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less sum in satisfaction thereof, though accepted as satisfaction, is not binding as such, for want of consideration." Chicago, M. & St. P. R. Co. v. Clark, 178 U. S. 364, 44 L. ed. 1105, 20 Sup. Ct. Rep. 928, and authorities there cited.
charge, which instructed the jury that the compromise evidenced by the agreement must be treated as inefficacious as to the particular items to which it related unless it was found that the minds of the parties had met on an entirely new and independent contract.
The judgment of the court below is reversed, and the cause is remanded with directions to set aside the judgment, and
(195 U. S. 524)
UNITED STATES, Appt., CHICAGO, MILWAUKEE, & ST. PAUL
RAILWAY COMPANY et al.
Railway land grants-erroneous certification by Secretary of Interior-bona fide purchaser.
1. A certification to the state of Minnesota, made by the Secretary of the Interior, for the benefit of a railway company, of land within the indemnity limits of the railway land grant act of July 4, 1866 (14 Stat. at L. 87, chap. 168), even if erroneous, is not absolutely void because of a previous application to enter the land as a homestead after a prior homestead entry had been canceled for abandonment, which application was refused because the land in question had then been withdrawn from market by the Land Department, where this refusal was acquiesced in and an entry was then made under an amended application, which did not cover the land in question, although the entryman thereunder made use of such land in connection with his own, but without laying claim to it as land which he had attempted to enter, and which had been improperly or wrongfully refused him.
Conceding, without so deciding, that such rule was controlling in Porto Rico, we think it is not applicable to the case in hand. As pointed out by this court in the case just previously cited, the rule in ques-grant a new trial. tion is subject, among others, to the wellestablished exception that it does not apply where, at the time of the agreement, there was a dispute between the parties, the subject-matter of which dispute is embraced in the agreement to extinguish a greater by a less amount. True it is, as pointed out in Fire Ins. Asso. v. Wickham, 141 U. S. 564, 35 L. ed. 860, 12 Sup. Ct. Rep. 84, it must appear that the alleged dispute really existed, and did not arise merely from an arbitrary denial by one party of an obligation which was obviously due. Despite the construction which we have given the contract, we think it is quite clear that the proof established that there was a bona fide dispute in this case. As we have seen, from the very inception of the contract the parties differed as to the medium of payment, the one, the city, insisting that it was Porto Rican money; the other, the gas company, that it was foreign current money. During a period of fully twenty years this controversy continued, and in every instance the gas company, although protesting, accepted the city's view of the contract, and, by taking a different medium, bound itself as to those payments despite its protest. When the period arrived when the company was no longer willing to so act, and stood upon its rights as it understood them, naturally the city stood upon its asserted rights, and thus the parties were at arm's length, disputing their respective rights. If there had been no agreement, the solution would have required judicial action. When, in view of this dispute, an agreement was reached that the payment should be made in United States currency, and that the payment should extinguish a larger amount estimated in Porto Rican currency, there was necessarily a compromise and settle. Submitted November 4, 1904. Decided Dement as to that payment which put the transaction so settled exactly in the position
which had resulted from the action of the parties concerning the payments made during the preceding period of more than twenty years.
It follows from the foregoing that the court below erred to the prejudice of the city in refusing the instruction asked by it as to the result of the compromise, and that this error was not cured by the general 25 S. C.-8.
A purchaser of land certified by the Secretary of the Interior to the state of Minnesota in aid of railway construction, and conveyed by that state to a railway company, occupies the position of a purchaser in good faith, protected as such by the act of March 3, 1887 (24 Stat. at L. 556, chap. 376, U. S. Comp. Stat. 1901, p. 1595), § 4, although the certification was erroneous, and might have been avoided and the land recovered back by the government while in the hands of the railway company, where such purchaser had no notice, actual or constructive, of the claim of the government.
cember 12, 1904.
APPEAL from the United States Circuit
Court of Appeals for the Eighth Circuit to review a judgment which affirmed a decree of the Circuit Court for the District of Minnesota, dismissing a bill to set aside a certification under a congressional land grant, made by the Secretary of the Interior to the state of Minnesota, for the benefit of a railway company, and to set aside the con-
veyance of such land by the state to the railway company, and by the company to one of the individual defendants. Affirmed. See same case below, 54 C. C. A. 545, 116 Fed. 969.
Statement by Mr. Justice Peckham: The United States, on the 6th day of March, 1893, filed this bill in the circuit court of the United States for the district of Minnesota, for the purpose of setting aside the certification, under the land grant of Congress (14 Stat. at L. 87, chap. 168), made by the Secretary of the Interior, of the land described in the bill, to the state of Minnesota, for the benefit of the railroad company, and also to set aside the conveyance thereof by the state to the railroad company, and by the company to one of the individual defendants. A supplemental bill was filed, by leave, March 4, 1901, bringing in by service of the subpoena other individual defendants.
The suit was brought under and pursuant to the act of Congress of March 3, 1887 (24 Stat. at L. 556, chap. 376, U. S. Comp. Stat. 1901, p. 1595), entitled "An Act to Provide for the Adjustment of Land Grants made by Congress to Aid in the Construction of Railroads, and for the Forfeiture of Unearned Lands, and for Other Purposes." Upon trial in the circuit court the bill was dismissed, and the decree of dismissal was affirmed by the United States circuit court of appeals for the eighth circuit (54 C. C. A. 545, 116 Fed. 969), and from that decree of affirmance the government has appealed here.
The facts upon which the controversy arose are, in substance, as follows: On the 4th day of July, 1866, Congress passed an act making an additional grant of lands to the state of Minnesota (14 Stat. at L. 87, chap. 168), to aid in the construction of railroads in that state. The Southern Minnesota Railroad Company was, at the time of the passage of the act of Congress, a corporation organized under the laws of Minnesota, with the power to construct a line of railroad, as mentioned in that act. The legislature of Minnesota, on the 25th day of February, 1867, transferred the land granted to it by the act of Congress to the railroad company, subject to the provisions of that act and also of the state statute.
Among the lands thus transferred was a lot 80 acres in extent, in Faribault county, Minnesota, being the property in dispute in this suit. The land was within the indemnity limits of the grant by Congress to the state, as determined by the map of definite location of the railroad, which became effective February 25, 1867. The de ficiency in what are termed the "place"
lands was largely in excess of 80 acres. the 29th day of November, 1870, the Southern Minnesota Railroad Company selected this tract, in section 35, in lieu of part of the land lost in the granted limits; and the land was certified to the state of Minnesota by the Secretary of the Interior, March 25, 1871, for the benefit of the railroad company; and on the 8th day of August, 1871, the state of Minnesota conveyed it by deed to the railroad company. In March, 1868, the company had mortgaged all of its property, including the land granted under the act of Congress and all subsequently acquired property, to secure the payment of its bonds. This mortgage was foreclosed, and the property sold and conveyed to a new corporation by the name of the Southern Minnesota Railway Company, and the land was conveyed to that company. On the 5th day of January, 1885, the railway company, by contract in writing, agreed to sell the land in dispute to one A. Boyeson, for the sum named in that contract. Boyeson assigned his interest in the contract, on the 6th of January, to Fredericksen, who, on the 1st day of April, 1885, assigned it to the defendant, Thomas S. Thompson, and, in turn, on the 3d day of February, 1888, the latter assigned it to Ericksrud, who paid the balance due upon the contract, and received the warranty deed for the land from the railway company on the 20th day of March, 1888.
Ericksrud died intestate on March 27, 1888, and on November 6, 1888, the land was decreed by the probate court to be the property of the widow and heirs at law of Ericksrud, and they remained in possession, and, on the 24th of May, 1899, these heirs at law, still being in possession, conveyed the same to the defendant Woodwick for the sum of $2,000 cash. This is the title of record coming from the United States to the state, thence to the railroad company, and, by mesne conveyances, to the defendant Woodwick; and there was nothing of record showing that any other person was entitled to the land at the time when Woodwick paid the $2,000 to the heirs of Ericksrud, and took the deed therefor. The defendant Donovan, however, lays claim to the land in question pursuant to the facts now to be stated.
Prior to the passage of the granting act of Congress, above referred to, one Luman Barclay had, on the 21st day of June, 1866, entered this land in controversy, and also the 80 acres in section 26, adjoining, as a homestead. In the following year (1867) Barclay abandoned the land and went to Canada. Some time after his departure, and in the same year (1867), Donovan, the defendant, sought to acquire a homestead
On the 26th day of June, 1883, Donovan applied at the local land office to enter this tract of land in section 35 as an additional homestead, under the act of March 3, 1879 (20 Stat. at L. 472, chap. 191, U. S. Comp. Stat. 1901, p. 1401); and the register certified that the application was for surveyed lands of the class the applicant was legally entitled to enter under the homestead act of 1862 [12 Stat. at L. 392, chap. 75]; in other words, unappropriated public lands of the United States. The application was rejected upon the ground that the land so applied for had been certified to the state of Minnesota, for the benefit of the railroad company. Donovan appealed from this rejection to the Commissioner of the General Land Office, where, it is stated, the matter is still pending and undetermined.
on government land. He examined the land | 26, Donovan says he offered to make proof for which Barclay had made his entry, and also as to the land in section 35, but his decided to enter it as a homestead. He offer was rejected rejected because, among other went to the United States local land office reasons, he had not entered the land in for the purpose, and was informed by the that section. He has obtained his patent register of the land office that he could not for the 80 acres in section 26. make the entry until Barclay's entry was canceled. He was also informed that, if he wished to make a claim that Barclay had abandoned his interest, he should publish notice of the time and place where he would make proof upon that matter. He published a notice accordingly, for three weeks, and paid $9 as the cost thereof, and, in the fore part of August, 1867, made proof that Barclay had abandoned his homestead claim. Donovan insists that he was given to understand that he could enter the land as a homestead as soon as the local land office received notice from the General Land Office, at Washington, that Barclay's entry was canceled. He thereupon made one application to enter both tracts of land,-the 80 acres in section 26, and the 80-acre tract in question in section 35, but left the date of application blank, because he could make no entry for the lot in section 35 until Barclay's entry had been canceled. He did this, as he or his witness Bullis said, to head off any other applicant for the land, and he left the application with the local land office. He then went into possession of section 26, and commenced the erection of a house thereon; and he says he commenced the cultivation of a small part of the tract in section 35. This was in the fall of 1867. The Barclay entry was duly canceled at Washington on the 14th of January, 1868, and notice thereafter given to the local land office, and Donovan was notified of the fact. On the 6th day of June, 1868, Donovan went to the local land office, and applied to enter the two tracts of land. He was there informed that the odd-numbered sections within 20 miles of the road had been withdrawn from market; and that such withdrawal included the section in question; and that he could not, therefore, enter the 80 acres in section 35 as a part of his homestead.
In 1885 the defendant Thompson, an assignee of the contract made by the railway company with Boyeson, went into possession of the 80 acres in section 35, and ordered Donovan off the same, and Donovan left the land accordingly. After Thompson took possession of the land,-April 1, 1885,— Donovan, in the same year, commenced a suit in the district court of Faribault county to obtain possession of the land; and, on or about the 24th of March, 1887, the state court decided that Donovan had no title to the land, or right to the possession of the same, and that Thompson had the right to the possession thereof under the contract already mentioned. This judg ment against him in the state court was never appealed from by Donovan, nor has it ever been vacated, modified, or reversed. In 1888 Donovan applied to the Land Department at Washington for relief, by reason of the act of Congress of March 3, 1887, heretofore referred to. In relation to that application the Commissioner of the General Donovan acquiesced in this determination Land Office, on February 14, 1889, addressed of the local land office, and made his entry a letter to the Secretary of the Interior, for the 80 acres in section 26. The old ap- and therein spoke of Donovan's application plication for the two lots was destroyed, for the institution of proceedings under that and a new one made out for the lot in sec- act of Congress, and said that Donovan had tion 26. He thereafter used the land in no title to the land; but he sent all the section 35, in connection with his own in papers to the Secretary, for review by him. section 26, and cut grass upon and ploughed On the 1st of April, 1889, the Secretary resome of it; but it does not appear that he plied to the communication of the Commislaid any claim to it as land which he had sioner of the General Land Office, and attempted to enter, and which had been im- therein reversed his holding, and directed properly or wrongfully refused him. His the latter to make a demand of the railway house and other permanent improvements company for the reconveyance of the land, were on section 26. At the time he made as provided for in the act. On the 12th of proof (in 1875) for the 80 acres in section' April, 1890, the Commissioner sent a com
munication to the Secretary, informing him | under the grant to the state pursuant to that a demand for the reconveyance of the the act of July 4, 1866, and it was thereland had been made April 9, 1889, upon the fore not legally withdrawn from market by railroad company, and that no answer had any act of the Land Department, nor could been made, although more than a year had it be certified to the state; and that the elapsed since the demand. On the 16th of attempt to do so was not only erroneous, April, 1890, the Secretary of the Interior but absolutely void; that, at the time when transmitted the letter to the Attorney Gen- Donovan made application to enter the land, eral, with a request that suit might be in- in June, 1868, it was part of the public stituted to have the certification of the land lands of the United States, open to entry, in question by the Land Department to the and his application, although he had done state of Minnesota set aside and canceled if, all that he could, was wrongfully denied by in the opinion of the Attorney General, the the local land office; that thereafter the suit could be maintained. After waiting filing of the map of definite location by the three years, and on the 6th of March, 1893, railway company, and its selection of the the United States filed its bill against the land in question, and the certification of the Chicago, Milwaukee, & St. Paul Railway land by the Secretary of the Interior to Company as successor in interest of the for- the state, and the conveyance by the state mer companies, and also against the South- to the railway company, and the contract ern Minnesota Railway Company, Michael and conveyances following thereon,-conDonovan, Thomas S. Thompson, and C. C. veyed no interest in or title to the premises Ericksrud. On August 11, 1894, the com- in question, but that they rightfully bepanies answered the bill. Donovan did not longed to Donovan, and therefore the ceranswer it until March 6, 1901, and then con- tification by the Land Department, etc., fessed the same, and prayed that the relief should be set aside, to the end that the land asked for might be granted. On March 4, may be transferred to Donovan, as demanded 1901, the United States filed a supplemental in the bill. bill, wherein it was stated that no service had ever been made upon Thompson or Ericksrud, and that, on May 24, 1899, the heirs of Ericksrud had joined in a deed conveying the land in question to Louis K. Woodwick. Process was prayed against the defendants, the heirs of Ericksrud, and also against Woodwick, and subpoenas were served on them, and on May 2, 1901, they answered the supplemental bill. A special examiner was appointed to take testimony; and on the 13th of January, 1902, he submitted his report of the testimony taken in the suit, to the court.
On the other hand, it is insisted on the part of the defendant Woodwick, that the action of the Land Department officials in withdrawing the land in question from market was valid, and within the jurisdiction of that department; that the selection of the land by the railway company was proper, as being within the indemnity limits of the grant by Congress; and that its certification by the Secretary of the Interior to the state was within the power of that officer, and the act was not, therefore, beyond his jurisdiction; and that his certification and the action of the state conveyed a good title, or, at any rate, that the de
Assistant Attorney General Purdy for fendant Woodwick was a bona fide purchaser appellant. of the land, and as such his rights were Messrs. Burton Hanson, W. H. Nor-preserved under the act of March 3, 1887. ris, and Andrew C. Dunn for appellees.
Mr. Justice Peckham, after making the foregoing statement of facts, delivered the opinion of the court:
The Attorney General contends that, before the passage of the act of Congress granting the land (July 4, 1866), Barclay had made legal entry upon the books of the local land office, of the land in question, under the homestead laws of Congress, and that such legal entry was in existence at the time of the passage of the act of Congress of July 4, 1866; that, by reason of such entry, the land was excepted from the grant under that act, and that when Barclay abandoned his homestead claim upon the land, it immediately became public land of the United States, and did not then pass
24 Stat. at L. 556, chap. 376, U. S. Comp. Stat. 1901, p. 1595.
If Woodwick is protected under that act, as a purchaser in good faith, even against Donovan, it is unnecessary to pursue an inquiry as to the existence of any other defense. We are of opinion that Woodwick is protected under the 4th section of the act. The plain intent of that section is, as stated by Mr. Justice Brewer in delivering the opinion of the court, in United States v. Winona & St. P. R. Co. 165 U. S. 463, 41 L. ed. 789, 17 Sup. Ct. Rep. 368, to secure one who, in good faith and as an honest transaction, purchases the land, and to leave to the government a simple claim for money against the railroad. The justice said (pp. 480, 481, L. ed. p. 796, 797, Sup. Ct. Rep. p. 372):
"It will be observed that the technical | remained in the Land Department, to be term 'bona fide purchaser' is not found in exercised by the Secretary of the Interior, this section, and while it is provided that notwithstanding the acts of Donovan as a mortgage or pledge shall not be considered shown by this record. It is shown by the a sale so as to entitle the mortgagee or testimony of Donovan himself and of his pledgee to the benefit of the act, it does witness Bullis, putting it all together, that secure to every one who, in good faith, has there never was, in fact, any entry of this made an absolute purchase from a railroad land at the local land office, in the name of company, protection to his title, irrespective Donovan, before the certification in 1871. of any errors or mistakes in the certification The facts as to what took place in that or patent. office, in regard to the applications of Donovan in 1867, before the Barclay entry was canceled, and in June, 1868, when the entry was made for the lot in section 26, are set forth in the statement of facts herein, and need not be repeated. The statement shows no such facts as put Donovan in the place of one who, having done all he could to enter the land, had been refused such entry, but had nevertheless not acquiesced in such decision, and had taken possession of it as a homestead. On the contrary, Donovan did acquiesce in that decision, and amended his application.
These being the provisions of the act of 1887, the act of 1896 (29 Stat. at L. 42, chap. 39, U. S. Comp. Stat. 1901, p. 1603), confirming the right and title of a bona fide purchaser, and providing that the patents to his lands should not be vacated or annulled, must be held to include one who, if not in the fullest sense a 'bona fide purchaser,' has nevertheless purchased in good faith from the railroad company.'
The counsel for the government, while strenuously denying that the legal title to this land passed to the state of Minnesota by virtue of the certification, in 1871, admits in his brief that, if Woodwick bought the land as a bona fide purchaser in 1899, and acquired the legal title to the same, then, at that present time, not only was the right of the United States to recover the land defeated, but Donovan was precluded from thereafter asserting his claim to the land, as against such bona fide purchaser. His denial that the legal title passed is based upon the contention that Donovan, before the year 1871, when the Secretary of the Interior certified this land to the state, had, as stated by counsel, initiated proceedings to obtain this land in section 35 as a homestead, and had done all he could to make entry thereof, and had been in possession for three years before this certification; and that prior to 1871 an initiatory title had passed from the United States to Donovan, by reason of his possession and offer to enter the land, and his payment of the fees and expenses to the local land officers, so as to prevent the passage of the legal title to the state, by virtue of the certification referred to, which, by reason of the acts of Donovan, was rendered wholly void, It is also asserted that, if the United States, in 1871, did retain title in itself, notwithstanding Donovan's occupation and cultivation of the land, yet such occupation and cultivation withdrew the land from the jurisdiction of the Land Department, so far as any right or power to issue a certification to the railroad company was concerned, just as effectually as though the land had been reserved or otherwise appropriated specifically by an act of Congress.
There was no entry made on the books of the local land office for this land, under the amended application, and the power of the Secretary of the Interior to make the certification, even if we assume that it was erroneously exercised, was not an act which was beyond the jurisdiction of the Secretary. The legal title was thus transferred by the government to the state, and, at the most, it was an erroneous certification within the meaning of the act of 1887. Although under such circumstances, if the certification were erroneous and might have been avoided, and the land recovered back by the government while in the hands of the railroad company, yet, Woodwick, if a purchaser in good faith of the lands, was entitled to them under the provisions of the act. He had no notice, actual or constructive, of the claim of the government in regard to this land. The record title was plain. No suit had been commenced when Ericksrud took his title from the government, and went into possession thereunder. He died within a week thereafter, and his heirs thereupon took possession. They were in possession when the government commenced this suit, in 1893, but were never served with process therein until 1901; which was two years after Woodwick had purchased the property from them, and had in good faith paid them the sum of $2,000 in cash for the land.
Counsel for the government admits that it is futile to maintain that Woodwick had constructive notice of the defects in his title by reason of the pendency of this suit, which had been commenced by the government in 1893, but in which the railroad companies
We think that, in 1871, when the certifi-alone had been served with process. cation was made, jurisdiction over this land
Whatever equities Donovan may have had