Officers, stockholders and employs of a private corporation
formed a scheme whereby they made entries in their individual
names, but really for the benefit of such corporation, of vacant
coal lands of the United States. The scheme was carried out and
patents were issued to such individuals, who immediately conveyed
the legal title to the corporation, which bore all the expenses and
cost of obtaining the lands, and some of the members of which had
previously taken the benefit of the statute relating to the
disposal of the public coal lands
Held:
(1) That such a transaction was in violation of §§ 2347, 2348
and 2350 of the Revised Statutes.
(2) That it was not necessary to the right of the United States
to maintain a suit to set aside such patents as void that the
government should offer to refund to the corporation the moneys
advanced by it to the patentees in order to obtain the lands, and
which the latter paid to the officers of the United States.
(3) That the rule that a suitor, asking equity, must do equity
should not be enforced in such a case as this.
(4) That if the corporation be entitled, upon a cancellation of
the patents so obtained, to a return of such moneys, it must be
assumed that Congress will make an appropriation for that purpose
when it becomes necessary to do so.
A private corporation is an association of persons within the
meaning of those sections.
This is a suit in equity by the United States against the
Trinidad Coal and Coking Company, a corporation created under the
laws of Colorado and engaged in the business of mining coal. The
defendant holds the legal title to six tracts of coal land within
the Pueblo Land District, in the County of
Page 137 U. S. 161
Las Animas, in that state, containing, in the aggregate, 954
34/100 acres, under conveyances executed to it by various
individuals to be presently named, and to whom, respectively,
patents were issued.
The relief sought by the government is a decree setting aside
these patents and declaring them void and of no effect as against
the United States. The defendant demurred to the bill upon the
ground that it did not make a case for relief in a court of equity,
nor allege that any of the entries were fraudulent or in
contravention of law. The demurrer was sustained and the bill
dismissed, the opinion of the court being reported in 37 F. 180.
The sole question is whether the United States is entitled, upon
the showing made by the bill, to the relief it asks.
Taking the allegations of the bill to be true, the case made by
the government is as follows:
On or about the 4th of June, 1883, T. J. Peter and Robert Savage
were officers and stockholders, and William H. Leffingwell, Milford
N. Wells, Alexander Craigmyle, Charles F. Schuman, and Thomas
Winsheimer were employees, of the defendant corporation. Peter,
Savage, and certain other officers and members of that corporation
whose names are unknown to the government, together with
Leffingwell, Wells, Craigmyle, Schuman, and Winsheimer, formed a
scheme to procure patents for these lands "for the benefit and on
behalf of said defendant corporation, and for the purpose of
enabling said corporation to fraudulently obtain titles" from the
United States for its "coal lands in excess of 320 acres, contrary
to the statutes of the United States in such cases made and
provided." In furtherance of that scheme, the persons just named,
and those associated with them, or some one of them, or some one
acting for them and in their behalf, on or about the day above
named, wrote and prepared or caused to be written and prepared
certain affidavits, one of which was in substance and to the effect
that
"no portion of the tract of land described as the northeast
quarter of section six, township thirty-four south, of range
sixty-three west of the sixth principal meridian, and containing
one hundred and fifty-two and 53/100ths
Page 137 U. S. 162
acres, was in the possession of any other party; that said
Robert Savage was twenty-one years of age, a citizen of the United
States, and had never held nor purchased, as an individual or as a
member of any association, lands under the laws of the United
States relating to the sale of coal lands of the United States;
that he, the said Savage, was well acquainted with the character of
said land, and with every legal subdivision thereof, and had
frequently passed over the same; that his knowledge of said land
was such as to enable him to testify understandingly in regard
thereto; that said land contained large deposits of coal, and was
chiefly valuable therefor; that there was not, to his knowledge,
within the limits thereof, any vein or lode of quartz or other rock
in place bearing gold, silver, or copper, and that there was not,
within the limits of said land, to his knowledge, any valuable
deposits of gold, silver, or copper."
This affidavit was subscribed and sworn to by Savage on the 4th
of June, 1883, before the register of the land office at Pueblo.
The other affidavit, subscribed and sworn to before the same
officer by Leffingwell and Wells, set forth in substance the same
facts as being within their knowledge.
The conspirators, or some one or more of them, or someone acting
for them, on or about the same date, filed these affidavits in the
land office at Pueblo, and made application, in the name and on
behalf of Savage, to enter and purchase, under the Statutes of the
United States, this tract of 152 53/100 acres as vacant coal land,
and at the same time there was paid to the receiver of public
moneys at that office the sum of $3,050.60 as the purchase price of
the tract at twenty dollars per acre. Thereupon the register issued
in duplicate a certificate to the effect that Savage had on that
day purchased this land from that officer at the price stated; that
the payment of the price had been made in full, as required by law,
and that, on the presentation of the certificate to the
Commissioner of the General Land Office, he would be entitled to
receive a patent for the land. Upon the payment of this money and
the issuing of the certificate, the receiver delivered to Savage,
or to the conspirators, or to some one of them, or to someone
for
Page 137 U. S. 163
them, in duplicate, a receipt which in effect acknowledged that
he had paid the above sum as and for the price of the land at
twenty dollars per acre. This being done, the register and receiver
forwarded the papers, affidavits, applications, and one of the
certificates and receipts to the General Land Office at Washington,
delivering the other duplicate certificate to the conspirators, or
to some one of them, or to someone acting for them, "such delivery
purporting to be for and on behalf of the said Robert Savage."
Similar applications and affidavits were prepared and filed at
the instance of the same persons in behalf of Leffingwell, Wells,
Craigmyle, Schuman, and Winsheimer, respectively, in reference to
the remaining tracts, and they severally procured patents to be
issued, as follows: to Savage for 152 53/100 acres; to Leffingwell,
Craigmyle, Schuman, and Winsheimer, each, for 160 acres, and to
Wells for 161 81/100 acres. The government, relying upon such
affidavits and certificates, believing that the lands were legally
entered by each individual for his own use and benefit, and in
ignorance of the conspiracy and its objects, issued patents for the
several tracts, purporting thereby to convey all its rights, title,
interest, and estate therein to the parties, respectively, in whose
names the entries were made. The patents were subsequently
delivered to the patentees or to someone representing them and
acting in their name.
It also appears from the bill that Savage, Leffingwell, Wells,
Craigmyle, Schuman, and Winsheimer did not enter the lands for
their own use and benefit, nor for the use and benefit of any of
them, but for the direct use and benefit of the Trinidad Coal and
Coking Company; that its officers procured the entrymen to go in a
body to the City of Pueblo to file the above papers, as stated;
that the papers and affidavits were drawn and prepared by its
officers; that the expenses of the conspirators in going to that
city to make the entries were paid by its officers, acting for it
and in its behalf; that the entire purchase money for all the
tracts and all land office fees, costs, and expenses were paid by
the company; that immediately after the filing of the affidavits in
the land office,
Page 137 U. S. 164
and the pretended entries, Savage, Leffingwell, Wells,
Craigmyle, Schuman, and Winsheimer, and each of them, executed and
delivered to the company warranty deeds conveying to it each of
said tracts; that the company immediately entered into possession,
and has possessed and claimed the lands until the present time;
that no one of the patentees has ever claimed or asserted any right
or interest in them or in any of them by virtue of the above
fraudulent and illegal entries; that the entries were in reality
and effect a purchase of the lands by the company, and that the
entries and purchases by the persons named were only a device to
evade the laws of the United States and to procure for the
defendant a greater amount of coal lands than it could legally
purchase and hold.
The bill further alleges that these entries of coal lands were
illegal for the additional reason that, prior to the 4th of June,
1883, Peter, being an officer and stockholder of the company, had,
on the 5th day of August, 1881, entered and purchased under the
laws of the United States 160 acres of vacant coal land, and other
officers and stockholders of the company, namely, Charles P. Teat,
Joseph L. Prentiss, Orlando B. Wheeler, and others, whose names are
unknown to the government, had purchased tracts of coal land of the
United States, all of which entered and purchased by T. J. Peter
and by such other officers and stockholders of the company were, on
the 4th day of June, 1883, held and owned by the defendant, and
were in the aggregate in excess of 320 acres of coal land; that
neither the company nor any member or officer of it, for its own
benefit or in its behalf, could then legally enter or purchase
additional coal lands from the government, and that when said
tracts were conveyed to it by the several patentees, it had full
notice of the alleged fraudulent scheme, as well as of the fact
that the lands were being entered and purchased for its benefit
exclusively.
Page 137 U. S. 165
MR. JUSTICE HARLAN, after stating the facts in the foregoing
language, delivered the opinion of the Court.
The patents in question were based upon entries made under
sections 2347, 2348, 2350, and 2352 of the Revised Statutes, which
embody, substantially, provisions in an Act of Congress approved
March 3, 1873, entitled: "
An act to provide for the sale of the
lands of the United States containing coal." 17 Stat. 607,
608, c. 279. These sections are as follows:
"SEC. 2347. Every person above the age of twenty-one years who
is a citizen of the United States or who has declared his intention
to become such, or any association of persons severally qualified
as above, shall, upon application to the register of the proper
land office, have the right to enter, by legal subdivisions, any
quantity of vacant coal lands of the United States not otherwise
appropriated or reserved by competent authority, not exceeding one
hundred and sixty acres to such individual person, or three hundred
and twenty acres to such association, upon payment to the receiver
of not less than ten dollars per acre for such lands, where the
same shall be situated more than fifteen miles from any completed
railroad, and not less than twenty dollars per acre for such lands
as shall be within fifteen miles of such road."
"SEC. 2348. Any person or association of persons severally
qualified as above provided who have opened and improved or shall
hereafter open and improve any coal mine or mines upon the public
lands, and shall be in actual possession of the same, shall be
entitled to a preference right of entry, under the preceding
section, of the mines so opened and improved,
provided
that when any association of not less than four persons, severally
qualified as above provided, shall have expended not less than five
thousand dollars in working and improving any such mine or mines,
such association may enter not exceeding six hundred and forty
acres, including such mining improvements."
"SEC. 2350. The three preceding sections shall be held to
authorize only one entry by the same person or association of
persons, and no association of persons any member of which shall
have taken the benefit of such sections, either as an
Page 137 U. S. 166
individual or as a member of any other association, shall enter
or hold any other lands under the provisions thereof, and no member
of any association which shall have taken the benefit of such
sections shall enter or hold any other lands under their
provisions, and all persons claiming under section twenty-three
hundred and forty-eight shall be required to prove their respective
rights, and pay for the lands filed upon within one year from the
time prescribed for filing their respective claims, and upon
failure to file the proper notice, or to pay for the land within
the required period, the same shall be subject to entry by any
other qualified applicant."
"SEC. 2352. Nothing in the five preceding sections shall be
construed to destroy or impair any rights which may have attached
prior to the third day of March, eighteen hundred and
seventy-three, or to authorize the sale of lands valuable for mines
of gold, silver, or copper."
The restrictions imposed upon the entry and purchase of the
vacant coal lands of the United States have been so clearly
expressed that no doubt can exist as to the intention of Congress
in enacting the above sections. The statute authorizes an
association of persons to enter not exceeding 320 acres, and
provides that only one entry can be made by the same person or
association, and that
"No association of persons any member of which shall have taken
the benefit of such sections either as an individual or as a member
of any other association shall enter or hold any other lands under
the provisions thereof."
It is contended that the case made by the bill is not within the
prohibitions of the statute, although the demurrer admits that the
Trinidad Coal and Coking Company acquired the lands in dispute
pursuant to a scheme whereby the several tracts were to be entered
for its benefit in the name of certain persons, its officers,
stockholders, and employees -- the title, when thus obtained, to be
conveyed to the company, which should, and did, bear all the
expenses attending the entries and purchases from the government.
This contention cannot be sustained unless the Court lends its aid
to make successful a mere device to evade the statute. The
policy
Page 137 U. S. 167
adopted for disposing of the vacant coal lands of the United
States should not be frustrated in this way. It was for Congress to
prescribe the conditions under which individuals and associations
of individuals might acquire these lands, and its intention should
not be defeated by a narrow construction of the statute. If the
scheme described in the bill be upheld as consistent with the
statute, it is easy to see that the prohibition upon an association
entering more than 320 acres, or entering or holding additional
coal lands, where one of its members has taken the benefit of its
provisions, would be of no value whatever. It is true in the
present case that some of the persons who made the entries in
question were not, strictly speaking, members of the corporation,
but only its employees. But, as they were parties to the alleged
scheme and were in fact agents of the defendant in obtaining from
the government coal lands that could not rightfully have been
entered in its own name, that circumstance is not controlling.
Besides, it appears from the bill that when that scheme was formed
and executed, Peter and other officers and stockholders of the
association had taken the benefit of the statute, and that the
lands originally entered and purchased by them were then held and
owned by the company, and were in excess of 320 acres. There is
consequently, in view of all the allegations of the bill, no escape
from the conclusion that the lands in question were fraudulently
obtained from the United States. We say fraudulently obtained
because, if the facts admitted by the demurrer had been set out in
the papers filed in the land office, the patents sought to be
cancelled could not have been issued without violating the statute.
The defendant would not have been permitted to do indirectly that
which it could not do directly. If the patents could not have been
rightfully issued upon papers disclosing the fact that Savage,
Leffingwell, Wells, Craigmyle, Schuman, and Winsheimer were really
acting in behalf of and as the agents of an association which was
to meet all the expenses attending the applications, and which
already held and owned coal lands formerly belonging to the United
States, and under conveyances from some
Page 137 U. S. 168
of its members who had previously taken the benefit of the
statute, it is difficult to perceive why the bill does not make a
case entitling the government to the relief asked. These views are
in accordance with the practice in the Department of the Interior.
Adolph Petersen et al., 6 L.D. 371;
Northern P. Coal
Co., 7 L.D. 422.
It is confidently asserted by the company that the individuals
making entries who were citizens of the United States, and not
members of an association of persons, had a right, under the
statute, and upon their own responsibility, to enter, each, the
quantity of coal lands for which they respectively received
patents, and that, having obtained patents, they were at liberty to
dispose of the lands as they saw proper, even to an association of
persons which, or some members of which, had already taken the full
benefit of the statute. Whether this be so or not, nothing else
appearing than is just stated, we need not now decide. The case
before us is not of that class. It is the case of an association
seeking to evade an act of Congress by using for its own benefit
the names of both its members and employees to obtain from the
government vacant coal lands which it could not legally obtain upon
entries made in its own name and which it was expressly forbidden
to enter by reason of some of its members having previously taken
the benefit of the statute.
In
McKinley v. Wheeler, 130 U.
S. 630,
130 U. S. 636,
it was decided that section 2319 of the Revised Statutes, declaring
valuable mineral deposits in lands belonging to the United States
to be free and open to exploration and purchase, and the lands in
which they were found to occupation and purchase by citizens of the
United States and those who have declared their intention to become
such, did not preclude a private corporation, formed under the laws
of a state, whose members were citizens of the United States, from
locating a mining claim on the public lands of the United States.
Thus far, it has been assumed that the defendant, although an
incorporated company, is an "association of persons" within the
meaning of the statute relating exclusively to the vacant coal
lands of the government, and as such is subject to the restriction
as to the number
Page 137 U. S. 169
of acres of such lands that may be entered in its name. We have
seen that the right to enter such lands is given only to persons
above the age of twenty-one years who are citizens of the United
States or have declared their intention to become such, and to
associations of persons severally so qualified, and each person of
the former class is permitted to enter not exceeding one hundred
and sixty acres, while "associations of persons," severally
qualified, as above, may enter not exceeding three hundred and
twenty acres. § 2347. The object of these restrictions as to
quantity was manifestly to prevent monopolies in these coal lands.
The reasons that suggested the prohibitions in respect to
associations of persons apply equally to incorporated and
unincorporated associations. But the purpose of the government
would be defeated altogether if it should be held that corporations
were not "associations of persons" within the meaning of the
statute, and subject to the restrictions imposed upon the latter by
sections 2347 and 2350. It is unreasonable to suppose that Congress
intended to limit the right of entering coal lands to one hundred
and sixty acres in the case of an individual and to three hundred
twenty acres in the case of an unincorporated association, and
leave the way open for an incorporated association by means of
entries made for its benefit in the names of its agents, officers,
stockholders, employees, and agents, to acquire public coal lands
without any restriction whatever as to quantity. The language of
the statute, to say nothing of the policy which underlies it, does
not require or permit any such interpretation of its provisions.
The words "association of persons" are often, and not inaptly,
employed to describe a corporation. An incorporated company is an
association of individuals acting as a single person, and by their
corporate name. As this Court has said,
"private corporations are but associations of individuals united
for some common purpose, and permitted by the law to use a common
seal, and to change its members without a dissolution of the
association."
Baltimore & Potomac Railroad v. Fifth Baptist
Church, 108 U. S. 317,
108 U. S.
330.
One other point discussed at the bar deserves consideration.
Page 137 U. S. 170
It is contended by the defendant that the United States is
subject, as a suitor, to the same rules that control courts of
equity when determining, as between private persons, whether
particular relief should be granted, that the government asking
equity must do equity, and consequently that the bill is defective
in not containing a distinct offer to refund the moneys which, it
is alleged, were furnished by the defendant to the several persons
to whom patents were issued. The rule referred to should not be
enforced in a case like the present one. In the matter of disposing
of the vacant coal lands of the United States, the government
should not be regarded as occupying the attitude of a mere seller
of real estate for its market value. It is not to be presumed that
the small price per acre required from those desiring to obtain a
title to such lands had any influence in determining the policy to
be adopted in opening them to entry. They were held in trust for
all the people, and in making regulations for disposing of them,
Congress took no thought of their pecuniary value, but, in the
discharge of a high public duty and in the interest of the whole
country, sought to develop the material resources of the United
States by opening its vacant coal lands to entry by individuals and
by associations of persons at prices below their actual value. The
controlling object of this and similar suits is to enforce a public
statute against those who have violated its provisions. It is not
disputed that the Attorney General may, in virtue of the authority
vested in him, institute this suit. According to the allegations of
the bill, which are admitted to be true, the defendant is a
wrongdoer against whom the government seeks to vindicate its policy
in reference to the development of its vacant coal lands. Congress,
when establishing that policy, was not bound to assume that
individuals or associations of individuals would attempt to defeat
it by means of fraudulent schemes or otherwise. If the defendant is
entitled, upon a cancellation of the patents fraudulently and
illegally obtained from the United States in the name of others for
its benefit, to a return of the moneys furnished to its agents in
order to procure such patents, we must assume that Congress will
make an appropriation for that
Page 137 U. S. 171
purpose when it becomes necessary to do so. The proposition that
the defendant, having violated a public statute in obtaining public
lands that were dedicated to other purposes, cannot be required to
surrender them until it has been reimbursed the amount expended by
it in procuring the legal title is not within the reason of the
ordinary rule that one who seeks equity must do equity, and if
sustained, would interfere with the prompt and efficient
administration of the public domain. Let the wrongdoer first
restore what it confesses to have obtained from the government by
means of a fraudulent scheme formed by its officers, stockholders,
and employees in violation of law.
The decree is reversed with directions to overrule the
demurrer and for further proceedings not inconsistent with this
opinion.