22
FEDERAL REPORTER
the loan. But it did not of itself constitute a contract. Nobody was bound by it, and there was no contract made until the delivery of the money and papers on Monday. Besides, the papers being dated on the 8th, which was a week-day, and the plaintiff having no reason to suppose they were not executed on that day, the defendants are undoubtedly estopped from showing that they were really exe\11ted on another day, which was Sunday, because such a proceeding would operate as a gross fraud upon an innocent party. . There is only .one other question, which is whether the plaintiff is entitled to a foreclosure for the entire amount of principal and interest, the principal not being due yet by the terms of the mortgage. The first six months' interest fell due on December, 1878. It was not paid, nor has any interest ever been paid. But the notice of the plaintiff's option to declare the whole amount due was not served until February 7, 1879, some six weeks after the ten days had elapsed, during which the defendants might pay the interest before the pJaintiff could elect to declare the principal due. I think too late, and that the option should have been declared at the expiration of ten . days, or within a very short and reasonable time thereafter; and that the plaintiff's decree should be for the foreclosure of the mortgage for default in the payment of interest. 'Decree of foreclosure for the plaintiff, with costs.
,
PttCK
v.
COMSTOCK.
(Owouit Oourt, W. D. Wisconsin. February 18, 1881.) l:"TAX DEED-STATUTE OF REV. ST. §
1210.
The omisSion of a recital in a tax deed, under the statutes of Wisconsin, of the previous issue of an irregular tax deed, does not prevent the running of the statute of 11mitations.-[ED·
.Demurrer. Suit to set aside Tax Deed. Walter S. Barnes, for complainant. John C. Spooner, for defendant.
PECK
23
Bl::s"N, D. J. This action is brought by the complainant, \Vho resides in Michigan, to set aside and cancel a tax deed upon certain land lying in the county of Burnett, in the .Htate of Wisconsin, upon which the plaintiff holds a mortgage by one William S. Patrick. The mortgage has been: foreclosed, and the time of redemption has expired, but no .sale has been made. The land was sold for taxes in May, 1874, for the taxes of 1873, and certificates of sale duly issued, which were afterwards duly and regularly assigned to .the defendant, who, on May 31,1877, the time for redeeming the lands from sale having expired, took out a tax deed from the clerk of Barron county, in which the lands then lay, which deed was, however, irregular and void upon its face Irom being sealed with the clerk's private, instead of his {}fficial, seal, as the law requires. This irregular deed was acknowledged and recorded. On August 4, 1877, the defend.ant, Comstock, ascertaining that his deed was irregular, applied to the clerk to have a new deed i\lsued, without, how, ever, complying with the statute, which requires notice of .such application to be given by publication. The clerk thereupon issued a new deed, which, as a first deed, is strictly regular in form, and sufficient in all respects to convey the title in the land to the defendant, all the previous tax pro-eeedings being conceded and alleged in the complaint to be· regular and valid; but as a second deed it is irregular and void, because it does not recite, as the statute requires in such jases, the issuing of the previous irregular deed. The bilUs .quite specific in its allegations of the regularity of the tax proceedings up to the issuing of the deeds, perhaps for the purpose of showing that the deed sought to. be set aside constitutes a cloud upon the plaintiff's title. It appears upon the face of the complaint that the time within which actions .are allowed to be brought under section 1210, Rev. St., to set aside or cancel a tax deed had expired when this action was brought; and the defendant demurs to the complaint on this ground, as well as that the facts set forth are insufficient to entitle the plaintiff to relief in equity. The question for determination 18 whether or not the statute
24
FEDERAL REPORTER.
of limitations runs upon the deed. I think it does, and that the demurrer must be sustained. Within the decisions of the supreme court of Wisconsin, which I feel bound to follow on this question, I think there can be little room for doubt. It is claimed by complainant that the tax deed is void, and therefore the statute does not run upon it. But, within the cases of Marsh v. The Supervisors, 42 Wis. 502; Philieo v. Hiles, 42 Wis. 527; and The Oconto Co. v. J e1'rard, 46 Wis. 324, the deed being void does not prevent the application of the statute. And such I understand to be the uniform holding of that court and the settled c.onstruction placed upon the stat· ute. Edgerton v. Bird, 6 Wis. 527;' Lawrence v. Kinney, 32 Wis. 281; Wood v. lv!eyer, 36 Wis. 308; Hill v. Kricke, 11 Wis. 442; Knox v. Cleveland, 13 Wis. 245; lIfilledge v. Coleman, 47 Wis. 184. The deed in this case sought to be set aside is conceded to be perfectly regular on its face as a first deed. It is, in fact, just such a deed as, the defendant was entitled to receive when he took out the irregular deed on the thirty-first of May. It is sufficient on its face, and does prima facie convey a complete title in fee to the land. It is only by going outside and beyond the deed itself and the record thereof that the irregularity can be shown which would avail to avoid the deed, if the inquiry had been instituted within the time when such inquiry would have been proper. See Gttest v. City of Brooklyn, 69 N. Y. 573; Marsh v. City of Brooklyn, 59 N. Y. 283. If Comstock had brought an action of ejectment to recover the lands, then it is clear that the introduction of this deed in evidence would have supported his claim of title, and that it would devolve upon the former owner to show affirmatively the irregularities which would go to render the deed void in fact. This is one of the very inquiries intended by the statute to close. The statute of limitations is one of repose, and it would answer but a poor purpose if it had no effect to cut off inquiries, the result of which would be to show that the deed was not merely voidable, but void in fact. Here the officer had full power and jurisdiction to issue a tax deed, and the defendant was entitled to one conveying full title to the land. Under the
PECK V. COMSTOCK.
25
decisions of the supreme court before the statute was passed requring notice to be given on application for a second deed, the defendant would have been entitled to just such a deed as this, and it would have conveyed a title in fee to the land. The statute was passed requiring notice of the application to be given, and certain other formalities to be observed which were not observed in this case: and the non-observance of which it is conceded rendered the deed void in fact. But it cannot be likened to a case where there is a total want of power to issue a deed. If it were possible to conceive different degrees of voidness, it seems clear that the deed is no more void in this case than one where there has been no assessment, as in 11Iarsk v. The Supervisors, or where thera has been no notice of sale of the land, or where the land has been sold to raise moneys in part that constituted no portion oitha-tax levied, asin Milledge v. Coleman, 47 Wis. 184, where itwas held that the statute run upon the tax deed. ,In all those cases it was not possible that there could be any valid tax deed on the sale, while here there c.ould have been, as the proceeilings up to and including the sale were all regular; and if the statute runs in those cases it is evident that it does in this. In that case, which is the last expression of tha supreme <:ourt on the question, the court say: uIn the very recent <:ase of Oconto Company v. Jerrard, 46 Wis. 317, the effect of the tax deed where the statute had run was very fully considered. In that case· there was no pretence that the tax for which the deed was issued proceeded upon a regular, fair, and equal assessment of the property to be taxed. A more fundamental and fatal defect in the tax proceedings than this could not well exist since a valid assessment is the foundation of the tax. In answer to the argument that the statute was not intended to apply to such a case, and that the deed could be impeached for a radical defect, the chief justice uses this language: 'The respondents had their day to impeach the tax proceedings and avoid the tax deed; then they might have said that the groundwork was 80 defective that there was no tax. This they did not then do, and they
2G
are now too late to do it. They suffered the statute to purge the tax proceedings of all defects, to raise the tax deed above impeachment. Their objections may be all well founded, but they came out of time. What the respondents might have said they cannot now say. The statute has left them like 'one estopped to spealt the truth, because they did not speak it when they might.' That has been the construction uniformly given by this court to the statute of limitations in relation'to tax deeds. It has been uniformly held in a multitude of cases that, as against the grantee of a tax deed, the statute puts at rest all objections' against the validity of a tax proceeding, whether on mere irregularity or going to the groundwork of the tax. The statute makes a deed valid on its face prima facie evidence, as soon as executed, of the regularity of all proceedings from the assessment of the 'land inclusive to the execution of the deed, and the effect of all the decisions is that, when the statute has run in favor of the grantee, the deed becomes conclusive to the same extent. The terms of the statute bar any action to recover possession of land sold and conveyed by deed for non-payment of taxes, and the learned counsel for the respondent contends that to bring a tax deed within the statute the validity of the tax and of the sale must be established. Such a construction would go far to make the statute a dead letter. The statute was designed to protect things de facto, not things de jure. When there has been an actual attempt, however defective in detail, to carry out a proper exercise of the taxing power, the statute applies; and the trouble with the argument is that in such a case, saving the instances excepted by the statute itself after the statute has run, the tax deed itself conclusivelyestablishes the validity of the tax and of the sale." Demurrer is sustained and for the defendant.
JOHNSON'll. L.lIlWIlJ.
, 2'1
.
JOHNSON
V · . LEWIS
and others. - - , 1881.)
(Uircuit Gourt, E. D. Arkan8rto. 1. TmJST-PARTNEHSIIIP.
Where a trust is created by deed, which contemplates the purchase of municipal bonds, (the legal title to which is vested in the trustees,) by a fund raIsed by the sale of certificates payable to bearer, which entitles the holder to participate in the income and in the tion of the securities by a drawing, in a mode prescribed in the deed, the relation of partners does not exist between the certificate holders. Whether such a trust is illegal under the English companies act, 1862, qurere.
2. NEGOTIABLE PAPER-TITLE OF' PURCHASER. The rule that the purchaser of a chattel acquires no better title than his vendor possessed has no application to paper. The party who takes such paper before due for a valuable tion, without knowledge of any defect of title, and in good faith, holds it by a title good against all the world.
In Equity. Palmer &; Tappan &; Hornor, and Cha,.les C. Warers, for plaintiff. Eben W. Kimball. for defendants. CALDWELL, D. J. The plaintiff was the holder of $10,000 in negotiable bonds issued by the county of Phillips. in this state, which he placed in the hands of W. N. Coler, on the twenty-sixth day of June, 1874, "to be sold at 60 cents, and accounted for at same, less a commission of 2t percent." Coler sold the bonds to the Municipal Trlfst, of London, England, in October, 1874, for 85 cents on the dollar, receiving a part of the price agreed to be paid therefor in cash, and the balance in certificates of the trust. Suit was afterwards brought against the county on the bonds, and judgment recovered thereon in favor of the trust, and the judgment assigned to Lewis. Thereupon the plaintiff filed this bill, in which he seeks to reclaim the bonds and their proceeds upon the alleged ground that Coler had never accounted to him for the bonds, and that he transferred them to the trust for money and certificates of stock in fraud of plaintiff's rights, of which the agents of the trust had full not.ice.