Brief for the United States — Independent Coal Co. v. United States

Opinion below. Sra coi "

Jurisdiction me iad)

Rtatement ' ‘

Summary of argument

Argument

1 The statute of Himitations is pot a ber te uny relief

sought in this cose . i e ~

VE. Wt ts tamaterial that the legal tle may have Paissed to

the State by the certifications or was unaffected bey

the decree tn the former sult - ) Ey}

Lil The State obtained no new tithe by the running of the

statule of limitations Is

IV The petitioners are barred by the facets extatlished in

the first decree from hoding tithe to these himeds as

agaluet the United States r : : ou

Vo The statute of limitations applicable toe patent. does

het apply te certifications 24

Vio The judgment of the Cireuit Court of Atenis shoutd

be o firmed x2

CITATIONS

Cases

Rourquin \ Hourquin, 1) Ga 11h oe

Charleston & Mimeng d Mio Coa ov l mited States (Pet

ruars 21. iwzT) ¥, $2

Cherch » KReutand O14 Po St 482 22

Clark v MecNee! 14 N Y Bs? 21

Cole, The WR. oY Re 182 22

Kapiorifen Cov tnited Slates BATU 8 oy, 1s, 26

Jdrmnisons \ Lewmerd 21 Wall 302 4

domes Vo lan lorena, 19010 8 ONG i2

la Rogec vy UC wited States SU OS a al)

lav Vitleow d Co Vv Lwted States D450 8 24 24

lowinrema + (iarfeid ZlL i SS Te Zi

Meader v Newton 11 Wall 442 12

Milner Vt wilted Slates Zas Peal 451 4, 2s

Melani vy Sprickh WUT Mo aus 21

Monru Cattle Co v Boeken WIV OS iz

Merv Crewlard WOU S la 12. if

Mellow \ of mated States VISTO oS 271 rh

Northern Pacifie Rye tu \ Ul wit)ed States ses U.K, S85 23

enqan0) 63 | ive

ROT WERE or arnt IRL AER

u

Cases (ectioucd

Kogers v. Lindacy, 13 How. 441_........-.-

Root vo Woolworth, 150 U.S. 401

Shields Vv. Thasaas, 18 How, BB... ......----

Thompeon vo Magewell 0 U8. a0

t wetted Nidtes

i wited Sfufes Vo Miaarsota, 270 U.S 1S]

Laited States ¥. Minar, 114 U. 8, 2358.

t wited States v. Schwez, WE UB. STS.

t mited States Vv. Sweet, 245 UB. BS. .

t mled States vo Waite & Waheicas BOUL S

l sited States ¥ Winuna @ At. Beier KOR

wel ‘ ;

Wills v ( asted States, US UN O14

Wright Hentgett Cov i wifed States Sil

Statutes

Act of Marh 2 Ise eT. 9 Stat. 2

Act of Aug 3 IND4 c Bl 10 Stat 348

Act of Maret 3% IN, c fail nm SS We Stat

Avrs River Co 24 Fed. 412

aig

Co, 1a 1

sae

lime), lane

Act of Jaly 26 Ise cc. 108, see 5 and 12, 25 Stat

lem ite

Act of Mareh 2 Dic 8 mew 1D Stat 42.

Jeadiclal Conte, wer 240 (a), as ainetded by the act of Pet

rusty 1A. 1h « Soe 48 Stat ich

Rev a] Statutes

Rew OS

“ee aia

BM heed a tam

oF

»» «Oy. At ere 4 svt

Min A th O85

Hiepham + Prmeigdes of Bygulty 10th et

— oe

Sew «= NT

a i |

Coger ob Equity Meading, pp T4 75

Story s Equity Mieedings, 10th el sere 2S

BSlibs MS Ge O72 —

SELLE II [HRY LAS WEE ARES IS ALIS NEA RT ES AYN GH LAC Pte te At

s

kt 86345.

1S

Inthe Supreme Court of the United States

OcroBper Trem, 1926

No. 300

INDEPENDENT Coat & Cokr CoMPANY AND CARBON

County Land Company, Petitioners,

.

Unirep Srarps or América AND Cannon CouNTY

ON WHIT OF CERTIORARI TO THE ENITED STATES CIRCUIT

COURT OF APPEALS FOR THE RIGHTH CIRCUIT

BRIEF FOR THE UNITED STATES

OPINION BELOW

The opinion of the Cireuit Court of Appeals

(R31) is reported in 9 FL (2d) 517.) It reversed

the decree of the Distmet Court for the District

of Utah dismissing the complaint (R. 24), not

reported,

JURISDICTION

The judgment of the Circuit Court of Appeals

was entered November 21, 1925. (R.35.) Certio-

rari Was allowed by this Court March 22, 1926, under

Section 2400a0 of the Judicial Code, as amended by

aye

a

the Act of February 13, 1925, «. 229, 43 Stat, 956,

YS,

STATEMENT

This ease arose in the United States District

Court for the Distriet of Utah, im whieh, on Mas

16, 1924, the United States filed its bill OR. 1) seek

Mig a deeree that the Carbon Counts Land Com

pany and the Dndependent Coal and t’oke Company

are trustees for the United States in respect of ers

tain eoal lands an Carbon County, Utah, which

had been patented to the Carbenm County Land

Compans by the State of Utah on February 10,

19 The Independent Coal & Coke Company

elaims an interest in a portion of the land through

the Carbon County Laas Company.

The ease was disposed of in the District Court on

metrons of the defendants te dismiss the bill of eon

plant, Which Were granted HR. 19-24), and the

facts open te consideration are those te te derived

from allegatiems on the ball of complaint and ch

closed in the exhibits te the ball

Ky Sections 8 and 12 of the Act of Congress ap

proved July Tb, ISM, « DSS Us Stat 17, log 110,

there were granted te the State of Utah MANS thea

aareds of acres of land for the purpose of erecting

an agreultural elege, a schol of mines, and a deaf

and dumb asvlum There was ne grant in place,

and all lands were te: be seleeted by the State from

Hnappropriated public laneds on strech suamemer as the

legislature sheauld prowide, with the approval of tie

Seervtarsy of the Interor The legtsiature of the

= —s

3

State created a board of land commissioners to

deal with the subject, with power to select the lands

and procure a transfer from the United States.

The lands involved in this case were. during

1901-1904, certified to the State of Utah under this

Act. (RR. 1.)

Between December 10, 1900, and September 14,

1903, Stanley B. Miluer, Truth A. Milner, his wife,

Harley O. Milner, acting through Stanley B. Milner

as agent, and Samuel H. Gilson, the predecessors

In Interest of the Carbon County Land Company,

made application to the board of land commissioners

of the State to purchase the lands here imvolved,

and requested that the State select the lands and

precure @ yuitent to the State to be issued by the

authorized officers of the United States, and that

pen such seleetion and patent the applicants would

purchase the land at a price of $1.50 per aere, pay-

able in iustallinents inten years. (R. 7-8.) The

grant from the United States did not contemplate

the selection of mineral lands.

The Milners, at the time of their application, sub-

titted affidavits (ROS 9) that they had knowledge of

the character of the lands and that they were non-

mineral and did not contain anv deposit of coal,

and the president and secretary of the State board

of land commissioners signed and submitted to the

Land OMee of the United States affidavits (RR,

9-10) that

We have caused the lands mentioned to he

earefully examined by avents and emiplovees

—,

4

of the state as to their mineral or agricultural

character,

and stating that there were not within the limits

of the land any deposits of coal. The lands were

certified on the faith of these representations.

The agreements by the Milners to purchase the

land from the State were assigned to the Carbon

County Land Company, having a total capital of

100,000 shares, of which Stanley B. Milner owned

GO,90 RLS.

In January, 07 (CR. 2, o2), the United States

brought suit in the United States Distmet Court

for the Distriet of Utah against the individual pur-

chasers from the State and the Carbon County

Land Company. While the bill of complaint in this

ease states (RO2> that this suit was ‘fer the cance)

lation of said contracts of sale upon the ground thet

the said lands were mineral lands, and were known

tobe such at the tune of their selection bis the State,’

the reeord in the first suit shows that if was an

detions tee quiet title of the United States (R. 6),

and the deeres which was entered was not a decree

cancelling the contracts to purchase between the

Miilriers ard the State, but a decree adjudging that

the United States was the owner and entitled to

peasession and quieting its tithe against any and all

claims of the defendants and enjeamng the defend

ants perpetually from setting up or making any

elaim to the lands (R.2 4 The theors of the Inf]

in the original suit was that the lands were coal m

character, known to be such at the tume of seleetion

-

v

and certification, and not properly certified on

that account, and that the certifieation had been

procured by fraudulent representations of the

defendants. The State of Utah was not made a

party,

The United States succeeded in that suit. and on

June & 1914, a decree was entered (R. ? adjudg-

Ig. In the present tense, that the United States ‘is

the owner and entitled to the possession’? of the

lands in question; that its title be quieted against

the claims of the defendants or any person claiming

under then, and that the defendants “have ne right,

tithe or interest, or right of possession.’ This de-

cree Was affirmed November 15, 1915, by the Cireuit

Court of Appeals. Milner vy. United States, DOS

Ped. 431. Appeal dismissed, 248 U.S. 594.

The decree In the former ese and the Copeldi perry of

the Cireuit Court of Appeals were set forth in or

attached as exhibits to the bil) af eomiplaint in this

ease (R265. The decree did not purport to settle

the tithe as of the date of the commencement of the

suit, but as of the date of the decree. and it was not

limited by ity terms te queting the plamtiff’s title

merely as against the contracts issued by the State,

The certifications made by the Secretary of the In

tereron selections by the officers of the State land

board were made at different dates fr ny Dime 2.

IMT, to December 1, 1904. Only one certifieation,

that relating to the Gilson purchase, was made as

late as Decemsbes 1, 14. The one last preceding

thade May S og iH. 12), mere thar ten

6

vears before the date of the decree in the former

suit, whieh was June 8, 1914. At the time the de-

eree was entered in the former suit, no patents from

the State of Utah to the purchasers had been issued,

but “payments as required by the contracts of

purchase "" had been made as therein provided.

(R. 12.)

Notwithstanding the decree in the former suit,

the State of Utah did not conform its subsequent

action thereto by seleeting other lands, but, quoting

the langwuage of the nll (Ro 4

On the contrary, on February 10, 1920, the

State issued its patent te said lands te the

Carbon County Land Company, a corpora

thon, the same party te which said contract.

of sale had been assigned; im se coimg the

State relied Lipeon the fact that st had met

pra rted with the legal tithe to the lands at the

time the decree was entered mm the befor

rrveritienedd stint

If the statute of liumitations avaiust suits te can

vl patents applies ty certifieations under the statute

here invelved, then the statute would have run

in faver of the State between the date of the institu

tion of the omygmal surt mn 1907 against the Carbon

County Land Company and the date of the decree

therein on 1014

There ts nething on the record herem to mdieate

that the patent from the State te the Carbon Counts

Lami Company on February, 1920, was or was not

pirsnant te the oruinal contracts to purchase

7

In the brief filed by the State of Utah amicus

curiae in support of the petition for certiorari. it is

disclosed that the State is quite willing to reap the

benefit of the frand perpetrated and adjudged

against the Carbon County Land Company, because

it is therein stated, although it ix not part of the

recerd, that the convevanece of 1920 from the State

ty the Carbon County Land Compony Was pursu-

ant to a new contract by whieh the land company

agreed to buy the land for a substantial sum. the

first mmstallment to be paid in 1990, and the next in

HHO, and the last in 1950.

Fach of the defendants filed a motion to dismiss,

resting mainly onthe proposition that the State was

barred under Seetion 8 of the Aet of Mareh 2, 189],

© 961, 26 Stat. 1095, 1099, beeause more than SIX

years had elapsed sinee the eause of Action arose

(apparently having reference to the dates of the cer-

Mieations te the State of Utah, R19, 20,29). Phy

District Court sustained the motions. helding that

“oortiiieation by the Seeretary of the Interior of the

lands in question to the State of Utah was in legal

effert a patent and in Tis opinion comes within the

hevting of the word patent as used in Seetion &

of the act of Mareh 3.1891. (R24) The ‘reuit

Court of Appeals reversed that decrer. except as t

Carbon County, which had a small claim for taxes.

and remanded the case with instructions te pertir

the other defendants to answer, (HR. 35

e416

s

SUMMARY OF ARGUMENT

The statute of limitations is not a bar to the

relief now sought. The action is not to set asple

or cancel a certification, but is ui aid of a former

decree whien declared the equitable tithe of the peti-

toner Carbon County Land Company fraudulent

and void and vested tithe in the United States. The

effect of the former decree was to take the pete

tener imeompetent te heid against the United

States any tithe based upon the original fraud, and

when the State conveved the legal tith to the Car

ben County Land Company that company and its

assignee held it impressed with the trust in faver

of the United States. To have that trust declared

by deeree is the purpose of the suit.

The statute of lumitations appleable te patents

dies not apply te certifications.

ARGUMENT

I

THE STATUTE FF LIMITATIONS IS NOT 4 HAH To any

MELIF® st GHT IN THIS ¢ Ast

The object of this action is not to set aside a

patent or a certification of publie lands, but by

invoking fundamental principles of equity te secure

the practical benetit of a deeree which the United

States obtained 12 vears age against the Carbon

County Land Company, then adjudged guilty of

hemmg a party to a fraudulent scheme to divest he

title of the LT’ ritend States to a Valuable fort tivo af

9

the publie domain, and now one of the petitioners

herein. The fraud was in making false statements

and procuring false affidavits and inducing the

State of Utah to use them to obtain from the In-

terior Department coal lands Which that Depart-

ment had no authority te certify, upon the repre-

sentation that they were agricultural lands which

the Department did have authority to certify. The

case Was sunilar to Charleston, South Carolina,

Mining Ad Mra. Co. \. United State s ( February 21,

1927 ).

The good faith of the State was not then ques-

toned. Its selection of the lands was made for

the purpose of selling them to the couspirators who

vad previously made application to the State te

purchase them. (R. 12, 13: Milner v. The United

States, 228 Fed. 431, 435, 436.) “The plan made

use of the State as a mere conduit through whieh

the lands were to be fraudulently aequired.”” (R.

$3.) The agreements to purchase were assigned to

the Carbon County Land Company, of the stock of

Which Milner, one of the « ESPArators, owned 99,950,

eutoot a total ef 100,000 shares, (Ro 18.) The

Circuit Court of Appeals said (R. 1s) -

We find that the Whole transaction was a

scheme or couspiracy on the part of Milner

to fraudulently obtain the ownership of these

lands from the United States.

The scheme succeeded so far that the lands were

certified and payments to the State, as required by

thy eoniract of purchase, had bree) made. R. 12. )

ay

10

The United States brought its suit against the

conspirators and their assignee, the petitioner

Carbon County Land Company, and on dune 8,

1914, obtained a decree which—

(1) Adjudged that the United States was the

owner and entitled to the possession of the land ;

(2) Quieted its tithe against any and all claims

of the defendants or of those claiming through or

under them ;

(3) Adjudged that the defendants had ne right.

title, interest, or right of possession in or to thy

lands ;

(4) Perpetualivy enjomed the defendants from

setting up or making any claims te er Upon the

lands and quieted all their claims.

Notwithstanding this deeree we now tind that

company claiming ownerstap of these same lands

under a patent from the State of Utah dated Feb

ruary 10, 1920, issued, as alleged in the bill ane

admitted by the motion to dismiss, iy rehanee Upe)

the fact that that State “had not parted with the

legal title to the Jands’’ at the time the decree wa

entered. (R.4.)) The bill avers ‘that at all times

the tithe to said lands has been equitably yy thy

United States,’ and asks that the defemdonts be

adjudged and deereed ‘to held whatever tithe thes

have to the said lands in trust fer the plamtt

(United States), and to convey the same to

plaintiff, and deliver te the plaintiff anv patent

deeds of the said lands in their possession.” stdyjes

to the mortgage taken by the State te secure

11

payment of the purchase price. (R. 5.) It is

res adjudicata against the petitioners that on June

8, 1914, the United States was the true owner

and entitled to the possession of these lands,

and that petitioners’ inchoate or equitable title

under its contract of purchase from the State of

Utah was void for fraud in procuring a record title

in the State, its vendor. That record title having

now been conveved by the State to the same parties,

equity and good conscience require that it, too,

should be surrendered so that complete beneticial

enjoyment of the fruits of that decree may vest

in the United States.

To enforce that right the present suit was begun.

The Cireuit Court of Appeals held very properly

that the suit was in aid of the former decree and

to obtain the benetits of that decree; that as to the

Carbon County Land Company the bill was a sup-

plemental bill, or, more properly, an original bill in

the nature of a supplemental bill and is proper

Where new interests arise or where relief of a dif-

ferent kind from that obtainable under the first suit

Is required. Root vy, Woolworth, 150 U. S. 401:

Shields Vv. Thomas, 18 How, 253. 262; Thompson vy,

Marwell, 95 US. 391, 399; Story’s Equity Plead-

ings, 10th ed., Sees. SOS, 339, S45, B51cb), BO, 420,

W220 Cooper on Equity Pleading, pp. 74, 75.

As to the merits, the court held that if the ease

stated in the bill should be made out it would seem

clear that the relief seught should be granted as to

the Carbon County Land Company and the Inde-

12

pendent Coal & Coke Company. Meader v. Norton,

11 Wall. 442, 458; Moore v. Crawford, 180 U.S.

12: Jones Vo Van Doren, 130 U.S, G84, 691; Mon-

roe Cattle Company \. Becker, WAT US. AT, 97.

The ease does not, therefore, seek to set aside a

patent after the runneng of the statute of limita

ioms, but io make perleet rights secired bn judg-

tment wo an action breught before the statute had

ruh.

Although the bill of complaint in this case saves

that the original suit was brought to cancel the con

tracts of purchase between the predecessors of the

Carbon County Land Company and the State, the

record elsewhere disclosed conclusively, we think,

that such was net and eould not have been the pur

pose of the suit, and that neo decree to that effect was

ever entered, The Cireuit Court of Appeals said

that the action Was te quiet tithe CR. G), and the de-

eree Which was actually entered Was net one can-

celling the contracts of purchase, but one ad judswing

the United States to be the owner of the lands, and

holding that the defendants had no interest in them.

The United States had no interest im eaneclhing thee

contracts as between the purchasers and the Stats

of Utan

If, as indieated by the record, before the decrees

was entered in the former suit all of the deferred

installments of the purehase pree under the con

tract (eXeept with respect to the one tract covered

by the Gilson purchase, as to whieh the final in-

stallment did net mature until December, 1914)

13

had been paid by the purchasers to the State. the

State at the time that decree was entered held only

the naked legal title.

When, pursuant to a contract for the sale of real

estate, the contract price has been fully paid, the

entire title is equitably vested in the purchaser and

he may compel a conveyance of the legal title by the

vendor, his heirs, or his assigns, Jennisons y.

Leonard, 21 Wall. 302, 309.) This is one of the

test familiar grounds for specifie performance.

See Buspham’s Principles of Equity, Wth Ed., Sec-

tion S64. Whatever Interest, therefore, the State

had then obtained under the original certitieations

or through the operation of the statute of limitations

belonged in equity te the purchasers,

The United States had the night, if it chose, to

pursue the equitable owner under the contract and

obtain the decree against it. Although the original

deeree did not in) terms transfer to the United

States from the Carbon County Land Company all

of the interest acquired by that Company Uhaor the

contracts, sneh was the legal effect for at adjudged

that the United States was the lawful owner of the

lands and its tithe was adjudged and decreed to be

qiteted against all elaims, demands, or pretenses

Whatseever of the defendants, CR. 4. Soils

quent to that deeres the Carbon Counts bard res

; '

palace ey 4 : ! t thited States. epter

Inte an Mivemen? Yoaitiy toe Sinte . rca) yper Ping

eontracts or surrender ‘athe State thy interes? pre

Vieusty held under the contract

14

While the contracts of purchase contained a

clause that the obligation of the State should be

released if the lands should be determined to be

mineral in character, that had no reference to a

case of fraud by the purchaser. As a result of the

decree in the suit by the United States against the

Carbon County Land Company the latter had ne

right to a refund of the purchase money from the

State, because the decree determining that fraud

had been perpetrated was not binding on the State,

and the Carbon County Land Company could not

in a suit against the State te recover the purchase

price paid have set up its own fraud as a ground for

reeovery. We think, therefore, the case should be

dealt with as if, at the time of the entry in the pres

ent tense of the decree of June, 114, the Carbon

‘ounty Land Company, as between it and the State

f Utah, was the equitable owner of the lands, or at

least all but a small part of them, and that what

ever fortifieation of the State's tithe had meanwhile

occurred through the running of the statute of lim

tations inured to the benefit of the Carbon Counts

Land Company, and that the effeet of the decree

then entered was te take from the Carbon Counts

Land Company and revest in the United States ans

and all interest which that Company had aequired

If that (Sanpany, before that deciee was en

tered, had eome inte court with a deed from the

State granted after the statute had ran, and on

15

that ground had demanded a dismissal of the bill,

can there be any doubt what the chancellor would

have donet Would he not then have decreed that

the entire title, legal as well as equitable, be sur-

rendered up to the United States? What equity

would have done then it will do now in aid of and

to carry to its logical conclusion the decree then

made.

II

TUS IMMATERIAL THAT THE LEGAL TITLE MAY HAVE

PASSED TO THE STATE BY THE CERTIFICATIONS OR WAS

UNAPPRCTED BY THE DECKER IN THE PORMER SUIT

It is argued on behalf of the petitioners that the

legal title to the lands passed to the State of Utah

by the certifications made, and was unaffected by

the decree in the former suit. That proposition

need not be considered.

We are not now concerned with any adjustment

of rights between the United States and the State of

Utah. It may be that after the statute of limita-

tons had run against a suit to cancel the certitica-

tion to the State, the State could have given a valid

conveyance to an innocent purchaser, It may be

that, after the statute had run, the State could have

given a valid conve Vanee to the Carbon County

Land Company but for the decree of June 8, 1914,

That, however, would not have prevented the United

States from suing it for damages for fraud. United

States vo Whited & W hicless, 246 UL S. 5592. In-

stead of doug that, howeve r, the United State 's, be-

43430. 3 a

—

fore the statute had run, brought its suit in equity

against the wrongdoer, and in that suit procured a

judgment establishing its own rightful title to the

land. The effect of that decree was to brand for-

ever the perpetrator of the fraud as incapable of

becoming a bena tide purchaser or of holding

against the United States the fruits of its fraud.

See cases cited, rnfra, pp. 21, oe.

The former suit was based upon the ease of Wil.

liams \. United States, WS ULS. 51 In that case

there had been a eertitication to the State of Nevada

and the latter had entered inte a contract fer the

sale of the Lands certified but had not conveyed the

legal tithe. Stuit was brought against the State's

transferve alone and it was contended that the ac-

thom coukd net be maimtained because the state was

a hecessary party; and, overruling that contention,

this Court held that the certification operated to

transfer the legal tithe to the State, while the con

tract between the State and its transferee putssed te

him the equitable tithe, the legal tithe being retained

by the State simply as security for the unpaid part

of the purchase price. ‘This Court said (p. 516):

The State of Nevada might have iter

vened. [Tt did not; doubtless, because it felt

it had no real interest. [t was no intentional

party to any wrong upon the general govern.

ment, If it« ageney had been used by the

wrongdoer to obtain tithe from the general

vevernment: af, conserus of mo wrong on its

part, it had obtained from the general gov

ernment the legal title and conveyed tt aw ay

—_—_

17

to the alleged wrong-doer, it might justly say

that it had no interest in the controversy, and

that it would leave to the determination of the

courts the question of right between the gov-

ernment and the alleged wrong-doer, and con-

form its subsequent action to that determi-

nation. That certainly is the dignified and

proper course to be pursued by a State, which

is charged to have been the innocent instru-

mentality and agent by which a title to real

estate has been wrongfully obtained from the

general government,

lt us obvious that the Government relied upon the

principles thus announced. Indeed, it is so alleged

in the ball CR. 4.) 0 It seems, however, that its

confidence Was not justified, for thereafter the State

issued its patent to the party which had made use of

itas a conduit through whieh lands had been fraud-

ulently acquired. Having divested the wrongdver

of its equitable tithe, and having thereafter discov-

ered that the wrongdoer had again succeeded in

obtaining from the same source another muniment

of title, in accordance with well recognized prin-

ciples of equity it brought another suit to impress

a trust with respeet to the new matter. This Court

suid in Moore v. Crawford, 130 U.S, 122, 128:

Whenever the legal title to property is ob-

tained through means or under cireum-

stances “which render it unconscientious for

the holder of the legal tithe to retain and

enjoy the beneficial interest, equity im-

presses a constructive trust on the property

ee EEEEEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeaeaaaqEamEmaEeaeaeaeeeoerreeeeeeeeee

18

thus acquired in favor of the one who is

truly and equitably entitled to the same,

although he may never, perhaps, have had

any legal estate therein; and a court of

equity has jurisdiction to reach the properts

either in the hands of the original wrongdoer,

or in the hands of any subsequent holder,

until a purchaser of it in good faith and

without notice acquires a higher right and

takes the property relieved from the trust.”

Pomeroy bq. Jur. 9 1053.

The moment the legal tithe vested im the pets

tieners it became tnpressed with a trust for the

benetit of the United States.

111

THE STATE OBTAINED Noo NEW TITLE BY THE RUNNING

oF THE STATUTE OF LIMITATIONS

It is argued that by virtue of the statute of Jimn-

tations the legal title of the State had mpened into

an impregnable tithe on February 10, 1920, when

the State patented the lands te the Carbon County

Land Company. Of course the State obtamed no

new tithe by reason of the running of the statute of

limitations, The only tithe which the State had was

that conferred by the certifieation, and that had

been adjudged fraudulent, and, so far as petitioners

are eoneerned, forever remained fraudulent. The

statute of limitations is to prevent fraud, net te

furnish the means by which to make it suceessful

and sure. Exploration Company v. United States,

247 US. 435. The only thing that the statute con

_——

19

ferred was immunity from suit. It merely deprived

the United States of a remedy.

The United States was, by the decree of 1914, the

owner of the equitable title; that is, the beneficial

title. The State had long before conveyed that

equitable title to the Carbon County Land Com-

pany. Indeed, it obtained certification to the lands

solely for the purpose of conveying them to that

Company. When, therefore, the rights of that

colmpany Were transferred to the United States, the

United States became entitled in equity to a fur-

ther conveyance of whatever Was necessary to per-

fect and make complete its beneticial use and

enjoyment of the property. When the State. un-

mindful of its duty in the premises, made further

convevanee to that company, equitv regards that

company as helding wt for the benefit of the one

helding the equitable tithe. As the conVvevanice by

the State was nothing but an additional step in aid

of the original fraud and intended to deprive the

United States of the benefits of its decree, so the

present suit Was but an additional move by the

United States, when the conspirators again be

stirred themselves, to protect the rights which it

had seeured under the tirst decree against the new

threat,

This Court said in United States v. Minor. 114

U.S. 233, 241:

When, therefore, he succeeds by MMIsrep-

resentation, by fraudulent practices, aided

by perjury, there would seem te be more

—

20

reason Why the United States, as the oWher

of land of which it has been defrauded by

these means, should have remedy against that

fraud—all the remedy which the courts can

give—than in the case of a private owner of

a few acres of land on whom a like fraud has

been practiced.

The United States is entitled in this ease to ‘all

the remedy which the courts can give.”

IV

THE PRTITIONDiS Ane Ban BY iHbt FACTS STAR

LISHED IN. THE PERNT DOCKED PROM HOLDING TITLE

Th) THESE LANDS 48 QGAINST THE 1 SIThD STATES

It is argued that the Carbon County Land Com.

PNY Was bet by virtue of the deeree in the first suit

debarred froin receiving a patent to these lands. yor

irom availing itself of the tithe thereby obtaied,

since the transactions through which it obtained

tithe Were net a continuation of but entirely distinet

from the transactions which were the subject of

litigation om the first suit. This brings us te the

controlling point in the case.

We clam that the Carbon County Land Com

pany Was by virtue of the deeree in the first suit

debarred from reeeaving or holding legal tithe te

these: lands, armed we chens that Vpron the reeormd, the

patent froin the State in 1920 was entire ly distinet

from the transactions which were the stibjeet of the

rst suit. There was no new tith mi the State mat

based upen the orginal fraud. The tall allewes

2)

(R. 4) that the State issued its patent to the same

party to which the original contracts of sale had

been assigned, and in so deing relied upon the fact

“that it had net parted with the legal title to the

lands at the time the decree was entered in the

before-mentioned suit.” While net as definite as

it might have been, this allegation plainly means

that the tithe was the same fraudulent title based

upon nothing new,

What the claim of the petitioners really amounts

to is that they are in the position of bona fide pur-

chasers, and therefore are entitled to rights aceord-

ingly. But this claim overlooks a fundamental

principle ot equity, Hamely, that the original

Wrongdoeer can never become a bona hide purchaser,

This Court said in Rogers \. Lindsey, V3 How. 441,

Ho:

A purchaser with notice may protect him-

self by obtaining the tithe of a purchaser for

a Valuable consideration without netics, un-

less he be the original party te the fraud.

The bona fide purchase purges away the

equity from the tithe in the hands of all per-

sons Whe may obtain a derivative tithe, ex-

cept it be that of the original party, whose

eomselence stands bound by the Violation of

the trust, and a meditated fraud. 1 Story,

bey. Jur., 397, 398, and cases.

To the same effect are (lark v. MeNeal, 114 N.

Y. 287; McDaniel v. Sprick, 297 Mo. 424, contain

ing avery full discussion of the question: Church v.

Ruland, 64 Pa, S+. 432, 444, opinion bw Pusties

—

“a, ~

eee ies

omen

22

Sharswood; Bourquin v. Bourquin, 120 Ga. 115,

opinion by Justice Lamar.

It is stated in Bispham'’s Principles of Equity,

lth bedition, See. 265, that the reason for this

is ‘that it would be a gross outrage to allow the

tan Whe had eriginally perpetrated the wrong to

reap the benetit of it.’ See also The W. B. Cole

OY Fed. 182.

The contention of the petitioners overlooks a

further principle; that is, that one claiming te be a

bona fide purchaser bas the burden of proof.

Woreoght Blodye tt Company \. United States, 2%

ULS.397. The Present case arises pen a motion te

dismiss the tall, and the decision of the Cirenit

Court of Appeals, reversing that of the District

Court, remanded the ease with directions to permit

these petitioners te answer They may then set up

ther claim te be innmecent purchasers,

When the petition fer certiorari was filed the

State of Utah filed a brief in support thereof, ap

pearing as amicus curias, In that brief it is alleged

that the land invelved comtammed 5,504.28 acres, and

that in 1920 the Carben County Land Company

agreed to pay S100} an acre therefor, and executed

its mortgage for S550, 428 to secure the mdelted-

ness. Brief of Attorney General of Utah, p. 2.

It is further stated that from the reeord it ap-

pears that the contracts annulled required the Mil-

hers te pay the State of Utah 81.50 per acre for

the land and that from the mortgave it appears that

the land company has agreed to pay the State $100

a

peracre. A copy of the mortgage is set forth as an

appendix to the motion of the State of Utah for

leave to appear as amicus curiac. It bears date the

znd day of January, 1920, It is signed on behalf

of the Carbon County Land Company by A.C, Mil-

ner, President, Whether this Milner is related to

the Milners involved in the original fraud does met

appear, but the sHuilarity of names ix signifiesant.

The mortgage is for the entire purchase price,

represented by three notes, all bearing date Janu-

ary 2. 1920, one for $100,000, payable on or before

January 2, 1950; one for FZ00000, pavable on or

before January 2, 140; and one for FL00A28, puy-

able on or before the 2nd day of January, 1950,

bene bearing interest until January 2. 1925. 11

thus appears that ne eney at all was paid by the

Carbon Land Company for the Property, but notes

were given for the entire amount extending over a

period of thirty vears. It alse contains a Provision

that the State will release from the mortgage Upon

payment of SO40,000, at any time, 640 acres of the

land deseribed. These facts of course are jot

shown by the reeord., They might be pleaded dn

Way of answer, The bill admits a mortyage to the

State (Ro) and disclaims any intent to attack it

In this ease.

Jnasmineh as the Attorn ¥ General of Utah ha

placed these facets before the ¢ ‘Ourt, it sees preter

feos) that i eur opinion they throw a strange.

light Upon the good faith of all cones rned, A pin

sg

chaser upon credit does not ordinarily acquire the

rights of a bona fide purchaser, Bispham, See, 207,

That he has net paid any part of the purchase price

and is net to begin paving for ten vears and has

thirty vears to complete does not add to his stand-

ing. ‘The whole transaction is plainly a gamble de-

pendent for Its suecess Uipeon the result of this suit,

The Attorney General of Utah also sets forth the

deed from Carbon County Land Company to Dnde-

pendent Coal & Coke Company. From = this it

appears that the consideration was 500,000) shares

of the grantee’s steck, and an assumption of part of

the mortyage,

The petitioners’ case is Vniconselonable. They or

5 their assigners, onee adjudged guilty of fraud in

5 inducing the certifieation so they could purchase

: from the State, now seek to avoid the effect of that

: decree and reb the United States of the fruits

thereof and of this valuable mineral land on purely

4 technical grounds. Tf that ean be done upon this

; record, then at hast fraud has found a way te cir.

: cumvent equity, Why a State should have become

: a party to such a transaction and com® here as a

i “frend of the Court’ to help consummate it, is hard

: te understand,

‘ v

ee ey

aS ae)

TH! STATUTE OF LIMITATIONS APPLICABLE TO PATENTS

Mors NOT APPLY TO CPHRTIFICATIONS

The Distmet Court granted the motion to dis

miss upon the ground that the aetion was barred

vsti aS Ni alt RS LORS

_—

25

by the limitation contained in Seetion & of the Act

of March 3, 1891, «, O61, 26 Stat. 1095, 1099. wach

provision Se

That suits by the United States to Vacate

and annul any patent heretofore issued shall

only be brought within tive years from the

passage of this act, and suits to vacate and

annul patents hereafter issued shall only be

brought within six vears after the date of the

issuance of such patents,

We have already argued that this Siit is net te

Vacate or annul a certification Ora patent, Never-

theless it is at least xravely doubtful whether, in

any event, this statute applies in the case of cer-

tifieations as distinet from patents,

Fundamental to the interpretation of the statute

lies the rule of law settled “tas a great principle of

pubhie policy that the “United States, asserting

rights vested in them as a sovereign government,

are not hound by any statute of limitations, unless

Congress has clearly manifested its intention that

they should be so bound." United States \. Whited

do Wheless, 46 Ul 8. 552. 56. In that case this

ate that this principle ‘has been

accepted by this court as requiring net a liberal,

a ostriet, construction of sueh

Statutes when it has been urged to apply them to

har the rights of the Cievernment,”’ referring to

Northern Pacific Railway Company vo United

States, 27 US

Court went on te st

but oa restrietive,

399, 367, in whieh the limitation in

the Aet of Mare); Zz T8896, ¢, 329, 29 Stat. 42. Wis

26

held not applicable to a patent erroneously issued

for Indian lands under a railroad grant, and La

Roque \. United States, eso US. 62, OS, in which

the general language of the Act of Mareh 3, 1891,

supra, Was held not applicable to a trust patent for

Indian reserved lands, Applying that principle it

was held that the statute did net bar a suit fer

damages.

So also in United States Vv. Minnesota, 270 UL S

IS], this statute was held inapplicable where the

United States sues to annul patents issued in

alleged violation of rights of its Indian wards and

of its obligations to them,

In Exploretion Compouy Vv. United States, Mi

U.S. 435, the statute Was liamited so that at dad net

begin to run until the discovery of fraud Which had

been conevaled.

lu Umited States \. Kiera Rover Company, 264

Reed. 412. C) CL A. 9th Cireurt, it was beid that the

statute did mot apply te a suit by the Gevertmens

tu set aside for fraud and mistake the approval by

the Seeretary of the Interior of a canal company’s

Lisat pes of location filed as the basis of a right of way

eres publre lands. The eourt, after prrneat nage atit

the facet that the term patent when apphed |

yrant of public lands has a well deflued meaning

and quoting Seetion tos of the Revised Statutes

directing how patents should be signed and ecunter

segned and reeorded, said, page 416:

It is a well-established rule that statutes

of limitations do net run against the se

27

ereign, in the absence of some express statu-

tory provision to the contrary, and if the

Statute is made applicable to a class of suits

only it will not be extended to other cases by

implication, It was well known to Congress

that grants of publie lands are not always

made by patent. Indeed, the grant of the

right of way in question made by the same

act is of that character. And had Congress

intended that the bar of the statute should

apply, not only to patents but to all legis-

lative grants, it would have so provided in

express terms.

See also Lee Wilson & Co. y. United States, 245

U.S. 24.

This Court has itlready intimated that the Act of

ISM affected patents only when it stated in Loui-

siana \. Garfield, 211 U.S. 70, at page 77:

It may be that this Aet apphes to appro-

vals when they are given the effect of patents

as Well as to patents, which alone are named.

7 . *

" ° ° United States tainly nought

argue that the statute of limitations was

confined to patents, or was exeluded by the

Act of 1871,

That case involved a certification made under the

Swamp Land Act of Mareh 2. 1849. « 87, 9 Stat. 352,

Which provided that on approval of a list of such

lands by the Seeretary of the Treasury the fee to

the same Should vest In the State,

Furthermore, the lands in question were not sub-

Ject to aequisition by the State of Utah or by the

3

defendants under the Enabling Act of July 16,

1894, «© 138, 28 Stat. 107, 109. That was deter-

mined in the former case, to which the Carbon

28

County Land Company was a party. Milner y.

United States, 228 Fed. 451. The court said (p.

439) :

The applicants to purchase the land in

question, the selecting agents of the state,

and the land offieers of the United States all

acted on the theory that mineral lands or

lands contaiming a deposit of coal did net

pass under the grant. [tas not claimed that

such lands passed, in the briefs of counsel,

and the pleadings practically admut the alle-

gation of the bull that the lands granted were

to be nonmineral, We are of the opinion,

however, that no such contention could be sus-

tained under the faets in this case. Seetion

231s, Roos. UL S. (Comp. St. 1915, 6 4613),

provides :

“Tn all cases lands valuable for minerals

shall be reserved from sale, except as othe:

Wise expressly directed by law.”

sa ’ . I the present ease, howe er, the

lands are not specitiod in the simtute, but seo

many thousand acres are granted to the pre

prrsencl state, te be seleeted as stated in this

epinien, and we eenelude that the eertifica

tieti of these lands by the Seeretary of the

Interner did net earry mineral lands im direct

opposition te section J3IS, and the general

prokiey of the United States,

While itis true that in Uneled States vo Winona

d& St. Peter Baar ad ¢ orm pany, wo SN. 46 . this

29

Court referred to the word “patent” in this Act as

including certification, the decision did not depend

upon it, for the Court pointed out the fact that the

suit Was commenced before the expiration of the

time prescribed, and said, referring to the limita-

tions preseribed in that Act (p. 476);

We only refer to them as showing the pur-

pose of Congress to uphold titles arising

under certifieation or patent by providing

that after a certain time, ete.

In that case, however, it must be admitted that

the Court held that the word “patent,” in Section

lof the Act of March 2, 1896, &. 39, 29 Stat. 42, 43, in

the sentence, * But no patent to any lands held by a

bona fide purchaser shall be vacated or annulled, but

the right and title of such purchaser is hereby con-

firmed,” ineluded certifications, for the land in-

volved had been certified. The latter statute, set

forth in a footnote to that case, 165 U.S. 468, by

the terms of its first section was restricted in its

application to patents issued under a railroad or

Wagon road grant, and the subsequent sections of

the Act referred repeatedly to “patented or certi-

fied’ lands. The suit related solely to lands under

railroad grants and the statute obviously was in-

tended to apply to that particular situation,

The term patent, as peinted out in United States

¥. Kern River Company, supra, has a very specific

meaning in the land laws, signifving an instrument

of especial solemmty signed in the name of the

President, countersigned by the recorder of the

30

Gieneral Land Office, and taking effect when there

recorded in books especially provided for the pur-

pose. United States v. Schurz, 102 U.S. 378, 408.

The other sections of the Act of March 3, 1891,

do net indicate that the word patent is intended

to be interchangeable with certification. As a

Whole the Act, besides making provisions for rights

of way and forest and other reservations, is oecu-

pied in repealing, revising, and adding to such gen-

eral land laws as the timber culture, town site, pre-

eluption and homestead laws, which lead to entries

and patents. It refers to entries and patents re-

peatedly, but never to selections, or approvals, or

certifications, or to these laws which involve them.

It is fair to assume that in enacting Section 8 the

attention of Congress was directed to the Protec:

tien of the kind of titles to whieh the other portions

of the statote so direetly related. Such was the

conclusion of Attorney General (irewory in an pt

lon to the Seeretary of the Interior, SO Ops, A. Gi.

O72, S77, in whieh he said:

This view is confirmed by section 7, whieh

protects bona fide purchases and ineum-

brancees made after final entry, and directs

that patents shall issue to entrymen after

the Langone of two years from the issuanee of

receiver's receipt, but confines both of these

provisions te entries made under the home.

stead, timber eulture, desert land, or pre

emption laws, or under the act itself,

The Attorney General in that opinion eoneluded

that the solemmity of patents, the unusual formality

BRISA Oe Ee ee PE Vl ow A) AL RRR ts Dene FE eet

31

involved in their production, the fact that they wear

the dignity and extend the assurance of the Goy-

ernment “in a degree not approached by any other

form of Executive conveyance,” may well have sup-

plied sufficient reason to Congress for confining the

limitation to them instead of extending it to less

ceremonious certifications and approvals,

Certifications, on the other hand, are authorized

hy wholly dissimilar Provisions of law, Passing

tithe by certification Was authorized by the Act of

August 3, 1834, ©, 201, 10 Stat. 6, reenacted with.

out substantial change as Section 2449 of the Re-

Vised Statutes lo cover cusses Where lands Were

granted by any law of ¢ ‘oMgress to one of the several

States and Territories, and Where the law did not

CONVES the fee-simple tithe of the lands or require

Patents to be isstied, the list of such lands shiomld bye

certified by the Commussioner of the General Land

Office and

shall be regarded as conveying the fee simple

of all the lands embraced In such lists that

are of the character contemplated by sueh

act of Congress, and intended to be granted

thereby; but where lands embraced in snel

lists are not of the character embraced by

such acts of Congress, and are net intended to

be granted thereby, the lists. so far as these

lands are concerned, shall be perfectly null

and void, and neo right, title, claim, or Inter:

est shall be conveyed thereby,

Considering the marked distinetion betwee pat-

ents and certifications and the facet that Congress,

er eee eee

— Pn oie ee Se EET Nate» bavi dagen d ok iolh Hes =

a AER oT oe

om

De

in the Act of March 3, 1891, was dealing in the other

sections of the Act exclusively with that portion of

the public land laws in which patents, not certifica-

tions, were used in passing title, and bearing in

mind further that statutes of limitations against

the United States are construed strictly, it is net

unreasonable to hold that the word patent in See-

tion Sof the Act was intended to apply only to pat-

ents and not to other forms of conveyanee or grant,

(30 Ops. A. Gi. 485.

134 statute and bey decisions of this Court, the cer-

tification of these known mineral lands was void,

bevend the authority of any officer. The disposi-

tien of mineral lands is governed by a special code

of laws. Charleston, S. C.. Mining d& Mfg. Co. vy.

lnited States ( February 21, 1927); United States

v. Sweet, 245 U.S. 568: Mallan v. United States,

lis UL S. 271, 276. Under such circumstances the

limitation contained in the Act of ISOL should not

be deemed applicable.

Vi

The judgment of the Cireuit Court of Appeals

should be affirmed.

Witniam DD. Mirrenens.,

Solteitor General.

Arun A. Waurart,

S pe wal Aassstant to the Attorney General,

RaXNcotrn S. Couns,

Alflorney.

Arn, 1927.