United States v. Whited & Wheless/Opinion of the Court

This is a suit to recover from the liquidating commissioners and the former president of a dissolved corporation the value of public lands described in a patent which it is alleged was procured from the government by the fraudulent conduct of the company and of its president.

A demurrer to the petition was sustained by the District Court, and this judgment was affirmed by the Circuit Court of Appeals on the ground that the cause of action stated was barred by the statute of limitations, which reads as follows:

'That suits by the United States to vacate and annul any     patent heretofore issued shall only be brought within five      years from the passage of this act, and suits to vacate and      annul patents hereafter issued shall only be brought within      six years after the date of the issuance of such patents.'      Act March 3, 1891, c. 561, § 8, 26 Stat. 1099 (Comp. St.     1916, § 5114).

The patent involved was issued on December 12, 1898, and if this case, commenced on December 29, 1914, were one 'to vacate and annul' the patent, plainly it would be barred. But this being a suit to recover damages from the fraudulent procurers of the patent, the question presented for decision is:

'Does the statutory bar to a suit to annul the patent also     bar a suit for the value of the land fraudulently procured to      be patented?'

The chief argument in support of the judgment of the lower court is that while the government before the period of the statute had expired had two remedies, one to annul the patent and one, affirming the patent, to recover the value of the land, yet they were both based on one right, and that when the statute barred the suit to annul, thereby the patent became as valid for the future as if it had been properly issued and that this cuts off the right, and leaves the government without further remedy.

This is begging the question. The statute of limitations did not create the right of action in the government or either of the remedies for enforcing that right. It relates to the remedy, and in terms applies only to one remedy, that for annulling the patent. The right of the government, asserted in this case, really springs from the fraudulent obtaining of the patent, not from the patent itself, and this right continues until it is satisfied or cut off by statute, and therefore to say that the barring of one remedy smothers the right to pursue the other is mere assertion, and does not advance us toward a conclusion as to the effect, if any, which such bar may have upon the other remedy, and the question we are considering remains unanswered, but becomes: What was the intention of Congress, confessedly not clearly expressed, with respect to this issue, when it enacted this limitation statute?

Fundamental to the interpretation of the statute which the answering of this question renders necessary, lies the rule of law settled 'as a great principle of public policy' that the 'United States, asserting rights vested in them as a sovereign government, are not bound by any statute of limitations, unless Congress has clearly manifested its intention that they should be so bound' (United States v. Nashville, Chattanooga & St. Louis Ry. Co., 118 U.S. 120, 125, 6 Sup. Ct. 1006, 30 L. Ed. 81), and also the fact that this principle has been accepted by this court as requiring not a liberal, but a restrictive, a strict, construction of such statutes when it has been urged to apply them to bar the rights of the government. Thus, in Northern Pacific Ry. Co. v. United States, 227 U.S. 355, 367, 33 Sup. Ct. 368, 57 L. Ed. 544, the limitation in the Act of March 2, 1896 (29 Stat. 42, c. 29), was hold not applicable to a patent erroneously issued for In ian lands under a railroad grant, and in La Roque v. United States, 239 U.S. 62, 68, 36 Sup. Ct. 22, 60 L. Ed. 147, the general language of the very act we are considering was held not applicable to a trust patent for Indian reserved lands.

With this rule of interpretation and of practice under it in mind, let us consider the scope of the limitation provision relied upon, which is found in section 8 of the Act of March 3, 1891 (26 Stat. 1099, c. 561) entitled 'An act to repeal timber culture laws and for other purposes.'

This act is a very considerable amendment to and revision of laws relating to public lands and, as House Report No. 253, 54th Congress, 1st Session, shows, it grew out of the insecurity and loss of confidence of the public in the integrity and value of patent titles to public lands, which had been occasioned by conflicting claims, chiefly between land grant railroad companies and the government, which had resulted in many suits being commenced to cancel patents. The statute was passed to promote prompt action for annulling patents where cause therefor was believed to exist and to make titles resting upon patents dependably secure when the period of limitation should expire. As might well be anticipated, therefore, this statute, originating in such conditions, was limited in its terms to suits 'to vacate and annul' patents, without any reference being made to suits to recover the value of the land when patents were fraudulently obtained, so that only by extravagant interpretation can its bar be made applicable to such suits-and such interpretation we have seen is forbidden.

To this we add that when the Congress really intended to bar by limitation statute the right to recover the value of lands, as well as the lands themselves, such intention found clear expression in the Act of March 2, 1896 (29 Stat. 42), which modified, and in a measure is a substitute for, the section we are considering, by declaring:

'That no suit shall be brought or maintained, nor shall     recovery be had for lands or the value thereof, that were      certified or patented in lieu of other lands,' etc.

And, finally, the decisions of this court furnish clear confirmation of the reality and substantial character of the contention of the government, by holding that when by mistake public officers executed a patent to a railroad company for lands which had afterwards been conveyed to purchasers dealing in good faith, the right of the government to recover such lands was barred, but nevertheless the right remained to sue for and recover the value of the lands so wrongfully received and conveyed. Southern Pacific R. R. Co. v. United States, 200 U.S. 341, 353, 26 Sup. Ct. 296, 50 L. Ed. 507.

Thus the rule and practice for interpreting the act, its language, as well that which is omitted from it as that which is contained in it, and the action of Congress in dealing with a kindred subject-matter, all impel to the conclusion that the omission of language barring the right of the government to recover the value of lands to which a patent had been fraudulently obtained, was intentional and deliberate, to the end that patent titles might be made secure but that persons who had defrauded the government should not be protected by the act in the enjoyment of their ill-gotten gains.

The support for the contention of the defendants in error, contrary to this conclusion, which they claim to find in United States v. Chandler-Dunbar Water Power Co., 209 U.S. 447, 28 Sup. Ct. 579, 52 L. Ed. 881, is based upon the statement that by the statute 'the patent is * *  * to have the same effect against the United States that it would have had if it had been valid in the first place.' But that is merely an emphatic way of saying that the title is made good. It does not import that the collateral effects of fraud in obtaining the patent are purged. The element of bad faith or fraud was expressly excluded.

While the Circuit Court of Appeals, as we have stated, rested its de ision wholly upon the limitation statute, yet, under warrant of the claim in the demurrer that the petition does not state a cause of action, it is further argued in this court, that if it be conceded that the right of recovery by the government is not barred, nevertheless such recovery is limited by section 2 of the Act of March 2, 1896 (29 Stat. 42), to the minimum government price for the land, and since the petition shows that this amount was paid to the government when the patent was issued, there can be no recovery.

But the act of 1896 deals only with patents 'erroneously issued under a railroad or wagon-road grant' and the limited recovery allowed is restricted to cases where it shall appear that such erroneously patented lands have been sold to bona fide purchasers. That such a statute can have no application to such a case as we are considering is too obvious for comment.

This doctrine, that where there are two remedies for the protection of a right one may be barred and the other not, is no novelty in the law. So long ago as 5 Pickering, in Lamb v. Clark, pages 193, 198, it was tersely stated as then familiar doctrine that 'If an injured party has a right to either of two actions, the one he chooses is not barred, because the other, if he had brought it, might have been.' And the principle has frequently been recognized by this and other courts. Lewis v. Hawkins, 23 Wall. 119, 127, 23 L. Ed. 113; Hardin v. Boyd, 113 U.S. 756, 765, 5 Sup. Ct. 771, 28 L. Ed. 1141; Kirkman v. Philips' Heirs, 7 Heisk. (Tenn.) 222, 224; Ivey's Administrator v. Owens, 28 Ala. 641, 649; Ganley v. Troy City Nat. Bank, 98 N. Y. 487, 494.

The conclusions we are here announcing are in entire accord with well-considered opinions by two Circuit Courts of Appeal, that of the Eighth Circuit, in United States v. Koleno, 226 Fed. 180, 141 C. C. A. 178, and in Union Coal & Coke Company v. United States (C. C. A.) 247 Fed. 106, and that of the Ninth Circuit in Bistline v. United States, 229 Fed. 546, 144 C. C. A. 6.

The judgment of the Circuit Court of Appeals is

Reversed.