat, were withdrawn from sale or location, pre-emption or homestead entry, and have ever since remained so withdrawn.

    Thereafter, and prior to November 8, 1889, the company duly constructed and equipped the entire railroad provided for in said act, and along the line designated upon the plat filed on January 3, 1867, and the road so constructed, except that part which extends from Mojave to the Needles, was duly accepted and approved by the President and Secretary of the Interior.

    A certain quarter section of land within the granted limits of the railroad, as constructed and shown on the map, having been granted and otherwise disposed of, prior to the time when the line of the route was designated by the plat filed with the Commissioner of the General Land Office, the quarter section of land in dispute in this case, which was within the indemnity, but not within the granted limits of the road, being more than 20 but within 30 miles on one side of the road as constructed, was selected by the railroad, in lieu of the quarter section above described as having been granted and otherwise disposed of by the United States. The land so selected was at the time the act of July 27, 1866, was passed, vacant and unappropriated public land of the United States, not mineral, to which the United States then had full title, not reserved, sold, granted, or otherwise appropriated, and free from pre-emption or other claims or rights, and such land has ever since so remained, except as it has been affected by the acts of the parties to this suit. The company had not, at the time the selection was made, nor has it since, selected or re- [183 U.S. 675, 678]   ceived lands to the extent or amount earned and acquired by it in virtue of the grant and the provisions of the granted act.

    The complaint further alleged that notwithstanding the rights of the company secured to it by the act of July 27, 1866, the United States issued a patent for the quarter section so selected in lieu of the other to the defendant, who claims the legal title to said land in fee simple and free from any trust or obligation to the plaintiff.

    To this complaint the defendant interposed a general demurrer, which was sustained, and the plaintiff having refused to amend his complaint, a final judgment was entered against it and an appeal taken to the supreme court of California, where the judgment of the superior court of Fresno county was affirmed upon the authority of another case against one Wood. 124 Cal. 475, 57 Pac. 388. Whereupon plaintiff sued out a writ of error from this court. of the court:

    Messrs. Maxwell Evarts and L. E. Payson for plaintiff in error.

    Mr. Joseph H. Call submitted the case for defendant in error.

    Statement by Mr. Justice Brown:

    This case involves a priority of right as to certain lands within the indemnity limits of the grant to plaintiff by act of Congress of July 27, 1866, and a patent for the same lands issued to the defendant as a settler under the land laws of the United States.

    It presents the single question whether the railroad company had a right, on July 26, 1893, to select the land in dispute as lieu lands, notwithstanding the defendant had nearly one year before and on September 15, 1892, received a patent for the same. This involves the further question whether the lands in dispute were subject to preemption and sale after the filing of the plat designating the line of the road; and this turns upon the meaning of the words, 'land hereby granted,' used in [183 U.S. 675, 679]   6, wherein it is enacted that the 'odd sections of land hereby granted shall not be liable to sale or entry or pre-emption, before or after they are surveyed, except by said company, as provided in this act,' which language must also be construed in connection with the further proviso in the same section, that the preemption act of 1841, the homestead act of 1862, and the acts amendatory thereof, 'shall be and the same are hereby extended to all other lands on the line of said road when surveyed, excepting those hereby granted to said company.'

    There is no dispute that the land 'hereby granted' extends to all the odd-num-bered sections within the place limits; that is, within 20 miles of each side of the road. The real question is whether it extends to the indemnity lands, 10 miles beyond this limit, so much of which the company was authorized to select in lieu of lands unavailable to it within the granted limits.

    The relative rights of railroads and of settlers under these congressional grants, all of which are couched in similar language, have been the subject of much litigation in this court, the main object of which has been to fix the time when the right of the roads to particular lands within both the place limits and the indemnity limits finally attaches as against both prior and subsequent settlers. Although at the last term of this court the question involved in the case under consideration was practically settled in Hewitt v. Schultz, 180 U.S. 139 , 45 L. ed. 463, 21 Sup. Ct. Rep. 309, the progressive steps by which the conclusion in that case was reached will show the difficulties which have attended the solution of these questions, and, as we think, indicate the logical necessity of affirming this case. Two objects have been kept steadily in view: First, securing to the railroad the benefit of the lands actually granted; second, protecting, as far as possible, the right of the public to lands not actually granted, or necessary to indemnify the roads for lands which have become unavailable to it within its granted limits, by reason of the fact that they had been otherwise disposed of prior to the designation of the line of the road.

    In the first of these cases, Schulenberg v. Harriman, 21 Wall. 44, 22 L. ed. 551, it was held that the act of June 3, 1856, granting lands to [183 U.S. 675, 680]   the state of Wisconsin, to aid in the construction of railroads, was a grant in proesenti of lands within the granted limits, and passed the title to the odd sections designated to be afterwards located; but, until such designation, the title did not attach to any specific tracts, and that when the route was fixed the title which was previously imperfect acquired precision, and became attached to the lands as of the date of the grant. There was no question of indemnity lands involved.

    In Leavenworth, L. & G. R. Co. v. United States, 92 U.S. 733 , 23 L. ed. 634, it was held that a similar grant, though operating in proesenti, did not apply to lands set apart for the use of an Indian tribe under a treaty, and that it was immaterial that they subsequently became a part of the public lands by the extinguishment of the Indian rights. This doctrine was extended in the next case, Newhall v. Sanger, 92 U.S. 761 , 23 L. ed. 769, to lands within the boundaries of an alleged Mexican or Spanish grant, which was sub judice at the time the Secretary of the Interior ordered a withdrawal of lands along the route of the road.

    In Ryan v. Central P. R. Co. 99 U.S. 382 , 25 L. ed. 305, the rule laid down in the last two cases was qualified and limited to lands within the place limits, and it was held that, as the lands in Ryan v. Central P. R. Co. were within the indemnity, but not within the place limits, 'the railroad company had not and could not have any claim to it until specially selected.' The land in dispute was within a tract formerly covered by a Mexican claim, which, although sub judice at the date of the act, had been finally rejected as invalid before the railroad road company had selected in as part of its lieu lands. When so selected 'there was no Mexican or other claim impending over it.' This case practically holds that the title to indemnity lands inures to the railroad company only when selection is made.

    This view, that the act conferred no rights to specified tracts within the indemnity limits until the grantees' right of selection had been exercised, was subsequently confirmed in Cedar Rapids & M. River R. Co. v. Hearring, 110 U.S. 27 , 28 L. ed. 56, 3 Sup. Ct. Rep. 485, and Kansas P. R. Co. v. Atchison, T. & S. F. R. Co 112 U.S. 414 28 L. ed. 794, 5 Sup. Ct. Rep. 208, although it had been stated only as a suggestion in Grinnell v. Chicago, R. I. & P. R. Co. 103 U.S. 739 , 26 L. ed. 456. [183 U.S. 675, 681]   In Van Wyck v. Knevals, 106 U.S. 360 , 27 L. ed. 201, 1 Sup. Ct. Rep. 336, it was again held that the grant of the place lands was in proesenti, and attached to the sections as soon as a map showing the definite location of the road was filed, and that a party who had subsequently entered a portion of the land covered by the grant, and procured a patent for the same, might be required to execute a release of the premises to the company. It was said by Mr. Justice Field, in that case, p. 365, L. ed. p. 202, Sup. Ct. Rep. p. 337, that the grant cut off all subsequent claims from the date of this act, with certain exceptions specifically named, and passed the title as fully as if they had been then capable of identification.

    The principle of this case was still further applied in St. Paul & S. C. R. Co. v. Winona & St. P. R. Co. 112 U.S. 720 , 28 L. ed. 872, 5 Sup. Ct. Rep. 334, to two conflicting grants, and it was held that as the title to the lands was within the place limits, it related back, after the road was located, to the date of the grant, priority of date of the act of Congress, and not priority of location of the line of the road, giving priority of title. A distinction was drawn in this case between the land within the place limits and land within the indemnity limits, and it was said that in case of the latter neither priority of grant, nor priority of location, nor priority of construction, gave priority of right; but this was determined by priority of selection.

    The case of Buttz v. Northern P. R. Co. 119 U.S. 55 , 30 L. ed. 330, 7 Sup. Ct. Rep. 100, is in seeming conflict with Leaven-worth, L. & G. R. Co. v. United States, 92 U.S. 733 , 23 L. ed. 634, inasmuch as it was held that the grant by act of July 2, 1864 [13 Stat. at L. 365, chap. 217], to the Northern Pacific Railroad, of lands to which the Indian title had not been extinguished, operated to convey the fee to the company subject to the right of occupancy by the Indians; but the case is distinguishable, as there was in the 2d section of the act a proviso that the United States 'should extinguish, as rapidly as might be consistent with public policy and the welfare of the Indians, their title to all lands falling under the operation of this act, and acquired in the donation to the road.' The prior case was not cited in the opinion.

    The conclusions to be deduced from these cases are--

    (1) That as to lands within the primary limits, the grant [183 U.S. 675, 682]   takes immediate effect, and attaches to particular lands when the map of definite location is filed; that the Secretary of the Interior may, upon the filing of such map, give notice of a withdrawal from sale of all the odd-numbered sections within the granted limits, and that the title so acquired by the railroad company relates back to the date of the grant, and takes precedence of all titles subsequently acquired, except those specifically named.

    (2) That to lands within the indemnity limits, the company takes no title until a deficiency in the place limits has been ascertained and the company has exercised its right of selection, with perhaps some rare exceptions. See St. Paul & P. R. Co. v. Northern P. R. Co. 139 U.S. 1 , 35 L. ed. 77, 11 Sup. Ct. Rep. 389.

    The last case upon this subject is Hewitt v. Schultz, 180 U.S. 139 , 45 L. ed. 463, 21 Sup. Ct. Rep. 309, which involved the title to a quarter section of land in North Dakota within the indemnity limits that is (as applied to territories), between the 40 and 50 mile limits of the Northern Pacific Railroad land grant. Plaintiff Hewitt claimed title as a settler under the pre-emption laws; defendant as a purchaser from the railroad company, under its grant of July 2, 1864. 13 Stat. at L. 365, chap. 217. The 3d and 6th sections of this act were, except as to the name of the railroad and a few immaterial words, identical with the corresponding sections of the Atlantic & Pacific act of July, 1866

    On March 30, 1872, the railroad company filed a map of its general route through the territory of Dakota, and the local land office was thereupon directed to withhold from sale or location all the odd-numbered sections within the place limits of 40 miles, as designated on such map. On June 11, 1873, the company having filed a map of the definite location of its line, the local land office was directed to withhold from sale, or entry, all the odd-numbered sections within the 50 mile limits. This action was taken pursuant to the practice at that time prevailing in the General Land Office.

    The land in dispute was more than 40, but within 50, miles of the line of definite location; that is, was within the indemnity limits, and the controlling question in the case was whether it was competent for the Secretary of the Interior to withdraw [183 U.S. 675, 683]   the odd-numbered sections within such indemnity limits; that is, between the 40 and 50 mile limits.

    Hewitt settled upon the land April 10, 1882, more than a year before the withdrawal was made, and it was not until March 19, 1883, that the railroad company filed in the local land office its selection of land, embracing the land in dispute within the indemnity limits.

    On April 4, 1883, Hewitt submitted his final proofs for the land, tendered the price, and demanded a patent; but his proof was rejected on the ground that the land had been withdrawn from entry under the act of July 2, 1864. Hewitt appealed to the Commissioner of the General Land Office, who affirmed the decision of the local land office, October 5, 1883. He was ousted of his possession the following year by the defendant Schultz, who had taken a deed from the railroad company. On August 15, 1887, the order of withdrawal of the indemnity lands was revoked, and, upon a review by the Commissioner of the General Land Office of his former decision, the ruling of the local land office was set aside, Hewitt's final proofs admitted, and the selection by the railroad held for cancelation. The company appealed from the decision in favor of Hewitt to the Secretary of the Interior, who affirmed the decision of the Commissioner, and a patent was issued to Hewitt, June 22, 1895.

    It was contended upon the argument in this court that the words 'the odd sections of land hereby granted,' used in the 6th section, referred to the lands described in the '1st' (3d) section of the act; that is, to those within the place limits, which were free from pre-emption and other claims, and unappropriated prior to the definite location of the road; and that, as to 'all other lands on the line of said road, when surveyed,' the act expressly declared that the pre-emption and homestead acts should extend to them; 'that Congress took pains to declare that it did not exclude from the operation of those statutes any lands except those granted to the company in the place limits of the road which were unappropriated when the line of the railroad was definitely fixed; and that if at the time such line was 'definitely fixed,' it appeared that any of the lands, granted, that is, lands in the place limits, had been sold, granted, [183 U.S. 675, 684]   or otherwise appropriated, then, but not before, the company was entitled to go into the indemnity limits beyond the 40 mile and within the 50 mile line, and under the direction of the Secretary of the Interior, and not otherwise, select odd-numbered sections to the extent necessary to supply the loss in the place limits.'

    The court, treating the question as one of grave doubt, based its views largely upon the practice of the Land Office since 1888, and of the opinions of Secretary Lamar in the Atlantic & P. R. Co. 6 Land Dec. 84, and of Secretary Vilas in Northern P. R. Co. v. Miller, 7 Land Dec. 100. The opinion of Secretary Lamar indicated that some of his predecessors had assumed that the power to withdraw lands within the indemnity limits could be exercised upon a definite location of the railroad before the loss in the place limits had been ascertained, but treating it as an original proposition, he thought the words of the act, 'that the odd-numbered sections of land hereby granted shall not be liable to sale, or entry, or pre-emption.' indicated clearly the legislative will that none other should be withdrawn than the odd-numbered sections within the granted limits. Mr. Secretary Vilas, considering the same subject, said: 'In my opinion,-and it is with great deference that I present it,-the granting act not only did not authorize a withdrawal of lands in the indemnity limits, but forbade it. The difference betwen lands in the granted limits and land in indemnity limits, and between the time and manner in which the title of the United States changes to and vests in the grantee, accordingly as lands are within one or the other of these limits, has been clearly defined by the supreme court, and it is sufficient to state the well-settled rules upon this subject.'

    The same question arose in Northern P. R. Co. v. Davis, 19 Land Dec. 87, and in Northern P. R. Co. v. Ayers, [24 Land Dec. 40], wherein Secretaries Smith and Francis expressed their concurrence in the views announced by Secretaries Lamar and Vilas.

    The court rested its decision largely upon this concurrence of views and long-continued practice of the Land Department, and summed up its opinion in the following words: 'If this were [183 U.S. 675, 685]   done' (that construction overthrown), 'it is to be apprehended that great, if not endless, confusion would ensue in the administration of the public lands, and that the rights of a vast number of people who have acquired homes under the pre-emption and homestead laws, in reliance upon the ruling of Secretary Vilas and his successors in office, would be destroyed . . . . If the practice in the Land Department could, with reason, be held to have been wrong, it cannot be said to have been so plainly or palpably wrong as to justify the court, after the lapse of so many years, in adjudging that it had misconstrued the act of July 2, 1864.'

    It is attempted to distinguish the case under consideration from that of Hewitt v. Schultz, by the fact that the land in controversy in this case is within the indemnity limits of a grant to a railroad passing through a state, and within the department's withdrawal of a 30-mile strip under the 6th section of the act, while the land in the Hewitt Case fell within the indemnity limits of the grant within a territory, and was beyond the 40-mile withdrawal, and was not withdrawn from sale by the 6th section, but was expressly declared to be still subject to the operations of the preemption laws. It is true that the lands withdrawn in that case lay within a territory and outside of the 40-mile strip required to be surveyed, while in this case the withdrawal of all the lands within the 30- mile strip operates as a withdrawal of all lands within the indemnity, as well as within the place limits, because the line ran through a state instead of a territory. But the real question is not whether the indemnity lands lay within or beyond the 40-mile limit, but whether the withdrawal can operate upon indemnity lands at all. It makes no difference in principle whether the indemnity lands are within or beyond the 40-mile limit, which is not a limit of withdrawal, but of survey, and the whole argument in Hewitt v. Schultz is directed to the question whether it is within the power of a Secretary of the Interior to withdraw indemnity, as well as place lands from settlement. The quantity of lands to be surveyed seems to have been arbitrarily fixed by Congress, with little attention to the actual limits of the grant, so as to include all lands within 40 miles of each side of the railroads, that is, 10 miles beyond the indemnity limits within the states, but [183 U.S. 675, 686]   10 miles inside of those limits within the territories; but the question of withdrawal is not necessarily dependent upon the question of survey, and the fact that in that case the indemnity lands were beyond the 40-mile limit was an incident, rather than a dominant fact. As said by Mr. Secretary Lamar: 'It is manifest that the said act gave no especial authority or direction to the executive to withdraw said lands, and when such withdrawal was made it was done by virtue of the general authority over such matters possessed by the Secretary of the Interior and in the exercise of his discretion.' The power of the Secretary to withdraw lands is exercised for the purpose of carrying out the grant to the railroad, and to prevent lands covered by said grant from being taken up by settlers before the road is completed and the patents issued to the company; but clearly that power cannot be exercised to withdraw lands which are beyond the intended limits of the grant. It was said by Secretary Smith to have been exercised for many years, 'but the right of this asserted power on the part of the executive is involved in obscurity.' Northern P. R. Co. v. Davis, 19 Land Dec. 87, 88.

    That the object of 6 was to direct a survey, and not a withdrawal of lands within the 40-mile strip, seems to have been the opinion of this court in St. Paul & S. C. R. Co. v. Winona & St. P. R. Co. 112 U.S. 720 , 28 L. ed. 872, 5 Sup. Ct. Rep. 334, in which Mr. Justice Miller, delivering the opinion, says, p. 732, L. ed. p. 876, Sup. Ct. Rep. p. 341:

    If the command of the statute were to withdraw from the market, instead of survey, all odd-numbered sections within the 40-mile strip, the position of the railroad company in this case would be impregnable; but as the withdrawal only extends to the lands 'hereby granted,' we must look elsewhere to ascertain the meaning of those precise words. There is good reason for withdrawing lands within the place limits, since these lands already belong to the railroad company, as soon as they are identified by the location of the line, while lands within the indemnity limits may never be required at all, and in most cases are required only to a limited extent. Undoubtedly the company acquires title to both classes of lands by the 3d section of the granting act; but it acquires a title to lands within the place limits by a present grant; but to land within the indemnity limits, only by a future power of selection. In both cases the statute is the origin of the title; but in the one case it gives instantaneously; in the other it is a mere promise to give in the future, and requires the action of the railroad to perfect it. The words 'hereby granted' evidently refer to the former.

    Treating this case as a reargument of the question involved in Hewitt v. Schultz, and it practically comes to that, we still adhere to the principle there announced. It seems to us the more reasonable, if not the necessary, inference to be deduced from the language of 3 and 6. By the former there is [183 U.S. 675, 688]   'hereby granted . . . every alternate section of public land, not mineral, designated by odd numbers, to the amount of twenty alternate sections per mile on each side of said railroad line, as said company may adopt, through the territories of the United States, and ten alternate sections of land per mile on each side of said railroad whenever it passes through any state.' These words terminate the grant, the remainder of the clause being immaterial in this connection, and if the whole clause had been followed by a period, instead of a semicolon, the meaning, perhaps, would have been clearer. But there follows another clause, that 'whenever, prior to said time, any of said section, or parts of sections, shall have been granted, sold, reserved, occupied by homestead settlers, or pre-empted, or otherwise disposed of, other lands shall be selected by said company in lieu thereof, under the direction of the Secretary of the Interior, in alternate sections, and designated by odd numbers, not more than 10 miles beyond the limits of said alternate sections,' etc. There is here a clear distinction between the lands granted in procsenti in the first clause, and lands to be thereafter selected by the company, whenever the deficiency in the granted lands shall be ascertained.

    The 6th section carries out the same idea. It requires a survey of 40 miles in width on both sides of the entire line, whether passing through states or territories. This would include only the granted or place limits within a territory, but within a state would cover the indemnity limits as well. There was no order in the act to withdraw any lands from settlement or sale, but such withdrawal seems to have been made in pursuance of the practice of the Interior Department, and for the purpose of preventing lands granted to the railroad company from being taken up by settlers, before the completion of the line and the final issue of patents. As was said by Mr. Secretary Lamar in the Atlantic & P. R. Co. 6 Land Dec. 84: 'Waiving all questions as to whether or not said granting act took from the Secretary all authority to withdraw said indemnity limits from settlement, it is manifest that the said act gave no special authority or direction to the executive to withdraw said lands; and when such withdrawal was [183 U.S. 675, 689]   made it was done by virtue of the general authority over such matters possessed by the Secretary of the Interior, and in the exercise of his discretion; so that, were the withdrawal to be revoked, no law would be violated, no contract broken.' But as the power to withdraw extends only to the 'lands hereby granted' and all other lands, except those hereby granted, remain open to settlement, we are thrown back upon 3 to determine what are the lands 'hereby granted.'

    Now, as already observed, there is a clear distinction in 3 between granted lands and lands to be selected after the deficiency in the granted lands has been ascertained. It is true that, prior to this selection being made, many of these indemnity lands may be taken up, and an insufficient amount left for the railroad (and we do not deny the force of the dissenting opinion in Hewitt v. Schultz in that connection), but we think this possibility serves rather as a basis for a further action by Congress, such as was made in the Northern Pacific case by the joint resolution of May 31, 1870 (16 Stat. at L. 378), than as a reason for withdrawing from settlement a vast amount of land which the railroad may never have occasion to require. It was said by Secretary Lamar in the case of the Atlantic & P. R. Co. 6 Land Dec. 84, 87: 'As to the lands within the indemnity limits, the contract was based upon two contingencies; that of losing lands within the granted limits, and being able to find sufficient to indemnify the company among the odd-numbered sections within a further limit of 10 miles. Here the interest of the company was so remote and contingent, being a mere potentiality, and not a grant, that Congress declined to order a withdrawal for the benefit of the same, or even a survey within the territories.' In view of the constant trend of population toward the western territories, it is a serious matter to withdraw these enormous tracts from settlement and hold them, as it were, in mortmain against the protest of those who stand ready to enter upon and possess them.

    It becomes still more serious when, as in this case, there was a delay of twenty-seven years between the granting act and the act of selection. It seems intolerable that a settler, who had entered and paid for lands in good faith, should be liable to an [183 U.S. 675, 690]   ouster after a possible lapse of twenty-seven years, when the very improvements he may have put upon the lands might be the reason for their selection by the company.

    We are therefore of opinion that the act of July 27, 1866, did not authorize the withdrawal by the Secretary of the Interior of the indemnity lands, that such lands remained open to homestead and pre-emption entry, and that patents issued to settlers within such indemnity limits, based upon the entries made prior to the selection by the railroad company, approved by the Interior Department, were valid as conveyances of the land as against the selection by the railroad company.

    The judgment of the Supreme Court of California is therefore affirmed.

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