State of Utah v. United States Carbon County Land Co v. Same

Decision Date15 February 1932
Docket Number43,Nos. 42,s. 42
PartiesSTATE OF UTAH et al. v. UNITED STATES. CARBON COUNTY LAND CO. v. SAME
CourtU.S. Supreme Court

[Syllabus from pages 534-536 intentionally omitted] Mr. Wm. J. Donovan, of New York City, for petitioner State of utah.

Mr. Mahlon E. Wilson, of Salt Lake City, Utah, for petitioner Independent Coal & Coke Co.

Mr. Samuel A. King, of Salt Lake City, Utah, for petitioner Carbon County Land Co.

The Attorney General and Mr. Thomas D.

[Argument of Counsel from page 537 intentionally omitted] Thacher, Sol. Gen., of Washington, D. C., for the United States.

Mr. Justice STONE delivered the opinion of the Court.

Certiorari was granted in these cases, 283 U. S. 816, 51 S. Ct. 658, 75 L. Ed. 1432, to review a decree of the Circuit Court of Appeals for the Tenth Circuit, by which it reversed a decree of the District Court for Utah and adjudged that the United States was entitled to certain lands described in the bill of complaint, and that the petitioners' title to the land is impressed with a trust in favor of the United States. It specifically decreed the cancellation of a certain mortgage and of tax liens on the lands claimed by the state of Utah, and directed conveyance of the lands and an accounting for their use by the other petitioners. (C. C. A.) 46 F.(2d) 980.

The sufficiency of the original bill of complaint was upheld and substantially all the questions now presented were considered and determined by this Court in Independent Coal & Coke Co. v. United States. 274 U. S. 640, 47 S. Ct. 714, 71 L. Ed. 1270. The suit was originally brought against the two corporate petitioners and certain individuals, the state not being a party, and the circumstances, so far as they then appeared, were set out in the opinion of this Court as follows (pages 642-644 of 274 U. S., 47 S. Ct. 714, 715, 71 L. Ed. 1270):

'This is a second suit by the United States, and is in aid of the first, for the restoration to the government of some 5,500 acres of public lands located in Utah, title to which was procured by a fraud perpetrated upon the land officers of the United States. The first suit, which resulted in a judgment for the government (affirmed (Milner v. U. S. (C. C. A.)) 228 F. 431), was predicated upon the following circumstances:

'The United States, in 1894, made a grant of public lands to the state of Utah to aid in the establishment of an agricultural college, certain schools and asylums, and for other purposes. Sections 8 and 10, Act of July 16, 1894, c. 138, 28 Stat. 107, 109, 110. Mineral lands were not included. See Milner v. United States (C. C. A.) 228 F. 431, 439; United States v. Sweet, 245 U. S. 563, 38 S. Ct. 193, 62 L. Ed. 473; Mullan v. United States, 118 U. S. 271, 276, 6 S. Ct. 1041, 30 L. Ed. 170; section 2318, R. S. (30 USCA § 21). The grant was not of lands in piece. Selections were to be made by the state with the approval of the Secretary of the Interior, from unappropriated public lands, in such manner as the Legislature should provide. The Legislature (Laws Utah 1896, c. 80) later created a board of land commissioners, with general supervisory powers over the disposition of the lands, and with authority to select particular lands under the grants.

'During the period from December 10, 1900, to September 14, 1903, Milner and others, the predecessors in interest of the Carbon County Land Company, one of the petitioners, made several applications to the state commission to select and obtain in the name of the state the lands now in question, and at the same time entered into agreements with the commission to purchase the lands from the state. In aid of the applications and agreements, milner and his associates filed affidavits with the commission, stating that they were acquainted with the character of these lands, which they affirmed were nonmineral and did not contain deposits of coal. They also deposed that the applications were not made for the purpose of fraudulently obtaining mineral holdings, but to acquire the land for agricultural use. The applicants were obviously aware that the affidavits or the information contained in them would in due course be submitted to the Land Office of the United States with the state commission's selections, as they were in fact. On the faith of these and other documents, the selections were approved by the Secretary of the Interior and the tracts in question were certified to the state on various dates, the last being in December, 1904. Certification was the mode of passing title from the United States to the state.

'In January, 1907, the United States brought the first suit, against Milner and his associates and the Carbon County Land Company, which had been organized by Milner to take over the land, and was controlled by him. The suit was founded on the charge that the certifications were procured by the fraudulent misrepresentations of Milner and the others, since they knew at the time of the applications that the lands contained coal deposits. Although the bill * * * sought the quieting of the government's title. It affirmatively appears that on June 8, 1914, the District Court entered a decree declaring that the United States 'is the owner' and 'entitled to the possession' of the lands in question and that the defendants 'have no right, title, or interest, or right of possession,' and perpetually enjoining them 'from setting up or making any claim to or upon said premises.' The Circuit Court of Appeals, in affirming the decree, held that 'the whole transaction was a scheme or conspiracy on the part of Milner to fraudulently obtain the ownership of these lands from the United States."

In its first opinion, this Court held, for reasons stated and upon authorities cited, that the decree in the earlier suit conclusively established that the Carbon County Land Company was a party to the fraudulent conspiracy to procure certification of the title to the lands to the state; that as against the land company and all claiming under it, the United States was equitably entitled to the land; that the land company, so far as it had acquired any interest in the land, was not shielded from the consequence of its fraud by having procured a conveyance to the state, even though the latter was not a party to the fraud; and that the land company could not acquire any further interest in the property from the state free of the obligation to make restitution of it, which equity imposes on one who despoils another of his property by fraud. Independent Coal & Coke Co. v. United States, supra, pages 647, 648 of 274 U. S., 47 S. Ct. 714, 71 L. Ed. 1432.

As the Independent Coal & Coke Company had acquired its alleged interest in the lands subsequent to their certification by the United States, it was held that it took them subject to the equities of the United States, unless the defense of bona fide purchaser was affirmatively established, and 'that none of the defendants, nor any claiming under them with notice, could by any legal device, however ingenious, acquire title from the state free from the taint of their fraud.' Id. pages 646, 647 of 274 U. S., 47 S. Ct. 714, 717, 71 L. Ed. 1432.

After the cause had been remanded to the District Court, the two corporate petitioners answered, and the state, which had contented itself with filing a brief amicus curiae when the cause was first here, was permitted to intervene. By its bill of complaint in intervention the state set up that at the time of the selection and certification of the lands it 'believed and had ever since believed that the land so certified by it was agricultural in character and it did not contain any known mineral'; that in 1920, which was subsequent to the decree in the first suit, it had entered into a new contract with the land company, under which it had sold and conveyed the lands to that company for $100 an acre, or a total of $556,428, taking back a mortgage for that amount, and had since assessed taxes, which were liens upon the lands, aggregating $40,000. The government, by its answer, prayed the cancellation of the mortgage and tax liens, or, in the alternative, if that relief were denied, that the certification of the lands of the state by the United States be canceled.

After a trial upon evidence, the district court, without making findings, gave judgment canceling the patent from the state of the land company and...

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