1

the new company, under what is claimed to
be due authority of law, issued its bonds on
the first day of July, 1887, to the amount of
$225,000, payable in twenty years from their
date, and to secure payment of the same
mortgaged its entire railroad from Oakland
to Bingham, forty-one miles. These bonds
were sold by the company and the proceeds
applied towards the completion of the road.
The mortgage given by the Somerset Rail-
road Company in 1871 included the roadbed
from Oakland to the terminus of the road in
Solon. The mortgage given by the new com-
pany in 1887 embraced the railroad so far as
it had been constructed by the old company,
as well as the sixteen miles constructed by
the new company after it took possession of
the road. The giving of this mortgage in
1887 was a matter of public notoriety, well
known to the trustees of the original mort-
gage, and no objection was made in behalf
of anyone; on the contrary, the trustees
stood by and saw this mortgage of 1887 given
and the bonds sold to innocent parties and
the money expended in extending the rail-
road sixteen miles, and it was not until more
than five years afterwards, when the road
had been built and completed and was in
operation to Bingham, that the trustees took

action.

[645] *In December, 1892, the trustees in the mortgage of 1871 commenced two actions at law, one in each of two counties in which the railroad was situated, in which actions the president of the new corporation, its superintendent, treasurer, accountant, and various station agents and conductors, were made parties defendant because they were in possession of the road, and the plaintiffs, trustees, claimed to recover from the defendants, as disseisors, the possession of the railroad, and from the defendants, as individuals, the sum of $180,000 as mesne profits. The ground upon which the trustees based their action was that the new company was never legally organized; that by the terms of the mortgage the trustees alone could take proceedings to foreclose the mortgage, and that the acts of the legislature passed subsequently to the execution of the mortgage, and under which the new company was formed, could and did have no validity as against the contract rights of the plaintiffs, secured to them by the law as it stood at the time of the execution of the mortgage of

1871.

ment of the $225,000 borrowed for the ex-
tension of its road; also the contracting of
debts and the expending of large amounts
of money in useful repairs and improve-
ments; and that all this was done without
the trustees making known to the new com-
pany that they or those whom they repre-
sented as bondholders had any claim or cause
of action against the new company; and the
complainants therefore averred that the trus
tees and those whom they represented had
been guilty of such delay and laches as to
estop them from denying the validity of the[646]
new corporation or its title or possession.
The new company also alleged the entire va-
lidity of the proceedings resulting in its for-
mation.

Answering that complaint, the trustees denied that the new company was ever established under any law of Maine; they denied that it ever had any legal organization or any legal existence; they denied that the mortgage of July 1, 1871, had ever been legally foreclosed, and they alleged that neither the original board of trustees named in the mortgage, nor their successors, had ever taken any steps towards a legal foreclosure, or had ever determined that there had been a breach of the conditions of that mortgage, and that the attempted foreclosure of that mortgage was in violation of the contract rights secured to the trustees thereunder at the time of its execution, and the attempted foreclosure of that mortgage was therefore utterly void; they denied that any statute of the state had been enacted, or could be enacted, which would or could deprive the bondholders or trustees of the rights secured to them by virtue of their contract of July 1, 1871, and the laws of the state in force when the contract was made. They alleged that the contract rights of all the parties to the mortgage of July 1, 1871, were fixed by the laws in force when the mortgage was executed, and that no law of the state of Maine then existing authorized the organization of the new corporation in the manner attempted herein, and that the laws then existing formed a part of the mortgage contract, and could be legally foreclosed and a new comprovided a mode by which the mortgage pany formed for the benefit of all the bondthe bondholders who took no part in the holders; and they alleged that the rights of formation of the new company were fixed by the mortgage contract, and could not be af ous other matters were set up in their anfected in any way except by payment. Variswer, which it is not now necessary to mention.'

Upon these facts and many others which are not now material to be stated, the new company commenced this suit in equity against the trustees in the mortgage of 1871, who were plaintiffs in the two actions at these issues held: "(1) That the new comThe supreme judicial court of Maine upon law, to enjoin the further prosecution of pany was legally organized; that the various those actions, and for other relief as men- acts of the legislature of Maine, passed subtioned in their complaint. In this suit the sequently to the execution of the mortgage, new company alleged (among other things) did not impair the obligations of the conthat the trustees in the mortgage of 1871 tract contained in the mortgage, but simply[647] and their successors had stood by, al- afforded a more convenient and quicker rem lowed, and encouraged the formation of the edy for a violation of the agreement and for new company and the surrendering of the the foreclosure of the mortgage than existed bonds and the ssuing of the stock in lieu at the time of its execution." (2) The thereof, and also the execution of the mort-court also stated and held as follows: "The gage by the new company to secure the pay- new corporation took possession of the mort

1898.

PIERCE V. SOMERSET RAILWAY.

gaged property on the first day of Septem- | dend under the insolvency proceedings Eustis
ber, 1883, and has ever since held it and ope- waived his legal right to claim that the dis-
rated the railroad. This action was author- charge obtained under the subsequent laws
ized by the statute, consented to by the Som- impaired the obligation of a contract. This
erset Railroad Company, the mortgagor, ac- court held that, whether that view of the
tively proposed and aided by one at least of case was sound or not, it was not a Federal
the trustees, and ever since has been acqui- question, and therefore not within the prov
Mr. Justice Shiras, in delivering the opin-
esced in by all the trustees. It is too late ínce of this court to inquire about.
for the trustees or dissenting bondholders
now to object to technical irregularities, if ion of the court, said:
any exist, especially as the Somerset Rail-
way has since extended the railroad from
North Anson to Bingham, a distance of
abount sixteen miles; built a branch railroad
of one mile in length of great importance to
the productiveness of the main line; placed
a mortgage upon the road for $225,000 to
make these extensions and other improve
ments; and in other ways materially changed
the condition and relations of all parties in
terested in the road. Their long acquies-
cence, without objection, coupled with the
changed conditions and relations resulting
from the possession and management of the
property by the Somerset Railway, estops
them from now questioning the legality of
the organization of the new corporation."
The court further held that, under the
statutes of Maine, the bondholders who had
refused to take stock in the new company
still retained the same rights under their
bonds as the holders of the stock in the new
company which had been given in exchange
for bonds, and that if any bondholder de-
clined ultimately to exchange his bonds for
stock he could not be compelled to do so, and
that the net earnings of the company when
distributed in the form of dividends or other-
wise must be distributed to its stockholders
and to the holders of any unexchanged bonds
in equal proportions; that if the holders of
unexchanged bonds chose to take stock they
could do so at any time, or they might retain
their present possessions and receive their
share of the net earnings pro rata with the
stockholders.

"The defendant in the trial court de-
pended on a discharge obtained by them un-
der regular proceedings under the insolvency
statutes of Massachusetts. This defense the
plaintiffs met by alleging that the statutes
under which the defendants had procured
their discharge had been enacted after the
promissory note sued on had been executed
and delivered, and that to give effect to a dis-
charge obtained under such subsequent laws
would impair the obligation of a contract,
within the meaning of the Constitution of
the United States. Upon such a state of
facts it is plain that a Federal question de-
cisive of the case was presented, and that if
of Massachusetts adjudged that question ad-
the judgment of the supreme judicial court [649]
versely to the plaintiffs it would be the duty
of this court to consider the soundness of
such a judgment.

[648] *It is thus seen that there were two ques-
tions determined by the state court:

One

related to the validity of the statutes passed
subsequently to the execution of the mort-
gage, the court holding them valid, and that
they did not impair the obligation of the con-
tract contained in the mortgage. That is a
Federal question. The other related to the
defense of estoppel on account of laches and
acquiescence, which is not a Federal ques-
tion. Either is sufficient upon which to base
and sustain the judgment of the state court.
In such case a writ of error to the state court
cannot be sustained. Eustis v. Bolles, 150
U. S. 361 [37: 1111]; Rutland Railroad Co.
v. Central Vermont Railroad Co. 159 U. S.
630 [40: 284]; Seneca Nation v. Christy, 162
U. S. 283 [40: 970].

A person may by his acts or omission to
act waive a right which he might otherwise
have under the Constitution of the United
States, as well as under a statute, and the
question whether he has or has not lost such
right by his failure to act, or by his action,
is not a Federal one.

In the above case of Eustis v. Bolles the state court held that by accepting his divi

"The record, however, further discloses that William T. Eustis, represented in this court by his executors, had accepted and receipted for the money which had been awarded him, as his portion, under the insolvency proceedings, and that the court below, conceding that his cause of action could not be taken away from him, without his consent, by proceedings under statutes of insolvency passed subsequently to the vesting of his rights, held that the action of Eustis, in so accepting and receipting for his dividend in the insolvency proceedings, was a waiver of his right to object to the validity ingly, the defendants were entitled to the of the insolvency statutes, and that, accordjudgment.

"The view of the court was that, when the
composition was confirmed, Eustis was put
to his election whether he would avail him-
self of the composition offer, or would reject
it and rely upon his right to enforce his debt.
against his debtors notwithstanding their
discharge.

"In its discussion of this question the court
below cited and claimed to follow the deci-
sion of this court in the case of Clay v. Smith,
3 Pet. 411 [7: 723], where it was held that
the plaintiff, by proving his debt and taking
a dividend under the bankrupt laws of Lou-
isiana, waived his right to object that the
law did not constitutionally apply to his
state. But in deciding that it was compe-
debt, he being a creditor residing in another
tent for Eustis to waive his legal rights, and
that accepting his dividend under the in-
solvency proceedings was such a waiver, the
court below did not decide a Federal ques-
tion. Whether that view of the case was
was broad enough, in itself, to support the
sound or not, it is not for us to inquire. It
final judgment, without reference to the Fed-
eral question."

319

patented by the applicant, is valid, in the ab
sence of any statutory provision.
[No. 305.]

ber 31, 1898.

IN ERROR to the Supreme Court of the

State of Montana to review a decree of

Eustis had a right which was protected by the Constitution of the United States. This right, the state court held, he had waived by his action, and this court said whether the state court was right or not was not a Fed- Submitted October 10, 1898. Decided Octo eral question. In Seneca Nation v. Christy, supra, it was [650]held by the state court that even if there were a right of recovery on the part of the plaintiffs in error because the grant of 1826 was in contravention of the Constitution of the United States, (which the court held was not the case), yet that such recovery was barred by the New York statute of limitations. This court held that as the judgment of the state court could be maintained upon the latter ground, it was without jurisdiction because the decision of the state court upon that ground involved no Federal ques

tion.

(See S. C. Reporter's ed. 650.)

Pierce v.Somerset Railway, ante, p. 316, followed.

[No. 13.]

that court affirming the decree of the Disthe State of Montana in and for the County of trict Court of the First Judicial District of Lewis and Clarke in favor of the plaintiff, the Montana Mining Company, in an action brought by it against the St. Louis Mining & Milling Company of Montana et al. for a decree that defendants shall convey to plaintiff by a good and sufficient deed a portion of a mining claim. On motion to dismiss or affirm. Affirmed.

See same case below, 20 Mont. 394.

Statement by Mr. Chief Justice Fuller:

*This was a suit for specific performance [65 brought by the Montana Mining Company against the St. Louis Mining & Milling Company of Montana and Charles Mayger in the district court of the first judicial district of the state of Montana, in and for the county of Lewis and Clarke.

The complaint alleged that on March 7, A. D. 1884, plaintiff's predecessors in interest, Robinson, Huggins, Sterling, DeCamp, and Eddy, were the owners of and in possession, and legally entitled to the use, occupation, and possession, of a certain portion of the Nine Hour Lode and Mining Claim, which embraced in all an area of 12,844.5 feet, together with the minerals therein contained.

That Mayger applied to the United States land office at Helena for a patent to the St. Louis Lode Mining Claim, owned by him, Argued October 11, 12, 1898. Decided Octo- and that in the survey he caused to be made

ber 31, 1898.

(See S. C. Reporter's ed. 650-658.) Compromise as to mining claim, when valid. ▲ compromise of a dispute as to a mining claim, whereby an action to determine the right thereto is dismissed, in consideration of an interest in the ground when thereafter

of his claim he included that part of the Nine Hour Lode Mining Claim described in the

complaint; whereupon an action was cont

menced by Robinson and Huggins against
Mayger in the district court of the third ju-
dicial district of the then territory of Mon-
tana to determine the right to the possession
of the particular premises. That on said 7th
of March, for the purpose of settling and
compromising that action, and settling and
agreeing upon the boundary lines between
the Nine Hour Lode Mining Claim and the
St. Louis Lode Mining Claim, Mayger made,
executed, and delivered to Robinson, Hug-
gins, and Sterling a certain bond for a deed,
whereby, in consideration of the compromise
and settlement of the action and the with-
covenanted and agreed that when he should
drawal of the protest and adverse claim, he
obtain a patent as applied for, he would, on
demand, make, execute, and deliver to Rob-
inson, Huggins, and Sterling, or their assigns,
a good and sufficient deed for the premises [65
described in the complaint; and thereupon
Robinson, Huggins, and Sterling dismissed
their said action, withdrew their adverse
claim, and performed all of the conditions of
the bond on their part.

That Mayger then proceeded with his ap

plication and obtained a patent, but that he tiff have ever since remained in possession gave no notice to plaintiff, or any of its pred- thereof, claiming and holding the same as a ecessors in interest, of the obtaining of the part of the Nine Hour Lode Mining Claim; patent until some time in November, 1889. that at the date of the execution and delivery That when the bond for a deed was exe of the bond, it was expressly agreed between cuted, plaintiff's predecessors in interest were the parties thereto that all of the ground in possession of the premises, and have ever lying to the east of the westerly line of the since been and are yet in possession thereof, strip should be a portion of the Nine Hour holding and using the same as a part of the Lode Mining Claim; that plaintiff is the sucNine Hour Lode Claim; that by mesne con- cessor in interest of Robinson, Huggins, and veyances the title to this claim, including Sterling, the obligees named in the bond, and the portion in dispute in this suit, had come also of De Camp and Eddy, who were coto plaintiff; that it is entitled to a convey- tenants with said obligees in the premises at ance of the premises from Mayger; that May- the date of the execution of the bond; that ger, on or about June 10, 1893, assumed to the mesne conveyances introduced in eviconvey said piece of ground to the St. Louis dence on the part of plaintiff embraced and Mining & Milling Company, which then had were intended to include the ground in quesfull knowledge and notice of the making, ex- tion, and conveyed to the grantees therein ecution, and delivery of the bond for a deed named all of the interest, legal and equit by Mayger, and of the rights and able, which the grantor or grantors had equities of the Montana Mining Com-in said premises, covering as well their inpany thereunder; that the St. Louis terest in the ground in dispute as in every Company has instituted a number of suits other part and parcel of the Nine Hour Lode in the Circuit Court of the United States, Mining Claim. in which it claims that it is the owner of the That in July, 1893, plaintiff duly demanded premises described in the complaint, and also a deed to the *ground in dispute from defend [654] the right to recover certain sums of money ants, which defendants refused to execute; for ores alleged to have been wrongfully ex-that in June, 1893, Mayger assumed tracted therefrom. The bond referred to was to convey the controverted ground to appended to the complaint. The prayer was the St. Louis Mining & Milling Comthat the court should decree that defendants should convey to plaintiff a good and sufficient deed to the premises in controversy.

pany, but that at the date of his conveyance the St. Louis Company had full notice and knowledge of plaintiff's equities in and to the disputed strip, and of its possession thereof; that defendants wrongfully asserted title to the ground in controversy, and thereby clouded plaintiff's title thereto, which cloud plaintiff had a right to have removed.

The district court concluded as matter of law that plaintiff was entitled to the conveyance prayed for, and that defendants should be enjoined from asserting any right, title or interest in or to the ground in dispute, and from in any manner interfering with the possession or enjoyment thereof by plaintiff.

In accordance with the findings of fact and conclusions of law, a decree was entered for plaintiff, and defendants appealed to the supreme court of the state of Montana, by which it was affirmed. [20 Mont. 394] 51 Pac. 824.

The answer denied all the material allegations of the complaint, and affirmatively alleged that the adverse claim interposed to the application of Mayger for a patent was for the purpose of harassing and hindering Mayger in obtaining a patent to his mining claim, and that the bond was given contrary to equity, good conscience, and public policy. The case was tried by the district court without a jury, and the court made and filed findings of fact and conclusions of law. It was found that plaintiff's predecessors in in[653]terest *were at the time mentioned in the complaint the owners of, in possession, and entitled to the possession, of the Nine Hour Lode Mining Claim as described, and that the strip of ground in dispute was at the time and continued to be a part of said claim; that the bond was executed and delivered by Mayger to the parties therein named, binding Mayger to convey to them or their assigns the ground in question when Mayger obtained a patent therefor; that it was given as a compromise and settlement of the controversy as to the land now in dispute, and then in litigation between the parties, and for the purpose of fixing and determining the boundary line beween the Nine Hour Lode Mining Claim and the St. Louis Mining Claim, as alleged in the complaint, and that Mayger thereafterwards did obtain a patent covering the premises in dispute; that plaintiffs in the adverse mining suit, on the execution to them of the bond by Mayger, dismissed their action and performed all the conditions of While it is conceded by plaintiffs in error the contract on their part; that at the time that there is no express prohibition on the of the execution of the bond the predecessors transaction involved in the record, it is conof plaintiff were in actual possession of the tended that the contract was contrary to the ground in dispute, and that they and plain-policy of the law, and that the question thus 171 U. S.

U. S., Book 43.

21

This writ of error was then sued out, and defendants in error now move to dismiss the writ, or that the decree be affirmed.

Messrs. Charles J. Hughes, Jr., and W.
E. Cullen for defendant in error in favor
of motion to dismiss or affirm.

Messrs. W. W. Dixon, Edwin W. Toole,
McConnell, Clayberg, & Gunn, and Thomas
C. Bach for plaintiffs in error in opposition
to motion.

*Mr. Chief Justice Fuller delivered the[654 opinion of the court:

321

The supreme court of Montana ruled that, in the absence of statutory prohibition, there was no reason in law or equity why the contract sought to be enforced should be held illegal, and we concur in this disposition of the Federal question suggested.

aised is necessarily a Federal question. | sideration was passed on in a suit brought [655] Granting that this is so, and that the *mo- to enforce its specific performance, and it tion to dismiss must therefore be overruled, was assumed that the contract was not void we are of opinion that there was color for the as in contravention of any statute of the motion, and that the case may properly be United States, or contrary to public policy. disposed of on the motion to affirm. In Myers v. Croft, 13 Wall. 291 [20: 562], this court was asked to hold that the prohi bition against alienation found in the last clause of the 12th section of the pre-emption act of 1841 extended from the date of entry to the actual issue of patent. This the court declined to do, and decided that the object of the act was attained when the pre-emptor went with clean hands to the land office and proved up and paid for his land. And the court said: "Restrictions upon the power of alienation after this would injure the preemptor, and would serve no important purpose of public policy. It is well known that patents do not issue in the usual course of business in the general land office until several years after the certificate of entry is given, and equally well known that nearly all the valuable lands in the new states ad

The public policy of the government is to be found in the Constitution and the laws, and the course of administration and decision. License Tax Cases, 5 Wall. 462 [18: 497]; United States Trans-Missouri Freight Association, 166 U. S. 340 [41: 1027].

V.

The proposition of plaintiffs in error is that where an application to enter a mining claim is made, and there is embraced therein land claimed by another, it is the duty of the latter to file an adverse claim and thereafter bring in some court of competent juris-mitted since 1841 have been taken up under diction an action to determine the right to the area in conflict, which action must be prosecuted to a final judgment or dismissed; and that no valid settlement can be made by which such adverse claimant can acquire any interest in the ground when thereafter patented by the applicant. We are not aware of any public policy of the government which sustains this proposition.

Where there is a valid location of a mining claim, the area becomes segregated from the public domain and the property of the locator. There is no inhibition in the mineral lands act against alienation, and he may sell it, mortgage it, or part with the whole or any portion of it as he may see fit. Forbes v. Gracey, 94 U. S. 766 [24: 314]; Manuel v. Wulff, 152 U. S. 510 [38: 534]; Black v. Elkhorn Mining Company, 163 U. S. 449 [41: 223].

The location of the Nine Hour Lode was in all respects sufficient and valid. When the dispute afterwards arose between Robinson and Mayger as to a portion of it, there was nothing to compel the filing of an adverse claim. The settlement made gave Robinson an equitable title immediately, and ultimately he was to have the complete legal title, to a piece of ground which, it seems, rightfully belonged to him. The government was not [656]defrauded in any way, nor was there any legal or moral fraud involved in the transaction. The settlement and adjustment of the dispute with reference to the right of possession appears upon its face to have been satisfactory to the parties when made, and should be upheld unless contravening some statute or some fundamental principle of law recognized as the basis of public policy. There was no such statute, and settlements of matters in litigation, or in dispute, without recourse to litigation, are generally favored, and are apparently of frequent occurrence in regard to mining land claims; nor is there anything in the decisions of this court to throw doubt on their validity.

In Ducie v. Ford, 138 U. S. 587 [34: 1091], a contract of the character of that under con

the pre-emption laws, and the right to sell
them freely exercised after the claim was
proved up, the land paid for, and the certifi-
cate of entry received. In view of these
facts we cannot suppose, in the absence of an
express declaration to that effect, that Con-
gress intended to tie up these lands in the
hands of the original owners until the gov
ernment should choose to issue the patent."

*In Davenport v. Lamb, 13 Wall. 418 [20: [657]
655], a covenant made by certain grantors
"that if they obtain the fee simple to said
property from the government of the United
States, they would convey the same to the
grantee, his heirs or assigns, by deed of gen-
eral warranty," made with reference to a
tract of land taken up under what was
known as the Oregon donation act, was up-
held although the point that the covenant
was against public policy was distinctly
made.

In Lamb v. Davenport, 18 Wall. 307 [21: 759], Mr. Justice Miller, speaking of claims under that act, said: "They were the subjects of bargain and sale, and, as among the parties to such contracts, they were valid. The right of the United States to dispose of their own property is undisputed, and to make rules by which the lands of the government may be sold or given away is acknowledged; but, subject to these well-known principles, parties in possession of the soil might make valid contracts, even concerning the title, predicated upon the hypothesis that they might thereafter lawfully acquire the title, except in cases where Congress has imposed restrictions on such contracts."

And to the same effect see Gaines v. Molen, 30 Fed. Rep. 27, where the subject was considered by Mr. Justice Brewer, then circuit judge.

Anderson v. Carkins, 135 U. S. 483 [34: 272], involved a contract made by a homesteader to convey a portion of a tract when he should acquire title thereto from the United States, and was disposed of on different grounds. It was stated in the opinion that "the theory of the homestead law is