United States v. Carbon County Land Co.

• Decision Date: 14 January 1931
• Docket Number: 253.,No. 248,248
• Citation: 46 F.2d 980
• Parties: UNITED STATES v. CARBON COUNTY LAND CO. et al. CARBON COUNTY LAND CO. v. UNITED STATES et al.
• Court: U.S. Court of Appeals — Tenth Circuit

46 F.2d 980 (1931)

UNITED STATES v. CARBON COUNTY LAND CO. et al.

CARBON COUNTY LAND CO. v. UNITED STATES et al.

Nos. 248, 253.

Circuit Court of Appeals, Tenth Circuit.

January 14, 1931.

Charles R. Hollingsworth, U. S. Atty., of Salt Lake City, Utah (Seth W. Richardson, Asst. Atty. Gen., and Nat M. Lacy, of Washington, D. C., on the brief), for the United States.

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

Samuel A. King, of Salt Lake City, Utah (Creighton G. King, of Salt Lake City, Utah, on the brief), for Carbon County Land Co.

George P. Parker, Atty. Gen., of Utah, for the State of Utah.

Before LEWIS, COTTERAL, and McDERMOTT, Circuit Judges.

McDERMOTT, Circuit Judge.

This is the fourth appearance in appellate courts of a controversy over 5,564.28 acres of coal land in Carbon county, Utah, the original litigation having been commenced on January 7, 1907. The earlier cases are Milner v. United States (C. C. A. 8) 228 F. 431, appeal dismissed, 248 U. S. 594, 39 S. Ct. 132, 63 L. Ed. 437; United States v. Carbon County Land Company (C. C. A. 8) 9 F.(2d) 517; certiorari granted and decision affirmed, Independent Coal & Coke Company et al. v. United States, 274 U. S. 640, 47 S. Ct. 714, 71 L. Ed. 1270. These opinions set out so fully the facts connected with the early history of the controversy that a sketch thereof will suffice for this opinion.

In the Act of July 16, 1894 (28 Stat. 109), which provided for statehood for Utah, there is a floating grant to the state of many thousands of acres of unappropriated public lands. Provision was made for the selection, from time to time, of the lands so granted, but mineral lands were not subject to selection by the state, and were not included in the grant. Section 2318, Rev. Stat. (30 USCA § 21); Independent Coal & Coke Company v. United States, 274 U. S. 640, 642, 47 S. Ct. 714, 71 L. Ed. 1270; Milner v. United States (C. C. A.) 228 F. 431, 439; Mullan v. United States, 118 U. S. 271, 276, 6 S. Ct. 1041, 30 L. Ed. 170; United States v. Sweet, 245 U. S. 563, 38 S. Ct. 193, 62 L. Ed. 473.

In 1896 the Legislature of Utah created a board of land commissioners and conferred upon it the control and management of such granted lands, and prescribed regulations for the selection and sale thereof. Laws of Utah 1896, c. 80. Pursuant thereto, and between 1900 and 1903, Stanley B. Milner and his relatives and associates applied to purchase the lands in controversy, describing them as "grazing lands" and agreeing to release the state from its obligation to sell "if the said land shall hereafter be determined to be mineral in character." These applications were accompanied by affidavits that the applicants were well acquainted with the lands, and that they were nonmineral. The state board relied upon the truthfulness of the affidavits, and its president and secretary made affidavit that the board had caused said lands to be examined, and that they were nonmineral. The state board then filed these documents with the local register and receiver of the United States Land Office at Salt Lake City, who certified that the lands were not listed on the survey as mineral lands; whereupon all papers were forwarded to the Commissioner of the General Land Office at Washington, and in reliance thereon the lands were certified to the state of Utah between 1901 and 1904. The agreement of the Milners to purchase then attached, under which the Milners had ten years to pay the purchase price, $1.50 an acre. The purchasers then assigned to the Carbon County Land Company, a corporation in which Stanley B. Milner owned 99.95 per cent. of the stock.

These lands were in fact underlain with valuable coal deposits, and are mineral lands within the statute. Mullan v. United States, 118 U. S. 271, 6 S. Ct. 1041, 30 L. Ed. 170. There was no exposure of commercially valuable coal on any subdivision of the lands selected; and until the decision in 1911 of United States v. Diamond Coal & Coke Company (C. C. A. 8) 191 F. 786, affirmed in 233 U. S. 236, 34 S. Ct. 507, 58 L. Ed. 936, many lawyers and some courts believed that such exposure was an essential to the listing of lands as mineral. A rule promulgated by the Commissioner of the General Land Office and decisions of the Land Office were to that effect. However, since the decision of the Diamond Coal & Coke Company Case, it is clear that the mineral character of land may be established by any satisfactory evidence, including geologic inference. The proof in the Milner Case, and in this case, leaves no doubt that the formation of the surrounding country, the outcroppings and development of contiguous territory, were such as to demonstrate the existence of valuable coal deposits under the lands involved, and that the Milners knew the facts indicating the presence of such minerals when they made their affidavits.

When these facts became known to the government, it brought an action, in 1907, against the Milners and their assignee, alleging that the lands were mineral in character and did not pass under the grant to the state; setting out that the certifications from the United States to the state had been procured by the fraudulent misrepresentations of the Milners; alleging that such certifications and all conveyances made thereunder were void, and that possession of the lands should be restored to the United States, and all clouds on the title of the United States should be removed. The bill prayed specifically for the cancellation and surrender of the Milner contracts, and for general relief.

The state of Utah was not made a party. The records of the state land board disclose that the day after this suit was filed Mr. Maynard, a special assistant to the Attorney General, appeared before the board and served upon it a copy of the bill of complaint, and stated that the bill only asked to set aside the Milner contracts and relieve the state from such contracts; that if the government won the suit, the title to the lands would be in the state; and that the government did not seek to deprive the state of its title. If these minutes correctly report Mr. Maynard's summary of the bill of complaint, he did not summarize accurately, for the bill alleges that the lands were mineral and were not granted to the state, that the certifications were procured by fraud and void, and that possession should be restored to the United States. He also read to the board the opinion in Williams v. United States, 138 U. S. 514, 11 S. Ct. 457, 34 L. Ed. 1026, in which a similar suit was brought to recover lands from purchasers from the state, where certification to the state had been procured by the fraud of the purchasers. There, as here, the state was not made a party, and it was argued that the state, the holder of the legal title, was a necessary party. But the Supreme Court held otherwise, and said, at page 516 of 138 U. S., 11 S. Ct. 457, 458: "The state of Nevada might have intervened. It did not; doubtless, because it felt it had no real interest. It was no intentional party to any wrong upon the general government. If its agency had been used by the wrongdoer to obtain title from the general government; if, conscious of no wrong on its part, it had obtained from the general government the legal title, and conveyed it away to the alleged wrong-doer, it might justly say that it had no interest in the controversy, and that it would leave to the determination of the courts the question of right between the government and the alleged wrong-doer, and conform its subsequent action to that determination. That, certainly, is the dignified and proper course to be pursued by a state which is charged to have been the innocent instrumentality and agent by which a title to real estate has been wrongfully obtained from the general government."

The Milner Case was tried in January, 1910. The evidence disclosed the mineral character of the lands as above set out, thus presenting the same legal question as the Diamond Coal & Coke Company Case, then on appeal; the trial court therefore awaited the decision in that case. When that case settled the law, the trial court in June, 1914, decreed the United States to be the "owner and entitled to the possession" of the lands involved, quieted its title against defendants and all claiming under them, decreed that defendants had no title or right to possession to any part of the property, and perpetually enjoined them from asserting any claim thereto.

This decree was affirmed in Milner v. United States (C. C. A. 8) 228 F. 431, 439, the Court of Appeals concluding its opinion by holding: "We find 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."

An appeal was taken to the Supreme Court of the United States, and dismissed for want of prosecution. 248 U. S. 594, 39 S. Ct. 132, 63 L. Ed. 437.

There was no further certification by the United States; the state of Utah was advised of the proceedings above related; yet in 1920, basing its right so to do upon the certifications determined to have been fraudulently secured, the state of Utah patented these lands to the Carbon County Land Company, the same corporation, with some change in stock ownership, which had been found to be privy to the original fraud, and which had been enjoined from ever asserting any claim to these lands. The patent recites a consideration of $556,428, and is unconditional. The patentee paid this consideration by executing its notes for the full purchase price, $100,000 due in 10 years, $200,000 in 20 years, and the balance in 30 years. The notes bore no interest for five years from their date; thereafter bore 5 per cent. Interest. The notes are secured by a mortgage on the lands so patented.

The Carbon County Land Company sold 1,120 acres of the land to the Independent Coal & Coke Company, in October, 1920, in consideration of...