Northern Pacific Railway Co. v. Doherty

Winslow, J. The grant of a right of way across the public lands of the United States by the act of July 2, 1864, was a grant in prcesenti, and took effect when the route was definitely fixed by relation as of the date of the act. St. Paul & P. R. Co. v. N. P. R. Co. 139 U. S. 1. The route was definitely fixed across the petitioner’s land before he made his entry thereof, and the controlling question is whether the eastern terminus of the Northern Pacific Railroad was located at Duluth, Minnesota, or at Ashland, Wisconsin. In the former case the company took no right of way over public lands in Wisconsin, and must now condemn and pay for the land in question; but in the latter case it is entitled to the right of way which it is using over the petitioner’s land under its grant. The act left the exact location of both termini of the proposed railway undetermined. It was to begin at a point on Lake Superior, in Minnesota or Wisconsin, and end at “ some point ” on Puget Sound. That this course was adopted in order to leave the question of the exact termini to the decision of the corporation itself cannot be doubted. The debate lipón the bill in the House of Representatives clearly shows that this was the intention (see remarks of Mr. Sweat, Cong. Globe, 1st Sess. 38th Cong. p. 1699), and such was undoubtedly the legal effect of the language used. When such discretion is vested in a corporation, its decision will not be interfered with unless it has exceeded the limits of its discretion, or bad faith in the selection is shown. Fall River I. W. Co. v. O. C. & F. R. R. Co. 5 Allen, 221; Parke's Appeal, 64 Pa. St. 137. Un — 48 — doubtedly, also, if the selection of a terminus be in fact once deliberately made, the power of choice is exhausted, and the determination is final. Pierce, Railroads, 254; State v. N. & D. T. Co. 10 Conn. 157; Hudson & D. Canal Co. v. N. Y. & E. R. Co. 9 Paige, 323. It is claimed by the petitioner — and such was the decision of the trial court — that the Northern Pacific Company definitely located its eastern terminus at Duluth, January 1, 1812, when it purchased one half of the track and right of way of the Lake Superior & Mississippi Railroad from Thompson Junction to Duluth, and made a contract for operation of the line in common. On the other hand,-the appellant company claims that these transactions did not constitute a location or selection of the eastern terminus of the road, but that the line from Thompson Junction to Duluth simply constituted a branch line, as authorized and required by the laws of the state of Minnesota, and that the eastern terminus was not definitely located until the passage of .the resolution of the board of directors of the Northern Pacific Railroad Company, August 2, 1884, fixing the terminus of the road at Ashland, Wisconsin. The petitioner’s contention is based upon, and fully supported by, two decisions by the Secretary of the Interior, made respectively November 13, 1895, and August 27, 1896. In re Northern Pacific R. Co., reported in 21 Land Dec. Dep. Int. 412, and 23 Land Dec. Dep. Int. 204. These decisions were rendered upon application by the Northern Pacific Railroad Company to select indemnity lands in North Dakota to make up for lands lost within the limits of its grant in Wisconsin. In the first" of these decisions it was held that the company had no land grant east of Superior, because its eastern terminus was either at Duluth or Superior, and in the second it was held that it had no land grant east of Thompson Junction. The argument in support of these decisions is that the railroad company was only entitled to touch one point upon — 49 — Lake Superior; that when it purchased the half interest in the Lake Superior & Mississippi Railroad track from Thompson Junction to Duluth, and began to operate it in connection with its main line to the west, such action constituted a consolidation or association with said latter company within the meaning of the act of incorporation, and, taken in connection with the actual operation of such line for ten years, definitely located the eastern terminus of the road at Duluth, whereby it exercised finally its right of selection of a terminus; that the subsequent filing of maps and resolutions showing an intention to fix the eastern terminus at or near Ashland was of no effect, because the right to select the eastern terminal had been exhausted; and that the approval of such maps, and the acts of the department in withdrawing from sale lands in Visconsin within the place limits, as well as the acceptance, by the executive department, of the road from Thompson Junction to Ashland, could not be considered as adjudicating the terminal right, because, after the terminal had been fixed, no act of the land department or of the executive could confer any right in the matter. Notwithstanding the strength of the argument made by Secretary Smith in these decisions, we find ourselves unable to agree with his position. The claim that the company was necessarily confined to a single point upon Lake Superior by the terms of its grant does not seem to us sound. This contention is based upon the opinion of Secretary Lamar in In re Atlantic & P. R. Co. 4 Land Dec. Dep. Int. 458, and upon the case of U. S. v. S. P. R. Co. 146 U. S. 510. In those cases a land grant was made to the company to aid in building a railroad to begin near Springfield, in Missouri, thence to the Colorado river, and “ thence west by the most practicable and eligible route to the Pacific.” The company filed maps of its route showing that it reached the Pacific at San Buenaventura, and then extended northward along the coast — 50 — '380 miles, and made San Francisco its terminus, claiming that its land grant extended to San Francisco. This claim was overruled by the Secretary and by the court on the ground that when the line reached the Pacific Ocean at San Buenaventura that point became the western terminus. It had constructed a line “ to the Pacific,” and its grant went no further. This view seems reasonable in consideration of the terms of the act and the situation in that case. • The road was to run “ to the Pacific.” The Pacific coast was nearly at right angles with the route of the road, and to hold that it might, after reaching the Pacific, turn northward out of its course and run several hundred miles along the coast to another port, would be evidently not within the intention of the grant. In the present case, however, the line was to commence at a “ point on Lake Superior,” meaning, of course, a shipping point. Lake Superior lies with a long finger pointing westward. Both of its coast lines are practically parallel with the necessary route of the proposed railroad. Row, it certainly could not have been contemplated that the railroad must start at the nearest or most westerly point on Lake Superior, because that would fix the terminus at Duluth and nowhere else, and make it impossible to start in Wisconsin; and it was as certainly the purpose of the act to leave the “ point ” undetermined, and to give the company a choice of shipping points at which to make their terminus, either' in Wisconsin or Minnesota. Had the company at once filed their maps showing Ashland as the eastern terminus, and commenced the construction of their line westward from Ashland, we apprehend no one would have seriously claimed that they were outside of their charter rights, even if the road touched Superior in its course westward. Having selected legitimately “ a point ” on Lake Superior, and one well calculated for their purpose, and not having gone out of their natural route to do so, what good reason could be — 51 — given for saying that they had transcended their powers ? Certainly, the fact that they have touched at Superior, and thus added- to the commercial facilities of the public, can hardly be a good reason for denying the power. The company, being entitled to start from any available point on Lake. Superior in "Wisconsin, had the right, it seems to us, to make Ashland that point; and then, having done so, its rights can hardly be curtailed by the fact that the shore of the lake runs parallel with its necessary route, so that in proceeding westward its line naturally and almost unavoidably touches another harbor. So we do not consider that the company was in any way prevented from making Ash-land its eastern terminus or from touching at Superior upon its route westward. But it is said — and this is perhaps the most serious objection — that in 18'72 the company made a practical selection of Duluth as its terminus by the purchase of a half interest in the Lake Superior & Mississippi track from Thompson Junction to Duluth, and by operating the same thereafter with its own trains. The Lake Superior & Mississippi was a land-grant railroad, and it is said that this purchase and the subsequent running agreements constitute a consolidation, confederation, or association of the two roads such as was contemplated and authorized by the third section of the act of incorporation, so that, as matter of fact, the road from Thompson Junction to Duluth became a part of the trunk line contemplated by Congress; and it is said that, unless it be so held, the Northern Pacific Railroad Company had no authority or power to make such purchase or running arrangements. Certainly, neither the purchase of one half of the roadbed of the Lake Superior & Mississippi Company, nor the subsequent operation of the roadbed in common, nor the leasing of the entire road, constituted a consolidation of the two corporations in any legal sense. Consolidation of two corporations properly may be said to take place when — 52 — the shareholders of both form a new one and dissolve the former corporations. Morawetz, Priv. Corp. § 939. It has been, also held to include a case where one corporation is enlarged and survives, issuing stock to the stockholders of the other corporation, which is dissolved and becomes merged in the former. Meyer v. Johnston, 64 Ala. 656. But nothing of the kind happened in the present case. Both corporations maintained their separate corporate existence. They simply became owners in common of a short piece of road, and made contracts with each other regulating its operation in common. It may be said that they associated themselves together, and in a certain sense this is true, but not in the sense contemplated by the act. The words “ confederate and associate ” are used in conjunction with the word “ consolidate,” and the familiar rule of nosoH/ur a sooiis plainly applies. Furthermore, the act says that this consolidation, confederation, or association is to be “ upon the terms named in the first section of the act.” The first section of the act creates the corporation, names the corporators, enumerates the corporate powers, provides for the first meeting of the corporation, names its officers and their duties, and provides for subscriptions for stock. These are the only “ terms ” named in the first section. It does not seem very clear what the words “ upon the terms named in the first section ” mean, but, if they mean anything, we think they must mean that the consolidation or association intended is one which results in a corporation combining the two corporations in one, thus satisfying the legal definition of consolidation, and not a mere ownership and operation in common of a piece of track, or a rental by one company to another of its road. Moreover, a plain and adequate reason appears to have existed for the purchase of an interest in the line from Thompson Junction to Duluth entirely outside of the consolidation provision. Sec. 18 of the act of incorporation provided that the Northern Pacific Railroad Company — 53 — should obtain the consent of the legislature of any state through which any portion of its line might pass, before commencing the construction thereof. By the act of the legislature of Minnesota approved March 2, 1866 (ch. 69, Sp. Laws of 1865), the consent was given, provided that, if the eastern terminus of the road was fixed east of the state, then the Northern Pacific Railroad Company should construct, or cause to he constructed, a line from its main line to the navigable waters of Lake Superior within the state of Minnesota. It thus became necessary for the company to comply with the terms of the proviso, provided it fixed its eastern terminus in "Wisconsin; and by its act of incorporation it was vested with all the powers and privileges necessary to carry into effect the -purposes of the act. In August, 1810, it located its proposed general route, and transmitted to the Interior department a map of such location, showing its eastern terminus to be in Wisconsin, at the mouth of the Montreal river, which map was approved by the Secretary of the Interior. Thus the condition contemplated by the proviso came into being, and it was necessary to construct a line from its main line to some Minnesota port on Lake Superior. This could be substantially complied with by the purchase of an existing line as well as by the construction of a new one, and we therefore conclude that the purchase of one half of the track of the Lake Superior & Mississippi Railroad from Thompson Junction to Duluth was simply a compliance with the proviso placed upon the Northern Pacific Railroad by the Minnesota legislature, and was not a location of the eastern terminus of the road. The result of these conclusions seems necessarily to be fatal to the petitioner’s case. One further claim should, however, be noticed. On March 6, 1865, one Josiah Perham, then president of the Northern Pacific Railroad Company, filed with the Secretary of the Interior a map showing a — 54 — proposed route of the proposed railroad. On this map there appear two lines from a point in North Dakota to Lake Superior, one ending at Duluth and one at the mouth of the Montreal river. This latter line is partially obliterated by a wavy red line through its whole length. It appears affirmatively that the president had no authority to make or file this map, and that the directors never authorized it, and, further, that on June 22, 1865, the map was rejected by the land commissioner and Secretary of the Interior because it did not comply with the rules and regulations of the land department. No further action was ever taken upon it, and it seems too plain to require argument that it can cut no figure in the case. All the subsequent maps made and filed by the corporation, as well as its recorded acts, show the clear intention to make the eastern terminus of the road in Wisconsin. In 1870 a map of general route was filed, showing the eastern terminus to be at the mouth of the Montreal river, upon receipt of which the odd-numbered sections of land within twenty miles of the line were withdrawn from sale, homestead, and pre-emption entry within the states of Minnesota and Wisconsin, and the price of land in the even-numbered sections was raised to $2.50 per acre, and large quantities of land sold by the United States at that price. In 1882 a map of definite location of the line from Thompson Junction eastward to a point in section 15, town 47, range 2 west of the fourth P. M. was filed in the land office at Washington. This line passed through Ashland, and terminated a few miles east of that city. This map was approved, and the land grant adjusted in accordance therewith by the department. In August, 1884, the board of directors of the company by formal resolution fixed the eastern terminus of the road at Ashland, and a certified copy of the resolution was filed in the general land office in December, 1884, whereupon the land commissioner made a diagram showing the eastern terminus so fixed, and adjusted the — 55 — grant in accordance therewith. The portion of the road extending eastward from Thompson Junction to Ashland was constructed in the years 1881,1882,1883, and 1884, and was examined in three sections by commissioners appointed by the President of the United States, as provided by the act of incorporation. The commissioners reported favorably upon all of these sections, and their recommendations were approved by the President, the last approval being dated February 6, 1885. All of these deliberate acts of the department and executive officers are brushed aside by Secretary Smith on the ground that the terminus of the road had been unalterably fixed at Duluth by the action of the Northern Pacific Company in 1872. As we do not agree with the Secretary’s premise, we cannot agree with his conclusion, and therefore hold that the terminus of the road is at Ash-land, and hence that the railroad company had a right of way across the petitioner’s land by virtue of the provisions of the act of incorporation. By the Cowrt.— Order reversed, and cause remanded with directions to dismiss the petition. Bardeen, J., took no part.