Colorado Coal & Iron Company v. United States

This is a bill in equity filed in the name of he United States by the attorney general on January 22, 1880, the object and prayer of which are to declare void and cancel 61 patents for as many distinct pieces of land, situated at different places in Las Animas county, in the state of Colorado, amounting in the aggregate to 9,565.95 acres. To the original bill the Southern Colorado Coal & Town Company, a corporation organized under the laws of Colorado, was the sole defendant. The patents in question were issued at different times between October, 1873, and October, 1874, upon pre-emption claims, under the act of 1841. In each case there appeared to the filed all the necessary and proper affidavits, duly verified before the register or receiver of the land-office at Pueblo, showing that the pre-emptors had entered and settled in person upon the land on a day named, and had made improvements thereon, the nature of which were set out in detail, and that the lands in question were non-mineral lands and subject to pre-emption under the acts of congress relating thereto. Between May, 1873, and December, 1875, warranty deeds in the names of the pre-emptors and patentees were made, acknowledged, and recorded, apparently conveying the premises to William S. Jackson, as trustee, who represented a number of individuals who had deposited money in his hands to be used in the purchase of lands in Colorado. On June 1, 1876, by deed duly acknowledged and recorded, but without covenant of warranty, Jackson conveyed and released all these lands to the defendant, the Southern Colorado Coal & Town Company. On January 20, 1880, that corporation was consolidated with other corporations under the name of the 'Colorado Coal & Iron Company,' to which, upon that date, the lands in question were conveyed. Under date of February 1, 1880, the coal and iron company made a mortgage covering the premises in question, with others, to Louis H. Meyer, as trustee, to secure an issue of bonds amounting to $3,500,000. On January 7, 1882, an amendment to the bill was filed, making the Colorado Coal & Iron Company, the consolidated corporation, together with Meyer, the trustee in the mortgage, parties defendant. The purchase price of the lands to the government was $11,997.45, which was paid at the time to the proper officer, $1,813.14 in cash, and the remainder in certificates known as 'Agricultural College Scrip,' which by law was receivable for that purpose.

It is charged in the bill that these patents were procured by means of a fraudulent conspiracy entered into by and between Irving W. Stanton, register of the land-office, Charles A. Cook, receiver for the land-district, at Pueblo, in Colorado, Alexander C. Hunt, and others unknown, who, it is alleged, organized and had incorporated the Southern Colorado Coal & Town Company. In furtherance of this conspiracy, and as the means of accomplishing its purpose, it is alleged 'that neither of the supposed pre-emptors of the land as aforesaid described by their names, as stated in said several proofs of pre-emption, or in the said certificates of location, ever settled upon the said lands, or improved the same, as represented in said several proofs of pre-emption, and that no person or persons whatsoever, as represented in either of said certificates of location, appeared or presented himself before said Stanton or Cook, or either of them, at any time, and made proof of pre-emption or agricultural college scrip location, either as pre-emptor or as witness for any pre-emptor as aforesaid described, as in and by said proofs of pre-emption and location certificates, or either of them, as aforesaid, is supposed, but that the same, and each of them, are false and fraudulent, and were designed, made, and executed by said Stanton and Cook and said Hunt, and the said persons to your orator unknown, or some one or more of them, in the manner aforesaid, and for the purpose of fraudulently depriving your orator of its title to the said pieces of land.'

It is further alleged that all the said supposed pre-emptors are fictitious persons, and their names are fictitious names, and that the supposed names that appear as witnesses to the said several proofs of pre-emption are fictitious names, and that no such person or persons, either as pre-emptors or as witnesses, have ever lived or been known in the county of Las Animas, where said pieces and parcels of land are located, and, in fact, that no such persons exist.

It is further alleged in the bill 'that the aforesaid pieces and parcels of land are not agricultural land, and are not suitable for agricultural or grazing purposes, and are of no value for any purpose except for the coal deposits therein contained. * * * That the said several pieces and parcels of land contain large and valuable deposits of coal, and that the said deposits of coal were known to the said Stanton and Cook and said Hunt, and to the said person or persons to your orator unknown, who wrote out, signed, and executed, or caused to be written out, signed, and executed, the several proofs of pre-emption and non-mineral affidavits at the time the said several proofs of pre-emption and non-mineral affidavits were made out, signed, and executed.'

It is also charged in the bill that the said Hunt was a stockholder in the Southern Colorado Coal & Town Company, and general manager of its business, and that the incorporators of said company and the trustees thereof, including William S. Jackson, 'knew at the time the aforesaid described land was conveyed to said company by said William S. Jackson, as hereinbefore described, that the several patents to said several pieces and parcels of land had been fraudulently obtained from your orator, and knew that the said several supposed pre-emptors and patentees were myths and fictitious persons, and knew that the said Jackson had no right, title, or interest in said land, or any part thereof.'

The answer of the Southern Colorado Coal & Town Company, filed November 2, 1881, specifically denies all the allegations of the bill alleging fraud, and denies that the said lands, or any portion of them, were mineral lands in the sense of not being lands capable of being acquired under the pre-emption law, and sets up by way of further defense that it was a purchaser of all the said lands in good faith for a valuable consideration without any knowledge or notice whatever of any or either of the pretended fraudulent acts and conspiracies in the bill alleged. Louis H. Meyer, on June 5, 1882, answered to the same effect, and by a stipulation the answer of the Southern Colorado Coal & Town Company was directed to stand as the answer of the Colorado Coal & Iron Company. Replications were duly filed, and the cause was heard on a large amount of proofs, resulting in a decree in favor of the complinant, declaring all the patents in the bill mentioned, and the subsequent conveyances of the land therein described to the defendants, to be fraudulent and void, and decreeing that they should be held for naught, and be delivered up to be canceled. The present appeal is from that decree.

It was held by the circuit court that the charge in the bill that the supposed pre-emptors and patentees were fictitious persons, having no existence, was sufficiently proved; that, consequently, there being no grantees, no legal title passed from the United States; and that, as the defendants acquired no legal title by virtue of the supposed conveyances to them, they cannot claim protection as bona fide purchasers for value without notice of the fraud. 18 Fed. Rep. 273.

Lyman'K. Bass,'B. H. Bristow,and David Willcox, for appellants.

[Argument of Counsel from pages 311-313 intentionally omitted]

''Sol. Gen. Jenks'', for appellee.

MATTHEWS, J.