Source: https://supreme.justia.com/cases/federal/us/260/290/
Timestamp: 2019-04-20 00:33:41+00:00

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Justia › US Law › US Case Law › US Supreme Court › Volume 260 › United States v. Oregon Lumber Co.
Where the government sued to annul land patents upon the ground of fraud, and persisted in the suit after the defendant had pleaded in bar the statute of limitation applicable to such cases, and the plea was sustained and the bill dismissed, held that the government had elected its remedy, and therefore could not afterwards maintain an action at law to recover damages for the fraud. P. 260 U. S. 294.
Questions certified by the circuit court of appeals arising upon review of a judgment of the district court which dismissed the complaint in an action brought by the United States to recover damages for fraud in procuring patents to public land.
This case is here upon a certificate from the Circuit Court of Appeals for the Ninth Circuit under § 239 of the Judicial Code.
The plaintiff in error brought an action at law against the defendant in error in the United States District Court for the District of Oregon to recover damages for the fraudulent acquisition of certain lands. The complaint was filed in February, 1918, and alleged that the Oregon Lumber Company, a corporation, and certain of its officers, named as codefendants, unlawfully conspired to acquire certain tracts of land in Oregon under the Timber and Stone Act of June 3, 1878, 20 Stat. 89. The lands were patented in 1900, subsequently conveyed by the patentees to an officer of the defendant corporation, and thereafter (with the exception of a small tract) transferred by such officer to the corporation. The value of the lands was alleged to be $65,000 and judgment was asked for this amount.
suit for the reason that the United States had had full knowledge of the matters complained of in its complaint for more than six years before the equity suit was instituted, and that no appeal was ever taken from the decree dismissing the complaint of the United States."
The plaintiff in error demurred to these separate defenses, and, the district court having overruled the demurrer and the plaintiff in error having declined to plead further, the court dismissed the complaint, and judgment was entered.
The district court, in rendering its judgment, decided that, inasmuch as the suit in equity was brought by the United States with knowledge of all the facts, it constituted an election final and conclusive.
"1. Is an action by the United States for the value of lands as damages, against the patentees for the lands for fraudulent acquisition of the lands patented under the Timber and Stone Act barred where more than six years have elapsed after the United States, with knowledge of the fraud, brought a suit in equity to cancel the patents for the same lands, in which equity suit decree of dismissal was made against the United States on the ground that the suit was barred by the statute of limitations?"
"2. If the foregoing question be answered in the negative, should any damages recoverable be reduced by such amounts as the United States may have received from the entrymen, as the price fixed by law for the lands described in the patents?"
upon a disaffirmance, and the second upon an affirmance, of a voidable transaction. Robb v. Vos, 155 U. S. 13, 155 U. S. 43; Connihan v. Thompson, 111 Mass. 270, 270; 2 Black on Rescission and Cancellation, § 562, and cases cited. The rule is applicable to the government in cases where patents have been procured by fraud. United States v. Koleno, 226 F. 180, 183. Any decisive action by a party, with knowledge of his rights and of the facts, determines his election in the case of inconsistent remedies, and one of the most unequivocal of such determinative acts is the bringing of a suit based upon one or the other of these inconsistent conclusions. Robb v. Vos, supra.
"Thus, we are brought to the conclusion that, since the two remedies asserted by the petitioner were alternative remedies, and since the order made, requiring the conversion of the suit in equity into one at law, was entered by the court sitting in chancery, for us to affirm the judgment of the circuit court of appeals that the petitioner, in obeying the order of the trial court, made a fatal choice of an inconsistent remedy would be to subordinate substance to form of procedure, with the result of defeating a claim which the respondents stipulated had been sufficiently established to justify a verdict against them. This we cannot consent to do."
But here, in the equity suit, the plaintiff in error, upon the coming in of the defendant's plea of the statute of limitations, made no offer to amend or request to transfer the case to the law docket, but proceeded to trial and judgment upon the original bill, with knowledge of all the facts for more than six years prior to the filing of its bill. Defeated in its equity suit, it brought its action at law upon the same allegations of fact. We think it is not admissible to thus speculate upon the action of the court, and having met with an adverse decision, to again vex the defendant with another and inconsistent action upon the same facts.
knowledge of all the facts upon which the plea of the statute of limitations was founded and sustained.
The mere filing of the bill in the first suit, according to many authorities, did not constitute an irrevocable election. But, upon ascertaining from their plea that the defendants intended to rely upon the statute of limitations, and having knowledge of the facts upon which that plea was founded and thereafter sustained, the plaintiff in error had fairly presented to it the alternative: (a) of abandoning that suit and beginning an action at law or transferring it to the law side of the court and making the necessary amendments to convert it into an action for damages, as a "mere incident in the progress of the original case" ( 247 U. S. 247 U.S. 210); or (b) of proceeding with the original case upon the issues as they stood. The plaintiff in error deliberately chose the latter alternative. If the election was not final before, it became final and irrevocable then. Rehfield v. Winters, 62 Or. 299, 305, 306; Bowker Fertilizer Co. v. Cox, 106 N.Y. 555, 558, 559; Moss v. Marks, 70 Neb. 701, 703.
The case of Bistline v. United States, 229 F. 546, relied upon by the plaintiff in error, is not in conflict with this conclusion. That was an action by the government to recover damages for the fraudulent acquisition of certain public lands. A prior suit had been brought in equity to cancel the patent, but the defendant's answer showed that the land had been conveyed to persons not made parties to the suit. The government thereupon promptly dismissed its suit in equity, and on the same day commenced the action at law for damages. If, in the instant case, a like course had been followed upon the coming in of the defendant's answer pleading the statute of limitations, the case just referred to would have been in point.
"It [appellant] could not obliterate the condition and leave the contract in force. It may be that it had an election to avoid the contract altogether, but, if so, it did not attempt to do it. It insisted on the contract as the ground of its claim to a lien for the price of the goods. The election supposed and relied upon is an election to keep the contract in force, but to leave out the reservation of title. . . . But the assertion of a lien by one who has title, so long as it is only as assertion and nothing more, is merely a mistake. It does not purport to be a choice, and it cannot be one, because the party has no right to choose. The claim in the lien suit, as was said in a recent case, was not an election, but an hypothesis."
involved could not be attacked collaterally. The Bogert suit, however, was a suit on behalf of the minority stockholders, asserting no corporate right of the railway company, but only the right of minority stockholders. The right asserted in the prior suits and that asserted in the Bogert suit were therefore the rights of different parties.
It is further urged that the judgment of the district court was not upon the merits, but upon the plea in bar, and that therefore, when the equity suit was begun, plaintiff in error had no choice of remedies, since the judgment rendered established that in fact there was no remedy in equity at all. The contention, we think, is unsound.
The defense of the statute of limitations is not a technical defense, but substantial and meritorious. The great weight of modern authority is to this effect. Lilly Brackett Co. v. Sonnemann, 157 Cal.192, and Wheeler v. Castor, 11 N.D. 347, 353 et seq., where the authorities are reviewed.
Such statutes are not only statutes of repose, but they supply the place of evidence lost or impaired by lapse of time by raising a presumption which renders proof unnecessary. Bell v. Morrison, 1 Pet. 351, 26 U. S. 360; Hanger v. Abbott, 6 Wall. 532, 73 U. S. 538; Wood v. Carpenter, 101 U. S. 135, 101 U. S. 139; Riddlesbarger v. Hartford Insurance Co., 7 Wall. 386, 74 U. S. 390. And see United States v. Chandler-Dunbar Co., 209 U. S. 447, 209 U. S. 450.
of rights, they supply its place by a presumption which renders proof unnecessary. Mere delay, extending to the limit prescribed, is itself a conclusive bar. The bane and antidote go together."
"They are founded upon the general experience of mankind that claims which are valid are not usually allowed to remain neglected The lapse of years without any attempt to enforce a demand creates, therefore, a presumption against its original validity, or that it has ceased to subsist. This presumption is made by these statutes a positive bar, and they thus become statutes of repose, protecting parties from the prosecution of stale claims when, by loss of evidence from death of some witnesses, and the imperfect recollection of others, or the destruction of documents, it might be impossible to establish the truth."
"In order that a judgment or decree should be on the merits, it is not necessary that the litigation should be determined 'on the merits' in the moral or abstract sense of these words. It is sufficient that the status of the action was such that the parties might have had their suit thus disposed of if they had properly presented and managed their respective cases. . . . A finding against a party, either upon final hearing or demurrer, that his cause of action as shown by him is barred by the statute of limitations or by laches is a decision upon the merits, concluding the right of action."
See also People ex rel. Best v. Preston, 62 Hun, 185, 188-189; Black v. Miller, 75 Mich. 323, 329.
the result of the judgment is the same -- viz., that plaintiff has no case, and to hold that plaintiff may then invoke another and inconsistent remedy is not to recognize an exception to the general operation of the doctrine of election of remedies, but to deny the doctrine altogether. Here, upon the facts as stated in the bill in equity and later in the action at law, both remedies were available to the plaintiff in error. In electing to sue in equity, plaintiff in error proceeded with full knowledge of the facts, but it underestimated the strength of its cause, and if that were sufficient to warrant the bringing of a second and inconsistent action, the result would be to confine the defense of election of remedies to cases where the first suit had been won by plaintiff, and to deny it in all cases where plaintiff had lost. But the election was determined by the bringing and maintenance of the suit, not by the final disposition of the case by the court. See, for example, Bolton Mines Co. v. Stokes, 82 Md. 50, 59.
The distinguishing feature of the instant case is that, after the coming in of the answer pleading the statute of limitations and the plain warning thus conveyed of the danger of continuing the equity suit further, the plaintiff in error persisted in pursuing it to final judgment, instead of promptly reforming the cause or dismissing the bill and seeking the alternative remedy, not subject to the same defense. The doctrine of election of remedies and that of res adjudicata are not the same, but they have this is common: that each has for its underlying basis the maxim which forbids that one shall be twice vexed for one and the same cause. The policy embodied in this maxim, we think, requires us to hold that the plaintiff in error, in bringing the original suit and in continuing after the plea in bar to follow it to a final determination, made an irrevocable election, and that it is now estopped from maintaining the present inconsistent action.
court of appeals desires to know is whether the action at law by the United States to recover the value of lands the title to which was fraudulently obtained is barred for the reason that the United States, with knowledge of the fraud, had previously prosecuted, upon the same facts, a suit in equity to final judgment of dismissal rendered on the ground that the suit was barred by the statute of limitations? This question we answer in the affirmative, and, as this disposes of the case, no answer to question No. 2 is required.
MR. JUSTICE BRANDEIS dissenting, with whom the CHIEF JUSTICE and MR. JUSTICE HOLMES concur.
The general rule that statutes of limitation do not run against the United States often works hardship. The rule proved so oppressive, when applied to proceedings to annual patents to land, that Congress erected for such suits the six-year bar. Act March 3, 1891, c. 561, § 8, 26 Stat. 1095, 1099. In Exploration Co., Limited v. United States, 247 U. S. 435, the act was construed to mean that the six years do not begin to run until the cause of action is discovered. This statute did not, in terms, extend the bar to the government's remedy at law. United States v. Whited & Wheless, 246 U. S. 552, held that the law gave two remedies to protect the single right, and that the Act of 1891 left intact the remedy at law for deceit practiced in securing the patent. The court therefore permitted recovery at law, although the remedy in equity had been barred.
an action at law for deceit. [Footnote 1] Or the government might, under the act March 3, 1915, c. 90, 38 Stat. 956, and Equity Rule 22, have then had the case transferred to the law side of the court, and have thus freed itself from the possibility of a statutory bar. It did not do either. Instead, it proceeded to a hearing in the equity suit, presumably because it considered the legal remedy inadequate and believed that it could establish its right to pursue the equitable remedy by showing that the fraud had been discovered within the six years. In this, the government proved to be mistaken. The court found that the United States had full knowledge of the matters complained of more than six years before the suit was begun, and for that reason could not have the relief sought in equity. Even then -- after the adverse decision, but before entry of a decree -- it was not too late to transfer the pending suit to the law side of the court and to proceed there with the action for deceit. Such a transfer, after full hearing on the merits and a decision that relief in equity could not be had, was made without loss of any right in Friederichsen v. Renard, 247 U. S. 207. But the government made no such application; the court entered a decree dismissing the bill, and no appeal was taken. Then, in 1918, the government brought the present action at law. The question now presented for decision is whether it had lost the right to do so.
of an estoppel in pais. Nor is there a suggestion that, by proceeding to a hearing in the equity suit, or by failing to ask that the case be transferred to the law side of the court, the government subjected defendants to any annoyance or expense, other than that necessarily incident to unproductive litigation. The remedy at law is denied solely on the ground that the so-called doctrine of election of remedies applies, that the government had two remedies, that the two remedies were inconsistent, that, when the statutory bar was pleaded in equity, the plaintiff was obliged at its peril to make a final choice between the two remedies, and that, since it selected the one which proved not to be available, it shall have no remedy whatsoever.
The doctrine of election of remedies is not a rule of substantive law. It is a rule of procedure or judicial administration. It is technical, and, as applied in some jurisdictions, has often sacrificed substantial right to supposed legal consistency. [Footnote 2] The doctrine has often been invoked in this Court, but never before successfully. Its existence has been recognized, but in every case in which the question presented was actually one of election of remedies, this Court held that the doctrine did not apply, giving as a reason that one or the other of its essential elements was absent. These essentials are that the party must have actually had two remedies and that the remedy in question must be inconsistent with the other previously invoked. Here, neither of these essential elements was present.
"We wish to rescind and get back the land, but if the facts or the law are such that we cannot rescind, then we wish to recover damages for the deceit."
full relief. The land may have been stripped, meanwhile, of its trees or its mineral, or the deceit may have involved the government in expenses which are recoverable. It is true that, under such circumstances, equity, if it annulled the patent, would probably retain the cause to award recovery for all damages as suffered. But it might leave the vendor to his remedy at law, and conversely the vendor might, if he chose, limit his suit in equity to the recovery of the property. In either event, he could recover his damages at law. Compare Brady v. Daly, 175 U. S. 148, 175 U. S. 161; Thomas v. Sugarman, 218 U. S. 129; Zimmerman v. Harding, 227 U. S. 489, 227 U. S. 493. There is therefore lacking here inconsistency of remedies, and for that reason also the doctrine of election of remedies does not apply.
government acted in bad faith in refusing to abandon the equitable remedy until the trial court had decided the issue of knowledge against it. The government gained nothing, the defendants lost nothing, by the bringing of the futile suit in equity to annul the patent. However stupid or stubborn a party may have been, he is not deprived of the right to try another remedy; for, whatever the cause of his earlier futile attempt, his failure proves him to have been mistaken. To hold that this action for deceit is barred because the government did not dismiss the earlier equity suit when it was advised by the answer that the statutory bar would be relied on lays down a rule new in this Court -- a rule inconsistent with the principles heretofore established and opposed to a long line of well considered decisions in state courts. To do this seems to me regrettable.
See Bistline v. United States, 229 F. 546.
See Election of Remedies, A Criticism, by Charles P. Hine, 26 Harvard Law Review, 707; Election between Alternative Remedies, by Walter Hussey Griffith, 16 Law Quarterly Review, 160; ibid., by F. W. Galbraith, 16 Law Quarterly Review, 269.
Barnsdall v. Waltemeyer, 142 F. 415, 420; Water, Light & Gas Co. v. Hutchinson, 160 F. 41, 43; Harrill v. Davis, 168 F. 187, 195; Brown v. Fletcher, 182 F. 963, 971-974; Rankin v. Tygard, 198 F. 795, 806; Union Central Life Ins. Co. v. Drake, 214 F. 563, 548; Agar v. Winslow, 123 Cal. 587, 590; Capital City Bank v. Hilson, 64 Fla. 206; Asher v. Pegg, 146 Iowa, 541, 543; Hillerich v. Franklin Ins. Co., 111 Ky. 255; Clark v. Heath, 101 Me. 530; Wilson v. Knapp, 143 Mich. 64; Kelsey v. Agricultural Insurance Co., 78 N.J.Eq. 378, 383.
In Strong v. Strong, 102 N.Y. 69, an earlier proceeding to rescind was held not to be an election because, by reason of laches and lack of tender, there was then no right to rescind.
Zimmerman v. Robinson & Co., 128 Iowa, 72; Marshall v. Gilman, 52 Minn. 88, 97; Tullos v. Mayfield, (Tex.Civ.App.) 198 S.W. 1073; Griffin v. Williams, (Tex.Civ.App.) 142 S.W. 981. Compare McGibbon v. Schmidt, 172 Cal. 70; Glover v. Radford, 120 Mich. 542, 544; Freeman v. Fehr, 132 Minn. 384, 388. See Cahoon v. Fisher, 146 Ind. 583; Conrow v. Little, 115 N.Y. 387.
See Crockett v. Miller, 112 F. 729, 736; Lenox v. Fuller, 39 Mich. 268, 273.
Thus, in Robb v. Vos, 155 U. S. 13, 155 U. S. 34, 155 U. S. 39, the question was whether Robb and Strong, trustees, by filing an answer and cross-petition in another suit, had ratified Kebler's want of authority, and therefore made the title of Vos and Stix to the land in question good. In Van Winkle v. Crowell, 146 U. S. 42, 146 U. S. 51, the commencement of a suit to enforce a mechanic's lien was an election to treat the title to property sold under conditional sale as having passed to the purchaser. In Stuart v. Hayden, 169 U. S. 1, commencement of an action which was deemed in effect an action for the purchase price was held to have ratified a sale of real estate, which the plaintiff later attempted to rescind. In Peters v. Bain, 133 U. S. 670, 133 U. S. 683, 133 U. S. 695, it was held that there was no election of remedies. Green v. Bogue, 158 U. S. 478, was a case of res judicata. In Dickson v. Patterson, 160 U. S. 584, 160 U. S. 588, 160 U. S. 592, there was only one remedy involved. The question was whether plaintiff had elected to ratify the transaction after knowledge of the fraud. In Dahn v. Davis, 258 U. S. 421, the question was one of statutory construction -- namely, whether an employee injured during federal control of the railroad had a right to compensation under both the Federal Control Act and the Compensation Act, or only under one.
Strong v. Strong, 102 N.Y. 69, 73; Henry v. Herrington, 193 N.Y. 218; Snow v. Alley, 156 Mass.193, 195; Clark v. Heath, 101 Me. 530; Wilson v. Knapp, 143 Mich. 64; Glover v. Radford, 120 Mich. 542, 544; Sullivan v. Ross' Estate, 113 Mich. 311, 319; Lenox v. Fuller, 39 Mich. 268; Marshall v. Gilman, 52 Minn. 88, 97; Garrett v. Farwell Co., 199 Ill. 436; Zimmerman v. Robinson & Co., 128 Iowa 72; American Pure Food Co. v. Elliott & Co., 151 N.C. 393; Tullos v. Mayfield, (Tex.Civ.App.) 198 S.W. 1073; Griffin v. Williams, (Tex.Civ.App.) 142 S.W. 981; Rankin v. Tygard, 198 F. 795.

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