172 U.S. 589
NORTHERN PAC. RY. CO.
MYERS, Treasurer of Jefferson County, Mont.
January 23, 1899. [172 U.S. 589, 590] This suit involves the validity of a tax, levied under the laws of the state of Montana, against certain lands lying within the grant to the Northern Pacific Railroad Company, made by the act of congress approyed July 2, 1864, c. 217 (13 Stat. 365).
It was brought in the circuit court of the United States for the district of Montana, by the receivers of the Northern Pacific Railroad Company, a federal corporation, and the receivers were appointed by a decree of the federal court.
The suit proceeded in the circuit court, in the name of said receivers, to a hearing on demurrer, and to a submission of the case upon bill, answer, and stipulated facts. On the 12th of November, 1896, it was stipulated and represented to the court that the Northern Pacific Railway Company had purchased the property in question pending the litigation, and it was agreed, and thereupon ordered by the court, that the Northern Pacific Railway Company be substituted as plaintiff in place of the receivers. Thereupon a decree was passed, on the 16th day of December, in favor of the complainant, enjoining the enforcement and collection of the taxes. From this [172 U.S. 589, 591] decree the defendant, William Myers, county treasurer, appealed to the circuit court of appeals, which reversed the decree of the circuit court. Myers v. Railway Co., 48 U. S. App. 620, 28 C. C. A. 412, and 83 Fed. 358. The plaintiff railway company takes this appeal.
It was agreed 'that the sole question desired to be submitted upon the pleadings, and this stipulation, is whether the lands described in the bill were subject to taxation under the laws of the United States and of the state of Montana.' This being the only question submitted, the allegations of the pleadings and statements of the stipulation not bearing on that question need not be stated; and it is sufficient to note that the bi l and stipulation showed the incorporation of the Northern Pacific Railroad Company by the act of July 2, 1864; its power to construct a railroad from Lake Superior to Puget Sound; the grant of land to it by section 3, which is quoted hereafter; the performance by the railroad company of all the conditions of the grant, both provisional and final, including the construction of the road and its acceptance by the United States; and the freedom of the lands from pre-emption claims and rights.
Prior to the attempted assessments and tax levies assailed, the lands were surveyed by the United States or its authority, and were reported by the surveyors making such surveys to be agricultural lands, nonmineral in character; and the company prepared, in the manner prescribed by the secretary of the interior, lists of the lands claimed by it under the grant, including the lands in controversy, and filed them in the proper district land office, paying the fees thereon; and attached to each of said lists was an affidavit of the land commissioner of the railroad company, in which it was affirmed 'that the foregoing list of lands which I hereby select is a correct list of a portion of the public lands claimed by said Northern Pacific Railroad Company as inuring to the said company' under its grant by the act of congress of July 2d, and a joint resolution approved May 31, 1870, and 'that the said lands are vacant, unappropriated, and are not interdicted mineral or reserve lands, and are of the character contemplated by the [172 U.S. 589, 592] grant, being within the limit of forty miles on each side of the line of route for a continuous distance of _____, being a portion of said lands for a section of ___ miles of said railroad, commencing at _____ and ending at _____.'
The said lists were duly filed, and their accuracy tested by the district land officers, and so certified, and it was also certified that the filing was allowed, that they were surveyed public lands within the limits of the grant, 'and that the same are not, nor is any part thereof, returned and denominated as mineral land or lands.' It was also certified that no claims were on file against the lands, and that the fees were paid.
The lists were transmitted to the office of the commissioner of the general land office.
The stipulation shows the manner of examination in the land office, and 'that such lands are not patented or certified to the company until clear lists are approved by the secretary'; and the lists have not yet been examined or passed or patented to the company, and that the mineral or nomineral character is under investigation under the provisions of the act of congress of February 26, 1895, c. 131 (28 Stat. 683).
The company has such right, title, interest, and property in the lands as was conferred upon it by the act of July, 1864, and the act and joint resolutions amendatory thereof, and acquired by a compliance with their terms.
One Thomas G. Merrill, a citizen of Montana, transmitted to the secretary of the interior a letter, signed by Thomas G. Miller, as chairman citizens' executive committee, declaring that the selections of the railroad company embraced thousands of recorded mineral claims, and extensive mining properties being prospected, developed, and worked; 'and, in view of the irreparable injury which would be caused to the people and state of Montana by the premature or unlawful conveyance of title to such lands to the railroad company, I beg leave to formally file the following requests:
Thomas G. Miller,
November 4, 1889, the secretary of the interior referred said letter to the commissioner of the general land office, with the following indorsement: 'Referred to Commissioner of Gen'l Land Office, with approval of within requests, and direction to comply thereunto. Please notify me when done. Nov. 4, '89. J. W. Noble, Sec'y.'
This order was not revoked prior to 1895
The company and its receivers have been diligent to prosecute the identification of the lands, and the defendant, conceding this, denies that they have not been or are not fully defined and identified as part of the grant to the company.
Three commissioners were appointed, as provided in the act of February 26, 1895, and commenced the examination and classification of said lands during the year 1895, and have classified certain of the lands as mineral, a list of which is inserted, and that the remainder of the lands have not been examined and classified; and it was admitted that other lands, a list of which is given, are in contest in the interior department, and that a certain section of land was decided in 1894, but subsequent to the assessment, to be mineral, and excepted from the grant, and that there were other lands to which there were claims, but which were disputed by the company, and that some contests were decided in favor of the company.
In the year 1894, the assessor of Jefferson county, Mont., [172 U.S. 589, 594] proceeded to, and did, assess the lands described in the complaint herein, in the manner and form prescribed by law, and described and included said lands in the assessment book of said county of Jefferson for said year.
The receivers appeared before the board of equalization, and objected to the assessment, and the board refused to strike the lands from the assessment roll, and the taxes were assessed and levied against the lands with the other lands of the county; that the tax proceedings were in manner and form in all respects as required by the laws of Montana; that the taxes amounted to $3,000, and that the treasurer of the county was proceeding to collect the same by sale, and would so collect the same if not enjoined and restrained by the order of the court.
As a ground of relief by injunction, the bill alleges: 'And your orators show that said tax levies cloud the title to said described lands, and impair the value thereof as an asset in the hands of your orators; that said certificates and deeds, when issued, as your orators believe and show they will be, will constitute further clouds upon the title thereto; that if said lands be sold, a multiplicity of suits will be necessary to quiet the title thereto, and to remove the clouds thereby created.'
Among the things which were asked to be adjudged at the final hearing, were:
Section 3 of the act of July 2, 1864, is as follows:
Section 4 provides for the issuing of patents on the completion and acceptance of each 25 consecutive miles of said railroad and telegraph line.
The assignment of errors is as follows:
C. W. Bunn and A. B. Browne, for appellant.
C. B. Nolan, for appellee.
Mr. Justice McKENNA, after stating the facts in the foregoing language, delivered the opinion of the court.
The averments in the bill of complaint and the stipulation [172 U.S. 589, 597] of facts show a controversy between the railroad company and the interior department as to the character of the lands, whether mineral or nonmineral, taxed by the state of Montana, and the company avers 'that, at the time of said attempted assessments and tax levies, said lands ... had not been, and are not now, certified or patented to said railroad company, and the said lands were not ascertained or determined to be a part of the lands granted to said company, nor were they segregated from the public lands of the United States, and the said railroad company had and has but a potential interest therein.' And part of the relief prayed for was 'that the lands be adjudged not subject to assessment and taxation by said county of Jefferson or by the state of Montana for the year 1894, and until the United States shall issue to said railroad company patents therefor.'
A similar claim was denied by the circuit court of appeals for the Ninth circuit in Railroad Co. v. Wright, 7 U. S. App. 502, 4 C. C. A. 193, and 54 Fed. 67, and by this court in Central Pac. Ry. Co. v. Nevada, 162 U.S. 512 , 16 Sup. Ct. 885. It is, however, now conceded that the railroad has a taxable interest, counsel for appellant saying:
In Railroad Co. v. Prescott, 16 Wall. 603, Railroad Co. v. McShane, 22 Wall. 444, and Northern Pac. R. Co. v. Traill Co., 115 U.S. 600 , 6 Sup. Ct. 201, it was decided that lands sold by the United States might be taxed before they had parted with the legal title by issuing a patent. But this principle, it was said, must be understood to be applicable only to cases where the right to the patent was complete, and the equitable title was fully vested in the party, without anything more to be paid or any act to be done going to the foundation of his right. In the first case, the court said two acts remained to be done which might wholly defeat the right to the patent: (1) The payment of the cost of surveying; (2) a right of pre-emption, which would accrue if the company did not dispose of the lands within a certain time. The dependency of the right of taxation on the first condition was affirmed with the principle announced in Railroad Co. v. McShane. The dependency of the right of taxation on the second ground was expressly overruled.
Embarrassment to the title of the United States by a sale of the land for taxes seems to have been the concern and basis of those cases. This embarrassment was relieved, and congress purmitted taxation by the act of July 10, 1886. By that act it is provided: 'That no lands granted to any railroad corporation by any act of congress shall be exempted from taxation by states, territories and municipal corporations on account of the lien of the United States upon the same f r the costs of surveying, selecting and conveying the same, or because no patent has been issued therefor; but this provision shall not apply to lands unsurveyed: Provided, [172 U.S. 589, 599] that any such land sold for taxes shall be taken by the purchaser subject to the lien for costs of surveying, selecting and conveying, to be paid in such manner by the purchaser as the secretary of the interior may by rule provide, and to all liens of the United States, all mortgages of the United States, and all rights of the United States in respect to such lands: Provided further, that this act shall apply only to lands situated opposite to and coterminous with completed portions of said roads and in organized counties: Provided further, that at any sale of lands under the provisions of this act the United States may become the preferred purchaser, and in such case the land sold shall be restored to the public domain and disposed of as provided by the laws relating thereto.' 24 Stat. 143, c. 764.
This act was interpreted in Central Pac. R. Co. v. Nevada, supra. The lands involved were classified in the opinion as follows: (1) Those patented; (2) those unsurveyed; (3) those surveyed, but unpatented, upon which the cost of surveying had been paid; and (4) like lands upon which the cost of survey had not been paid. Applying the statute, Mr. Justice Brown, speaking for the court, said: 'The principal dispute is with regard to the fourth class. ... In view of the statute, it is difficult to see how these lands, which are the very ones provided for by the statute, can escape taxation, if the state chooses to tax them.'
This case establishes that the state may tax the surveyed lands, mineral or agricultural, within the place limits of the grant, and there is nothing in the case nor its principle which limits the assessment to an interest less than the title,-that distinguishes the lands from a claim to them. The statute of Nevada defined the term 'real estate' to include 'the ownership of, or claim to, or possession of, or right of possession to any lands'; and the supreme court of the state had decided that, to constitute a possessory claim, actual possession was necessary, and, on this account, distinguished in some way surveyed from unsurveyed lands. It was urged that the distinction was not justified, and that the necessity of actual possession applied alike to both kinds, and exempted both kinds from taxation, and hence it was insisted there was nothing to [172 U.S. 589, 600] tax unless the title was taxed, and that this could not be done under the decisions of this court. To this contention the opinion replied that how the interest of the railroad should be defined was not a federal question, nor did inaptitude of definition by the supreme court of the state or in the application of the definition raise a federal question. 'Taxation of the lands by the state,' it was said, 'rested upon some theory that the railroad had a taxable interest in them. What that interest was does not concern us so long as it appears that, so far as congress is concerned, express authority was given to tax the lands.'
If this case leaves us any concern, it is only to inquire what assessable interest passed by the grant. It is not necessary to detail the cases in which this court has held that railroad land grants are in praesenti of land to be afterwards located. This principle reached the fullest effect and application in Deseret Salt Co. v. Tarpey, 142 U.S. 241 , 12 Sup. Ct. 158, in which it was held that the legal title passed by such grants, as distinguished from merely equitable interests, and an action of ejectment was sustained by a lessee of the Central Pacific Railroad Company before patent was issued. But, in Barden v. Railroad Co., 154 U.S. 288 , 14 Sup. Ct. 1030, in a similar action, recovery was denied to the Northern Pacific Railroad Company on the ground that mineral lands were not conveyed by the grant to it, but were 'specifically reserved to the United States, and excepted from the operations o the grant.'
The accommodation of these cases is not difficult. In the Barden Case there was a concession that the land was mineral, and there was an attempted recovery of valuable ores. In the Deseret Case there was no such concession, and the primary effect of the grant prevailed. In the case at bar there is no such concession, and the primary effect of the grant must prevail. There is no presumption of law of what kind of lands the grant is composed. Upon its face, therefore, the relation of the railroad to every part of it is the same, and, on the authority of Deseret Salt Co. v. Tarpey, ejectment may be brought for every part of it. The action, of course, may be [172 U.S. 589, 601] defeated; but it may prevail, and a title which may prevail for the company in ejectment surely may be attributed to it for taxation, to be defeated in the latter upon the same proof or concession by which it would be defeated in the former. An averment that there is a controversy about the character of lands not yielded to, an expression of doubt about it not acted on, is not sufficient. This view does not bring the railroad company to an unjust dilemma. The company has the title, or nothing; in response to its obligations to the state, it must say which. If it have the title to any of the lands, this title cannot be diminished to a claim or an interest because it has not, or may not have, title to others. If there is uncertainty, it must be resolved by the railroad. Suppose, to use the language of counsel, 'neither the assessor nor the railway company can place its hand on a single specific parcel, and say whether it belongs to the company or to the United States.' We nevertheless say again, as we said, by the chief justice, in Railroad Co. v. Patterson, 154 U.S. 130 , 14 Sup. Ct. 977: 'If the legal or equitable title to the lands or any of them was in the railroad, then it was liable for the taxes on all or some of them, and the mere fact that the title might be in controversy would not appear, in itself, to furnish sufficient reason why the railroad should not determine whether the lands or some of them were worth paying taxes on or not.'
That the Barden Case does not preclude state taxation of the lands is also manifest from its expression. Mr. Justice Field, who delivered the opinion of the court, in answer to the contention that its doctrine would have that effect, said: 'So also it is said that the states and territories through which the road passes would not be able to tax the property of the company, unless they could tax the whole property, minerals as well as lands. We do not see why not. The authority to tax the property granted to the company did not give authority to tax the minerals, which were not granted. The property could be appraised without including any consideration of the minerals. The value of the property, excluding the minerals, could be as well estimated as its value [172 U.S. 589, 602] including them. The property could be taxed for its value to the extent of the title, which is of the land.'
The averment of the answer is that this was done; that the lands were assessed and taxed for their value as agricultural lands, without including the minerals in them. The replication put this in issue, but the stipulation of facts does not explicitly notice it, but probably was intended to cover it by the agreement that the assessment was made in the manner and form required by the laws of Montana.
We are referred to the act of congress of February 26, 1895, c. 131, entitled. 'An act to provide for the examination and classification of certain mineral lands in the states of Montana and Idaho' (28 Stat. 683), as strengthening the contention of appellants. We do not think it does. It was passed after the time at which the validity of the assessment complained of must be determined. Besides, it does not purport to define the rights of the railway company in any particular with which we are now concerned. It furnishes the secretary of the interior with another instrumentality,-not bringing the lands to different judgment, but to an earlier judgment.
Discovering no error in the decree of the circuit court of appeals, it is affirmed.
Mr. Justice BREWER, Mr. Justice SHIRAS, Mr. Justice WHITE, and Mr. Justice PECKHAM dissented.