Court Opinion

ID: 9417537
Source: CourtListenerOpinion
Date Created: 2023-08-02 20:22:58.21316+00
Date Added: 2024-06-11T17:21:45.221862
License: Public Domain

Mr. Justice Brewer
(with whom concurred Mr. Justice Gray) dissenting:
Mr. Justice Gray and myself dissent from the views expressed, and the conclusions reached in the foregoing; opinion.-
*201By the act of Congress of July 2,1862, making a grant, and the act of the legislature of the State of New York, of May 5, ,1863, accepting the same, a trust was created in the State . of New York in respect to this land scrip. This is evident •from these sections: 12 Stat. c. 130, pp. 503-505.
“ An Act donating the Public Lands to the several States and Territories which may provide. Colleges for the Benefit of Agriculture and the Mechanic Arts.
“ Be it enacted ’by the Senate and House of Representatives ■of the United States of America in Congress assembled, That .there be granted to the several States for the purposes hereinafter mentioned, an amount of public land, to be apportioned to each State a quantity equal to thirty thousand acres for each senator and representative in Congress to which the States are respectively entitled, by the apportionment under the census of eighteen hundred and sixty: Provided, That no miheral lands shall be selected or purchased under the provisions of this act.
“ Sec. 2. And be it further enacted, That the land aforesaid, after being surveyed, shall .be apportioned to the several States in sections or sub-divisions of sections, not less than one quarter of a section; and whenever there are public lands in a State subject to a sale at private entry at one dollar and twentyLive cents :per acre, the quantity to which said State ..shall be entitled, shall be selected from such lands within the •limits of such. State, and the Secretary of the Interior is heréby directed to issue to each of the States in which there is mot the quantity of public lands subject to sale at private entry at one dollar and twenty-five, cents per acre, to which said State may Be entitled, under the provisions of this act, •land'scrip to the amount in acres for the deficiency of its distributive share;' said scrip to be sold by said States and the proceeds thereof applied to. the- uses and purposes prescribed ..in, this act, and for no other use or purpose whatsoever: Provided, That in no case shall any- State to which land scrip .may thus be issued be allowed to locate- the same within the limits of any other State, or of any, Territory of. the United *202States, but their assignees may thus locate said land scrip upon any of the Unappropriated lands of the United States subject to sale at private entry at one dollar and twenty-five cents, or less, per acre : And provided further, That not more than one million acres shall be located by such assignees in any one of the States: And provided further, That no. such location shall be made before one year, from the passage of this act.
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“ Seo. 4. And he it further enacted, That all moneys derived from the sale of the lands aforesaid by the States to which the lands are apportioned, and from the sales of land'scrip herein-before provided for, shall be invested in stocks of the United States, or of the States, or some other safe stocks,' yielding not less than five per centum' upon the par value of said stocks ; and that the moneys so invested shall constitute a perpetual fund, the capital of which shall remain forever undiminished, (except so far as may be provided in section fifth of this act,) and the interest of which shall be inviolably appropriated by each State which may take and claim the benefit of this act, to the endowment, support and maintenance of at least one college where the leading object shall be, without excluding other scientific and classical studies, and including military tactics, to teach such branches of learning as are related to agriculture and the mechanic arts, in such manner as the legislatures of the States may respectively prescribe, in order to promote the liberal and practical education of the industrial classes in the several pursuits and professions in life.
“Sec. 5. Andhe it further enacted, That the grant of land and' land scrip hereby authorized shall be made on the following conditions, to which, as well as to the provisions hereinbefore contained, the previous assent of the several States shall be signified by legislative acts:
• “ First. If any portion of the fund invested, as provided by the foregoing section, or any portion of', the interest thereon, shall, by any action or contingency, be diminished or lost, it shall be replaced by the State to which it belongs, so that the capital of the fund shall remain forever undiminished; and the' annual interest shall be regularly applied without dimimi*203tion to the purposes mentioned in the fourth section of this act, except that a sum, not exceeding ten per centum upon the amount received by any State under the provisions of this act, may be expended for- the purchase of lands for sites- or experimental farms whenever authorized by thé respective legislatures of isaid States. ■
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“ Seventh. No State shall be éntitled to the benefits of this act, unless' it shall express its acceptance thereof by its legislature within two years from the date of its approval by the •President.”
Under this statute, the action of the State designating one beneficiary was not final; and it'could withdraw, thereafter, the income from one institution and bestow it upon another, even as it did, in fact, in this case, as shown by the record. Suppose, hereafter, Cornell University should be so conducted that its “leading object” should not be “to teach such branches of learning as are related to agriculture and the •mechanic arts,” as required by the act of Congress, it would be. the right and the duty of the State to take the fund and' apply it to that purpose by other means and instruments.
The sacredness of the duties cast upon a trustee, recognized from time immemorial, obtains; and the subsequent transaction by which the land scrip was disposed of cannot be interpreted as if it Were a disposition by an absolute owner of his property. A trustee may not speculate in respect to trust ■ property for. his own benefit, or for the benefit of a friend, or in favor of any institution. The fact of a trust compels that all received as the proceeds of trust property, directly or indirectly, must be adjudged forever within the obligations of that trust. .
The scrip became the -property of the State in trust. The act of Congress determines the fact, the nature and extent of the trust. It grants land; or in the absence of public lands within the State, scrip to the corresponding amount. It provides, in section two, that where scrip is taken by a State, it may be sold by it, “ and the proceeds thereof applied to the uses and purposes prescribed in this act, and .for no other use *204or purpose whatsoever.” • Section three, while referring to the land which may be taken under the act, indicates fully the , scope and intent of the trust, by enacting “ that all the expenses of management, superintendence and taxes from date of selection of said lands, previous to their sales, and all expenses incurred in the management and disbursement of the moneys which may be received therefrom, shall be paid by the States to which they may belong, out of the treasury of said States, so that the entire proceeds of the sale of said lands shall be applied without any diminution whatever to the purposes hereinafter mentioned.” Section four provides “that all moneys derived from the sale of lands, and 'from the sales of land scrip, shall be invested, etc.; and that the moneys so invested shall constitute-a perpetual fund, the capital of which-shall remain forever undiminished, and the interest of which shall be inviolably appropriated, etc., specifying the purposes of the appropriation.” Obviously the’ scope of this is, that all moneys .derived- from this property, whether land or scrip, whether obtained directly or indirectly, are consecrated to the purposes designated, and must be held by the State in trust forever. Among the limitations provided is that expressed in the see.ond clause in the fifth section, that “ no portion of said fund, nor the interest thereon, shall be applied, directly or indirectly, under any pretence whatever, to the purchase, erection, preservation, or repair of any building or buildings.” Nothing can be clearer from this statute than that a State, accepting its provisions, constituted itself a trustee, with the obligation!that .it should devote to the purposes of the act all the - proceeds, of the land, or land scrip which it might obtain, directly or indirectly.
The State of New York, having no public lands within its .limits, received .scrip ; but the scrip was subjected to the same trust that land would have been subjected to, and was subjected to, when taken by any’ State. All expense in respect to the location v and management of the lands, or the .invest.ment of the funds, was to be borne by the State, in order that .the net proceeds of this grant, no matter how obtained, should ;be appropriated to the. purposes expressed. Hence, the State *205of New York, accepting the trust, was' powerless to repudiate its1 obligations, orto provide for an appropriation for any other purposes, or under any other conditions, of the moneys which might be' received, directly or indirectly, from the disposition of this trust property.- Prior to November 24, 1865, scrip to the aggregate amount of 176,000 acres was sold at prices ranging from fifty to eighty-five cents — the average being sixty-five, nearly.
-The first selection of the beneficiary of this trust was the. People’s College of Havana; but that selection was not satisfactory ; and on April 27, 1865, Cornell University was established by act of- the legislature of New York, and it was designated as the beneficiary; the act providing, as a condition of this selection, that Cornell University should be endowed to the extent of five hundred thousand dollars by Ezra Cornell. The provision in § 4 in its charter, that “ the corporation hereby created may hold real and personal property to an amount not exceeding three millions of dollars in the' aggregate,” evidently means that the property of the corporation shall not exceed three millions, after’ deducting-the amount of all its debts and obligations, and does- not include property which the State might retake at any time, and a fortiori property which the State, under a duty imposed upon it by law, owned upon a trust which-it could not divest itself of. • Here, a reference to Mr. Cornell, and his connection with this- transaction, is appropriate. A man acquiring wealth by his own exertions, the dream of his later years was a university, bearing his name, and so munificently endowed as to become, like Yale and-Harvard, a centre of learning; and his purchase of the scrip, and his transaction with the State, must be interpreted in the .line of this thought. It was the glory of a great university which he hoped to realize —■ one which would link his name with its glory. The means were subordinate — the glory and strength of Cornell University -was. the purpose. Unquestionably inspired by his thought and wish, on April 10, 1866, the legislature -passed an act for the future disposal of the scrip, and authorized the Comptroller to fix its price¿ That price was *206not to be less than thirty cents per acre. The act also provided that he might contract for the sale thereof to .the trustees of Cornell University; and that, if they did not purchase, the Commissioners of the Land Office might contract for the sale to any person or persons; but added, expressly, that “ said trustees or such person or persons shall at the time make an agreement and give security for the performance thereof to. the satisfaction of the Comptroller, to the effect that, the .whole net avails and profits from the sale of scrip or the location and use by the said trustees, person or persons of the said lands or of the lands located under said scrip, shall from time to time, as such net avails or profits are received, be paid over and devoted to the purposes of such institution or institutions as have been or shall be created by the act, chapter five hundred and eighty-five of the laws of eighteen hundred and sixty-five, of the State of New York, in accordance with the provisions of the act of Congress hereinbefore mentioned. And the said trustees, person or persons to whom the said lands or scrip shall be sold, shall report to the Comptroller, annually, under such oath and in such form as the Comptroller shall direct, the amount of land or scrip sold, the prices at which the same have been sold, and the amount of money received therefor, and the amount of. expenses incurred in the location and sale thereof.”
This act has a twofold aspect: It is the legislation of' a • sovereign State, prescribing the duties and powers of one of its officials; and it is also a declaration of the duties cast by a trustee upon its agent in respect to trust property. In either ■ aspect, its voice is potential in respect to that which was under the authority thereafter done by official or agent. It must be borne in mind that the State had no land — nothing but scrip. This fact was known, and must be recognized in any interpretation of the powers granted. "What were they ? First, to sell for cash, at a price not less than that to b.e fixed by the Comptroller. Second, and this was obviously in view of propositions or suggestions made by Mr. Cornell as to what he was willing to do, that if no sale for cash was made, the scrip might be disposed of to any one who would give to this *207fund the full benefit of- any profits made by the location of the scrip upon public lands. Can it be doubted, under such a statute, that, if 'no absolute sale for cash was made, and the alternative proposition was finally accepted by the official and agent of the State and trustee, the net profits of such location and sale were to become and be a part of the trust funds % If language means anything, it means this. No stipulation by official or agent could nullify or thwart the express limitations of this power. A.n illustration or two will make this clear: Suppose under this authority the Land Commissioners had-contracted with Mr. Cornell to take the scrip and locate it upon public lands, and out of the' proceeds pay thirty cents an acre to the fund, and give the -balance to the commissioners for their private gain, or to the State for the public purpose of a state house, or. other matter of general interest, would any court or any person uphold for a moment the validity of such a contract so far as respects the latter-provisions; and would not the universal voice declare that, notwithstanding it, the entire proceeds of the location of scrip and sale of lands belonged to the fund of - which the State was the trustee 1 That is this case. The Comptroller fixed the price at fifty cents an acre, about fifteen cents an acre less than had heretofore been realized. Not only that, but while it is in evidence that the amount of scrip authorized by the act of Congress created a temporary depression in price, so that although no land was purchasable from Congress at less than one dollar and a quarter per acre, the price of scrip was temporarily reduced to less than half that figure; yet, as appears from the report of a commission, appointed in 1874 by the State of New York to inquire into this college land grant, the cash market value of the scrip was always at least fifty cents an acre and the sales by other States of scrip, amounting in all to 5,699,600 acres, ranged from fifty to ninety cents, only 120,000 acres having been sold below fifty cents. It is thus obvious that the depression in price was only temporary. The prior experience of the State of New York, the whole experience of other States, ténds to show that fifty cents was the minimum value of this scrip.
*208■ No' sale was made, no- contract ■ of sale entered into at the' price fixed byt the Comptroller. The-contract entered into was by virtue of the alternative authority given.
That contract was upon' this proposition, from Mr. Cornell:
“ Appreciating, however, as I do most fully, your motives for desiring to give the utmost possible security and permanency to the funds which are, in a great degree, to constitute the endowment of . the Cornell University, I shall most cheerfully accept your views so far as to consent to place the entire prof-its .to be derived from the sale of the lands, to be located with the college land scrip in thé treasury of the State, if the State will receive the money as a separate fund from that which ■may be derived from the. sale of scrip and will keep it permanently invested, and appropriatethe proceeds from the.income thereof annually to the Cornell University, subject to the direction of the trustees thereof, for the general purposes of said’institution, and' not to hold it subject, to the restrictions which the act of Congress places upon the. fund derivable from the sale of the college land scrip, or as a donation from the government of the United States, but as a donation from Ezra Cornell to the Cornell University. Acting upon the above básis, I propose to purchase 'said land scrip as- fast as I can advantageously locate-the same, paying therefor at theLate of thirty cents per acre in good seven per cent bonds and securities, and obligating myself to pay the profits as specified in chapter 481, of the laws of 186.8, into the treasury of the State, as follows : Thirty cents pér acre of said profits.to be added to the College Land Scrip Fund, and the balance of said profits to be placed in a separate fund, to be known as the Cornell University Fund and to be preserved and invested for the benefit of said institution,,and the income derived therefrom to be paid over annually to the trustees of said university for the general purposes of said institution.”
. Jt'is unnecessary to notice other portions of the correspondence, or to review the contract, for all of significance is expressed in this proposition. ■ It is not an absolute sale of the scrip for so- much money. The obligation assumed by Mr. Cornell, to the State was thirty cents an acre, and -the net profi *209its of the location of the scrip on public lands, and sale of the lands. In briefer words, thirty cents an acre and net profits was his offer. True, he proposed that only part of the profits, to wit, thirty cents an acre, should pass to the fund : but what authority had the commissioners for making such a limitation in the contract ? Suppose, after the making of the contract,' the commissioners had declined to transfer the scrip to him, could he have compelled the specific performance, by mandamus, of that contract? Would not a clear and satisfactory answer have been that the commissioners had no authority to partition the profits ? The limit of their authority was a contract by which the, agent and locator should pay to the State the whole net profits of the location. As Mr. Cornell could not have compelled, by mandamus, the performance by the commissioners of the contract, so, on the other hand,-having received .the scrip and located it, and disposed of the land, and paid the money into the State, that unauthorized stipulation becomes surplusage. It cannot relieve the State of New York from its liability as trustee. It is not potent to turn a portion of the proceeds of this scrip into other channels, or to other uses. The fact that all the proceeds were going to the selected beneficiary, doubtless led the commissioners to indifference as to the stipulations of the contract; but such indifference did not enlarge their powers nor make valid the stipulation in excess thereof. It seems strange that a trustee can avail itself of a disregard by its agent of his instructions so as to relieve itself of responsibility for about four-fifths of the proceeds of the trust property; yet such is the result of the conclusions reached by this court.
We are sustained in this view by a report of a majority of the commission, appointed in 1874 by the legislature of the . State of New York, to inquire into this fund; for they say: “ The question was raised in the Comptroller’s report of 1869, and earlier, whether this agreement' of 4th August, 1866, was a sale of the-scrip-to, Mr. Cornell; whether it was not, ‘in substance, an agency with a transfer of title -for the purpose of facilitating the object in view.’ We are of the opinion that the agreement -was an actual sale to Mr. Cornell;. but that all his profits, made from these lands, are part of the purchase-*210money, and so subject to the restrictions of the act of Congress. Everything that forms a part of the consideration for the sale of the trust property by the State belongs to the trust fund created by Congress.” And again: “We are asked, finally, to recommend ‘ what legislation is necessary to properly secure said funds in compliance with the act of Congress.’ None seems to be necessary in reference to the fund to be derived from what are called the ultimate net profits'from the location and sale of the lands by Mr. Cornell, under the agreement of August, 1866. By his contract with the. State he is. to pay these profits into its treasury, and he has twenty years in which to complete the sale of the lands. This fund, is, in our opinion, a part of the proceeds of the scrip within the purview of the act of Congress, and cannot.be legally distinguished from the other fund. Mr. Cornell Seems to have taken this view before entering into the contract; for, in a public communication, dated October 26, 1869, referring to a letter from himself to Comptroller Hillhouse in June, 1866, he says: ‘ I volunteered to create a fund three or • four times as large as that which the' State could produce,, for the same object that Congress intended, and at'my own risk and expenses, without charging a single dime-to anybody for my services.’ He could not impose on the state treasury a new and distinct trust as to any part of the consideration he was to pay. Unless these profits are part of the purchase-money,' the State gave to him for the college bearing his name a monopoly of the scrip on long credit .for a price much less than its cash value. The secdnd thirty cents per acre, provided for in- the agreement, being dependent solely on contingent profits, which might not be realized; if at all, for twenty years, and then without interest, was not, at the date of the agreement, equivalent to more than from seven to ten cents. These profits, being part of the purchase-money, the State is bound to receive' them, when, from time to time, realized, and invest them in the manner prescribed by the act of Congress, and. to appropriate the. income to the educational purposes in the act defined.” ■ .
. It is true, a minority of that- commission dissented; but the *211reasoning of the minority makes the contract of no validity, except as to the sale of the scrip for thirty cents an acre, and leaves only that amount as the fund for which the State is responsible. The reasoning is that the State was not authorized under the act to itself locate scrip.on lands in another State; and if the profits of the location were to belong to the' State, it would follow that the State was the beneficial owner of the lands thus located, and therefore there was a direct evasion of the act of Congress. Concede the force, of that reasoning, and who can take advantage of it ? Can the State, which has received the proceeds of such, location say that it had no authority to receive them ; and can it, after receiving them, repudiate its liability as trustee for that which it- has received as the proceeds of the trust property ?
It scarcely need be said that no subsequent legislation on the part of the State of New York, and no agreement between it and Cornell University as to the possession of these funds, can have the effect to relieve the State from its liability as trustee, or .place the title to those funds elsewhere than in the State.