Statement of the Case. troversy between the petitioner and the complainants, a removal of the cause to the United States Circuit Court for the District of North Dakota was prayed for, and on the 5th of September, 1894, the court granted the petition and made an order for the removal of the cause. Upon a trial of the issues joined in the case, the Circuit Court of the United States for the District of North Dakota dismissed the complainants' bill, and the complainants thereupon appealed to the United States Circuit Court of Appeals for the Eighth Circuit. It appears from the complainants' bill, that the Northern Pacific Railroad Company was a corporation created and existing by virtue of an act of Congress, approved July 2, 1864, c. 217, 13 Stat. 365, entitled "An act granting lands to aid in the construction of a railroad and telegraph line from Lake Superior to Puget Sound, on the Pacific coast, by the northern route." The third section of that act, for the purpose of aiding in the construction of a railroad and telegraph line to the Pacific coast, granted to the railroad company, its successors and assigns, certain portions of the public lands, as mentioned in the section. Pursuant to the provisions of the act, and prior to the year 1888, the company had definitely fixed the line of its railroad, and prior to that year had constructed and put in operation a continuous line of railroad and telegraph, extending from the waters of Lake Superior westerly and through the Territory of North Dakota to the waters of Puget Sound; and prior to, and during the year 1888, many thousand acres of land in North Dakota were owned by the railroad company, under the land grant above mentioned, although patents for a portion of the same were not issued until June 24, 1893, and, for another portion, not until June 18, 1894. (No question is made by the complainants herein that the lands owned by the company were not taxable in 1888 on account of the fact that the company had not then received patents from the United States. therefor.) On the 31st of May, 1870, Congress adopted a resolution authorizing the company to issue bonds for the construction. of its road, and to secure the same by mortgages on its prop Statement of the Case. erty of all kinds and description, real, personal and mixed, including its franchises as a corporation. Under that resolution the company executed, at different times, several mortgages to secure the payment of a hundred millions or more of bonds issued to aid in the construction of the road, and these mortgages covered all the property of the company, including the lands granted to it by the United States under the act of 1864. In 1893 the company was insolvent and unable to meet the interest upon its bonds or to pay its other indebtedness, and in that year suits were duly commenced against it by creditors to recover the amount of its indebtedness, and also, by the trustee mortgagee, to foreclose the mortgages, in which suit receivers were appointed, and the complainants are their successors. On March 9, 1883, the legislature of the Territory enacted a statute, entitled "An act to provide for the levy and collection of taxes upon railroad property of railroad companies in this Territory," Laws of 1883, c. 99, p. 211, the first and fifth sections of which are set forth in the margin. This act was repealed by chapter 105 of the Laws of 1889. 1 ACT OF 1883. SECTION 1. Percentage of Gross Earnings to be Paid in Lieu of Other Taxes. In lieu of any and all other taxes upon any railroads, except railroads operated by horse power, within this Territory, or upon the equipment, appurtenances or appendages thereof, or upon any other property situated in this Territory, belonging to the corporation owning or operating such railroads, or upon the capital stock or business transaction of such railroad company, there shall hereafter be paid into the treasury of this Territory a percentage of all the gross earnings of the corporation owning or operating such railroad, arising from the operation of such railroad as shall be situated within this Territory, as hereinafter stated, that is to say: Every such railroad corporation or person operating a railroad in this Territory shall pay to said treasurer each year for the first five years after said railroad shall be or shall have been operated in whole or in part, two (2) per centum of such gross earnings; and for and in each and every year after the expiration of the said five years, three (3) per centum of the said gross earnings; and the payment of such per centum annually as aforesaid shall be and is in full of all taxation and assessments whatever upon the property aforesaid. The said payments shall be made one half () on or before the fifteenth day of February, and one half () on or before the Statement of the Case. Subsequently, and on the 7th day of March, 1889, the legislature of the Territory passed another act, entitled “An act for the levy and collection of taxes upon property of railroad companies in this Territory." Section 7 of the act of 1889 is set forth in the margin.1 fifteenth day of August, in each year, and for the purpose of ascertaining the gross earnings aforesaid, an accurate account of such earnings shall be kept by said company; an abstract whereof shall be furnished by said company to the treasurer of this Territory on or before the first (1st) day of February in each year; the truth of which abstract shall be verified by the affidavits of the treasurer and secretary of said company, and for the purpose of ascertaining the truth of such affidavits and the correctness of such abstracts, full power is hereby vested in the governor of this Territory, or any other person appointed by law, to examine under oath the officers and employés of said company, or other persons, and if any person so examined by the governor or other authorized persons shall knowingly or wilfully swear falsely concerning the matter aforesaid, every such person is declared to have committed perjury. And for the purpose of securing to the Territory the payment of the aforesaid per centums, it is hereby declared that the Territory shall have a lien upon the railroad of said company and upon all property, estate and effects of said company whatsoever, personal, real or mixed. And the lien hereby secured to the Territory shall have and take precedence of all demands, decrees and judgments against said company. SEC. 5. Lands Subject to Taxation. - The lands of any railroad company shall become subject to taxation in the same manner as other similar property, as soon as the same are sold, leased or contracted to be sold or leased; and on or before the first day of April of each year, each railroad company having lands within this Territory, shall return to the county clerk of each county, full and complete lists, verified by the affidavits of some officer of the company having knowledge of the facts, of all lands of such company situated in such county, sold or contracted to be sold or leased during the year ending the last day of December preceding, and the list furnished on or before the first day of April, A.D. 1883, in compliance with the terms of this section, shall include a complete list of all lands sold or leased, or contracted to be sold or leased, prior to the last day of December, A.D. 1882. 1 ACT OF 1889. SEC. 7. Any Railroad Company which at the date of the passage of this act owns or is engaged in operating any line or lines of railroad in this Territory, may at any time within thirty days after the passage of this act, by resolution of its board of directors, attested by its secretary, and filed with the secretary of the Territory, accept and become subject to the provisions of this act, and provided that any railroad company which is now Statement of the Case. The Northern Pacific Railroad Company, within, thirty days after the passage of the act of 1889, duly accepted its provisions, and within thirty days from that date paid into the treasury of the Territory the entire amount of taxes and interest theretofore claimed by the Territory as due and remaining unpaid to it from the company on local and interstate earnings under the act of 1883, excepting that the second half of the sum due from the company to the Territory for the taxes of 1888, according to the provisions of the act of 1883, was not paid to and received by the treasurer of the Territory until August 15, 1889. The whole tax for 1888, under the act of 1883, amounted to nearly $100,000, while for all the years in which the company was in arrear under the act of 1883 (including the year 1888) the amount paid was nearly $200,000. In the year 1888 the usual proceedings were taken by the officials of Richland County to assess all the property in the county under the general assessment laws of the Territory, in arrears in the payment of taxes assessed under chapter 99 of the Laws of 1883, shall, within thirty days after the passage of this act, pay into the territorial treasury the full amount of the taxes and interest due under the assessments under said law of 1883 before they can avail themselves of the provisions of this act, by accepting its terms, including taxes on both territorial and interstate earnings. It is further expressly provided that any company failing to strictly comply with the provisions of this act within the term herein provided shall be immediately subject to assessment and in the manner provided for the assessment and the taxation of the property of individuals of this Territory, and said taxes shall be collected in the same manner as is now provided in cases of the property of individuals. Any company which has not complied with the provisions of chapter 99 of the Session Laws of 1883 by paying all taxes claimed on gross earnings, both territorial and interstate, or by filing an account of gross earnings, both territorial and interstate, shall prepare and file such account in the manner therein provided within thirty days from the passage hereof, and pay one half of the entire amount due under the agreement and acceptance herein referred to, for the current year, and also the entire amount of taxes heretofore claimed by the Territory on local and interstate earnings of such companies, but remaining unpaid at the time of filing said account, and within thirty days after the passage of this act, or the same shall not apply to such company or companies. The balance of said taxes due for the current year shall be paid to the territorial treasurer on or before the fifteenth day of August, 1889. Opinion of the Court. and in such assessment the land grant lands of the railroad company were included, (regardless of the act of 1883,) and thereafter in due course the taxes thus levied, not having been paid by the company, the treasurer of the county on the 4th day of November, 1889, attempted and pretended to sell many parcels of land belonging to the railroad company and being in the county already mentioned, for the purpose of collecting the taxes unpaid thereon, and no redemptions of the lands having been made, the county treasurer executed to the persons who purchased the lands or their assignees, some of whom are defendants in this suit, deeds purporting to convey the lands so sold to such persons, and these deeds are alleged to be invalid, but still a cloud upon the title of the company to the lands described therein. The bill also sets forth a great many different alleged errors, irregularities and omissions on the part of the taxing authorities in taking proceedings to levy the taxes, by reason of which, as alleged, the taxation of the property of the company was illegal and the deeds were null and void. A joint and several demurrer and answer to the bill was served upon the part of the defendants, taking issue upon some of the allegations of fact in the bill and demurring to other parts thereof, but a sufficient statement of the case has already been made to lead to a proper understanding of the questions hereinafter discussed. Mr. C. W. Bunn for McHenry. Mr. Edgar W. Camp for Alford. MR. JUSTICE PECKHAM, after stating the facts, delivered the opinion of the court. The learned Circuit Court of Appeals has certified to this court six questions, concerning which it desires the instruction of this court for a proper decision of the cause. ing are the questions so certified: VOL. CLXVIII-42 The follow |