FEDll:'RAL, REPORTER.
:, ' ... ' UNITED STAT:IilSI1. WENZ
et al.
.(Oircuit Oourt,. D. (lolmado. March 6,
PuRoilASlIU'ui.
stant'e9f the gov.ernll\llmt, ·on fraud in ,entering the lands and procuring them,in the absence Of'aliy I,>rQof of a conspirQ,CY. Q,nd where it is not shown thQ,t subsequent purchasers of the lands had knowledge of such fraud.
.,, Patents to lands, after "lapse of'l:;: years, will not be. set aside at thein'
A.sn>E-LAPsB oil' TI:M:E-INNOOENT
In Equ.ity.
Bill to land. H. W. Hobson, for complainant,,;, , Pla,ttRogers, W.F. Stone, and Geo. Roger8, for, defendants.
';,
BREWilllR, Jr. ,Q'his is abiJ).. file<i ,by; tlte,government 10 set, aside the patent$'to,eert$in tracts in:ijoulder, county, Colorado.. ,ha,ve read the en-; tireteatiQlony,and need pnlYaay thlltrecent rulings .of the supreme court: leave ,no room for question, apd settle this case adversely to the government. There is no evidence of any conspiracy. The land officers are not ,As to w4etller ,the land was agricultural or mineral, and as ,to whether the proper improvements and residence were made and .the testimpny is not clear and',sati,sfactory. The entries were made in 1871 t neadiY 17 years ago;. and, even if wrong were shown on the part of the one Glntering l/;}ndapd receiving' the patent, there is nothing to show knowledge thereof on the part of the purchasers and present go for dismissing the bill. Similar deowners. · I,.et cree may be entered in the other and like Cllses with this.
WHEELER 11. SEXTON.
" «(Jiircu£t Oo,,!-rt, D.
March 8, less.)
Upon the authority of the Nebraska supreme court decisions, a sale oUand situated in Nebraska, under a power of sale in a is invalid,the mortgaglle being confined. ,to an a.otlon for the sQ,]e of the premises, or to an ordinary s1Jitat law torecover'tl,1odebt itself. "
OF SALE-VALIDITY OF SALE UNDER POWER.
In Equity. Action iJ? ejectnxentby John G. Wheeler against Thomas Sexton. ...., Montgomerll '8eJe,ff1'ey, f6r plaintiff. W. ,H., Munger; for defendant. BREWER, 1. This is an adion.in·.ejectment. 'The facts are tht.de:In 1874 Haroni Wheeler was the owner of the land. He resided inMoline, Ill., and, oesides the tract in controversy) owned several otherpieees
.wHEELER
v.
SEXTON.
155
of property in Illinois and Missouri. Certain parties indorsed a note for him ,arid· to secure them he executed ll. mortgage on these several tracts. The mortgage contained power of sale, authorizing the mortgagees, on default in payment of the note, to advertise and sell in the city of Rock Island, Ill. He did default, and the mortgagees advertised and sold. The single question is aR to the validity of that sale. As the land is situated in this state, it is a question of local law, and in it this court must be guided by the decisions of the supreme court of this state. Burge88 v. Seligman,1'07 U. S. 20,2 Sup. Ct. Rep. 10; Flash v. Conn, 109 U.S. 371,3 ·Sup,'Ct.Rep.263; Samuel v. Holladay, 1 Woolw. 406. The validity of such a power, and of the sale! made under it, at common law may be conceded; and it is also true that in the Nebraska statutes can be found no express prohibition upon such a power; yet it seems to me that the supreme court 'of Nebraska, by two or three decisions at an interval of many yeats, has ruled against the validity of a sale made under such a power, and limited the mortgagees' remedies to proceedings in court. The first case referred to is that of Kyger v. Ryley,2 Neb. 22, (decided some time prior to 1873.) It is true, in that case the precise question was whether, when a note was barred, the mortgage securing it was also barred; but the opinion discusses at some length the'different status of a mortgage at common law, and that under the statute, and in the course of the opinion this declaration is found: "The remedy of the mortgagee is confined to an action for the sale of the pledged or mortgaged premises to pay the debt secured by the mortgage, or to an ordinary suit at law to recover the debt itself." Again, in the cases of Webb v. Hosetton, 4 Neb. 308, and Hurley v. Estes, 6 Neb. 386, (decided in 1876 and 1877,) the court ruled that a deed of trust to a third person, as trustee for the creditor, is no more than a: mortgage, and subject to the same rules as to its nature and the method of foreclosure. And finally, in the case of Comstock v. Michael, 17 Neb. 298,22 N. W. Rep. 549, (decided in 1885,) these facts were presented: A deed of trust had been executed containing Ii. power of sale similar to the one at bar. Under that power the trustees sold and conveyed. The proceedings were regular. The purchaser, who was the original creditor, brought this suit,and in it set forth the original trust deed, the proceedings under the sale, and prayed a decree quieting the title. He also set forth the debt which was secured by the trust deed, and prayed in the alternative that, if the proceedings under the sale. were not valid, he might have a decree of foreclosure. The trial court, holding the proceedings invalid, found the amount due on the debt, and decreed foreclosure.. The debtor took the case to the supreme court, and that court held that a forec19sure was proper, but reversed the judgment on the ground that the debt had been fixed at too large an amount. After holding that a bill stating facts and praying relief ill the altenmtive was good under equity practice, it adds these words: .. There can be no doubt but that a deed of trust can be foreclosed the same a.nd although the plaintiff had at one time adopted and sought to pursue an unwarranted and inadmissible remedy, yet'it canno!; be said that he thereby 'forfeited his right, while yet in loco penitentice, to 8fJ an ordinary
FEDERAL REPORTER.
turn back and enter upon the true course. And as to the effect of whatever he did while in pursuit of the false method. while we must hold that he gained nothing by su.ch proceedings, we must admit that he lost nothing beyond his time. labor, and expenses."
Counsel for defendant insists that this expression of opinion is mere dictwm, and that therefore the question is still open for consideration by this court; but I cannot so regard it, even if this case stood by itself. Certainly, when. taken in connection with the earlier cases, it would seem as though the supreme court had decided the question, so far as this state is concerned; for if the proceedings under the power were valid, the plaintiff had a good title, and should have had a decree quieting it. He should not have been put to the delay and expense of a foreclosure sale, with the possibility of finally losing the land. If his title were good, the amount of the original debt was immaterial. That his bill and prayer were good for a. decree quieting the title was conceded, and the only question was whether there was enough in it to sustain a foreclosure; and yet upon such a state of facts the supreme court says that he took nothing by his proceedings under the power, and reduced the amount of debt as found by the trial cou..rt. So, whatever might be my views upon this question as an independent proposition, I think the supreme court of the state has decided it, and I must follow that decision. . Judgment will be entered for the plaintiff.
BISCHOFFSHEIM .". BROWN
et aZ.
(OiTcuit Oourt, 8. D. New York. March 19,1888.) RAILROAD COMPANIEs-BONDS AND MORTGAGES-TRUSTEES.
The complainant's firm were agents for a railway company to negotiate cer tain mortgage bonds, and account for 'the proceeds to trustees. They negotiated the bonds, and became accountable for the price, but subsequently bought them back in their own interest, and led the company to suppose that they had never been negotiated. Subsequently they made a loan to the company upon a pledge of the bonds as collateral security, and by the terms of the agreement ofloan the trustees of the company (who had the equitable title to the proceeds of \loll the bonds pledged) agreed to treat the loan as a trust fund, and disburse it for certain specified objects. In a suit brought by the complainant. as survivor·of the firm, to .enforce the agreement. alleging that the trustees had appropriated tke money to foreign objects, and seeking to compel them to account, it appeared that the loan was made in entire ignorance of the fact that the bonds had been negotiated, and that the trustees were entitled to a larger sum then in the hands of the complainant's firm than the sum loaned. Held, (1) that a court of equity would not. upon such a state of facts, assist the complainant, because he did not come into court with clean hands; (2) that the trustees could invoke the principles of equita.ble setoff to defeat the action.
Bill in Equity. . . Bischoffsheim, sUfvivorof the firm of Bischoffsheim & Goldschmidt· . complainant, filed a bill against J. C. Brown and Jesse Seligman, to ra-
