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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Brief for the United States
- **Published:** January 1, 1927
- **Citation:** 274 U.S. 640

## Text

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.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386006_0719%3A06. Public record. Not legal advice.