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respects are unable to comply with the order of the District Court.
The judgment of the District Court was proper. The judgment of the Circuit Court of Appeals is
UNITED STATES v. DUNN ET AL.
APPEAL FROM THE CIRCUIT COURT OF APPEALS FOR THE
No. 120. Argued March 13, 1925.-Decided April 13, 1925. 1. Parties who take a lease of a ward's property under a secret.
agreement with the guardian making the lease that it shall inure in part to his personal benefit, hold the lease, and if that be transferred to a purchaser, hold the proceeds they acquire from it, as trustees ex maleficio for the ward without regard to whether the ward was actually damaged by the fraud of the guardian.
P. 130. 2. In such cases, the ward may, at his option, follow the frauduArgument for Appellees.
lently diverted trust res until it reaches the hands of a bona fide purchaser for value, or claim the proceeds of the sale or other disposition of it in the hands of the person who fraudulently acquired it from the fiduciary and in the hands of that person's
donees. P. 132. 3. A suit to establish an equitable claim to specific property may
be prosecuted to subject the proceeds of that property to the trust, if it develop in the course of the trial that the defendant has conveyed it away in violation of his equitable duty to the plain
tiff. P. 133. 4. The guardian of an Indian leased his ward's land partly
in consideration of a secret interest for himself agreed to by his lessees; and afterwards, in a compromise between the lessees and one who had obtained a lease of the same land from the Indian's curator, the guardian's lease was executed by the curator also and, having been approved by a County Court and by the Secretary of the Interior, was assigned to a corporation, shares of which were issued to the respective lessees and parties claiming under them, the assignment of the lease being the sole consideration for the shares distributed to the lessees of the guardian. Held, (a) that a suit by the United States, on behalf of
the Indian, to set the lease aside or for alternative relief, could be prosecuted to reach the shares, or the proceeds thereof, in the hands of the fraudulent lessees and their donees, including shares bought by these lessees from the guardian, even though relief could not be had as against the corporation and bona fide purchasers for value; and (b) that an agreement by the plaintiff after defeat in the District Court, not to prosecute the appeal as against the corporation and bona fide shareholders, did not
prevent this relief as against the others. P. 135. 5. In a suit praying relief from the execution and legal effects of
a lease because it was procured by the fraud of the lessees, the lessees can not, while claiming under it and holding the benefits derived from it, deny the authority of the lessor to make it.
P. 135. 6. One who claims the benefit derived from a breach of trust in
which he actively participated and who shows no prejudice from a delay of six years in bringing suit to compel him to account, can not
complain of laches. P. 136. 288 Fed. 158, reversed in part; affirmed in part.
APPEAL from a decree of the Circuit Court of Appeals affirming a decree of the District Court which dismissed a bill brought by the United States, on behalf of a fullblooded Choctaw Indian, a minor, to cancel for fraud an oil and gas lease on the Indian's land in Oklahoma, or, in the alternative, to affix a trust on shares held by defendants in a corporation, also a defendant, to which the lease had been assigned.
Messrs. Walter A. Ledbetter and W. W. Dyar, Special Assistants to the Attorney General, for the United States. The Solicitor General was on the briefs.
Messrs. George S. Ramsay and William G. Davisson, for appellees. Messrs. William B. Johnson, Hugh W. McGill, Edgar A. de Meules, and Villard Martin were on the briefs.
Eaves was the duly appointed, qualified, legal and acting curator or guardian of the estate, and as such was the only person empowered by law to execute an oil lease
Argument for Appellees.
on the land in question. Two separate and distinct guardianships or curatorships cannot exist at the same time for one and the same person. Eaves was not only de jure curator, because he actually occupied the office and exercised the authorities of a curator. The lease executed by Eaves, curator, to Mullen, under the order and confirmation of the County Court of Love County, was valid and binding subject to the approval of the Secretary of the Interior—that is to say, it was as valid and binding as possible to make under the law, the Secretary's approval being necessary to its final confirmation.
The execution of a lease on the same land to Dunn and Gillam by a pseudo guardian, no matter how fraudulently obtained, created no actionable wrong in favor of the ward against the lessees under such lease, in the absence of evidence that the ward suffered some injury thereby. Dunn and Gillam, occupying no fiduciary relationship to the ward, and having obtained nothing by virtue of the Thomas lease, cannot be held to be trustees of any property or rights or interest acquired by them in the Mullen lease from Eaves by virtue of haying used the Thomas lease as a means of coercing Mullen into a compromise agreement whereby they obtained from Mullen, and not from the ward, an interest in the lease. The fact that Eaves joined in the Thomas lease instead of Thomas joining in the Eaves lease in no way alters the legal rights or status of the parties, it clearly appearing that the lease involved in this case never acquired any validity from its execution by Thomas, as guardian, and therefore, insofar as the rights of the parties are involved, we should treat the lease as having been executed solely by Eaves, as curator.
It was immaterial to the Department and to the parties whether Thomas joined in the Eaves lease to Mullen or Eaves joined in the Thomas lease to Dunn and Gillam,
Argument for Appellees.
that being a mere formality, it being the intention of all parties that if the Thomas lease was good Mullen should have an interest therein and if the Eaves lease was good, then Dunn and Gillam should have an interest in that lease.
Two things must concur to constitute actionable fraud—inequitable conduct and injury. In other words, fraud and damage must concur before a court of equity will grant any relief against a judicial sale. The lease required court approval and partakes of the nature of a judicial sale. Story's Eq. Juris., 14th ed. Vol. 1, $$ 289 and 290; Bigby v. Powell, 25 Ga. 244; Rock, etc., Ry. Co., v. Wells, 61 Ark. 354, 54 Am. St. Rep. 216; Shultz v. Shultz, 36 Ind. 323; Hartford Fire Ins. Co., v. Meyer, 30 Neb. 135; Mass. Benefit Life Ass'n. v. Lohmiller, 74 Fed. 23; Ableman v. Roth, 12 Wis. 81; Hockaday v. Jones, 56 Pac. 1054; Wilson v. Shipman, 34 Neb. 573. There must not only be fraud, but there must be damage or injury. In other words, it must be shown that it would be inequitable and unjust for the judgment to be enforced, Felt v. Bell, 10 Am. & Eng. Dec. in Equity, 35.
Defendants are not estopped to deny the authority of Thomas to act as guardian. Injury is a necessary element of a valid estoppel, and neither the appellant nor its ward is injured by showing that Thomas had no authority, nor is the lessee injured.
The appellant was guardian of the full blooded Indian, and had full power to compromise this case, especially with the approval of the Court of Appeals, which was given. Tiger v. I'est'n Inv. Co. 221 U. S. 286; United States v. Kagama, 118 U. S. 375–384; Heckman v. United States, 224 U. S. 444. The appellant, being vested with complete authority to institute the suit and control the litigation, has the concomitant power to compromise the case. Thompson v. Maxwell Land Grant de Ry. Co., 168 U. S. 451.
Argument for Appellees.
Upon the discovery of the alleged fraud, the United States had one of two remedies: A suit in equity for rescission, cancellation and accounting, in which it would be necessary to offer to do equity by restoring to defendants the consideration paid, etc.; or an action for damages to recover the value of the lease at the time it was fraudulently obtained. Black, Rescission & Cancellation (2d ed.), 561.
The plaintiff can not have both of these remedies, and was required to elect which remedy it would pursue, and, having elected to pursue the remedy in equity for rescission, it is bound thereby, Shappirio v. Goldberg, 192 U. S. 232. It can not have a judgment for damages or for the stock of any particular stockholder, Wilson v. New United States Cattle Ranch, 73 Fed. 994; Shappirio v. Goldberg, supra; Supreme Council, etc., v. Lippincott, 134 Fed. 284.
The appellant, with or without the written consent of some of the parties, can not change its action in the Court of Appeals so as to ask for another and different relief against some of the parties not joining in the compromise.
The lease, being an entirety, can not be split up by various suits to cancel against various interested defendants. While an injured party may sue one or all the joint tort feasors for damages, there can be only one suit to cancel a lease, and the compromise and settlement of the suit is an affirmance and ratification of the lease as an entirety and terminates the cause of action against everyone. I Story, Eq. Juris., (14th ed.,) Vol. 1, § 291. If with knowledge of the fraud the party exacts performance or performs himself he condones the fraud, McLean v. Clapp, 141 U. S. 429; Grymes v. Sanders, 93 U. S. 55; Burk v. Johnson, 146 Fed. 209; Kingman v. Stoddard, 85 Fed. 740; Simon v. Goodyear Metallic Rubber Shoe Co. 105 Fed. 574.
It appears from the evidence that the compromise was a collusive arrangement between the Bull Head Oil Com