cluding appellant's steamer Munro. It also appears that the Lake Transportation Company as agent of appellant and under the management of said Mills, had to do with directing the movements of the latter's boats. On November 17th and 30th respectively, the Munro, at the direction of the Lake Transportation Company upon instructions from Mills, transported two cargoes of said coal, aggregating between 19,000 and 20,000 tons, from Lorain, Ohio, to Milwaukee, as above stated, where appellee presented the bills of lading which had been issued by the master of the ship, and received the coal at its docks. It appears from the evidence that on all coal transported by appellant's boats and delivered to appellee previous to the two November cargoes in question, appellant received its freight charges from the Lake Transportation Company, the latter having received the same from the Franklin and Fremont Steamship Companies, to whom appellee had contracted to make payment for the carriage of its season's coal. No demand for the freight charges was made upon appellee by the master of the ship or appellant at the time of making delivery of these Munro cargoes. Thereafter, on November 24th and December 7th, as it had done in all previous like instances, and without any notice other than the said bills of lading that it was expected to pay appellant the freight therefor, appellee in good faith paid said freight charges to the Franklin and Fremont companies. Appellant, not having received the freight thus earned by its steamer Munro, brought suit to recover the same from appellee, basing its suit upon the bills of lading covering said cargoes. These bills of lading were in the usual form. One of them, omitting its number and date, is as follows: "Shipped in good order and condition by the Lorain Coal & Dock Company for account and at the risk of whom it may concern on board the steamer J. G. Munro, whereof is master, bound for Milwaukee, Wis., the following articles as here marked and described, as addressed on the margin, or to his or their assigns or consignees, upon paying the freight and charges as noted below (danger of navigation, fire and collision excepted). "In witness whereof the master of said vessel hath affirmed to bills of lading, of this tenor and date, one of which being accomplished, the others to stand void. Consignee and Destination. Central Coal Co., Milwaukee, Wis. Description of Articles 786...... Net tons #8 Pittsburg "Rate of freight hereon is as agreed per net ton. The District Court found the issues for the respondent and dismissed the libel, with costs. The decision of the court that the receipt of the cargoes of coal with knowledge of the bills of lading set out in the libel was not conclusive as to appellee's liability and that libelant was in law chargeable with knowledge of all the facts pertaining to respondent's relation to the transportation of the two cargoes in question, is assigned as error. John B. Richards, of Buffalo, N. Y., for appellant. Before BAKER, KOHLSAAT, and ALSCHULER, Circuit Judges. KOHLSAAT, Circuit Judge (after stating the facts as above). It is appellant's contention that the receipt of the bills of lading by appellee and its acceptance of the two cargoes of coal covered thereby created an absolute liability on appellee's part to pay the freight charges to appellant. It is also contended that appellee is liable for the freight as consignor. It is no doubt the general rule that the fact that a consignee named in a bill of lading received by him which provides that the cargo is to be delivered upon his paying the freight, who accepts the goods described therein, is evidence sufficient to establish an implied promise to pay the freight charges to the carrier or shipowner, in the absence of other qualifying circumstances. Philadelphia R. R. Co. v. Barnard, Fed. Cas. No. 11,086; Hatch v. Tucker, 12 R. I. 501, 34 Am. Rep. 707. In the latter case, after reviewing the authorities, both English and American, the court concludes that: "The weight of authority, therefore, seems to be that where there is a bill of lading, and the acceptance by the consignee is proven and unexplained, the law will imply a promise to pay freight." To the same effect is Union Pacific R. Co. v. American Smelting & Refining Co., 202 Fed. 720, 723, 121 C. C. A. 182, citing Hatch v. Tucker, supra; Cock v. Taylor, 13 East, 399; Dougal v. Kemble, 3 Bing. 383; Merian v. Funck, 4 Denio (N. Y.) 110; Pelayo v. Fox, 9 Pa. 489; Blanchard v. Page, 8 Gray (Mass.) 281; North German Lloyd v. Heule (D. C.) 44 Fed. 100, 10 L. R. A. 814; Taylor v. Fall River Iron Works (D. C.) 124 Fed. 826; Neilsen v. Jesup (D. C.) 30 Fed. 138; Gates v. Ryan (D. C.) 37 Fed. 154; Davidson v. City Bank, 57 N. Y. 81, 85; Grant & Stone v. Wood, 21 N. J. Law, 292, 295, 47 Am. Dec. 162. And the reason for this rule, as said by the court in Union Pacific R. Co. v. American Smelting, etc., Co., supra, "is that the consignee accepts the goods with knowledge that the carrier looks to him for payment of the transportation charges and waives his lien for them by delivery in reliance upon the consignee's implied promise, evidenced by his acceptance of the goods, that he will pay the charges." The same implication arises if there be no bill of lading, provided the consignee accepts the goods knowing that the carrier expects him to pay the charges. Same case, citing a number of authorities. In either case, the acceptance of the goods under such circumstances constitutes but prima facie evidence of such promise on the part of the consignee. The question then is: Are the bills of lading here involved, notwithstanding the other facts bearing upon that question, to be taken as conclusive evidence of such knowledge on the part of appellee? If not, and the other evidence in the record is considered, it is very clear, not only that appellee had no such knowledge, but also that, so far as the record discloses, there was wanting sufficient notice to advise appellee that appellant, at the time of making delivery of the Munro cargoes in question, had any intention of holding appellee for the freight charges. It is legally deducible from the evidence that appellant was advised of the circumstances attending the whole transaction. Its agent, the Lake Transportation Company, was actually told by Oakes, manager of the Franklin and Fremont Steamship Companies, that those companies had the whole contract for carrying appellee's coal for that season. As such agent, it received all payments for other cargoes of said coal from those companies. The contract between those companies and the Weston Transit Company discloses the existence of the original contract. Mills, manager of appellant, signed that contract, while the bills of lading themselves make such reference to that contract as to charge appellant with knowledge of its terms. Thus appellant was chargeable with knowledge that appellee had contracted with the Franklin and Fremont Steamship Companies for carrying 148 C.C.A.-4 all its season's coal, that the latter two companies had contracted with the Weston Transit Company to carry part of that coal for them, and that through their common manager appellant was assisting the Weston Transit Company in that service. These facts, we hold, were sufficient to overcome any presumption which may have arisen from the circumstances attending the bills of lading in the premises. The judgment of the District Court is therefore affirmed. (234 Fed. 34) NORTHERN COLORADO COAL CO. v. UNITED STATES. 1. PUBLIC LANDS 120-SUIT FOR CANCELLATION OF PATENTS-BURDEN OF PROOF. Where the United States has shown that patents to public lands were obtained fraudulently, a subsequent purchaser, claiming through the patentees, has the burden of proving affirmatively that he was a goodfaith purchaser. [Ed. Note. For other cases, see Public Lands, Cent. Dig. §§ 332-335; Dec. Dig. 120.] 2. MINES AND MINERALS 45-SUIT FOR CANCELLATION OF PATENTS-BONA FIDE PURCHASER. A coal company acquired a bond for a deed to a large quantity of land, 800 acres of which was then a part of the public domain and was known coal land. Subsequently the obligor obtained patents through dummy locators and conveyed the land to the company. Held, that the company was chargeable with knowledge of such facts that it was not entitled to protection as a bona fide purchaser. [Ed. Note. For other cases, see Mines and Minerals, Cent. Dig. § 131; Dec. Dig. 45.] 3. MINES AND MINERALS 11-ENTRY OF COAL LANDS-CORPORATIONS. A corporation, which purchased coal lands previously patented to other entrymen, did not by such act "take the benefit" of the statute authorizing a single entry only by an association or its members, within the meaning of Rev. St. § 2350 (Comp. St. 1913, § 4662), so as to disqualify its stockholders from making personal entries. [Ed. Note. For other cases, see Mines and Minerals, Cent. Dig. §§ 14, 17; Dec. Dig. 11.] Appeal from the District Court of the United States for the District of Colorado; Robert E. Lewis, Judge. Suit in equity by the United States against the Northern Colorado Coal Company and others. From the decree, both parties appeal. Affirmed. John A. Gordon, Asst. U. S. Atty., of Denver, Colo. (Harry B. Tedrow, U. S. Atty., of Denver, Colo., on the brief), for the United States. For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes Henry McAllister, Jr., of Denver, Colo. (N. E. Corthell, of Laramie, Wyo., and Joel F. Vaile and William N. Vaile, both of Denver, Colo., on the brief), for defendants. Before CARLAND, Circuit Judge, and AMIDON and VAN VALKENBURGH, District Judges. AMIDON, District Judge. This is a suit brought by the United States to cancel patents for 1,280 acres of coal land situated in Larimer county, Colo. Title to 800 acres of the property is held by the defendant Coal Company as purchaser. The remaining 480 acres is held by the defendants Miller, Peters, and Smith under patents issued upon their individual entries. The bill asserts that the company derives its title through dummy entrymen, and further asserts that the individual defendants at the time they made their entries were stockholders of the Coal Company; and as it had already acquired coal lands in excess of the 320 acres allowed by the United States Revised Statutes, §§ 2348-2350 (Comp. St. 1913, §§ 4660-4662), they, as stockholders, were disentitled to file individual claims. The trial court entered a decree in favor of the government against the Coal Company, canceling the patents under which it claims, and dismissed the bill on the merits as against the individual defendants. Cross-appeals are brought to review the decree. To understand the case the facts must be stated more fully. Two brothers by the name of Riach executed a bond for a deed in favor of a Mr. Lee, bearing date December 16, 1902, binding them to convey to him by perfect title 4,240 acres of land, specifically described by tracts, and including the 800 acres involved in this suit. The bond. was acknowledged and presumptively delivered January 9, 1903. On December 26, 1902, Mr. Lee organized the defendant corporation, and became its secretary, and a member of its board of directors. January 15, 1903, he entered into an agreement with the company binding himself to convey to it 3,600 acres of land, including 160 acres of the 800 acres here involved, also three mining claims, and a controlling interest in the stock of a gold and copper mining company. This agreement is acknowledged and was presumptively delivered March 22, 1903. August 5, 1904, Lee released the company from all existing obligations under this contract. On the same day he assigned to it his bond with the Riachs, the company acquiring all his rights and assuming all his obligations under the bond. Nearly two years afterwards one of the brothers, James C. Riach, employed dummy entrymen to give him the use of their names for the purpose of acquiring title to the 800 acres under the coal land statutes. These entrymen appointed Mr. Riach their attorney to make and perfect the entries. He paid all the expenses and the purchase price of the land. The first of the entries was made in April, 1905, three of them in March, 1906, and the fifth in August, 1906. Receiver's receipts were issued on the first claim in April, 1905, and on the other claims in 1906, at about the time the entries were made. As soon as the receiver's receipts were issued, deeds were executed for the property by the several entrymen to James C. Riach. Patents. were issued on the five claims as follows: Three in August, 1906, and two in July, 1907. James C. Riach executed a warranty deed for the 800 acres to the company in October, 1907. [1] It is conceded that under the law as declared by the Supreme Court in U. S. v. Keitel, 211 U. S. 370, 29 Sup. Ct. 123, 53 L. Ed. 230, and U. S. v. Munday, 222 U. S. 175, 32 Sup. Ct. 53, 56 L. Ed. 149, the patents as against the entrymen and Riach are void. The Coal Company must prevail, if at all, as a good-faith purchaser. The law in regard to that defense, when title is derived through fraudulent patents, has been greatly clarified by the decision of the Supreme Court in Wright-Blodgett Company v. United States, 236 U. S. 397, 35 Sup. Ct. 339, 59 L. Ed. 637. In many opinions language will be found to the effect that, when the government seeks to set aside a patent for fraud, the respect due to such instruments and the stability of titles. emanating from the government demand that the case be established by clear and convincing proof. This rule has sometimes been extended so as to require the government to show, not only that the patent was. obtained by fraud, but also that a purchaser acquiring title upon the faith of the patent had actual notice of the fraud. Such is not the law. All that the government is required to do is to show that the patent was obtained by fraud. It is then entitled to a cancellation of the patent, except as against a holder who can show that he acquired title. to the land as a good-faith purchaser. That defense is affirmative. The burden of proving it rests upon the purchaser. The government is not required to show that he took the title with notice of the fraud. On the contrary, the burden is upon him to show that he acquired the title for a valuable consideration and without notice. Under the law as thus declared in the Wright-Blodgett Case, the government here is entitled to a cancellation of the patents, unless the coal company has shown by a preponderance of the evidence that it is a good-faith purchaser. Has it discharged that burden? For two reasons we think the trial court properly held that it has not. [2] First. By taking from Mr. Lee the assignment of his bond for a deed, the Coal Company stepped into his shoes and sustains the same relations to the lands which he sustained. At the time this assignment was made the lands were still a part of the public domain, and remained such for nearly two years before the fraudulent entries were made. The company had actual knowledge that the lands were public lands. This is a fair inference from the language of the bond for the deed, and from the whole course of dealing between the parties. The officers of the company were also intimately familiar with the lands. Mr. Miller, its vice president, had visited the properties from time to time every year subsequent to the year 1902. He also had a coal claim of his own, which was situated within one mile of the several tracts which made up the 800 acres. During all of this time he was on intimate terms with James C. Riach, and made his home when visiting the property at Mr. Riach's house. Other officers of the company had a similar, though less extensive, knowledge of the properties. What is the fair import of the bond for a deed in the light of this |