Trustees of the Internal Improvement Fund v. St. Johns Railway Co.

Judge White,

of the Second Circuit,.(sitting in the. place .of Mr. Justice Westcott, disqualified,) delivered the opinion -of the court. -

There are two questions involved in this Case—•

First. Whether the' 13th section of the St:‘Johns ‘Railway •charter granting'swamp and overflowed' lands to'this company is unconstitutional, as'impairing'the obligation of contracts arising under the internal' improvement act'of Janmary 6, 1855?

Second. Whether the St. Johns'Railway was constituted •in accord anee with the' provisions‘and' specifications of the internal improvement act'; and, if not1, whether-the doing of"' this was a condition precedent' upon 'which the grant to it should take effect?

The lands granted "to the cómpaÜiy áre a'portion of those which were granted to the State-by' act bf Congress'of September 28, 1850. This act specifies the Object and' conditions of the grant, and the Supreme Court Of the United States, commenting on it, says': “ It is" not doubted that the •grant by the United States to the State, upon conditions, and tlio acceptance of the grant by the State, constituted a-contract. All the elements of a contract met in the transaction, competent parties, proper subject-matter, sufficient-consideration, and consent of minds. This contract was binding upon the State, and could not be violated by its legislation without infringement of the contract. The grant required the State to appropriate the lands granted to the purpose of reclaiming them.” McGhee vs. Mathis, 4 Wallace, 155.

From this case we see that it was the-opinion of the Supreme Court of the United States that any disposition of the lands -for objects and purposes other than those of the grant, and in such a manner as to defeat these, would be ». violation of this contract.- This leads to the inquiry whether the act of the Legislature consolidating them with the' lands granted to the State for internal improvement purposes, and vesting them in trust under the second section,, ■was enacted with a view and intention of carrying into-effect the contract entered into under the act of Congress. It cannot be supposed that the Legislature by this act intended to violate this contract, but it must be assumed that the contrary was their intention.

By referring to the act of Congress, we find that the object of the grant was to enable the States to reclaim these lands for settlement and cultivation, and the means of doing this, as pointed out - in' the act, was by the use of the proceeds of these lands, or the appropriation of the lands in kind. The only condition annexed to the grant was that-they should be applied exclusively, so far as necessary, -to-the purpose of reclaiming said lands by levees and drains. Wherever these means were not necessary, a full discretion-was left to the States in the choice of other means, not inconsistent with the grant, which they might deem most appropriate to carry into effect its object. Some of them might be best reclaimed by means of drains, some by levees,, and some by both combined. But the States in which they were situated were necessarily to be the judges and to have the power of determining the necessity of either, or both modes; or whether the object could be better accomplished to any extent by other methods..

It is true, that the leading object of the Legislature in-passing this act seems to have been to provide for and encourage a liberal system of internal improvements in this State, and for this purpose they set apart all of the internal improvement and swamp and overflowed lands acquired by the grant, and declared them to be a separate and distinct fund, to be strictly applied according to the provisions of the act. (Section. 1.) For the purpose of assuring a proper application of this fund for the purposes therein declared, they vested these lands in five trustees, by the second section, to be held by them in trust for the uses and purposes thereinafter provided. The leading and primary use and purpose thereinafter provided, to which the fund was made applicable, was to aid in the construction of those lines oF road and canal mentioned in the 4th section, and which have been held by this court in all of its adjudications of this act to be a State system. The terms, conditions, and manner in which this aid should be extended to roads which might accept its provisions were prescribed- in the act.' Another use and purpose for which this fund was set apart and to which it was made applicable was that provided in the 16th section. Finally, these lands were to be applied in such manner as might be directed by the Legislature upon the contingencies mentioned in the 27th section. But all of .these uses were intended to be subject to the power reserved to the General Assembly in the 29th section of the act to grant alternate sections of the swamp and overflowed lands, for six miles on' each side, to such railroads to be thereafter chartered, as they might deem proper.

"We have now the grant by Congress, its objects, and thr legislative aoüon and power over the subject, and we are of opinion that in passing this act, the Legislature intended as one of its main objects to carry into effect the purposes of this grant. If this intention can be collected from the act, it must control its construction. That such was its intention is evident from the 16th section, which provides that “ the trustees shall make such arrangements for drainage of swamp and overflowed lands as in their judgment may be most advantageous to the internal improvement fund and the settlement and cultivation of the land.”

This is one of the modes of reclaiming these lands pointed out in the act of Congress. This intention is further evident fx-om the 29th section, in which the power to grant alternate sections is reserved to the General Assembly, which is limited to this class of lands granted by Congress, and must be construed in inference to this grant, and as one of the means of reclaiming it.

It is clear from these provisions that the Legislature intended that the trust created by the second section of this act should be subject to, and to some extent controlled by its subsequent provisions.

As further evidence of this we refer to the 28th section, in which the right of way is gx’anted, and to the 15th section, in which the alternate sections of State lands for six miles on each side are gi’anted to the diffei'ent coixxpanies which might thereafter construct portions of the lines of road indicated in the 4th section, “ but the title to the same shall not vest in the company except as the road progresses, and not until thirty miles ai’e completed, when the company may sell one-half of the same within said thirty miles, and on the completion of thirty additional miles, then they may sell the balance of their lands remaining unsold in the first thirty miles, and so oxi for each division of thirty miles until the road is completed.” It will be noticed that the grant ot the light of way is unconditional; that of the alternate sections was to take effect upon the contingencies mentioned in the 15th section. Nothing further was left to be done by the State or the Trustees to vest the title of these lands in the companies; it was a present grant to take effect as the work progressed.

"What stronger evidence could be given than that drawn from these sections, that the Legislature intended that the trust created by the 2d section of the act should be subject to, and to some extent controlled by, its subsequent provisions ?

If correct in the position that the Legislature intended by this act to execute to some extent the contract arising under the act of Congress, and that they intended that the trust created by the 2d section of the internal improvement act should be subject to, and to some extent controlled by, its subsequent provisions, then the importance of the reservation of the power over this subject in the 29th section becomes more’striking and apparent, as a necessary means of more fully carrying into effect the purposes of the grant by Congress.

It must be borne in mind that a very small portion of the lands vested in the Trustees were donated for general internal improvement purposes, not exceeding five hundred thousand acres; much the larger portion, probably nineteen-twentieths of them, was donated under the grant of the swamp and overflowed lands. When this vast domain is considered, much, if not most, of it lying out of the reach and beyond the influence for development of the great and leading works indicated in the 4th section, it would have been singular if some such power had not been reserved. No more efficient mode of reclaiming them could have been devised than that of constructing lines of railroad and canals through them, thus rendering them accessible to settlers, furnishing transportation for their productions, enhancing the value of the adjacent lands, and making these available for the fund and leading purposes of the trust, which would otherwise be valueless to it; and as such works producing such results are ordinarily beyond the capacity of individual capital and enterprise, it was a wise provision of the act to reserve the power and authorize the use of these lands for such purposes by granting portions of them to corporations, which, by combination of capital, could more successfully accomplish those objects. Railroads, more than any other modern institution, are considered the great developers of new countries, by hastening their settlement and rapid improvement, and in a State, situated as is a large portion of ours, with its greatly-diversified climate and varied productions, but much of it inaccessible for want of transportation, no one can estimate the value which such works would add to these lands and the resulting advantages to the fund, to say nothing of their influence in sustaining the roads, which were the primary objects of the trust. This view of the law is sustained by sound reasoning, and no doubt influenced and controlled the body which devised and adopted the internal improvement act.

The present is the first case in which the reserved power of the Legislature over this fund, under the 29th section of the act, has been brought in question.

It is contended that the Legislature had no power to make the grant to the St. Johns Railway Company under the 13th section of its charter, because a previous Legislature had vested the lands so granted in the Trustees of the Internal Improvement Fund, and that they have become bound to the creditors of this fund by the terms of this contract, and that the 13th section is a diversion of a part of this fund from the purposes of the trust, and is, therefore, inoperative and void, because it impairs the obligation of said contract.

This court, in the case of Gonzalez vs. Sullivan, (reported in this volume) held “that the acceptance of the provisions of the internal improvement act by those companies constituted such act, its requirements and benefits a portion of their several charters, and that such requirements became a law of their being.”

We add that these companies, their creditors and the trustees, acquired all of the rights confirmed by this act, subject to its restrictions and reservations, which formed a part of the law of their contract with the State when they accepted its provisions. '

All of the lands vested in the Trustees wfere pledged to the purposes of the trust, except such as the Legislature authorized to be otherwise applied, and these exceptions apply exclusively to the swamp and overflowed lands. These are the lands granted to the St. Johns Railway Company under the 13th section of its charter, and the grant is strictly within the limits and only of the lands named in the 29th section, which reserved the power to the Legislature to make the grant. If they vested in the Trustees, they did so subject to this reserved power of the Legislature to dispose of them in the manner and for the purposes mentioned in the 13th section of this charter.

. This section is a contract between the State and this company, based upon a valuable consideration which the company has performed on its part, ancT the trust fund has derived its benefits in the enhanced value of the even sections which remain to the fund within the limits of the grant, which was a part of the consideration stipulated in the act.

In the case of Gonzalez vs. Sullivan, the court, in commenting on the case of Bailey vs. The Trustees, (10 Fla.,) say: “ A holder of bonds before that time, issued under the third section of the act, sought to enjoin such appropriation' of the fund, (to improve the navigation of a river) and the court held that he was entitled to such injunction. The ground of its action was that the measure of the right of the holder of the bond was the act of 1855; that upon the sale of fchp bonds therein authorized rights became vested, a contract was brought into existence ; that the terms of the law measured its obligation; and that the act appropriating funds for the improvement of a river was a violation of this contract in that it diverted a portion of the funds pledged for the payment of the bond contrary to the t'erms of the law;” and they add: “ That case was authority for the position that an antecedent bondholder can set aside or enjoin an appropriation of the fund for any purpose to which it was not applicable at the time that his right as a bondholder attached. That was the true question in the case, the equity of the bondholder, the cestui que trust, was held effective to' restrain and -limit the power of the Trustees to the terms of the law as it was when his right accrued, and when the obligation of his contract attached.” The law as it stood when the right of the creditor in this case accrued, and when the obligation of his contract attached, declared in express terms “ that the alternate sections of the swamp and overflowed lands for six miles on each side may be granted by the General Assembly to such railroad companies, to' be hereafter chartered, as they may deem proper.” This was but a retention by the Legislature of its original power over the subject to the extent mentioned in the act, and to this extent operated as a limitation upon the trust and the power of the Trustees. It was notice to the creditor of the power therein reserved, was binding upon the Trustees, and entered into and became a part of the condition of the contract under which' the bonds were issued and the creditor took them. They contracted with a view to this reservation and subject to the exception of these lands from the funds pledged. These are “ the terms of the law as it was when his right accrued and when the obligation of his contract attached.” It did not in any respect change the character of the trust, or in any other manner limit it. It but more clearly defined it by pointing out the limitation which the Legislature intended to place upon it. Thus limited this power cannot be used to impair dr defeat the trust, as contended by the appellants, but was intended and may be made to promote its objects by enhancing the value of the alternate sections remaining in the fund, and thus improving the trust property. . -

In the case of Gleason vs. The Trustees, this court held that it was the duty of the Trustees to improve the trust property. The court say : “ The error of the defence here made by the Trustees is the conception that a contract to improve the trust estate by using a portion of it to render the balance more valuable in the manner authorized by the act; in other words, using a portion of the fund, or a portion of the land itself, to make the other more advantageous, is a violation of the trust. The construction contended for would render the Trustees powerless to drain one acre of the millions of acres of swamp lands now in their hands, thus preventing their improvement, and would prevent them from carrying out the manifest policy and spirit of the law on the subject. _ The performance of this contract, (for the drainage of lands) so far as appears from the face of the bill, is no diversion of the trust fund; it is its simple improvement in a manner authorized by the law of the trust.’’ 15 Fla., 398-9.

So we think that the grant to the St.' Johns Railway Company was but carrying out the true spirit and policy of the law on this subject, which we have seen was twofold, to reclaim these lands by'granting the alternate sections as authorized by the 29th section, and by the use of this as one means to improve the trust estate in aid of the internal improvement system inaugurated by the act.

It would not be straining the law too far to say that the Legislature also intended by this means to extend to the remote and inaccessible portions of the State the benefit of this class of improvements. It is manifest then that the Legislature intended to dispose of these lands in the various modes pointed out in this act in such a manner as to carry into effect the object of the grant by Congress, and at the same time to provide for the objects of the trust created by this act. To strike out the 16th and 29th sections would render the act obnoxious to the constitutional prohibition to the States forbidding the passing of any law impairing the obligation of contracts; for without these sections the act would be a total diversion of this magnificent fund from the object of the grant by Congress, and an exclusive application of it to another and different purpose from that contemplated in the grant.

By our construction of the internal improvement act, its various provisions are made to harmonize with each other and with: the act of Congress, and each is made to stand and take effect.

It is in'harmony also with the several decisions of this court on the different questions which have arisen under it. For these reasons we think the 13th section of the St. Johns Railway charter does not conflict, but harmonizes with the principles and purposes of the act of Congress granting these ' landb, and with the express provisions of the internal improvement act. It interferes with no vested right, nor does it impair the obligation of any contract between the State and United States, or the Trustees and creditors of the fund.

We come next to the consideration of the second quesUonr whether the' St. Johns railway was constructed in compliance with the provisions and specifications of the internal improvement act, and if not, whether the doing of this was á condition precedent upon which the grant to this company should take effect.

It is contended that a compliance with the provisions of the 29th section, as to the construction of the road, is a condition precedent to the vesting of the title of these lands in the company.

The provision of the 29th section, as to the manner of the construction of the roads therein authorized, refers to the sixth specification of the sixth section of the same act, which regulates the gauge of the different railroads which were to constitute the general system under this act; the other specifications of this section were modified by the 1st section of the act of 14th of December, 1855. There is no question in this case as to drainage, the bill alleging that the company had complied with the provisions of the internal improvement act on this subject, and this is conceded by the appellants.

The only question is as to the guage of the road, and the appellants contend that the pleadings show that this condition was never performed, and that consequently no title has ever passed from the Trustees or vested in the company. But it will be apparent, upon examination of the 13th section of the act incorporating this company, that the investí-* ture of the title to the lands therein granted was not made' to depend upon any such condition, but was made to take-effect upon the completion of one-sixth of the work, and so on for every one-sixth as the work progressed to its final completion. This is the only condition named in its char- ’ ter upon which the grant should vest in the company, and upon the performance of this condition it became executed in the company.

But it is alleged that the charter act of this company does not expressly repeal the 6th and 29th sections of the internal, improvement law, and that “ every presumption should be indulged against an intention to repeal any part of said law.”

/We do not think the charter act of this company has any such effect, in so far as the 6th section of the internal improvement law was applicable to and binding upon the com-parties which accepted its provisions. So far as these are concerned, as decided by this court, it became a part of “ the law of their being.”

But the act incorporating this company did not bring it within the system provided for in the internal improvement act; it was not required to accept its provisions, and had it accepted them, this would not have made it a part of the system without sbme clause in its charter or special act authorizing it; it is outside of and independent of the system, and the internal improvement act is no part of its organic law, nor is it bound by any of its provisions. Its rights and powers are derived solely from its charter.

The power of the Legislature reserved in the 29th section being an original power not parted with, is not and could not be limited by the 6th section so as to prevent any future Legislature from exercising its co-equal power over the same subject, unless rights had become vested arising under contract which brought into operation some constitutional limitation upon the exercise of such power by a future Legislature. This is a principle well established by all the authorities bn this subject. See Cooley’s Con., 125-6-7, note 1, 126.

In the case of Gonzalez vs. Sullivan, this court used this language: “ The court here simply say that the Legislature had the right to designate some objects of improvement to be constructed first, and to postpone others. While this may be true of this Legislature, it is also true of a subsequent Legislature that its powers were not limited by the power of the first, unless the act of the first was of such character as called into operation a constitutional limitation, and something more than a simple antecedent exercise of legislative power stood in the way of the exercise of the powers of the subsequent one. The internal improvement act is not organic law, and the power of one Legislature is no greater than another. Where the power of the subsequent one is limited, it results from the fact that the act of the first is of 6uch character that the organic law renders it inviolable through constitutional limitations covering the subject.”

The specifications of the 6th section of the internal improvement act are the terms of a contract between the State on the one part and the companies which accepted it on the other, and between these parties these specifications were binding; and it was only upon a compliance with this and other provisions of the act that these companies were authorized to construct their roads and issue their bonds.

The reason wliy these companies were required to comply with the sixth specification of the 6th section in the matter of the gauge of their roads is given in this specification. It says: “ The gauge of the different railroads shall be uniformly five feet, and connected continuously, so that cars or trains of cars can pass on all the routes indicated without changing freight.” What routes were indicated f Those mentioned in the 4th section undoubtedly; and the reason of this requirement was to so construct the roads which were to form the general system that the cars or trains of each should pass over the roads of the others; and the subsequent portion of this specification makes it “ the duty of the different railroad companies to adopt a uniform tariff for transportation of passengers and for haulihg the freight in the cars of another company, and no discrimination shall be made by one company against the freight or passengers of another company.”

The reason of this requirement is not applicable to the St. Johns Railway, which is no part of the system, but is remote from and disconnected with it. It is difficult to perceive how or in what manner the general system can be injured, or the rights of its creditors affected, by allowing a different gauge to another road with which it has not and cannot have a connection.

If the St. Johns Railway Company had been required to conform its gauge to that of the roads 'composing the general system, the effect upon the fund and the rights of its creditors would have been the same; it would not have added to, or diminished the fund, or affected their rights, or made them different in any manner from what they are under the grant in the 13th section without this requirement.

So fay then as these creditors are concerned, their rights are not affected, nor is the obligation of the contract between the State or Trustees and them impaired by the grant in the 13th section of the charter of this company; and this being so, it was competent for the Legislature to make the grant therein without requiring on their part a compliance with the 6th section of the internal improvement act.

Rut it is said the grant failed because this company did not complete its road within the time required by its charter. There is no forfeiture in the act of the grant upon the failure of the company to complete its road within the time prescribed in its charter, neither has there been any forfeiture of its franchises claimed or adjudged; but, as before stated, the title was to vest in fee pimple in the company upon the completion of one-sixth of the road, and so on for every one-sixth until the whole road should have been completed, and this having been done, the grant became absolute in the company.

The decree of the court below must be affirmed.