United States v. Bellingham Bay Improvement Co.

HUNT, Circuit Judge (after stating the facts as above). The question presented is whether the court erred in ruling that the suit was barred by the statute of limitations. Under the doctrine of United States v. Diamond Coal & Coke Co., 255 U. S. 323 , 41 Sup. Ct. 335, 65 L. Ed. 660 , we are of the opinion that the complaint states a cause of action to which the defendants must plead. The allegations make it plain that in 1904 Cornwall obtained patent through deception and perjury, and thereafter all the conveyances set forth were made with knowledge of the fraudulent acts of Cornwall. The facts that the Puget Sound Traction, Eight & Power Company did not receive conveyance until September, 1912, which was more than 26 months after the statute of limitations had run, and more than 8 years after patent was issued, and that the use of the property was for water power purposes by a public service corporation, have had attentive consideration. We do not fail to recognize that the bar of the statute of limitations is effectual, unless the facts and circumstances are such that they have given rise to an equitable principle which must be applied.. Exploration Co. v. United States, 247 U. S. 435 , 38 Sup. Ct. 571, 62 L. Ed. 1200 ; Linn & Lane Timber Co. v. United States, 196 Fed. 593 , 116 C. C. A. 267 ; Id., 203 Fed. 394 , 121 C. C. A. 498 . Not only was the fraud conceived in the original acts of Cornwall and the locators, but in 1905 conveyances of the property as mining claims were made with the purpose of concealing the true character of the lands, and concealing the truth from the United States. The government, relying upon the representations, was deceived by them, and acting upon the belief that the ground was mineral, and that the representations in the application for patent were made in good faith, conveyed the land, and as a result of the acts of concealment done in order to conceal, the officers of the United States had no knowledge of the facts until 1910. We are not prepared to hold that, where patent for lands is issued upon an ex parte or a passive showing, the government cannot after-wards rely upon the truth of the showing made for the issuance of the patent, hut must investigate as to what uses may be made of lands included in the patents issued. United States v. Minor, 114 U. S. 233 , 5 Sup. Ct. 836, 29 L. Ed. 110 . As to the original fraudulent grantee, the remedy of the United States would be complete, and why should it not be afforded as against those who have purchased with actual knowledge of the facts constituting the original imposition consummated by fraud, and where the buyer knows that the ignorance of the fraud has been produced by intentional efforts of the guilty persons in concealing the truth from the government? Bailey v. Glover, 21 Wall. (88. U. S.) 342, 22 L. Ed. 636 . Defendants should answer, and here, as in the Diamond Coal Company Case, supra, avert what the Chief Justice characterized as the “danger of wrong to result from a final determination of the cause up *525 on mere inference without proof.” The decree must be reversed, and cause remanded, with directions to set aside the decree of dismissal and the.motions to dismiss, and for further proceedings in conformity to this opinion. Reversed and remanded.