"The right of the company to the odd sections within the limits of its grant, covered by the Indian claim, did not depend upon the extinguishment of that claim before the definite location of the line of the road was made and a map thereof filed with the Commissioner of the General Land Office. The provisions of the third section, limiting the grant to lands to which the United States had then full title, they not having been reserved, sold, granted, or otherwise appropriated, and being free from preemption or other claims of rights, did not exclude from the grant Indian lands, not thus reserved, sold, or appropriated, which were subject simply to their right of occupancy. Nearly all the lands in the Territory of Dakota, and, indeed, a large, if not the greater, portion of the lands along the entire route to Puget Sound on which the road of the company was to be constructed, was subject to this right of occupancy by the Indians. With knowledge of their title and its impediment to the use of the lands by the company, Congress made the grant, with a stipulation to extinguish the title."

The suggestion of the Supreme Court as to the existence of the Indian right of occupancy existing at the date of the Northern Pacific grant from the eastern boundary of Dakota Territory westward to Puget Sound well illustrates the results which would follow the acceptance of this suggestion of the acting forester that a construction settled for 40 years be overthrown. If it should now be held that mere Indian right of occupancy was effectual on July 2, 1864, to take lands out of the category of public lands it would follow that every patent issued for lands so situated was invalid and the majority of titles deraigned from the Northern Pacific grant would have no protection except that of the statute of limitations. Curiously, too, it would follow that all of the arguments of the acting forester against the existence of an ascerained deficiency in the Northern Pacific grant must fail, for even he could not contend that with this vast area excluded from the grant there ever existed in the indemnity limits an area sufficient to make up even a fraction of the losses.

POINT XVII

"17. To show the values that have been lost to the United States under the act of March 2, 1896, for lands erroneously patented to the Northern Pacific." It was, of course, inevitable that in the administration of the Northern Pacific grant as well as in the administration of every other railroad grant some tracts of land not falling within the terms of the granting act should have been patented in error. Having this in mind Congress adopted various acts which prescribe a uniform rule applicable to all railroad grantees. The first of the acts was that of March 3, 1887 (24 Stat. 556). This act after directing the Secretary of the Interior to proceed with the adjustment of all railroad grants in accordance with the construction placed upon them by the Supreme Court, provided that if it should appear in the course of such adjustment that lands had been erroneously patented to any railroad company a demand for reconveyance should be made and in case of default in complying with such demand, suit should be brought by the United States to cancel the patents so erroneously issued. By act of March 3, 1891 (26 Stat. 1093), Congress provided that no suit to cancel any patent theretofore issued should be maintained unless instituted within five years from the date of the act and that no suit to cancel any patent thereafter issued should be maintained unless instituted within six years from the date of the patent. By the act of March 2, 1896 (29 Stat. 42), the above limitation was again modified by a provision that suits might be maintained to cancel patents theretofore issued if instituted within five years, notwithstanding the limitation of the act of March 3, 1891, supra, which had not then expired. The act confirmed the title of all lands so erroneously patented which were held by bona fide purchasers from the railroad grantee. The act further provided that whenever the title of such bona fide purchaser should be so confirmed, suit might be brought against the patentee and recovery had by the United States of the purchase price received by it but in no event in an amount exceeding the Government price of $1.25 per acre.

The Acting Forester in his argument takes exception to the uniform policy adopted by Congress in the legislation summarized above. He says:

"It is submitted that it is not good business from the Government standpoint in cases where lands have been erroneously patented under a railroad land grant to take only $1.25 per acre, notwithstanding the fact that the

grantee railroad company may have received more than this price for the lands."

It does not, however, accord with reason that the policy established by Congress and applied in the adjustment of railroad grants for more than 30 years should now be departed from and an effort be now made to open the adjustment of the scores of grants which have been closed and seek to recover from the grantees for lands erroneously patented sums in excess of those at which the Government offered such lands to any applicant.

The Supreme Court in United States v. Winona & St. Peter Railroad Co. (165 U. S. 463) considered at length the reasons which led Congress to adopt the policy now criticized by the Acting Forester. And on the facts of this same case, the court reached a conclusion which, if the tentative adjustment of the Northern Pacific grant now under consideration shall be sustained, or, indeed, if any deficiency shall be found in the Northern Pacific grant, constitutes a complete answer to this suggestion of the Acting Forester.

In the case cited it appeared that the Winona & St. Peter Railroad Co. had succeeded to the rights of the State of Minnesota under a grant made by Congress in aid of a line of railroad. This grant contained substantially the same provisions as did the Northern Pacific grant defining adverse claims and appropriations which were effectual to except lands therefrom. During a long period, and before certain decisions by the Supreme Court holding otherwise, the Interior Department had uniformly held that abandoned but uncanceled homestead entries and preemption filings of record in local land offices at the date of the definite location of the line of road in aid of which the grant was made did not except the lands from the grant, and pursuant to these rulings had certified to the State of Minnesota for the benefit of the Winona & St. Peter Co. certain lands covered by such uncanceled entries and filings. The legal effect of such certification was the same as the issuance of patents. The lands so certified were all situated in the place or granted limits of the grant in question. After the lands were so certified the railroad company had sold them for a valuable consideration to persons who had no actual knowledge of the adverse claims of record in the land office and who believed that the railroad title was valid. The suit was instituted by the United States under the act of March 3, 1887, to cancel the certifications. The court held that the act of March 2, 1896, supra, confirmed the title of the purchasers although enacted after the suit was instituted and that, therefore, the certifications, though confessedly erroneous, could not be canceled. It was then contended by the Government that under the provisions of the act of March 2, 1896, a recovery should be allowed against the company for the Government price of the land. The court, after pointing out that the complaint did not specifically pray for this relief, said:

"But, lastly and chiefly, that it does not appear from this record either that the railroad company received an excess of lands, or has even received (these lands included) the full quantity of lands promised in the grant; and, further, that it does not appear that there were not within the granted or indemnity limits lands which the company might have rightfully received but for this erroneous certification. It will hardly be contended that if, simply through a mistake of the Land Department, these lands were certified when at the time other lands were open to certification which could rightfully have been certified, and which have since been disposed of by the Government to other parties, so that there is now no way of filling the grant, the Government can, nevertheless, recover the value of the lands so erroneously certified. In other words, the mistake of the officers of the Government can not be both potent to prevent the railroad company obtaining its full quota of lands, and at the same time potent to enable the Government to recover from the company the value of lands erroneously certified."

The doctrine of the Supreme Court is recognized in Southern Pacific Co. v. United States (200 U. S. 341), where the court sustained a recovery of the Government price, but was careful to point out that there were ample lands available to satisfy the full measure of the grant.

POINT XVIII

"18. To deduct from the Northern Pacific grant an area equal to the acreage sold under the 1875 foreclosure proceedings at private sale in violation of the public sale provision of the joint resolution of May 31, 1870 (area involved) [acres] 838,852.00."

The reference of the Acting Forester to the foreclosure of 1875 and, indeed, the subsequent points suggested require a brief preliminary statement covering the foreclosure of 1875, and also that of 1896.

The granting act of July 2, 1864, gave to all of the people of the United States the right to subscribe to the company's stock, but provided by the tenth section that no mortgage or construction bonds were ever to be issued by the company without the consent of Congress.

By 1870 it had become apparent that money would not be invested in stock as contemplated by the act of 1864 and upon May 31 of that year was passed the joint resolution which declared "that the Northern Pacific Railroad Co. be, and hereby is, authorized to issue its bonds to aid in the construction and equipment of its road, and to secure the same by mortgage on its property and rights of property of all kinds and descriptions, real, personal, and mixed, including its franchise as a corporation."

The act of 1864 described the line of the company as "beginning at a point on Lake Superior, in the State of Minnesota or Wisconsin; thence westerly by the most eligible railroad route, as shall be determined by said company, within the territory of the United States, on a line north of the forty-fifth degree of latitude, to some point on Puget Sound, with a branch, via the Valley of the Columbia River, to a point at or near Portland, in the State of Oregon." The land grant described in the act of 1864 was opposite this line. The joint resolution of 1870, besides giving the right to issue bonds to aid in the construction and to secure them by mortgage, gave the company also a right to build a line not described in the act of 1864, viz, from the Columbia River (at or near Portland) to Puget Sound. with the same grant of lands per mile that had been made in the act of 1864 for the main line. The joint resolution also authorized the company to select indemnity within an additional 10 miles on each side of the limits fixed by the act of 1864. This additional 10 miles is known as the second indemnity limit.

Upon July 1, 1870, in pursuance of the authority conferred by the joint resolution, the Northern Pacific Railroad Co. executed and delivered to Jay Cooke and John Edgar Thomson, as trustees, a certain instrument known as the first mortgage and trust deed of the Northern Pacific Railroad Co. to secure 7-30 bonds, which were issued and used to the amount of $30,735,000, for the purpose of raising funds to construct and equip the railway.

Approximately 500 miles of railroad were constructed from the proceeds of these bonds which, as was found by the Circuit Court of the United States for the Southern District of New York, in its foreclosure decree hereafter mentioned, constituted a first and paramount lien on all of the property, right, title, and interest which the Northern Pacific Railroad Co. then had, or at any time thereafter might acquire, in and to the land grant as finally located. in accordance with the acts of Congress, and also upon the right of way and railroad and branches of the railroad company, and equipment, together with all the rights, liberties, and franchises, including the franchise to be a corporation, and property of every description of the said Northern Pacific Railroad Co."

The mortgage of 1870 was duly filed and recorded in the office of the Secretary of the Interior.

On January 1, 1874. default was made in the payment of interest upon these mortgage bonds, and a suit for foreclosure of the mortgage and sale of the mortgaged premises was prosecuted against the railroad company in the Circuit Court of the United States for the Southern District of New York. This suit resulted in a final decree of foreclosure and sale upon May 12, 1875, amended August 6, 1875.

A committee under a plan of reorganization, adopted by the bondholders on June 30, 1875, became the purchasers at the foreclosure sale of August 12, 1875. Upon the same day the masters made and filed their report of sale, which, upon August 25, 1875, was duly confirmed by the court by a decree of confirmation based upon the report of the masters, including as part thereof the said plan of reorganization; and the masters were directed to execute and to deliver to the committee of the bondholders under said plan of reorganization a deed of conveyance of the property, rights, liberties, and franchises sold to the purchasers being "all the properties of the said Northern Pacific Railroad Co., together with all its rights, liberties, and franchises, including the franchise to be a corporation (excepting only the lands that have been conveyed to the said company by letters patent of the United States, or certified to or for said company by the land officers of the United States in the several land districts where the same are situate, and remaining undisposed of by the said

company and trustees in accordance with the terms and provisions of the deed of trust in said final decree mentioned) as an entirety."

It was also decreed that the complainants, Jay Cooke and Charlemagne Tower, trustees of the mortgage, and George W. Cass, the receiver, at the same time should make, execute, and deliver to the said purchasers good and sufficient deeds of the same property.

Accordingly, deeds to the reorganization committee were made and delivered upon September 17, 1875, by the masters, upon September 27, 1875, by the trustees under the mortgage, and upon September 28, 1875, by the receiver.

Upon the next day, September 29, 1875, the parties who had assented to and complied with the conditions of the plan of reorganization met and, as the preferred stockholders and corporators of the Northern Pacific Railroad Co., duly organized by the election from their own number of a board of directors, in accordance with the provisions of the charter of the company; and thereupon the purchasing committee placed the railroad and property under the control and management of this board of directors.

On the same day, September 29, 1875, and prior to such reorganization, the reorganization committee adopted a preamble and resolutions upon the assumption that the franchise to be a corporation under the original act of July 2, 1864, was covered by the mortgage and had passed to and vested in the purchasers, and that thereby such purchasers and those whom they represented had become corporators of the said Northern Pacific Railroad Co. and were vested with all the rights of that company, including its franchise to be a corporation, without any further act, deed, or ceremony. This action was based on the opinion of counsel that the privilege in the joint resolution of 1870 to mortgage its franchise as a corporation included among those franchises the right to be a corporation; therefore that the corporate existence was mortgaged and passed by the foreclosure. Notwithstanding this opinion, and to remove all question, the reorganization committee made and delivered a deed of further assurance (upon March 22, 1882), conveying and transferring everything they had bought at the foreclosure sale to "the Northern Pacific Railroad Co., a corporation created by and existing under the laws of the United States of America "-that is, the company incorporated by Congress in the act of July 2, 1864. Therefore, it then became immaterial whether the right to be a corporation passed by the foreclosure or not. If it passed, the reorganizers became by that fact the corporation chartered by Congress July 2, 1864. on the other hand, such franchise did not pass, the Federal corporation retained it, and by the deed of March 22, 1882, acquired all the property and property rights of the reorganization committee. If the right to be a corporation passed at foreclosure, the purchasers deeded it back to the Federal company, and if it did not pass by the foreclosure the Federal company retained it.

If,

Thereupon the reorganized company began, and during the next 18 years proceeded to construct and complete its railway in accordance with the act of 1864, and in fulfillment of the congressional purpose to the Pacific coast, more than 1,875 miles, at a cost of upward of $140,000,000, raised through the issue of bonds secured by six several mortgages, all of which were duly and contemporaneously filed in the Department of the Interior, as follows, to wit: (1) Missouri Division mortgage, May 1, 1879, $2,500,000; (2) Pend d'Oreille Division mortgage, 'September 1. 1879, $4,500,000; (3) general first mortgage, January 1, 1881, $41,879,000; (4) general second mortgage, November 20, 1883, $20,000,000; (5) general third mortgage, December 1, 1887, $11,461,000; and (6) consolidated mortgage, December 2, 1889, $45,520,000. Frome time to time between November 20, 1871, and December 8, 1884, maps of definite location of the railway were filed by the Northern Pacific Railroad Co. in the Department of the Interior.

During the years 1893 to 1896 the company was in the hands of receivers appointed by various circuit courts of the United States. In these proceedings the mortgages above stated were adjudged to be liens against the railway and, with exceptions here immaterial, against the land grant, and these properties were sold under final decree dated the 27th of April, 1896. The sales were held during July and August of that year, and were confirmed by the various circuit courts having jurisdiction. The Northern Pacific Railway Co., a Wisconsin corporation, at these sales purchased the railway and land grant, and on the 1st day of September, 1896, was by the said courts admitted into possession.

It has remained in possession ever since, has rebuilt large portions of the railroad and greatly improved it,, double-tracked a large part of it, and has expended thereon in additions and betterments and improvements over $205,712,940.14.

The successorship of the Northern Pacific Railway Co. has not escaped challenge during this time and these challenges have involved not only the foreclosure of 1893-1896, but the foreclosure and sales of 1875, discussed by the Acting Forester. Substantially all the objections which he raises to the foreclosure of 1875 and a number of other objections have been discussed on two occasions before the Attorney General of the United States; with the result that Attorney General Judson Harmon, February 6, 1897, and Attorney General W. H. Moody, April 12, 1905, sustained the land grants made by Congress to the Northern Pacific Railroad Co., and the due succession thereto of the railway company. December 26, 1899, the Acting Secretary of the Interior through his attorney, the present Mr. Justice Van Devanter, held that the Northern Pacific Railway Co. was successor of the railroad company and was entitled to receive patents of lands coming within the grants by Congress to that company.

In every way the United States since 1896 has recognized the title of the railway company to the land grants that were made to the railroad company. The Department of the Interior during the same time has been working on the adjustment of the grants and has patented thereunder 15,593,986.64 acres of land to the railway company.

Objections made now to the foreclosrue or sale thereunder of 1875 are nearly 50 years after the event and involve overruling at this late day the judgment of the Circuit Court of the United States rendered in 1875, the opinions of the Attorney General of the United States referred to, and the practice and action of both the executive and legislative departments of the United States during the whole period.

In the letter of the Acting Forester, page 26, and in the brief which he submits, page 36 and following, it is over and over asserted that the joint resolution of 1870 required the land grant of the company, if sold on foreclosure, to be sold in single sections or subdivisions in the States where the lands lay. The contention is that this provision was violated in the foreclosure of 1875, and this violation apparently is assigned as a reason for forfeiting the grant.

The whole contention is based on assertion that the joint resolution of 1870 requires the land grant to be sold in this manner. Unless the joint resolution did so require this there is nothing in the contention.

(a) It is obvious that the joint resolution makes no requirement as to any lands, except those granted by the resolution; and the resolution did not affect any lands that were involved in the foreclosure of 1875, or that belonged to the company at that time.

The resolution reads: "That all lands hereby granted to said company which shall not be sold or disposed of or remain subject to the mortgage by this act authorized, at the expiration of five years after the completion of the entire road, shall be subject to settlement and preemption like other lands at a price to be paid to said company not exceeding two dollars and fifty cents per acre; and if the mortgage hereby authorized shall at any time be enforced by foreclosure or other legal proceeding, or the mortgaged lands hereby granted, or any of them, be sold by the trustees to whom such mortgage may be executed, either at its maturity or for any failure or default of said company under the terms thereof, such lands shall be sold at public sale, at places within the States and Territories in which they shall be situate, after not less than sixty days' previous notice, in single sections or subdivisions thereof, to the highest and best bidder."

The grant of 1864 contained no authority to mortgage and consequently no direction as to sales on foreclosure. The whole grant of the company from Lake Superior to Puget Sound rests on the act of 1864 and did not come through the joint resolution. The full scope of that resolution as a grant was of lands between Portland and Tacoma equivalent per mile of road to the grant created by the act of 1864. Also the joint resolution created a second indemnity belt for the whole grant 10 miles in width outside the indemnity limits of 1864.

The proviso says that in case the mortgage shall be foreclosed or "the mort gaged lands hereby granted, or any of them, be sold," such lands, i. e., lands hereby granted shall be sold as stated. But lands "hereby granted" means