Opinion — Wright-Blodgett Co. v. United States

WRIGHT-BLODGETT CO. v. UNITED STATES. 397

236 U. 8. Syllabus.

WRIGHT-BLODGETT COMPANY v. UNITED

STATES.

SAME ». SAME.

SAME v. SAME.

SAME »v. SAME.

SAME ». SAME.

APPEALS FROM THE CIRCUIT COURT OF APPEALS FOR THE

FIFTH CIRCUIT.

Nos. 151, 152, 154, 155, 156. Argued January 26, 27, 1915.—Decided

February 23, 1915.

Although several cases cancelling patents for fraud have been de-

cided by the District Court without opinion, if the same decree was

entered in all the cases and all were alike in their main features,

although varying in details, and the Circuit Court of Appeals af-

firmed all the decrees with an opinion stating that fraud in the entry

was proved and that the grantee was charged with knowledge, the

two courts must be deemed to have concurred in their findings;

and the rule that under such conditions their determinations upon

questions of fact, in absence of clear error will not be disturbed,

applies.

While a patent obtained by fraud is not void or subject to collateral

attack, it may be directly assailed by the Government in a suit

against the patentee or grantee, and such a suit can only be sus-

tained by proof producing conviction.

Despite satisfactory proof of fraud in obtaining the patent, if the legal

title has passed, bona fide purchase for value is a perfect defense;

but it is an affirmative one which the grantee must establish in

order to defeat the Government's right to cancel a patent which

fraud alone is shown to have induced. Boone v. Chiles, 10 Pet.

nietieteiie s a a at 5 ala

398 OCTOBER TERM, 1914.

Argument for Appellant. 236 U.S.

Tue facts, which involve the validity of certain land

patents issued under the homestead laws of the United

States, are stated in the opinion.

Mr. J. Blane Monroe, with whom Mr. Monte M. Lemann

and Mr. A. R. Mitchell were on the brief, for appellant:

When the United States brings a suit to annul a patent

to land held by a vendee of the entryman, on the ground

of fraud in the entryman it must prove actual notice of

such fraud in said vendee. United States v. Clark, 200

U. 8. 601; United States v. Detroit Lumber Co., 200 U.S.

321.

When the United States seeks to annul a patent on

grounds of fraud in the entryman and notice in his vendee,

the specific details of the fraud and of the notice must be

set out in the bill, and the probata must conform to the

allegata. Maxwell Land Grant Case, 121 U.S. 325; United

Stales v. Barber Lumber Co., 172 Fed. Rep. 950; United

States v. Atherton, 102 U.S. 372; Harrison v. Nixon, 9 Pet.

503.

It will not do for the United States to allege notice in

one way and through named individuals, and to attempt

to prove notice in another way and through other in-

dividuals, See cases supra.

When seeking to annul a patent under the seal and sig-

nature of the President, the United States to succeed must

adduce that class of evidence which commands respect

and that amount which produces conviction. A patent

cannot be set aside upon a bare preponderance of evidence

which leaves the issue in doubt. Mazwell Land Grant Case,

121 U.S. 381; Colorado Coal Co. v. United States, 123 U.S.

307; 133 U.S. 193; United States v. Stinson, 197 U.S. 200.

The officials of the land office of the United States are

affirmatively charged with the duty of investigating land

entries and of ascertaining before issuing either a final re-

ceipt or patent, that the law is fully complied with. The ©

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WRIGHT-BLODGETT CO. v. UNITED STATES. 399

5 U.S. Argument for Appellant.

irchaser from a person holding a final receipt is charged

th no such duty. On the contrary, he is entitled to buy

the faith of the patent and receipt and without looking

r grounds of doubt. If the bill shows that the entry-

un’s actions, settlement and proof deceived the trained

uths of the Government land department, and that

ey issued both final receipt and patent, a strong de facto

esumption arises that the entryman’s vendee was like-

se deceived.

General statements that representatives of the defend-

t were in the general neighborhood at the time of the

rchase are not sufficient to overcome this presumption

rticularly so when the improvements placed upon the

id were such as to create in the casual observer the belief

at the law was fully complied with. Maxwell Land Grant

se, 121 U.S. 381; Clark Case, 200 U. 8S. 601.

Nor will such general statements prevail when the

ord shows that defendants were in the habit of buying

id on a general cruiser’s estimate without special exam-

ition and that they purchased the particular land in

ntroversy on the advice of counsel of high standing after

amination of the abstract of title thereto.

As Rev. Stat., § 2301 does not require a commuter

prove that he has not agreed to sell his land before re-

ving his final receipt, this court will not write such a

vision into that statute. Williamson v. United States,

7 U.S. 455; United States v. Biggs, 211 U.S. 507; Adams

Church, 193 U. 8. 510; United States v. Sullenberger, 211

8. 525; United States v. Freeman, 211 U. 8. 523.

When the United States, while attempting to discharge

obligation to show actual notice on the part of the

endant of the fraud in the entryman places the entry-

in on the stand and the latter swears that he took an

ont of the defendant to the land, pointed out to him the

provements which he, the entryman, had placed upon

and ‘‘assured” said agent that everything which the

“0.1 DAUR Pole AE IME

400 OCTOBER TERM, 1914.

Opinion of the Court. 236 U.S.

law required had been done, the United States not only

fails to prove notice in the defendant but affirmatively es-

tablishes defendant’s good faith and absence of notice.

Mr. Assistant Attorney General Knaebel, with whom Mr.

S. W. Williams was on the brief, for the United States:

The two lower courts having concurred in finding that

the testimony respecting cultivation, residence, and im-

provements was false, and that the appellant had notice

through its agents on the ground at the time of its pur-

chase, the finding should not be disturbed unless clearly

erroneous.

There is evidence to support the findings.

The Government having, with the requisite certainty,

established that the entries were fraudulent, the onus was

upon the appellant to make good its plea of bona fide pur-

chase without notice.

The evidence of the unlawful prior agreements was

competent.

In support of these contentions, see Bailey v. Sanders,

228 U.S. 603; Boone v. Chiles, 10 Pet. 177; Gilson v. United

States, 234 U.S. 380; Jones v. Meehan, 175 U.S. 1; Neale v.

Neales, 9 Wall. 1; Texas & Pac. Ry. v. R. R. Com. of

La., 232 U. 8. 338; United States v. Brannan, 217 Fed.

Rep. 849; United States v. Cal. & Oreg. Land Co., 192 U.S.

355; United States v. Clark, 200 U. 8. 601; United States v.

Hill, 217 Fed. Rep. 841.

Mr. Justice HuGues delivered the opinion of the court.

These five cases, although involving separate transac-

tions, may conveniently be considered in a single opinion.

The suits were brought by the United States to annul cer-

tain land patents ! issued under the homestead laws upon

1In No. 151 the entry was made October 19, 1898, by Joe J. Hicks;

commutation proof was offered June 11, 1901, and final certificate is-

nw

~~ ~~» FS 69 C3 OE ot creel Oe llllllSllUCUlCOU

WRIGHT-BLODGETT CO. v. UNITED STATES. 401

'U. 8. Opinion of the Court.

» ground that the respective entrymen had defrauded

» Government in securing the patents in that they had

t actually resided upon the land and cultivated it as

juired by the statute, the statements in their proofs

on commutation being false. Rev. Stat., § 2301. It

s further averred that the Wright-Blodgett Company,

> appellant, at the time of its purchase of the respective

cts had notice through its agents of the fraud which

d been perpetrated by the entrymen. The appellant

swered in each case, disclaiming all knowledge of the

eged fraud and setting up that it was a bona fide pur-

user for value after the issuance to the entrymen of the

al receipts. The cases were separately heard and in

*h, upon pleadings and proofs, a decree was entered

aceling the patent. Upon appeal, the Circuit Court of

peals affirmed the decrees. The opinion of that court

ted that it found ‘that fraud in the homestead entry’

s proved, and that the appellant was ‘charged through

active agents on the ground with knowledge of the

ud.’

d July 6, 1901; on July 10, 1901, the entryman sold the land to the

ellant. Patent was issued April 1, 1902.

n No. 152 the entry was made April 10, 1899, by Walter O. Allen;

imutation proof was offered June 11, 1901, and final certificate is-

d July 8, 1901; on July 10, 1901, the entryman sold the land to the

ellant. Patent was issued July 5, 1902.

n No. 154 the entry was made January 13, 1900, by Elijah Z. Boyd;

amutation proof was offered May 18, 1901, and final certificate is-

d May 24, 1901; on June 21, 1901, the entryman sold the land to the

ellant. Patent was issued February 15, 1902.

n No. 155 the entry was made May 4, 1899, by Samuel 8. Akin, Jr.,

nmutation proof was offered August 17, 1901, and final certificate

ied September 18, 1901; on September 28, 1901, the entryman sold

land to the appellant. Patent was issued April 1, 1902.

n No. 156 the entry was made January 31, 1900, by Samuel E.

vers; commutation proof was offered August 17, 1901, and final

tificate issued September 18, 1901; on September 28, 1901, the entry-

n sold the land to the appellant. Patent was issued April 1, 1902.

VOL. CCXXXVI—26

SESE CE LEY,

402 OCTOBER TERM, 1914.

Opinion of the Court. 236 U. 8.

The appellant urges that it does not appear that the

two courts concurred in their findings as the cases were

decided in the District Court without opinion and, in

three of the cases, there was testimony which, according

to the Government, tended to show that the transactions

were fraudulent not only because there had not been the

residence and cultivation required by the statute and

stated in the proofs, but also because of agreements prior

to the commutation proofs to sell the lands to the appel-

lant. But the District Court rendered its decree in the

five cases on the same day; in two of these, it is not sug-

gested that there was evidence of such anticipatory agree-

ments, but the same decree was entered and must have

proceeded on the evidence as to the lack of residence and

cultivation. While the facts in the several cases vary in

details they are so far alike in their main features with

respect to residence and cultivation as to make it ab-

solutely impossible to assume that any different conclusion

of fact was reached by the District Court in the three cases

than that at which it arrived in the two others. The two

courts must be deemed to have concurred in their findings

and in accordance with the well-settled rule their deter-

mination upon mere questions of fact will not be dis-

turbed, unless clear error is shown. Stuart v. Hayden, 169

U. S. 1, 14; Towson v. Moore, 173 U.S. 17, 24; Texas &

Pacific Ry. v. Railroad Commission, 232 U. 8. 338, 339;

Washington Securities Co. v. United States, 234 U.S. 76,

78; Gilson v. United States, 234 U.S. 380, 384. An exam-

ination of the record fails to disclose any such error in the

finding as to the fraud of the entrymen, and it is not nec-

essary to recite the evidence.

It is insisted, however, that in the finding as to the

standing of the appellant there was involved an erroneous

application of the law. In substance, the argument comes

to this,—that in a suit by the United States to cancel a

patent upon the ground of fraud, where the land is held

WRIGHT-BLODGETT CO. v. UNITED STATES. 403

36 U.S. Opinion of the Court.

y a grantee of the entryman, the Government must

stablish that the grantee is not a bona fide purchaser

wr value; that this must be shown by proof of a clear and

ogent character; and ‘that, measured by this standard,

1e Government’s case was not made out. This contention

roceeds upon an erroneous view of the governing prin-

ples as repeatedly set forth in the decisions of this court.

hese principles may be briefly restated: Where a patent

obtained by false and fraudulent proofs submitted for

1e purpose of deceiving the officers of the Government,

nd of thus obtaining public lands without compliance

ith the requirements of the law, while the patent is not

oid or subject to collateral attack, it may be directly as-

iled in a suit by the Government against the parties

aiming under it. In such case, the respect due to a

atent, the presumption that all the preceding steps re-

uired by the law had been observed before its issue, and

1e immense importance of stability of titles dependent

pon these instruments, demand that suit to cancel them

10uld be sustained only by proof which produces convic-

on. United States vy. Minor, 114 U. S. 233, 239; Maxwell

and-Grant Case, 121 U. S. 325, 381; United States v.

tinson, 197 U. S. 200, 204, 205; Diamond Coal Co. v.

nited States, 233 U. S. 236, 239. And, despite satis-

ctory proof of fraud in obtaining the patent, as the legal

tle has passed, bona fide purchase for value is a perfect

sfense. Colorado Coal Co. v. United States, 123 U. 8. 307,

13; United States v. Stinson, supra; Diamond Coal Co. v.

nited States, supra; United States v. Detroit Lumber Co.,

)0 U.S. 321; United States v. Clark, 200 U. S. 601. But

is is an affirmative defense which the grantee must es-

blish in order to defeat the Government’s right to the

incellation of the conveyance which fraud alone is shown

have induced. The rule as to this defense is thus stated

| Boone v. Chiles, 10 Pet. 177, 211, 212: ‘In setting it up

y plea or answer, it must state the deed of purchase, the

a

Opinion of the Court. 236 U.S.

404 OCTOBER TERM, 1914.

date, parties, and contents briefly; that the vendor was

seized in fee, and in possession; the consideration must be

stated, with a distinct averment that it was bona fide and

truly paid, independently of the recital in the déed.

Notice must be denied previous to, and down to the time

of paying the money, and the delivery of the deed; and if

notice is specially charged, the denial must be of all cir-

cumstances referred to, from which notice can be inferred;

and the answer or plea show how the grantor acquired

title. . . . The title purchased must be apparently

perfect, good at law, a vested estate in fee-simple. ;

It must be by a regular conveyance; for the purchaser of

an equitable title holds it subject to the equities upon it

in the hands of the vendor, and has no better standing in

a court of equity. . . . Such is the case which must

be stated to give a defendant the benefit of an answer or

plea of an innocent purchase without notice; the case

stated must be made out, evidence will not be permitted

to be given of any other matter not set out.”’ See also

Smith v. Orton, 131 U.8., appendiz, lxxv, Ixxviii; Colorado

Coal Co. v. United States, supra; United States v. Cali-

fornia &c. Land Co., 148 U.S. 31, 41, 42; United States v.

Stinson, supra; Story’s Eq. Pl., §§ 805, 805a, 806; 2 ©

Pomeroy, Eq. Jur., §§ 745, 784; Jewett v. Palmer, 7 Johns.

Ch. 65, 68; Seymour v. McKinstry, 106 N. Y. 230; Graves —

v. Coutant, 31 N. J. Eq. 763; Sillyman v. King, 36 Iowa,

207 ; Prickett v. Muck, 74 Wisconsin, 199; Bank v. Ellis, 30

Minnesota, 270; Lewis v. Lindley, 19 Montana, 422. In

United States v. Detroit Lumber Co., supra, the Circuit

Court of Appeals found that the Detroit Company was

a purchaser in good faith and this court reviewing the

facts reached the same result. The Company had no

knowledge or intimation of wrong until long after the is-

suance of the patents. In United States v. Clark, supra,

both courts below had found that Clark had no actual

knowledge of the alleged frauds or of facts sufficient to put

UNITED STATES v. SMULL. 405

236 U. 8. Syllabus.

him upon inquiry. Clark, his agents and advisers, testi-

fied that they did not know or suspect anything wrong.

(200 U.8., p. 608.) The defense of bona fide purchaser for

value was completely made out and what is said in the

opinion must be read in the light of that fact. Nothing

was shown to impair the case which the defendant had

established; and there was no intention to depart from

the well-settled rule to which we have referred.

In the present case the appellant had its agents upon

the ground and it has been found that through these

agents it had knowledge of the fraud. The contention

that as the Government had alleged notice through par-

ticular agents it could not be shown that the Company

had acquired knowledge through other agents than those

named is without merit; the allegation in the bill as to the

particular agents was surplusage. Upon the question of

fact, with respect to bona fides in its purchase, both courts

below have found against the appellant and the record does

not show any error requiring the reversal of the decrees.

Decrees affirmed.

Mr. Justice McReyno.ps took no part in the con-

ideration and _ aS

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