Source: https://supreme.justia.com/cases/federal/us/107/348/
Timestamp: 2019-04-26 05:44:57+00:00

Document:
A. conveyed, March 6, 1859, to a county in Nebraska certain lands for a "poor farm," and they were thereafter used as such. The county, pursuant to its agreement, made one cash payment, and for the remainder of the stipulated consideration gave its notes secured by mortgage, and payable respectively in one, two, three, and four years. A. assigned the notes to B. Sometime thereafter, the supreme court of the state decided that, by the purchase of lands for such a purpose, a county could not be bound to pay at any specified time the purchase money, or to secure it by mortgage upon them, but was limited to a payment in cash and to the levy of an annual tax to create a fund wherewith to pay the residue. A. and B., the notes remaining unpaid, filed, Sept. 10, 1877, a bill praying for a reconveyance and an accounting, or, should the county elect to retain the lands, then for a decree for the value of them.
1. That in view of that decision, the contract being unauthorized only so far as it relates to the time and mode of paying the purchase money, and the title to the lands having passed by the conveyance, the county holds that title as a trustee for the benefit of B., and that he is entitled to the relief prayed for.
2. That unless the sum due on account of the purchase money, after a proper allowance shall be made as a compensation for a failure of A.'s title to a small part of the lands, be paid within a reasonable time, to be fixed by the court below, having reference to the necessity of raising the same by taxation, as prescribed and limited by the statute, the county be required to execute and deliver a deed, releasing to A. all the title acquired under his deed, and that he convey the same to B.
3. That the suit is not barred by the Statute of Limitations.
This is a bill in equity filed Sept. 10, 1877, by Chapman, a citizen of Tennessee, and the representatives of Charles A. Ely, deceased, citizens of Ohio, against the County of Douglas, a municipal corporation of Nebraska.
as the court shall direct, the reasonable price and value of said land, as stated in said deed of conveyance, with lawful interest thereon from the date of said deed to the time of the making of such payment."
"on the following conditions, to-wit, that the party of the second part shall pay to the party of the first part at the ensealing and delivery of a warranty conveyance from the party of the first part to the party of the second part of the real estate aforesaid, two thousand ($2,000) dollars in county orders of the County of Douglas aforesaid on the treasurer of said County of Douglas, and the balance of six thousand ($6,000) dollars in four equal annual payments, together with interest on the amount due at ten (10) percent per annum until paid, and the said party of the first part will, when required, resign to and give up the possession of said property to the party of the second part, or its assigns or agents, immediately on the payment of the first payment hereinbefore enumerated, and put the said County of Douglas or its agents in full and peaceable possession of said described property. And the said party of the second part agrees to purchase said property on the terms aforesaid of the from the party of the first part, and for the security of the deferred payments, as hereinbefore set forth, to give a mortgage upon said described property to the party of the first part."
On the next day, March 5, 1859, in pursuance of this agreement, Chapman and wife executed and delivered to the county commissioners a deed to the County of Douglas for the land, which was accepted and placed by them on record. The first installment of the purchase money, $2,000 in county orders, was paid at that time, when, also, the county commissioners, in the name of the county, executed and delivered to Chapman the four promissory notes required by the agreement, payable in one, two, three, and four years from that date, respectively, and a mortgage, in the usual form of a conveyance in fee, with a defeasance to secure the payment of the same, which was accepted and recorded.
The property was purchased for the use of the county for a poorhouse and farm. Possession of it was taken immediately by the county authorities, and it has been improved and used for that purpose continuously ever since. The title of Chapman as to the one hundred and sixty-acre tract was perfect, but as to the ten-acre tract has failed.
On November 26, 1860, the notes and mortgage were assigned, for value, to Charles A. Ely, who having since deceased, his rights have devolved upon his legal representatives. On June 13, 1868, William A. Ely, a minor and the devisee of Charles A. Ely, by his next friend and guardian, commenced a suit in the district court for Douglas County for the foreclosure of the mortgage, to which a demurrer was interposed, on the ground that the notes and mortgage were void ab initio for want of power on the part of the county to make them, and also because any action on them was barred by the statute of limitations. This demurrer having been sustained, the plaintiff dismissed the action on July 21, 1868, without prejudice. On August 8, 1868, a similar suit, by bill in equity, was begun in the circuit court of the United States, which, on November 19, in the same year, was dismissed without prejudice, and on March 15, 1869, a similar bill was filed in the same court, to which the same defenses, as above stated, were raised upon a demurrer, which was sustained, and subsequently, on December 30, 1872, the bill was dismissed without prejudice.
perfect good faith, and for good and sufficient considerations, in all things conformable to equity and good conscience, save as hereinafter stated."
"the sum paid by this defendant for said lands, to-wit, $2,000, was the full, fair value thereof at the time of the said purchase and sale, and the amount of the said notes and mortgage was just so much in excess of the true value thereof. This defendant is informed and believes, and now here charges, that the said notes and mortgage were made between the said Chapman and the said commissioners, acting in the name of said county, with the full knowledge on the part of all of them that the full and fair value of the premises had been already paid therefor by the said county, and that the agreement to give the said notes and mortgage was unjust and oppressive toward the said county, and that, in fact they were without consideration, and that the giving thereof was induced by some secret and fraudulent agreement or understanding between the said commissioners, or some of them, on the one side, and the said Chapman on the other."
"there has been such a change of circumstances that that mode of relief would be most oppressive. This land, purchased when the county was very sparsely settled, and situated very near to a town which has recently grown to great importance, must have greatly appreciated in value. Besides which fact there is the further one already adverted to, that the county has improved it to the extent of $30,000."
It is therefore insisted that the county should be permitted to retain the land without paying for it.
On final hearing the bill was dismissed, and the decree to that effect is brought here for review by this appeal.
"Said commissioners are hereby empowered to receive donations to aid in the establishment of such poor house, and also empowered, from time to time, as they shall see fit, to levy and collect a tax, not exceeding one percent, on the taxable property in the county and to appropriate the same to the purchase of land not exceeding the aforesaid six hundred and forty acres, and to erect and furnish buildings suitable for a poor house, and to put into operation and to defray the actual expenses of said poor house should the labor of the inmates be inadequate thereto."
By sec. 23 of the same act, the commissioners are authorized, if they deem it to be for the interest of the county, to appropriate out of any other money belonging to the county any sum not exceeding $2,500, for the purpose of purchasing a farm and erecting thereon suitable buildings, as contemplated in the sections before referred to.
These provisions of the statute were construed by the Supreme Court of Nebraska in the case of Stewart v. Otoe County, 2 Neb. 177. It does not appear from the report when this decision was made, but as the case arose upon a contract dated in January, 1870, it must, of course, have been long after the making of the contract which is the foundation of the present litigation.
"There is no authority of law for the county commissioners to bind the county in the manner contemplated. They cannot give a promissory note, nor can they mortgage the property of the county. Should they formally do so, their action would be a nullity. In the purchase of land for a poor farm, the authority of the commissioners of a county is very clearly set forth. The mode of raising the money and paying it over are all definitely stated. These statutes set a limit beyond which they cannot go. They are a guide not only to the commissioners, but equally so to all persons dealing with them, who must see to it that their contracts are within the boundaries thus described. . . . Here we find the authority, and indeed the only authority, for the purchase and payment of money for a 'poor farm' by the county commissioners, and here too is specially designated the money that may be used for that purpose, together with the mode of raising it. But there is not one word about mortgaging the property of the county to secure the payment of the purchase money at a given time. The statutes provide the only security that can be given. The public faith is pledged, and a tax not exceeding one percent may be levied upon all the taxable property of the county annually, and, when collected, paid to the person entitled thereto by an order upon the treasurer of the county, payable out of that special fund."
of the deed or wait for its payment in the due course of administration by the appropriation of the taxes levied, collected, and paid into the treasury applicable to that purpose.
"deals with a county and takes in payment of his demand a warrant of the character of these, no time of payment being fixed, does so under an implied agreement that if there be no funds in the treasury out of which it can be satisfied, he will wait until the money can be raised in the ordinary mode of collecting such revenues. He is presumed to act with reference to the actual condition and the laws regulating and controlling the business of the country. He cannot be permitted immediately upon the receipt of such warrant to resort to the courts to enforce payment by judgment and execution, without regard to the condition of the treasury at the time or the laws by which the revenues are raised and disbursed."
"But these warrants do not, nor was it the intention of the legislature that they should, fall within the operation of this act. . . . Nor can any action be brought on such warrant until the fund is raised, or at least sufficient time has elapsed to enable the county to levy and collect it in the mode prescribed in the revenue laws. That the legislature never intended that county warrants should be affected by the limitation act before referred to is evident, I think, from the whole course of legislation respecting them. As late as the 12th of February, 1866, it was enacted that"
"All debts heretofore incurred by the county commissioners of any county, acting in good faith and duly recorded at the time on their books, shall be deemed valid and the county shall be held liable for the same."
of the legislature that might be cited, I have reached the conclusion that the plea of the statute of limitations cannot be successfully made against these warrants, and that whenever it can be shown that the funds have been collected out of which they can be paid, or sufficient time has been given to do so in the mode pointed out in the statute, their payment may be demanded, and, if refused, legally coerced.
And if in such cases a proceeding in mandamus should be considered to be the more appropriate and perhaps the only effective remedy, it also is not embraced in the statute of limitations prescribed generally for civil actions. The writ may well be refused when the relator has slept upon his rights for an unreasonable time, and especially if the delay has been prejudicial to the defendant, or to the rights of other persons, though what laches, in the assertion of a clear legal right, would be sufficient to justify a refusal of a remedy by mandamus must depend in a great measure on the character and circumstances of the particular case. Chinn v. Trustees, 32 Ohio St. 236; Moses, Mandamus 190. There is no statute of limitations in Nebraska applicable to that proceeding.
and if a county obtains the money or property of others without authority, the law, independent of any statute, will compel restitution or compensation."
"When no penalty is imposed, and the intention of the legislature appears to be simply that the agreement is not to be enforced, then neither the agreement itself nor the performance of it is to be treated as unlawful for any other purpose."
Johnson v. Meeker, 1 Wis. 436.
"The money of the plaintiff was taken and is still held by the defendant under an agreement which, it is contended, it had no power to make, and which, if it had power to make, it has wholly failed on its part to perform. It was money of the plaintiff, now in possession of the defendant, which in equity and good conscience it ought now to pay over, and which may be recovered back in an action for money had and received. The illegality is not that which arises where the contract is in violation of public policy or of sound morals, and under which the law will give no aid to either party. The plaintiff himself is chargeable with no illegal act, and the corporation is the only one at fault in exceeding its corporate powers by making the express contract. The plaintiff is not seeking to enforce that contract, but only to recover his own money and prevent the defendant from unjustly retaining the benefit of its own illegal act. He is doing nothing which must be regarded as a necessary affirmance of an illegal act.
The decision of this Court in Hitchcock v. Galveston, 96 U. S. 341, 96 U. S. 351, covers the very point. There, a recovery was allowed for the value of the benefit conferred upon the municipal corporation, notwithstanding, and, indeed, for the reason, that the contract to pay in bonds was held to be illegal and void. 'It matters not,' said the Court,"
"that the promise was to pay in a manner not authorized by law. If payments cannot be made in bonds, because their issue is ultra vires, it would be sanctioning rank injustice to hold that payment need not be made at all. Such is not the law."
"The city is not exempted from the common obligation to do justice which binds individuals. Such obligations rest upon all persons, whether natural or artificial. If the city obtains the money of another by mistake or without authority of law, it is her duty to refund it, from this general obligation. It she obtain other property which does not belong to her, it is her duty to restore it, or, if used, to render an equivalent therefor, from the like obligation. Argenti v. San Francisco, 16 Cal. 282. The legal liability springs from the moral duty to make restitution."
"Whenever the circumstances of a transaction are such that the person who takes the legal estate in property cannot also enjoy the beneficial interest, without necessarily violating some established principle of equity, the court will immediately raise a constructive trust, and fasten it upon the conscience of the legal owner, so as to convert him into a trustee for the parties who, in equity, are entitled to the beneficial enjoyment."
estate is treated as trustee of the title for the purchaser, and the mortgagee, having the legal title, after payment of the mortgage debt, is a trustee for the mortgagor. The analogy is complete between these, and every case, of which the present is one, where the holder of the legal title is under a duty to convey to another.
But admitting that Chapman was entitled to call for a reconveyance, it is alleged that the statute of limitations of Nebraska, which bars the right to recover the title to real estate in ten years from the time it first accrued, defeats the recovery.
The statute of limitations in force March 5, 1859, which was the date of the deed, prescribed twenty-one years, after the cause of action shall have accrued, as the period within which an action for the recovery of the title to lands must be brought. Rev.Stat.Neb. 1866, p. 395, sec. 6.
the limitation was twenty-one years, according to the statute then in force, within which the present suit was in fact brought.
But the more satisfactory answer to this defense is that none of the statutes of limitation referred to apply to the case at all. We have already seen that by the decision in the case of Brewer v. Otoe County, 1 Neb. 373, it is the declared law of Nebraska that the claim against the county for the purchase money, on the supposition that the understanding had been to accept payment according to the terms of the statute, was not liable to the bar of the limitation acts. So that the obligation of the county to pay would not be extinguished by the statutory lapse of time. Now although the right of Chapman to rescind the contract and demand a reconveyance accrued at the very date of the deed, he was not bound to exercise the right, and his cause of action did not accrue until he had made manifest his election. He had the right to treat as null that part of the contract which was illegal, and, having executed it on his part, to waive performance according to its terms, on the part of the county, and wait a reasonable length of time for the county to make the payment in the mode made lawful by the statute, before exerting his power to rescind the contract. Until that time had elapsed and until, after that, Chapman had elected to rescind, there was no existing cause of action, and consequently nothing upon which the statute of limitations could begin to take effect. When that reasonable time expired we have no means of determining. It would depend upon circumstances not disclosed in the record, such as the state of the county treasury, the extent of its other obligations, the value of the taxable property, and its general financial condition. There is nothing whatever to show that the delay that has taken place in filing the present bill has been unreasonable. It is impossible therefore to say that any statute of limitations has even begun to run against the cause of action, much less that its bar has become complete.
to and possession of the property, because the parties cannot be placed in statu quo; that the circumstances have greatly changed by the increase in the value of the property and the expensive improvements that have been put upon it by the county. If the relief asked and expected was an unconditional reconveyance of the title and surrender of possession, this would undoubtedly be true. But such is not the case. Any such injurious and inequitable results as are deprecated may easily be averted by the simple payment of the amount due on account of the purchase money, which the appellants consent to receive, which is within the statutory powers of the county, and for which proper provisions may be made in the decree.
The principles on which we proceed to establish the right of the appellants to the relief prayed for were announced and acted upon by this Court in the case of Parkersburg v. Brown, in which it was also held that the equity of the original grantor of the property sought to be reclaimed, passed by an assignment of the void securities. 106 U. S. 106 U.S. 487. This settles the relative rights of Chapman and his co-complainants, the representatives of Ely, and entitles the latter, in the name of the former, to the relief prayed for in the bill.
And conversely, the right of the county, represented by its taxpayers, to require a rescission of such a contract, on condition of a surrender of the void securities on the part of the vendor, and a reconveyance of the title in consideration of which they were issued, was recognized by this Court in the case of Crampton v. Zabriskie, 101 U. S. 601.

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