A good deal of testimony was taken, but the case was practically submitted and a decree entered upon a stipulation of facts made by the Government and defendants. It of itself is quite voluminous, but we deem only certain of its facts material.

By the act of July 25, 1866, supra (ch. 242, 14 Stat., 239), Congress authorized and empowered the California & Oregon Railroad Co., which had been organized under a statute of the State of California, and such company, organized under the laws of Oregon, as the legislature of that State should designate, to construct and maintain a railroad and telegraph line between the city of Portland, in Oregon, and the Central Pacific Railroad in California, as follows: The California & Oregon Co. to construct that part of the railroad and telegraph line within the State of California, beginning at a point to be selected by the company on the Central Pacific Railroad in Sacramento Valley, and running thence northerly through the Sacramento and Shasta Valleys to the northern boundary of the State. The Oregon Co. to construct the part in Oregon from Portland south through certain designated valleys to the southern boundary of Oregon to connect with the part constructed by the first-named company. Whichever company first completed its respective part of the road from the designated terminus to the boundary line between the States was authorized to continue construction until the parts should meet and connect, and the whole line of railroad and telegraph should be completed.

Section 2 of the act granted to the companies, their successors and assigns, “for the purpose of aiding in the construction of said railroad and telegraph line, and to secure the safe and speedy transportation of the mails, troops, munitions of war, and public stores over the line of said railroad, every alternate section of public land, not mineral, designated by odd numbers, to the amount of 20 alternate sections per mile (10 on each side) of said railroad line."

In case of deficiency in the original sections granted other lands might be selected in lieu thereof. Upon the filing of the survey of the railroad the lands granted were to be withdrawn from public sale so far as located within the limits designated. And it was provided that the lands granted should be applied to the building of the said road within the States, respectively, wherein they were situated; and that the lands reserved by the Government should not be sold except at double the minimum price of public lands, with provisions for sale to actual settlers under the preemption and the homestead laws.

Section 3 granted to the companies the right of way through the public lands "for the construction of said railroad and telegraph line" 100 feet in width on each side of the road, including grounds for stations, etc., and the right to take from the public lands materials for the construction of the road.

Section 4 provided that when 20 or more consecutive miles of any portion of the railroad and telegraph line should be ready for the service contemplated, commissioners should be appointed by the President to examine the same, and if it should appear that 20 miles had been completed and equipped in all respects as required by the act, and the commissioners should so report under oath to the President of the United States, patents should issue to the companies or either of them, as the case might be, to the extent of the completed section, and successively as 20 or more miles should be constructed, until the entire railroad and telegraph line authorized by the act should be constructed, and patents to the lands granted should be issued.

Section 5 expressed that the grants were made upon the condition that the companies should keep the railroad and telegraph in repair and use and transport the mails and dispatches for the Government when required to do so by any department thereof; that the Government should have the preference in the use of the railroad and telegraph at reasonable rates not exceeding those paid by private parties, and that the road should remain a public highway for the use of the Government, free of toll or other charges upon the transportation of the property or troops of the United States, and at the cost and charge of the corporation or companies.

Section 6 required assent to the act to be filed in the Department of the Interior within one year after the passage of the act, and that the first section of 20 miles should be completed within two years and 20 miles in each year thereafter, and the whole on or before July 1, 1875; and the road to be of the saine gauge as the Central Pacific Railroad of California and be connected therewith.

Section 7 required the roads to be operated and used as one connected and continuous line and afford to the Government and the public equal advantages and facilities as to rates, time and transportation.

Section 8 provided that for failure to file assent to the act or to complete the road as required the act should be null and void, "and all the lands not conveyed by patent to said company or companies, as the case may be, at the date of such failure, shall revert to the United States."

And it was provided if the road and telegraph should not be kept in repair and fit for use the United States might put the same in repair and use and might devote the income of the road and telegraph line to repay all expenditure caused by the default of the companies or either of them, or might fix pecuniary responsibility not exceeding the value of the lands granted.

Section 9 provided that wherever the word "company" or "companies" was used in the act it should be construed to embrace the words "their associates, successors, and assigns" the same as if the words had been inserted or thereto annexed.

Sections 10 and 11 are not material to be quoted. And section 12 provided that Congress might, at any time, having due regard for the right of the companies, “add to, alter, amend, or repeal" the act.

To avail of the grant, the Oregon Central Railroad Co. was incorporated October 6, 1866. It projected its road from Portland to Forest Grove, thence southerly on the westerly side of the Willamette River and became known as the "West Side Co." and its railroad line as the "West Side Line."

The Legislature of Oregon, by joint resolution adopted October 10, 1866, designated the Oregon Central as the road to receive the land grant. (There were certain steps in the organization of the company not important.)

The assent of the company to the act of 1866 was filed in the office of the Secretary of the Interior and subsequently (Aug. 20, 1868) a map of survey of its projected line. April 22, 1867, certain persons, contending that the West Side Co. had not been lawfully incorporated or organized, and desiring to secure the grants and other benefits under the act of 1866, caused proceedings. to be taken, intending to organize under the general laws of Oregon the Oregon Central Railroad Co., of Salem, and so named in its articles of incorporation. It projected its line of railroad on the easterly side of the Willamette River and became known as the "East Side Co." and its rail road line as the "East Side Line."

In furtherance of its design it procured from the Legislature of Oregon, on October 20, 1868, the adoption of a joint resolution which declared that the West Side Co. was not properly incorporated and was incapable of receiving the grant, and designated the Oregon Central Railroad Co., organized at Salem on April 22, 1867, "as the company entitled to receive the lands in Oregon and the benefits and privileges conferred by the said act of Congress." (Oregon session laws, 1868.)

Controversy arose between the companies as to which was entitled to the benefits of the act of 1866, which controversy continued until about January, 1870.

The controversy was carried to Congress, and on April 10, 1869, Congress passed an act which amended section 6 of the act of 1866 so as to allow any railroad company theretofore designated by the Legislature of Oregon to file its assent to the act of 1866 within one year from the date of the amending act, and providing that nothing therein contained should impair any rights theretofore acquired by any railroad company; but declaring that neither the act of 1866 nor the amending act should be construed to entitle more than one company to a grant of land. “And provided further, That the lands granted by the act aforesaid (act of 1866) shall be sold to actual settlers only, in quantities not greater than one quarter section to one purchaser, and for a price not exceeding $2.50 per acre.'

*

On June 8, 1869, the East Side Co. adopted a resolution which recited the act of July, 1866, its designation by the Legislature of Oregon as the company to receive the grant, the passage of the act of April 10, 1869, and concluded as follows: "This company, the Oregon Central Railroad, of Salem, Oreg., * * do hereby accept all the provisions, rights, privileges, and franchises of said act of July 25, 1866, of all acts amendatory thereof, and upon the conditions therein specified, and do hereby give our assent and the assent of such company thereto."

* * *

and

A certified copy of the resolution was filed in the office of the Secretary of the Interior June 30, 1869, and in the following October a map of survey of location of the first 60 miles of the projected line. On December 24, following, the company completed the first 20 miles within the prescribed time, and the same was examined and approved by commissioners appointed therefor pursuant to the provisions of section 4 of the act of 1866.

March 16, 1870, the Oregon & California Railroad Co. was incorporated, and, on March 29, 1870, the East Side Co. assigned to it all of its property, including the land grant, with present and future rights under the act of July, 1866, and acts amendatory thereof and supplemental thereto, and by virtue of any act or resolution of the Legislature of Oregon, and by the action of its stockholders the East Side Co. was dissolved and its stock canceled.

Resolutions were adopted by the Oregon & California Railroad Co. accepting the transfer and also a resolution accepting the act of 1866 and amendments thereto, and "all the benefits and emoluments therein or thereof granted, and upon the terms and

conditions therein specified." and authorizing its assent to be filed with the Secretary of the Interior and a copy of the deed of assignment from the Oregon Central Railroad Co. This was done, and since the date of the transfer (Mar. 29, 1870) the Oregon & California Railroad Co. has assumed and still assumes itself to be the successor of the East Side Co. and of all its rights under the acts of Congress.

The West Side Co. abandoned all claims under the act of 1866 and solicited and obtained from Congress by the act of May 4, 1870, a grant of other lands. The act recited (sec. 1) that for the purpose of aiding in the construction of a railroad and telegraph line from Portland to Astoria, and from a suitable point of junction near Forest Grove to the Yamkill River, near McMinnville, in the State of Oregon, there is granted to the Oregon Central Railroad Co., now engaged in constructing the said road, and to their successors and assigns, the right of way through the public lands, and the right to take materials from the public lands and necessary lands for depots, etc., not exceeding 40 acres at any one place; and also 20 alternate sections per mile of the public lands, not mineral, excepting coal or iron lands, designated by odd numbers, not disposed of or reserved or held by valid preemption or homestead rights at the time of the passage of the act.

There was the usual provision for selecting other lands in case of deficiency; the survey of the lands along the line of the railroad; the segregation of lands upon the survey and location of 20 or more miles of road; and for the disposition of the lands reserved by the Government within the limits of the grant only to actual settlers at double the minimum price for such lands.

The issuance of patents was provided (sec. 3) upon the completion and equipment of 20-mile sections of the railroad.

By section 4 it was enacted "That the said alternate sections of land granted by this act, excepting only such as are necessary for the company to reserve for depots, stations, sidetracks, wood yards, standing ground, and other needful uses in operating the road, shall be sold by the company only to actual settlers in quantities not exceeding 160 acres or a quarter section to any one settler, and at prices not exceeding $2.50 per acre."

It was provided (sec. 5) that the company should, by mortgage or deed of trust to two or more trustees, appropriate and set apart the net proceeds of the lands as a sinking fund, to be kept invested in United States bonds or other safe securities for the purchase from time to time of the first mortgage construction bonds on the road, depots, etc., and that no part of the funds should be applied to any other purpose until all of the bonds should have been purchased or redeemed or canceled.

An assent to the act was required to be filed with the Secretary of the Interior (sec. 6) and it was expressed that the grant was upon the condition that 20 miles or more of the road should be completed within two years and the entire road and telegraph line within six years from the date of the act.

In this act Congress, by the words “Oregon Central Railroad Co,” referred to the West Side Co.

On July 20, 1870, the West Side Co. filed its assent to the act in the office of the Secretary of the Interior.

During the year 1870 the Oregon & California Railroad Co, procured, by mortgage bonds, approximately $8,000,000, and during the year 1871 the West Side Co. in the same way procured about $1,000,000. With the funds thus procured the lines of railroad contemplated by the act of 1866 and the act of May 4, 1870, respectively, were prosecuted continuously until about January, 1873.

As stated, the East Side Co. completed the construction of the first 20 miles of its railroad, and the Oregon & California Railroad Co., after the assignment and transfer to it, as stated, continued construction in 1870, 1871, and 1872 for a distance of approximately 197 miles; and the West Side Co., with the funds procured by it in 1871, constructed its line under the act of 1870 from Portland to McMinnville, a distance of approximately 47 miles. There was no other construction by the West Side Co., and the lands contiguous to the line of road from Forest Grove to Astoria was forfeited by act of Congress of January 31, 1885.

Financial vicissitudes came to both companies and construction was suspended. It was never resumed by the West Side Co., and the East Side Co., under its new name of Oregon & California Railroad Co., finally became, by the assignment of the West Side Co., the owner of the grants under both acts.

The consideration of the conveyance was the payment of the debts of the West Side Co. Since the date of the conveyance the Oregon & California Railroad Co. has assumed and still assumes itself to be the successor of the West Side Co., in and to all of the rights, franchises, and property granted or intended to be granted by the act of May 4, 1870.

Further financial difficulties impeded the construction of the road and these were met by the various processes detailed in the stipulation of facts, and which we omit, except as referred to in the opinion. Among these were a cancellation of the stock of the company and a reissue secured by a trust deed, of which Stephen T. Gage became the only surviving trustee, an issue of bonds, the trust deed to the Union Trust Co., leases to the Southern Pacific Co., and the final control by that company through stock ownership of all of the proprieties and land grants. That company thereafter administered the land grants. These transactions were alleged as breaches of the conditions which, it is contended, were constituted by the provisos in the respective acts given above, providing for the sale of the granted lands to actual

settlers.

There were sold by the Oregon & California Railroad Co. prior to May 12, 1887, 163,430.28 acres of the granted lands, nearly all of which were sold to actual settlers in small quantities, although in a few instances the quantities exceeded 160 acres to one purchaser, and the prices were slightly in excess of $2.50 an acre. A rapidly increasing demand for the lands in large quantities at increased prices commenced about 1889 or 1890 and has continued ever since. From 1894 to 1903 some of the granted lands were sold to persons not actual settlers in quantities and at prices exceeding the maximum designated in the provisos, and in several instances in quantities from 1,000 to 20,000 acres and to one purchaser at prices ranging from $5 to $40 an acre-and in one instance a sale of 45,000 acres at $7 an acre to a single purchaser. About 5,306 sales were made, aggregating 820,000 acres, of which sales about 4,930 were for a quantity not exceeding 160 acres and 376 sales in quantities exceeding 160 acres to one purchaser, aggregating 524,000 acres. The latter sales were to persons other than actual settlers and for other purposes than settlement and at prices in excess of $2.50 an acre; and approximately 478,000 acres were sold since 1897, and approximately 370,000 of the 524,000 were sold to 38 purchasers in quantities exceeding 2,000 acres to each purchaser. Approximately three-fourths of all sales made since 1897 were made by contracts providing for the payment of the purchase price in from five to ten annual payments and execution of conveyance upon final payment, a consider able number of which contracts were pending when this suit was brought.

On January 1, 1903, the company withdrew from sales all of its lands and refused to accept offers for any of them, asserting that they were timberlands and unsuitable for settlement. At the time the answer was filed there remained unsold 2,360,492.81 acres, of which 2,075,616.45 acres were therefore patented under the land-grant acts, and 284,876.36 acres at that time remained unpatented, all of which are claimed by the company under the land grants.

Since January, 1903, over 4,000 persons have applied to purchase certain of the unsold lands, claiming that they desired to do so for the purpose of settling and establishing homes thereon, and each applicant stated that he was willing and able to tender at the rate of $2.50 therefor. Until about the year 1890 or 1891 there was substantially no demand for the granted lands except for the purpose of settlement, and nearly all of the sales prior to the year 1894 were made for settlement and to settlers.

Prior to 1894 the company maintained an immigration bureau to induce settlement upon the lands, and the greater part of the sales made after that year were to persons not settlers and for prices exceeding $2.50 per acre.

It was testified that the gross amount of lands that inured to the Oregon & California Railroad Co. under both the east side and the west side grants was 3, 182, 169.57 acres, and it was stipulated that between the years 1871 and 1906 there were patented under the east side grant 2,745,786.68 acres, and between the years 1895 and 1903 there were patented under the west side grant 128,618.13 acres, leaving unpatented 307,764.76 acres. At the time the answer was filed there remained unsold of the granted lands 2,360, 492.81 acres, of which 2,075,616.45 acres were therefore patented to the Oregon & California Railroad Co. under the land grants, and 284,876.36 thereof at that time remained unpatented, all of which unsold lands are claimed by the railroad company under and by virtue of the grants. The reasonable value of said unsold lands exceed the sum of $30,000,000. There is a table attached to the answer showing the net amount received by the railroad company to be, after all disbursements, $2,495,094.03. (The bill, as we have seen and presently more at length refer to, prays a forfeiture of the unsold lands only.)

Pursuant to the rules and regulations of the Interior Department, all of the patents were issued to and based upon applications in writing therefor from time to time filed in the appropriate land office of the United States by the Oregon & California Railroad Co. as the "successor and assign" of the East Side Co. and the West Side Co., respectively. Each application was accompanied by an affidavit, which alleged among other things the following: "The said lands are vacant, unappropriated, are

not interdicted mineral, nor reserve lands, and are of the character contemplated by the granting act" under which the patents were applied for.

The stipulation sets out the creation of an auditor of railroad accounts and subsequently the creation of a commissioner of railroads, and his duties by various acts of Congress until 1904, when the bureau was terminated and the duties, files, and records thereof were transferred to the Secretary of the Interior, and that from 1879 to and including 1903, reports were made of the transactions of the land department of the Oregon & California Railroad Co. upon blanks furnished by such bureau. The details of the reports are given, which show many sales of the lands in excess of $2.50 per acre.

The bureau, it is stipulated, made annual reports to the Secretary of the Interior which were embodied in his annual report to the President, and by the President forwarded to Congress, where they were referred to appropriate committees and printed as executive documents.

These reports show the administration of the grants by the company, the number of acres received under the grants, the number sold, and at what prices, some of which exceed $2.50 per acre, and that the price asked for lands not sold was in excess of that sum per acre.

OPINION IN THE CASE OF OREGON & CALIFORNIA RAILROAD CO. v. UNITED STATES.

(The opinion was delivered by Mr. Justice McKenna.)

A direct and simple description of the case would seem to be that it presents for judgment a few provisions in two acts of Congress which neither of themselves nor from the context demand much effort of interpretation or construction. But the case has never been considered as having that simple directness. A bill which occupies 78 pages of the record (exclusive of exhibits), the allegations of which were iterated and reiterated by cross complainants and interveners and added to, and an answer that admitted or traversed their averments with equal volume and circumstance, constituted the case for trial. Seventeen volumes of testimony, each of many pages, were deemed necessary to sustain the case as made. It is certain, therefore, that no averment has been omitted from the pleadings; no fact from the testimony that has any bearing on the case; the industry of counsel has neglected no statute or citation," and their ability no comment or reason that can elucidate or persuade. As we proceed it will be seen that we have rejected some contentions. It is not the fault of counsel if we have misunderstood them.

Yet, with all the research, it may be on account of it, the contestants have not preserved an exact alignment and have shown no preference as to the company in which contents are made or opposed.

The Government contends that the provisos, we so designate them and shall so refer to them, though they differ in technical language, constitute conditions subsequent and that by the alleged breaches indicated the lands became forfeited to the Ünited States. The railroad company and other defendants contend that the provisos constitute restrictive and unenforceable covenants. The cross complainants insist that a trust was created for actual settlers and the interveners urge that the trust has the broader scope of including all persons who desire to make actual settlement upon the lands.

This curious situation is presented: The Government joins with the railroad in opposing the contentions of the cross complainants and interveners. Both of the latter unite with the Government in contesting the position of the railroad, but join with the railroad against the Government's assertion of forfeiture. The cross complainants attack the claim of the interveners, and the State of Oregon, through its attorney general, without definitely taking sides in the controversies, declares it to be to the interest of the State and expresses the hope that the lands now withdrawn by the railroad shall be "subject to settlement and improvement, as contemplated by the provisions of the grant, in order that these vast areas of the State may be improved, but also that the lands may not be withdrawn from taxation, thus depriving the State, and especially the 18 counties in which they are situated, of a large proportion of their resources from direct taxation." The interest and hope expressed seem like a prayer against the Government's contentions.

There is something more in these opposing contentions than a wrangle or medley of interests, and we are admonished that the words of the provisos, simple and direct as they are of themselves, take on, when they come to be applied, ambiguous and disputable meaning. It may be said at the outset that if ambiguity exists there may be argument in it against some of the contentions.