B-127772, AUG. 2, 1956

B-127772, AUG. 2, 1956

TO THE SECRETARY OF AGRICULTURE:

REFERENCE IS MADE TO THE ASSISTANT SECRETARY'S LETTER OF MAY 1, 1956, REQUESTING OUR DECISION AS TO THE DISPOSITION TO BE MADE OF THE SUM OF $241,533 NOW BEING HELD IN DEPOSIT FUND ACCOUNT, SYMBOL 12X6875 (11) SUSPENSE, FOREST SERVICE. THIS SUM REPRESENTS AMOUNTS RECEIVED FROM SALES OF TIMBER AND OTHER USES OF CERTAIN LANDS FORMERLY ADMINISTERED AS NATIONAL FOREST LANDS.

THE LAND IN QUESTION IS LOCATED IN NAVAJO AND COCONINO COUNTIES, ARIZONA, AND IS WITHIN THE INDEMNITY LIMITS OF THE LAND GRANT MADE TO THE ATLANTIC AND PACIFIC RAILROAD COMPANY BY THE ACT OF JULY 27, 1866, 14 STAT. 292. ON FEBRUARY 3, 1886, THE RAILROAD EXECUTED A CONTRACT WITH THE AZTEC LAND AND CATTLE COMPANY, LTD., AGREEING TO SELL TO AZTEC ONE MILLION ACRES OF THE GRANTED LAND COMPRISING THE ODD NUMBERED SECTIONS OF LAND WITHIN CERTAIN DESCRIBED BOUNDARIES, PART OF WHICH WERE WITHIN THE "PLACE" LIMITS OF THE GRANT AND THE BALANCE WITHIN THE "INDEMNITY" LIMITS, THE LATTER PORTION INCLUDING THE LAND HERE IN QUESTION. THE RAILROAD AGREED TO TAKE OUT PATENTS ON PORTIONS OF THE LAND WHENEVER REQUESTED TO DO SO BY AZTEC AND TO CONVEY SAME TO AZTEC. BY DEEDS DATED MAY 12, 1886, AND MAY 25, 1894, THE ATLANTIC AND PACIFIC RAILROAD COMPANY CONVEYED TO THE AZTEC LAND AND CATTLE COMPANY AS MUCH LAND AS WAS THEN SURVEYED, COMPRISING 576,701.91 ACRES, BUT WHICH DID NOT INCLUDE THE LAND HERE IN QUESTION. SUBSEQUENTLY, THE ATLANTIC AND PACIFIC RAILROAD COMPANY WAS SUCCEEDED BY THE SANTA FE PACIFIC RAILROAD COMPANY AND THE LAND GRANT WAS CONFIRMED THEREIN BY THE ACT OF MARCH 3, 1897, 29 STAT. 622. AN EXECUTIVE PROCLAMATION OF AUGUST 17, 1898, ESTABLISHED THE BLACK MESA FOREST RESERVE (NOW THE COCONINO AND SITGREAVES NATIONAL FORESTS), INCLUDING WITHIN ITS EXTERIOR LIMITS THE INDEMNITY LAND HERE INVOLVED, WHICH, AT THAT TIME, WAS STILL UNSURVEYED. ON NOVEMBER 7, 1905, A QUITCLAIM DEED WAS EXECUTED BETWEEN THE SANTA FE PACIFIC RAILROAD COMPANY AND THE AZTEC LAND AND CATTLE COMPANY, LTD., REFERRING TO THE CONTRACT OF FEBRUARY 3, 1886, AND THE DEEDS OF MAY 12, 1886, AND MAY 25, 1894, AND QUITCLAIMING TO AZTEC THE REMAINING 423,298.09 ACRES WHICH HAD NOT, AS YET, BEEN PATENTED AND CONVEYED AS PROVIDED BY THE CONTRACT, INCLUDING THE LAND HERE INVOLVED. IN ACCORDANCE WITH THE PROVISIONS OF SECTION 321 (B), PART II, TITLE III, OF THE TRANSPORTATION ACT OF 1940, 54 STAT. 954, 49 U.S.C. 65, SANTA FE, ON DECEMBER 18, 1940, FILED A RELEASE OF ALL CLAIMS ARISING FROM THE LAND GRANT STATUTES, SUCH RELEASE EXCEPTING LAND SOLD TO INNOCENT PURCHASERS FOR VALUE PRIOR TO SEPTEMBER 18, 1940, AS PROVIDED BY SAID SECTION.

ON JUNE 26, 1942, THE SANTA FE PACIFIC RAILROAD COMPANY FILED AN APPLICATION FOR PATENT TO THE INDEMNITY LAND HERE IN QUESTION IN ORDER TO CONVEY SAME TO AZTEC. THE COMMISSIONER OF THE GENERAL LAND OFFICE REJECTED THE APPLICATION ON APRIL 8, 1943, ON THE GROUND THAT "THE LAND HAD NOT BEEN ASCERTAINED AND IDENTIFIED SO THAT THE RAILROAD ACQUIRED ANY INTEREST IN SPECIFIC LAND WHICH IT COULD CONVEY PRIOR TO THE FILING OF ITS RELEASE AND THAT, THEREFORE, ITS TRANSFEREE IS NOT PROTECTED UNDER THE SAVING CLAUSE OF SECTION 321 (B) OF THE TRANSPORTATION ACT.' SANTA FE APPEALED THIS REJECTION TO THE SECRETARY OF THE INTERIOR AND AFTER THE SECRETARY'S ADVERSE RULING OF JANUARY 8, 1944, MOVED FOR A REHEARING, WHICH WAS DENIED FEBRUARY 8, 1944.

THEREUPON ON MARCH 16, 1944, SANTA FE AND AZTEC INSTITUTED SUIT AGAINST THE SECRETARY OF THE INTERIOR IN THE DISTRICT COURT OF THE UNITED STATES FOR THE DISTRICT OF COLUMBIA, SEEKING AN INJUNCTION RESTRAINING THE SECRETARY FROM REJECTING THE APPLICATION FOR PATENT AND A WRIT IN THE NATURE OF MANDAMUS DIRECTING HIM TO PROCEED TO DETERMINE SANTA FE'S RIGHT TO PATENT THESE LANDS. BOTH PLAINTIFF AND DEFENDANT INTERPOSED MOTIONS FOR SUMMARY JUDGMENT AND ON MAY 21, 1945, THE COURT SUSTAINED PLAINTIFF'S MOTION AND OVERRULED THAT OF DEFENDANT (SANTA FE PACIFIC RAILROAD COMPANY V. ICKES, 60 F.SUPP. 721). THIS DECISION WAS APPEALED AND ON OCTOBER 21, 1946, THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT COURT OF COLUMBIA REVERSED THE JUDGMENT OF THE LOWER COURT AND REMANDED THE CASE FOR TRIAL ON THE MERITS. (KRUG V. SANTA FE PACIFIC RAILROAD COMPANY, 158 F.2D 317) UPON RESUBMISSION TO THE DISTRICT COURT ON THE MERITS, JUDGMENT WAS RENDERED IN FAVOR OF SANTA FE AND AZTEC ON JANUARY 14, 1949. THE GOVERNMENT APPEALED AGAIN AND ON NOVEMBER 15, 1951, THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA AFFIRMED THE DECISION OF THE DISTRICT COURT (CHAPMAN V. SANTA FE PACIFIC RAILROAD COMPANY, 198 F.2D 498). THE SUPREME COURT DENIED CERTIORARI ON JUNE 2, 1952, 343 U.S. 964. PURSUANT TO THESE DECISIONS, PATENT NO. 1149012, DATED JANUARY 11, 1955, FOR 5,619.96 ACRES AND PATENT NO. 1151099, DATED MARCH 25, 1955, FOR 87,847.88 ACRES WERE ISSUED TO SANTA FE FOR THE BENEFIT OF AZTEC.

THE LETTER OF MAY 1 INDICATES THAT THE FOREST SERVICE CONTINUED TO ADMINISTER THE LANDS IN QUESTION AS NATIONAL FOREST LAND SUBSEQUENT TO THE DATE OF APPLICATION FOR PATENT ON JUNE 26, 1942, SUCH ADMINISTRATION BEING CONTINUED UNTIL NOVEMBER 15, 1951, WHEN THE SECOND COURT OF APPEALS DECISION WAS RENDERED. AT THAT TIME THE FOREST SERVICE BEGAN DEPOSITING THE RECEIPTS FROM THIS LAND INTO DEPOSIT FUND ACCOUNT 12X6875 (11) SUSPENSE, FOREST SERVICE. AFTER SEVERAL CONFERENCES WITH REPRESENTATIVES OF AZTEC IN 1952 IT WAS AGREED THAT THE FOREST SERVICE WOULD ENTER INTO NO NEW TIMBER SALES CONTRACTS AFFECTING THESE LANDS, BUT WOULD CONTINUE TO DISPOSE OF TIMBER UNDER EXISTING CONTRACTS AND PLACE THE INCOME IN SPECIAL DEPOSIT SUSPENSE, AND ISSUE GRAZING AND SPECIAL LAND USE PERMITS FOR 1953, PLACING THE RECEIPTS THEREFROM IN SPECIAL DEPOSIT. NO AGREEMENT WAS MADE AS TO THE ULTIMATE DISPOSITION OF THESE FUNDS. THIS ARRANGEMENT CONTINUED IN EFFECT UNTIL THE LANDS WERE PATENTED, AT WHICH TIME IT WAS DISCONTINUED, AND NOW THE QUESTION IS PRESENTED AS TO THE DISPOSITION TO BE MADE OF THE $241,533 COLLECTED FROM THESE LANDS SINCE NOVEMBER 15, 1951, AND HELD IN THE DEPOSIT FUND ACCOUNT.

THE COURT DECISIONS CITED ABOVE HELD THAT SANTA FE WAS ENTITLED TO RECEIVE PATENTS ON THE LANDS HERE IN QUESTION, AND PATENTS WERE ISSUED ON JANUARY 11 AND MARCH 25, 1955. HOWEVER, IT HAS BEEN HELD IN MANY CASES THAT WHERE, AS HERE, THE RIGHT TO A PATENT ON LAND EXISTS THE PARTY ENTITLED THERETO HOLDS THE FULL EQUITABLE TITLE TO THE LAND WITH ALL THE BENEFITS, IMMUNITIES, AND BURDENS OF OWNERSHIP FROM THE DATE THE LAST PREREQUISITE FOR THE PATENT IS MET, WITH THE GOVERNMENT HOLDING THE MERE NAKED LEGAL TITLE IN TRUST UNTIL THE PATENT IS ISSUED, AND THAT THE PATENT, WHEN ISSUED, RELATES BACK TO THE INCEPTION OF THE RIGHTS OF THE PATENTEE; THAT IS, THE DATE THE LAST PREREQUISITE WAS MET. SEE BALLINGER V. FROST, 216 U.S. 240; BENSON MINING COMPANY V. ALTA MINING COMPANY, 145 U.S. 428; BARNEY V. DOLPH, 97 U.S. 652; JOHNSON V. JOHNSON, 179 P. 595; WOOD V. GLEASON, 140 P. 418; MIAMI V. SIROCCO COUNTY, 1880 SO. 344; AND CASES CITED THEREIN. SPECIFICALLY IN CONNECTION WITH THE QUESTION OF A RAILROAD'S TITLE TO INDEMNITY LAND, THE SUPREME COURT STATED IN PAYNE V. CENTRAL PACIFIC RAILROAD COMPANY, 255 U.S. 228, THAT THE FILING OF AN APPLICATION FOR PATENT TO INDEMNITY LAND BY A RAILROAD WHICH IS ENTITLED THERETO "IS NOT TO BE LIKENED TO THE INITIAL STEP OF ONE WHO WISHES TO OBTAIN THE TITLE TO PUBLIC LAND BY FUTURE COMPLIANCE WITH THE LAW, BUT RATHER TO THE CONCLUDING STEP OF ONE WHO BY FULL COMPLIANCE HAS EARNED THE RIGHT TO RECEIVE THE TITLE," AND THAT , "THE RULE APPLICABLE IN SUCH A SITUATION IS THAT "A PERSON WHO COMPLIES WITH ALL THE REQUISITES NECESSARY TO ENTITLE HIM TO A PATENT FOR A PARTICULAR LOT OR TRACT IS TO BE REGARDED AS THE EQUITABLE OWNER THEREOF.'" SEE ALSO, WEYERHAEUSER V. HOYT, 219 U.S. 380; SOUTHERN PACIFIC RAILROAD COMPANY V. WOOD, 57 P. 388. MOREOVER, THE SUPREME COURT HELD IN UNITED STATES V, ANDERSON, 194 U.S. 394, QUOTING FROM THE SYLLABUS, THAT:

"WHERE THE SELECTION OF INDEMNITY LANDS IS MADE IN ACCORDANCE WITH THE STATUTE AND THE SELECTION REJECTED, AND ACTION ON THE APPEAL IS DELAYED, BUT THE APPEAL IS FINALLY DECIDED IN FAVOR OF THE THE CASE IS ONE PECULIARLY WITHIN THE PRINCIPLE OF RELATION, AS THE APPROVAL OF THE SELECTION MANIFESTLY IMPORTS THAT AT THE TIME OF THE SELECTION THE LAND WAS RIGHTFULLY CLAIMED BY THE APPLICANT.

"THE SUCCESSOR IN INTEREST TO THE APPLICANT WHO WOULD HAVE BEEN ENTITLED TO RECOVER AGAINST TRESPASSERS FOR MATERIALS REMOVED FROM THE LAND AFTER THE APPLICATION AND BEFORE THE PATENT ISSUED, MAY, UNDER THE DOCTRINE OF RELATION, BE REGARDED AS THE OWNER FROM THE DATE OF THE APPLICATION, AND IS ENTITLED TO RECEIVE FROM THE UNITED STATES THE AMOUNT COLLECTED BY IT FROM TRESPASSERS WHO REMOVED MATERIALS FROM THE LAND AFTER SUCH DATE, THE UNITED STATES HAVING HAD NOTICE OF THE CLAIM PRIOR TO SUCH COLLECTION.'

THE ABOVE DECISIONS CLEARLY INDICATE THAT THE AZTEC LAND AND CATTLE COMPANY, LTD., AS SUCCESSOR IN INTEREST TO THE SANTA FE PACIFIC RAILROAD COMPANY, IS ENTITLED TO THE $241,533 NOW BEING HELD IN THE DEPOSIT FUND ACCOUNT. ACCORDINGLY, PAYMENT THEREOF SHOULD BE MADE TO AZTEC.