facts sufficient to constitute a cause of action against him. This was overruled, and said defendant filed answer. The parties waived a jury by written stipulation, the case was tried to the court, and during the hearing the government amended its complaint, so as to only claim $800 in place of $1,600. At the outset of the trial the defendant Pitan objected to the introduction of any evidence under the complaint upon the ground, that it failed to state facts sufficient to show a cause of action. This objection was overruled, and Pitan excepted. Thereupon the parties stipulated in open court: "That for the purposes of hearing and determining this action by the court at this time the facts pleaded in the complaint herein are admitted." The court rendered judgment for the complainant for $800 and, Carl Pitan having departed this life, his administrator, Paul Pitan, and his heirs at law, were substituted for him, and sued out this writ of error. [1] In United States v. Koleno, 141 C. C. A. 178, 226 Fed. 180, we held that an action such as this would lie at the suit of the government. It is now contended that such action is purely statutory, and arises under section 2 of the Act of March 2, 1896, as follows: "Sec. 2. That if any person claiming to be a bona fide purchaser of any lands erroneously patented or certified shall present his claim to the Secretary of the Interior prior to the institution of a suit to cancel a patent or certification, and if it shall appear that he is a bona fide purchaser, the Secretary of the Interior shall request that suit be brought in such case against the patentee, or the corporation, company, person, or association of persons for whose benefit the certification was made, for the value of said land, which in no case shall be more than the minimum government price thereof, and the title of such claimant shall stand confirmed." 29 Stats. 42, 43, c. 39 (Comp. St. 1916, § 4902). In the first place, the context of this quoted portion shows that the statute in question had reference wholly to land grants to railroads and wagon roads. In the second place, while it may be conceded that, while the land procured by fraud is "erroneously patented," it is much more. It is not only erroneously patented, but it is fraudulently procured to be patented. In speaking of patents obtained by fraud, Mr. Justice Miller, speaking for the Supreme Court, said in Únited States v. Minor, 114 U. S. 233, 241, 5 Sup. Ct. 836, 839 [29 L. Ed. 110]: "When, therefore, he succeeds by misrepresentation, by fraudulent practices, aided by perjury, there would seem to be more reason why the United States, as the owner of land of which it has been defrauded by these means, should have remedy against that fraud-all the remedy which the courts can give— than in the case of a private owner of a few acres of land on whom a like fraud has been practiced." And in the case of Southern Pacific Co. v. United States, 200 U. S. 341, 26 Sup. Ct. 296, 50 L. Ed. 507, the court said: "When by mistake a tract of land is erroneously conveyed, so that the vendee has obtained a title which does not belong to him, and before the mistake is discovered the vendee conveys to a third party purchasing in good faith, the original owner is not limited to a suit to cancel the conveyances and re-establish in himself the title, but he may recover of his vendee the value of the land up to at least the sum received on the sale, and thus confirm the title of the innocent purchaser. The conveyance to the innocent pur chaser is equivalent to a conversion of personal property." The claims of the government are stronger than the claims of a private individual. The government is not seeking to sell its lands for the highest price they will fairly bring. It is seeking to give homesteads to the people, and to do this with very little reference to whether it realizes the value of the lands or not. We therefore are forced to the conclusion that when a patent is not merely "erroneously" granted, but is obtained by fraud, the government has at least the same right a private individual would have who had been defrauded of his property, and that its rights are not exclusively statutory. With reference to private parties it is held that the measure of damages suffered by one who is fraudulently induced to make a contract of sale is the difference between the actual value of that which he parts with and the actual value of that which he receives under the contract. Rockefeller v. Merritt, 22 C. C. A. 608, 76 Fed. 909, 35 L. R. A. 633. And there is nothing in the case of United States v. Norris, 137 C. C. A. 552, 222 Fed. 14, in conflict with this holding, but much to sustain it. [2] It is next insisted that this case was barred by the statute of limitations. It is not claimed there is any statute which expressly bars the form of action here brought, but reliance is placed upon section 8 of an act to repeal timber culture laws and for other purposes (26 Stats. 1095, 1099, as amended by Act March 3, 1891, 26 Stats. 1093): "Sec. 8. That suits by the United States to vacate and annul any patent heretofore issued shall only be brought within five years from the passage of this act, and suits to vacate and annul patents hereafter issued shall only be brought within six years after the date of the issuance of such patents." It is then contended that patents after the statute of limitations expires become absolutely good, and the plaintiff in error cites United States v. Winona & St. Peter Railroad Co., 165 U. S. 463, 17 Sup. Ct. 368, 41 L. Ed. 789, and United States v. Chandler-Dunbar Co., 209 U. S. 447, 28 Sup. Ct. 579, 52 L. Ed. 881. But it is elementary that one. who has been defrauded may elect to rescind, or he may elect to ratify the transaction and sue for his damages. If, therefore, the government at any time, either within or without the statute of limitations, elected to sue for damages, it must first in effect ratify the transaction, and the patent would become as valid by the government's election as it would by virtue of the statute of limitations. It is not disputed that ordinarily the statute of limitations does not run against the government. United States v. Knight, 14 Pet. 301, 315, 10 L. Ed. 465; United States v. Throckmorton, 98 U. S. 61, 25 L. Ed. 93; United States v. Koleno, 141 C. C. A. 178, 226 Fed. 180, 182. The mere fact that the government permitted the patent to become valid by the statute of limitations in place of by its express ratification would not affect the question of the right to maintain an action for damages. It was not only so held by the court below in this case, but to the same effect in United States v. Jones (D. C.) 218 Fed. 973, and there is no decision to the contrary. This action was not barred by the statute of limitations.. [3] It is next contended that the government was in any event only entitled to recover a second time the $80 paid by Bertha E, Henry. As already stated, the government has never sought to obtain the actual value of lands from purchasers. In this very case it did not offer the land for sale at 50 cents an acre, but agreed that it would accept 50 cents an acre and the prior occupancy and improvement of the land by Bertha E. Henry. It is now claimed that the government could be cheated out of the prior occupancy and improvement, and be compelled to take some arbitrary sum, which it has fixed to receive in cash, as its full measure of damages. We have seen that the government is entitled to the same rights as a private individual when defrauded. If this case rested upon the demurrer, we would be in doubt as to whether the demurrer admitted the amount of the damages. Thompson v. Haislip, 14 Ark. 220; Greer v. Newbill, 89 Ark. 509, 117 S. W. 531; Sprague v. New York, etc., R. Co., 68 Conn. 345, 36 Atl. 791, 37 L. R. A. 638; Havens v. Hartford, etc. R. Co., 28 Conn. 69; Chapin v. Curtis, 23 Conn. 388; Darrah v. The Lightfoot, 15 Mo. 187; Galewski v. Casualty Co., 191 Ill. App. 496. But, in addition to filing a demurrer, the defendant below expressly stipulated that for the purpose of hearing and determining this action by the court at this time the facts. pleaded in the complaint herein are admitted. Under this admission the court was justified in rendering judgment for $800, the amount alleged to be the government's damages in the amended complaint. No error is shown, and the judgment of the District Court is affirmed. In re SUTTER HOTEL CO. SUTTER HOTEL CO. v. DECKER ELECTRICAL CONST. CO. et al. (Circuit Court of Appeals, Ninth Circuit. April 9, 1917.) No. 2895. 1. BANKRUPTCY 455-APPEALABLE ORDERS-CONDITIONAL ORDER. An order that, if the alleged bankrupt shall appear and plead to the petition within five days, the adjudication will be set aside and the motion to quash service of subpoena granted, being conditional, was not final, and not appealable. [Ed. Note. For other cases, see Bankruptcy, Cent. Dig. § 916.] 2. BANKRUPTCY PROCEEDINGS-DEFAULT-VACATING CONDITIONALLY. 100(2)-VOLUNTARY Where an adjudication in bankruptcy was made on default of the bankrupt after the marshal had returned the petition and subpoena as having been served on the president of the bankrupt corporation, which return prima facie established service on the corporation, and thereafter the bankrupt moved to set aside the adjudication, because the one served had resigned the presidency before he was served, but the affidavit of a petitioning creditor seriously questioned the good faith of the resignation, and the court gave the bankrupt five days within which to appear and plead to the petition, in which event the adjudication would be set aside, the order of adjudication remained in effect after the expiration of that time without any attempt by the bankrupt to comply with condition. [Ed. Note. For other cases, see Bankruptcy, Cent. Dig. §§ 131, 144.] For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes Appeal from the District Court of the United States for the First Division of the Northern District of California; Maurice T. Dooling, Judge. Involuntary proceedings in bankruptcy by the Decker Electrical Construction Company and others for the adjudication of the Sutter Hotel Company as a bankrupt. From an order denying the alleged bankrupt's motion to set aside the adjudication entered on default and to quash the service, except on condition that alleged bankrupt enter its appearance and plead to the petition, the alleged bankrupt appeals. Appeal dismissed. The record in this case shows that on the petition of three of its corporation creditors, namely, Decker Electrical Construction Company, Home Laundry Company, and Rathjen Mercantile Company, filed in the court below September 4, 1916, the appellant company was, on the 13th day of October, 1916, adjudged bankrupt and the appropriate reference ordered-the court reciting in its order "that service of said petition with a writ of subpoena has been duly served on the alleged bankrupt, and that the last day upon which pleadings may be filed has expired, and no such pleadings have been filed by any parties hereto." Thereafter, and on the 30th day of the same month of October, the Hotel Company, by its attorney, gave notice that on the 4th of November, following, or as soon thereafter as he could be heard, motion would be made to the court for an order "quashing the service of subpoena on Thomas P. Woodward, the alleged president of the said Sutter Hotel Company," on the ground that, at the time the creditors' petition and the subpœna were served upon him as president of the Hotel Company, he was not an officer or director thereof-basing the motion upon an affidavit of one Easton, which stated, among other things, that he then was, and ever since May 13, 1916, had been, secretary of the Sutter Hotel Company, and "that said affiant, as secretary of said corporation, on the 13th day of May, 1916, received in writing the resignation of one Thomas P. Woodward, as director and president of said Sutter Hotel Company, a corporation, which said resignation of Thomas P. Woodward as director and president of said Sutter Hotel Company was accepted by the board of directors on said 13th day of May, 1916; that since the said 13th day of May, 1916, the said Thomas P. Woodward has not been a director nor officer of said Sutter Hotel Company; that affiant is informed and believes, and therefore alleges, that a subpoena was served on said Thomas P. Woodward by Lawrence J. Conlon, deputy United States marshal, on the 21st day of September, 1916; that said subpoena was served on said Thomas P. Woodward as president of said Sutter Hotel Company, a corporation, and affiant alleges that at said time of service of said subpœna on said Thomas P. Woodward, he was not a director or officer of said corporation." On the coming on of the motion for hearing, the attorney for the petitioning creditors filed his own affidavit, reading, in part, as follows: "Affiant is informed and believes, and upon such information and belief alleges, that Charles A. Christin, Esq., who appears herein as attorney for said Sutter Hotel Company, has ever since the 13th day of May, A. D. 1916, been the attorney for the said Sutter Hotel Company, and that on said last-named date he was the attorney for the Jacob Z. Davis Estate Company, designated in said petitioning creditors' petition herein as the Davis Estate Company, and that on said date the said Charles A. Christin, as a part of the transactions with the Enterprise Brewing Company and the Davis Estate Company set forth in these creditors' petition on file herein, received from the said Sutter Hotel Company, for said Davis Estate Company, all shares of stock issued by said Sutter Hotel Company, properly indorsed, except 1 share issued to R. S. Woodward, 1 share issued to L. S. Melsted, and 1 certificate for 3,500 shares issued to Thomas P. Woodward, said shares so received by him constituting a majority of all the issued shares of the capital stock of said corporation; that upon the filing of these creditors' petition herein and the making of the order of said court therefor a writ of subpœna, directed to said Sutter Hotel Company, was on the 7th day of September, A. D. 1916, issued out of said court, and thereupon placed in the hands of the United States marshal of said district for service, and that on said 7th day of September, A. D. 1916, this affiant informed said Charles A. Christin, by telephone to him personally, of the filing of said petition and the issuance of said writ, and inquired of said Christin whether Thomas P. Woodward was still president of said Sutter Hotel Company, to which the said Christin replied that one R. O. Hoskins was president of said Sutter Hotel Company; that on the same day affiant wrote and sent by mail a letter to said Christin requesting said and other information concerning said Sutter Hotel Company, but has never received a reply to said letter; that affiant thereupon directed said marshal to serve said writ upon said Hoskins, who, as affiant was then informed by said Christin, was then and at all said times connected with the law office of said Christin and there employed, and said marshal thereupon repeatedly made efforts to make such service upon him at said office, but was there informed, as affiant is by him informed and verily believes, that said Hoskins was absent from said city and county, and that it was uncertain as to when he would return, and said marshal reported such inability to serve said writ to this affiant on the 12th day of September, A. D. 1916; that on said last-named day affiant reported such inability to said Christin and requested him to enter the appearance of said Sutter Hotel Company in said proceeding, but he declined to do so, and he at the same time stated to affiant that he (had) gone to the office of the clerk of said court and there read the said petition of said creditors; that said last-named day the said Christin also told this affiant that he, said Christin, had been mistaken when he had informed this affiant of the aforesaid change in the office of president of said Sutter Hotel Company, and that said Hoskins was president thereof, and he then further told affiant that no one had been elected president of said Sutter Hotel Company in the place or stead of said Woodward; that the said Woodward has been president of said Sutter Hotel Company for several years; that said petitioning creditors, and this affiant, on their information and belief, deny that Erwin C. Easton, as secretary of said corporation or otherwise, on the 13th day of May, 1916, or any other time, received in writing or otherwise the resignation of said Thomas P. Woodward as director or president of said Sutter Hotel Company, or that said resignation was accepted by the board of directors or at all on said 13th day of May, 1916, or at any other time, or that since said time said Thomas P. Woodward has not been a director nor officer of said Sutter Hotel Company; on the contrary, on their information and belief, they allege that said Thomas P. Woodward at all said times was and still is president of said Sutter Hotel Company, therefore, upon the issuance of an additional writ of subpoena herein after the original writ had been returned unserved, affiant requested said marshal to serve said writ upon said Thomas P. Woodward as president of said Sutter Hotel Company, which service was accordingly made on the 21st day of September, A. D. 1916, as shown by said marshal's return on file herein, to which reference is hereby made." Upon the showing thus made the court below, after argument by the counsel of the respective parties, "ordered that if the Sutter Hotel Company shall within five days appear and plead to the petition herein, the order adjudicating it a bankrupt will be set aside and the motion to quash service of the subpoena will be granted; otherwise, the motion will be denied, and the order of adjudication will stand as entered." It is from the order thus entered that the present appeal was taken. Charles A. Christin, of San Francisco, Cal., for appellant. Before GILBERT, ROSS, and HUNT, Circuit Judges. ROSS, Circuit Judge (after stating the facts as above). [1] The order, being conditional, necessarily was not final. It was therefore not appealable. 241 F.-24 |