United States v. Bellingham Bay Improvement Co.

6 F.2d 102 | 9th Cir. | 1925

HUNT, Circuit Judge

(after stating the facts as above). To eases of the general character of that before us, where the government seeks to cancel a patent on the ground that it has been obtained through deception, perjury, and fraud, the doctrine announced in Bailey v. Glover, 88 U. S. (21 Wall.) 342, 22 L. Ed. 636, Exploration Co. v. United States, 247 U. S. 435, 38 S. Ct. 571, 62 L. Ed. 1200, and United States v. Diamond Coal Co., 255 U. S. 323, 41 S. Ct. 335, 65 L. Ed. 660, and regarded by us upon the former appeal, is that, where the party injured by the fraud remains in ignorance of it, without any fault or want of diligence or care on his part, the bar of the statute of limitations does not begin to run until the fraud is discovered, and this, though there be no special circumstances or efforts on the part of the party committing the fraud to conceal it from the knowledge of the other party. Whether, _ under the facts stated in the complaint, that doctrine is applicable to Donovan is "the main question presented.

Donovan was not a party to the suit when it was instituted in February, 1914, nor was he brought in until more than 18 years after the issuance of the patent, and more than 12 years and 10 months- after the alleged fraud was discovered. And even at this late day the so-called Donovan, amendment contains no allegation of any act by way of fraud, or of any concealment, or of any effort to conceal, on Donovan’s part, which was not discovered or known by the United States in 1910. The amended complaint, after setting forth certain fraudulent acts through which title was secured from the government, alleges that certain defendants, for the purpose of concealing from the plaintiff the alleged frauds perpetrated upon it, caused to be placed of record in What-com county, Wash., conveyances of the land described as mining claims, and that the language employed in the conveyances was inserted for purposes of concealment of the alleged fraud. However, the only defendants in respect to that matter are Cornwall, Bellingham Bay Improvement ’Company, Stearns, and Whatcom County Railway & Light Company. We can only look upon the complaint, amended by the Donovan amendment, as stating a cause in equity for cancellation of patent and relief incidental thereto.

So regarding it, we are clearly of opinion that, as against Donovan, the suit is barred by the statute of limitations. Any action that could be maintained against him is at law for damages. But, timely objection having been made, action at law against him -cannot be combined with a suit in equity for the cancellation of the patent and equitable relief against his codefendants. United States v. Oregon Lumber Co., 260 U. S. 290, 43 S. Ct. 100, 67 L. Ed. 261; United States v. Norris, 222 F. 14, 137 C. C. A. 552; United States v. Exploration Co., 203 F. 387, 121 C. C. A. 491. And that he could present the question of the statute of limitations by motion to dismiss is recognized in the case of Curtis v. Connly, 257 U. S. 260, 42 S. Ct. 100, 66 L. Ed. 222. In United States v. Oregon Lumber Company, supra, the court said that the United States was entitled either to disaffirm and recover patented lands, or affirm the patent and recover damages for the fraud, but that it could not do both, and that any decisive action by a party " with-knowledge of his rights and the facts determines his election . in the ease of inconsistent remedies, and one of the most unequivocal of such determinative acts is the bringing of a suit based upon one or th.e other of these inconsistent conclusions. ’ ’

As peculiarly pertinent to the present case, the court also held that upon ascertaining from the plea of defendants that they intended to rely upon the statute of limitations, and having knowledge of the facts upon which that plea was founded and thereafter sustained, the government had fairly presented to it the alternative " (a) of abandoning that suit and beginning an action at law, or transferring it to the law side of the court and making the necessary amendments to convert-it into an aetion for damages, as a mere incident in the progress of the original ease; or (b) of proceeding with the original case upon issues as they stood. The plaintiff in error deliberately chose the latter alternative. If the election was not final, it became final and irrevocable then. ’ ’

Cases where a suit has been instituted in equity to cancel a patent, and recovery has been denied for the reason that the property has been transferred to a bona fide holder, and where it is held that a decree in lieu of and for the value of the property can be entered against the fraudulent patentee, do not control; for in the second amended complaint in. this suit, as in the former complaint, the allegations are and have been that each of .the defendants in the- chain of title acquired the lands with full knowledge of the fraudulent manner in which the lands were obtained, and the suit has been consistently carried on in' equity with defendants steadily insisting upon the bar of the statute of limitations. American Mills Co. v. American Security Co., 260 U. S. 360, 43 S. Ct. 149, 67 L. Ed. 306.

The contention that it was error in the District Court to hold that the United States "could not properly include in the second amended bill of complaint a prayer in the alternative for damages in the event that the patent could not be cancelled,” is not well founded, for the order related only to questions growing out of the Donovan amendment. With Donovan out, the complaint still contains a prayer for alternative relief by way of recovery for value, and the government may have any equitable relief to which it may be entitled under the proof. But relief, if any is to be had, must he such as may follow a disaffirmance of the patent.

The order of the court striking from the second amended complaint allegations respecting the value, being interlocutory, is not final, and therefore not appealable. The decree dismissing the suit as to Donovan was right, and must be affirmed.

Affirmed.