255 U.S.

228
41 S.Ct. 314
65 L.Ed. 598

PAYNE, Secretary of Interior, et al.

v.
CENTRAL PAC. RY. CO.
No. 17.
Argued Oct. 6, 1920.
Decided Feb. 28, 1921.

Mr. Assistant Attorney General Nebeker and Messrs. Charles D. Mahaffie

and C. Edward Wright, both of Washington, D. C., for appellants.
[Argument of Counsel from pages 229-231 intentionally omitted]
Messrs. A. A. Hoehling, Jr., of Washington D. C., Frank Thunen, of San
Francisco, Cal., and C. F. R. Ogilby, of Washington, D. C., for appellee.
Mr. Justice VAN DEVANTER delivered the opinion of the Court.

This is a suit to enjoin the Secretary of the Interior and the Commissioner of the
General Land Office from canceling a selection of indemnity lands under a
railroad land grant. The trial court dismissed the bill, and the Court of Appeals
reversed that decree and directed that an injunction issue. Central Pac. Ry. Co.
v. Lane, 46 App. D. C. 374, Ann. Cas. 1918C, 1002. An appeal under section
250, par. 6, of the Judicial Code (Comp. St. 1227) brings the case here.

The allegations of the bill were admitted by a motion to dismiss, upon which
the defendants announced their purpose to stand; and the case as thus made is
as follows:

By the Act of July 25, 1866, c. 242, 14 Stat. 239, a grant of public lands in
California and Oregon was made 'for the purpose of aiding in the construction'
of a line of railroad from a point in Sacramento Valley to Portland, 'and to
secure the safe and speedy transportation of the mails, troops, munitions of war
and public stores' over such line. The part of the grant in California was made

to the California and Oregon Railroad Company, its successors and assigns, and
the part in Oregon to another company. The grant was in present terms'there
be, and hereby is, granted'and was of 'every alternate section of public land,
not mineral, designated by odd numbers,' within designated limits on each side
of the line. With this was coupled a provision that
4

'When any of said alternate section or parts of sections shall be found to have
been granted, sold, reserved, occupied by homestead settlers, pre-empted, or
otherwise disposed of, other lands, designated as aforesaid, shall be selected by
said companies in lieu thereof, under the direction of the Secretary of the
Interior, in alternate sections designated by odd numbers as aforesaid, nearest to
and not more than ten miles beyond the limits of said first-named alternate
sections.'

The line of the road was to be definitely located by filing a map with the
Secretary of the Interior; and the work of construction was to be completed in
sections of twenty miles within a time named, which was extended to July 1,
1880, by an amendment of June 25, 1868. 15 Stat. 80, c. 80. The completion of
each section was to be ascertained and reported by commissioners appointed by
the President, whereupon patents for the lands coterminous therewith were to
be issued. The railroad was to be and remain 'a public highway for the use of
the government of the United States, free of all toll or other charges' for the
transportation of its property or troops. An assent to the act on the part of each
grantee was to be filed within one year after its passage.

The California and Oregon Railroad Company duly assented to the act,
definitely located its part of the line by filing the required map, and
constructed, completed and equipped that part of the railroad within the
extended time. The completion was duly reported by the commissioners and
was recognized by the President. In addition, that company and its successors
have complied with the act in all other respects. The Central Pacific Railway
Company, the plaintiff, became the legal successor of that company in 1899,
and holds its rights, title and interest under the grant. The part of the road in
Oregon also was completed, but that is not of present concern.

In the process of adjusting the grant it has developed that many of the
designated sections in the place limits were lost to the grant by reason of other
disposals, homestead settlements and pre-emption claims antedating the
definite location of the line of the road, thereby making it necessary to resort to
the indemnity limits to satisfy the grant. The present ascertained losses amount
to thousands of acres, and it is certain that further substantial losses will
develop as the adjustment proceeds. As yet it is impossible to determine even

approximately the total losses, because a material part of the grant is still
unsurveyed; and this makes it uncertain whether all can be made good from the
lands available for indemnity.
8

The lands in question were selected by means of an indemnity list filed in the
local land office February 24, 1910, and the selection was in lieu of losses
specified in the list which were actual and entitled the plaintiff to indemnity.
The lands selected are in the indemnity limits and admittedly nonmineral, and
at the time of selection were such as could be selected to supply the losses
specified. The list was accompanied by the requisite sustaining proofs and
conformed in all respects to the regulations embodying the directions of the
Secretary of the Interior upon the subject. The plaintiff paid the fees collectible
thereon, and the local land officers approved the list and promptly forwarded it
and the accompanying proofs to the General Land Office with the usual
certificates and indorsements. It remained pending in that office until January
16, 1915, when the Commissioner ordered its cancellation solely on the ground
that in the meantime the selected lands had been included in a temporary
executive withdrawal for a water power site under the Act of June 25, 1910, c.
421, 36 Stat. 847 (Comp. St. 4523-4525). The plaintiff appealed to the
Secretary of the Interior, and he affirmed the Commissioner's action. A
reconsideration was sought and denied, and the plaintiff then brought this suit.

It is not questioned that, had the selection been reached for consideration before
the withdrawal, it would have been the duty of the Commissioner and the
Secretary to approve it and pass the lands to patent; nor that, if the withdrawal
be not an obstacle, it still is their duty to do so. But it is insisted that so long as
the selection was without the Secretary's actual approval it gave no right as
against the government, and that the withdrawal made while it was as yet
unapproved became a legal obstacle to its approval. In this there is an obvious
misconception of the office and effect of the selection, and the misconception is
particularly shown in the brief for the appellants, where the selection is treated
as only a preliminary land application or filing. Counsel there say:

10

'What is the effect then of the mere filing of an indemnity selection? Its only
effect, we submit, is to give the selector a preference right to the land as against
one tendering a filing thereafter.'

11

Rightly speaking, the selection is not to be likened to the initial step of one who
wishes to obtain the title to public land by future compliance with the law, but
rather to the concluding step of one who by full compliance has earned the right
to receive the title. Referring to a similar grant and the relative obligations of
the government and the grantee, it was said in Burke v. Southern Pacific R. R.

Co., 234 U. S. 669, 679, 680, 34 Sup. Ct. 907, 911 (58 L. Ed. 1527):
12

'The act did not follow the building of the road, but preceded it. Instead of
giving a gratuitous reward for something already done, the act made a proposal
to the company to the effect that if the latter would locate, construct and put
into operation a designated line of railroad, patents would be issued to the
company confirming in it the right and title to the public lands falling within
the descriptive terms of the grant. The purpose was to bring about the
construction of the road, with the resulting advantages to the government and
the public, and to that end provision was made for compensating the company,
if it should do the work, by patenting to it the lands indicated. The company
was at liberty to accept or reject the proposal. It accepted in the mode
contemplated by the act, and thereby the parties were brought into such
contractual relations that the terms of the proposal became obligatory on both.
Menotti v. Dillon, 167 U. S. 703, 721. And when, by constructing the road and
putting it in operation, the company performed its part of the contract, it
became entitled to performance by the government. In other words, it earned
the right to the lands described.'

13

And, speaking specially of the right to indemnity lands under such a grant, it
was said in United States v. Southern Pacific R. R. Co., 223 U. S. 565, 570, 32
Sup. Ct. 326, 327 (56 L. Ed. 553):

14

'What a railroad is to be indemnified for may be fixed as of the moment of the

grant, but what it may elect when its right to indemnity is determined depends
on the state of the lands selected at the moment of choice. Of course the
railroad is limited in choosing by the terms of the indemnity grant, but the socalled grant is rather to be described as a power. Ordinarily no color of title is
gained until the power is exercised. When it is exercised in satisfaction of a
meritorious claim which the government created upon valuable consideration
and which it must be taken to have intended to satisfy (so far as it may be
satisfied within the territorial limits laid down), it seems to us that lands within
those limits should not be excluded simply because in a different event they
would have been subject to a paramount claim.'

15

The ultimate obligation of the government in respect of the indemnity lands is

on the same plane as that respecting the lands in place. The only difference is in
the mode of identification. Those in place are identified by filing the map of
definite location, and the indemnity lands by selections made in lieu of losses in
the place limits. St. Paul & Sioux City R. R. Co. v. Winona & St. Peter R. R.
Co., 112 U. S. 720, 731-733, 5 Sup. Ct. 334, 28 L. Ed. 872; Southern Pacific R.
R. Co. v. Bell, 183 U. S. 675, 687, 22 Sup. Ct. 232, 46 L. Ed. 383. The

selections are to be made by the grantee, not be the Secretary of the Interior.
True, the act provides that they shall be made under the Secretary's direction,
but this merely applies to them the general rule, announced in Rev. Stat. 441,
453, 2478 (Comp. St. 681, 699, 5120), that the administrative execution of
all public land laws is to be under his 'supervision' and 'direction.' Catholic
Bishop of Nesqually v. Gibbson, 158 U. S. 155, 166, 15 Sup. Ct. 779, 39 L. Ed.
931. Its purpose is to make sure that, in accord with that power of supervision
and direction, he is to see to it that the right of selection is not abused, that
claims arising out of prior settlement and the like are not disturbed, that no
indemnity is given except for actual losses of the class intended, and that the
lands selected are such as are subject to selection. But of course it does not
clothe him with any discretion to enlarge or curtail the rights of the grantee, nor
to substitute his judgment for the will of Congress as manifested in the granting
act. Cornelius v. Kessel, 128 U. S. 456, 461, 9 Sup. Ct. 122, 32 L. Ed. 482;
Orchard v. Alexander, 157 U. S. 372, 383, 15 Sup. Ct. 635, 39 L. Ed. 737;
Williams v. United States, 138 U. S. 514, 524, 11 Sup. Ct. 457, 34 L. Ed. 1026;
Daniels v. Wagner, 237 U. S. 547, 557-561, 35 Sup. Ct. 740, 59 L. Ed. 1102, L.
R. A. 1916A, 1116, Ann. Cas. 1917A, 40; Northern Pacific Ry. Co. v.
McComas, 250 U. S. 387, 392-393, 39 SUP. Ct. 546, 63 L. ED. 1049. THE
CASES CIted aS making for a different conclusion respecting the Secretary's
discretion were examined, and that view of them rejected in Weyerhaeuser v.
Hoyt, 269 U. S. 380, 388, 31 Sup. Ct. 300, 55 L. Ed. 258, and Daniels v.
Wagner, 237 U. S. 547, 557-561, 35 Sup. Ct. 740, 59 L. Ed. 1102, L. R. A.
1916A, 1116, Ann. Cas. 1917A, 40. In the Weyerhaeuser Case it was held that
the authority conferred on the Secretary respecting the selection of indemnity
lands 'involved not only the power but implied the duty to determine the
lawfulness of the selections as of the time when the exertion of the authority
was invoked by the lawful filling of the list of selections.'
16

As before shown, this indemnity selection was made in full compliance with
the directions promulgated by the Secretary, was of lands subject to selection,
and was based on actual losses in the place limits adequate to sustain it. The
railroad then had been constructed and equipped as required by the granting
act, and nothing remained to be done by the grantee or its successor to fulfill the
conditions of the grant and perfect the right to a patent. The rule applicable in
such a situation is that

17

'A person who complies with all the requisites necessary to entitle him to a
patent in a particular lot or tract is to be regarded as the equitable owner
thereof.' Wirth v. Branson, 98 U. S. 118, 121 (25 L. Ed. 86), Benson Mining
Co. v. Alta Mining Co., 145 U. S. 428, 432, 12 Sup. Ct. 877, 36 L. Ed. 762.

18

This rule has been applied and enforced where the Secretary through an error of
law declined to approve and give effect to lawful selections and certified the
lands for the use of another claimant, the court saying that the Secretary could
not thus deprive the selecting company of 'rights which became vested by its
selection of those lands.' St. Paul & Sioux City R. R. Co. v. Winona & St. Peter
R. R. Co., 112 U. S. 720, 5 Sup. Ct. 334, 28 L. Ed. 872.

19

The act under which the subsequent power site withdrawal was made is
confined to 'public lands,' a term uniformly regarded as not including lands to
which rights have attached and become vested through full compliance with an
applicable land law. Newhall v. Sanger, 92 U. S. 761, 763, 23 L. Ed. 769;
Minnesota v. Hitchcock, 185 U. S. 373, 391, 22 Sup. Ct. 650, 46 L. Ed. 954;
United States v. Hemmer, 241 U. S. 379, 385, 386, 36 Sup. Ct. 659, 60 L. Ed.
1055. Besides, to apply the act to the lands in question, lawfully earned and
selected as they were, would work such an interference with private rights as
plainly to require that it be construed as not including them. Wilcox v. Jackson,
13 Pet. 498, 513, 10 L. Ed. 264; Lytle v. Arkansas, 9 How. 314, 333, 335, 13 L.
Ed. 153; Sinking Fund Cases, 99 U. S. 700, 718, 719, 25 L. Ed. 496; United
States v. Jin Fuey Moy, 241 U. S. 394, 400, 36 Sup. Ct. 658, 60 L. Ed. 1061,
Ann. Cas. 1917D, 854.

20

We are asked to say that this is a suit against the United States, and therefore
not maintainable without its consent, but we think the suit is one to restrain the
appellants from canceling a valid indemnity selection through a mistaken
conception of their authority, and thereby casting a cloud on the plaintiff's title.
Ballinger v. Frost, 216 U. S. 240, 30 Sup. Ct. 338, 54 L. Ed. 464; Philadelphia
Co. v. Stimson, 223 U. S. 605, 619, 620, 32 Sup. Ct. 340, 56 L. Ed. 570; Lane
v. Watts, 234 U. S. 525, 540, 34 Sup. Ct. 965, 58 L. Ed. 1440.

21

Our conclusion is that in giving effect to the withdrawal as against the prior
selection, which admittedly was valid when made, the appellants departed from
a plain official duty, and that to avoid the resulting injury to the plaintiff, for
which no other remedy is available, an injunction should issue, directing a
disposal of the selection on its merits unaffected by the withdrawal. Such an
injunction, we think, is better suited to the occasion than that indicated by
Court of Appeals. In other respects the decree of that court is

22

Affirmed.