« ΠροηγούμενηΣυνέχεια »
(250 U. S. 387)
7. PUBLIC LANDS Om 108—RAILROAD GRANT NORTHERN PAC. RY. CO. et al. v. Mc
-LIEU LAND SELECTION.
Whether lieu lands selected by railroad com
pany in place of those primarily granted were, (Argued Jan. 22, 1919. Decided June 9, 1919.) when the selections were tendered, so occu
pied and appropriated as not to be properly No. 172.
subject to acquisition, is a question for deter
mination by the Secretary of the Interior, whose 1. PUBLIC LANDS On91 SWAMP LAND approval or disapproval involves an exercise of RAILROAD GRANT-CONFLICT.
sound, but not arbitrary, discretion, and makes The pendency of a claim by the state of it permissible for him, where a selection is prof. Oregon under the swamp land grant made by fered for land which a bona fide occupant, misAct Sept. 28, 1850 (Comp. St. $8 4958–4960), understanding his rights, has reclaimed, to reand Act March 12, 1860, to lands which would ject the selection and hold title in the United otherwise pass to the Northern Pacific Railroad States until the occupant may be enabled, withas parts of odd-numbered sections within the in the limits of existing law or by special act, place limits of land grant made by Act July to obtain title. 2, 1864, prevented such lands from passing un- 8. PUBLIC LANDS M120 — PATENTS — PAT. der the grant as place lands, regardless of ENT OF OCCUPIED LAND. whether the swamp land claim
Where, at the time a patent was issued to grounded.
a railroad under a lieu land selection, the par2. PUBLIC LANDS Ew116–PATENT-EFFECT. cel of land was so occupied or appropriated that
it properly could not be selected and patented Where, through mistake in the Land De- in place of land found to be mineral, that may partment, lands which were claimed by the state afford basis for suit by the United States to of Oregon as swamp lands under Act Sept. 28, cancel the patent, or basis for holding the rail1850 (Comp. St. &$ 4958–4960) and Act March road company as trustee of title for the occu12, 1800, were erroneously patented as place
pant. lands under the grant made to Northern Pacific Railroad by Act July 2, 1864, such patents 9. PUBLIC LANDS m117–PATENTS-ATTACK, carried the legal title, but the Uuited States That land selected by railroad company in was entitled to a reconveyance, and in equity lieu of its primary grant was so occupied or remained the true owner.
appropriated that it properly could not be se
lected and patented does not entitle the occu3. ADVERSE POSSESSION 7(2) PRESCRIP
pant to complain on behalf of the United States, TIVE TITLE-ACQUISITION.
or assail the patent collaterally. No prescriptive title can be obtained to public lands belonging to the United States, nor On Writ of Certiorari to the Supreme can a prescriptive title be obtained where the Court of the State of Oregon. Land Department erroneously conveyed to a railroad company lands as to which there were Suit to quiet title by E. W. McComas conflicting claims, and the company in less against the Northern Pacific Railway Comthan the prescriptive period reconveyed the pany and others. A judgment for plaintiff, same to the United States, which remained the which was affirmed by Supreme Court of owner in equity.
Oregon (82 Or. 639, 161 Pac. 562), was subse4. PUBLIC LANDS Ow82—RAILROAD GRANTS, quently modified on rehearing (82 Or. 639, LIEU LAND SELECTIONS.
162 Pac. 862), and defendants bring cerPending lieu land selections by Northern tiorari. Reversed and remanded. Pacific Railroad in place of lands excluded from
* Messrs. Charles Donnelly, of St. Paul, the primary grant because mineral require the approval of the Secretary of the Interior to Minn., Charles H. Carey, James B. Kerr, aud make them effective.
Charles A. Hart, all of Portland, Or., and
C. W. Bunn, of St. Paul, Minn., for peti. 5. PUBLIC LANDS 103(4)
PENDING tioners. CLAIMS-AUTHORITY TO ADJUDICATE.
Mr. Harvey M. Friend, of Washington, D. Where full title to land was in the United C., for respondent. States, and there were conflicting pending claims, the courts may not take up the adjudication of such claims, but must await the de
Mr. Justice VAN DEVANTER delivered cision of the land officers and the issue of pat- the opinion of the Court. ents in regular course.
This is a suit to quiet title in the plaintiff
to five small tracts of land in Umatilla coun6. PUBLIC LANDS Ow103(4)—Possession-ty, Oregon, the right to such relief being AUTHORITY OF COURT.
predicated solely on adverse possession unPending the final action of the Land De-der color of title for ten years, the period partment on conflicting claims, the courts may prescribed in a local statute. The plaintiff protect the possession lawfully acquired or restore one wrongfully interrupted, for that is obtained a judgment, which at first was afa matter not confided to the Land Department, firmed by the Supreme Court of the state and and may be dealt with by the courts in the ex. then on a petition for rehearing was modified ercise of their general powers.
as to two of the tracts. McComas v. North
For other cases see same topic and KEY-NU..BER in all Key-Numbered Digests and Indexes
(39 Sup.Ct.) ern Pac. R. Co., 82 Or. 639, 161 Pac. 562, / ing under the grant as place lands. Whit162 Pac. 862. The case is here on writ of ney v. Taylor, 158 U. S. 85, 92, 94, 15 Sup. certiorari.
Ct. 796, 39 L. Ed. 906; Northern Pacific R. R. There was substantial testimony tending to Co. v. Sanders, 166 U. S. 620, 630, 17 Sup. Ct. show that McComas, the plaintiff, and his 671, 41 L. Ed. 1139; Northern Pacific R. R. predecessors had been in undisputed posses- Co. v. Musser-Sauntry Co., 168 U. S. 604, 609, sion of the lands for ten years when the 18 Sup. Ct. 205, 42 L Ed. 596. But through suit was brought and that during that period some mistake in the Land Department three they had been cultivating the lands and of the tracts were erroneously patented to claiming the same under the deeds from the the railroad company as place lands between state hereinafter mentioned and had put 1906 and 1909. Without doubt the patents improvements thereon costing more than passed the legal title, but the United States $10,000. The other facts are set forth in a was entitled to a reconveyance from the stipulation found in the record.
railroad company and in equity remained the The lands are all parts of odd-numbered true owner. Germania Iron Co. v. United sections within *the primary or place limits States, 165 U. S. 379, 17 Sup. Ct. 337, 41 L. of the land grant made to the Northern Ed. 754. The two tracts not patented as Pacific Railroad Company by the Act of place lands were selected by the railroad July 2, 1864, c. 217, 13 Stat. 365. At the date company in 1908 and a succeeding year in of that act they were public lands of the lieu of other lands in place excluded from United States and they continued to be such the grant by reason of being mineral. These at the time the line of road opposite which selections were received by the local land they lie was definitely located, save as their office and were awaiting action by the Secstatus was affected by a pending claim of retary of the Interior at the time of the trial. the state under the swamp-land grant made This suit was brought September 25, 1912. by the Act of September 28, 1850, c. 84, 9 Shortly thereafter the railroad company, recStat. 519 (Comp. St. $8 4958–4960), and the ognizing that the patents theretofore issued Act of March 12, 1860, c. 5, 12 Stat. 3. This i to it for three of the tracts had been erroneclaim was shown by a swamp land selection ously issued, reconveyed the title to the list filed in the Land Department November United States and subsequently selected those 23, 1872, and was still pending in that de tracts in lieu of other tracts in place expartment in 1892 and 1895. In those years cluded from the grant by reason of being the state, without waiting for a determina- mineral. These selections were received by tion of its claim by the department executed the local land office; one was approved by deeds for the lands to persons who in turn the Secretary of the Interior and passed to executed deeds therefor to the plaintiff. As patent, and the other two were at the time to three of the tracts the swamp land claim of the trial pending before that officer. was examined and rejected by the depart- The plaintiff made no effort by pleading or ment some time before this suit was begun, evidence to show that the swamp land claim and as to the other two it was still pending was well grounded or that he, his predecesat that time.
sors or the state, had in any way become en[1, 2] The definite location of the line of titled to receive the title from the United road opposite which the lands lie was effected States. by a map filed in the Land Department and (3, 4) With some hesitation the trial court approved June 29, 1883. The grant to the concluded that the lands were not excepted railroad company was of all the odd-number from the grant of lands in *place by reason of ed sections of public land within designated the existence of the swamp land claim at limits on either side of the line of road as the date of the definite location, and thereso located, with an express exception of such fore that on the definite location, by which lands as at the time of definite location were the place limits were identified, the title reserved, sold, etc., or were not “free from passed to the railroad company, the grant pre-emption or other claims or rights." There being one in præsenti as respects place lands was also an express exclusion of all mineral falling within its terms and not within its lands and a provision that "in lieu thereof a excepting or excluding clauses, and the prolike quantity of unoccupied and unappropriat- vision for patents being intended only to ed agricultural lands in odd-numbered sec- give further assurance. Deseret Salt Co. tions nearest to the line of said road may be v. Tarpey, 142 U. S. 241, 12 Sup. Ct. 158, selected" under the direction of the Secre- 35 L. Ed. 999; Toltec Ranch Co. v. Cook, 191 tary of the Interior. By reason of the pend-U. S. 532, 24 Sup. Ct. 166, 48 L. Ed. 291. On ency of the swamp land claim at the time that theory a decree was entered quieting the of the definite location all the tracts in title in the plaintiff as to all the tracts. question were expected from the grant of But the court should have held that the lands in place, and this whether *the claim swamp land claim pending, as it was, at the was well grounded or otherwise; that is to date of the definite location prevented these say, the fact that the claim was pending and lands from passing under the grant of lands undetermined prevented the lands from pass- ) in place. The decisions of this court before cited leave no room for doubt on this point. ( by the courts in the exercise of their general The cases of Iowa R. Land Co. v. Blumer, 206 power. Gauthier v. Morrison, 232 U. S. 452, U. S. 482, 27 Sup. Ct. 769, 51 L. Ed. 1148, and 461, 34 Sup. Ct. 384, 58 L. Ed. 680. Missouri Valley Land Co. v. Wiese, 208 U.  Whether the tracts as to which the S. 234, 28 Sup. Ct. 294, 52 L. Ed. 466, relied swamp land claim is still pending were such on by the plaintiff, are not apposite. The as came within the terms of the swamp land lands there in question were within the place grant is a question of fact the decision of limits and at the time of definite location which is expressly committed to the Land were free from other claims; so they were Department; and this also is true of the not excepted from the grant, as here, but question whether the tracts covered by the passed from the government on the definite į railroad company's lieu land selections were location. It follows that as to the three when the selections were tendered so Octracts erroneously patented as before shown cupied and appropriated as not properly to the railroad company had no title, legal or be subject to acquisition *in that way. The equitable, prior to the issue of the patents. approval or disapproval by the Secretary of Up to that time the title was in the United the Interior of such lieu selections is not States, and of course no prescriptive right merely a formal act. It involves an exercise was acquired against it under the local stat- of sound, but not arbitrary, discretion and ute. Besides, the title received through makes it admissible for him, where a se those patents was turned back to the United lection is proffered for land which a bona States before the trial and this operated to fide occupant, misinformed and misunderrestore the three tracts to their prior status standing his rights, has reclaimed and imas public lands. The title under those pat-proved at large cost, to reject the selection ents—and it was merely the naked legal and hold the title in the United States until, title-did not remain in the railroad com- as this court has said, "within the limits of pany for anything like the period named in existing law or by special act of Congress," the local statute, if that be material. As to the occupant may be enabled to obtain title the other two tracts the railroad company from the United States. Williams v. United up to the time the suit was brought had States, 138 U. S. 514, 524, 11 Sup. Ct. 457, 461 nothing *more than pending lieu land selec- (34 L. Ed. 1026). tions which required the approval of the Sec- [8, 9] As to the fifth tract the railroad retary of the Interior to make them effective company at the time of the trial held a (Wisconsin Central R. R. Co. v. Price County, patent issued pending the suit on a lieu land 133 U. S. 496, 512, 10 Sup. Ct. 341, 33 L. Ed. selection but recently initiated ; so the pre687), but as yet they had not received his scriptive right asserted by the plaintiff could approval.
not possibly include that tract. If, as he as[5,6] The situation then at the time the serts, the tract was so occupied or appropriatcase was heard in the trial court was this: ed that it properly could not be selected and The railroad company had neither the legal patented in lieu of land in place found to be nor the equitable title to four of the tracts. mineral, that may afford an adequate basis Instead, the full title was in the United for a suit by the United States to cancel the States and all existing claims to them aris- patent (Diamond Coal & Coke Co. v. United ing under the land grants and other public States, 233 U. S. 236, 34 Sup. Ct. 507, 58 L. land laws were pending in the Land Depart- Ed. 936), or afford a basis for holding the ment, whose officers were specially charged railroad company as a trustee of the title for by law with their examination and determina- him if, notwithstanding the silence of the tion and with the disposal of the title ac- present record on the subject, he was encordingly. It is settled that in such a situa-titled to a patent for the tract (Svor v. Mortion the courts may not take up the adjudi- ris, 227 U. S. 524, 529, 530, 33 Sup. Ct. 385, cation of the pending claims, but must await 57 L. Ed. 623); but it does not enable him to the decision of the land officers and the issue complain on behalf of the United States or of patents in regular course. Michigan Land to assail the patent collaterally (Hoofnagle & Lumber Co. v. Rust, 168 U. S. 589, 592, v. Anderson, 7 Wheat. 212, 214, 215, 5 L. Ed. 594, 18 Sup. Ct. 208, 42 L. Ed. 591 ; Brown v. 437; Smelting Co. v. Kemp, 104 U. S. 636, Hitchcock, 73 U. S. 473, 19 Sup. Ct. 485, 43647, 26 L. Ed. 875; Bohall v. Dilla, 114 U. S. L. Ed. 772; Cosmos Exploration Co. v. Gray | 47, 51, 5 Sup. Ct. 782, 29 L. Ed. 61; Sparks v. Eagle Oil Co., 190 U. S. 301, 315, 23 Sup. Ct. Pierce, 115 U. S. 408, 6 Sup. Ct. 102, 29 L. Ed. 692, 24 Sup. Ct. 860, 47 L. Ed. 1064; Humbird | 428; Fisher v. Rule, 248 U. S. 314, 318, 39 v. Avery, 195 U. S. 480, 502, 25 Sup. Ct. 123, Sup. Ct. 122, 63 L. Ed. 263). 49 L. Ed. 286. There is, however, a related The Supreme Court of the state in its final jurisdiction which the courts may exercise opinion came nearer the views here expressed pending the final action of those officers; than did the trial court, but it assured that they may protect a possession lawfully ac- the reconveyance by the railroad company to quired or restore one wrongfully interrupted, the United States was not accepted by the for that is a matter which is not confided to latter and so was of no effect. In this the the Land Department and may be dealt with court was mis*taken, for it affirmatively ap
(39 Sup.Ct.) pears not only that the land officers after the found that he was guilty of a breach of his reconveyance entertained the lieu selections common-law liability. of the same tracts, but also that they ap- 5. Courts m347—FEDERAL COURT PRACTICE proved one of those selections and passed it
-DENIALS. to patent. Besides, the ultimate judgment
Affirmative allegations of defense in an anentered by the court departs somewhat-pos- swer filed in an equity suit must be deemed sibly through a clerical inadvertence from denied, under equity rule 31 (198 Fed. xxvii, its final opinion.
115 C. C. A. xxvii). The judgment must be reversed and the 6. BANKS AND BANKING ww254 NATIONAL cause remanded for further proceedings not BANKS-CONTINUATION IN OFFICE. inconsistent with the views here expressed. As Rev. St. § 5145 (Comp. St. $ 9683), de Judgment reversed.
clares that directors shall hold office for one year and until their successors are elected and qualify, one who was elected and duly qualified as director of a national bank in 1910 must, in
the absence of evidence that he resigned or re(250 U. S. 504)
fused to qualify when reelected in the following BOWERMAN V. HAMNER.
year, be treated as a director during the year
1911, in which the bank failed, where the only (Argued April 28 and 29, 1919. Decided June 9, evidence as to his status was a letter bearing 1919.)
on mismanagement written by the director to
the president after failure. No. 289.
Mr. Justice McKenna and Mr. Justice Mc1. BANKS AND BANKING 253–NATIONAL Reynolds dissenting. BANKS-LIABILITY OF DIRECTORS. While, in a suit for damages against nation
Appeal from the United States Circuit al bank directors, based solely upon a violation Court of Appeals for the Ninth Circuit. of duty imposed by the National Bank Act, it
Suit by Frank R. McCormick, as receiver is not enough to show a negligent violation of the act, but something more, in effect an inten- of the First National Bank of Salmon, tional violation, must be shown to justify a against Guy E. Bowerman and others. A recovery, yet the National Bank Act does not decree for the named defendant was reversed relieve directors from the common-law duty to by the Circuit Court of Appeals (McCormick diligently and honestly manage the affairs of the v. King, 241 Fed. 737, 154 C. C. A. 439), and association.
said defendant appeals; C. D. Hamner, who 2. BANKS AND BANKING 251–NATIONAL succeeded Frank R. McCormick as receiver, BANKS–LIABILITY OF DIRECTORS-BILL. being substituted in his stead. Affirmed. In a suit against national bank directors, a
*Messrs. Oliver 0. Haga and James H. Richbill may be framed so as to charge, not only a ards, both of Boise, Idaho, for appellant. violation of the duty imposed by the National Bank Act, but a violation of their common-law
Mr. James M. Stevens, of Pocatello, Idaho, obligations.
for appellee. 3. BANKS AND BANKING 253–NATIONAL BANKS-DIRECTORS-LIABILITY.
Mr. Justice CLARKE delivered the opinion Where a director of a national bank resided of the Court. some 200 miles distant from the site of the bank, This is a suit, commenced in the United and during the entire period of his directorate States District Court for the District of: did not attend a directors' meeting or give any Idaho, Eastern Division, by the receiver of attention to the affairs of the bank, which were the First National Bank of Salmon, against so mismanaged that failure resulted, he is liable the former executive officers and directors of for breach of his common-law duty to honestly the bank, to obtain an accounting and decree and diligently administer the affairs of the bank, even though he cannot be held liable because for money lost by the alleged unlawful and the officers in charge made loans in excess of negligent management of the affairs of the the limit imposed by Rev. St. § 5200 (Comp. bank. St. $ 9761).
* The sole appellant, Bowerman, was a direc4. APPEAL AND ERROR Cw1177(6)--REVIEW-tor, but not an executive officer of the bank, DETERMINATION.
from its organization in January, 1906, until Where a bank director construed a bill by its failure in August, 1911, and, as owner of the receiver as relying solely on a breach of $10,000 of the capital stock, he was the largstatutory duty and declined to offer any evi- est stockholder but one. dence, held, that he must be charged with notice The bank was located in a small town in that in equity decision is subject to review on Idaho. It had a capital stock of only $25,000, both law and facts, and in view of the hardship which was increased in February, 1910, to that it would work upon the receiver of the insolvent bank the director is not entitled to an $50,000, and it had a book surplus of $15,000 opportunity to produce evidence on the question -$5,000 of which was improperly carried of his common-law liability, where the appellate to the surplus account in July, 1910, when court, on appeal from a decision in his favor, the capital was certainly impaired.
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When the plaintiff rested, the appellant The evidence applicable to the allegations moved that the bill be dismissed as to him, against Bowerman may be summarized as announcing that he would not introduce any follows: evidence in his own behalf, and at the con- He was a director during the entire 54 clusion of the trial the District Court grant- years of the existence of the bank, but never ed his motion. On appeal the Circuit Court attended a single directors' meeting, regular of Appeals reversed this judgment, found or special. The only justification or excuse Bowerman liable, and in the decree, which he offers for such conduct is that he lived we are reviewing, remanded the case to the about 200 miles from the town in which the District Court, with direction to enter a bank was located, and that communication decree in conformity with the views express- between the two places was difficult. ed in its opinion.
In a letter, which is in evidence, written The amended bill, on which the case was by him to the *president of the bank in 1911, tried, is framed in fact, though not in form, / after the failure, he refers to himself as "a in the alternative, averring, first, that the nominal director,” and says that, prompted executive officers made, and that the direc-by a published statement of the bank, which tors negligently. permitted them to make, he had seen in 1910, he began writing to three designated loans, each in excess of one the president, warning him of the consequenctenth part of the paid-in and unimpaired cap- es if the “very hazardous manner of conital stock and surplus of the bank, in viola- ducting the bank” was not changed, "various tion of section 5200 of the Revised Statutes matters corrected, more of the notes collectof the United States (Comp. St. § 9761). It ed, and the reserve kept up." In this letter then proceeds to allege: That, beginning he says that he had never been "consulted with January, 1910, the affairs of the bank as to the management of the bank, its busiwere grossly mismanaged by the executive ness transactions, or its policy," and that he officers, with the negligent permission of had never received a statement of its condiappellant and other directors; that of the tion, either the usual published statement three designated loans, on which large losses or one for his personal use, without making were sustained, the first was made to the request for it, and that in some cases he had Salmon Lumber Company, a corporation been obliged to write several times before without financial resources to justify such a one was sent to him. The record, however, loan without security, and with its capital does not show that any communication of stock owned principally by members of the the kind described in this letter was ever family of the president of the *bank; that the written by him prior to the failure. two other designated loans were negligently The only certified copies in evidence of made to persons without financial standing the oath taken by Bowerman as a director and without security sufficient to justify the are for the years beginning in January, 1909, making of them; that overdrafts aggregat- and in January, 1910. They are in the form ing large amounts were permitted to be made prescribed by statute, that the affiant will by many persons, in violation of the by-laws "diligently and honestly administer the afof the association, and that a dividend on fairs of the association, and that he will the capital stock was declared and paid in not knowingly violate or willingly permit July, 1910, when the capital stock and sur- to be violated any of the provisions” of the plus of the bank had been much impaired statutes of the United States under which and its assets greatly depreciated. This the association was organized. gross mismanagement, it is a verred, caused The by-laws of the bank are in evidence, the failure of the bank and the loss for and they require “that regular meetings of which recovery is prayed.
the directors shall be held on the first TuesWith respect to appellant, Bowerman, it is day of each month"; that a "loans commitspecifically alleged that, in disregard of his tee,” to be composed of the president, cashoath as a director to diligently and honestly ier, and one director, shall make a report to administer the affairs of the bank, be negli- each meeting of the board of directors of all gently and willfully failed to attend a single bills, notes, and other evidences of debt dismeeting of the board of directors, to at any counted and purchased since its last previous time examine, or cause to be examined, the report; that no officer or clerk shall pay any books and papers of the bank, to ascertain check drawn upon the bank, unless the drawits condition, or to in any manner inform er at the time of its presentation had suffihimself as to the loans and overdrafts that cient funds on deposit to meet it; that a were being made during the long period of committee of three directors shall examine mismanagement by the executive officers. It the affairs of the bank *every month, to see is alleged that the exercise by him as a di- whether it is in sound and solvent condition, rector of a proper supervision of the affairs and to recommend changes which may seem of the bank would have prevented the mis- desirable in the manner of doing business. management complained of, and the loss In addition to these, there was a special which resulted from it.
by-law adopted on January 18, 1910, upon Appellant's answer to the bill is substan- the suggestion of the Comptroller of the tially a general denial.
Treasury, requiring that