Davis v. Gray
Opinion of the Court
delivered the opinion of the court.
This is an appeal in equity from the decree of the Circuit Court of the United States for the Western District of Texas. The appellee was the complainant in the court below. The defendants demurred to the bill. The demurrer was overruled. The defendants stood by it. A decree as prayed for was thereupon rendered pro confesso for the complainant. The defendants removed the caseto this court by.appeal, and it is now before us, as it was before the court- below, upon the demurrer to the bill. This brings the whole case as made by the bill under review. The facts averred, so far as they are material, are to be taken as admitted and true. We shall refer to them accordingly. The question presented for our determination is, whether the Circuit Court erred in overruling the demurrer. The appellants, having elected not to answer, the decree for the complainant followed as of course. •'
At the outset of our examination of the case, we are met by jurisdictionah objections as to the parties — both complainant and defendants — which, before proceeding further, must be disposed of. We will consider first, those which relate to the complainant, and then, those with respect to the defeudants.
The complainant was appointed to his office of receiver, in the suit in equity of Forbes and others v. The Memphis, El Paso, and Pacific Railroad Company, a corporation created by the State of Texas. The suit was in the same court whence this appeal was taken. In that case, on the. 6th of July, 1870, it was, among other things, ordered and decreed, that the corporation should be enjoined from disposing of any of its effects, and that John A. C¿ Gray,- the complainant in this suit, should be, and he "was thereby “appointed receiver; to take possession of the moneys apd assets, real and personal; roadbed, road, and all property whatsoever, of the said Memphis, El Paso, and Pacific Railroad Com
On the 20th of January, 1871, it was further ordered by the court “that the said John A. 0. Gray, receiver as aforesaid, be, and he is hereby, authorized and empowered to defend and continue all suits brought by or against the said' Memphis, El Paso, and Pacific Railroad Company, whether before or after the appointment of said receiver, and whether in the name of said company or otherwise; defend all suits brought against him as such receiver or affecting his receivership, and to bring such suits-in the name of said company, or in the name of said receiver, as he may- be advised by counsel to be necessary and proper in the discharge of the duties of his office, and for acquiring, securing, and protecting the assets, franchises, and rights of the said company and of the said receiver, and for securing and protecting the land grant and land reservation of the said company.”
It is to be presumed the receiver .filed this bill, as it is framed in accordance with the advice of counsel.
The authority given by the decree is ample. Still the question arises whether it was competent for him to proceed iu his own name instead of the name of the company whose rights he seeks by this bill to assert. A receiver is appointed upon a principle of justice for the benefit of all concerned. Every kind of property of such, a nature that, if legal, it might be taken in execution, may, if equitable, be put into his possession. Hence the appointment 'has l.cen said to be an equitable execution. He is virtually a representative of the court, and of all the parties in interest in the litigation wherein he is appointed.
Here the-property in question is not in the possession of. the defendants. The possession of the receiver has not been invaded. He has not been in possession, is not seeking possession.;- and there is no question in the case-relating to that subject. But the order of the court expressly requires the receiver to secure and protect “ the assets, franchises, and rights,” ánd “ the land grant and reservation of said company.” He is seeking to perform that duty by enjoining the appellants from doing illegal acts, which the bill alleges, if done, tvould render the rights and title of the company to the immense property last mentioned, of greatly diminished value, if not wholly worthless.
We think it is'competent for him to perform this function in the mode he has adopted. The decree, in the case wherein he was appointed, expressly authorizes him to sue for that purpose in his own name. The order was made by a court of adequate authority in the regular exercise of its jurisdiction. No appeal has been taken, and the order stands unreversed.
This bill is auxiliary to the original suit-,
A few remarks ivill.be sufficient to dispose of the jurisdictional objections as to the appellants.
.In Osborn v. The Bank of the United States,
(1.) A Cii’cuit Court of the United States, in a proper case in equity, may enjoin a State officer front executing a State law in conflict with the Constitution or a statute of the United States, when such execution will violate the rights of the complainant. .
(2.) ‘Where the State is concerned, the State should be made a party, if it could be done. That it cannot be done is a sufficient reason for the omission to do it, and the coui’t may proceed-to decree against the officers of the State iu all respects as if 'the State were a party to th'e record.
(3.) In deciding who are parties to the suit the court will not look beyond the record. Making a State officer a party does not make the State a party, although her law may have prompted his action, and the State may stand behind him as' the l’eal party in interest. A State can be made a party only by shaping the bill'expressly with that view, as where individuals or corporations are intended to be put in that relation to the case..
Dodge v. Woolsey,
In Woodruff v. Trapnall
A party by going into a National court does not lose any right,or appropriate remedy of which he might have availed himself in the State courts of the same locality. The wise policy of the Constitution gives him a choice of tribunals. In the former he may hope to escape the local influences which sometimes disturb the even flow of justice. And in the regular course of procedure, if the amount involved be large enough, he may have access to this tribunal as the
It is insisted that the corporation, on behalf of which this suit was instituted, has ceased to exist.
The bill avers that “The Memphis, El Paso, and Pacific Railroad Company” ... is “ a corporation created by and existing under certain statutes of the State of Texas hereinafter set forth,” and.that within the times limited by the charter and extended by other acts the company “did all acts and things necessary to the full and complete vesting, securing, and preserving of the franchises, rights, and privileges granted thereby.” The demurrer admits the truth of .these averments unless they are inconsistent with the statutes which bear upon the subject. The corporation was created by an act of the legislature of Texas, approved February 4th, 1856. By the first section certain parties are named and created a body politic and corporate, and the general powers inherent in all such bodies are formally given. The second gives the right to construct a railway, commencing on the eastern boundary of the State, between Sulphur Fork and Red River, at the western terminus of the Mississippi, Ouachita, and Red River Railroad, or of the Cairo and Fulton Railroad, and running thence westerly to the Rio Grande, opposite to or near the town of El Paso. The twentieth section declares that no rights shall vest under the charter until a certain amount of stock therein named shall have been subscribed, and the percentage prescribed Shall have been paid- upon it. This requirement is covered by the averment in the bill that the compauy had done everything necessary to secure the vesting of all the franchises given to it. We do not understand that there is any controversy on this subject. All the other conditions prescribed, involving the existence of the corporation, are clearly subsequent. They are found in the fourteenth section of the charter,, iq the first section of the act of February
(1.) There has been no judgment of ouster and dissolution. Without this they are inoperative. .To make them effectual they must be grasped and wielded by the proper judicial action.
(2.) The offences and punishment denounced have been condoned and waived by the subsequent.action of the legislature. The act of March 20th, 1861; the act for'the relief of railroad companies, approved January 11th, 1862; the act for the relief of companies incorporated for purposes of internal improvement, approved February 18th, 1862; and the third section of the “Act to incorporate the.Transcontinental Railroad Company,” of the 27th July, 1870, each and all have that effect. The section last mentioned authorizes the company therein named to “ purchase the rights, franchises, and property of the Memphis,-El.Paso, and Pacific Railroad Company, heretofore incorporated by this State.” This is a clear affirmation, by implication, of the existence of the corporation, and of the possession-of the rights, franchises, and property conferred by its charter.' What is implied is as effectual as what is expressed.
The heart of this litigation lies in the immense land grant which is in- controversy between the parties. The objections we have considered are only outworks thrown up to prevent the conflict from reaching that point. It is insisted that the rights of the company touching the entire reservation have become forfeited. •
There are other provisions prescribing various details not necessary to be particularly stated or considered.
A proviso in the seventeenth section declares that no title shall be permanently vested in the company or their assigns for land granted for the grading as contemplated by the act, until twenty-five miles of the road shall have been completed and put iti running order. The proviso in the twentieth section of the charter, that no rights shall vest under it until the condition therein prescribed is complied with, has already been considered. Conditions of forfeiture of the lands granted are prescribed in this and subsequent acts. They are found in the fourteenth section of this act; in the first' and fourth sections of the supplemental act of th*e same date; and in the third and fourth sections of the act of February 10th, 1858. These conditions will be considered hereafter.
The act for the relief of internal improvement companies of February 18th, 1862, declared that the time of the continuance of the war between the Confederate States and the United States should not be compüted against any internal improvement company in reckoning the period allowed them .for the completion of any work they had contracted to do.
The act of January 11th, 1862, for the, relief of railroad companies enacted that the failure of any chartered railroad company of the State to complete any part of its road, as required by existing laws, should not operate as a forfeiture of its charter or of the lauds to which the company-would
The act for the benefit of railroad companies of November 13th, 1866, declared that the grant of sixteen sections of land to the mile to railroad companies theretofore, or thereafter, constructing railroads in Texas,.should be extended under the same restrictions and limitations theretofore provided by law, for ten years after the passage of the act. These several acts are valid.
By an act approved July 27th, 1870, the Southern Transcontinental Railroad Company was incorporated.
It was declared that the object of the company thus created was to construct and establish a railway line and telegraphic communication from the eastern boundary of the State of Texas, “and thence as near as practicable to the route of the Memphis, El Paso, and Pacific Railroad Company, to, or near, the town of El Paso.” It ivas enacted that “ the main line of said road shall follow;, as near as' may be practicable, the old survey of the Memphis and El Paso road.” It was further enacted that “ the said company, hereby incorporated, may purchase the rights, franchises, and property of the Memphis, El Paso, and Pacific Railroad Company, heretofore incorporated by this State,” as before mentioned.
The first section of the ordinance of 1869 declared that all beads of families settled on vacant lands lying within the Memphis and El Paso railroad reserve, should be entitled to receive from the State of Texas eighty acres of land, including the place occupied, upon payment of the expenses of survey and patent.
By the second section it was declared that all the vacant
In November, 1869, the present-constitution of Texas was adopted. 'It was subsequently approved by Congress.
Sections five and seven of this constitution áre as follows:
“ Section- 5. All public lands heretofore reserved for the benefit-of railroads or railway companies shall hereafter be subject. to location and survey by any.genuine land certificates.
. “.Section 7. All lands granted to railway companies which have not been alienated by said companies in conformity with the terms of "their charter respectively, and the laws of the State under- which the grants were made, are hereby declared forfeited to the State for the benefit of the school fund.”
This summary gives a view of the statutory and constitutional provisions necessary to be considered in disposing of the '‘question before us.-
On the 20th of June, 1857, the company filed in the land office at Austin surveys showing the line of the road from the eastern boundary of the State to El. Paso, which line ■was officially recognized by the Commissioner of the Gen- ' eral Land Office of Texas. By the 1st of March, 1860, the company had surveyed; sectionized, and numbered all the sections and fractional sections of the vacant lands within the reservation, from the eastern boundary of the State-to the crossing of the Brazos, of which due returns were made to the commissioner, and by him accepted. By the lfith of May, 1859, the company had marked and designated the central line of the road from the Brazos to the Colorado, and made proper returns to the office of the. commissioner, by •who,h they were accepted. The lands granted to the com-■,pan-j thereby became defined and officially recognized as such along the whole extent of their line.
By conseut of parties the bill was amended núnc pro tunc in three particulars. The complainant admitted that no land within the reserve had been surveyed, sectio.nized,'or numbered west of the Brazos River, and that no work had been done on the road before or since 1861, except as averred in the bill. He averred that he applied to the General Land Office for the number and names of those who had located certificates other than such as were issued to the company upon lands within the. reservation, and that Keuehler, the defendant, answered that the number was very great, amounting to hundreds, and that a list could not be furnished without great time and labor. He averred further that parties were constantly locating certificates and making surveys within the reservation, and that they -were allowed a specified time to make their returns, so that it was impossible for him to obtain a full list of such parties.
The company commenced work within one year from the) 1st of March, 1856, and before the 1st of March, 1861, had completely graded more than'fifty miles of its roadway, beginning at the eastern boundary line of the State and extending west in the direction of El Paso.
We do not understand that up to that time there was a breach of any condition touching the existence of the corporation or its right to the lands within the reservation. Before that time the tracts east of the Brazos covered by the grant were definitely fixed by the surveys which the company had made. The title of the company to those west of the Brazos, though the sections- were not designated, was equally valid. The good will of a lease which the landlord is in the habit of renewing is property, and rights
The rights of the company west of the Brazos were of a much more substantial character than those which were the subjects of judicial action in the cases cited.
The real estate of a corporation is a distinct thing from its franchises. But the right to acquire and sell real estate is a franchise, and the right to acquire the particular real estate designated in the charter of this company, and here in question, is within that category. It might, therefore, well be doubted whether this right could be taken from the company without an appropriate proceeding instituted for that purpose, and prosecuted to judgment by the State. But the view which we take of the case renders it unnecessary to. pursue the subject.
We will recur to the conditions of forfeiture touching the land granty and Consider them irrespective of that point. The provisions to that effect, in the fourteenth section of the charter, are expressly superseded by those in the first section of the supplemental act of February 5th, 1856. The fourth section of that act prescribes a further condition. These provisions again are superseded by the third and fourth sections- of the amendatory act of February 10th, 1858. The conditions prescribed by the last-named act are :
(1.) To survey the reserve as far as the Brazos River, within four years from the 1st of March, 1856.'
(2.) To run and designate the centré line of the reserva-, tion from the Brazos to the Colorado, within fifteen months from the 10th of February', 1858.
(8.) To survey the whole reserve within ten years from February 10th, 1858.
(4.) To have a connection with some road leading to the Mississippi or Gulf of Mexico within ten years from February 10th, 1858.
(5.) That the company shall have finished and in running
(6.)' That the right to acquire lands from the State by donation shall cease at the expiration of fifteen years from February 10th, 18,58.
The two first conditions were performed within the time prescribed. These points are covered by the averments of the bill. The time limited for the performance of the third and fourth is extended from February 10th, 1868, to-June 10th, 1873, by adding the time of the continuance of the war, according to the act of February 18th, 1862, before referred to. When the bill was filed there were no such roads as those mentioned in the fifth condition with which a connection could be formed. The fifteen years limited by the sixth condition expired February 10th, 1873. The period that elapsed during the war is to be added. That extends the time so much further.
The title of the company is therefore unaffected by the breach of any condition anuexed to the grant.
But suppose there had been such breaches, as is insisted by the counsel for the appellants, the result must still be the same.
Except as to a small portion of the land in question the legal title is yet in the State. Whatever may be the. right of the company it is wholly equitable in its character. With' a few exceptions, which have no applicability in this case, the same rules apply in equity to equitable estates as are applied at law to legal estates. They are alike descendible, devisable, alienable, and barrable.
There is wide distinction between a condition precedent, where no title has vested and none is to vest until the condition is performed, and a condition subsequent, operating by way of defeasance. In the former ease equity can give
Here the controlling consideration is, that the performanee of all the conditions not performed was prevented by the-State herself; By plunging into the war, and prosecuting it,-she confessedly rendered it impossible for the company to fulfil during its continuance.' This is alleged in the bill, and admitted by the demurrer.
The rule at law is, that if a condition subsequent be possible at the time of making it, and becomes afterwards' impossible to be complied with, by the act of God, or the law, or the grantor, the estate having once vested, is not thereby-divested, but becomes absolute.
Both parties will thus be put in the same ..situation, as near as may be, as if the breaches had not occurred. Neither will be subjected to any serious hardship. The State, by her own acts, has lost tlie benefits of an earlier completion of the work. The company has lost the income which it might have enjoyed, and has doubtless been thrown into embarrassments it would have escaped. The circumstances do not call for a severe application of the rules of law upon either side.
That the act of incorporation and the land grant here in •question, were contracts, is too well settled in this court to require discussion.
A case more imperatively demanding the exercise of jurisdiction in equity could hardly be imagined than that' presented in this bill. Should the interposition invoked be refused; doubtles.s the reservation would speedily be thatched over with adverse claims. A cloud would not oidy be thrown upon the title of the company, but the time, litigation, labor, and expense involved in the vindication of its rights, would very greatly lessen the value of the grant and materially det lay the progress of the work it was intended to aid. The injury would be irreparable. It is the peculiar function of a court of- equity in a case like this to avert such results.
It has been insisted that those holding adverse claims should have been brought into the case as parties. They
The parties referred to are sufficiently represented for the purposes of this litigation by the Governor and the Commissioner of the General Land Office. We feel no difficulty in disposing of the case, as it is presented in the record.
There are other points, ably maintained by the learned counsel for the appellants, to which we have not adverted. They are sufficiently answered by what has been said. It would extend this opinion unuecessarily, and could serve no useful purpose, specifically to consider them.
The Circuit Court decided correctly. The decree appealed from is
Affirmed.
Bank of the United States v. Dandridge, 12 Wheaton, 70.
Jeremy’s Equity, 249 ; Davis v. Duke of Marlborough, 2 Swanston, 125; Shakel v. Duke of Marlborough, 4 Maddock, 463.
Wyatt’s Practical Register, 355.
In re Colvin, 3' Maryland Chancery Decisions, 278; Delany v. Mansfield, 1 Hogan, 234.
The Chantauque County Bank v. White, 6 Barbour, 589; Verplanck v. Mercantile Ins. Co. of New York, 2 Paige, 452.
De Groot v. Jay, 30 Barbour, 483; Angel v. Smith, 9 Vesey, 335; Russell v. E. A. R R. Co., 3 Mac. & Gor. 104; Parker v. Browning, 8 Paige, 388; Noe v. Gibson, 7 Paige, 513; 2 Story’s Equity, § 833, A. & B.
2 Daniels’s Chancery Practice, 1433.
Empringham v. Short, 3 Hare, 470.
8 Paige, 388; Noe v. Gibson, 7 Id. 513; 2 Story’s Equity, supra; 2 J & W. 176; 2 Daniels’s Chancery Practice, 1433.
2 Daniels’s Chancery Practice, 1437.
Marten v. Van Schaick, 4 Paige, 479.
Freeman v. Howe, 24 Howard, 451; Jones v. Andrews, 10 Wallace, 327.
1 Black, 436.
18 Howard, 331.
16 Howard, 432.
16 Id. 369.
18 Id. 380.
10 Howard, 190.
15 Id. 304.
Ward v. Townsend, 2 Texas, 581; Cohen v. Smith, 3 Id. 51; Commissioner General Land Office v Smith, 5 Id. 471; McLelland v. Shaw, 15 Id. 319 ; Stewart v. Crosby, Ib. 547.
Whitman v The Governor, 5 Ohio State, 528; Houston and Great Northern Railroad Co. v. Kuechler, Commissioner, Supreme Court of Texas — not yet reported.
Ex parte McNiel, 13 Wallace, 236.
. See Angell & Ames on Corporations, § 777, and the authorities there cited.
United States v. Babbit, 1 Black, 67..
See the 33d section of the constitution of Texas of 1869, and Texas v. White, 7 Wallace, 700.
See section 3 of the act of February 10th, 1868.
Phyfe v. Wardell & Woolley, 5 Paige, 268; see, also, Amour v. Alexander, 10 Id. 571.
Jickling on the Analogy of Estates, &c., 17; Croxall v. Shererd, 5 Wal lace, 281.
Wens v. Smith, 2 Edwards's Chancery, 78; see also as to the principle of compensation, Beaty v. Harkey, 2 Smedes & Marshall, 563.
4th Kent, 129.
Nicoll v. New York and Erie Railroad Co., 2 Kernan, 121; Ludlow v. The New York and Harlem Railroad Co., 12 Barbour, 440; Webster v. Cooper, 14 Howard, 488.
4 Reports, p. 119.
Coke Littleton, 206 a, 208 b; 2 Blaekstone’s Commentaries, 156, 4 Kent, *130.
Hayden v. Stoughton, 5 Pickering, 528; 4 Kent, *125, 126; Comyns's Digest, Title, “ Condition G, 5.”
Walker v. Wheeler, 2 Connecticut, 299; Beaty v. Harkey, 2 Smedes & Marshall, 563 ; Moss v. Matthews, 3 Vesey, Jr., 279; 2 Vernon, 366 ; 1 Id. 83; 3 Brown’s Chancery, 256; Taylor v. Popham, 1 Id. 168; 1 Bacon Abridgment, 642; 1 Haddock’s Chancery Practice, 41, 42; City Bank v. Smith, 3 Gill & Johnson, 265
Dumpor’s Case, 1st Smith’s Leading Cases, 85, American note.
Fletcher v. Peck, 6 Cranch 137; New Jersey v. Wilson, 7 Id. 166; Dartmouth College v. Woodward, 4 Wheaton, 518; State Bank v. Knoop, 16 Howard, 369.
Von Hoffman v. The City of Quincy, 4 Wallace, 535.
Curran v. The State of Arkansas, 15 Howard, 308.
Dissenting Opinion
with whom concurred the CHIEF JUSTICE, dissenting, said:
I am constrained to enter my dissent to the opinion and judgment of the court in this case, for the reason that this suit, although in form otherwise, is in effect' against the State of Texas. The object which it seeks to obtain shows this to be so, which is to deprive the State of the power to dispose, in its own way, of its public lands, and this object, by >fhe decision just rendered, is accomplished. In my judgment the bill should have been dismissed, because the State is exempt from suit at-the instance of private persons, and on the face of th.e bill it is apparent that the State is arraigned as a defendant.
Reference
- Cited By
- 320 cases
- Status
- Published
- Syllabus
- 1 In this case — where a person who had been appointed receiver of a railroad, to which a large grant of lands had been made by a State, was seeking to enjoin the officers of the State which had declared the lands forfeited, from granting them to other persons — the court states at large what is the office and what are the duties of a receiver, giving to them a liberal interpretation in aid of the jurisdiction of the court. It says that in the progress and growth of equity jurisdiction it has become usual to clothe them with much larger powers than were formerly conferred; that in some of the States they are by statute charged with the duty of settling the affairs of certain corporations when insolvent, and are authorized expressly to sue in their own names; and that the court sees no reason why a court of equity, in the exercise of its undoubted authority, may not accomplish all the best results intended to be secured by such legislation, without its aid 2. The doctrines of Osborne v. The Bank of the United States affirmed; and the principles re-declared. (a.) That a Circuit Court of the United States, in a proper case in equity, may enjoin a State officer from executing a State law in conflict with the. Constitution' or a statute of the United States, when suc.h execution will violate the rights of the complainant. (.b ) That where the State is concerned the State should be made a party, if it can be-done. That it cannot be done is a sufficient reason for the omission to do it, and the case may proceed to decree against her officers in all respects as if she were a party to the record. (c.) That in deciding who are parties to the suit the court will not look beyond the record. That making a State officer a party does not make the State a party, although her law may prompt his action, and she may stand behind him as the real party in interest; that a State can he made a party only by shaping the bill expressly with that view, as where individuals or corporations are intended to be put in that relation to ffie case. 3 The Memphis, El Raso, and Pacific Railroad Company had not (on the 20th of January, 1871), in view of the existence of the rebellion, and of several statutes of Texas condoning its non-compliance with conditions of its charter, lost its franchise or its right of and to the land grant and land reservation of the company given in its charter. 4. The articles 5 and 7 of the'constitution of Texas, made in 1809, which on an assumption that the company had then lost them, disposed of the lands away from it, violated the obligations of a contract and were void. 6. Where the State of Texas had made to a railroad company a large grant of lands, defeasible if certain things were not done within a certain time by the company, the fact that the so-called secession of the State and her plunging into the war, and prosecuting it, rendered it impossible for the company to fulfil the conditions, in law abrogated them. 6. However’, as the court thought that the enforcement of the legal rule in the particular case would work injustice, it declined to apply such legal rule, and applying an equitable one held that the conditions should still he complied with; but complied with in’such reasonable time, as would put the parties in the same situation, as near as might he, as if no breach of condition had occurred.