Conditions of Land Grant
In regard to the land grant, the Land Office was called on for a great many decisions after 1864, mostly in interpretation of the exemptions carried in the federal legislation. The cases were not all brought by or against the Central Pacific, but they nevertheless affected its rights.
In general, the grant of land to the Central Pacific was held to be an absolute unconditional present grant. The route not being at the time determined, the grant was in the nature of a float, and the title did not attach to any specific sections until they were capable of identification. When once identified, however, the title attached to specific sections as of the date of the grant, except in the case of sections which were specifically reserved.[86] While the grant was a present grant, it conveyed only land which was public land, that is to say, portions of the public domain which were open to sale or other disposition under general laws at the time the grant was made. This definition did not include lands which became public subsequent to the date of the grant, or lands reserved by competent authority for any purpose or in any manner, whether or not the reservations were mentioned in the granting act.[87]
It followed from the theory that the land grant was a present grant, that a valid homestead entry existing at the date of the passage of the Land Grant Act excepted the land covered from the area granted to the railroad even though the entry were canceled prior to the definite location of the railroad line.[88] The same effect was produced by an uncanceled and unexpired pre-emption claim, or by any other valid claim or reservation which was alive at the date of approval of the granting act. In cases like these the cancellation of the claim restored the land in question to the public domain, but did not operate to replace it within the railroad grant.[89]
Yet, although the theory that the grant took effect as of the date of the granting act was strictly applied against the railroad, the settler enjoyed the protection of a milder rule laid down in the statute itself. Section 7 of the Act of 1862 required the railroad company to designate the general route of the road within a stated time, and instructed the Secretary of the Interior thereupon to withdraw lands within 15 miles (changed to 25 miles in 1864) of the route designated from pre-emption, private entry, and sale; and Section 3 provided that the land grant to the railroad should not include lands to which a pre-emption or homestead claim might have attached at the time the line of road was definitely fixed. Pre-emption or homestead claims might therefore be established after the passage of the land-grant statute, provided that this was done before the lands were withdrawn from settlement.[90] Indeed, the Secretary of the Interior ruled that settlement and occupation exempted land from the grant even though the settler failed formally to assert his claim.[91] After the lands embraced in the grant were withdrawn from pre-emption, private entry, and sale, a settler could not secure acreage by subsequent occupation, although he settled prior to the time when the Central Pacific acquired actual title.
Losses Due to Spanish and Mexican Grants
A class of cases distinct from those of ordinary settlers arose in connection with Spanish and Mexican grants. It appeared that when California became a state, the Spanish and Mexican grants were both indefinite and unrecorded, so that it was not known just what lands were public domain and what lands were private. On March 3, 1861, Congress passed an act creating a Board of Land Commissioners in California, and provided that all persons claiming land in California by virtue of any right or title derived from either the Spanish or Mexican governments, should present the same to the board within two years for adjudication, with privilege of appeal to the United States courts.[92]
Following this act, many claims were presented. The United States Supreme Court held that land within the boundaries of alleged Spanish or Mexican lands which were sub judice at the time the Secretary of the Interior ordered the withdrawal of lands along the route of the road, were not embraced in the land granted to the company. There were many sections of California lands which were sub judice on August 2, 1862, and this fact caused serious loss to the Central Pacific in its grant in California. In addition to losses from the cause just mentioned, the company suffered from the indefiniteness of the Spanish and Mexican grants, and from the delay in determining the extent and boundaries of the Spanish and Mexican claims.
Policy Toward Settlers
It was the policy of the company to invite settlers upon its lands before the lands were patented, and then to select and apply for patents on lands which settlers desired to buy.[93] Sometimes, indeed, the company leased unpatented land to cattlemen at low rates, in spite of its lack of title. Actual transfers were made by bargain and sale deed warranting to the purchaser the entire title acquired by the company from the federal government. The prices ranged from $2.50 to $20 per acre, but little was sold at a price above $5. Usually land covered with tall timber was held at $5, and that covered with pine at $10. The actual cost to the purchaser was slightly greater, because he was compelled to pay for the acknowledgment of three signatures to the deed, and for the recording, amounting in all to perhaps $5.50 or $6. On the other hand, the company granted as much as five years’ credit, and through the practice of selling land seekers’ tickets from San Francisco, Sacramento, San José, Lathrop, and Los Angeles to points along the line of railroad, which were accepted as cash on the purchaser’s first payment for his land, it practically furnished free transportation for California terminals to the sections bought. This last practice, at least, was in force on the Southern Pacific in 1880, and presumably on the Central Pacific also.