[Statement of Case from pages 600-603 intentionally omitted]
The opinion of the court was delivered by: Miller, C. J.
W. P. Clough, for appellant, Northern Pac. R. Co.
M. S. Wilkinson, for appellee, Iver L. Rockne, County Treasurer, etc.
[Argument of Counsel from pages 603-606 intentionally omitted]
This is an appeal from a decree of the supreme court of the territory of Dakota. A suit was brought by the appellant in the district court of Traill county for the purpose of enjoining the authorities of that county from enforcing the collection of taxes assessed on lands of the company, on the ground that, by law and the acts of congress to be hereafter considered, they were not subject to taxation. The district court made a finding of the facts in the case, on which it declared the law to be for the defendant, and dismissed the bill. On appeal to the supreme court of the territory, the case was twice argued, and, though the membership of that court was changed by the substitution of two new judges for two retiring judges between the two hearings, the court was, in each instance, equally divided, and the judgment it rendered of affirmance had but the assent of two judges out of the six who had heard it argued.
The railroad company claims that the lands in question are not taxable under the decisions of this court in the cases of Railway Co. v. Prescott, 16 Wall. 603, and Railway Co. v. McShane, 22 Wall. 444. In those cases taxes levied on lands granted by congress to aid in building the roads were held to be void by reason of the fact that neither the companies, nor any one for them, had paid to the United States the costs of surveying those lands by the government. The taxes in the first case had been levied by authorities of the state, under the laws of Kansas, and in the second by like authorities of the state of Nebraska. These lands had originally been granted to the Union Pacific Railroad Company and other companies, to aid in building a road from the Iowa state line to the Pacific ocean, by an act of congress approved July 1, 1862. The company to which the grant was made for the branch of the road in Kansas was already in existence, and the company which received the grant to build the main road, namely, the Union Pacific Railroad Company, was chartered by this act, and the corporators immediately organized under it. In the year 1864 (July 2d) congress, by an amendatory act, made additional grants to the companies, and made several changes in the charter or original act, one of which, found in section 21, reads as follows: 'That before any land granted by this act shall be conveyed to the said company or party entitled thereto, * * * there shall first be paid into the treasury of the United States the cost of surveying, selecting, and conveying the same, by said company or party in interest, as the titles shall be required by said company.' 13 St. 365.
In the case of Railway Co. v. Prescott, which was a writ of error to the supreme court of Kansas, this court held these lands could not be assessed and sold for taxes under state laws until this cost of surveying them was paid to the United States, because the government retained the legal title to the same to compel this payment. The case was decided in 1872. In 1874 the case of Railway Co. v. McShane came before us, involving the same question, and because it also involved some other points decided in Railway Co. v. Prescott, which the court reconsidered and overruled, it necessarily received full consideration, the result of which was to reaffirm the proposition that, until the United States was reimbursed for the expenses of the survey of those lands, they were not subject to state taxation.
By an act approved also July 2, 1864, (13 St. 365,) congress passed a law chartering the Northern Pacific Railroad Company to construct a road from Lake Superior to Puget's sound, on the Pacific coast, by the northern route, and made a munificent grant of the public lands to aid in this construction. The terms of the grant and its conditions were much the same as the original grant of 1862 to the Union Pacific Company and its branches. It contained the following provisions: 'Sec. 20. And be it further enacted, that the better to accomplish the object of this act, namely, to promote the public interest and welfare by the construction of said railroad and telegraph line, and keeping the same in working order, and to secure to the government at all times (but particularly in time of war) the use and benefits of the same for postal, military, and other purposes, congress may at any time, having due regard for the rights of said Northern Pacific Railroad Company, add to, alter, amend, or repeal this act.' And in 1870, when making the appropriation for the survey of these lands within the limit of the grant to the Northern Pacific Railroad Company, congress added this proviso: 'That before any land granted to said company by the United States shall be conveyed to any party entitled thereto under any of the acts incorporating or relating to said company, there shall first be paid into the treasury of the United States the cost of surveying, selecting, and conveying the same by the company or party in interest.' 16 St. at Large, 305. It will be seen that this language is almost identical with section 21 of the act of 1864 concerning the lands granted to the Union Pacific Company, which was construed in Railway Co. v. Prescott and in Railway Co. v. McShane. As the principle of the exemption of these lands from taxation until the costs of surveying them was paid received the full consideration of the court in two cases argued and decided two years apart, and as it received the unanimous approval of the court, it must govern the present case, unless a distinction can be shown.
Such distinction is relied on, and has received the support of a decision of the supreme court of Minnesota in the case of Cass Co. v. Morrison, 28 Minn. 257, S. C. 9 N. W. Rep. 761. It is there held that the company having built its road and earned the lands, had thereby acquired a complete equitable title, with right to demand a patent, though the costs of survey had not been paid, and this equitable title was subject to taxation. It was also held that, because the requirement to pay these costs was made in 1870, six years after the original grant, it was void as an unconstitutional exercise of power by congress. But we think that the clause authorizing congress 'to add to, alter, amend, or repeal the act of 1864,' clearly conferred this power on congress, especially when exercised, as in this instance, before the company had built a mile of road, or earned an acre of land, or in any other manner secured an equitable right to the lands. Sinking Fund Cases, 99 U. S. 719. But this very question, in a little different form, was raised and decided in Railway Co. v. Prescott, 16 Wall. 608. In that case the original grant, made in 1862, contained no provision about the payment of the costs of survey. The act of 1864, which did contain this provision, added very largely to the area of the land granted by the act of 1862, and the opening sentences of the opinion state the proposition whether the requirement that the costs of surveying must be paid before the patent shall issue covers all of both grants or only that of 1864; and it is held that it covers both. We think this governs the present case. Independently of the clause of the act of 1864 authorizing amendments, additions, and repeals, we think that, until the lands were earned, and other acts that the law demanded that the company should do had been done, it had no such right in the lands as would prevent congress from passing a remedial provision so eminently just as the one under consideration.
Again, it is said that, since the road was built before this tax was levied and the company had earned the land, its equitable title was complete, and, according to the decisions of this court, it was subject to taxation. The same point was urged in Railway Co. v. Prescott. But the court said that 'this doctrine was only applicable to cases where the right to the patent is complete, the equitable title fully vested, without anything more to be paid or any act to be done going to the foundation of the right.' But it added, in that case, that two important acts remained to be done, the failure to do which might wholly defeat the company's title. One of these was payment of the costs of surveying. It may be well to restate the grounds on which this decision rests. The United States made a magnificent grant to this company of lands equal in quantity to forty or fifty thousand square miles, an area as large as an average state of the Union. It thought proper to require of the grantee the payment of the costs of making the surveys necessary to the location and ascertainment of these lands. To secure the payment of those expenses, it decided to retain the legal title in its own hands until they were paid. The government was, as to these costs, in the condition of a trustee in a conveyance to secure payment of money. But, if the land was liable to be sold for taxes due to state, territorial, or county organizations, this security would be easily lost. No sale of land for taxes, no taxes can be assessed on any property, but by virtue of the sovereign authority in whose jurisdiction it is done. If not assessed by direct act of the legislature itself, it must, to be valid, be done under authority of a law enacted by such legislature. A valid sale, therefore, for taxes, being the highest exercise of sovereign power of the state, must carry the title to the property sold, and if it does not do this, it is because the assessment is void.
It follows that, if the assessment of these taxes is valid and the proceedings well conducted, the sale confers a title paramount to all others, and thereby destroys the lien of the United States for the costs of surveying these lands. If, on the other hand, the sale would not confer such a title, it is because there exists no authority to make it. At all events, the holder of the equitable title to these lands has a right to prevent a sale which would have the effect of impeding the United States in the assertion of her right to them until these costs are paid. We are aware of the use being made of this principle by the companies, who, having earned the lands, neglect to pay these costs in order to prevent taxation. The remedy lies with congress, and is of easy application. If that body will take steps to enforce its lien for these costs of survey, by sale of the lands or by forfeiture of title, the treasury of the United States would soon be reimbursed for its expenses in maxing the surveys, and the states and territories, in which the lands lay, be remitted to their appropriate rights of taxation. The courts can do no more than declare the law as it exists.
The decree of the supreme court of the territory of Dakota is reversed, and the cause remanded, with directions to cause a decree to be entered perpetually enjoining the treasurer of Traill county from any further proceeding to collect the taxes in the bill mentioned.
© 1992-2012 VersusLaw ...