, United States v. Detroit Lumber Co. :: 200 U.S. 321 (1906) :: US LAW US Supreme Court Center

United States v. Detroit Lumber Co. :: 200 U.S. 321 (1906) :: US LAW US Supreme Court Center

    U.S. Supreme Court

    United States v. Detroit Lumber Co., 2 hundred U.S. 321 (1906)

    United States v. Detroit Timber and Lumber Company

    Nos. 106, 165

    Argued December 7, 1905

    Decided February 19, 1906

    two hundred U.S. 321

    Syllabus

    The rule of law concerning right faith is the equal in respect to purchases of land and timber as that which obtains in different industrial transactions, and no person is certain to expect that the celebration with whom he deals is a perpetrator; but, on paying full value for the property offered, the title to which is outwardly legitimate and in regard to which there are no suspicious circumstances, he's going to collect the rights of a bona fide client.

    Equity seems at the substance, and not at the mere shape wherein a transaction takes location, and optimistic fraud inside the entries of land bought

    Page 200 U. S. 322

    via one corporation from every other will now not be charged to the consumer where there is not anything which casts imputation on its conduct, or has a tendency to show that it turned into now not a client in desirable faith, because after the real purchase and fee therefor, however previous to the final conveyance, an officer of the vendee employer have become an officer of the vendor organisation for the reason of closing up its business.

    Although the doctrine of relation is but a fiction of regulation, it's miles resorted to whenever justice calls for, and under it, patents for lands whilst issued through the USA end up operative as of the dates of the entries -- the inception of the equitable right upon which the patent is based -- and the doctrine may be carried out to defend a bona fide consumer of wood however the wrongful individual of the entries of which he's ignorant. But the doctrine of relation in no way includes a patent lower back to the date of any access apart from that on which it is issued.

    The headnotes to the reviews of this Court are not the work of the Court, but are clearly the paintings of the Reporter, giving his expertise of the selection, prepared for the ease of the career.

    A very last receipt is an acknowledgment by the government that it has acquired full pay for the land and holds the title in accept as true with for the entryman and will in due path issue to him a patent, and thereupon he turns into the equitable owner of the land.

    Until the patent which passes the felony name is issued, the felony title stays in the government, and is problem to investigation and determination by means of the Land Department, but this strength will not be exercised arbitrarily or with out observe, and if improperly exercised, the rights of the entryman can be enforced inside the courts after the patent has been issued to different parties.

    The ideas of equity exist independently of, and anterior to, all Congressional law, and the statutes are both annunciations of these concepts or their programs to precise cases, and a party handling an entryman the evidences of whose entry are in form right and enough is justly entitled to the consideration of a court docket of fairness, and one that has in good religion cut and eliminated wooden below contract with such an entryman whose access is ultimately cancelled and buy cash retained with the aid of the government can't be pressured to account to the authorities for the timber cut and eliminated in reliance on such settlement.

    These are move-appeals from a decree of the Circuit Court of Appeals for the Eighth Circuit putting forward in part and reversing in element a decree of the Circuit Court for the Western District of Arkansas.

    The bill become filed on April 5, 1902, by way of america in opposition to the Detroit Timber & Lumber Company, the Martin-Alexander

    Page 200 U. S. 323

    Lumber Company, and a number of character defendants. The item of the bill became to set aside patents to forty-4 tracts of land issued to the individual defendants, and all conveyances, contracts, and leases from them purporting to carry identify to or a right to cut and put off wooden from the lands, and also for an accounting of the wooden cut and eliminated from the lands by means of the two businesses, and judgment therefor.

    The fee changed into that the lands were entered below the Timber Act of June 3, 1878, 20 Stat. 89, and in fraud of its provisions, in that the purchase money turned into advanced through the Martin-Alexander Company below contracts with the entrymen that, after the entries, they need to deliver to it all of the standing timber thereon. The Martin-Alexander Company denied that there had been any such contracts, and the Detroit Company in addition pleaded that it become a bona fide client from the former organization. It appeared from the testimony that for some time prior to January 14, 1901, the Martin-Alexander Company owned and operated a sawmill plant inside the area of those lands; that maximum, if not all, of the entrymen have been its employees; that it furnished all of the cash for the acquisition expenses of those lands, in addition to for the fees linked with the entries, and that, after the entries, the entrymen, with 3 exceptions, performed conveyances to it of all of the standing wooden. Fifty-8 and one-half percentage of the inventory of the Martin-Alexander Company belonged to E. B. Martin, even as A. V. Alexander managed the remainder, which became owned by way of himself, his spouse, and J. O. Means.

    On January 14, 1901, the Detroit Company bought the complete property of the Martin-Alexander Company for $60,000 cash and an assumption of its duties, amounting to $17,456.seventy nine. Prior to May 9, 1901, patents had been issued for all of the lands, thirteen having been issued before January 14, 1901. After the acquisition from the Martin-Alexander Company, the Detroit Company received deeds of the lands from the patentees of twenty-seven of the tracts.

    Page two hundred U. S. 324

    The circuit courtroom found that the transactions among the entrymen and the Martin-Alexander Company had been not in war with the statute, that there have been no agreements between them and it prior to the entries in admire to conveyances of the status wooden, and that there has been only the mere expectation at the part of the agency that it'd be able to buy the timber. Thereupon it dismissed the invoice. 124 F. 393. The court docket of appeals, reviewing the testimony, held that there were contracts among the parties making the entries and the Martin-Alexander Company previous to the entries, and that consequently those entries had been in fraud of the act, however it additionally found that the purchase by the Detroit Company became in true religion, and that consequently that corporation changed into entitled to safety in its purchase. It ordered the bill dismissed as to the twenty-seven tracts for which patents have been issued and conveyances made to the Detroit Company. As to the seventeen which had now not been conveyed, it ordered a decree cancelling the patents, but disregarding the bill to this point as respects any relief claimed against the Detroit Company. 131 F. 668.

    Page 2 hundred U. S. 328

    U.S. Supreme Court

    United States v. Detroit Lumber Co., 200 U.S. 321 (1906)

    United States v. Detroit Timber and Lumber Company

    Nos. 106, a hundred sixty five

    Argued December 7, 1905

    Decided February 19, 1906

    2 hundred U.S. 321

    APPEAL AND CROSS-APPEAL FROM THE CIRCUIT

    COURT OF APPEALS FOR THE EIGHTH CIRCUIT

    Syllabus

    The rule of law concerning desirable religion is the equal in appreciate to purchases of land and wood as that which obtains in different business transactions, and no person is bound to anticipate that the celebration with whom he deals is a perpetrator; however, on paying full price for the property offered, the identify to which is outwardly valid and in regard to which there are not any suspicious occasions, he's going to accumulate the rights of a bona fide purchaser.

    Equity seems at the substance, and no longer at the mere shape wherein a transaction takes vicinity, and positive fraud in the entries of land bought

    Page two hundred U. S. 322

    by way of one organization from some other will no longer be charged to the client where there's not anything which casts imputation on its behavior, or has a tendency to show that it turned into now not a patron in appropriate faith, due to the fact after the real buy and payment therefor, however prior to the very last conveyance, an officer of the vendee corporation became an officer of the seller organization for the reason of closing up its commercial enterprise.

    Although the doctrine of relation is but a fiction of regulation, it's miles resorted to every time justice calls for, and underneath it, patents for lands whilst issued via america grow to be operative as of the dates of the entries -- the inception of the equitable proper upon which the patent is based totally -- and the doctrine may be applied to protect a bona fide consumer of timber notwithstanding the wrongful person of the entries of which he is ignorant. But the doctrine of relation never incorporates a patent again to the date of any entry apart from that on which it is issued.

    The headnotes to the opinions of this Court are not the paintings of the Court, but are actually the paintings of the Reporter, giving his know-how of the decision, organized for the benefit of the profession.

    A very last receipt is an acknowledgment via the government that it has acquired complete pay for the land and holds the name in agree with for the entryman and will in due path trouble to him a patent, and thereupon he becomes the equitable proprietor of the land.

    Until the patent which passes the felony title is issued, the criminal title remains within the authorities, and is issue to investigation and backbone via the Land Department, however this energy will no longer be exercised arbitrarily or without be aware, and if improperly exercised, the rights of the entryman can be enforced in the courts after the patent has been issued to other parties.

    The concepts of fairness exist independently of, and anterior to, all Congressional legislation, and the statutes are both annunciations of those principles or their programs to precise cases, and a party managing an entryman the evidences of whose access are in shape right and sufficient is justly entitled to the attention of a court docket of fairness, and one who has in true faith reduce and removed wooden beneath agreement with such an entryman whose access is in the end cancelled and purchase money retained by way of the government can not be forced to account to the government for the wooden reduce and eliminated in reliance on such agreement.

    These are cross-appeals from a decree of the Circuit Court of Appeals for the Eighth Circuit declaring in part and reversing in component a decree of the Circuit Court for the Western District of Arkansas.

    The invoice become filed on April five, 1902, through the US in opposition to the Detroit Timber & Lumber Company, the Martin-Alexander

    Page 2 hundred U. S. 323

    Lumber Company, and a number of character defendants. The object of the invoice was to set aside patents to 40-four tracts of land issued to the man or woman defendants, and all conveyances, contracts, and rentals from them purporting to bring name to or a proper to cut and dispose of wood from the lands, and additionally for an accounting of the timber reduce and removed from the lands via the 2 groups, and judgment therefor.

    The fee became that the lands were entered beneath the Timber Act of June three, 1878, 20 Stat. 89, and in fraud of its provisions, in that the purchase cash turned into superior by using the Martin-Alexander Company underneath contracts with the entrymen that, after the entries, they must bring to it all the standing wood thereon. The Martin-Alexander Company denied that there had been any such contracts, and the Detroit Company further pleaded that it was a bona fide patron from the former organisation. It regarded from the testimony that for a while previous to January 14, 1901, the Martin-Alexander Company owned and operated a sawmill plant within the area of these lands; that maximum, if not all, of the entrymen had been its employees; that it provided all the money for the purchase charges of those lands, as well as for the costs related with the entries, and that, after the entries, the entrymen, with three exceptions, achieved conveyances to it of all the standing wood. Fifty-eight and one-half percent of the stock of the Martin-Alexander Company belonged to E. B. Martin, at the same time as A. V. Alexander controlled the the rest, which changed into owned with the aid of himself, his wife, and J. O. Means.

    On January 14, 1901, the Detroit Company purchased the complete belongings of the Martin-Alexander Company for $60,000 cash and an assumption of its obligations, amounting to $17,456.79. Prior to May nine, 1901, patents had been issued for all the lands, thirteen having been issued before January 14, 1901. After the purchase from the Martin-Alexander Company, the Detroit Company obtained deeds of the lands from the patentees of twenty-seven of the tracts.

    Page 2 hundred U. S. 324

    The circuit court determined that the transactions among the entrymen and the Martin-Alexander Company have been now not in war with the statute, that there have been no agreements between them and it prior to the entries in respect to conveyances of the standing wood, and that there was only the mere expectation at the part of the employer that it would be capable of buy the wood. Thereupon it dismissed the invoice. 124 F. 393. The court of appeals, reviewing the testimony, held that there have been contracts among the events making the entries and the Martin-Alexander Company prior to the entries, and that consequently those entries were in fraud of the act, however it also observed that the acquisition with the aid of the Detroit Company become in excellent faith, and that consequently that agency turned into entitled to protection in its buy. It ordered the bill dismissed as to the twenty-seven tracts for which patents were issued and conveyances made to the Detroit Company. As to the seventeen which had not been conveyed, it ordered a decree cancelling the patents, however brushing off the invoice so far as respects any alleviation claimed in opposition to the Detroit Company. 131 F. 668.

    Page 200 U. S. 328

    MR. JUSTICE BREWER introduced the opinion of the Court.

    The in a position and problematic evaluations of both the circuit court and the courtroom of appeals relieve us from an awful lot hard work. There are questions of truth: first, whether the parties making the entries had, previous to obtaining name from the authorities, made any agreement with the Martin-Alexander Company for a conveyance of an hobby inside the properties, or had been in search of to collect identify entirely for his or her very own advantage. Second, whether

    Page two hundred U. S. 329

    the Detroit Company was a purchaser in desirable religion from the Martin-Alexander Company. With connection with the first question, the circuit courtroom turned into of the opinion that there have been no agreements among the events. The court docket of appeals was of a unique opinion, and held that the entries were made in pursuance of such agreements. This is a case in fairness, and while in this sort of case questions of fact are usually open to consideration by an appellate court docket, incredible recognize is paid to the conclusions of the trial court in recognize to them. Certainly if the circuit courtroom and the courtroom of appeals had agreed, we should be very loath to disturb their end. Differing as they do within the present case, we've got tested this question, and agree with the courtroom of appeals. The whole control of these entries was inside the arms of an agent of the Martin-Alexander Company. It supplied the moneys each for the purchase fees and all costs, and it is not clean to accept as true with that it did all this on a trifling expectation that, after the entries were made, it may buy the timber. It is a much extra affordable conclusion that it had an knowledge with the parties making the entries respecting purchases and fees. It is pretty probable that the entrymen had been now not conscious of wronging the government, and idea that if it received the full fee demanded, that turned into sufficient. The testimony of one witness indicates, at the least, that they will have been counseled that there was no contract unless it changed into in writing, and that as a result they could conscientiously take the oath required in reference to an access. So, without casting any imputation of intentional perjury on those events, we believe the court of appeals that the testimony points strongly to the fact that the entries had been in pursuance of an know-how or settlement with the Martin-Alexander Company that, because it changed into advancing all the money, the entrymen should convey to it the status wooden at a hard and fast charge.

    With reference to the second one question of truth, the circuit court docket made no locating, having disposed of the case by way of its end in admire to the primary. The court of appeals found

    Page 2 hundred U. S. 330

    that the Detroit Company was a consumer in suitable religion from the Martin-Alexander Company. Here too we've examined the testimony and are satisfied that the belief of the court docket of appeals turned into accurate. A brief assertion of the salient statistics may be now not unimportant. The headquarters of the Detroit Company had been in St. Louis, of the Martin-Alexander Company in southwest Arkansas. They dealt at arm s period. On December 20, 1900, Alexander, of the Martin-Alexander Company, implemented to U. L. Clark, president of the Detroit Company at St. Louis, to buy Martin s interest within the Martin-Alexander Company. Clark declined, pointing out that the Detroit Company would make no buy of a fractional hobby inside the property. Thereupon it become arranged that he should make an examination which will the acquisition of the entire property. The Detroit Company s inspector turned into despatched to Arkansas to study the lands. Clark himself went down inside the January following, and, after receiving the record of the inspector, phrases of sale were, on January 14, agreed upon: $60,000 coins and the belief of the Martin-Alexander Company s debts. The $60,000, through agreement among the stockholders of the Martin-Alexander Company, became divided $34,850 to Martin, $24,850 to Mrs. Alexander, $150 to A. V. Alexander, and $150 to J. O. Means. Martin and Means were paid straight away; the money owed were also promptly paid. Alexander desired to take stock in the Detroit Lumber Company in lieu of the money coming to his wife and himself. Clark turned into no longer then legal to make such association, however sooner or later the inventory of the Detroit Lumber Company turned into accelerated and the Alexanders have been paid in full in that stock. The entire property of the Martin-Alexander Company, protected in which were the sawmill, tram and logging roads, these timber contracts and other like contracts, and additionally all stock available, was on the time of the purchase -- January 14 -- became over to the Detroit Lumber Company, which thereafter persevered the enterprise. The Martin-Alexander Company had no deeds of the lands in controversy, however genuinely contracts for the timber

    Page two hundred U. S. 331

    thereon, and, in an effort to be relieved from the need of maintaining debts with admire to the extraordinary tracts, the Detroit Company proceeded to acquire deeds from twenty-seven of the patentees, paying on a mean $25 apiece therefor, which turned into a truthful charge for the lands after the wooden were reduce off. It had no know-how or intimation that there was anything wrong in the titles until the final of September or the first of October, 1901 -- greater than 4 months after the authorities had issued its patents for all the lands -- while it obtained a observe to that impact from a central authority inspector.

    Now we observation that there may be no intimation inside the testimony that the acquisition fee became not paid by means of the Detroit Company in coins and stock as agreed upon, no inspiration that the charge turned into an unreasonable one. There turned into not anything odd or unnatural within the agreement among the organizations; on the contrary, it turned into one that would possibly properly be entered into by way of parties situated as those were. But it's far contended via the authorities that, if the Detroit Company had examined with care the books of the Martin-Alexander Company and the papers which it turned over as evidences of its titles, it'd have perceived that the wooden contracts had been made shortly after the difficulty of the final receiver s receipts, that the events making the contracts have been all or almost all employees of the Martin-Alexander Company, to whom moneys have been superior, and with each of whom an account became being stored; that it became its responsibility to seriously take a look at those subjects with a purpose to ensure that the titles which it changed into obtaining had been suitable. In their quick, suggest for the government say:

    "We declare that the law as laid down in Hawley v. Diller, 178 U. S. 476, that one that takes name before the issuance of patent can not claim to be a bona fide customer, made it the duty of the Detroit Company to make the maximum looking inquiry at the least as to all the wood contracts besides the thirteen for which patents to the land had issued."

    We do now not apprehend the regulation to be as stated, or that person who enters into an ordinary and reasonable contract for the

    Page two hundred U. S. 332

    purchase of assets from every other is bound to presume that the seller is a perpetrator, and that therefore he have to make a searching inquiry as to the validity of his claim to the belongings. The rule of regulation in admire to purchases of land or wooden is the same as that which obtains in different industrial transactions, and this kind of rule as is said with the aid of counsel would shake the principles of commercial business. No one is bound to anticipate that the birthday celebration with whom he offers is a perpetrator, and if he affords belongings the title to which is outwardly legitimate, and there are no situations disclosed which cast suspicion upon the title, he may additionally rightfully address him, and, paying full fee for the same, gather the rights of a consumer in excellent faith. Jones v. Simpson, 116 U. S. 609, 116 U. S. 615. He isn't bound to make a looking examination of all the account books of the seller, nor to hunt for something to cast a suspicion upon the integrity of the identify.

    It is similarly stated that the written agreement of sale from the Martin-Alexander Company to the Detroit Company changed into now not performed till March 1, 1901, and that, at the fourteenth of January, 1901, Martin resigned his function as president of the Martin-Alexander Company, and Clark, the president of the Detroit Company, changed into elected president of the former organisation; that, as the chief government of that company, he changed into charged with expertise of all that the business enterprise knew, and that therefore, earlier than the written contract was entered into, he and the Detroit Company had constructive observe of the wrongful character of these wood contracts. But that is a mere evasive technicality. The bill fees and the answer admits the sale on January 14, and the records, as disclosed by using the testimony, are that Martin desired to go away without delay on receipt of his cash, and go back to his domestic in Illinois; that Clark changed into installed his vicinity as president to enable the Martin-Alexander Company to shut up its extremely good affairs. The real contract between the parties became entered into before Clark became president, and all that became afterwards performed turned into certainly to put in writing the terms of the agreement which have been

    Page two hundred U. S. 333

    agreed upon. Equity appears at the substance, and not on the mere shape wherein a transaction takes vicinity. The rule in appreciate to constructive be aware turned into accordingly stated in Wilson v. Wall, 6 Wall. 83, seventy three U. S. ninety one:

    "A chancellor will now not be astute to charge a optimistic believe upon person who has acted really and paid a full and honest attention with out notice or know-how. On this point, we want most effective check with Sugden on Vendors, p. 622, wherein he says:"

    "In Ware v. Lord Egmont, the Lord Chancellor Cranworth expressed his whole concurrence in what on many occasions of overdue years had fallen from judges of extraordinary eminence on the subject of optimistic note, specifically -- that it turned into exceptionally inexpedient for courts of equity to extend the doctrine. When a person has now not real observe, he ought no longer to be treated as though he had be aware unless the situations are which includes allow the courtroom to say no longer best that he may have obtained, but additionally that he must have obtained it however for his gross negligence within the behavior of the business in query. The query, then, whilst it's far sought to have an effect on a purchaser with positive note, isn't always whether or not he had the means of obtaining, and can, with the aid of prudent caution, have obtained the information in question, but whether not acquiring become an act of gross or culpable negligence."

    And again, in Townsend v. Little, 109 U. S. 504, 109 U. S. 511:

    "Constructive note is described to be in its nature no extra than proof of be aware, the presumption of that's so violent that the court will no longer even allow of its being controverted. Plumb v. Fluitt, 2 Anst. 432; Kennedy v. Green, three My. & K. 699. . . . As said through Strong, J., in Meehan v. Williams, 48 Pa. 238, what makes inquiry a duty is this type of seen nation of things as is inconsistent with a super right in him who proposes to promote. See also Holmes v. Stout, 4 N.J.Eq. 492; McMechan v. Griffing, 3 Pick. 149; Harwick v. Thompson, nine Ala. 409."

    In the mild of these government, we see nothing which casts any imputation at the conduct of the Detroit Company or

    Page two hundred U. S. 334

    that tends to reveal that it become no longer a client in absolute properly religion.

    Now what's the regulation controlling underneath those situations? Much reliance is placed through the government on Hawley v. Diller, 178 U. S. 476, which, asserting prior cases, holds that an entryman below the Timber Act acquires simplest an equity, and that a client from him cannot be seemed as a bona fide customer inside the which means of the act. But the Detroit Company bought twenty-seven tracts after the difficulty of the patents therefor. And, in making those purchases, it dealt now not with the Martin-Alexander Company, but without delay with the patentees. While the quantities paid had been small, yet, as recommend for the government admit in their quick that "the land without the wood is of no price," there can be no suggestion of inadequacy of fee. As additionally it had no know-how or suspicion of incorrect inside the titles, it is, as to those tracts, strictly and technically, within the language of the act, a bona fide patron. If or not it's contended that, with the aid of virtue of the contracts for the sale of wooden, it had obtained a few interest in the lands previous to the difficulty of patents, it is sufficient to mention that, through the doctrine of relation, the patents, when issued, have become operative as of the dates of the entries. It is actual that this doctrine is but a fiction of regulation, but it's far a fiction resorted to whenever justice calls for. It is that precept by way of which an act finished at one time is taken into consideration to have been performed at a few antecedent time. It is a doctrine of common utility, designed to sell justice. Thus, a sheriff s deed takes impact not of its date, however of the time when the lien of the judgment attached. The normal railroad land offers had been offers in praesenti, and underneath them the title has been adjudged to pass no longer at the finishing touch of the road, but at the date of the supply. Leavenworth, Lawrence & Galveston Railroad v. United States, ninety two U. S. 733; St. Paul &c. Railway Co. v. Phelps, 137 U. S. 528; St. Paul & Pacific v. Northern Pacific, 139 U. S. 1; United States v. Southern Pacific Railroad, 146 U. S. 570. A patent from america operates to switch the name not merely from the date of the

    Page 200 U. S. 335

    patent, but from the inception of the equitable right upon which it's miles based. Shepley v. Cowan, ninety one U. S. 330. Indeed, that is normally proper in case of the merging of an equitable proper into a criminal title. Although the patents in this situation were no longer issued till after the sales of the wooden, but, while issued, they have become operative as of the date of the original entries. This doctrine has regularly been recognized by this and different courts. Landes v. Brant, 10 How. 348; French v. Spencer, 21 How. 228; Stark v. Starr, 6 Wall. 402; Lynch v. Bernal, 9 Wall. 315; Gibson v. Chouteau, thirteen Wall. ninety two; Simmons v. Wagner, one zero one U. S. 260; Jackson v. Ramsay, three Cow. 75; Welch v. Dutton, seventy nine Ill. 465; Ormiston v. Trumbo, seventy seven Mo.App. 310. In the primary of these cases, it changed into stated (p. fifty one U. S. 372):

    "To protect consumers, the rule of thumb applies that, in which there are divers acts concurrent to make a conveyance, property, or different issue, the authentic act will be desired, and to this the other acts shall have relation -- as stated in Viner s Abr. tit. Relation, 290. . . ."

    "Cruise on Real Property, vol. V, pp. 510-511, lays down the doctrine with outstanding distinctness. He says:"

    "There isn't any rule better founded in law, purpose, and comfort than this: that each one the numerous elements and ceremonies essential to finish a conveyance shall be taken collectively as one act, and function from the large part through relation. . . ."

    "Applying the doctrine of relation, and taking all of the several components and ceremonies important to finish the identify collectively, as one act, then the confirmation of 1811 and the patent of 1845 have to be taken to narrate to the primary act -- that of filing the claim in 1805."

    In Simmons v. Wagner, p. one hundred and one U. S. 261:

    "Where the proper to a patent has once grow to be vested in a purchaser of public lands, it is equivalent, to date as the authorities is involved, to a patent absolutely issued. The execution and shipping of the patent after the proper to it has emerge as complete are the mere ministerial acts of

    Page two hundred U. S. 336

    the officers charged with that obligation. Barney v. Dolph, 97 U. S. 652."

    See additionally United States v. Freyberg, 32 Fed.195, a case in the Circuit Court for the Eastern District of Wisconsin in which it was held via Judge Dyer that an action added by the government to get better for wood reduce from land which were entered as a abode, however the full equitable identify of which had not then passed to the entryman, both by means of the required profession of the premises or via a commuting of the abode to a preemption access -- an motion maintainable at the time it became commenced -- was defeated by way of the difficulty of the final receiver s receipt and the ensuing perfection of a complete equitable name.

    Counsel for the government deny the application of this precept in the present case on the ground, first, that it offers vitality and validity to a wrongful acquisition of identify from the government. They say that fairness is in no way founded on a wrong, and that, because the authentic entries were wrongful, the doctrine of relation will not be implemented. But that is a clean false impression of the cause and scope of the doctrine of relation. If the unique entries had been rightful, there is no need of its application, for the patents might bypass perfect titles. The equity is founded at the rightful conduct of the customer, and now not at the wrongful conduct of the entrymen. It upholds the customer in his honest purchase notwithstanding the wrongful man or woman of the entries. This is similar to the normal rule in admire to a bona fide client. Equity sustains the identify no matter the fact that his grantor might also have wrongfully received it, and upholds it due to his rightful behavior.

    Counsel also say that the question is settled by the choice in Hawley v. Diller, supra, depending upon the second one paragraph within the headnotes:

    "An entryman below this act acquires handiest an equity, and a client from him can not be regarded as a bona fide purchaser in the which means of the act of Congress except he turn out to be

    Page two hundred U. S. 337

    such after the authorities, with the aid of issuing a patent, has parted with the felony identify."

    There are two or three solutions to this contention. In the first place, the headnote is not the paintings of the court, nor does it kingdom its choice, even though a extraordinary rule, it is proper, is prescribed via statute in some states. It is definitely the work of the reporter, gives his information of the choice, and is ready for the benefit of the career inside the exam of the reviews. In the second place, if the patent stated in that headnote is a patent issued upon a wrongful entry, no such reality regarded inside the case, due to the fact no patent became issued upon the entry charged to had been wrongful, but after that entry had been cancelled, a patent become issued to Diller on a brand new entry. If it refers to a few different patent than one issued upon a wrongful access, it has no pertinency, for the doctrine of relation by no means incorporates a patent lower back to the date of every other entry than that, upon which it's miles issued. And eventually, the headnote is a misinterpretation of the scope of the selection.

    With reference to the opposite tracts and the denial of any comfort, by accounting or in any other case, in opposition to the Detroit Company, it's far contended that, as prior to the difficulty of a patent, the Land Department may want to have set apart the entries because of the fraudulent contracts, the courts will now furnish the identical relief, and further, that inasmuch as the patents are through this decree cancelled and the name restored to the government, the Detroit Company should be appeared as a offender in appreciate to the wood which it took from the lands prior to the decree, and an accounting have to were ordered. But this ignores the fact that the Detroit Company acted in suitable religion, and purchased the wood from those having an seemingly perfect equitable title thereto. It turns into necessary to inquire what's the importance of a very last receiver s receipt and the impact of a cancellation by means of the Land Department of the sort of receipt. The receipt is an acknowledgment by using the authorities that it has obtained complete pay for the land, that it holds the felony identify in accept as true with for the entryman, and could in due direction trouble to

    Page 200 U. S. 338

    him a patent. He is the equitable owner of the land. It turns into concern to country taxation, and beneath the manipulate of state laws in admire to conveyances, inheritances, and many others. Carroll v. Safford, three How. 441; Witherspoon v. Duncan, 4 Wall. 210; Simmons v. Wagner, supra; Winona & St. Peter Land Co. v. Minnesota, 159 U. S. 526; Cornelius v. Kessel, 128 U. S. 456; Hastings & Dakota R. Co. v. Whitney, 132 U. S. 357; Benson Mining Co. v. Alta Mining Co., a hundred forty five U. S. 428.

    Indeed, in some of the critiques of this Court, emphasizing the value of a receiver s receipt, there are expressions which appear to underestimate the significance of a patent. Wisconsin Central R. Co. v. Price County, 133 U. S. 496, 133 U. S. 510; Deseret Salt Co. v. Tarpey, 142 U. S. 241, 142 U. S. 251. For it ought to be remembered that the latter is the tool which passes the felony title, and that, until it's far issued, the prison name remains with the government, and is situation to research and backbone by way of the Land Department. Barden v. Northern Pacific R. Co., 154 U. S. 288, 154 U. S. 326; Michigan Land & Lumber Co. v. Rust, 168 U. S. 589, 168 U. S. 592; Guaranty Savings Bank v. Bladow, 176 U. S. 448. But at the same time as, until the problem of the patent, the land is below the control of the Land Department, which, upon proper investigation and for enough reasons, may additionally set aside the certificates of entry, yet this electricity of the Land Department can not arbitrarily be exercised with out notice to the entryman, and if improperly exercised, the rights of the entryman may be enforced inside the courts after the patent has issued to other events. Guaranty Savings Bank v. Bladow, supra. It is real, as against the authorities, and even as the identify remains in the authorities, he won't be capable of implement his fairness because no movement may be maintained against the authorities besides upon agreement, explicit or implied. United States v. Jones, 131 U. S. 1. But even as he may not sue on his equity, he can also guard that equity while sued with the aid of the authorities. It is every so often said that a prison identify with an fairness is paramount to an fairness alone; however this isn't strictly authentic except the equities are same, for sometimes a superior equity

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    may be adjudged paramount to a criminal title and an inferior equity. Garland v. Wynn, 20 How. eight; Lytle v. Arkansas, 22 How. 193; Lindsey v. Hawes, 2 Black 554; Wirth v. Branson, ninety eight U. S. 118; 2 Pomeroy s Eq.Jur. § 678 and following. But we need now not prevent to inquire what rights the Detroit Company could have after a patent has issued. It is enough now to preserve that it can protect its equities against the suit of the government.

    It is a mistake to assume that, for the willpower of equities and equitable rights we ought to appearance simplest to the statutes of Congress. The principles of fairness exist independently of, and anterior to, all congressional legislation, and the statutes are both annunciations of these principles or boundaries upon their application mainly instances. In passing upon transactions between the government and its vendees, we have to bear in thoughts the general principles of fairness, and decide rights upon the ones standards except as they are restrained by unique statutory provisions. And without a doubt, upon those concepts, a celebration shopping an equitable proper is entitled to be included in his buy up to now as it could be executed without trespassing upon the rights of different parties. The statute provides that if an entry is wrongfully made, it could, prior to patent, be set apart through the Land Department, the entryman forfeiting the cash which he has paid. In other words, by the movement of the Department, the equitable name is cancelled and restored to the government. It then has each the full identify to the land and the money which had been paid for it. And that is the penalty that's imposed for the wrongful access. Certainly, while the government retains the entire price which it has placed upon the land and additionally recovers the land itself, it's miles abundantly compensated for any incorrect which has been attempted by means of the entryman. And a celebration who offers with such entryman -- depending upon the evidences of his access, which are in all respects in form excellent and sufficient, and are an acknowledgment with the aid of the government officials of a rightful access -- is justly entitled to the consideration of a courtroom of equity. In this case, locating

    Page 200 U. S. 340

    the entryman maintaining apparently legitimate equitable titles to the lands, it entered into contracts with them for the acquisition of the wooden. It cut and removed the wooden, all in right religion. It is equitable that, having therefore acted in correct religion, it need to now not be held to account for the wood which it has already paid for and reduce and eliminated in reliance upon those contracts. The authorities has every dollar which it would have obtained in case of a superbly valid entry, and has additionally recovered the land. Surely it isn't just for it to ask similarly price, and from a party who dealt in proper faith with the entrymen, depending upon the titles which it had created. If the Detroit Company has taken some timber from the land, it has as soon as paid for it, and ought not to be forced to pay a 2nd time, and to the government, which has already received full pay for the land, wood and all. It is inequitable to give to the authorities now not simply the land and the fee which it charged for the land, but additionally the value of the timber obtained with the aid of the Detroit Company. It is doubling the penalty which the statute imposes, or, if now not doubling at the least, in large part increasing it.

    We suppose the selection of the court docket of appeals became proper, and it is

    Affirmed.

    MR. JUSTICE HARLAN and MR. JUSTICE McKENNA dissent.

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