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that some branch lines may no longer be "profitable" and the company may ap ply for permission to abandon them, renewed attention has focused on the original land grants and intended relationship, if any, of the grants to the continued operation of the railroad.
In examining this relationship, this report will consider the historical context in which railroad land grants were enacted, the language of the Northern Pacific grants and their relevant legislative history, subsequent events, judicial interpretation of the Northern Pacific and other railroad grants.
A considerable amount has been written about the railroad land grants. Many factors have been identified as leading to the burst of major railroad construction legislation that occurred in the middle of the nineteenth century. Among these factors were the discovery of gold in California, the impending dangers of the civil war, the absence, after secession, of opposing votes by Southern states, and a desire to encourage the settlement and development of the vast new Western territories, thereby increasing tax revenues, opening mar→ kets, and providing more adequately for the defense of the West. also, of course, the judgment that these transcontinental lines could not be built without substantial Federal assistance. The grants sometimes consisted only of a right of way across public lands, but sometimes also included a greater subsidy in the form of additional grants of land, financial support, Some grants were made to states to be conveyed by them to a railroad company upon completion of specified segments of line. Other grants were made to corporations directly. Usually this latter course was followed if the route
5/ See e.g., J.B. SANBORN, CONGRESSIONAL GRANTS OF LAND IN AID OF RAILWAYS (1981). P.W. GATES, HISTORY OF PUBLIC LAND LAW DEVELOPMENT, ch. XIV (1968).
was to cross territories rather than states.
Typically, in this latter instance,
a federally chartered corporation was created by the same legislation that es
tablished the land grants.
Several transcontinental railroads were authorized within the same decade, 6/ including the Union Pacific/Central Pacific in 1862, and 1864 the Northern Paci1/ fic in 1854, the Atlantic and Pacific in 1856, and the Texas Pacific in 1871. Not all of these were built as contemplated. The transcontinental line authorized
in 1862 received only about half the amount of lands that Northern Pacific was granted where its line passed through territories, but the 1862 line received financial subsidies that Northern Pacific did not.
By the time the fourth transcontinental line was authorized in 1871, vehement opposition was developing to the railroads that only a few short years before had received such enthusiastic support. As one historian put it, when the West "...saw evidence that railroads were not prompt in bringing their lands on the market and putting them into the hands of farm makers, the West turned 9/ from warm friendship to outright hostility to railroads. Attempts were made to declare forfeitures of unearned or partially earned and yet unsold grants. "In 1890 after long agitation a general forfeiture act was adopted providing that unearned grants of projected railroads should be forfeited to the United States. The measure satisfied few of the agrarians who were more anxious to have the huge Northern Pacific grant forfeited, or at least that portion along the Cascade branch which was built after 1879. The forfeiture act did cause
6/ Act of July 1, 1862, ch. 120, 12 Stat. 489 and Act of July 2, 1864, ch. 216, 13 Stat. 356.
7/ Act of July 27, 1866, ch. 278, 14 Stat. 292.
8/ Act of March 3, 1871, ch. 122, 16 Stat.573.
relinquishment of some 2 million acres along the branch of the railroad down
the Columbia from Wallula to Portland, which had not been built by Northern 10/
Another writer has described the forfeiture act of 1890 as
"virtually an official confirmation" of the Northern Pacific grant.
It appears that it was widely assumed that the lands granted to the railroad would be sold to settlers, both to raise money for the railroad companies and to promote the settlement along the railroads that in turn would provide them with business. When, however, it became clear that the railroads could and did raise money by mortgaging the lands rather than by selling them and that the railroads were retaining the lands or selling them at high prices to speculators, public opinion turned against the railroads, which increasingly came to be seen more as "monopolists" than benefactors. The 1890 legislation was viewed as weak because while Congress could have declared specific lands and grants forfeited, it did not do so. Rather it was left for the courts to determine in which instances grants were unearned or partially earned and this was seen as 12/ a victory for the railroad interests.
In 1929, Congress authorized the Attorney General to bring suit against Northern Pacific for an accounting, to determine all questions of breach of conditions in the granting legislation, and to resolve all questions as to which lands Northern Pacific might be entitled. This suit was settled in 1941. As will be discussed, resolving the land grant entitlement/forfeiture questions surrounding the Northern Pacific Railway Co.'s grants proved to be complex
10/ Ibid., at 381.
11/ D. Ellis, FORFEITURE OF RAILROAD LAND GRANTS, at 52-55.
Courts that have considered the Northern Pacific legislation have held
the statutes to be both grants of lands and contractual agreements that became 13/ binding upon certain acts of performance by the railroads. The land grant aspects of the statutes will be considered first.
A review of basic property law concepts is helpful at this point.
it must be kept in mind that when Congress grants lands, the grant is both a grant of property and a law and, therefore, Congress is free to specify terms or elements different from those that otherwise would apply either by virtue of
the common law or earlier statutes.
To grant land usually is to convey legal title to it. Usually the conveyance of title is complete and final, but it is possible that title can be conveyed to a grantee, and then revert to the grantor in some instances. A grant may be interpreted to have been made with the understanding that it was to continue only so long as some use or circumstance continued and that if that use or circumstance ceased, then title would revert automatically to the grantor. This is called a fee simple determinable.
Or a grant may be interpreted as being made on the condition that if "x" occurs, then the grant reverts to the grantor. This is called a grant on a condition subsequent.
The principal difference between these two types of grants is that in the former instance (the fee simple determinable), no action on the part of the grantor is necessary to reassert title; title reverts by action of law as soon as the envisioned use or circumstance ceases. In contrast, if the grant is deemed to be a grant on a condition subsequent, the grantor must take some
13/ United States v. Northern Pacific Railway Co., 256 U.S. 51 (1921).
action to reassert title upon the breach (or fulfillment) of the condition (depending on whether the grant and condition were worded positively or negatively). This action usually takes the form of a judicial proceeding to determine that the terms of the condition have in fact been met or breached.
If the grantor is Congress, however, that further action maybe either through legislative action declaring that Congress finds the condition to be met or
In attempting to characterize a grant a court will look to the "intent of the grantor", primarily by examining carefully the language chosen in the instrument of conveyance. Typically this search to ascertain the intent
of the grantor has taken the form of looking for the presence of certain words of art in the drafting of the grant. For example, courts have looked for words like "X grants (land) to Y for so long as it shall be used for religious purin order to find a determinable fee. Here the grant itself contains
the limitation that returns the title. In contrast, language that appears to make the grant and then impose a condition that will have a certain effect, is more likely to be interpreted to pass a fee on a condition:
"X grants (land)
to Y, but if Y uses it for a tavern, then title reverts to X". This type of language then would require further action by X to assert that the triggering condition has in fact occurred.
A court may, however, also interpret some parts of the land grant legislation as establishing a contractual agreement between the United States Government and the railroad. In this instance, the land grants may be part of the "consideration" or mutual benefit of the bargain that makes the contractual agreement binding, but be unaffected by a "breach" (failure to perform) as
14/ Schulenberg v. Harriman, 21 Wallace 44, 57 (1874)