« ForrigeFortsett »
and judgment as a bar to the defense set, the equal protection feature of the federal up in the present action.
Constitution. By way of rejoinder, defendant denied its It will be observed that every point raised identity with the Postal Telegraph Cable by defendant, whether of fact or of state or Company of New York, defendant in the federal law, was held immaterial upon the former action, denied that defendant in the ground that (a) the first New York company present action was the lessee or successor had accepted the grant subject to the payof said company or bad succeeded to all its ment of the charge of $100 per annum; (b) rights, or to any of its rights under the ordi- its liability to pay the same had been adjunance, and denied that it had succeeded to dicated in the former suit; and (c) defendant, any of the duties of said New York com as successor to the rights and privileges of pany. In the same pleading were the aver- that company, was concluded by the former ments respecting its acquisition of title to judgment against it. the property, its operation thereof, and its
It is true that, in answer to the assertion want of relation with the New York com- of a right under the Act of Congress of July pany, which we have recited.
24, 1866, to erect poles and string wires in The Court of Appeals, in disposing of the the streets without the consent of the city, case (160 Ky. 244, 169 S. W. 700), laid aside the court declared that the act did not take the questions that were raised under both from the city the right to charge a telegraph state and federal law as to the validity and company for using its streets a reasonable effect of the ordinance, including the author. compensation in the way of a license fee or ity of the city to grant the privilege or exact occupation tax, citing St. Louis v. Western the tax, upon the ground that the first New Union Telegraph Co., 148 U. S. 92, 13 Sup. York company had agreed to the ordinance, Ct. 485, 37 L. Ed. 380, and Western Union and it and its successors, including defend- Telegraph Co. v. Richmond, 224 U. S. 160, ant, had since been in possession of the 32 Sup. Ct. 449, 56 L. Ed. 710. In each of streets under and by virtue of it, and would these cases, however, it was assumed, in the not be heard to dispute its validity while absence of anything to the contrary, that thus occupying the streets. Referring to the statement in the ordinance that it was municipality represented the public in the
under the state Constitution and laws the not to be construed as granting a franchise, control of*the streets (148 U. S. 100, 13 Sup. the court said:
"Doubtless it was well known that a franchise Ct. 485, 37 L. Ed. 380; 224 U. S. 171, 32 Sup. such as is contemplated and required by the Ct. 449, 56 L. Ed. 710); in the St. Louis Case (state) Constitution could not be secured in this it was so held upon rehearing (149 U. S. 465, way. In accepting the use of the streets un- 13 Sup. Ct. 990, 37 L. Ed. 810); in both cases der this ordinance, the company merely ob- it was held that the question of reasonable tained the right, for the stipulated compensation, to occupy the streets until such time as compensation was a question of fact, to be the city might see proper to revoke the license. determined in the usual way (148 U. S. 104, But so long as the company occupies the streets 105, 13 Sup. Ct. 485, 37 L. Ed. 380; 224 U. under the license it must pay the agreed price. S. 171, 172, 32 Sup. Ct. 449, 56 L. Ed. 710); The compensation provided by the ordinance is not a license tax upon the right of the company and in the St. Louis Case, upon a retrial, to do business in the city, but merely a charge the ordinance charge was found to be unagainst the company for the use of the streets reasonable in fact (166 U. S. 388, 391, 17 Sup. with its poles and wires."
Ct. 608, 41 L. Ed. 1044). But in the present The contention that the exaction of $100 per annum for the use of the streets was case, both the power of the city under the unreasonable was passed by a reference to Constitution and laws of the state, and the the previous decision, where it was held (76 reasonableness in fact of the charge of $100 S. W. 159, 25 Ky. Law Rep. 637) that the per annum, were denied by defendant, and question of the reasonableness of the grant the court declined to pass upon either quesand what was a fair compensation for the tion, deeming that defendant was concluded servitude was a question for the parties to upon both points by the consent of its prededecide. Finally, the contention that the enforcement of the ordinance denied to defend
We assume that if the first New York ant the equal protection of the laws was company did at the outset accept the ordi. rejected upon the ground that it did not nance, either in writing according to its appear that any other telegraph company
terms or by erecting poles and wires and ocwas occupying the streets of Newport under cupying the streets thereunder or in any a grant like the one conferred by the ordi- other manner satisfactory to the city, that nance in question; the court declaring that company and its successors in the ownership a corporation accepting a privilege under of the telegraph system, including defendanti one grant cannot complain that other cor were bound to comply with the terms of the porations are occupying the streets under ordinance as to the "special license tax" different grants imposing other conditions, (which evidently in that case would be reand that cities may make reasonable classi- garded as an agreed rental), so long as they fications of grants and privileges, and attach continued to retain and enjoy the privileges dissimilar conditions and impose dissimilar conferred; that in that event every claim of burdens upon each class, without violating federal right here asserted would be without
foundation; and that, if the fact of accept-yerty, that the grantor can transfer no better ance had been conclusively adjudged in a right or title than he himself has, and that former proceeding against defendant or its the grantee takes cum onere. From this it folprivy, the same result would follow.
lows that nothing which the grantor can do or  But the question arises whether the suffer after he has parted with the title can basis of fact upon which the state court rest affect rights previously vested in the grantee, ed its decision denying the asserted federal for there is no longer privity between them. rights has any support in the record; for, if This doctrine is universally accepted, and not, it is our duty to review and correct the was applied by this court in Keokuk & West
Southern Pacific Co. v. Schuyler, 227 | ern Railroad v. Missouri, 152 U. S. 301, 314, U. S. 601, 611, 33 Sup. Ct. 277, 57 L. Ed. 662, 14 Sup. Ct. 605, 38 L. Ed. 457; Keokuk Rail43 L. R. A. (N. S.) 901; North Carolina R. R. road v. Scotland County, 152 U. S. 318, 322, Co. v. Zachary, 232 U. S. 248, 259, 34 Sup. 14 Sup. Ct. 605, 38 L. Ed. 457; Dull v. BlackCt. 305, 58 L. Ed. 591, Ann. Cas. 19140, 159; man, 169 U. S. 243, 248, 18 Sup. Ct. 333, 42 Carlson v. Curtiss, 234 U. S. 103, 106, 34 Sup. L. Ed. 733; Old Colony Trust Co. v. Omaba, Ct. 717, 58 L. Ed. 1237; Norfolk & Western 230 U. S. 100, 122, 33 Sup. Ct. 967, 57 L. Ed. Ry. v.* West Virginia, 236 U. S. 605, 610, 35 | 1410. We infer that its obvious application Sup. Ct. 437, 59 L. Ed. 745; Interstate Amuse- to the facts of this case was inadvertently ment Co. v. Albert, 239 U. S. 560, 567, 36 overlooked by the Court of Appeals, because Sup. Ct. 168, 60 L. Ed. 439.
the general principle is recognized in previ.  Since the case proceeded to judgment ous decisions of that court as a limitation upon the pleadings, it is elementary that upon the doctrine of lis pendens. Clarkson every uncontradicted allegation of fact by the v. Morgan's Devisees, 6 B. Mon. (45 Ky.) unsuccessful party must be taken as true. 441, 446, 453; Parks v. Smoot, 105 Ky. 63, This applies to the denial by defendant that 67, 48 S. W. 146. either it or the first New York company ac (4-6] Res judicata, like other kinds of es. cepted the ordinance, the averment that the toppel, ordinarily is a matter of state law, latter company declined to accept it and erect- and as the decision of the state court in this ed its poles and strung its wires in the streets case in effect rests upon that ground, this of of the city under another and independent itself would be sufficient to sustain the judgclaim of right as plaintiff well knew, and ment against reversal in this court, except other averments bearing upon the question for two queries that must first be answered: of acceptance in fact.
(a) Is the question of state law, in this case,  There remains only the adjudication in independent of the federal questions? And the former suit against the first New York (b) is the decision reached upon that point company, which we assume to have been suf-sufficiently well founded to furnish adequate ficiently pleaded, and to have substantially support for the judgment? Eustis v. Bolles, involved the points that are now material 150 U. S. 361, 366, 14 Sup. Ot. 131, 37 L. Ed. so as to make them res judicata in a subse- 1111; Southern Pacific Co. v. Schuyler, 227 quent suit between the parties and their U. S. 601, 610, 33 Sup. Ct. 277, 57 L. Ed. privies although based on a different demand | 662, 43 L. R. A. (N. S.) 901; Enterprise Ir(Cromwell v. County of Sac, 94 U. S. 351, rigation District v. Canal Co., 243 U. S. 157, 352, 24 L. Ed. 195; Wilson's Executor v. 164, 37 Sup. Ct. 318, 61 L. Ed. 614. Deen, 121 U. S. 525, 534, 7 Sup. Ct. 1004, 30 Waiving the doubt whether, under the parL. Ed. 980; Nesbitt v. Riverside Independent ticular facts of this case, the question of res District, 144 U. S. 610, 12 Sup. Ct. 746, 36 judicata can be regarded as independent of L. Ed. 562), and which the Court of Appeals the federal questions that were raised, we regarded as concluding defendant upon mat- are of the opinion that the decision reached ters of fact as well as law. But there is upon it is so clearly ill founded that it cannothing in the record to make this judg. not sustain the judgment;* and this for the ment conclusive as against defendant ex- reason that it is inconsistent with another cept upon the theory of a privity of estate federal right of defendant, fundamental in between it and the first New York company. character. And, as to this, it appears from the aver The doctrine of res judicata rests at botments in defendant's pleadings-indeed, it is tom upon the ground that the party to be stated as a fact in the opinion of the court affected, or some other with whom he is that the suit against that company was in privity, has litigated or had an opportuni. brought in the year 1899, two years after it ty to litigate the same matter in a former had conveyed its property in the state of action in a court of competent jurisdiction. Kentucky, including all its rights and inter- Southern Pacific R. R. v. United States, 168 ests in the city of Newport, to another cor- U. S. 1, 48, 18 Sup. Ct. 18, 42 L. Ed. 355; poration through which defendant after-Greenl. Ev. 88 522, 523. The opportunity to wards acquired title.
be heard is an essential requisite of due The ground upon which, and upon which process of law in judicial proceedings. Windalone, a judgment against a prior owner is sor V. McVeigh, 93 U. S. 274, 277, 23 L. Ed. held conclusive against his successor in inter- 914; Louisville & Nashville R. R. Co. v. est, is that the estoppel runs with the prop Schmidt, 177 U. S. 230, 236, 20 Sup. Ct. 620,
44 L Ed. 747; Simon v. Craft, 182 U. S. 427, , whose benefit it is alleged the frauds were 436, 21 Sup. Ct. 836, 45 L. Ed. 1165. And committed. Six of the patents were of as a state may not
, consistently with the date of October 16, 1902, and three of date Fourteenth Amendment, enforce a judgment of September 6, 1902. The suit was brought against a party named in the proceedings March 3, 1911, about eight and a half years without a hearing or an opportunity to be after the dates of the patents, the bill alheard (Pennoyer v. Neff, 95 U. S. 714, 733, leging that the fraud by which the patents 24 L. Ed. 565; Scott v. McNeal, 154 U. S. 34, were obtained was self-concealing in its na46, 14 Sup. Ct. 1108, 38 L. Ed. 896; Coe v. ture, was concealed from the government by Armour Fertilizer Works, 237 U. S. 413, 423, the wrongdoers and was not discovered until 35 Sup. Ct. 625, 59 L. Ed. 1027), so it cannot, 1909. The defendants demurred the without disregarding the requirement of due ground that the suit was barred by the stat. process, give a conclusive effect to a prior ute of limitations, and the demurrer was susjudgment against one who is neither a party tained by the District Court. 190 Fed. 405.09 nor in privity with a party therein.
The Circuit Court of Appeals for the Eighth It follows that in this case res judicata Circuit reversed this decision, and the case cannot be regarded as an adequate support was sent back to the District Court 203 for the judgment; and since, without that, Fed. 387, 121 C. C. A. 491. After trial a dewe have not the materials necessary for a cree was rendered against the defendants, proper disposition of the federal questions the present plaintiffs in error. 225 Fed. 854. that were raised, we express no opinion upon This decree was affirmed by the Circuit them.
Court of Appeals (235 Fed. 110, 148 C. C. A. Judgment reversed, and the cause remand- 604), and the case comes here. ed for further proceedings not inconsistent The District Court found the following with this opinion.
The Exploration Company, defendant here
in, is a corporation of Great Britian, author. (247 U. S. 435)
ized to purchase, own, and operate mines, and EXPLORATION CO., Limited, et al. v. UNIT
to purchase and own shares of stock in mines ED STATES.
in all parts of the world. It was the owner of (Argued May 1, 1918. Decided June 10, 1918.)
mines and mining lands in different parts of No. 277.
the world, and also of shares of stock of corLIMITATION OF ACTIONS CW100(10)—SUITS TO
porations engaged in mining in the United CANCEL PATENT CONSTRUCTION OF Stat. States and other countries. In 1901, and for UTE.
several years thereafter, its representative in Where patents to public lands were obtain this country was Charles A. Molson, to whom ed through fraud, and the fraud was concealed until more than 'six years after issuance, suit it bad executed a general power of attorney may be maintained thereafter, notwithstanding to represent it in all matters in the United Acť March 3, 1891, c. 561, 26 Stat. 1099 (Comp. States. The Exploration Company desired to St. 1916, § 5114), declaring that suits by the United States to cancel patents hereafter issued acquire certain coal lands in the state of Coloshall only be brought within six years after the rado, which were a part of the public do date of issuance, for such statute is subject to main of the United States, but was unable to the long-established equitable rule that in suits do so because it was a foreign corporation, for fraud, where the fraud bas been concealed, limitations do not begin to run until its discoval and desired more of these coal lands than ery by the party defrauded.
a domestic coroporation could obtain under Mr. Justice McKenna and Mr. Justice Van the laws of the United States. It therefore Devanter, dissenting.
conceived and carried into effect the followAppeal from the United States Circuit | ing scheme for the purpose of acquiring Court of Appeals for the Eighth Circuit. them: Mr. Molson employed one Henry Bur
Suit by the United States against the Ex- rell to obtain title to the lands. Burrell emploration Company, Limited, and Philip L. ployed other agents, who were sent to resi. Foster. A decree for the United States (225 dents of Colorado, legally entitled to acquire Fed. 854), was affirmed by the Circuit Court public coal lands from the United States, of Appeals (235 Fed. 110, 148 C. C. A. 604), and induced them to make entry of such lands and defendants appeal. Affirmed.
as were pointed out to them by the ExploraThis suit was brought in the United States tion Company's agents, and which were supDistrict Court for the District of Colorado posed to contain valuable veins of coal. A to cancel nine coal land patents embracing large number of such entries were made on 1,120 acres of land in Colorado which, it was lands situated in the counties of Gunnison charged, had been procured from the United and Delta, the parties having filed declaratoStates by fraud. A further purpose of the ry statements as required by law. Many suit was to cancel deeds of the same land of these lands were abandoned and no patfrom various persons to one Philip L. Foster ents applied for, but the filings on the lands alleged to be in secret trust for the Explora- herein involved were paid for and* patents tion Company, a foreign corporation, for therefor secured. Henry Burrell was a wit
For other cases see same topic aud KEY-NUMBER in all Key-Numbered Digests and Indexes
ness in most, if not all, of these entries. The, 1911, several months less than two years aftparties who made the entries were promised er the discovery of the alleged fraudulent the sum of twenty-five dollars for their serv- acts. ices in so doing. Burrell was to pay all fees, The District Court found that the defendas well as the purchase money, with funds ants did not actively conceal the facts which furnished by the Exploration Company. The constitute fraud in this case by enjoining sientry men and women executed deeds of con- lence on the entrymen and patentees, or by veyance for their respective tracts of land directing them or the agents who acted for it and delivered them to Burrell as soon as the to refuse to give any information relating tofinal proofs were made and the money paid the entries, if asked by the officers of the by the Exploration Company's agent to the government, but were guilty of a passive conrespective officers of the land offices within cealment. When the investigation was made whose jurisdiction the lands were situated by the agents of the General Land Office, in Henry Burrell caused these deeds to be made 1909, in relation to these entries, the patento Alexander Burrell, his brother, and Alex- tees, as well as the company's agents stated ander Burrell later conveyed the lands to Al- the facts truthfully, but until that time the berta L. Smith, a resident of Montana, the fact that the entries were all made for the only consideration for the conveyance being benefit of the Exploration Company, and that that Smith promised to hold them in trust the legal title held by the defendant Foster for and to convey them to any person desig- was for the benefit of the company, was connated by the agent of the Exploration Com- cealed. There were no facts or circumstancpany. The agent Charles A. Molson having es within the knowledge of any official of the died, the Exploration Company appointed government prior to the investigation in 1909Philip L. Foster to succeed him as its duly which could arouse even a bare suspicion authorized general agent in the United that the entries were made in the manner States, and Smith conveyed these lands to hereinbefore described and for the benefit of Foster, without any other consideration, who the Exploration Company. holds the legal title in secret trust for the
Messrs. Henry McAllister, Jr., and George Exploration Company. In 1902 patents to E. Tralles, both of Denver, Colo., for appelthese lands were issued by the United States, lants. but the fact that they were secured by false
Mr. Assistant Attorney General Kearful, affidavits, and not for the benefit of the en- for the United States. try men and women, but for the sole benefit of the Exploration Company, who in reality * Mr. Justice DAY, after making the fore: paid the government the purchase money, going statement, delivered the opinion of the was kept secret, and did not become known Court. to any of the officers of the government, nor
The Circuit Court of Appeals found that did any facts become known to them which the evidence fully supported the findings of could arouse the suspicion of one reasona- the trial court. We find no occasion to disbly diligent that the patents had been obtain- turb the findings of fact by two courts. The ed by false affidavits for the sole benefit of question presented for our consideration is the Exploration Company until 1909, more whether the suit was barred by the statute than six years after issuance of the patents, of limitations under the Act of March 3, and then it only became known to the officers 1891, c. 561, 26 Stat. 1099 (Comp. St. 1916, $ of the government by reason of the fact that 5114), which provides: a* Utah corporation had acquired a great "That suits by the United States to vacate many of the public lands in the same manner and annul any patent heretofore issued shall that these lands were obtained, and this be only be brought within five years from the pasing discovered in 1909, the Secretary of the sage of this act, and suits to vacate and annul
patents hereafter issued shall only be brought Interior directed in that year an examina- within six years after the date of the issuances tion of all coal-land entries made in the of such patents." states of Utah and Colorado. The facts As averred in the bill, and found by the were for the first time discovered in this in- courts, the frauds were concealed until after vestigation. There was nothing in the rec- six years had elapsed from the issuance of ords, or on file in the General Land Office of the patents. "After it was supposed the statthe United States or the Department of the ute of limitations had barred any action, the Interior which could possibly have aroused participants in the fraud taiked very freely, a suspicion that these lands had been obtain- telling the truth when it was thought it ed for the sole benefit of the Exploration would do no harm." It is the contention of Company until the reports of the special the appellants that the statute was intended agents of the General Land Office were made to bar all actions after six years from the in the latter part of 1909. As soon as the date of the issuance of the patent, that if facts were ascertained, the Secretary of the for six years the government has failed to Interior transmitted them to the Department discover the fraud, no matter what its diliof Justice, with the request to institute suits gence in that respect may be, its action to set aside the patents to the lands, and this against the guilty parties is forever barred, suit was accordingly instituted on March 3, and they may hold in security the lands thus
obtained by grant from the United States by, of action did not accrue until the discovery means of fraud perpetrated in defiance of its of the fraud; that such was the undisputed laws enacted for the disposition of the public doctrine of courts of equity, and that the domain. We are unable to agree with this weight of authority, English and American, contention. We think the true rule is estab-applied the same rule to actions at law. lished in federal jurisprudence by the deci- Among other cases cited by Mr. Justiceca sion of this court in Bailey V. Glover, 21 Miller is the decision of Mr. Justice Story Wall. 342, 22 L. Ed. 636. In that case a at the circuit in Sherwood. v. Sutton, 5* question was presented under the Bankrupt- Mason, 143, 21 Fed. Cas. p. 1303, No. 12,cy Act of 1867 (Act March 2, 1867, c. 176, 14 782. That case involved a statute of the Stat. 517), which provided that no suit at state of New Hampshire which provided law or in equity should be maintained by or that actions for fraud and deceit should be against an assignee in bankruptcy, or by or brought within six years. It contained no against any person claiming an adverse in- exception as to actions founded on fraud terest, touching the property or rights of where the same had been concealed during property of the bankrupt, in any court what the period of limitation, and the question ever, unless the same should be brought was whether such exception was implied. within two years from the time the cause of the cases were very fully reviewed by Mr. action accrued for or against the assignee. Justice Story, and in holding that the statute The action was brought to set aside a con- did not begin to run until the discovery of veyance on the ground of fraud. Among the fraud, he said (21 Fed. Cas. 1307): other things it was charged that the bank
"What, then, is the reason, upon which this rupt, his wife, son and father-in-law being exception has been established? It is, that evdefendants in the case, kept secret their ery statute is to be expounded reasonably, so as
to suppress, and not to extend, the mischiefs, fraudulent acts and endeavored to conceal which it was designed to cure. The statute them from the knowledge both of the as- of limitations was mainly intended to suppress signee and of Winston & Company, a cred- fraud, by preventing fraudulent and unjust itor proving a debt, whereby both were pre time, when the evidence might no
longer claims from starting up at great distances of
vithvented from obtaining any sufficient knowl- in the reach of the other party, by which they edge or information thereof until within the could be repelled. It ought not, then, to be so previous two years, and that even up to the construed, as to become an instrument to entime suit was instituted they had not been sonable interpretation; and cases of fraud,
courage fraud, if it admits of any other reaable to obtain full and particular informa- therefore, form an implied exception, to be acttion as to the fraudulent disposition made ed upon by courts of law and equity, according by the bankrupt of a large part of his prop- Such, it seems to me, is the reason on which
to the nature of their respective jurisdictions. erty. A general demurrer was filed to the the exception is built, and not merely that there bill on the ground that the suit was not is an equity binding upon the conscience of the brought within two years as required by the party, which the statute does not reach or con
trol." statute. It is thus apparent that no attempt was made to prosecute the action Bailey v. Glover has never been overruled within two years from the time the same ac-nor modified in this court and has been apcrued. It was contended that the statute was proved and followed. Rosenthal v. Walker, Imperative, that it made no exceptions, and 111 U. S. 185, 190, 4 Sup. Ct. 382, 28 L. Ed. that the action was consequently barred by 395; Traer v. Clews, 115 U. S. 528, 537, 538, limitation. This court, after a full review of 6 Sup. Ct. 155, 29 L. Ed. 467; Kirby v. Lake decisions English and American, decided that Shore, etc., R. R. Co., 120 U. S. 130, 136, 7 notwithstanding the positive terms of the Sup. Ct. 430, 30 L Ed. 569; Avery v. statute, it did not begin to run until after Cleary, 132 U. S. 604, 609, 10 Sup. Ct. 220, the discovery of the fraud. In the course of 33 L. Ed. 469. It was also applied in the the opinion Mr. Justice Miller said:
Court of Appeals for the Ninth Circuit in “They [statutes of limitation] were enacted the case of Linn & Lane Timber Co. v. United to prevent frauds; to prevent parties from as- States, 196 Fed. 593, 116 C. C. A. 267; 203 serting rights after the lapse of time bad de Fed. 394, 121 C. C. A. 498. stroyed or impaired the evidence which would show that such rights never existed, or had
. It is true that Mr. Justice Brewer, in de been satisfied, transferred, or extinguished, if livering the opinion of the court, in United they ever did 'exist. To hold that by concealing States v. Winona, etc., R. R. Co., 165 U. S. a fraud, or by committing a fraud in a manner that it concealed itself until such time as 463, 476, 17 Sup. Ct. 368, 41 L. Ed. 789, said the party committing the fraud could plead the that no matter what the mistake or error of statute of limitations to protect it, is to make the Land Department was, or what the frauds the law which was designed to prevent fraud the means by which it is made successful and of the patentee, the patent would become secure."
conclusive as a transfer of title after the It will be observed in that statute, as in lapse of six years. But the learned justice the one now under consideration, there was said in the same opinion that this limitation no provision that the cause of action should could not be availed of because the suit not be deemed to have accrued until the dis- was commenced before the expiration of the covery of the fraud. But it was held that time prescribed, and that it was referred to for the purpose of such statutes the cause as showing the purpose of Congress to up