American Dock & Improvement Co. v. Trustees for the Support of Public Schools

| New York Court of Chancery | Feb 15, 1885

The Chancello».

The grounds on which the complainants’ claim to relief is; based are so fully stated in the opinion of the court of errors and appeals in this case (8 Stew. Eq. 181), and in the charge of the-justice who presided at the trial of the issue at law, that it would be entirely superfluous to restate them here at any length.. The land in question in this suit is a tract known as the ’West-Line Grant, formerly wholly under the waters of Communipaw bay. The complainants claim it as riparian owners, and insist that their title as such was recognized, fortified and established-' by the wharf act of 1851. They also claim title acquired by them, as they allege, under the act of 1860, authorizing the extension of'the Central railroad, and under the act of incorporation of the American Dock and Improvement Company, passed in 1860. They also claim title by estoppel. The opposing-title, that under which the property is claimed in behalf of or under the West Line Railroad Company, rests wholly upon a special grant from the state contained in the ninth section of the-supplement to the charter of the West Line company (which-supplement was passed in 1872), and in a deed made, as is-claimed, under and in execution of the authority of that section.. The question presented by the issue at law was whether the-West Line Railroad Company, at and after the delivery of the-deed from the state to it, had the legal title to and right of possession of all or any part of the land described in the deed; and-if it had such title and right to part only, to what part it was so-entitled. As to such facts as the judge at the trial held to be material, there was no dispute, and consequently, under his-rulings as to the admissibility of evidence offered on the trial,, there was no question of fact to be settled by the jury. He so-charged accordingly. Under the charge they found a verdict in-favor of the complainants, who were defendants in the issue, fora small part (two hundred and fifty-seven thousandths of an acre) of the land, and in favor of the receiver of the West Line-company, who was the plaintiff in the issue, for the rest.

The complainants now move to set aside the verdict on several grounds, which will be stated in connection with the consideration thereof. On the other hand, their adversaries not only resist the motion, but move, on notice, for a decree upon and in conformity with the verdict.

The first ground assigned for. a new trial is that the judge erred in permitting the plaintiff in the issue to give in evidénce the deed from the state to the West Line company without requiring proof that the lands described therein came within the location made by the company, and that the price of the land had been paid before the grant was made.

The authority for the grant is, as before stated, contained in the ninth section of the supplement of 1872 to the charter of the West Line company. That section provided that any lands of the state under tide water, or that might theretofore have been under tide water, which should happen to come within the location of the route -or of the depots, stations or other works of the company or should be needed therefor, should be paid for by the company to the trustees of the school fund of the state; that the boundaries and price thereof should be fixed by the riparian commissioners, on application for that purpose to them; that the price should be paid prior to any filling or improvement thereon authorized by that section; that on such payment the title to the land should vest in the company in fee simple, and that a deed therefor might be made by the riparian commissioners, governor and attorney-general, in the name and under the great seal of the state. The deed recites that the land thereby conveyed lies, in part, under tide water, and part theretofore lay under tide water ; that it happened to come within the location of the route, of the depots, stations and other works of the company, and was needed therefor; that the commissioners, pursuant to the above-quoted section, and on application of the company, had fixed the boundaries as they were thereinafter described, and the price of the lands at $125,000, and that the company had, pursuant to the directions of the act, paid that sum to the trustees of the school fund of the state; and it declared that the conveyance was made in consideration of those premises and of that sum of $125,000 paid to the trustees of the school fund, the receipt whereof was thereby acknowledged and the company for-' ¿ver released, and discharged therefrom. It will be seen that the instrument declares that all the prerequisites to the grant have been complied with. The deed (which was under the great seal of the state) was of itself competent evidence, without proof, that the previous steps leading to the vesting of the title had been taken. Brown v. Galloway, Pet. C. O. 291.

The second ground is, that the judge refused to allow the defendants to offer evidence to show that the land conveyed by the deed did not come within the location of the road or of the depots, stations, or other works of the company. It may be remarked, in passing, that the land was granted by the act not merely in the contingency that it should happen to come within the location of the route, depots, stations or other works, but also in case it should be needed for any of those purposes. The act was of itself a grant of the land. It declared that the title to the land should, on certain conditions, vest in the company in fee. It provided also for the ascertainment of the boundaries and the fixing of the price, and to whom the price was to be paid, and also for the giving of a deed by the governor, attorney-general, and riparian commissioners, in the name and under the great seal of the state, for the property. The act was offered and received in evidence on the part of the plaintiff in the beginning of the trial. The defendants’ counsel urge that evidence that the land was not within the location should have been admitted with a view to defeating the grant—to show want of authority to make the deed. But the evidence was not competent. In Polk’s Lessecs v. Wendell, 9 Cranch 87" court="SCOTUS" date_filed="1815-02-21" href="https://app.midpage.ai/document/polks-lessee-v-wendal-85099?utm_source=webapp" opinion_id="85099">9 Cranch 87 (1815), Chief-Justice Marshall, speaking in reference to a patent for land, says that every prerequisite has been performed is an inference properly deducible, and which every man has a right to draw, from the existence of the grant itself, and that it would therefore be extremely unreasonable to avoid a grant in any court for irregularities in the conduct of those who are appointed by the government to supervise the progressive course of a title from its commencement to its consummation in a patent. He adds that there are some things so essential to the validity of the contract that the great principles of justice and of law would be violated, did there not exist some tribunal to which an injured party might appeal, and in which the means by which the elder title was acquired might be examined; that in general a court of equity appears to be a tribunal better adapted to that object than a court of law; that on an ejectment the pleadings give no notice of latent defects of which the party means to avail himself, and should he be allowed to use them the holder of the elder grant might often be surprised; but that in equity, the specific points must be brought into view &c. He further says that, in general, equity is the more eligible tribunal for those questions, and that they ought to be excluded from a court of law. He adds that there are cases in which a grant is absolutely void, as where the state has no title to the thing granted, or where the officer has no authority to issue the grant; and that, in such cases, the validity of the title may be inquired into at law. The same doctrine is laid down in the recent cases of Smelting Co. v. Kemp (1881), 104 U.S. 636" court="SCOTUS" date_filed="1882-03-18" href="https://app.midpage.ai/document/smelting-co-v-kemp-90513?utm_source=webapp" opinion_id="90513">104 U. S. 636, and Steel v. Smelting Co. (1882), 106 U.S. 447" court="SCOTUS" date_filed="1882-12-18" href="https://app.midpage.ai/document/steel-v-smelting-co-90695?utm_source=webapp" opinion_id="90695">106 U. S. 447. In the former case, the court says that the doctrine goes so far that if, in any circumstances under existing law, a patent would be held valid, it will be presumed that such circumstances exist. The court also says that a patent may be impeached collaterally in an action, and its operation, as a conveyance, defeated, by showing that the defendant had no jurisdiction to dispose of the lands; that the law did not provide for selling them, or that they had been reserved from sale or dedicated to special purposes, or had been previously disposed of to others. The court adds that in establishing any of those particulars, the judgment of the department is not assailed, nor is the regularity of the proceedings called into question, but the authority of the department to act at all is denied, and shown to have never existed. In the case in hand the act of the legislature was, as before stated, in itself a grant of the land in a certain contingency, and on a certain condition. There was authority to convey, provided the contingency existed, and the condition was performed. The former was that the land happened to come within the location of the company’s road or works, or was needed therefor, and the condition was payment of the price, which was to be fixed (as were the boundaries) by the riparian commissioners. Whether the contingency had happened or not, and the extent to which, if it had happened, the land of the state was to be taken under the authority given by the act, and what price was to be paid, were matters left, in the first instance, to the judgment of the commissioners, and were then to be adjudicated upon by those who were to give the deed—the governor, the attorney-general and the commissioners. The act, in other words, granted the land on payment of the price, leaving it to those who were to give the deed to determine whether the land was in the location of the route or works, or needed therefor, and what the boundaries should be declared to be, and what price should be paid, and whether it had been paid. In Minter v. Orommelin, 18 TIow. 87, it was held, in a case where title to an Indian reservation, which was to be forfeited by abandonment, was claimed by patent, that it was to be presumed that the secretary of the treasury had decided the fact of abandonment, and issued the order for sale. In this case the question as to whether the land had been disposed of by the state previously to the making of the grant, so that it had no title when the grant was made, was tried in the suit so far as it could be tried in a court of law, which, in an ejectment, can deal with legal titles alone. There was no error in the exclusion, on the trial of the issue, of the evidence offered to show that the land was not within the location.

The third ground of alleged error is, the refusal to permit the defendants to prove the amount of expenditures incurred in carrying out the entire system of improvements in Communipaw bay according to the original plan adopted by them. The court permitted them to prove their expenditures upon the land in question; but they claim that they ought to have been permitted to show expenditures by them elsewhere, also in or towards the execution of a plan or project adopted by them for the reclamation and improvement of a large tract formerly wholly under tide water, to which they claim title, and of which the West Line grant is part. As a legal proposition, it is clear that reclamation of land under water in one place, would not give a legal title to land under water elsewhere. The judge, therefore, properly refused to permit the defendants to prove such expenditure.

The fourth ground is, that the judge refused to permit the defendants to prove that from 1863 to 1872, the Central Railroad Company had reported annually, as part of the cost of its road, the cost of its work of reclamation and improvement in Communipaw cove, and had annually paid to the state a tax of one-half of one per cent, upon such cost so reported. The section of the supplement to the charter of the company pursuant to which the reports were made, and the tax paid, provides that the company shall annually report the cost of its road, and shall pay to the state a tax of one-half of one per cent, thereupon, and provides that no other tax or impost shall be levied or assessed upon the company. To include in the report of the cost of the road expenditures for reclamation and improvement of the great tract of land iú Communipaw cove, without mentioning those expenditures, would obviously be no notice to the state that such expenditures had been made. Such expenditure was not in fact part of the cost of the road. If the expenditures had been distinctly and explicitly reported as expenditures for the reclamation and improvement of the land under water, the fact that the state had received the tax upon them under such circumstances would not have created a legal title to the land on which the expenditures had been made. The objection under consideration is therefore untenable. ■

The fifth objection is, that the judge erred in his charge in certain matters to which exceptions were taken which will now be considered. The first is the charge that the thirteenth section of the riparian act of 1869 was designed for the benefit of the riparian owner, who, after notice, had neglected to apply for the grant, and the grant had consequently been made to some one else. Also, that the right of the riparian owner to compensation in such ease was by the. act made to depend upon whether, in law, he had such a right or interest as would make compensation to him necessary in order to enable the state to make the grant.

The eighth and thirteenth sections contemplate the making of a grant of the shore to some one else than the riparian owners; but out of regard to a natural and obvious equity, the eighth ■section gives such owner preference, as a purchaser, over any stranger, and the thirteenth provides for the protection of any right he may have in case the grant is made to a stranger. The eighth provides that no grant shall be made to a stranger unless the riparian owner, after six months’ notice, shall have neglected to apply for a grant to himself, and pay, or secure to be paid, the price which the commission shall have fixed. The thirteenth provides that where the grant is made to a stranger, he shall not fill up or improve the lands granted until the rights and interest of the riparian owner in them (if any he has). shall be extinguished by compensation as provided for in that section. The title of the state to what is known as the shore is beyond all controversy. The provision for notice to the riparian owner before sale to a stranger, was not the result of a necessity, but was a gratuitous concession on the part of the state, which it had the power to withdraw at will. It was of grace and not of right. The provision for compensation to such owner was not a recognition of any absolute right or in'erest on his part as such, for it is guarded by a qualification which forbids such a conclusion. Provision is made for compensation only in case the riparian owner has any rights or interest in the land granted. If it had been intended to be a recognition of the existence of the right of such owner to or in the land granted, the provision for compensation would have been unqualified, and the recognition clear and absolute. The legislature had the power to rescind the provision for pre-emption, and in the case in hand it did so by the special grant in the supplement of 1872 to the West Line charter. It had also the power to repeal the provision for compensation. The wharf act (of 1851) conferred only a license revocable at the will of the legislature at any time before improvement actually made. The riparian act. of 1869 repealed the wharf act, so far as lands under the tide water of the Hudson river, New York bay and Kill von Kull were concerned, saving, however, any grant of land under water or right to reclaim, made directly by legislative act, or grant or license, power or authority so made or given, to purchase, fill up, occupy, possess and enjoy lands covered with water, fronting and adjoining lands owned, or authorized to be owned, by the corporation or grantee or licensee in such legislative act mentioned, its, his or their representatives, grantee or assigns; saving, also, any grant or license, power or authority to erect or build docks, wharves and piers opposite and adjoining land owned, or authorized to be owned, by the corporation or grantee or licensee in the legislative act mentioned,, its, his or their representatives, grantees or assigns theretofore made or given directly by legislative act, whether those acts were repealable or not; and saving, also, and making irrevocable, any revocable license given by the board of chosen freeholders of a county to build docks, wharves or piers, or to fill in or reclaim any lands under water in the New York bay, Hudson river, or Kill von Kull, so far as the land under water had been reclaimed or built upon under such revocable license; and it expressly provided that as to the future, such revocable license was thereby revoked, and that no occupation or reclamation of land under water without such legislative act or revocable license, should divert the title of the state or confer any rights upon the party who had reclaimed or who was in possession thereof. Any riparian owner who had reclaimed the shore in front of his land before the passage of that act, had legal title to the land reclaimed. After the passage of that act, reclamation in the-places to which the act was applicable by a riparian owner having no special legislative authority, without the permission of the commissioners, conferred no legal title. As to the land under water in those places, the state, of course, if it still held legal title, had the power to make a special grant. The right or interest of the riparian owner, referred to in the thirteenth section of the riparian act, was the claim of adjacency, the right to reach tide water from his land. But that right was subsequently, in 1870, held not to interfere with the right of the state to sell the shore to a stranger. In Stevens v. Peterson and Newark R. R. Co., 5 Vr. 532, it was held, in the court of errors and appeals, that the state could grant land in navigable water within its territorial limits, to any one without making compensation to the riparian owner. Since that decision it is clear that, at law, the riparian owner who has not in fact reclaimed the land under water in front of his bank has, as riparian owner, no legal right to, or in respect to that land, which will prevent the state from granting it to any person, and that without any compensation to such owner.

The second ground of exception is as to that part of the charge which was an expression by the judge of an opinion derived from the consideration of the provisions of the West Line supplement, that the legislature, in the ninth section, contemplated the taking by the railroad company of the very land in dispute. That was a matter in no way' material. It had no important bearing in the case. But the reasons presented by the judge for his opinion are persuasive, and tend, at least, to lead to the conclusion which he reached.

The third exception is to the charge that the grant to the West Line company was not in violation of the constitutional prerogative of congress to regulate commerce with foreign nations and among the several states. The judge said that ever since the decision in Willson v. Blackbird Creek Co., 2 Pet. 245" court="SCOTUS" date_filed="1829-03-20" href="https://app.midpage.ai/document/willson-and-others-v-the-black-bird-creek-marsh-company-85631?utm_source=webapp" opinion_id="85631">2 Pet. 245, it has been regarded as settled that the power of congress does not exclude the jurisdiction of the state over navigable waters within its boundaries, and that a state law on this subject is not invalid unless congress has acted and the state law is in conflict with the congressional regulations, or interferes with the rights which are permitted by them. He added that he did not consider certain acts of congress, making appropriations for the. improvement of New York harbor’, as congressional legislation of such a character as would conflict with the right of the state to make the grant. By the convention between this state and the state of New York {Nix. Dig. p. 822), it was agreed that this state should have the exclusive right of property in and to the land under water lying west of the middle of the bay of New York and west of the middle of that part of Hudson river which lies between Manhattan island and New Jersey; and that this state should have exclusive jurisdiction of and over the wharves, docks and improvements made and to be made on tbe shore of this state &c. That compact was approved in all its parts by congress, in 1834 ; the act of approval, however, containing a provision saving the jurisdiction of the United States in and over the islands or waters. The views expressed by the judge upon the matter under consideration, were a correct statement of the law on the subject. There is another consideration of such conclusive force as to deprive the objection of all weight. The complainants themselves claim the land in, question, under title derived from the state, by grant express or implied, or by estoppel. Yet, though claiming under the state, they insist that the state never had any right to make a grant. The question in this suit is between rival claimants, who, on both sides, claim under the state, and in this controversy—as between them—the question whether congress has jurisdiction or not is neither material nor pertinent.

The fourth exception is to the charge, that it was unnecessary for the plaintiff in this issue to show that the conditions on which the grant of land in controversy was authorized, had been complied with, and that evidence .to the contrary on the part of the defendants in the issue was inadmissible. This subject was dealt with and disposed of in the former part of this opinion, in the consideration of the first and second grounds.

The fifth and sixth exceptions are to the charge that the grant did not become inoperative by reason of the forfeiture of the charter of the West Line company.

The point of these objections is that inasmuch as by the charter of the West Line company it was provided that if the railroad should not be completed at the expiration of ten years from the 1st day of July, 1865, then and in that case (except as to the part constructed), the act should be void ,• and inasmuch as the period expired in 1875, and that part of the road which was located on the land in question was not then built; and inasmuch as the company has been declared insolvent and its franchises sold, and the grant was intended merely for the purposes of the company, for the exercise of its franchises, the grant is, in-view of these considerations, void.

The grant, though made to a railroad company and for its purposes, was in fee and for a consideration paid. If, under the circumstances, the land reverted to the state, it alone could take advantage thereof. The defendants could not do so. It cannot be doubted that if, instead of ceasing to exercise its franchises, the company had changed its route, land acquired by it in fee, for a consideration, for its original route, would have been held' to be still its property in fee. A railroad company may buy land in fee and hold it, and, if it becomes insolvent, such property will be assets for the payment of its debts.

The remaining exceptions are to that part of the charge which relates to the construction of that part of the charter of the American Dock and Improvement Company which granted power to that company to purchase and hold any lands “ adjoining or near ” the tracts of land mentioned in the act as being then owned by the corporators, and to improve all and every portion of the lands under water held or purchased by it “ as therein aforesaid,” and granting it liberty to fill up, raise, occupy, possess and enjoy, as its own property, all lands covered with water which it might hold or purchase, or which might lie in front of any lands which it might hold or purchase &c.

The principle applied by the judge in construing these provisions was, that grants of this description are to be construed strictly against the grantees, and that the state is never presumed to have parted with any of its property in the absence of conclusive proof, either in express terms or by necessary implication, of its intention to do so.

The charge on the subject under consideration was- correct. It was, in brief, that the grant of power to purchase under the charter will be satisfied by confining it to the lands between the limits fixed in the eleventh section, i. e., between Cavan Point- and the south line of the lands of the Central Railroad Company.

The remaining reasons are, that the verdict was the finding of the jury by direction of the judge (wherefore, it is insisted, the issue was not, in fact, tried by a jury), and that tbe verdict was contrary to the evidence.

As before stated, there were no disputed facts. No fact that the judge permitted the parties to introduce was questioned. There was, therefore, no occasion for any deliberation by the jury as to those matters. There remained only questions of law,, as to which it was the duty of the .judge to instruct and direct them. He neither erred in his rulings upon the admissibility of the evidence offered, nor in his view of the law of the case. The verdict; therefore, is satisfactory to me as the finding of the state of the legal title to the premises in question. It will, therefore, be permitted to stand accordingly.

The defendants move for a decree upon the verdict. If the finding of the legal title were conclusive of the controversy, they would be entitled to such decree. But there still remains at least one matter of much importance to be determined, viz., whether the legal title must not give way to and follow the equitable one claimed by the complainants.

The question whether, .since the decision in Stevens v. Paterson and Newark R. R. Co., the riparian owner has a right of' adjacency of which he may avail himself in equity as against a grant to a stranger, is yet to be considered. There may also be considerations in regard to the West Line grant, and its validity as against the complainants, which, though inadmissible in the trial of the issue at law, may have great weight here.

It was said by Chief-Justice Marshall, in Polk’s Lessees v. Wendell, 9 Cranch 87, that while at law only certain defences may be set up to avoid a patent, in equity the defects in the title under such an instrument are the particular objects of investigation, and that that court may, on a view of the whole ease, annex equitable conditions to its decree, or order what may be reasonable, without absolutely avoiding the whole grant. The bill in this case, in addition to the claim of legal title, sets up one purely equitable, based upon equitable estoppel arising from the acquiescence of the state in the expenditure by the complainants of very large sums of money in reclaiming and improving the property. In that connection, the question whether improvements in partial execution of a plan or project for reclaiming a tract of which the land in controversy formed part, although such improvements were not made upon that land, are to be considered in equity as if made there, would properly come up for consideration.

The bill expressly claims the benefit of the equity which arises where an owner of property has permitted another person to expend money upon it in improvements which have added to its value. It alleges that acting under their construction of their charters, the complainants have, with the knowledge and acquiescence of the state, expended very large sums in improving the land, and they therefore claim that in view of that fact, they ought, irrespective of their claims under their charters, to be held in equity to be the owners of the land. The principle upon the application of which they rely, has long been established. In Pilling v. Armitage, 12 Ves. 78, Sir William Grant, M. R., says: “ There are different positions in the books with regal’d to the sort of equity arising from laying out money upon another’s estate through inadvertence or mistake; that person seeing that, and not interfering to put the party upon his guard. The case with reference to which that proposition is ordinarily stated, is that of building upon another man’s ground. That is -a case which supposes a total absence of title on the one side j implying, therefore, that the act must be done of necessity, under the influence of mistake, and undoubtedly it may be expected that the party should advertise the other that he is acting under a mistake.”

One reason for the principle is, that it is inequitable under the circumstances that one man should be profited at the expense of another. Nemo debet locwpletari ex álterius incommodo. The doctrine is considered with favor, and the grounds of it stated by Judge Story in Bright v. Boyd, 1 Story C. C. 478. A notable instance of 'its application is to be found in McKelway v. Armour, 2 Stock. 115, where one upon whose land another had, by his own mistake alone (supposing the land to be his own property), built a house, was compelled to accept the alternative of conveying the land to the latter for due consideration, or paying for the improvements. In the case under consideration, the legal title to ■the land when the improvements were made was in the state, and, according to the bill, the reclamation was made by the riparian -owners, not only under the supposed authority of their charter, but under a claim of the right of adjacency. It is urged by the -defendants that the title of the state could not be defeated or affected by those considerations because, as alleged, the reclamation was made after prohibitory notification on the part of the ■state. But there is no evidence before me on that head. The -evidence taken on the trial of the issue at law is not before me for any purpose, except collaterally for the purpose of determining what weight is to be given to the verdict, and it is not evidence on the final hearing, there being no order that it stand as ■evidence in the cause. Prudden v. Lindsley, 2 Stew. Eq. 615.

’ Again it is argued that if such considerations could avail to ■defeat or affect the title of the state, they could not affect the title of the "West Line company because, as alleged, they had no uotice of the equity. There being no evidence whatever in the ■cause which can be used on the final hearing, it is impossible to adjudicate upon that subject at this time.

Both motions (for a new trial on the one side, and for a final ■decree upon the verdict on the other) will be denied, with costs