Linn Lane Timber Company v. United States No 46 Same v. Same No 159
| Decision Date | 08 March 1915 |
| Docket Number | Nos. 46 and 159,s. 46 and 159 |
| Parties | LINN & LANE TIMBER COMPANY and Charles A. Smith, Appts., v. UNITED STATES. NO 46. SAME v. SAME. NO 159 |
| Court | U.S. Supreme Court |
Messrs. John Lind, A. Ueland, and W. M. Jerome for appellants.
Assistant Attorney General Knaebel, and Mr. Henry C. Lewis, Special Assistant to the Attorney General, for appellee.
Messrs. Joel F. Vaile and Henry McAllister, Jr., as amici curioe in No. 46.
Messrs. Joseph Paxton Blair and Charles R. Lewers as amici curioe in No. 159.
These are suits in equity brought by the United States against the appellants to annul patents issued under the timber and stone act of June 3, 1878, chap. 151, 20 Stat. at L. 89, Comp. Stat. 1913, § 4671, on the ground that the entries were fraudulent. Both of the courts below have found that the entries were fraudulent, that the defendant Smith was either a party to the fraud or chargeable with notice of it, and that the Linn & Lane Timber Company stood in no better position than Smith. The circuit court of appeals made decrees for the United States in respect of all the lands concerned. 181 Fed. 545, 116 C. C. A. 267, 196 Fed. 593, 121 C. C. A. 498, 203 Fed. 394. The main question here concerns the statute of limitations: '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 of March 3, 1891, chap. 561, § 8, 26 Stat. at L. 1095, 1099, Comp. Stat. 1913, §§ 5116, 5114. See act of March 3, 1891, chap. 559, 26 Stat. at L. 1093, Comp. Stat. 1913, § 4992. In No. 46 the twenty-eight patents in controversy were issued on August 12, 1902. In No. 159, nine of the patents were issued on August 12, 1902, and eight on July 9, 1902. The bills were filed and subpoenas were taken out and delivered to the marshal on May 25, 1908. On July 20 the marshal returned non est inventus as to Smith. An order of notice was applied for on the same day, suggesting that he was residing in Minneapolis, and was granted on July 27. Smith was served with process on August 11, 1908, and the corporation was made a party on November 16, and was served on November 18, 1908; so that it will be seen that the corporation was not brought into the suit until more than six years had run after the issue of all the patents, and that Smith was served more than six years after the issue of eight of the patents involved in No. 159. On the other hand, the bills were filed within six years.
The patented lands had been conveyed to various persons in trust for Smith in 1900, shortly after the making of final proof. In May, 1906, Smith, still having the equitable or legal title, organized a Minnesota corporation, the appellant, with 1,000 shares of $100 each, for the purpose of receiving and holding the title to these and other lands. He took 998 shares, his wife 1, and his attorney 1. He then offered to pay for the stock with the land, and subsequently caused to be executed deeds purporting to convey the lands to the corporation, but he retained the deeds and did not have them recorded until September 9, 1908, after the beginning of these suits, and more than six years after the issue of the patents. It is found, it would seem reasonably, that one purpose of Smith was to keep the titles concealed until the statute of limitations should have run. The United States was ignorant of the transaction. But a month from the recording of the conveyances to the corporation Smith and other defendants pleaded it in abatement, and in November, as we have said, the United States filed amended bills.
Upon the facts as found by the two courts below we must take it that the corporation was the mere tool of Smith, that his knowledge was its knowledge (J. J. McCaskill Co. v. United States, 216 U. S. 504, 54 L. ed. 590, 30 Sup. Ct. Rep. 386), and that it was party to an effort to keep the title concealed until it was too late for the United States to complain. It even is open to some doubt whether the deeds ever were delivered until they were recorded, and it seems open to none that, as was said by the circuit court of appeals, recording the deeds was the first business the corporation did. This being so, the difference in legal personality between Smith and the corporation gives the corporation no greater rights than Smith. It cannot be privy to a fraud, and on the ground of its success set up a title of which, if that be material,...
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