In the first half of the Nineteenth Century the United States acquired a vast new area of sparsely populated lands in the South and West. Settlement and absorption of this territory into the older part of the country became a national problem which demanded for its solution a more rapid and extensive means of transportation of goods and people than was provided by wagons, stagecoaches, and waterways. The building of railroads largely provided the answer. They made it possible for the frontier homesteads and communities to be established on the lands of the new territory and yet maintain live contact with the national economy and culture. To encourage a rapid railroad building program, Congress chose to make public grants of a large proportion of the new lands to underwrite and subsidize the participation of private individuals and privately owned companies in the program. In this congressional program of land grants 'in aid of construction' were sown the seeds of the present lawsuit.
Enormous areas of public lands were granted railroads, almost equal to the acreage of the New England States, New York and Pennsylvania combined. Execution of the land-grant program was marked by innumerable complex and unforeseen difficulties; its course has been beset by claims and counterclaims asserted by and between settlers, railroads, and Government. Congress, the executive agencies, and the courts have been repeatedly called upon to help resolve these conflicting claims. The lapse of nearly a century since the program was instituted has not resolved all of the . This lawsuit requires consideration of old and recent congressional efforts to settle these persistently recurring controversies.
One substantial field of railroad-government controversy has been the terms of the original land-grant acts which required the railroads to carry Government goods and personnel free of tolls. By reason of judicial interpretation of these terms, as supplemented by periodic legislation, land-grant railroads for more than half a century immediately prior to 1940 transported for the Government at one-half of the standard commercial rates. During the depression years beginning in the late 1920's and immediately following, railroad earnings declined considerably, and a movement began to relieve the roads of their land-grant rate obligations. Studies by some Government selected agencies recommended legislation for outright repeal of the provisions for rate concessions to the Government. Bills to accomplish this in the 75th and 76th Congresses failed to pass but § 321 of the Transportation Act of 1940 provided that land-grant roads could, by compliance with specified conditions, collect from the Government full commercial rates, except for the transportation of military and naval freight and personnel. In brief, it required that a railroad, to qualify for full rates, must execute, within a year after passage of the Act, a release of any claim it might have 'against the United States to lands, interest in lands, compensation, or reimbursement on account of lands or interests in lands, which have been granted, claimed to have been granted, or which it is claimed should have been granted to such carrier or any * * * predecessor in interest under any grant to such carrier or such predecessor in interest as aforesaid.' (Italics supplied.)
Shortly after passage of this Act respondent took advantage of it, and gave the Government a release framed substantially in the words of the statute. Its predecessor in interest had obtained a grant to lands in Arizona and New Mexico, under an Act of 1866 containing the usual governmental rate concession terms. 14 Stat. 292, 297. The 1866 Act had specifically recited that if the Government, because of prior settlement of part of the granted lands by homesteaders, could not give possession to some of the lands granted to the railroad, it could select, under the direction of the Secretary of the Interior, other public lands in lieu of them as an indemnity. Respondent had large outstanding claims against the Government for these 'indemnity' lands when it signed the release and concedes that the release extinguishes these claims.