United States v. Oregon Lumber Company/Dissent Brandeis

by George Sutherland

United States Supreme Court

260 U.S. 290

United States  v.  Oregon Lumber Company

 Argued: Oct. 9, 1922. --- Decided: Nov 27, 1922

Mr. Justice BRANDEIS dissenting, with whom the Chief Justice and Mr. Justice HOLMES concur.

The general rule that statutes of limitation do not run against the United States often works hardship. The rule proved so oppressive when applied to proceedings to annual patents to land, that Congress erected for such suits the six-year bar. Act March 3, 1891, c. 561, § 8, 26 Stat. 1095, 1099 (Comp. St. § 5114). In Exploration Co., Limited, v. United States, 247 U.S. 435, 38 Sup. Ct. 571, 62 L. Ed. 1200, the act was construed to mean that the 6 years do not begin to run until the cause of action is discovered. This statute did not in terms extend the bar to the government's remedy at law. United States v. Whited & Wheless, 246 U.S. 552, 38 Sup. Ct. 367, 62 L. Ed. 879, held that the law gave two remedies to protect the single right, and that the act of 1891 left intact the remedy at law for deceit practiced in securing the patent. The court, therefore, permitted recovery at law, although the remedy in equity had been barred.

The fraud here involved was practiced in connection with the acquisition of land patented in 1900. To obtain redress the government brought in 1912 a bill in equity to annual the patent. Defendants pleaded the statutory bar. The government might then have dismissed its bill; and if it had done so, it could then unquestionably have commenced an action at law for deceit. ^[1] Or the government might, under the act March 3, 1915, c. 90, 38 Stat. 956 (Comp. St. §§ 1251a-1251c), and equity rule 22 (33 Sup. Ct. xxiv), have then had the case transferred to the law side of the court, and have thus freed itself from the possibility of a statutory bar. It did not do either. Instead, it proceeded to a hearing in the equity suit, presumably because it considered the legal remedy inadequate and believed that it could establish its right to pursue the equitable remedy by showing that the fraud had been discovered within the 6 years. In this the government proved to be mistaken. The court found that the United States had full knowledge of the matters complained of more than 6 years before the suit was begun, and for that reason could not have the relief sought in equity. Even then after the adverse decision, but before entry of a decree-it was not too late to transfer the pending suit to the law side of the court, and to proceed there with the action for deceit. Such a transfer, after full hearing on the merits and a decision that relief in equity could not be had, was made without loss of any right in Friederichsen v. Renard, 247 U.S. 207, 38 Sup. Ct. 450, 62 L. Ed. 1075. But the government made no such application; the court entered a decree dismissing the bill; and no appeal was taken. Then, in 1918, the government brought the present action at law. The question now presented for decision is whether it had lost the right to do so.

The thing adjudged in the equity case was solely that the fraud had been discovered by the government more than 6 years before the commencement of the suit, and that, for this reason, the patent could not be annulled. There was no adjudication of the government's substantive right. And since it had two remedies to protect that right, and the fact found is not a bar to an action at law, no suggestion is made that the decree of dismissal bars this action as res judicata. There is likewise no suggestion of an estoppel in pais. Nor is there a suggestion that by proceeding to a hearing in the equity suit, or by failing to ask that the case be transferred to the law side of the court, the government subjected defendants to any annoyance or expense, other than that necessarily incident to unproductive litigation. The remedy at law is denied solely on the ground that the socalled doctrine of election of remedies applies; that the government had two remedies; that the two remedies were inconsistent; that, when the statutory bar was pleaded in equity, the plaintiff was obliged at its peril to make a final choice between the two remedies; and that, since it selected the one which proved not to be available, it shall have no remedy whatsoever.

The doctrine of election of remedies is not a rule of substantive law. It is a rule of procedure or judicial administration. It is technical, and, as applied in some jurisdictions, has often sacrificed substantial right to supposed legal consistency. ^[2] The doctrine has often been invoked in this court, but never before successfully. Its existence has been recognized; but in every case in which the question presented was actually one of election of remedies, this court held that the doctrine did not apply, giving as a reason that one or the other of its essential elements was absent. These essentials are that the party must have actually had two remedies and that the remedy in question must be inconsistent with the other previously invoked. Here neither of these essential elements was present.

The government did not have a remedy in equity when the suit to annual the patent was begun or at any time thereafter. That this is true was established by the decree in the equity suit. The government's alleged choice of the equitable remedy was, therefore, 'not an election, but an hypothesis.' Northern Assurance Co. v. Grand View Building Association, 203 U.S. 106, 108, 27 Sup. Ct. 27, 28 (51 L. Ed. 109); Wm. W. Bierce, Ltd., v. Hutchins, 205 U.S. 340, 347, 27 Sup. Ct. 524, 51 L. Ed. 828. For 'it is impossible to conceive of a right of election in a case where no such right existed.' Friend v. Talcott, 228 U.S. 27, 37, 38, 33 Sup. Ct. 505, 507 (57 L. Ed. 718). Thus the mere fact that the remedy first invoked was at the time unavailable precludes application of the doctrine. The reason why it was unavailable is immaterial. A party is equally free to try another remedy, whether the earlier proceeding was futile because of inability to establish assumed facts essential to the existence of the remedy then pursued or because the assumed facts did not as matter of law entitle him to the relief sought. ^[3] In the Northern Assurance Case, supra, the earlier action at law was held not to be an election, because the facts there relied on could not be proved. In the Bierce Case, supra, filing an earlier lien suit was held not to be an election, because one cannot have a lien on one's own property. In Friederichsen v. Renard, supra, suing to set aside the conveyance was not an election, because the right to rescind had been lost. In Southern Pacific Co. v. Bogert, 250 U.S. 483, 490, 491, 39 Sup. Ct. 533, 63 L. Ed. 1099, the earlier unsuccessful suits were not an election, because facts there essential could not be established. So, in the case at bar, because the equitable remedy, theretofore invoked was not in fact available to the government, its right to proceed at law was not lost, under the doctrine of election of remedies. ^[4]

Moreover, an action at law for deceit is not inconsistent with a prior unsuccessful suit to annul the patent. This case must not be confused with those in which it has been held that a prior action at law on a contract, or other proceeding arising out of it, bars a later suit to rescind, as where an action on a purchase money note has been held to bar a later suit by the vendor to set aside the conveyance for fraud. There the reason why the conveyance cannot be set aside is that by suing at law the vendor exercises his option to affirm the voidable transaction, and cannot thereafter disaffirm it. In so doing he makes a choice of substantive rights. But where the vendor's first attempt to obtain redress was by way of rescission, and there was in fact then no right to rescind, his substantive rights have not been changed. ^[5] This is the situation presented in the case at bar. The government said, in effect:

'We wish to rescind and get back the land; but if the facts or the law are such that we cannot rescind, then we wish to recover damages for the deceit.'

Certainly that is not taking inconsistent positions. See United States v. Whited & Wheless, supra, 246 U.S. 562, 564, 38 Sup. Ct. 367, 62 L. Ed. 879. Indeed, an action for damages might be permissible as a supplemental remedy, even if the equitable relief had been granted. ^[6] For annulling the patent may fail to give the government full relief. The land may have been stripped, meanwhile, of its trees or its mineral, or the deceit may have involved the government in expenses which are recoverable. It is true that under such circumstances equity, if it annulled the patent, would probably retain the cause to award recovery for all damages as suffered. But it might leave the vendor to his remedy at law; and conversely the vendor might, if he chose, limit his suit in equity to the recovery of the property. In either event he could recover his damages at law. Compare Brady v. Daly, 175 U.S. 148, 161, 20 Sup. Ct. 62, 44 L. Ed. 109; Thomas v. Sugarman, 218 U.S. 129, 30 Sup. Ct. 650, 54 L. Ed. 967, 29 L. R. A. (N. S.) 250; Zimmerman v. Harding, 227 U.S. 489, 493, 33 Sup. Ct. 387, 57 L. Ed. 608. There is, therefore, lacking here inconsistency of remedies; and for that reason, also, the doctrine of election of remedies does not apply.

There are some cases in this court, earlier than those discussed above, in which the doctrine of election of remedies was referred to when denying the relief sought. But in those cases, of which Robb v. Vos, 155 U.S. 13, 15 Sup. Ct. 4, 39 L. Ed. 52, is an example, relief was not denied because of a previous election of an inconsistent remedy. The party failed because he had theretofore made a choice of an alternative substantive right, as where one by his conduct ratifies and makes valid an unauthorized transaction otherwise void. In such cases the mere fact that the conduct relied upon consisted, in whole, or in part, of legal proceedings, is of no legal significance in this connection. ^[7]

Because the government had, as now appears, no remedy except the action at law for deceit, and also because this remedy is not inconsistent with an earlier vain attempt to rescind, a denial of the right to prosecute the present action cannot, consistently with the earlier decisions of this court, rest upon the doctrine of election of remedies. Support for the denial is sought in the fact that the government did not abandon its futile attempt to annul the patent, when it was advised by the defendants' answer that they proposed to rely upon the statutory bar. But it is well settled that a party may disregard such a warning. If he deems it doubtful which one of several possible courses will lead to relief, he may (even where the courses are inconsistent) follow one to defeat, and still pursue thereafter another remedy until he ultimately finds the one which will afford him redress, provided always that the facts do not create an equitable estoppel. ^[8] There is, of course, no suggestion here that the government acted in bad faith in refusing to abandon the equitable remedy until the trial court had decided the issue of knowledge against it. The government gained nothing, the defendants lost nothing, by the bringing of the futile suit in equity to annul the patent. However stupid or stubborn a party may have been, he is not deprived of the right to try another remedy; for, whatever the cause of his earlier futile attempt, his failure proves him to have been mistaken. To hold that this action for deceit is barred, because the government did not dismiss the earlier equity suit when it was advised by the answer that the statutory bar would be relied on, lays down a rule new in this court-a rule inconsistent with the principles heretofore established, and opposed to a long line of well considered decisions in state courts. To do this seems to me regrettable.

Notes

1. See Bistline v. United States, 229 Fed. 546, 144 C. C. A. 6.
2. See Election of Remedies, A Criticism, by Charles P. Hine, 26 Harvard Law Review, 707; Election between Alternative Remedies, by Walter Hussey Griffith, 16 Law Quarterly Review, 160; Id., by F. W. Galbraith, 16 Law Quarterly Review, 269.
3. Barnsdall v. Waltemeyer, 142 Fed. 415, 420, 73 C. C. A. 515; Water, Light & Gas Co. v. Hutchinson, 160 Fed. 41, 43, 90 C. C. A. 547, 19 L. R.A. (N. S.) 219; Harrill v. Davis, 168 Fed. 187, 195, 94 C. C. A. 47, 22 L. R. A. (N. S.) 1153; Brown v. Fletcher, 182 Fed. 963, 971-974, 105 C. C. A. 425; Rankin v. Tygard, 198 Fed. 795, 806, 119 C. C. A. 591; Union Central Life Ins. Co. v. Drake, 214 Fed. 563, 548, 131 C. C. A. 82; Agar v. Winslow, 123 Cal. 587, 590, 56 Pac. 422, 69 Am. St . Rep. 84; Capital City Bank v. Hilson, 64 Fla. 206, 60 South. 189, Ann. Cas 1914B, 1211; Asher v. Pegg, 146 Iowa, 541, 543, 123 N. W. 739, 30 L. R. A. (N. S.) 890; Hillerich v. Franklin Ins. Co., 111 Ky. 255, 63 S. W. 592; Clark v. Heath, 101 Me. 530, 64 Atl. 913, 8 L. R. A. (N. S.) 144; Wilson v. Knapp, 143 Mich. 64, 106 N. W. 695; Kelsey v. Agricultural Insurance Co., 78 N. J. Eq. 378, 383, 79 Atl. 539.
4. In strong v. Strong, 102 N. Y. 69, 73, 5 N. E. 799, an earlier proceeding to rescind was held not to be an election because by reason of laches and lack of tender there was then no right to rescind.
5. Zimmerman v. Robinson & Co., 128 Iowa, 72, 102 N. W. 814, 5 Ann. Cas. 960; Marshall v. Gilman, 52 Minn. 88, 97, 53 N. W. 811; Tullos v. Mayfield (Tex. Civ. App.) 198 S. W. 1073; Griffin v. Williams (Tex. Civ. App.) 142 S. W. 981. Compare McGibbon v. Schmidt, 172 Cal. 70, 155 Pac. 460; Glover v. Radford, 120 Mich. 542, 544, 79 N. W. 803; Freeman v. Fehr, 132 Minn. 384, 388, 157 N. W. 587. See Cahoon v. Fisher, 146 Ind. 583, 44 N. E. 664, 45 N. E. 787, 36 L. R. A. 193; Conrow v. Little, 115 N. Y. 387, 22 N. E. 346, 5 L. R. A. 693.
6. See Crockett v. Miller, 112 Fed. 729, 736, 50 C. C. A. 447; Lenox v. Fuller, 39 Mich. 268, 273.
7. Thus in Robb v. Vos, 155 U.S. 13, 34, 39, 15 Sup. Ct. 4, 39 L. Ed. 52, the question was whether Robb and Strong, trustees, by filing an answer and cross-petition in another suit had ratified Kebler's want of authority, and therefore made the title of Vos and Stix to the land in question good. In Van Winkle v. Crowell, 146 U.S. 42, 51, 13 Sup. Ct. 18, 36 L. Ed. 880, the commencement of a suit to enforce a mechanic's lien was an election to treat the title to property sold under conditional sale as having passed to the purchaser. In Stuart v. Hayden, 169 U.S. 1, 18 Sup. Ct. 274, 42 L. Ed. 639, commencement of an action which was deemed in effect an action for the purchase price, was held to have ratified a sale of real estate, which the plaintiff later attempted to rescind. In Peters v. Bain, 133 U.S. 670, 683, 695, 10 Sup. Ct. 354, 33 L. Ed. 696, it was held that there was no election of remedies. Green v. Bogue, 158 U.S. 478, 15 Sup. Ct. 975, 39 L. Ed. 1061, was a case of res judicata. In Dickson v. Patterson, 160 U.S. 584, 588, 592, 16 Sup. Ct. 373, 40 L. Ed. 543, there was only one remedy involved. The question was whether plaintiff had elected to ratify the transaction after knowledge of the fraud. In Dahn v. Davis, 258 U.S. 421, 42 Sup. Ct. 320, 66 L. Ed. 696, the question was one of statutory construction, namely, whether an employee injured during federal control of the railroad had a right to compensation under both the Federal Control Act (Comp. St. 1918, Comp. St. Ann. Supp. 1919, §§ 3115 3/4 a-3115 3/4 p) and the Compensation Act (Comp. St. §§ 8932 a-8932 uu), or only under one.
8. Strong v. Strong, 102 N. Y. 69, 73, 5 N. E. 799; Henry v. Herrington, 193 N. Y. 218, 86 N. E. 29, 20 L. R. A. 249; Snow v. Alley, 156 Mass. 193, 195, 30 N. E. 691; Clark v. Heath, 101 Me. 530, 64 Atl. 913, 8 L. R. A. (N. S.) 144; Wilson v. Knapp, 143 Mich. 64, 106 N. W. 695; Glover v. Radford, 120 Mich. 542, 544, 79 N. W. 803; Sullivan v. Ross' Estate, 113 Mich. 311, 319, 71 N. W. 634, 76 N. W. 309; Lenox v. Fuller, 39 Mich. 268; Marshall v. Gilman, 52 Minn. 88, 97, 53 N. W. 811; Garrett v. Farwell Co., 199 Ill. 436, 65 N. E. 361; Zimmerman v. Robinson & Co., 128 Iowa, 72, 102 N. W. 814, 5 Ann. Cas. 960; American Pure Food Co. v. Elliott & Co., 151 N. C. 393, 66 S. E. 451, 31 L. R. A. (N. S.) 910; Tullos v. Mayfield (Tex. Civ. App.) 198 S. W. 1073; Griffin v. Williams (Tex. Civ. App.) 142 S. W. 981; Rankin v. Tygard, 198 Fed. 795, 119 C. C. A. 591.