South End Mining Co. v. Tinney , 22 Nev. 19 ( 1894 )

The complaint in this action has a double aspect. It states, first, a cause of action in ejectment; and, secondly, an equitable cause of action to obtain an injunction to restrain certain trespasses threatened by the defendants. To these the answer attempts to plead, among other things, an equitable defense. Of the right of the defendants to set up an equitable defense to an action for the possession of lands there can be no question, and as to this defense the case is to be tried in the same manner and upon the same principles that would apply to an original bill in equity, brought for the same purpose. (Pom. Rem. Rem. Rights, sec. 87, et seq.; Bohall v. Dilla, 114 U. S. 47,5 Sup. Ct. 782; Quinby v. Conlan, 104 U. S. 420;Estrada v. Murphy, 19 Cal. 248, 273;Hollinshead v. Simms, 51 Cal. 158;Treadway v. Wilder, 8 Nev. 93;Dutertree v. Shallenberger, 21 Nev. 507,34 Pac. 449; Suessenbach v. Bank, 5 Dak. 477, 41 N. W. 662.)

2. As judgment was rendered against the defendants upon the pleadings, the question is whether the answer states any defense, and I pass to a consideration of whether, in the light of equitable principles, it presents facts which entitle the defendants to defeat the action, founded, as it is, upon the legal title.

It will be noticed that when the plaintiff ceased the prosecution of its application for a patent, and abandoned the mine, it had not paid for the ground, nor obtained a final certificate of purchase from the receiver of the land office. This failure prevents it from having obtained such vested rights as relieved it from the necessity of doing the annual assessment work, and distinguishes the case fromBenson Mining Co. v. Alta Mining Co.,145 U. S. 428, 12 Sup. Ct. 877, and Deno v. Griffin,20 Nev. 249, 20 Pac. 308, where it was held that by reason of completed patent applications and payment the requirement of doing the work no longer existed. Section 2324, Rev. Stat. U. S., provides that, until a patent issues, not less than $100 worth of labor shall be performed or improvements made upon a claim during each year, and upon failure to do so the claim shall be open to relocation in the same manner as though no location had ever been made. The courts have held a patent certificate issued upon final payment to be equivalent to a patent, but until then abandonment, or a failure to do the annual work, subjects the claim to relocation. (Sickels, Min. Dec. 371, 384; Copp, Min. Lands, 255, 296; Ferguson v. MiningCo., 18 Copp, Landowner, 242; MiningCo. v. Gage, 17 Copp, Landowner, 39.)

Then, by reason of this abandonment and forfeiture, the Comet became subject to relocation, and while in this condition the defendants and their grantors relocated a portion of it under the name of the "Phœnix." The answer shows that this relocation was made strictly in accordance with the mining laws, and there is no contention that it was not, in all respects, sufficient, nor that the defendants have not since fully complied with the laws in keeping up their title. Under these circumstances, up to the time the patent was issued to the plaintiff, they were vested with both the legal and equitable title to the ground as fully as it is possible to obtain such title by a location of a mine upon the mineral lands of the United States, upon which no patent has been obtained. As will be shown hereafter, in another connection, this vested in them, even as against the United States, the full beneficial ownership of the claim, which could only be lost by a failure upon their part to comply with the mining laws. Suppose that prior to the issuance of this patent to the plaintiff it had brought this action, can there be any question that it would have been decided in favor of the defendants? There can be but one answer to this, and this shows that it is only by reason of the bare legal title, obtained by this patent, that it now has any standing, even in a court of law.

Then the naked fact is that, while the defendants were the full beneficial owners of this property in accordance with the laws of the United States, without notice to them, and without their knowledge, the plaintiff has, by fraud and trickery practiced in the land office, obtained a patent therefor; and the question is whether this fraud has been so well perpetrated, and is so well intrenched in the law, that even a court of equity can afford the defendants no remedy. I am happy to say that in my judgment such is not the case, and, further, that any system of laws that would not afford a remedy under such circumstances would be unworthy a civilized people.

The publication and posting of the notices, which the mining law requires to be made upon applications for patent, had been made long prior to the time that the defendants located the Phœnix claim. An adverse claim must be filed during the sixty days that these notices are given, and it was consequently impossible for them to file an adverse claim to the application. Their rights date from ten years subsequent to this. Had their ownership dated from any time prior to the publication of the notices, they would, of course, have been required to advertise the application in the land office, or they would have lost all right in the ground. But the law does not require impossibilities, and the fact that they did not and could not do so cuts no figure in the case. Subsequent to this, the plaintiff lost all ownership in the ground, and the defendants obtained their title; and it is upon this situation that the case must be decided.

3. Having established, at least to my own satisfaction, that previous to the patent the mine was the property of the defendants, I proceed to consider whether by reason of that patent they have lost all right therein, which can be protected by a court of equity. It is doubtful, although in my view quite immaterial, whether the plaintiff was guilty of any fraud upon the United States in the proceedings in the land office such as would justify the annulling and setting aside of the patent, in that the fact that they had done the annual labor is not one of the conditions of obtaining a patent; but this does not matter, and I shall not pause to consider it. Obtaining a patent to the defendant's mine was, under the circumstances, a positive and unequivocal fraud upon them; and, even if it were not, the answer shows such a state of facts as make the plaintiff the holder of the patent title in trust for the owners of the mine. These are that without the publication or posting of any notice of its intention so to do, and without the defendant's consent or knowledge, the plaintiff has secretly and surreptitiously obtained a patent to their property. This is entirely sufficient to require a court of equity to hold it a trustee of that title for the defendants.

This has often been decided by the courts, and the principle upon which it is done is quite clearly stated by Judge Sawyer in the case of Lakin v. Mining Co., 11 Saw. 231, 238, 25 Fed. 337, as follows: "Where one party wrongfully obtains the legal title to land, which, in equity and good conscience, belongs to another, whether he acts in good faith or otherwise, he will be charged in equity as a constructive trustee of the equitable owner. That, I think, is a doctrine established by the following cases: Wilson v. Castro,31 Cal. 420; Salmon v. Symonds, 30 Cal. 301;Bludworth v. Lake, 33 Cal. 256; Hardy v. Harbin, 4 Sawy. 549 — the latter being a decision of Mr. Justice Field on the circuit."

This case, while no more in point upon principle than many other decisions, is in its facts very similar to the case in hand. The defendant there had secretly and clandestinely, but without positive fraud, and without any fiduciary relation existing between the parties, by means of an old and dormant application, obtained a patent to the plaintiff's mine. Upon the ground stated in the quotation it was decreed that the defendant held this title in trust for the plaintiff, and it was compelled to convey it to him. Two cases more alike in their essential facts than that and this could scarcely be found. Of the two this is the stronger, as here actual fraud in the land office intervened.

That case was approved and the same principle affirmed inHunt v. Patchin, 13 Sawy. 304, where the patantee of a mine was again decreed to hold the patent title in trust for the equitable owner of the property.

In Wilson v. Castro, 31 Cal. 420, it was held that where one who had a grant of land from the Mexican government died intestate, and then a person, mistakenly believing himself the heir, sold a part of the land to others, who afterwards, under the belief that they had acquired a good title, and without any fraud, obtained a confirmation of the grant and a patent from the United States, the patent did not deprive the true heirs at law of their interest in the property, but the patentees held the title in trust for them; that it did not matter whether the patentees acted in good faith and did not know that they occupied to the heirs at law the relation of trustees in equity, for the trust arose as a matter of law, and was a constructive trust. It was held, further, that the fact that the true heirs had notice of the proceedings taken by the patentees to obtain a confirmation of the grant and patent for the same, but did not intevene to protect their rights, did not destroy the trust.

In Hardy v. Harbin, 4 Sawy. 536, Justice Field said (p. 540): "The bill is filed for the purpose of having a trust declared and enforced, the complainant relying upon the established doctrine that wherever property is acquired by fraud, or under such circumstances as to render it inequitable for the holder of the legal title to retain it, a court of equity will convert him into a trustee of the party actually entitled to its beneficial enjoyment." The title involved was a United States patent, and it was again decreed to be held in trust for the true owner.

In Sanford v. Sanford, 13 Pac. Rep. 602, decided by the Supreme Court of Oregon, and subsequently affirmed by the Supreme Court of the United States (139 U. S. 642), one had by a false affidavit made in the land office obtained a patent to a piece of land upon which another had settled, and which equitably belonged to the latter; it was again decided that the patentee held the legal title in trust for the equitable owner.

In Rector v. Gibbons, III. U. S. 276, 291, the Supreme Court of the United States, speaking of the case ofJohnson v. Towsley, 13 Wall. 72, said:

"The decision aptly expresses the settled doctrine of this court with reference to the action of officers of the land department, that when the legal title has passed from the United States to one party, when in equity and in good conscience, and by the laws of congress it ought to go to another, a court of equity will convert the holder into a trustee of the true owner and compel him to convey the legal title."

Nothing to the contrary was decided or even suggested inHamilton v. South Nevada G. and S. Mining Co., 13 Sawy. 113, and the same is true of SmeltingCompany v. Kemp, 104 U. S. 636, andSteel v. Smelting Company, 106 Id. 447. The two latter were both actions of law in the United States courts, where, as every lawyer knows, no equitable defense can be interposed, but must be set up by a separate action in equity. The attempt in those cases was to assail a patent collaterally, which, upon well-settled principles, it was held could not be done. The distinction between those cases and such a proceeding in equity as we are now dealing with is over and again pointed out in the opinions therein rendered by Mr. Justice Field. In Silver v. Ladd, 7 Wall. 219, 228, speaking of the equitable action, Mr. Justice Miller said:

"The relief given in this class of cases does not proceed upon the ground of annulling or setting aside the patent wrongfully issued. That would leave the title in the United States, and the plaintiff might be as far from obtaining justice as before. And it may be well doubted whether the patent can be set aside without the United States being a party to the suit. The relief granted is founded upon the theory that the title which has passed from the United States to the defendant, inured in equity to the benefit of plaintiff, and a court of chancery gives effect to this equity, according to its forms, in several ways."

The language used in Hardy v. Harbin, 4 Sawy. 536, 541, is also very much in point here. The court said: "And it is upon the confirmation and patent that the defendants rely to resist the claim of the complainants. Their position is that the confirmation inured to the benefit of the confirmee, and that the patent is conclusive evidence of the validity of their title; that it is the record of the government upon it, which cannot be questioned, except in direct proceedings instituted in the name of the government or by its authority. It is undoubtedly true that the confirmation inured to the benefit of the confirmees, so far as the legal title to the premises was concerned. It established the legal title in them, but it determined nothing as to the equitable relations between them and third parties."

This distinction is again carefully pointed out inSanford v. Sanford, 139 U. S. 642, 646, and inLee v. Johnson, 116 Id. 48.

In very many of the cases no fiduciary relation existed between the parties, and hence the suggestion that this is the only ground upon which a patentee can be held to be a trustee is shown to be without foundation. The true ground in such cases as this is fraud, or that "in equity and good conscience" the land belongs to another.

4. It is also argued that the defendants are not in such privity with the government title that they can contest the patent and assert their rights. T find, however, the contrary to be the law. As I have shown, the defendants were, at the time the patent issued, the owners of a mining location upon the premises in dispute, made and held in all respects in accordance with the laws. As to the effect of this location, the court, in Noyes v. Mantle, 127 U. S. 348,353, 8 Sup. Ct. 1132, used this language: "As said inBelk v. Meagher, 104 U. S. 279, 283: ``A mining claim perfected under the law is property in the highest sense of the term, which may he bought, sold, and conveyed, and will pass by descent.' It is not, therefore, subject to the disposal of the government." And again, inGwillim v. Donnellan, 115 U. S. 45, 49,5 Sup. Ct. 1110: "A valid and subsisting location of mineral lands, made and kept up in accordance with the provisions of the statutes of the United States, has the effect of a grant by the United States of the right of present and exclusive possession of the lands located. * * * To entitle the plaintiff to recover in this suit, therefore, it was incumbent on him to show that he was the owner of a valid and subsisting location of the land in dispute, superior in right to that of the defendants. His location must be one which entitles him to possession against the United States, as well as against another claimant. If it is not valid as against the one, it is not as against the other. The location is the plaintiff's title." In Seymour v. Fisher,16 Colo. 188, 27 Pac. 240, the court said: "The locator thereof is entitled to the present possession and use as against all the world, including even the United States, which, prior to patent, retains the legal ownership." Such a title as this is amply sufficient to entitle the owner to demand that the patentee shall hold the title in trust for him. (Sparks v. Pierce, 115 U. S. 408,6 Sup. Ct. 102; Bohall v. Dilla,114 U. S. 47, 5 Sup. Ct. 782.) "Until the patent issued, the government held the title in trust for the locators or their vendees. * * * The entry at the United States land office, and the patent issued in pursuance thereof, was burdened with this trust, and the same may be enforced against any person claiming under the patent who can be charged with it." (Suessenbach v. Bank, 5 Dak. 477, 499, 41 N. W. 662.) The rule in such cases is well stated inChism v. Price, 54 Ark. 251, 258,15 S. W. 883, 1031, as follows: "A stranger or occupant without right cannot assail a patent for fraud practiced against the state; but an occupant with a right to purchase may attack a patent issued in fraud of his rights, and upon equitable terms may demand a conveyance from the patentee."Hermocilla v. Hubbell, 89 Cal. 5, 10,26 Pac. 611, is directly in point. It was there held: "The defendants were in possession of their claims under locations, which were made in accordance with the law and the local rules and customs. They were, therefore, in privity with the United States, and had a clear right to contest the patent and assert their rights."

5. It is said that the defendants' remedy is to apply to the attorney-general of the United States to bring a bill in equity to set aside the patent. I shall not consider this matter. Aside from the fact that it would be puerile to hold that the defendants' vested rights can be made dependent upon the discretionary action of an executive officer, there are several answers to it, some of which are suggested inU. S. v. San Jacinto Tin Co., 125 U. S. 273,8 Sup. Ct. 850. But as I have shown that in this proceeding they are entitled to the protection of the law, it is unnecessary to determine whether any other course is open to them. The case of Railroad Co. v. Cannon, 4 C.C.A. 303, 54 Fed. 253, is not in point. As there stated by Hawley, J. (page 255, 54 Fed., and page 306, 4 C.C.A.), that was "not a case where equitable relief is sought against a party holding the legal title." This is. Again, the court there held that the railroad company's rights did not attach to the premises, if ever, until 1882, while the patent had been issued to the defendants in 1879. A court would not be likely to hold that a patent was taken in trust for a party that obtained no right in the land until two years after it was granted. But here the defendants' rights date from 1887, and the patent was not issued to the plaintiff for more than a year thereafter.

6. The question as to the statute of limitation turns upon whether the legislature intended to include patented mines within the provisions of Gen. Stats., sec. 3632. As originally adopted, the section reads as follows (Stats. 1861, p. 27): "No action for the recovery of mining claims, or for the recovery of the possession thereof, shall be maintained unless it appear that the plaintiff, or his assigns, was seized or possessed of such mining claim in question within two years before the commencement of such action." In 1867 it was amended to its present form, and now reads thus: "No action for the recovery of mining claims, or for the recovery of the possession thereof, shall be maintained, unless it appear that the plaintiff or those through or from whom he claims, were seized or possessed of such mining claim, or were the owners thereof according to the laws and customs of the district embracing the same, within two years before the commencement of such action. Occupation and adverse possession of a mining claim shall consist in holding and working the same, in the usual and customary mode of holding and working similar claims in the vicinity thereof. All the provisions of this act, which apply to other real estate, so far as applicable, shall be deemed to include and apply to mining claims; provided, that in such application ``two years' shall be held to be the period intended whenever the term. ``five years' is used; and provided further, that when the terms ``legal title' or ``title' are used, they shall be held to include title acquired by location or occupation, according to the usages, laws and customs of the district embracing the claim."

The argument that the section was not intended to include patented claims is based upon the use of the term "mining claims," which, it is said, means simply a mine held under the laws and customs of miners; and upon the fact that when the section was first enacted no greater title than that could he obtained. It will be noticed, however, that when the amendment was adopted the laws of the United States did provide for obtaining a patent to a mine, and it must be supposed that the amendment was adopted with that state of facts in view. As to the meaning of the term "mining claim," the question is, of course, not what the words mean in other connections, but what they are intended to mean as used here. Had the legislature used the word "mines" in connection with, or instead of, "mining claims," there would seem to be no point to the argument; and whatever there is now is considerably weakened by the fact that those terms were then, as they still are, often used to mean the same thing. (State v. Real Del Monte Gold Silver Min.Co., 1 Nev. 523.)

As the section now stands it seems to provide for three kinds of ownership of a mining claim: (1) Where the claimant was seized; (2) where he was possessed; (3) where it had been held in accordance with mining laws and customs. We are not to suppose that any of these terms were needlessly used, or used without meaning; and, if not, the word "seized" means something different from simple possession of a claim, or of a holding of it in accordance with the laws and customs of miners. If so, it must mean, as it would naturally import, an ownership in fee, for this is the only other kind of ownership known to the law. The phrase, "according to the laws and customs of the district," is not found in the original section, and must have been added because of doubts as to whether a claim so held was within the words "seized or possessed." Apparently the main purpose of the amendment was to make certain the application of the section to such claims, and that could only have been demanded by a belief that, as originally adopted, it did not apply to them, and applied only to mines held in fee, or by simple possession.

Again, the definition of what shall constitute adverse possession of mining property mentions nothing but mining claims; and, if those words were not intended to cover patented claims as well, then there is no provision as to what shall constitute an adverse holding of a patented mine — a hardly probable oversight. The same words, "seized or possessed," are used in the next section with reference to other real property, but no suggestion has ever been made that they do not apply to lands held in fee, as well as otherwise, although when adopted there was, perhaps, not a piece of patented land in the whole territory. The main reason, too, for fixing a shorter period of limitation for mines than for other property, applies as well to patented claims as to those held by other titles. Other classes of real property are comparatively stable in value, and can be used and made productive at a comparatively small expense; but not so with mines. They are often only made to "pay" by the expenditure of vast sums of money, and by this are sometimes changed from worthlessness to a value of many thousands of dollars. It is only justice that the holders of claims against this class of property should be required to assert them at an early day, to the end that they may not, in recovering their own, also reap too large a benefit from the enterprise of others. (Oil Co. v. Marbury,91 U. S. 587, 592.)

Altogether, it seems reasonably clear that by the use of the words mentioned the legislature intended to include every kind of title by which mining property can be held.

Judgment reversed.