Case ID: dc_9/html/0452-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Justice MacArthur", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

HENRY P. SANDERS vs. ISAAC S. LYON.
    In Equity. —
    No. 4060.
    I. A misrepresentation for which a contract will be declared void must have relation to a material matter of fact. A party will not be allowed to impeach his contract upon an allegation that complainant had deceived him upon a question of law, which was equally open to both parties.
    II. Where the defendant gave the complainant every opportunity he possessed to inform himself as to the location, condition, and title to the lands under negotiation, and requested him to call on the proper persons and officers to ascertain the facts regarding the lands, he cannot have relief on the ground of misrepresentations, when he had the means of knowledge pointed out to him by the party he was dealing with.
    III. Where there is neither fraud nor warranty, there is no redress in equity.
    STATEMENT OE THE CASE.
    This case came here upon an appeal from a decree made at the special term dismissing a suit in equity.
    It appears that, on the 26th day of February, 1873, the defendant conveyed a tract of land, consisting of 640 acres, in the county of Leelenaw, Michigan, to the complainant, at the price of $5 per acre, and that he paid $700 in cash, and gave his five promissory notes, for $500 each, to the order of the defendant, at one; two, three, four, and five years; that he has paid one of said notes and interest on the others, amounting to $160. The deed of conveyance contained a covenant to warrant and defend the premises from all claims of persons claiming the same under or through the grantors. The bill prays that this conveyance may be set aside, and defendant decreed to repay the sums which he received therefor, and deliver up the notes given for the balance of the unpaid purchase-money. The bill of complaint alleges that defendant represented that he was the owner of said lands in fee-simple, that they were free and clear of all taxes and other incumbrances and that he had a good right to convey them, and that, relying wholly upon his representation, the complainant purchased, as already stated. It is then stated that the defendant was not the owner of said lands, nor were they free from taxes and incumbrances, nor did the defendant convey a good title; but, on the contrary, the lands, were originally subject to entry only by Indians; and one. Francis S. Blackman, an Indian, had entered them in the Land-Office, and in 1806 conveyed them all, except eighty acres, to different persons, whose deeds had been recorded in Leelenaw County, so that the lands were owned by such persons and largely in their possession at the date of said conveyance to complainant, and most of said lands had been sold for taxes each year from 1869 to 1873. It is further alleged that the certificates of location of said lands were handed by Blackman to one Beuben Goodrich, of Michigan, and by him brought to Washington for the purpose of procuring patents, and Goodrich left them with one O. H. Holden for the same purpose. In October, 1869, the defendant received them from Holden as collateral security for money loaned him. At that time there was on the back of each certificate what purported to be a written assignment by Blackman, under seal, with the name of the assignee in blank, purporting to convey the lands named therein. The defendant, while holding said certificates as collateral security, wrongfully, unlawfully, and without authority, wrote his own name in said blanks, as assignee or grantee, and on July 17, 1872, wrongfully and unlawfully procured United States patents to issue to him; but said pretended assignments are void, and passed no title in the lands to the defendant, and ■were never recorded in Leelenaw County; that, in June, 1872, a United States patent for forty acres of said lands had issued to one Adison Ah-go-sa, an Indian, upon his location and entry, and in January, 1873, he had conveyed the same to one V. C. Miller by deed recorded in Leelenaw County on the same day, and the defendant did not and could not convey to the plaintiff any title thereto.
    - The bill then charges that the defendant knew that his representations were false, and that he made them with the deliberate purpose to deceive and defraud the complainant, or he made them under a gross mistake as to facts.
    
      The answer denies all fraud, misrepresentation, or mistake in general and in particular, and says that, on the 7th of January, 1870, the defendant purchased the certificates of location of C. H. Holden, without notice or reason to suspect the integrity of his title to them, and July 25, 1872, received patents for the land; that Blackman indorsed his name and affixed his seal on the back of the certificates, and transferred and delivered them to Goodrich, who transferred and delivered them to Holden, to enable him to sell and transfer them, and to enable the holder to fill his own name in the blanks and obtain the patents; that such is the usage of the General Land-Office; and plaintiff believes that the patents conferred a good title upon him.
    That the plaintiff came to the defendant and inquired about ihe location and price of the lands, and defendant responded as well as he could in regard to their location, and gave him the price; said he had never seen them, but would furnish the plaintiff a map and any other papers relating to them, and did furnish him with a map and the patents, and explained from whom and how he had obtained the certificates, and informing him that the certificates had been suspended for years on account of irregularity and fraud; that he might take the papers and make inquiry; and he took them and held the matter under advisement for more than two months, during which time they discussed questions relating to the lands, and defendant told plaintiff that he knew all that he did on the subject; and finally plaintiff came to defendant and made the purchase.
    The answer further alleges that the defendant has no information as to the sale of the lands for faxes, or as to the patent of 40 acres to Ah-go-sa, or as to the conveyances by Blackman and his grantees, or as to their being in possession, other than that furnished by the bill and exhibits.
    It says that defendant has no knowledge that Blackman gave the certificates to Goodrich and Goodrich gave them to Holden simply to get patents on them, and denies that such' was the fact, but admits that the certificates were originally delivered by Holden to the defendant as collateral security for a loan, and that the loan was paid, and says that the defendant afterward purchased them of Holden for $2,000, and filled his own name in the blank assignments at the instance and in the presence of Holden; and admits that the assignments were never recorded in the county in which the lands lie.
    The answer further says that both plaintiff and defendant relied solely upon the patents, and that the plaintiff did not put his complaint about the sale on any misrepresentations of the defendant, but on some supposed defect in the title, until July 10,1874, when he addressed the defendant in writing, and set up substantially the same grounds of complaint as in his bill; and denies that the defendant agreed to rescind the sale and take a reconveyance of the lands.
    It alleges that, in March, 1873, the defendant indorsed and delivered the notes to his father, Curlys Lyon, for and on account of a debt due him by defendant of a greater amount than the notes. That plaintiff has not had the patents recorded, or paid taxes on the lands, or otherwise protected them, so that defendant cannot be placed in the same condition as he was at the time of said sale.
    It will be seen by this statement of the pleadings that one of the material grounds relied upon for relief is the alleged falsehood of certain representations made by the defendant at the time of the sale as to there being no taxes on the lands -or other matter affecting the title. Read the following extract from the complainant’s deposition:
    “In the summer of 1872, I 'was informed by Mr. T. E. Chandler that Isaac S. Lyon had certain lands in Michigan, and had spoken to him about getting him a customer for the lauds and about their location. Afterward I said to Lyon that I understood he had lands for sale in Michigan. He told me that he had such lands; that they were located about Grand Traverse Bay, and he wanted to know if I knew anything about lands in that country. I told him I didn’t know anything particularly about them, but that I had heard it favorably spoken of; had known of some settlers going to that portion of the country. I told him I had gone up the lakes in 1866 in a steamer, which touched at Northport, on Grand Traverse Bay, and that I supposed that was near the location of the lands. In a subsequent conversation, Mr. Lyon told me that he had got the certificates for the lands, and United States patents were issued directly to him. He said that' the patent from the United States was the foundation of the title, and in searching a title it was never necessary to go hack of a United States patent. He said that in this district when they traced the title up to the United States that was the end of the search. He said that the lands were located by an Indian; that the lands were situated in- an Indian reservation, and that under the treaty with the United States the lands were subject to entry by Indians only. He said that the lands had been entered some time ago; that the entry had been suspended by the Land-Office for the reason that the Indian-Office had preferred some charges of fraud in regard to the entry of the lands, but that as to these lands for which he had patents the charges had. been removed, and the patents had been issued under the authority of an act of Congress. He said that previous to the issue of the patents the land belonged to the United States; .that it was Government land; that no State had a right to tax Government lands, therefore there could be no tax upon the lands previous to 1872, the date when the patent was issued. He remarked that he must write up to Michigan and ascertain if there had been any taxes assessed for the year 1872. This occurred in conversations while we were negotiating about the purchase of the lands. He said that he could make good use of the-money, and that he would rather have the money than the land, although he considered the lands were a good investment. He said he would place the papers in my hands, and I could go to the Land-Office and ascertain that the issue of the patents was regular and everything was all right.”
    The following is extracted from the testimony of the defendant, Lyon:
    “ Some two or three months previous to consummating the sale of the lauds described in the complainant’s bill to Mr. Sanders he called on me in my room at the Patent-Office, and stated that he had heard I had some Michigan land for sale, and inquired where it was situated, how much there was of it, and what I asked per acre, &c. I described its location as best I could, stated the quantity, and gave the price as $5 per acre. I told Mr. Sanders that I had at my house a map of these lands, prepared at the General Laud-Office, showing .specific location, quality of soil, and whether generally timbered or not. Also the patents issued to me by the United States for these lands; also other papers bearing upon the subject which I would produce upon his next call. A day or two after that he called again upon me concerning these lands, and, according to promise, I showed him the map of this land prepared at the General Land-Office; also my United States patent for those lands; also a certificate of location similar to those on which I had secured United States patents ; also the act of Congress authorizing patents to issue upon those certificates. The certificate of location which I showed him was like that contained in Mr. Sanders’s exemplification of patents. I explained from whom I got the original certificates of location of these lands; referred him to Mr. Holden, the person named; explained also how I got them; when I got them; how long I had held them; explained, also,-that upon certificates similar to the one shown, I had procured United States patents; explained also that these certificates had been suspended for a num; ber of years by the General Land-Office on account of some supposed fraud connected with the location of these certificates. It was then more than seven years since these lands were first located. I stated that I had had considerable difficulty in securing the patents upon these lands; but that Congress finally passed an act authorizing patents to be issued to the holders of these certificates. I stated to Mr. Sanders at that interview that I had. never seen these lands; that I knew nothing about them except from the papers presented, but that I had caused letters to be sent to a party in the vicinity of these lands, inquiring as to their value, situation, occupancy, taxes, &c., and that one letter had been received in answer, which was in his friend Chandler’s possession, and that another and fuller answer was expected daily. In fact, I told him all I knew; not a single fact known to me was concealed. At that time my United States patents for these lands had not been recorded in Michigan.
    “ Question. Did you make any representation to him as to the quality, condition, and character of these lands or in reference to the taxes due upon them.
    “Answer. I did not. I told Mr. Sauders at this interview to take all the papers, investigate fully every particular connected with these lands, and when he was willing to pay $5 per acre to come forward and conclude the arrangements. I told him that these lands stood- me in that price, and that price I must have now or at some future tíme. I told him that if he, upon investigation, found these lands more valuable — worth as much as $20 per acre — he could have them for •85 per acre, and if he, upon investigation, found these lands worth nothing at all, still my price was $5 per acre, as I would rather have the money than wild lands. Mr. Sanders took all the papers away with him at this second interview, and, with the exception of the certificate of location shown him, he has retained the papers ever since. Among the papers thus retained by him were my United States patents ■for these lands, which have never been recorded in Michigan, but which Mr. .Sanders, upon his purchase of these lands, promised to get recorded, but which he has never done.
    “After this Mr. Sanders would frequently call upon me at my room and talk about these lands. At these interviews we discussed almost every imaginary possibility connected with them j the possibility of their being under water; in a •swamp; on a hill-top; occupied by a squatter, or some one claiming title; the possibility of their having been sold for taxes. Tet, connected with the mention of every one of these •subjects, I invariably and emphatically stated that he must investigate and satisfy himself upon all these points; that I ■did not know a thing about them. I referred him to Mr. Holden, from whom 1 purchased the original certificates of location, for information at the other end of the line. I told Mr. Sanders to take his time; that I was in no haste to sell. As a consequence, he dallied along for two or three months, sometimes appearing as if he intended to purchase, and at ■other times appearing indifferent. Finally, Mr. Sanders expressed himself satisfied with the lands as they stood and the price, although he said he ran considerable risk in making the purchase, and the sale was finally consummated.”
    This is the substance of the testimony of the parties on the •subject of representations. There were no other witnesses to their negotiations, and the other evidence in the case does mot materially affect the foregoing extracts.
    
      The case was heard at special tern and a decree passed ■dismissing the bill, from which decree the complainant has taken this appeal.
    
      Samuel R. Bond and Marcus S. Hopkins for complainant:
    The plaintiff resorts to a court of equity to be relieved from his contract to pay the defendant for lands purchased, on the ground of a total failure of title, and consequently of consideration, and of fraudulent representations of the defendant, or a material and gross mistake of the parties, as to the title supposed to have been conveyed. In either case, whether the evidence be held to establish fraud or mistake, if a failure of title be shown, a proper subject of equity jurisdiction is presented. In support of this position the following authorities are cited:
    Fonblanque’s Equity, 114; Story on Sales, sections 407, 415-423; 1 Maddox’s Ch., 208; Kerr on Fraud and Mistake, pp. 60, 63, 78-80; Haight vs. Hayt, 19 N. Y., 464; Hadlock vs. Williams, 10 Vt., 570, (cited in Kerr, p. 408;) Irich and Wife vs. Fulton, 3 Grat., 193; Bailey vs. James, 11 Gratt., 468; Watson vs. Stucher, 5 Dana, 581; Pringle vs. Samuel, 1 Little, 43; Bingham vs. Bingham, 1 Ves., sr., 126; Rawlins vs. Wickham, 3 De Gex & Jones, 304; Garnett vs. Macon, 2 Brock., 250; Smith vs. Richards, 13 Pet., 26, and 2 Pet., 455; Daniel vs. Mitchell, 1 Story, 172, and Hitchcock vs. Giddings, Daniel’s Exch., 1.
    It is also contended that a failure of title is manifest from the fact that the lands had been sold for taxes and a large portion conveyed by Francis Blackman before the patents issued, and that the issuing of the patents in defendant’s name did not give him a title to the lands.
    If they had been issued to him upon Blackman’s proper assignment or conveyance, yet as Blackman had previously conveyed the lands by deeds which had been recorded, he would but hold the bare legal record title in trust for the real owners, to wit, Blackman’s grantees, and a court of equity will compel him to convey to them. Stark’s Heirs vs. Mather, 1 Walker’s Miss., 181; Stephenson vs. Smith, 7 Mo., 610; Grove’s Heirs vs. Fulsom, 16 Mo., 543; Brush vs. Ware, 19 Pet., 93; Gibson vs. Choteau, 13 Wall., 25.
    
      But we contend that it was the defendant’s own fraudulent and unlawful act, to wit, inserting his ñamé in the blank assignment of the certificates, which'caused the patents to issue in his name, and thus induced the plaintiff to make the purchase. It is clear that Holden never had any authority from Blackman or Goodrich to'transfer the certificates to defendant or even to place them in his hands. . This was done in- fraud of their rights. How can it be claimed, then, that Blackman ever gave any authority for the blanks to be filled with defendant’s name; or how can any such authority possibly be implied"? The evidence shows that Blackman had conveyed a part of the lands to Goodrich and a part to other persons. There were four certificates, for 160 acres each, so that Blackman’s grantees did not each receive a conveyance of the land covered by a certificate, but of only a portion of it, and the certificates were, therefore, delivered to Goodrich, who came to Washington to get the patents issued, and thus perfect the legal title of himself and the other grantees.
    Again, the assignment of a certificate of location of land is a conveyance of real estate, and the certificate is real estate, as land-warrants were held to be until declared to be personal property in 1858 by act of Congress, the essential difference being that a land-warrant is a simple right of location, relating to no specific lands, while a certificate of location covers the lands described in it. United States vs. Nelson, 2 Brock., 64; Hibblewhite vs. McMorine, 6 M. & W., 200; Duncan vs. Hodges, 4 McCord, 239.
    The deed from the defendant to the plaintiff', which was drawn by the defendant and is filed as an exhibit, contains a covenant of special warranty only against the claims of all persons claiming or to claim said lands, or any part thereof, by, from, under, or through the defendant, his heirs or assigns, which would afford relief at most, and that a circuitous one, for failure of title by reason of the sale of the lands for taxes. But the failure is total and upon other grounds, and the plaintiff is wholly remediless in the premises, unless a court of equity grants him relief and prevents, as is its province, a gross injustice, the exaction of payment for that which he has never received, and which the defendant never had to. sell.
    
      
      Joseph H. Bradley for defendant:
    Where the means of information are open to both parties and no concealment is made or attempted, even misrepresen-, tation furnishes no ground for a court of equity to interfere in an executed contract. The neglect of a purchaser to avail himself in all such cases of the means of information, whether attributable to his indolence or his credulity, takes from him all claim for relief. Slaughter’s Administrator vs. Gershon, 13 Wall., 385. The facts fully sustain the allegations of the defendant that there was no mistake of which the complainant had not full opportunity to inform himself; no misrepresentation in form or substance-by the appellee ; no fraud; for he referred the appellant to the person from whom he derived his title or claim to title; and the complainant himself applied to the Land-Office and satisfied himself as to the truth of defendant’s representations. And the failure of title is still an open question, to be decided in a court of law.
    The rule of law is supposed to be fully settled, inflexible, and not now a subject of contestation, that where a party purchases land he cannot be relieved from his purchase without an eviction; that he must depend upon his covenants, and, if he has not taken proper covenants for his protection, equity cannot relieve him. Abbot vs. Allen, 2 Johns. Ch., 519; Bumpus vs. Platner, 1 Johns. Ch., 218; Patton vs. Taylor et al., 7 How., 159, and cases cited; Beale vs. Lively, 8 Leigh, 658; Noonan vs. Lee, 2 Black, 508. Here the purchaser was notified by his vendor that he did not know whether the land was occupied or vacant, whether taxed or not taxed, or what was its condition, and the purchaser applied at the Land-Office and satisfied himself on that point, and failed or neglected to take any covenant for title.
    The question of the right of the defendant to fill up with his own name the blank in the assignment from Blackman, the original locator, is not an open question on these issues—
    1st. Because the complainant had full notice and opportunity, derived from information given to him by the defendant before the said purchase to ascertain both the facts and the law relating to that matter.
    It is a controversy between two innocent parties. Both have paid value for the lands. The loss must fall on him who» failed by his own negligence to ascertain the facts necessary to his title.
    2d. .But if the court shall not think the burden of inquiry was on complainant, then it will be contended by defendant that the execution of the assignment in blank on these certificates authorized the person to whom they were delivered to sell. and transfer them, and to fill up that blank in the name qf ,the person who should present them to the land-office, and authorized such person to receive patents for them in his own name. In other words, it made them not negotiable instruments, but marketable commodities. Baldwin vs. Ely, 9 How., 599, 600, and cases cited below.
    The whole legislation by Congress in reference to the public lands declares the patent the superior and conclusive evidence of legal title; until its issuance, the fee is in the Government, which by the patent passes to the grantee, and be is entitled to recover in ejectment. ’ 13 Pet., 450; Bagnell et al. vs. Broderick, 13 Pet., 646; Brush and Ware, 15 Pet., 93, 108, 110; Stark vs. Stone, 6 Wall., 402. Here the legal title is clearly in the complainant. If any one else has an equity to be protected, it must be under the laws of Michigan and in the courts of that State. Finally, there was neither misrepresentation nor fraud, nor any mistake of which a court of equity can take cognizance. 1 Story’s Eq., 9th. ed.,, sec. 197 to 200(a), 202,203,203(b).
   Mr. Justice MacArthur

delivered the opinion of the court

It will be unnecessary to examine whether most of the representations are true or false, as they are clearly matters of opinion upon questions of law which were equally open to both parties, and in regard to which a misstatement would afford no ground for equitable relief. A misrepresentation for which a contract will be declared void must have relation to a material matter of fact, and with regard to which the complainant had not the means of knowledge. Even if the defendant had'declared that a State had no right to tax government lands, and that, consequently, there could be no tax upon the lands in question previous to the issuance of a patent, this was a question of law or argument which, although now well settled, was formerly a point about which even lawyers might well differ. A party will not be heard to say that he was deceived upon a matter of this description. The defendant controverts the charge of the complainant, and testifies that he gave him all the information in his possession in regard to the title, .and avowed his ignorance of the character or location of the land,: or whether it had been sold for taxes, or whether it was occupied, except that he held the* patent for the same, and referred him for information to C. H. Holden, the person from whom he purchased the certificates; that he showed him a map of this land prepared at the General Land-Office; also the patents; also a certificate of location similar to those in question; also the act of Congress also that he had never seen the lands and knew nothing about them except from the papers 5 that he told him all he knew, without concealing a single fact, and requested him to take all the papers, investigate fully, and when he was willing to pay $5 per acre, defendant would conclude the sale. But we will not further compare the testimony upon this point, but simply state our conclusion that the charge of the bill in respect to representation is not sustained by the-proof.

The allegation that defendant obtained the patents fraudulently is not a matter of which the complainant can avail himself. There is at most a dispute between Holden and defendant whether the latter puchased the certificate, and in a suit for their conversion Holden has been defeated on that issue. Besides, he gave the complainant every opportunity ;,o inform himself on that matter, for he requested him to call on Holden to ascertain from him what he knew in regard to the lands. The same observations will also apply with equal force as to the right of the defendant to fill up with his own.name the blank in the assignment from Blackman. He was shown a similar certificate, and visited the Land-Office previous to the-sale, and was there informed that the title was all right. He had, therefore, the most ample opportunity to inform himself' as to the law and the facts in regard to those matters, and he cannot now be allowed to impeach his contract when he-had the means of knowledge pointed out to him by the very-party with whom he was dealing.

In regard to the interest in this land created by the deeds previously executed by Blackman, it is to be remembered that they are quit-claims, and only included the interest which he then had, and it is by no means clear that a court of equity would compel a grantee after a patent had issued to convey to them. Such would not be the rule at common law. The deed executed by defendant covenants only against those claiming through or by him. The complainant satisfied himself as to the representations by going to the Land-Office, and he has no covenants of general warranty, for title. Where there is neither fraud nor warranty, there is no redress in equity, for it is the warranty which estops the grantor and all persons in privity with him fi;om denying that he was siezed at the time of the conveyance. Crews vs. Burcham, 1 Black, 352; Paton vs. Taylor, 7 How., 157.

Upon the whole, we think the decree below ought to be confirmed.