PACIFIC MILL & MINING CO. v. LEETE, 94 F. 968

MORROW, Circuit Judge. The question to be determined is, which of the parties is entitled to the money repaid by the government? It appears that the defendant in error (plaintiff in the court below) was an original locator of the land, and paid the government its price for the same, lie thereafter sold his interest, and his grantee in turn sold to the plaintiff in error. While the land was in its possession, the government canceled the patent previously issued therefor, but no attempt was made to obtain a return of the purchase price by the plaintiff in error.

A few years later the defendant in error bargained for the property and purchased it. He then attempted 1<> recover from the government the original purchase price, and found it necessary to collect it through the plaintiff in error, his grantor, as it was the owner of the property at the date of cancellation of the patent. He asked its assistance, and it was at first given, but later revoked, and the money collected by plaintiff in error for its own use and benefit.

To enable the plaintiff in the court below to recover this money from the defendant, it was necessary for him to show that there was an agreement or understanding between them, at the date of the deed from defendant to plaintiff in 1895, that plaintiff should have the money upon its collection from the government, and that the right to the recovery of this money was an element of consideration in his purchase of the land.

There was no specific agreement in writing in regard to the transaction, ansi the language of the correspondence must be the guide in determining the nature of the understanding of the respective parties. The oral evidence related principally to the acts and conduct of the parties subsequent to the execution of the deed, and, as tending to show the understanding of the parties at the time the deed was executed and delivered, it was admissible.

The correspondence shows that early in the negotiations the defendant in error claimed to be the owner and entitled to one-half of the money in the hands of the government, whether he purchased the property of plaintiff in error or not. It is also shown that the plaintiff in error knew that this money could be recovered from the government, and, when defendant in error asserted his right to one-half of it, no denial was made by plaintiff in error of this right. In the further negotiations, resulting in an offer by defendant in error and its acceptance by plaintiff in error, no mention was made of this money.

Plaintiff in error did not assert any claim to this money for itself at this time, and, in fact, after the transaction was closed and title had passed to the defendant in error, the plaintiff in error regularly executed a power of attorney to the attorneys of defendant in error for the express purpose of assisting the defendant in error to collect the amount for himself.

It was only upon being advised that the land department required a quitclaim deed from it, and that the warrant on the United States treasury would issue in the plaintiff’s name, that it revoked this power of attorney, and proceeded to the collection of the money independent of the claims or rights of defendant in error. Plaintiff in error claims that it was induced to make the power of attorney by' tbe representations of defendant in error as to bis ownership of tbe money, and was then in ignorance of its legal rights.

It is true that parties acting in ignorance of their rights are protected by the law from imposition and deceit; but the facts show that defendant in error did not deceive or impose upon plaintiff, as, at the very outset of the negotiations, - he stated his claim of an interest in the money held by the government, and immediately, upon receiving a deed to the interest of plaintiff in error, proceeded to the collection of the entire amount.

The presumption is warrantable that, had the statutes permitted an assignment of an account against the United States treasury, the defendant in error would have recoverd the money from the government without objection from the plaintiff in error. “The doctrine is settled that, in general, a mistake of law, pure and simple, is not adequate ground for relief.

Where a party with knowledge of all the ■ material facts, and without any other special circumstances giving rise to an equity in his behalf,, enters into a transaction affecting his interests, rights, and liabilities, under an ignorance or error with respect to the rules of law controlling the case, courts will not, in general, relieve him from the consequences of his mistake.” 2 Pom. Eq. Jur. § 842. A leading case under this rule, and illustrating its reasons, is Bilbie v. Lumley, 2 East, 469.

In this case an insurer, with knowledge of all the facts which relieved him of his liability on a policy of insurance wliich he had signed, but in ignorance of the legal rights resulting’ from those facts, paid the amount he had insured, and afterwards he brought an action to recover back the money as paid under a mistake. The court held that the action could not be maintained. Lord Ellen-borough said: “Every man must be taken to be cognizant of tbe law; otherwise, there is no saying to what extent the ignorance might not be carried.

It would be urged in almost every case.” Had the defendant in error been able, under the laws of the United States, to collect the money in controversy from the government upon the power of attorney executed by the plaintiff in error, the latter would not, under the doctrine of this case, have been able to recover it from the defendant in error.

This being so, it is not perceived how a statute of the United States relating to the assignment of claims against the government, and designed only for the protection of the latter, can so change the rights of the parties as to give the plaintiff in error a right to the fund which it did not otherwise possess or have a legal right To enforce.

Under the facts as disclosed by the testimony, the plaintiff in error should undoubtedly be considered as having acquiesced in the claim of defendant iu error to the money at the time the deed was executed by plaintiff in error, and also when it executed and gave to him the power of attorney to collect for himself the money from the government.

The minds of the. parties met in the fulfillment of their agreement or contract on these two occasions, and the plaintiff in error is estopped from- denying that understanding later, upon the discovery ’that it had possessed certain legal rights of which it had not availed itself. Having allowed the defendant in error to act upon the understanding had by both parties, the plaintiff in error cannot now deny that understanding, to the loss or injury of the defendant in error. Storrs v. Barker, 6 Johns. Ch. 166; Mississippi Coal & Ice Co. v. The Ottumwa Belle, 78 Fed. 613; Illinois Trust & Savings Bank v.

City of Arkansas City, 40 U. S. App. 257, 22 C. C. A. 171, and 76 Fed. 271; Smiley v. Barker, 55 U. S. App. 125, 28 C. C. A. 9, and 83 Fed. 684; Markham v. O'Connor, 52 Ga. 183; Cunningham v. Patrick, 136 Mo. 621, 37 S. W. 817. “The vital principle [of estoppel in pais] is that he who by his language or conduct leads another to do what he would not otherwise have done shall not subject such person to loss or injury by disappointing the expectations upon which he acted. Ruc.h a change of position is sternly forbidden. It involves fraud and falsehood, and the law abhors both.” Dickerson v. Colgrove, 100 U.

S. 578; Fritter, Eq. §§ 21, 22. “Equitable estoppel, in the modern sense, arises from the conduct of a party, using that word in its broadest meaning as Including his spoken or written words, his positive acts, and his silence or negative omission to do anything. Its foundation is justice and good conscience.” 2 Pom. Eq. Jur. § 802. “The doctrine seems to be established by authority that the conduct and admissions of a party operate against him in the nature of an estoppel, wherever*, in good conscience and honest dealing, he ought not to be permitted to gainsay them.

Thus negligence becomes constructive fraud, although, strictly speaking, the actual intention to mislead or deceive may be wanting, and the party may be innocent, if innocence and negligence may be deemed compatible. In such cases the maxim is justly applied to him that, when one of two innocent persons must suffer, he shall suffer who by his own acts occasioned the confidence and loss.” Stevens v. Dennett, 51 N. H. 324.

In view of these established principles of law, which appear to be applicable to the conduct of the plaintiff in error in Lhis transaction, we are of the opinion that the money refunded by the government and collected by the plaintiff in error belonged of right to the defendant in error. The judgment of the lower court is therefore affirmed.