(39 Sup.Ct.) been no fraud. The case was remanded for reconsideration to the Board of General Appraisers. While the protest concerning the 14 entries was pending, the collector had, for like alleged fraud, ordered a reliquidation of the remaining 5 of the 19 entries, and by protest and payment of duties the action of the collector as to those entries was before the Board of General Appraisers for consideration. They, were heard by the Board along with the entries which the Board had under consideration by virtue of the remanding order of the Court of Customs Appeals. The Board held, in view of the ruling of the Court of Customs Appeals as to the presumption of power and burden of proof, that the reliquidation in both cases was valid and that the protests were consequently without merit. Both cases were then appealed to the Court of Customs Appeals, which in an elaborate opinion reiterated and applied its previous ruling (7 Ct. Cust. App. 243), and the cases are here on the allowance of a certiorari. of proof which the construction sustained, the remedial purposes of the statute were either wholly negatived or in any event greatly perverted. It is indeed true that in the opinion on the first hearing below and in the argument at bar a suggestion was made that as in the particular instance the importer had become an actor seeking to question the reliquidation, he thereby, as an actor, assumed the burden of proof as to the absence of fraud which would not have rested upon him under the statute had he refused to pay the duty resulting from the reliquidation and awaited action taken against him by the United States to enforce it. But as the court below expressly declared that the proceeding taken *was appropriate to resist the result of the reliquidation, if illegal, it cannot be that the right to correct the wrong was lost by resort to the remedy appropriate for its correction. Moreover the proposition can alone rest upon the assumption that the limitation on power which the statute imposed was ephem[1] Obviously the whole case turns upon eral while from the text it is certain that the significance of section 21 of the Act of it was permanent and controlling. The 1874, the text of which is as follows (18 Stat. cogency of this conclusion stands out in bold 186, 190): relief when it is considered that the reme"Whenever any goods, wares, and merchan-dial purpose of the statute was to protect dise shall have been entered and passed free the citizen from the unlimited power to reof duty, and whenever duties upon any import- liquidate and the uncertainties affecting comed goods, wares, and merchandise shall have mercial transactions resulting from the been liquidated and paid, and such goods, existence of such power. The inevitable rewares, and merchandise shall have been deliver-sult of the argument is to cast upon the ed to the owner, importer, agent, or consignee, citizen the perpetual burden of showing that such entry and passage free of duty and such he had not been guilty of wrong as the only settlement of duties shall, after the expiration of one year from the time of entry, in the ab- means of escaping the exercise against him sence of fraud and in the absence of protest by of the unlimited power to reliquidate which the owner, importer, agent, or consignee, be it was the purpose of the statute to prevent. final and conclusive upon all parties." Indisputable also is it, as stated by the Court of Customs Appeals and long previously pointed out in United States v. Phelps et al., 17 Blatchf. 312, Fed. Cas. No. 16039, that the remedy intended to be accomplished by the section in question was to prevent the right to reliquidate, which had previously been exerted without limit, from being exercised except in the particular conditions stated, and thus in the interest of the citizen to circumscribe the power to the instances specified in order that uncertainty as to the finality of customs entries might be removed and the security of commercial transactions be safeguarded. But from this premise we are of opinion that the error of the construction given to the statute below becomes at once apparent, since, in the first place, by a presumption of power it virtually removes the limitation as to the exercise of the power which the statute created, and further, as the necessary result of the onus 39 SUP.CT.-35 [2] It is contended that although it be admitted that the statute was wrongly construed below, nevertheless the reliquidation should be now sustained because there was adequate proof in the record to show the existence of fraud which justified the reliquidation order without reference to the presumption upon which the court below based its conclusion. We do not, however, think this view can be sustained, since, the erroneous ruling as to the statute dominates the entire situation and exacts that the question of the existence of the fraud necessary to give rise to the power to reliquidate should be disposed of by the tribunals peculiarly competent to consider such question, disembarrassed from any mistaken construction as to the presumption created by the statute. It follows that the judgment of the Court of Customs Appeals must be and it is reversed and the cases remanded to the Board of General Appraisers for further proceedings not inconsistent with this opinion. And it is so ordered. (250 U. S. 387) NORTHERN PAC. RY. CO. et al. v. Mc- 7. PUBLIC LANDS 108-RAILROAD GRANT -LIEU LAND SELECTION. Whether lieu lands selected by railroad company in place of those primarily granted were, (Argued Jan. 22, 1919. Decided June 9, 1919.) when the selections were tendered, so occu No. 172. SWAMP LAND 1. PUBLIC LANDS 91 RAILROAD GRANT-CONFLICT. The pendency of a claim by the state of Oregon under the swamp land grant made by Act Sept. 28, 1850 (Comp. St. 88 4958-4960), and Act March 12, 1860, to lands which would otherwise pass to the Northern Pacific Railroad as parts of odd-numbered sections within the place limits of land grant made by Act July 2, 1864, prevented such lands from passing under the grant as place lands, regardless of whether the swamp land claim was well grounded. 2. PUBLIC LANDS pied and appropriated as not to be properly subject to acquisition, is a question for determination by the Secretary of the Interior, whose approval or disapproval involves an exercise of sound, but not arbitrary, discretion, and makes it permissible for him, where a selection is proffered for land which a bona fide occupant, misunderstanding his rights, has reclaimed, to reject the selection and hold title in the United States until the occupant may be enabled, within the limits of existing law or by special act, to obtain title. 8. PUBLIC LANDS 120-PATENTS-PATENT OF OCCUPIED LAND. Where, at the time a patent was issued to a railroad under a lieu land selection, the parcel of land was so occupied or appropriated that it properly could not be selected and patented in place of land found to be mineral, that may afford basis for suit by the United States to cancel the patent, or basis for holding the railroad company as trustee of title for the occu 116-PATENT-EFFECT. Where, through mistake in the Land Department, lands which were claimed by the state of Oregon as swamp lands under Act Sept. 28, 1850 (Comp. St. §§ 4958-4960) and Act March 12, 1860, were erroneously patented as place lands under the grant made to Northern Pacific | Railroad by Act July 2, 1864, such patents 9. PUBLIC LANDS 117-PATENTS-ATTACK. carried the legal title, but the United States was entitled to a reconveyance, and in equity remained the true owner. pant. That land selected by railroad company in lieu of its primary grant was so occupied or appropriated that it properly could not be selected and patented does not entitle the occupant to complain on behalf of the United States, or assail the patent collaterally. On Writ of Certiorari to the Supreme Court of the State of Oregon. Suit to quiet title by E. W. McComas against the Northern Pacific Railway Company and others. A judgment for plaintiff, which was affirmed by Supreme Court of Oregon (82 Or. 639, 161 Pac. 562), was subse 4. PUBLIC LANDS 82-RAILROAD GRANTS- quently modified on rehearing (82 Or. 639, LIEU LAND SELECTIONS. Pending lieu land selections by Northern Pacific Railroad in place of lands excluded from the primary grant because mineral require the approval of the Secretary of the Interior to make them effective. 162 Pac. 862), and defendants bring certiorari. Reversed and remanded. *Messrs. Charles Donnelly, of St. Paul, Minn., Charles H. Carey, James B. Kerr, aud Charles A. Hart, all of Portland, Or., and C. W. Bunn, of St. Paul, Minn., for petiPENDING tioners. 5. PUBLIC LANDS m 103(4) Where full title to land was in the United States, and there were conflicting pending claims, the courts may not take up the adjudication of such claims, but must await the decision of the land officers and the issue of patents in regular course. Mr. Harvey M. Friend, of Washington, D. C., for respondent. Mr. Justice VAN DEVANTER delivered the opinion of the Court. This is a suit to quiet title in the plaintiff to five small tracts of land in Umatilla county, Oregon, the right to such relief being predicated solely on adverse possession under color of title for ten years, the period prescribed in a local statute. The plaintiff obtained a judgment, which at first was affirmed by the Supreme Court of the state and then on a petition for rehearing was modified as to two of the tracts. McComas v. North For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes +388 389 (39 Sup.Ct.) ern Pac. R. Co., 82 Or. 639, 161 Pac. 562, [ing under the grant as place lands. Whit162 Pac. 862. The case is here on writ of certiorari. There was substantial testimony tending to show that McComas, the plaintiff, and his predecessors had been in undisputed possession of the lands for ten years when the suit was brought and that during that period they had been cultivating the lands and claiming the same under the deeds from the state hereinafter mentioned and had put improvements thereon costing more than $10,000. The other facts are set forth in a stipulation found in the record. The lands are all parts of odd-numbered sections within the primary or place limits of the land grant made to the Northern Pacific Railroad Company by the Act of July 2, 1864, c. 217, 13 Stat. 365. At the date of that act they were public lands of the United States and they continued to be such at the time the line of road opposite which they lie was definitely located, save as their status was affected by a pending claim of the state under the swamp-land grant made by the Act of September 28, 1850, c. 84, 9 Stat. 519 (Comp. St. §§ 4958-4960), and the Act of March 12, 1860, c. 5, 12 Stat. 3. This claim was shown by a swamp land selection list filed in the Land Department November 23, 1872, and was still pending in that department in 1892 and 1895. In those years the state, without waiting for a determination of its claim by the department executed deeds for the lands to persons who in turn executed deeds therefor to the plaintiff. As to three of the tracts the swamp land claim was examined and rejected by the department some time before this suit was begun, and as to the other two it was still pending at that time. ney v. Taylor, 158 U. S. 85, 92, 94, 15 Sup. Ct. 796, 39 L. Ed. 906; Northern Pacific R. R. Co. v. Sanders, 166 U. S. 620, 630, 17 Sup. Ct. 671, 41 L. Ed. 1139; Northern Pacific R. R. Co. v. Musser-Sauntry Co., 168 U. S. 604, 609, 18 Sup. Ct. 205, 42 L. Ed. 596. But through some mistake in the Land Department three of the tracts were erroneously patented to the railroad company as place lands between 1906 and 1909. Without doubt the patents passed the legal title, but the United States was entitled to a reconveyance from the railroad company and in equity remained the true owner. Germania Iron Co. v. United States, 165 U. S. 379, 17 Sup. Ct. 337, 41 L. Ed. 754. The two tracts not patented as place lands were selected by the railroad company in 1908 and a succeeding year in lieu of other lands in place excluded from the grant by reason of being mineral. These selections were received by the local land office and were awaiting action by the Secretary of the Interior at the time of the trial. This suit was brought September 25, 1912. Shortly thereafter the railroad company, recognizing that the patents theretofore issued to it for three of the tracts had been erroneously issued, reconveyed the title to the United States and subsequently selected those tracts in lieu of other tracts in place excluded from the grant by reason of being mineral. These selections were received by the local land office; one was approved by the Secretary of the Interior and passed to patent, and the other two were at the time of the trial pending before that officer. The plaintiff made no effort by pleading or evidence to show that the swamp land claim was well grounded or that he, his predecessors or the state, had in any way become entitled to receive the title from the United States. [3, 4] With some hesitation the trial court concluded that the lands were not excepted from the grant of lands in *place by reason of the existence of the swamp land claim at the date of the definite location, and therefore that on the definite location, by which the place limits were identified, the title passed to the railroad company, the grant being one in præsenti as respects place lands falling within its terms and not within its excepting or excluding clauses, and the provision for patents being intended only to give further assurance. Deseret Salt Co. v. Tarpey, 142 U. S. 241, 12 Sup. Ct. 158, 35 L. Ed. 999; Toltec Ranch Co. v. Cook, 191 U. S. 532, 24 Sup. Ct. 166, 48 L. Ed. 291. On that theory a decree was entered quieting the title in the plaintiff as to all the tracts. [1, 2] The definite location of the line of road opposite which the lands lie was effected by a map filed in the Land Department and approved June 29, 1883. The grant to the railroad company was of all the odd-numbered sections of public land within designated limits on either side of the line of road as so located, with an express exception of such lands as at the time of definite location were reserved, sold, etc., or were not "free from pre-emption or other claims or rights." There was also an express exclusion of all mineral lands and a provision that "in lieu thereof a like quantity of unoccupied and unappropriated agricultural lands in odd-numbered sections nearest to the line of said road may be selected" under the direction of the Secretary of the Interior. By reason of the pendency of the swamp land claim at the time of the definite location all the tracts in question were expected from the grant of But the court should have held that the lands in place, and this whether the claim swamp land claim pending, as it was, at the was well grounded or otherwise; that is to date of the definite location prevented these say, the fact that the claim was pending and lands from passing under the grant of lands undetermined prevented the lands from pass-in place. The decisions of this court before *391 cited leave no room for doubt on this point. [ by the courts in the exercise of their general The cases of Iowa R. Land Co. v. Blumer, 206 power. Gauthier v. Morrison, 232 U. S. 452, U. S. 482, 27 Sup. Ct. 769, 51 L. Ed. 1148, and 461, 34 Sup. Ct. 384, 58 L. Ed. 680. Missouri Valley Land Co. v. Wiese, 208 U. [7] Whether the tracts as to which the S. 234, 28 Sup. Ct. 294, 52 L. Ed. 466, relied swamp land claim is still pending were such on by the plaintiff, are not apposite. The as came within the terms of the swamp land lands there in question were within the place grant is a question of fact the decision of limits and at the time of definite location which is expressly committed to the Land were free from other claims; so they were Department; and this also is true of the not excepted from the grant, as here, but question whether the tracts covered by the passed from the government on the definite railroad company's lieu land selections were location. It follows that as to the three when the selections were tendered so octracts erroneously patented as before shown cupied and appropriated as not properly to the railroad company had no title, legal or be subject to acquisition *in that way. Thei equitable, prior to the issue of the patents. approval or disapproval by the Secretary of Up to that time the title was in the United the Interior of such lieu selections is not States, and of course no prescriptive right | merely a formal act. It involves an exercise was acquired against it under- the local stat- of sound, but not arbitrary, discretion and ute. Besides, the title received through makes it admissible for him, where a sethose patents was turned back to the United lection is proffered for land which a bona States before the trial and this operated to fide occupant, misinformed and misunderrestore the three tracts to their prior status standing his rights, has reclaimed and imas public lands. The title under those pat-proved at large cost, to reject the selection ents-and it was merely the naked legal and hold the title in the United States until, title did not remain in the railroad com- as this court has said, "within the limits of pany for anything like the period named in existing law or by special act of Congress," the local statute, if that be material. As to the occupant may be enabled to obtain title the other two tracts the railroad company from the United States. Williams v. United up to the time the suit was brought had States, 138 U. S. 514, 524, 11 Sup. Ct. 457, 461 nothing more than pending lieu land selec- (34 L. Ed. 1026). tions which required the approval of the Secretary of the Interior to make them effective (Wisconsin Central R. R. Co. v. Price County, 133 U. S. 496, 512, 10 Sup. Ct. 341, 33 L. Ed. 687), but as yet they had not received his approval. [8,9] As to the fifth tract the railroad company at the time of the trial held a patent issued pending the suit on a lieu land selection but recently initiated; so the prescriptive right asserted by the plaintiff could not possibly include that tract. If, as he asserts, the tract was so occupied or appropriated that it properly could not be selected and patented in lieu of land in place found to be mineral, that may afford an adequate basis for a suit by the United States to cancel the patent (Diamond Coal & Coke Co. v. United States, 233 U. S. 236, 34 Sup. Ct. 507, 58 L. Ed. 936), or afford a basis for holding the railroad company as a trustee of the title for [5, 6] The situation then at the time the case was heard in the trial court was this: The railroad company had neither the legal nor the equitable title to four of the tracts. Instead, the full title was in the United States and all existing claims to them arising under the land grants and other public land laws were pending in the Land Department, whose officers were specially charged by law with their examination and determina-him if, notwithstanding the silence of the tion and with the disposal of the title accordingly. It is settled that in such a situation the courts may not take up the adjudication of the pending claims, but must await the decision of the land officers and the issue of patents in regular course. Michigan Land & Lumber Co. v. Rust, 168 U. S. 589, 592, 594, 18 Sup. Ct. 208, 42 L. Ed. 591; Brown v. Hitchcock, 73 U. S. 473, 19 Sup. Ct. 485, 43 L. Ed. 772; Cosmos Exploration Co. v. Gray Eagle Oil Co., 190 U. S. 301, 315, 23 Sup. Ct. 692, 24 Sup. Ct. 860, 47 L. Ed. 1064; Humbird v. Avery, 195 U. S. 480, 502, 25 Sup. Ct. 123, 49 L. Ed. 286. There is, however, a related The Supreme Court of the state in its final jurisdiction which the courts may exercise | opinion came nearer the views here expressed pending the final action of those officers; than did the trial court, but it assumed that they may protect a possession lawfully acquired or restore one wrongfully interrupted, for that is a matter which is not confided to the Land Department and may be dealt with present record on the subject, he was entitled to a patent for the tract (Svor v. Morris, 227 U. S. 524, 529, 530, 33 Sup. Ct. 385, 57 L. Ed. 623); but it does not enable him to complain on behalf of the United States or to assail the patent collaterally (Hoofnagle v. Anderson, 7 Wheat. 212, 214, 215, 5 L. Ed. 437; Smelting Co. v. Kemp, 104 U. S. 636, 647, 26 L. Ed. 875; Bohall v. Dilla, 114 U. S. 47, 51, 5 Sup. Ct. 782, 29 L. Ed. 61; Sparks v. Pierce, 115 U. S. 408, 6 Sup. Ct. 102, 29 L. Ed. 428; Fisher v. Rule, 248 U. S. 314, 318, 39 Sup. Ct. 122, 63 L. Ed. 263). the reconveyance by the railroad company to the United States was not accepted by the latter and so was of no effect. In this the court was mis*taken, for it affirmatively ap *893 *394 (39 Sup.Ct.) 5. COURTS 347-FEDERAL COURT PRACTICE -DENIALS. pears not only that the land officers after the found that he was guilty of a breach of his reconveyance entertained the lieu selections common-law liability. of the same tracts, but also that they approved one of those selections and passed it to patent. Besides, the ultimate judgment entered by the court departs somewhat-possibly through a clerical inadvertence-from its final opinion. The judgment must be reversed and the cause remanded for further proceedings not inconsistent with the views here expressed. Judgment reversed. (250 U. S. 504) BOWERMAN v. HAMNER. Affirmative allegations of defense in an answer filed in an equity suit must be deemed denied, under equity rule 31 (198 Fed. xxvii, 115 C. C. A. xxvii). 6. BANKS AND BANKING 254 NATIONAL BANKS-CONTINUATION IN OFFICE. As Rev. St. § 5145 (Comp. St. § 9683), declares that directors shall hold office for one year and until their successors are elected and qualify, one who was elected and duly qualified as director of a national bank in 1910 must, in the absence of evidence that he resigned or refused to qualify when reelected in the following year, be treated as a director during the year 1911, in which the bank failed, where the only (Argued April 28 and 29, 1919. Decided June 9, evidence as to his status was a letter bearing 1919.) No. 289. 1. BANKS AND BANKING 253-NATIONAL BANKS-LIABILITY OF DIRECTORS. While, in a suit for damages against national bank directors, based solely upon a violation of duty imposed by the National Bank Act, it is not enough to show a negligent violation of the act, but something more, in effect an intentional violation, must be shown to justify a recovery, yet the National Bank Act does not relieve directors from the common-law duty to diligently and honestly manage the affairs of the association. 2. BANKS AND BANKING 254-NATIONAL BANKS-LIABILITY OF DIRECTORS-BILL. In a suit against national bank directors, a bill may be framed so as to charge, not only a violation of the duty imposed by the National Bank Act, but a violation of their common-law obligations. 3. BANKS AND BANKING 253-NATIONAL BANKS-DIRECTORS-LIABILITY. Where a director of a national bank resided some 200 miles distant from the site of the bank, and during the entire period of his directorate did not attend a directors' meeting or give any attention to the affairs of the bank, which were so mismanaged that failure resulted, he is liable for breach of his common-law duty to honestly and diligently administer the affairs of the bank, even though he cannot be held liable because the officers in charge made loans in excess of the limit imposed by Rev. St. § 5200 (Comp. St. § 9761). 4. APPEAL AND ERROR DETERMINATION. Appeal from the United States Circuit Court of Appeals for the Ninth Circuit. Suit by Frank R. McCormick, as receiver of the First National Bank of Salmon, against Guy E. Bowerman and others. A decree for the named defendant was reversed by the Circuit Court of Appeals (McCormick v. King, 241 Fed. 737, 154 C. C. A. 439), and said defendant appeals; C. D. Hamner, who succeeded Frank R. McCormick as receiver, being substituted in his stead. Affirmed. *Messrs. Oliver O. Haga and James H. Richards, both of Boise, Idaho, for appellant. Mr. James M. Stevens, of Pocatello, Idaho, for appellee. Mr. Justice CLARKE delivered the opinion of the Court. This is a suit, commenced in the United States District Court for the District of Idaho, Eastern Division, by the receiver of the First National Bank of Salmon, against the former executive officers and directors of the bank, to obtain an accounting and decree for money lost by the alleged unlawful and negligent management of the affairs of the bank. *The sole appellant, Bowerman, was a direc1177(6)-REVIEW-tor, but not an executive officer of the bank, from its organization in January, 1906, until its failure in August, 1911, and, as owner of $10,000 of the capital stock, he was the largest stockholder but one. Where a bank director construed a bill by the receiver as relying solely on a breach of statutory duty and declined to offer any evidence, held, that he must be charged with notice that in equity decision is subject to review on both law and facts, and in view of the hardship that it would work upon the receiver of the in The bank was located in a small town in Idaho. It had a capital stock of only $25,000, which was increased in February, 1910, to $50,000, and it had a book surplus of $15,000 solvent bank the director is not entitled to an opportunity to produce evidence on the question -$5,000 of which was improperly carried of his common-law liability, where the appellate to the surplus account in July, 1910, when court, on appeal from a decision in his favor, the capital was certainly impaired. For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes *506 *505 |