AMES V. HOLDERBAUM.
341;
Deeming the objection of want of parties well taken; under the facts· shown upon the face of this record, and as the absent parties cannot be made defendants without ousting the jurisdiction of the court, the order will be that the cause be dismissed without prejudice to the right of complainant to proceed in a court of competent jurisdiction.
AMPlS
11. HOLDERBAUM ef,
at
(Circuit Court, S. D. Iowa. June 8, 1890.) FEDERAL COURTS-JURISDICTION-SUIT TO FORECLOSE MORTGAGE.
Dndel:' Act Congo March 8,1875, § 8, (18 D. S. St. p ..470, c.187,) which is expressly left in force by amendatory. Act Congo Aug. 18, 18811, (25 U. S. St. p. 488, c. 866,) and.' whi\lh provides that" when, in any suit commenced in anI circuit court of the Unite\l States to enforce any legal or equitable lien upon * * real or personal property within the district where such suit is brought, one or more of the defendants' therein shall not be an inhabitant of, or found within, the said district, * * *. it . shall be lawful for the court to make an orQ.er directing such absent defendant or defendants to appear," etc., the circuit court has jurisdiction of a suit by a resident of another district to foreclose a mortgage on land situated within the district, though some of the defendants are, and others are not, residents of the district in which the suit is brought. " .
In Equity. Bill to foreclose mortgage on real estate. Kaujf'rnflnt!c Guernsey, for complainant. John Leonflrd t!c Son, and Gatch, Connor t!c Weaver, for defendants. SHIRAS, J. The complainant is, and was when this suit was brought, a. citizen of the state of Illinois; A. C. Holderbaum was a citizen of, Iowa, and Henry and David Hochstetler were citizens of Ohio; and the property covered by the mortgage sought to be foreclosed is in Iowa. The motion to dismiss is based upon the theory that under the statute of August 13, 1888,1 the jurisdiction of the circuit court of the United States is based solely upon the diverse citizenship of the adversary parties, and that, under the construction given thereto by the supreme -court in the case of Smith V. Lyon, 10 Sup. Ot. Rep. 303, this court can, not takp, jurisdiction of this cause, because two of the defendants are citizens of Ohio. If this suit was 8 purely personal action, wherein the . place of bringing the suit was dependent upon the residence of the parties, the objection urged to the jurisdiction would have weight; but is . the rule l'ecognized in Smith v. Lyon applicable to suits for foreclosure of mortgnges on realty, wherein the place of bringing suit is determined by the location of the realty covered by the mortgage? Under the statutes ·of Iowa. the mortgagor retains the legal title and right of possession of mortgaged realty,and proceedings for the foreclo8urethereof must be· brought in the county wherein the realty, or some part thereof, is situated. The decree operates in rel1l., and may be rendered -without-per-' 125 U. S. St. p. 4.33, C.
866.
FEDERAL',REPORTER,
vol. 42.
sornd: setrice: u ponor jurisdiction over the person of the mortgagor; and thEi suit'is therefore to: ,be deemed to 'be local in its nature. 2. Jones, Mortgl i: 1444. WHen the suit is of a purely personal nature, the place, of,hrUiging suit, when jurisdiction depends solely upon the diverse cHi-. zenship of thepartiea;dl!:by the act of 1888 restricted to the districts-wherein the plaintiff and the defendant reside; and, unless all the plaintiffs reside in one district, suit cannot be brought in that district. Nor, unless all the defendants reside in the same district, can suit be brought therein, because the statute does not confer the right to bring the suit in a district wherein a pl,.t1rtonly of the defendants reside. In Smith v. Lyon it is shown that this has been the construction placed upon the judiciary act of 1789, and all succeeding acts regulating the jurisdiction of the circuit courts. In the act of 1875/ by section 8 thereof, it is provjdl'l.4 when, fnnny suit commenced in any Circuit court of the' Uhited States to enforce any legal or equitable lien upon, or claim to, or tOreln()veanyincumbrance or lien or cloud upon, the title to real or personal property within the district where such suit is brought, one or more of the defendants therein shall not be an inhabitant of, or fOUlld district, or shall not voluntarily appear thereto, it shall beJawf.tIl for;tpe court to make an order directing such absent defendant or defendants to appear," etc. 'This section clearly recognizes and confers jurisdiction to proceed in the class of cases therein named, which includes the foreclosure bf mortgage's; even one or more of tbe defendants was not an inhabitant of the district wherein the suit was brought.,:,;· ' If the controversy was between citizens of the United States, and in.1lo.-/:llltllcient amount,the controversy came within the jurisdiction courts. If the, foreclosure of a mortg;age on real estate was, th", such suit,the place of bringing the aC,tionwas determined by the 19pationof the mortgaged property.,. In ,other words, under the provisipnS.of act of1875, if a of Ohio ,held a mO,rtgage on realty to securel;igebt in excessof$500 given by a resident and, citizenQ(IQwaand qy a'resident and citizen of Missouri, he could file a. bill of foreclosure in court in Iowa, and procure and publish ·. The, act of section, 8ol,theaet. of 1875 remains in: i the passage of the former act. , The statute of 18,88 to beconstriled as though section 8 formed a part of jn, it dOeE!", ,This section .isclearlyintended ,to the ofbril1 gi ngsuit;when the the,enforcement of alieJ;l. upon title, to realty , and. under its provisjonsit, ds the location of property, and not the, residence of the parties, thltt ,settles the place of suit. :10 the classes of Cf\ses coming within its prqvisions, section 8 has tb,e :with theaet of 1888alJ,it had.in connec-, ti.Qn pi 187 staled io, Smith v. Lyoo., the first clause of <?f the, j to all the: i
1
Act Congo March 3, 1875, (18 U. S. St. p. 470,
Co
137.)
UNITED STATEI;i'TJltiST,CO;l1.WA:BA.m, ST. L. ·
P. BY. CO.
:.343
States as-regards thesuhject-matter of the suit, and as regards theicharacter of the parties who, by reason, of such character, ,as 'plaintiffs, or" defendants,sustain suits.. in circuit courts; hutthe,nextseliltence in 1;he saine section undertakes. to define the jurisdiction of each one of tne'several circuit courts of the United States with reference to'itsterIitoriaIlinlits." In other words, the first cla'use of the jurisdiction of the circuit courts of the United States, is; defines the several classes of cases which may be brought in such POllrtS·.' Tha. second clause determines the place of bringing'suit in personal actions;' and section 8 of the act of 1875, which, in effect, . hecomesthe tbird;clause of the act of 1888.deteI'mines the place of suit . when the purpose is to, enforce a claim to or lien upon realty, and auEluitinthe district where the property, or 'some 'pM't;.of it, is situated. -This construction preserves the full force of section 8 of the act of 1875,which was evidently the intent of the act of 1888, and conforms. the meaning thereof to that which it had in the former, ... In fact, the statute of 1888 to be merely an amend;C:ment of 18'75 {'1trld 'it is clear thlit, if the present proceeding ':cou1dChave beerrbl'bugHtin this court under the act of 1875 before it was amended, it can bebr6ught urider'that-act RSRmended. ' The amount involvedissufficient.The parties plaintiff and defendant are citizens of different"states. The controversy is' the enforcement of a. mortgage lien by a proceeding seeking the sale of the realty. The suit is J'1t'ltHe wherein the mortgaged realty is ,situated. f;;Underthe$ecircurristances,there is J?,othing in,the language ofJbeact ,of 1888 Which sh<)ws thM:it was the intent of congress, in the paSSllge 'ofthat'Mt\ todefeatthe'jllrisdiction whioh would have attachedJunder of the ract o'f 1875. ,The: motion. to dismiss iathe,r:efore overruled.. , :' , t ...
Co.". (Oircuit
WABASH, ST. L. & P. Ry. Co. eta!. June 2,1890.)
(Jottrl;' S. D. IOwa;W. D.'
: 'rne St. L., K. C. &; N. B,. Co., after. executing a mortgage on its l1ne,was con's,olidated with another road, taform the Wi; St; L. &; P. R. Co. Thelattercompany then executed a mortgage CAveriug aU pr,operty the lines., The W., St. I.. &; P. Co. filed its bill in the circuit court,'of the United States for the eastern district of Missouri', admitting its insolvency,"and asking thati'eoeivers be "appointed. Said court, appointed a and .. and tbey took cbarge of tbe of tbe conl!olid!lwd Bills of foreclosure of the .mortgage by the St. , L. ,;K.C: '&;. N. were' filed' in the state' district' court ot 'Iowa and circuit court of Missouri,an<! were each: removed to the Uuited Statel! circuit. courts for tboli\e districts. The trustee in tbe J,llortgage by the St. L., x:,' C. &; N. R. CO. applied . to tbe United States circlllt-'conrt in Missouri for the surrender to the receiver to be appointed in the foreolcsuresuit in J;owa 1:1>, tbe receiv.ers H. and'tr at isomuch of.,tbe p,ro.pertyin theirpGs!l/lssi9Jlas was subJect to.tbe lienot the given tpcoD;lpialUant. Ttl\' court g-ratited the order, provIding· for the use sUllhre, , ooiver. duHng .the .time in, wnwhthe .should be " ,apportioned, of the rol1jng stock which had .been needed in 'the business of the St,.. L;, E::. C); -& N. -R_Co., and'lIubmiliting the llpportioumeQ.t (lfthe rQlliDg'&tock of the
844
,FEDERAL REPORTER,
vol. 42.'
consolidated companies to tbe courts in whicb the foreclosure suits were pending. K. was appointed receiver, by the United States circuit court in Iowa, of the St. L., K. C. & N. R. Co., and possession of the line was delivered to him by H. and T., inolwling certain stock. K. then filed a petition in the circuit court in Iowa, setting fort'l1- ,the order of the circuit court in !i:lssouri as to the apportionment of the rolling stock, averring that it had never been made, praying for an account of the stoQk ,belonging to the St. L., K. C. & N. R. Co., and asking tbat tbe receivers H. and T. be ordered to deliver tbe stock belonging to said St. L., K. C. & N. R. Co. A decree was entered deciding that the road was entitled to certain stocls and authorizing tbe receiver K., or the purchasers of the St. L., K. C. & N. R. vo. at the forllclosure sale, to institute proceedings to ascertain what other rolling stock the company was entitled to. The circuit court in Missouri granted a decree of foreolosure, under which a sale was had to the trustees in the mortgage, who afterwards conyeyed the llroperty to the W. R. Co., and the receivers of the court in Missouri deliVered the property to it. Afterwards a decree of foreclosUre was rendered in the circuit court in Iowa, and a sale was made tQ a committee o,f the bondholders secured by the mortgage, who organized tbe O. & St. L. R. Co. Held, that the cir. cuit court in Iowa had no jurisdiction of a controversy between the O. & St. L. R. Co. Bnd theW. R. Co., both of which companies were incorporated under the law of Missouri, as to the damages to be paid for the detention of tbe cars, and the destruction of a portion tbereof while in possession of the receivers appointed by the court at St.' Louis,slnce the court in Iowa never had llossession of the, prollerty.
·InEquity. ·Supplemental petition on behalf of the Omaha & St. Louis Railway ComJlll,llY to recover from the Wabash Western Railway Company rental claimed to be due for use of certain rolling stock. ,271Mdf(l'6 Sheldon, for complainant. H.'II",Trimbleand H. S. 'Priest, for defendant. 'SmRAS, J. On the ,15th day of.February, 1879, the St. Louis, Kansas City & Northern Railway Company executed a mortgage on its line'ofrailway, then in course of construction, between Pattensburg, Mo., November the named comand Council Bluffs, Iowa. In the 'panywas consolidated with the Wabash Railway Compll,ny, under the title of the Wabash, St. Louis & Pacific Railway Company. In June, 1880, the latter company executed a blanket mortgage covering all the property of the consolidated lines to the Central Trust Company of New York, and in 1883 a further mortgage to the Mercantile Trust Company. Int,he spring of 1884 the consolidated company filed its bill in the circuit court of the UnIted States for the eastern district of Missouri, at St. Louis, admitting its insolvency, andafiking that receivers of the property be appointed to take charge of the property for the protection of all interested therein. To this bill the trustees in the several mortgages were made parties. On the 29th day of May, 1884, the court at St. Louis lippointed Solon Humphreys lind Thomas E. Tutt receivers according to . the prayer ofthe bill, and they forthwHh took possession and control of the entire property of the Wabash, St. Louis & Pacific Railway Company, including that upon the line from Pattensburg to Council Bluffs, wbich was known as theUOmaha Division of the Wabash, St. Louis & Pacific System." In carrying on the process of disintegration necessary 'to settle the rights of the various mortgagees holding liens upon the different lines ofrailway ,that had beenconsolida.ted to form the Wabash system, bills for the foreclosure of the mortgage executed to the United States Trpst Company by the St. Louis, Kansas City & Northern Rail-
UNITED STATES TRUST CO. V. WABASH, ST.
r..
&; P. BY. CO.
345
way Company were filed in the state district court of Iowa and circuit court in Missouri, which were each removed into the United States circuit courts for these districts. On the 6th day of January, 1886, the United States Trust Company, the complainant in said bills of foreclosure, applied to the United States circuit court at St. Louis for the surrender to the receiver to be appointed in the foreclosure case in Iowa, by the receivers Humphreys and Tutt, of so much of the property in their possession as was subject to the lien of the mortgage given to complainant. The court at St. Louis granted the order sought, which contained the following: "Provided tnat. inasmuch as the rolling stock and equipment properly coveredand conveyed by said mortgage has been used indiscriminately with the roIling stock and equipment belonging to other divisions of the raHway. and inasmuch as an equitable apportionment of the rolling stock and equipment will be made as hereinafter prOVided, it Is further ordered that for the time being, and until afinal distribution and apportionment olthe rolling stock is madeto the said Omaha Division. Recei vers Humphreys and Tutt shaH permit said trustee, or it.s representatives. or receiver appointed as hereinafter provided, to have the use of sllch rolling stock and equipment in kind and amount as has beennpeded in the business of said Omaha Division during the three months last past. * * * It is further ordered that the matter of the division and equitable apportionment of the rolling stock and equipment between said Omaha Di vision and said Wabash. St. Louis & Pacific Railway Company be, and the same is hereby, submitted to the courts in which the actions brought by /laid trustee for the foreclosure of its said mortgage are pending for adjUdication and settlement and decree." On March 1,1886, Thomas McKissock was appointed receiver by this court of the line known as the "Omaha Division," and p08session of this line was delivered to him by Messrs. Humphreys and Tutt, in accordance with the order previously made by the circuit court at St. Louis, including certain stock as contemplated in that order. The question in dispute between the mortgagees under the blanket mortgage of June, 1880, and the mortgagees under the mortgage of Feb· ruary 19, 1879, as to the rolling stock covered by the latter was brought before this court by means of a petition filed by Thomas McKissock, receiver, setting forth the order made by the circuit court at St. Louis in regard to the necessity of an apportionment of the rolling stock, averring that such apportionment had never been made, praying that an account might be taken of the rolling stock belonging to the Omaha Division, and "that the said Wabash receivers may be ordered and decreed to deliver to your petitioner the full amout of the rolling stock and equipment covered and conveyed by the said mortgage, or its equivalent in amount and kind, fiS this court may determine." Upon the heating on this petition a decree was entered on the 6th of October, 1887, adjudging that the mortgage of February 15, 1879, covered the Tolling stock marked "Omaha Division," and naming certain specific cars which belonged thereto, and further authorizing the petitioner or the purchasers of the Omaha Division at the foreclosure sale, or their successors or assigns, by proceedings in equity or otherwise, to procure an adjudication as to. what other rolling stock in addition to that specifically
FEDERAL ltlWoBTEB i 'vol.
42.'
by the lien of the 'mortgage in question; .it being thei" 'proviaed that nothing in the decree contained should be regarded as affecting'the right of the petitioner or the purchasers of said Omaha Divisiori,o! their successors or assigns, from recovering from Humphreys' and 'Tutt as receivers, or any person or corporation succeeding to the possession of the property heldhyihem, a reasonable rental for the use by said receivers or· those succeeding' them of such rolling stock as might be adjudged to belong totheOmaha Division'. The present complainant, the United States Trust Company, thereupon ·filed a supplemental petition, in which it prayed that it might have the benefit of the orighi'li.lstlit and the proceedings thereunder; thatan account be taken of the rolli'ng stock belonging to the Omaha Division; that the same be ordeIedto be transferred to it as the trustee in .the mortgage executed February 1$,1879, or to McKissock as l:eceiver; and that said mortgage of February 15, 1879, be declared to bEl the first lieno:nsuch rolling stock. At the Ma.rch term, 1889, of thiseourt, on the hearing on this petition, it waslleld that the lien of the mortgage of February 15, 1879, atta.ched to all'the engines and cars which in fact had been purchased fOt'the the proper desigcating marks, . Omaha Division, and hac! placed according to the requirements of. the mortgage. .See opinion reported, in 38 Fed. Rep. 891. In the mean time in the circuit court at St. Louis, in the original cause therein pending, there was granted a decreeof foreclosure on t.he 6th of January, 1886. In May following, a sale was had under this decree, and the trustees in the mortgages becam8 the puruhnsers, and a deed of conveyance was executed to them. In' April, 1887, the property thus purchased was conveyed to the Wabash Western Company, a oorporationcreated under the laws of the state of Missouri, and the receiver delivered up possession of the property; the said Wabash Company entering into a stipulation to be responsible for aU claims existing against said receiver growing out of such receivership. On the 12th day of October, 1886, in the suit pending in this 'court for the foreclosure of the mortgage of February 15, 1879,a,decree was rendered, and under it a sale was made, December 28, 1886; the property beil:'lg'hought by a purchasing committee acting on behalf of the bondholders, who subsequently organized a corporation known as the "Omaha & St.Louis Railway C()mpany, " and created under the laws of the state of. Missouri. Upon the filing oftheopinionreported in 38 Fed. Rep., a decree was entered, which, among other things, decreed that the mortgage of Februa.ry 15, 1879, was the first lien upon oertain described rolling stock, formerly belonging to the Wabash, St.Louis & Pacific Railway Company, but purchased for and used upon the Omaha Division; that the l3aid Omaha & St. Louis Railway Oompany was entitled to the possession of the remainder of said equipillentbeionging to said Omaha Division, and em:llberated in the decree, which had not already been delivered over; it being further decreed that the said defend'l.nll,the Wabash Western Railway Cornpany,do within 30 days surrender and, deliver to the Omaha & St. Louis Railwa.y Company each and all of the cars, engines,
llNITED STATEI\'1'R1)ST CO.V.WABASH, ST.L." P. BY. 00.
847
to belong to the Omaha DiviSion., The ninth paragl"aphof this decree is as follows: , ,. "(9) That upon tbe receipt by the Omaha and 81. Louis Rail way Company of the equipment enu!Derated in the sixth paragraph of this decree, it is orthat the said lJiIaster take an account,. and report to this court,the BOMble' lUl10unt, if any, to be paid to the complainant or the Omaha & St. Louis Railway Company by the Wabash Western Railway Company for the use. froIll March 6,. 18H6, to the date of its surrender, of so much of the rolling stock hereinbefore adjUdged to belong to the Omaha Division as is in excess in value and in amount of the rolling stock actually used upon said Omaha Pi vision from said March 6, 1886, to the date of the surrender aforesaid; 'and anyf,urther amount due for any equipment covered by complainant's mortgage; .and injured or destroyed since March 6, 1886, while in the possession of the said Wabash receivers or said Wabash Western Railway Company; and also any sum that may be found due from said Omaha & St LOllis Railway Company. by reason of any cars tother than those covered by said mortgage of February 15. 1879) having been heretofore injured or destroyed While temporarily in its possession, or any sum due for use of said cars. II On May 29, 1889, the general managers of the Wabash Western and the Omaha & St. Louis Companies, by agreement in writing, made an exchange of the rolling stock required to be delivered up; the exchange thus made having the effect of performing the requirements of the decree of April 4, 1889, for the delivery of the rolling stock adjudged to belong to the Omaha & St. Louis Railway Company. In this agreement it was further stipulated that all claims of either party, that is, of the Wabash Western or Omaha & St. Louis Railway Companies, for rental, mileage, loss, damage, repairs, or improvements suffered or made prior to June 1, 1889, upon the equipment described in the third paragraph of the decree of April 4, 1889, as well with respect to such equipment as had been in use on the Omaha & St. Louis road since March 6, 1886, should be deemed to be among the issues to be determined upon the reference ordered in the ninth paragraph of said decree. Under the reference ordered in this paragraph of the decree, the master has taken a large amount of testimony, and has filed his report, stating the account between the Wabash Western Railway Company and the Omaha & St. Louis Railway Company; finding a balance due the latter company of $83,613.43. On behalf of the Wabash Western, various exceptions have been filed to the report of the master; and, the matter coming before th& court, it is now insisted on behalf-of that company that this court has no jurisdiction of the matters sought to be settled by the reference in question, nor of this controversy between the named railway companies, they being both corporations created under the laws of the state of Missouri, and that the issue isa purely legal one, of which a, court of equity cannot take cognizance; and it is therefore asked that the reference or.: dered in the ninth paragraph of said decree of Apri14, 1889, be set From the foregoing statement of facts it will· be noticed that from time to time, in the progress Of the several foreclosure proceedings, the original parties have ceased to longer have an interest in the litigation, and new parties have been introduced upon the record. Thus, in the consolidated case in the court at St. Louis, by the decrees therein rendered,
vo1.42.
and the sales based thereon, the interests therein involved have passed to the Wabash Western Qompany, and in the case pending in this court the interests involved have passed to the Omaha & St. Louis Company. The present position of affairs is correctly stated by counsel for the latter comvany in the opening statement of his brief herein submitted, which is as follows: ' , "This proceeding is broughton behalf of the Omaha and St. Louis Hailway Company (hereinafter called the ·Omaha Company') to recover from the Wabash Western Railway Company (hereinafter called the · Wabash Company') for the use of and damage to 732 cars and fifteen engines bet ween March 6. 1886. and May 29. 1889. which equipment, by a final decree entered herein April 4, 1889. was adjudged to be the property of the Omaha Company."
Upon the record the United States Trust Company is a party, but only as the trustee in the mortgage executed by the Omaha & St. Louis Company; and, as the trustee therein, it has not the right to enforce the claim belonging to the mortgagor company. It being an admitted fact that the Wabash Western and the Omaha & St. Louis Companies are both Missouri corporations, it is clear that this court cannot take jurisdiction originally of a matter in litigation between them. Support to the juris.diction, if it exists at all, must be found in the subject-matter of the suit, or in its relation to the preceding foreclosure proceedings. Viewing the question as a mere matter of damages, to be compensated by a money judgment, there is nothing in the nature of the litigated question which confers jurisdiction on this court. Counsel for complainant present two grounds for sustaining the jurisdiction; the one being that the supplemental bill presents an issue which was necessarily and primarily involved in the original proceedings, and that the supplemental bill is only, therefore, ancillary and auxillary to the original bill,and jurisdiction thereof is therefore to be supported by the jurisdiction of the original proceedings. The thought presented is that in the foreclosure proceedings the court took possession and control of the mortgaged property, and that' all parties becoming interested therein, and desiring to assert their rights to the property, or any portion of it, would have the right to intervene in the C0urt having the original jurisdiction, and could do so irrespective of the citizenship of such intervening parties. Special reliance is placed by counsel upon the case of Minnesota Co.v. St. Paul Co., 2 Wall. 609, which in many of its aspects is quite analogous to the present case, and in which it was held that the United States court, in which the original foreclosure proceedings were had, could entertain jurisdiction to determine, as -be:tween purchasers at the foreclosure, what portions of the rolling stock belonged to the several divisions of the road that had been separately sold. The main ground upon which the ruling is placed was that, "in contemplation ofJaw, this property is still in the hands of the receiver of the court. If in the hands of the receiver of the circuit court, nothing can be plainer than that any litigation for its possession must take place in that court, without regard to the citizenship of the parties." Jurisdiction in that case was sustained in the United States court on the ground
UNITED STATES TRUST CO. t7. WABASH, ST. L. &: P. BY. 00.
349
that the property was to be deemed to be still in the possession and under the control of that court, and for the further reason that the question in dispute arose upon the construction to be given to the orders and decrees of the federal court. The question decided in that case was as to the jurisdiction of the federal court, in which the original foreclosure proceedings were had, and is not directly applicable to the real difficulty presented on this record. I entertain no doubt that all questions touchthe possession and other rights in property rightfully in the control of a federal court may be litigated in that court, irrespective of the citizenship of the adversary claimants. As I understand it, however, the court of original jurisdiction in this sense is the United State!! circuit court at St. Louis. The first foreclosure proceedings were pending in that court. The receiver appointed by that court took possession of the rolling stock on the entire system for the benefit of all interested. In the control and management of the property, the receivers Humpreys and Tutt were subject to the orders of that court. When the foreclosure in this 'court was begun, the court at St. Louis directed its receivers to allow McKissock, the receiver appointed by this court, to use such rolling stock as might be necessary to run the Omaha Division, pending the final decision of the question of the apportionment of the rolling stock used in common among the several mortgagees claiming priority of lien thereon, As to such rolling stock as in fact came into the possession of this court through the possession of its receiver, McKissock, this court would have jurisdiction to hear and determine the rights of the parties claiming the possession thereof. As to the rolling stock that remained in the p,Ossession of Humphreys and Tutt, and as to the questions between parties arising out of the orders of the court putting said receivers in possession of said property, and controlling the disposition thereof, the jurisdiction is in the court at St. Louis. Humphreys and Tutt were ,not receivers of this court, and the property in their possession has never been in the possession of this court, and no jurisdiction in this court can ,be based upon their possession of the property, or upon any alleged faIlure to deliver up possession thereof. Paragraph 9 of the decree of April 4, 1889, requires an accounting of the amount to be paid as rental for ,the Uf>e of cars by Humphreys and Tutt, as receivers of the Wabash, St. Louis &PaQi/ic Railway Company, or by the Wabash Western Company, as the successors thereof, and of any sum due for cars destroyed while in their possession. The ruling in Minnesota Co. v. St. Paul Co., supra, sustains the right of the Omaha & St. Louis Company to appear in the court llt St. Louis for the assertion of any rights it may have to the property in question; but that does not sustain the jurisdiction of the federal court in Iowa. The real ground taken by counsel for complainant is that Humphreys and 'rutt, as receivers of the court at St. Louis, took and held possession of certain rolling stock which in reality belonged to the Omaha Di.vision, and that after the initation of the foreclosure proceedings in this court they should have delivered up the possession of these cars to McKissock, and that, as they did not do so, they must account for the
lB'6O
.0:\ ';:'
,iDDERAL REPORTER,
voI. 42.
'rental value ther$Of, as well as 'for the value of the cats: destroyed. If jurisdiction of the present is to be 'sustained by reason of the original jurisdictioti and possession taken in the foreclosure suit, it is olear ,that this origihal jurisdiction is vested in the court at 'St. Louis. The same result follows if the question is deemed to arise on the orders reoiIrtdiMctingHumphreys and Tutt as to the disposition to be -m!Ule of ,the rolling·,gtockcoming into their possession as receivers. These orders were niad'e by the court at St. Louis, and' it is the tribunal to'settle the questions arising thereon. This court did not have the pos!!laBsioD or control of the property during the time rental for its, use or damages for its destruction are claimed, ·nor did it have possession thereof'when the present proceedings were brought. There is nothing, therefore, wpon which to found a valid claim to jurisdiction on the ground that, this court has or ever had jurisdiction of the property, for the use of Which rental is claimed. ' The second ground of jurisdiction suggested by counsel is that the pro'<leeding by supplemental petition by which the question of what proper'tywascovered by the mortgage of February 15, 1879, was presented to thiscout1,: was, in effect, nn equitable suit in replevin; and that, under the Code :of Iowa,., damages for the unlawful detention' of property are recoverable in the replevin suit; and that the court, having taken jurisdiction to construe the mortgage, and determine what property was subject to the lien thereof, should proceed to settle the question of damages, and thus save further litigation. The action of replevin is based upon the right to the possession, and does not necessarily involve the question of title. It is too clear to need any elaboration that this court could not have entertained an action in replevin, on part of its receiver, to recover possession of the cars in question from the receivers appointed by the St. Louis court. 'fhey were rightfully in possession of the property,regardless of the ultimate question of the priority of the liens of the respective mortgages. The proceeding in this' court was not in the nature of replevin to recover mere possession, but to settle the question of the titles del'ived from the sales, under the respective foreclosure decrees. The pleadings framed to present the issues did not present the question of rental for the use of the cars, nor of damages for cars destroyed, nor of the wrongful detention of the cars by Humphreys and Tutt. The question of title having been finally closed by the decree of April 4, 1889, and the property having been apportioned by agreement of the parties in satisfaction of that decree, there is nothing in the nature of a replevin suit pending giving this 'court jurisdiction to now adjudicate on aquestion of damages lor the use or destruCtion of any of the property. The argument based upon the assumption that the proceedings were in the ·nature of proceedings in rem, and that the court, having once acqUired jurisdiction, will proceed to do complete justice between the parties, ,must fall, for the reason· that this court has not now,and never did have, >possession of the property. Possession was originally taken by the court at St. Louis; and, so far as the cars which it is claimed were wrongfully detained by the Wabash receivers are concerned,they never passed into
'Ul!UTED STATES
'I-
V. & C.M.WAGON BOAD 00.
the
of this court, but, 80 far as delivered at aU,were delivered directly to the Omaha & St. Louis Company. I appreciate the force of tlle suggestion that it is highly desirable to end all these questions promptly, but that consideration can ha\'e no weight when the jurisdiction of the court is challenged. I have given the arguments of counsel full consideration, but I can find no substantial ground to uphold the jurisdiction of this court to hear and determine the issue sought to be presented upon the questions raised by the ninth paragraph of the decree of April 4, 1889. When that reference was ordered, the question of jurisdiction as between citizens of the same state was doubtless not considered. Being satisfied that the court is without jurisdiction to proceed as between the parties now before the court, the order will be that the reference made under paragraph 9 of the decree in question be set aside, anti that the proceedings thereon be dismissed, at cost of complainants therein, without prejudice to their right to proceed in a court of competent jurisdiction.
'/J. W ALLAMET
V. & C. M.
WAGON ROAD
Co. et al.
(District Court, D. Oregon.
May 12, 1890.)
PuBLIC LANDs-GRANT IN AID OF WAGON ROAD-COMPLIANCE WITH CONDITIONS-BUIT TO ENFORCE FORFEITURE.
In 1866, congress made a grant of lands to the state of Oregon, to aid in the construction of a wagon-road from Albany through the Cascade mountains, to the eastern boundary of the state, and provided that the land might bll sold, as the work progressed, on tb,e certificate of the goveruor of the state that the portion of the same coterminus with said lands was "complete.» The state tran!lferred the grant, without further condition or qualification, to the Wallamet Valley & Cascade Mountain Wagon Road Company, which undertook the construction of the road, and withln the five years allowed therefor, procured certificates from the governors of the state that the road was completed as reqUired by law. Soon after the company 80ld the lands to the defendants Weill and Cahn l who are now the legal owners thereof, except a small portion which has been dIsposed of. In 1874, congress authorized the issue of patents for these lands to ,the state or'its assignee, when it was shown by the certificates of tne governor that said road was "constructed and completed.» Between 1878 and 1883 a question was made before the departmept of the interior whether the company had completed the road according to law, and testimony was received thereon, pro and con; and after argument the secretary of the interior directed patents to issue to the company, which was done on October 80, 1l!82, for 4.40,856 acres, in addition to a patent for 107,893 acres issued on June 19, 1876, Inc,o!lsequence of this action by the secretary the defendallts believed ,that. the due constructiQn of the road was admitted by the complainant, and were thereby induced to expend a larg'e sum of money on and about said property. In 1889, congresllpllllsed an act requiring the attorney general to bring 8 suit in this court, againtallpersonsclaiming an interest in this grant, to determine the question of constnitltion of the road, the legal effect of the governor's certificates, tile right of the United, States to resume the grant, and to obtain judgment declaring the land coterminous with any uncompleted portions of the road forfeited, saving rights of anr bona fide purchasers; the suit to be tried and adjUdicated ,like equity. On August 29,1889, in pursuance of this authority, this suit was commenced to obtain the relief therein specified. The de;fendants Weill' and cahn, filed two plea,S to the bill,' in one of whi'ch they set up the ;foregoing facts as an estoppel, ana in the other the defense of a bona fide pUrchaser for a valuable consideratiou"and without notice of any failure on the part of the company to com, ply'With'ttie terms and conditions of the grant. Held, (1) that this suit must be tried a$a between private, persons, in whiCh the defendanta mayaet up any
FEDERAL REi'ORTER,
estoppel and the statute of limitations, that they could if the complainantwas merlllya private person; (2) that the claim of the complainant , Wsst aside theMe patents, and declare these lands forfeited, is, under the circum,a,stale one, and therefore ought not to be allowed; (3) that the complainant, by the passage of the act of 1874, either accepted the certificates as conclusive evidence of the due construction of the road, or thereby waived all further per.formance of the condition on which the grant was made; (4) that the complainant, by the action of its executive department. in issuing the patent of 1882, impliedly recognized and accepted the performance of such condition, and, having thereby induced the defendants to change their relation to said property by expending a large sum of money thereon and thereabout, is now estopped to allege or claim that said condition was not performed; (5) that the certificate of the governor of Oregon was made by the act ofJ860 the only evidence of the compliance with the terms of the grant by the completi()n of the road; (0) that upon the facts stated in the plea. the defendants are purchasers in good faith and for a valuable consideration. within the saving clause of the act of 1&;9, and within the general principles of , equity jurisprudence ; and (7) tbat, on the case made by the bill and first plea thereto, it appears that the complainants ought not to prevail in this suit, and therefore it is dismissed. (SyHalYu8DII the Court.)
InEquity. Mr. Lewis L. McArthur, for the United States. Mr. John A. Stanley, Mr. C. E. S. Wood, and Mr. Henry Ach, for defendanis. 'J.By the act of July 5, 1866, (14 St. 89,) congress made a grant to the state of Oregon, to aid in the construction of a military wagon road from Albany to the eastern boundary of the state, of the odd sections of the public lands, equal to three sections per mile of said road, to be selecied within six miles thereof, together with the right of way for the same. The legislature of the state was authorized to dispose of the lands for the construction of the road as the work progressed, and the goverllorof the state certified" to the secretary of the interior" that any 10 miles of the same were completed. If the road was not completed within 5 years, no further sales were to be made, and the land remaining unsold should "revert" to the United States. The act also provided that the road should be constructed with such "width, graduation, and bridges as to permit of its regular use as a wagon road," and in such other "special manner"as the state might prescribe, and that the road should. remain a public highway for the use of the government of the United States. On October 24, 1866, the legislature of the state granted to the Wallamet Valley & Cascade Mountain Wagon Road Company, hereinafter called th e " Wagon Road Company," a corporation theretofore formed, under the general laws of Oregon, for the purpose of constructing and maintaining awagon road from Albany, across the Cascade mountains, to the D(:schutes river, "all lands, right of way, rights, privileges, and immunities" theretofore granted to the state, "for the purpose of aiding said company" in constructing the road described in the act of congress, "upon the conditions and limitations therein prescribed." Sess. Laws, 58. Between April 11, 1868, and June 24, 1871, both inclusive, there were issued by the governors of Oregop,and duly filed with the secretary of the interior, four certificates, which, taken collectively, showed that
UNITED STATEStl. WALLAMET V. & C. K. WAGON ROAD 00.
853
the road had been completed, according to the acts of congress and of the legislative assembly, to the eastern boundary of the state, a distance of 448.7 miles. On June 18, 1874, congress passed "an act to authorize the issuance of patents for lands granted to the state of Oregon in certain cases," (18 St. 80,) which reads as follows: "Whereas, certailliands have heretofore, by acts of congress, been granted to the state of Oregon to aid in the construction of certain military wagon roads in. said state. and there exists no law providing for the issuing of formal patents for said lands, therefore, be it enacted, * * * that, in .all cases when the roads, in aid of the construction of which said lands were granted. are shown by the certificate of the governor of the state of Oregon, as in said acts provided, to have been constructed and completed, patents for said lands shall issue in due form to the state of Oregon as fast as the same shall, under said grants, be selected and certified, unless the state of Oregon shall, by public act, have transferred its interests in said lands to any corporation or corporations, in which case the patents shall issue from the general land-office, to such corporation or corporations upon the payment of the necessary expenses thereof: provided, that this shall not be construed to revive any landgrant already expired, nor to create any new rights of any kind, except to provide for iSSUing patents to lands to which the stale is already entitled."
, On June 19, 1876, and October 30, 1882, patents- were issued to the wagon road company under the act of 1874,-the first one for 107,893 acres, and the second one for 440,856 acres,-since which no patent has been issuecl for any portion of the grant. On June 6, 1881, the secretary of the interior, in a communication addressed to the speaker of the house of representatives, estimated that the company is entitled under the grant to 1,346 sections of land, or 861,440 acres. On March 2, 1889, congress passed an act making it the duty of the attorney genera] to cause a suit to be brought against all persons or corporations claiming an interest in wagon-road grants made to the state of Oregon, including the one made by the act of 1866, "to determine the questions of the seasonable and proper com pletion of said roads in accordance with the terms of the granting acts, either in whole or in part, the legal effect of the several certificates of the governors of the state of Oregon of the completion of said roads, and the right of resumption of such granted lands by the United States, and to obtain judgments, which the court is hereby authorized to render, declaring forfeited to the United States all oisuch lands as are coterminous with the part or parts of either of said wagon roads which were not constructed in accordance with the requirements of the granting acts, and setting aside patents which have issued for any such lands, saving and preserving the rights of all brmaftde purchasers of either of said grants, or any portion of said grants, for a valuable consideration, if any such there be. Said suit or suits shall be tried and adjudicated in like manner, and by the same principles and rules of jurisprudence, as other suits in equity are therein tried." The act also provides, among other things, for the disposition of the lands in case the same are declared forfeited by the final determination of said suit. v.42F.no.7-23
, In.pu!:IlUl\p{le M this. act, this sUit. was. commenced by the attorney general.on' August 29, 1889, on behalf of the United: States against the wagon road company and others, to have the lands included in said grant fQtfeited!to the United Statell, and the patentsisi$ued therefor, as well as the (leJ:tificates of the gover.llQrs of Oregon, concerning the conand void,Oll the ground and struction of the road, declared for ,the reasop, .asalleged,that the ,road never was "constructed and maintained" as required bylaw, either in whole or in part, so as to be a.'public highway, over. whioh the property, ·troops, 'or'mails of the UriitedStatescould be transported; 'that the proceeds ofsaid lands were to the ..conatflNtion olth,.e road; that the certificates of the were false, and were .obtained on the false and fraudulent reprl:lsentfltions of the wagon road COropany, without examination on the pa'rti()fsaid governors, and in one instance--that of September 8,1870, his knowledgeth'at the same"I'VaS false;' all ohvhich was known tdt4e:'defendantsat' the. time they acquired an interestiil these lands. ,'lJle: ,pilLalsQ shows thaVby sun4'r, Conveyances, Commencing with tbat,p.fJbe.Wagon road company of A#gust 19, 1871 ,to H.K. W. Clarke, FredW.· Clarke, the son of said H. K. W. Clarke, Weill, oL\pril 9, 1879, tbe title tosaidlands has become Alexander Weill and DavidCabp) and that T. :a:qgg, and corporation a of which he is an officer, made defendants in the bill, claim an interest in said lands·. .1'be by leave of the courh have filed two to!th!3 bill and their joint and several answers in support thereof. ThlfJirs,tplea may be called an estoppel. Briefly, it alleges that after these defendants had acquired the title to thela,J;J.ds in question, as stated in the pill, and in March, 1878, a comat th{joffice .of the eecretary of the interior to the effe,cttllat ,the road had .n<)t constructed as. required by the act of July, 1866, ill of Which the commissioner of the general ihe of said secret&ry, appointed a special agent to examine tpe ,and, report thereon; that in. October, 1880, said ,road had ,not been constructed as required by agent re.po11tedthat , law; that, 's,aid, report, and the evidenceuqcompanying the same, was laid beforecongr,ess, anclillthe house of ,representatives was referred to on military affairs, which consideration the of evidencEl,and thereof, madl:l a 1881, recommending that nO: actionpf congress be , , . cOlUmittee say they "do not feel called upon to vestigate,th,edisputedqqestionof frau,d arising fr.om the parte testinl:Qny submitt6,d, o!-,warrapted in expressing an opinion in regard to the .but. believe that ,tQ be:a.matter within the province of the judicial, department ofthegoverpmenh" and conclude as and foHOWo\l: ; ,,'" II (1) T,hatthe act·of congress approved. July 5, 1866.· vested a present title to tbe land in question in tbe state of Oregon; (2) that by the act'of the leg-
UNITED STATES fJ. WALLAMET
'v.
&
c.' M. WA'GON ROAD CO.
855
Islature. and the acts 'of the governor of Oregon, the titleto'sard land was vested in the Wallamet Valley &, Cascade Mountain Wagon RoadCompal1Y'; (3) that by the deed of said company to Clarke. and the subsequent deeds from Chnke and others, the title of said land is now vested in the present claimant, Alexander Weill; (4) that said title 'cannot be forfeited, ot: allnulled, or, reinvested in the United ,excepting by a jUdicial proceeding; and'that the same has become a vested right, which congress cann'ot impair or take away." That a,fterwards, on February 8,1882, a communication from the secretary of the interior was laid pefore congress, containing furth,er charges, and allege4 proofs that the road was not constructed as required by act of July and the matter was referred in the house of representatives to 'the comlnittee on public lands, and in .the senate to the committee on military affairs, which committees rep<;,rted, recommending take no in the premises. Both these reports are annexed to, the plea, and made a part thereof; and each states that the title to passed to the state and its assigns ullq.er the act of congress and the state legislature. The senate committee say that "it is impossible" for them "to make such an investigation as will justify action by congress which would do justiceand equity in the premises," and that "the executive department of the government had ample authority in law" to investigate the mattel', and, if necessary, to institute legal proceedings in the courts' of the United States to secure a forfeiture of the grant, or any part thereof, for failure to comply with the terms and conditions thereof, "without any legislation or instructions from the Iegislative department." That by the proceedings thus had the matter of the completion of the road was referred to the executive department of the government, whereupon the secretary of the interior, after due investigation of the subject, including the hearing of argument thereon, did on July 5, 1882, direct the commissioner of the general land-offict: to proceed and certify the lands for patent under the act of June 18, 1874, and thereafter, in October, 1882, said patent for 440,856 acres was duly issued to the wagon road company; that these relying in good faith upon the action of the legislative and executive department of the government, were induced to, and did, before the passage of the act of 1889, "so alter and change theirposition in reference to said lands" as to "render it inequitable and unconscionable for the complainant to assert any right * * to forfeit. or .reclaim said lands;" that these changes consist, in part, ill the expenditure of $2,660.62 in securing the issue of patents therefor;' the payment of $29,885.79 of taxes le\Tied thereon; in the payment of $109,800.97 to agents and attorneys for grading, selecting, and platting said lands, and defendingfhe possession of the same from adverse claim ants and trespassers; by the. salt' of sundry parcels of said lands witb warranty of title, on which the liability of the defendants exceedstha surp of $22,609.71; in the expenditure of $86,805.75 in rebuilding and improving said road through its entire length, which has greatly increased the value of the lands along the line thereof; a very large portioD of which still belongs to the complainant, and in the payment of
in
FEDERAL REPORTER,
on said sums of money, making in all the sum of $280,754.03. In the second plea, these defendants aver that they are purchasers in good faith, fora valuable consideration, and in support thereof allege, in substance and effect, that in 1871 said lands were in the market for sale, when Weilland H. K. W. Clarke purchased thesame of the wagon road company, through their agent, T. Edgenton Hogg; that in pursuance of said the vendor conveyed the lands, on August 19, 1871, to said Clarke,whb on September 1st of that year conveyed the same to the defendant Cahn, in trust for Weill, Clarke, and Hogg; that at this time greater portion of these lands were unsurveyed, and, for the purpose of continuing the existence of the wagon road company, and thereby securing the selection and patenting of the lands, Weill and Clarke, in the month of August, 1871, purchased the stock of said company, and, as ,8 matter of convenience, some' of said stock was bought in the name of Hogg, and by him held for Weill and Clarke, but said stock had no value apart from said land-grant; that, at the time of the conveyance of said lands by the company, Weill had expended in the purchase thereof $140,636.39, and Clarke, $20,000; thatat the time of said purchase the several certificates of the governors of Oregon to the construction and completion of said road, as required by the act of July 5, 1866, were on file in the department of the interior aud the office of the secretary ofstate of Oregon,and these defendants then believed, and 'do still believe, that the same were altogether true. and never heard anything to the contrary 11ntil 1880, when the attehtion of eongress was called to the matter by the se9retary of the interior; that, before purchasing the lands, Weill employed counsel learned in the law, who advised him that the title of the wagon road company tothe same was perfect, and that he had a right to rely 011 the certificates of the governors as conclusive evidence that the conditiohs brthe grant had been duly performed; that in making said purchase he did so rely, and but for the existence of said certificates would not have made it; that, at the date of the purchase, these defendants were l,iving in San Francisco, and had never been in Oregon, except there a short time in June, 1867, nor have either ofthem Cahn, ever beetltlleresince; that prior to said purchase neither Hogg nor Clarke had lJ,IlY knowledge or information that these certificates were not true in point of fact, and, if they,or either of them, were obtained by false or 'fraudulent means, neither of these defendants, nor Hogg nor Clarke,had any knowledge or information thereof; that in 1879 WeiIl purchased all the interest of Hogg and Clarke in said lands, the same being 11-24 thereof, for $21,400, and the release to the former, and the estat¢of the latter, from the repayment to him of their proporto many thousand dollars, of the money advanced by tions, him in the purchase of the lands, and received conveyances from them accordi l1 g1y,Rs'set forthin the complainant's bill. support of the plea avers that the price paid by Weill The on August 19, 1871, for the lands, was the full value thereof, and denies
UNrrED STATES .,. WALLAMET V. &: C. M. WAGON ROAD Co.
857
all knowledge or notice that the road had not then been duly constructed and completed, as required by the act of congress, or that the certificates of the governors were in any respect untrue, or had been procured by false or fraudulent representations. The case was heard on the sufficiency of the pleas, admitting the truth of the facts stated therein. The act authorizing the bringing of this suit empowers the court to consider and determine these three questions, and no others: (1) Was the road seasonably and properly completed, either in whole or in part, as provided in the act making the grant? (2) What is the legal effect of the governor's certificates concerning the completion of the road? And, (3) What right has the United States to resume the granted lands? U. S. v. Railway Co., 98 U. S. 608. In the determination of these questions the court is required, by the act of 1889, to proceed "in like manner," and he governed "by the same principles and rules of jurisprudence," as in other suits in equity; that is, as in suits between private individuals. And such is the rule of procedure and adjudication in the case, independent of the directions of the statute. When the United States.comes into a court (Jf equity to assert a claim, it is subject, and must submit to, the rules of procedure and principles of jurisprudence which obtain in suits between private parties. U. S. v. Arredondo, 6 Pet. 711; U. S. v. Flint, 4 Sawy. 58; U. S. v. Tichenor, 8 Sawy. 156, 12 Fed. Rep. 449. The grant of 1866 was a grant in prmsenti. The language of the act is "that 1here be, and hereby is, granted to the state of Oregon." As soon as the line of the road was designated, the grant attached to the odd-num" bered sections, within the prescribed limits, on either of said line, and took effect from the date thereof. Cahn v. Barnes, 7 Sawy. 53,5 Fed. Rep. 320; Pengm v. Munz, 12 Sawy. 238, 29 Fed. Rep. 830; Schulenberg v. Harriman, 21 Wall. 44; Missouri Ry. Co. v. Kansas Ry. Co. i 97 U. S. '491; Van Wyck v. Knevals, 106 U. S. 360, 1 Sup. Ct. Rep. 336. The grant, however, was a conditional one; the condition being that the road should be completed in the manner provided within five years from tha date of the act. This was a condition subsequent; and, unless it was complied with, the complainant, as grantor, might, by proper legislation or judicial proceedings, have enforced the forfeiture of the grant on account of such failure. But no one else could do so; and, unless the grantor does, the title remains unimpaired in the grantee. Schulenberg v. Harriman, ff/Jr pra,63. As appears from the first plea, congress has repeatedly refused to de.clare the forfeiture of the grant, or take upon itself the investigation of the question whether tha condition had been complied with or not. The attorney genera] declined to institute judicial proceedings to that end until required to do so by the act of 1889, which appears to have bOOn
\358
'"
,r, . " i':' I.J'JCDERAJ, REPORTER, vol. 42.
passed on the nlenloJ.'ial of the legislature of the state.. It is also. well understood that congress was influenced to the passage of the act by the desire of these defEmdants to have a speedy and complete determination of their rights in the premises. Qn the facts stated in this plea, the demand made by this suit for the forfeiture of this grant on the ground stated in the ·bill is ,what is known in equity as a "sta:1e claim," and therefore ought not to be allowed. The period prescribed for the construction of this road expired in July, 1871, full 18' years hefore the commencement of this suit. During all this time, it was open to'the complainant to bring this suit, by its attorney general;to have this grant declared forfeited on the grounds now stated in its bill. U. S. v. Throckmorton, 98 U. S. 70; U. S. v.Tin Co., 125 U. S. 278, 8 Sup. Ct. Rep. 850. This, in my judgment, is such a delay or lapse of time as renders the claimstale, and constitutes, under the circumstances, a bar to the relief sought. Lapse of time, partidularly when coupled with possession, as in this case, is a defense,inequity, in cases not within the reach of the statute oflhnitation. Story,. Eq.. Pl. § 813; 2 Story, Eq. Jur. §1520; U. S. v. Tichenor, 8 Sawy. 156,12 Fed. Rep. 449; U. S. v. Beebe, 4 McCrary, 12, 17 Fed. ·Rep. 36. , F'or seren years after the expiration of the time prescribed for the construction of the road Rlld filing of the certificates of the governors, in which its completion was formally mid officially declared, nothing appears to have been said or suggested to the contrary by anyone, when a trespasser on the lands made a complaint to the secretary of the interior that the road had not been constructed according to law. Investigation ensue<l under the direction of the secretary, and the matter was submitted to congress, who referred it back to the executive department in 1882, where, after due consideration, patents were ordered issued to the comthe act of1874, which was done, as to the greater portion pany of the lands. ' The statute of limitations does not ordinarily run against the United States. .But this suit is required by. the act of congress to be tried and adjudicated as a suit between private parties; and therefore, in my judgment, the lapse of time, or the bar of the statute of limitations, is to havetlw same effect as in a suit between such parties. the analogous action at law, to recover the possession of on account .of a breach of the condition on which they were granted, would be barred in 10 years, and prior to that time in .20 years; aQd althoUgh. the statute of limitations does not apply, proprio tigore, to suits in equity, yet in cases like this, of concurrent jurisdiction at;law, ,the court: will apply the same limitation to one as the other.lia'U V.RU8SeU, 3 Sawy. 515; Manning v.Hayden,5 Sawy. 379.-.,; iNQ case has been cited from the supreme court in which it has been distinctly held thtlot· the defense of estoppel can be made against the
UNITED STATES "·. WALLAMET V." Co M. WAQON ROA.D 00.
859
national government. But in many cases it is so assumed, even where the term is not used. For instance, in Clark v. U. S., 95 U. S. 543, it was held that a defense to a daim against the government for the use of a steam-boat, which involved bad faith on its part, could.not be made. In Branson v. Wirth, 17 Wall. 39, it is assumed in the opinion of the court that the United Sta.tes .may be estopped. In U. S: v. McLattghlin, 12 Sawy. 201, 30 Fed. Rep. 147, it was said by Judge SAwYER "that the law of .estoppel, in a proper case, applies to the goverument." In Indiana v. Milk, 11 Biss. 209, 11 Fed. Rep. 389, the court having found that the state, by its conduct, had recognized the validity of the defendant's title, and thereby induced them to alter ·their position, by investing their money on the strength of it, Judge GRESHAM said: "The state cannot now, in fairness or law, assert its invalidity. "Resol,ute good faith sbould Ilbaracterize the conduct of states in their dealings with individuals, and there is no reason, in morals or law, tbat will ex-. empt t4em frolll the doctrine of estoppel."
In my jndgment, the complainant ought not, in fairness and justice, to be allowed to assert, as against these defendants, that this road was not completed as required by law, and claim a forfeiture of the grant on that ground. In the first place, the certificates of the governors to the completion of the road are the acts of the agent of the complainant. By the express terms of the grant, the governor of the state was authorized and required to determine if and when the. road was: constructed, as provided therein, and his certificate to that effect is the necessary and only. legal evidence of that fact. On the faith of these certificates, the truth of which does not appear to have been questioned then, or for long after, these defendants invested their money in their lands. By this means the complainant proclaimed to these defendants: "This road has been constructed according to law. The condition 011 which this grant was made has been complied with, and the same has become absolute." And it ought not now to be heard to allege anything to the. contrary, even if it should be true, to the. prejudice or injury of those who, like these defendants, have in good faith acted upon such representation as true. In the second place, after the investigations in congress and the department of the interior, between the years 1878 and 1882, concerning the effect and verity of these certificates, and the fact of the compliance of the wagon road company with the conditions of the grant, the complainant practically affirmed the right of the company to the lands, and listed, the same for patent under. the act of 1874, and actually issued such patent for the greater portion ·of the grant, on the faith of all which these defendants were induced to materially change their position in relution to the property by expending large sums of money thereon and
h:DERAL REP0RTER,
the payment Qf $29,885.79 taxes levied thereon and improvement of the road. . , In addition to the grounds above stated, on which this estoppel ought to be allowed as against the United States, there is the express provision in the actof 1889 to the effect that this suit shall be tried and adjudicated as a suit in equity between private individuals. This direction is withohtqualification or exception, and, in my judgment, includes the setting u:p idf :an· estoppel, as well as any other procedure or defense known to equity practice or jurisprudence. By this provision the complainant consents in advance that an estoppel for conduct may be availed of against it itithis suit. .And· ,even admitting, what is denied by the plea, that their certificates are false in fact, and were procured by the fraud of the-wagon road company. and that these defendants·had notice of the same when they m'ade th'e'purchase, 'alld therefore the complainant is not estopped to sI1'cM these facts in any litigation, hetween it and them in which they may be pertinent and material, 'still'; 'by the deliberate action of the cCHnplitinant, the inquiry' has become immaterial. Congress had the same right to waive the .performanceof the condition subsequent to the grant as to make it in the first place. When, therefore, congress decided by the act of 1874 that patents should issue for· these'lands in case it was shown by the certificates of the governors of Oregon that the road was "c0nstructed and com pleted," in effect, it thoreby affirmed, for the purpose of the grant, the integrity and efficacy of said certificates, and accepted them as final and conclusive evidence of the performance of the terms and conditions of tbe grant, or waived the same. Again, admitting that the complainant could as a matter of fact, l1nd notwithstandIng the certificates to the contrary 1 show that the road waS not completed in Bll respeC'ts according to law, and that these defendants had notice thereof, still, the complainant having subsequently investigated the question upon evidence taken pro and con thereon), and deoided, by and through its proper officers, that the grantee or its assignee, the wagon road company, was entitled to a patent for the I'ands .under the act of 1874, either on the ground that the road had been 'sufficiently constructed, or that under said act the certificates were conclusiV'e of that fact,' in consequence of which these defEmdants made the expenditures and incurred the liabilities on and about the property 8S above stated, the complainant would be estopped to show such failure or notice in this suit. The second plea is also good. All the elements of a bona jide purchase appear in the transaction. The original grant passeg the legal title to the state, which it transferred to the wagon road company, who conveyed the same to these defendants. Their grantor was not only the apparent, but the ()'Wner of the property. The purchase is alleged to have been made in. good faith, and nothing appears to the contrary; and it was made fora.valuable consideration,-$140,636. It is a matter of com-
by the authority of the state, and $86,805.75 disbursed in the repair
UNITED STATES V. WALLAMET V. & C. M. WAGON ROAD CO.
361
mon knowledge, of which the court may take notice, that at the date of this purchase the country along the greater portion of the line of this road was unsettled, and much of it occupied by, or 'within the range of, wild Indians. Its value was purely speculative. Neither had the purchasers any notice of any defect or flaw in the title of their grantor, or any failure on its part to comply with toe condition of the grant. But on this point the district attorney contends that, the grant having been made hy statute on a condition SUbsequent, the purchasers were bound to inquire and see that this condition was fulfilled before they can claim to have purchased in good faith. Admit this. But how were they to aecertain whether the condition was fulfilled or not? In effect, the district attorney answerS: "By a personal examination of the work on the ground." This would be a very unsafe proceeding. The purchasers might think the work was all that the law required, andsolle judge or jury before whom the question might be raised afterwards , might think otherwise. The only specific direction in tbe act. on the subject is that the road shall be constructed, flO as "to permit of itsr("gular use as a wagon road, and in such other special manner as the state of Oregon may prescribe. " The state assigned the grant to the wagon road company without prescribing any "special manner" in which the road should be constructed. It follows that the construction was only to be such as "to permit of its regular use as a wagon road." Nothing could be more indefinite than this. Probably no two men in Oregon could have been found who would agree in all particulars as to what was necessary to constitute such a road. . The act provides for the sale of the lands, as the work progresses, in sections of not less than 10 continuous miles, on the certificate of the governor to the secretary of tlie interior that the same "are completed:" No lands were in fact sold until the certificates were furnished of the completion of the whole road. But this is a matter of which the grantor cannot complain. The provision was intended solely for the benefit of the grantee, and could be waived, as it was. The power to declare the' road, or any portion thereof, not less than 10 miles, "completed," was thus vested in the governor. When his certificate to that effect was filed with the secretary of the interior, the fact of completion was established; and anyone thereafter seeking to purchase the lands need go no further, or seek elsewhere, for information on this point.. And so these defendants, finding the evidence on file as to the completion of the road, that authorized the sale of the lands, freed from all conditions thereabout, purchased the same in good faith, and for a val·· uable consideration. On the facts stated in the plea there can be but one conclusion in the premises,-that these defendants are bona fide purchasers, within the purview dfthe act of 1889, and the principles of equity jurisprudence on that subject; therefore, they are not liable- to have the lands sO pu·rchased by them declared forfeited to the United Stntes, even if the cerof the governors should prove false aQd fraudulent, of which there
1362
.r'
FEDERAL
dsqo beyon<l.the formal allegations of the bill, unSll by ,specific statement showing wherein or· how they are false or frau.dulent. ,. !:" The ,ple{!.!l are both sustained,and in my judgment the bill ought to be dismissed. 'fhe facts stated.inthem are .not only admitted for the purpose .of this hearillg, but they are manifestly trUe. The only exception to this statement is the denial of.tbe falsity of the certificates, or, if they are false, notice to. these defendants of that fact. That they ever had any such notice .is extremely improbable,under the· circumstallces. Naturally enough, a purchasenvould relyon:the ceJ:tificates, and not travel hundrads of miles, through an unsettled COUll try, to determine by personal observation a matter. which the la,W!;Inade the governor the unqualified judge of; and which, as I have 'said,no two persons were likely to agree about.' . I . Admitting fhat the falsity of certificate maybe shown in conjunction with notice to these defelldants of that fact, the time which has . elapsed since the period for the construction of the road has expired, ,and the absence of,a,QY resident population along its line at that time, would render it extremely difficult to make any satisfactory proof on the subject·. The company waa not bound to do more than construct the road. Its maintenance was no part of the condition of the grant. ,If ..the state had constructed the road, it would no doubt have been left to the people who wantl'ld the use of it to keep it in repair. as in the case of the other public roads. grant to the wagon road company without conThe state assigned dition in this respect. Nor is it likely that anyone would at that day have accepted the grant on the onerous and uncertain condition of keep ing the road indefinitely in repair. The fact that the act authorized the land to be sold, freed from all conditions, of course, as fast as the road was constructed, shows conclusively that the grant was not intended.to be charged with the burden of maintaining the road through all time. or at all. In the nature of in many places the road would soon deteriorate and disappear,.i£not kept in repair. Snow and rain, floods, wash-outs, and slides must occur yt;arly on the line of this road, or some portions of it. Therefore it would be very difficult to show at this late day what was the character and quantity of work done in its construction. The persons employed on the work, who would be the best, and almost ·the only. witnesses on this point, are likely, in 20 or more years, to have I died or disappeared.· .. These alone are probably suffioient reasons for dismissing this bill. But the conclusions reached on the first plea make it certain, in the · judgment of thisc6utt,that the complainant cannot, and ought not to, . prevail in this because the claim is clearly a stale one, and also, by analogy to the statute of limitati ODS, is barred by the lapse of time;serond, because, by theaot of 1874, it has either accepted the certificate as conclusive evidence. of the due constr.uction of the road, or thereby waived all furtherperformanoe 9fthecondition SUbsequent; and,
HeNRY". TRAVELERS' INS. CO.:
363
thil'd, by the action of its executive department prior to 1883, whereby
it dir;;tinctly recognized and accepted the performance of such condition, and thereby induced these defendants to so alter their position in relation to the property that it would be unconscionable and unjust now to allege the contrary to their serious injury and prejudice. As an authority applicable to this case generally, see U. S. v. Road Co., 41 Fed. Rep. 493. Let it decree be entered dismissing the bill as to these defendantB.
HENRY
et ale v.
TRAVELERS'
INS. Co.
(Cir{)uit OO1.llrt. D. Oolorado.
May 15,1890.)
1.
ACCOUNTlNG-EvIDENCB-CORPORATB DEBTS.
Plaintiffalld defendant made a contract by which defElndant was to take bor..dlof certain ditch companies, in which they were interested, in payment of all debts due defendapt from the companies" and for advances thereafter to be made to them. Plaintiff was to surrender the obligations of the companies and those given by plaintiff for the benefit of the companies. This agreement did not apply to the private debts of plaintiff to defendant. On an accounting directed in a suit to enforce the contract, the master inauded in the debts of the cOIQpanies certain notes, on tbeir face the personal obligations Of plaintiff to defendant. All tbe other obligations were notes executed by the companies, and indorsed byplf.intiff. Attbetime plaintiff applied for the loan of defendant, for which all these notes were ,nven, be stated that he wanted for personal uses an amount equal to that for wbich the individual notes were given.' :Moreover, some of it was paid by defendant for tbe purpose of obtaining the release of stock owned by plaintiff indiVidually. Furthermore, in a statement of plaintiff's personal resources made after the loan, and under plaintiff's direction, for defendant, these individual notes were included in his per- . sonalliabilities. Held, that they were improperly included in the statement of the companies' debts. Defendant is entitled to receive bonds of the companies for advances made, since the commencement of this suit, for the completion of the companies' canals. OF CONTRACT.
2. 8.
SAj\{1!:..,..COLLATERAL NOTES.
Plaiutiff gave defendant certain chattel notes as collateral security for "past, present, or future indebtedness." Held that, in the absence of negligence, defend- . ant should be charged only with such amount as it had collected·
.. SAllE-INTEREST.
As judgments in Colorado draw interest, defendant should have been allowed Interest OIl to the time of its payment. Defendant should be allowed interest on its claims against plaintiff to the date of the master's report, and, on its claims against the complloBies, to the time it received, or should have received, bonds in payment.
5.
BAllE.
6.
.
BU{B-AcCOUNT-BoOK-EvIDENCE.
In the absence of proof that an entry in defendant's books,showinJ\' that a certain claim against plaintiff was paid, was made without the direQtion of some officer or agent of defendant having authority to dil'ect it, it will be presumed to have been made by its authority, and to be correct.
In Equity.. On exceptions to .report. For former reports, see 33 Fed. Rep. 132; 34 Fed. Rep. 258j 35Fed. 15. ·