Supreme Court of the United States - 146 U.S. 387
The legal dispute between the State of Illinois and the Illinois Central Railroad Company concerns the ownership of the bed of Lake Michigan and the right to develop the harbor of Chicago. The court will determine whether the railroad company encroached upon the state's dominion, sovereignty, and proprietary right over lands under the navigable waters of the Great Lakes, and whether the state granted the company permission to do so. The court will also examine the validity of the company's claim to make further encroachments based on a grant from the state in April 1869. The State holds title to the lands under navigable waters in trust for the people, and while it may grant parcels for public interest, it cannot relinquish control over the entire harbor. The company's ownership and use of the piers are valid under riparian ownership law if they do not extend beyond the point of navigability. The confirmation made by the act cannot be used to extend the railroad company's riparian rights beyond its ownership of lands in sections ten and fifteen on the shore of the lake. The city has the power to prescribe conditions for the entry and use of the land.
The legal case involves determining whether the State of Illinois has the power to grant private property rights in lands under the waters of Lake Michigan to the Illinois Central Railroad Company. The grant must be made through a valid enactment and not legally revoked. The corporation was granted the authority to survey, locate, construct, complete, alter, maintain, and operate a railroad with one or more tracks or lines of rails from the southern terminus of the Illinois and Michigan Canal to Cairo, with a branch to Chicago on Lake Michigan, and another branch via Galena to a point on the Mississippi River opposite Dubuque in the State of Iowa. The corporation is required to pay into the treasury of the State, on the first Monday of December and June of each year, five percent of the gross receipts of the road and branches for the preceding six months, in exchange for the grants, privileges, and franchises conferred. The corporation is also required to pay an annual tax for state purposes on all its property and assets. The act of November 5, 1849, provides a method for condemning land required for railroad use and grants the corporation fee simple title to the land upon entry of judgment. The corporation is exempt from all taxation except as provided for in the charter. The corporation is prohibited from locating their track within any city without the consent of the common council of said city, as per the eighth section of the charter. The common council of Chicago gave consent to the location of the railroad within the city through an ordinance passed on June 14, 1852.
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