Supreme Court’s Construction of the Federal Constitution in 1920-1921

While the Constitution does not in terms forbid the United States, as it forbids the states, to pass any law impairing the obligation of contracts, the principle has become established that contracts made by the United States may create rights of which individuals may not be divested. This principle is attached to the Fifth Amendment’s prohibition against depriving any person of property without due process of law. In applying this principle, United States v. Northern Pacific Ry. Co.2 held that a grant of land to a railroad to induce its construction is a contract, and that provisions for substituting indemnity lands to supply losses “in the place limits” confer substantial rights under the protection of the due-process clause. Government authorities had issued patents for certain indemnity lands which they later sought to revoke because before issue the land in question had been withdrawn for the creation of a forest reserve. The company resisted revocation on the ground that at the time of the withdrawal there was not enough indemnity land left to make up for the losses in the place limits. The court held that the government cannot defeat its original grant by withdrawing indemnity lands when there are not enough other indemnity lands left to enable it to comply with that grant, and that the general rule that no right attaches to any specific land until it is “selected” does not apply as between the government and the grantee when the lands available for indemnity are not sufficient for that purpose. There was doubt as to the quantity of indemnity land remaining at the time of the withdrawal in question, and the case was sent back for determination of the facts.