haeuser
v.

(195 U. S. 480)

WALDO A. AVERY et al.

Public lands-railroad land grants-conflicting claims-vested rights-court's interference with Land Department.

is here meant has not been changed. By | JOHN A. HUMBIRD and Frederick Weyerthe decisions of this court, which are collected in the opinion delivered in Forsyth v. Vehmeyer, 177 U. S. 177, 180, 44 L. ed. 723, 725, 20 Sup. Ct. Rep. 623, it was held, reviewing the former cases in this court, that, under the act of 1867, the fraud referred to meant positive fraud, or fraud in fact, involving moral turpitude or intentional wrong, and not implied fraud, 1. which may exist without an imputation of bad faith. "Such a construction of the statute," it was said in Neal v. Clark, 95 U. S. 704, 709, 24 L. ed. 586, 587, "is consonant with equity, and consistent with the object and intention of Congress in enacting a general law by which the honest citizen may be relieved from the burden of hopeless insolvency. A different construction would be inconsistent with the liberal spirit which pervades the entire bankrupt system." This language, we think, equally applies to the present case. The difference is that, under the act of 1898, claims for fraud prosecuted to judgment will not be exempted. The reason for this change, as suggested by Mr. Justice Brown, in delivering the opinion in Crawford v. Burke, may be that Congress did not intend to offer any inducement to change unliquidated claims into actions for fraud, and therefore limited the exception from the operation of the discharge to such 2. A waiver of the objection that vested rights

cases only as had been litigated and reduced to actual judgment. When such is the case we think a correct interpretation of the law does not require a close examination into the form of the action to determine whether technically it is one ex delicto or otherwise, but the real question is, Was the relief granted in the judgment based upon actual, as distinguished from constructive, fraud of the bankrupt? If the judgment is thus founded, whatever the form of the action, it is the intent and purpose of the law that the bankrupt shall not be discharged from it, but shall still rest under its obligation, so far as the bankrupt law is concerned.

As thus interpreted, we think there can be no question that the judgment rendered in this case was based upon the fraud of Bullis and Barse. The facts charged and found showed false and fraudulent representations as to the character of the property which was to be the security of those who should purchase the bonds, and resulted in depriving them wrongfully of valuable rights. These findings were held sufficient in the state tribunals to warrant relief on the ground of fraud, and the judgment in this case is, in our opinion, in an action for fraud within the meaning of the bankrupt law.

The judgment of the Supreme Court of New York is, therefore, affirmed.

3.

Sales or contracts made by the Northern Pacific Railway Company after its acceptance of the act of July 1, 1898 (30 Stat. at L. 597, 620, chap. 546), cannot defeat the operation of the provisions of that act, enacted to settle disputes arising out of conflicting rulings in the Land Department with reference to the eastern terminus of the railroad as affecting the Northern Pacific land grant, by permitting any purchaser or settler claiming, in good faith, under any law of the United States or ruling of the Land Department, any land so situated that a right thereto in the railroad grantee or its successor in interest attached by reason of definite location or selection, to elect whether to retain or transfer his claim, and requiring the Secretary of the Interior to furnish the company with a list of the lands so retained, and allowing the company to select other lands in lieu thereof upon executing a proper relinquishment, although the statute contains a provision that the railroad grantee or its successor in interest shall not be bound to relinquish lands sold or contracted by it.

of the railroad company under the Northern Pacific land grant are interfered with by the provisions of the act of July 1, 1898, enacted to settle disputes arising out of conflicting rulings in the Land Department with reference to the eastern terminus of the railroad as affecting its land grant, results from the acceptance of that act by the successor in interest of the railway grantee.

A court of equity will not undertake to determine, in advance of the final action of the Land Department, the respective rights of grantees from the Northern Pacific Railway Company of land claimed to be within the indemnity limits of the land grant of July 2, 1864 (13 Stat. at L. 365, chap. 217), and settlers and purchasers from the United States or their grantees, whether holding patents or not, who claim the protection of the act of July 1, 1898, enacted to settle disputes arising out of conflicting rulings in the Land Department with reference to the eastern terminus of the railroad as affecting the Northern Pacific land grant, by permitting any purchaser or settler claiming, in good faith, under any law of the United States or ruling of the Land Department, any land so situated that a right thereto in the railroad grantee or its successor in interest attached by reason of definite location or selection, to elect whether to retain or transfer his claim, and requiring the Secretary of the Interior to furnish the company with a list of the lands so retained, and allowing the company to se lect other lands in lieu thereof upon executing a proper relinquishment.

[No. 7.]

Argued October 23, 26, 1903. Decided De- | claims of the defendants constitute clouds

the directions of the Secretary the com- | definite location and the lists of selections pany, the circuit court states, filed lists of filed by it with the Secretary. In reference selections of lands, some in the first and oth- to the action of the Interior Department, ers in the second indemnity limits, in lieu of the circuit court said: "By reason of the lands lost to it in its place limits, such erroneous ruling of the Secretary of the Inlists including all the lands in controversy terior as to the location of the eastern terin this suit. But the bill avers that no final minus of said railroad, and his revocation action has ever been taken by the Land De- of his prior approval of lawful selections partment upon such lists; and they have by the railroad company of indemnity lands, not yet been approved by the Department. and permitting sales and entries of such seSubsequently, on August 12th, 1896, the lected lands, as unappropriated, he had Secretary of the Interior ruled that Duluth, introduced confusion and conflict in respect not Ashland, was the eastern terminus of to the right to such lands, which was bethe railroad, and therefore that the land ginning to be litigated in the courts. . grant of 1864 did not embrace any lands The fact that patents had issued in a few between Duluth and Ashland. The com- instances would not end such disputes as pany's lists of selections were thereupon to the lands so patented, as courts would canceled by order of the Secretary, and the adjudge the patentee in any case to hold lands covered by them were thereafter treat- the title in trust for the other party, ed by the Department as unappropriated wherever the other party had clearly the public lands, and were opened for sale and right to the land." 110 Fed. 465, 469. entry.

This appears from an official communication addressed by the Commissioner of the General Land Office, with the approval of the Secretary of the Interior, to the register and receiver at Duluth. In that communication the Commissioner said: "On August 27th, 1896, the Secretary of the Interior rendered a decision wherein he held that the initial point on Lake Superior, or the eastern terminus of the grant to the Northern Pacific Railroad Company, was at Duluth, Minnesota, and on December 24th, 1896, he approved a diagram prepared by this office showing the eastern terminal of the grant. On January 23d, 1897, a copy of so much of said diagram as related to or affected lands within your district was transmitted to you for the use and guidance of your office. The decision of the Secretary aforesaid had the effect of restoring to the public domain all lands lying east of said terminal, which had theretofore been withdrawn on account of the grant to said railroad company. Therefore to the end that all persons interested may have an opportunity to present any claims they may have to any of these lands, you will cause to be published for the period of thirty days, in some newspaper of general circulation in their vicinity, a notice referring to said Secretary's decision, which in effect declared that all lands previously withdrawn on account of the grant to the Northern Pacific Railroad Company, and lying east of the terminal established at Duluth, are restored to the public domain and are subject to disposal at your office."

Under the above ruling of the Secretary as to the eastern terminus, the defendants were allowed to make entries and purchases on the line of the railroad between Duluth and Ashland, despite the company's map of

Such was the situation when Congress incorporated into the body of the sundry civil appropriation act of July 1st, 1898 (30 Stat. at L. 597, 620, chap. 546), subdivision, Surveying the Public Lands, certain provisions relating to the Northern Pacific land grant. As these provisions disclose a scheme or plan for the settlement of the disputes arising out of the conflicting rulings in the Land Department in reference to the eastern terminus of the railroad, and its action in reference to the public lands between Duluth and Ashland, they should all be examined in order to ascertain the intention of Congress. They are therefore here given in full.

By that act-dividing it, for convenience. into paragraphs-it was provided:

"That where, prior to January first, eighteen hundred and ninety-eight, the whole or any part of an odd-numbered section, in either the granted or the indemnity limits of the land grant to the Northern Pacific Railroad Company, to which the right of the grantee or its lawful successor is claimed to have attached by definite location or selection, has been purchased directly from the United States, or settled upon or claimed in good faith by any qualified settler under color of title or claim of right under any law of the United States or any ruling of the Interior Department, and where purchaser, settler, or claimant refuses to transfer his entry as hereinafter provided, the railroad grantee or its successor in interest, upon a proper relinquishment thereof, shall be entitled to select in lieu of the land relinquished an equal quantity of public lands, surveyed or unsurveyed, not mineral or reserved, and not valuable for stone, iron, or coal, and free from valid adverse claim, or not occupied by settlers at the time of such selection, situated within

lieu thereof by said railroad grantee or its successor in interest, as hereinbefore provided, and patents shall issue therefor:

any state or territory into which such rail-road right, other lands may be selected in road grant extends, and patents shall issue for the land so selected as though it had been originally granted; but all selections of unsurveyed lands shall be of odd-numbered sections, to be identified by the survey when made, and patent therefor shall issue to and in the name of the corporation surrendering the lands before mentioned, and such patents shall not issue until after the survey:

2. "Provided, however, That the Secretary of the Interior shall from time to time ascertain, and, as soon as conveniently may be done, cause to be prepared and delivered to the said railroad grantee or its successor in interest a list or lists of the several tracts which have been purchased or settled upon or occupied as aforesaid, and are now claimed by said purchasers or occupants, their heirs or assigns, according to the smallest government subdivisions. And all right, title, and interest of the said railroad grantee or its successor in interest, in and to any of such tracts, which the said railroad grantee or its successor in interest may relinquish hereunder shall revert to the United States, and such tracts shall be treated, under the laws thereof, in the same manner as if no rights thereto had ever vested in the said railroad grantee, and all qualified persons who have occupied and may be on said lands as herein provided, or who have purchased said lands in good faith as aforesaid, their heirs and assigns, shall be permitted to prove their titles to said lands according to law, as if said grant had never been made; and upon such relinquishment said Northern Pacific Railroad Company or its lawful successor in interest may proceed to select, in the manner hereinbefore provided, lands in lieu of those relinquished, and patents shall issue therefor:

5. "And provided, further, That nothing herein contained shall be construed as intended or having the effect to recognize the Northern Pacific Railway Company as the lawful successor of the Northern Pacific Railroad Company in the ownership of the lands granted by the United States to the Northern Pacific Railroad Company, under and by virtue of foreclosure proceedings against said Northern Pacific Railroad Company in the courts of the United States, but the legal question whether the said Northern Pacific Railway Company is such lawful successor of the said Northern Pacific Railroad Company, should the question be raised, shall be determined wholly without reference to the provisions of this act, and nothing in this act shall be construed as enlarging the quantity of land which the said Northern Pacific Railroad Company is entitled to under laws heretofore enacted: 6. "And provided, further, That all qualified settlers, their heirs or assigns, who, prior to January first, eighteen hundred and ninety-eight, purchased, or settled upon or claimed in good faith, under color of title or claim of right under any law of the United States or any ruling of the Interior Department, any part of an odd-numbered section in either the granted or indemnity limits of the land grant to the Northern Pacific Railroad Company, to which the right of such grantee or its lawful successor is claimed to have attached by definite location or selection, may in lieu thereof transfer their claims to an equal quantity of public lands, surveyed or unsurveyed, not mineral or reserved, and not valuable for stone, iron, or coal, and free from valid adverse claim, or not occupied by a settler at the time of such entry, situated in any state or territory into which such railroad grant extends, and make proof therefor as in other cases provided; and in making such proof, credit shall be given for the period of their bona fide residence and amount of their improvements upon their respective claims in the said granted or indemnity limits of the land grant to the said Northern Pacific Railroad Company, the same as if 4. "And provided, further, That whenever made upon the tract to which the transfer any qualified settler shall in good faith is made; and before the Secretary of the make settlement in pursuance of existing Interior shall cause to be prepared and delaw upon any odd-numbered sections of un- livered to said railroad grantee or its sucsurveyed public lands within the said rail- cessor in interest any list or lists of the road grant to which the right of such rail- several tracts which have been purchased or road grantee or its successor in interest settled upon or occupied as hereinbefore has attached, then, upon proof thereof sat- provided, he shall notify the purchaser, setisfactory to the Secretary of the Interior, tler, or claimant, his heirs or assigns, claimand a due relinquishment of the prior rail-'ing against said railroad company, of his

3. "Provided, further, That the railroad grantee or its successor in interest shall accept the said list or lists so to be made by the Secretary of the Interior as conclusive with respect to the particular lands to be relinquished by it, but it shall not be bound to relinquish lands sold or contracted by it, or lands which it uses or needs for railroad purposes, or lands valuable for stone, iron, or coal:

right to transfer his entry or claim, as here- | fendants nor their grantors after the defiin provided, and shall give him or them option to take lieu lands for those claimed by him or them, or hold his claim and allow the said railroad company to do so under the terms of this act." 30 Stat. at L. 597, 620.

The provisions of that act were formally accepted in writing by the Northern Pacific Railway Company on the 13th of July, 1898, in writing, and such written acceptance was promptly transmitted by the company to the Secretary of the Interior.

nite location of the road as shown by the company's accepted map of location could have acquired any valid title by entry or settlement, or by purchase, except from the railroad grantee, and that the defense cannot be maintained without violating the rights that were vested in the company in virtue of such definite location.

The defendants, of course, combat this view of the rights of the parties, and insist that they are fully protected in their claims by the act of 1898, all the provisions of which, as we have seen, were accepted by the railroad company.

In the statement accompanying the certified questions it is set forth that prior to the passage of the act of July 1st, 1898, the Secretary of the Interior had, pursuant to his original ruling as to the eastern terminus of the railroad, caused patents to be delivered to defendant settlers or their grantors for about 3,400 acres of the lands involved in this suit; that at the time of the passage of that act about 2,800 acres of the lands in question had been entered by defendant settlers or their grantors prior to January 1st, 1898, but no patents therefor had been issued; that after January 1st, 1898, the settlers or their grantors were permitted to enter about 5,000 acres of the lands here in controversy. The situation is thus described in the statement sent up by the circuit court of appeals: Of the lands claimed by the plaintiffs as suc

In a case in the supreme court of Wisconsin, determined shortly before the act of 1898, it was held, contrary to the ruling of the Interior Department in 1896, that Ashland, and not Duluth, was the eastern terminus of the Northern Pacific Railway. Northern P. R. Co. v. Doherty, 100 Wis. 39, 75 N. W. 1079. Upon writ of error to this court that judgment was affirmed. Doherty v. Northern P. R. Co. 177 U. S. 421, 44 L. ed. 830, 20 Sup. Ct. Rep. 677, and United States v. Northern P. R. Co. 177 U. S. 435, 44 L. ed. 836, 20 Sup. Ct. Rep. 706. After the above decisions by this courtwhich were rendered April 16th, 1900-the Secretary of the Interior revoked the order canceling the company's above lists of selections, and reinstated them. Shortly before those cases were argued here, namely, on January 19th, 1900,―and apparently to meet the contingency of a reversal by this court of the judgment of the supreme court of Wisconsin,-the Northern Pacific Rail-cessors in interest of the Northern Pacific way Company made conveyances with warranty to the plaintiffs, Humbird and Weyerhaeuser, of all the lands aggregating more than 10,000 acres, the title to which is here in dispute. As appears from the record, these conveyances were made after the Land Department had issued regulations to facili-respects about 5,000 acres, being for tracts tate the adjustment of claims under the act of July 1st, 1898. It should be recalled here that the lands covered by those conveyances were placed on the above list of selections filed by the railroad company, but those lists had not then, nor have they since, received the approval of the Secretary.

It is contended by the plaintiffs that the result of the above decisions in this court, adjudging the eastern terminus of the Northern Pacific Railroad to be at Ashland, Wisconsin, and not at Duluth, Minnesota, was that the odd-numbered alternate sections between Duluth and Ashland, on either side of the railroad, as definitely located, to the extent and within the limits prescribed, and not excluded from the grant of July 2d, 1864, were to be deemed public lands from which that grant could be supplied, and to which neither the de

Railroad Company about 3,400 acres thereof were held by the appellees under patents issued by the government prior to July 1st, 1898; for the residue of the lands the settlers held final receipts and final certificates, such final receipts and final certificates, as

entered subsequent to January 1st, 1898. In reference to the lands for which final receipts and certificates have been issued nothing, so far as appears, remains to be done by the Land Department except the issuing of patents.

The relief sought is a decree declaring, among other things, that the lands described in the exhibit attached to the bill, and all the timber standing or lying thereon, belong to the plaintiffs; that the entries, locations, final certificates, Land Office receipts, and patents, under which the several defendants claim, be adjudged to be void and removed as clouds from the titles of the plaintiffs, and the defendants severally enjoined from asserting any title by virtue thereof; and that such of the defendants as hold patents may be declared to hold as trustees for the plaintiffs in respect of any title conveyed by such pat