United States v. Desert Gold Mining Company, Marlin K. Edwards

The United States issued eight land patents during 1961 to Desert Gold Mining Company, and others, upon proof that gold had been discovered in and upon public land. After acquiring its patents, Desert Gold borrowed money and executed its promissory note in the sum of $100,000 payable to Marlin K. Edwards. The payment of the note was secured with a mortgage on the patented lands. The note and mortgage were dated June 8, 1962. Desert Gold only received as proceeds from the loan the sum of $84,477.92, because $10,000 was deducted for Edward’s commission, and a $5,000 brokerage fee was paid to Phoenician Properties. Miscellaneous other charges for recording, taxes, escrow, and title insurance reduced the loan proceeds to the final figure. Interest on the face amount of the note was charged at 8% per annum. Between August 1, 1962, and April 15, 1963, Edwards assigned all his interest to six other individuals.

In September 1963, the United States brought suit to rescind the patents alleging they had been obtained by fraud or mistake. Edwards was joined as a defendant. In October 1963, he filed a motion for partial summary judgment on the ground that he was a bona fide encumbrancer for…