Source: https://supreme.justia.com/cases/federal/us/148/31/
Timestamp: 2019-04-18 10:55:30+00:00

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Justia › US Law › US Case Law › US Supreme Court › Volume 148 › United States v. California & Oregon Land Co.
The former decision in this case, 140 U. S. 140 U.S. 599, imported that the pleas were sufficient in law, and remanded the case only for an inquiry as to their truthfulness.
A defendant in equity may let the facts averred in the bill go unchallenged and set up some special matter by plea sufficient to defeat the recovery, and in such case, no fact is in issue at the hearing but the matter so specially pleaded.
In these suits, those defendants who were not the original wrongdoers had the right to set up any special matter of defense which constituted a defense as to them, and then the inquiry was limited to such matter as between them and the government.
The essential elements which go to make a bona fide purchaser of real estate are (1) a valuable consideration, (2) an absence of notice of fraud or defect, (3) presence of good faith.
It is again decided that when a statute of the United States delegates to a tribunal or officer full jurisdiction over a subject in which the United States are interested, his or its determination within the limit of his authority is conclusive in the absence of fraud.
A person holding under a quitclaim deed may be a bona fide purchaser. Oliver v. Piatt, 3 How. 333; Van Rensselaer v. Kearney, 11 How. 297; May v. Le Claire, 11 Wall. 217; Villa v. Rodriguez, 12 Wall. 323; Dickerson v. Colgrove, 100 U. S. 578; Baker v. Humphrey, 101 U. S. 494, and Hanrick v. Patrick, 119 U. S. 156, questioned on this point.
A deed by which the grantor aliens, releases, grants, bargains, sells, and conveys the granted estate to the grantee, his heirs and assigns, to have and to hold the same and all the right, title and interest of the grantor therein is a deed of bargain and sale, and will convey an after-acquired title.
applied in the construction of said road, and shall be disposed of only as the work progresses, and the same shall be applied to no other purpose whatever."
"SEC. 3. And be it further enacted that said road shall 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 of Oregon may prescribe."
"SEC. 4. And be it further enacted that the lands hereby granted to said state shall be disposed of only in the following manner, that is to say that a quantity of land, not exceeding thirty sections, for said road may be sold, and when the governor of said state shall certify to the Secretary of the Interior that any ten continuous miles of said road are completed, then another quantity of land hereby granted, not to exceed thirty sections, may be sold, and so from time to time until said road is completed, and if said road is not completed within five years, no further sales shall be made, and the land remaining unsold shall revert to the United States."
"Chap. 305. An act to authorize the issuance of patents for lands granted to the State of Oregon in certain cases."
"Whereas, certain lands 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,"
same shall, under said grants, be selected and certified unless the State of Oregon shall be 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 their payment of the necessary expenses thereof: provided, that this shall not be construed to revive any land grant already expired, nor to create any new rights of any kind except to provide for issuing patents for lands to which the state is already entitled."
granted to the State of Oregon by certain enumerated acts of Congress -- among others, the act above referred to, of July 2, 1864 -- to determine the questions of the reasonable and proper completion 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 of such 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 bona fide purchasers of either of said grants, or of 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, with right to writ of error or appeal by either or any party as in other cases."
California and Oregon Land Company filed two pleas and an answer in support thereof. The case was set down for hearing on the pleas, and on February 18, 1896, they were sustained, and the bill dismissed. From such decree of dismissal the United States appealed to this Court. On May 25, 1891, the decision of the circuit court was reversed, 140 U.S. 140 U. S. 599, and the case remanded for further proceedings. The opinion of this Court was announced by Mr. Justice Blatchford, and in that opinion will be found a full history of all the matters affecting the litigation up to that time. The conclusion reached was that the circuit court erred in not permitting the United States to reply to the pleas and in dismissing the bill absolutely. After the mandate had been filed in the circuit court, issue was joined on the pleas, testimony taken, and on December 7, 1891, a decree was again entered sustaining the second plea and dismissing the bill of complaint, as to the defendant, the California and Oregon Land Company. From this decree an appeal was taken to the circuit court of appeals, by which court, on March 10, 1892, that decree was affirmed, 51 F. 629, and from this decree of affirmance the United States appeal to this Court.
The burden of complaint in this case is that the circuit court erred in restricting the scope of the inquiry. The government sought to introduce testimony to show that the road was never in fact constructed, as required by the act of Congress, and also that the certificates of the governors, made as provided by section 4 of the act of 1864, were obtained by fraud and misrepresentation, as averred in the bill. But all of this testimony was excluded and the inquiry limited to the single question whether the land company was a bona fide purchaser.
"that each of said several certificates was made honestly and in good faith, and without any fraudulent intent or procurement or false representation by any person whomsoever."
purchaser in good faith, and to that question, as heretofore stated, the inquiry was restricted.
"the decree of the circuit court, so far as it dismisses the bill, must be reversed, and the case be remanded to that court with a direction to allow the plaintiffs to reply to and join issue on the pleas,"
and the mandate which was sent to the circuit court recited this direction. That decision was the law of this case for the subsequent proceedings in that court. There was no adjudication that the pleas were insufficient in law; on the contrary, the plain implication of the opinion was that they were sufficient, and the question which was remanded to that court for inquiry was as to their truthfulness. There was no adjudication of insufficiency, and no rehearing ordered on that question. If the government was not satisfied with the decision, it should have called our attention to it, and have sought a modification or enlargement of the decree. The circuit court properly construed it, and proceeded in obedience thereto to permit the government to join issue on the pleas, and to entertain an inquiry as to their truthfulness, and that was the only matter open for inquiry.
"that 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,"
party named as defendant to a suit in equity brought by it to bear all the expenses and submit to all the delay of a prolonged inquiry into the truth of the facts averred in the bill, it is obvious from the language we have quoted from the statute that Congress did not intend to deprive any party of the rights ordinarily vested in defendants in suits in equity. If the sole purpose were to ascertain by judicial investigation whether the roads were in fact completed as required, that purpose could have been accomplished by making defendants only the original parties, the wrongdoers. If other parties than they were made defendants, as is the fact here, such parties, within the terms of the statute, had the right by plea to set up any special matter which, as to them, constituted a full defense, and as between such parties and the government the inquiry, by settled rules of equity, was then limited to such matter.
"But the proper office of a plea is not, like an answer, to meet all the allegations of the bill; nor like a demurrer, admitting those allegations, to deny the equity of the bill; but it is to present some distinct fact, which of itself creates a bar to the suit, or to the part to which the plea applies, and thus to avoid the necessity of making the discovery asked for, and the expense of going into the evidence at large. Mitford Pl. (4th ed.) 14, 219, 295; Story, Eq. Pl. §§ 649, 652."
Eq.Pl. 302, 303; Story, Eq.Pl. § 697. That practice in this particular has been twice recognized by this Court. Hughes v. Blake, 6 Wheat. 453, 19 U. S. 472; Rhode Island v. Massachusetts, 14 Pet. 210, 39 U. S. 257."
"In a case so heard, decided by this Court in 1808, Chief Justice Marshall said:"
"In this case, the merits of the claim cannot be examined. The only questions before this Court are upon the sufficiency of the plea to bar the action, and the sufficiency of the testimony to support the plea as pleaded."
"Stead v. Course, 4 Cranch 403, 8 U. S. 413. In a case before the House of Lords a year afterwards, Lord Redesdale"
"observed that a plea was a special answer to a bill, differing in this from an answer in the common form, as it demanded the judgment of the court, in the first instance, whether the special matter urged by it did not debar the plaintiff from his title to that answer which the bill required. If a plea were allowed, nothing remained in issue between the parties, so far as the plea extended, but the truth of the matter pleaded. . . . Upon a plea allowed, nothing is in issue between the parties but the matter pleaded, and the averments added to support the plea. . . . Upon argument of a plea, every fact stated in the bill and not denied by answer in support of the plea must be taken for true."
"Roche v. Morgell, 2 Sch. & Lef. 721, 725-727."
"saving and preserving the rights of all bona fide purchasers of either of said grants, or of any portion of said grants, for a valuable consideration, if any such there be."
defend himself by any of them at law, his adversary will have no help in equity to set these encumbrances aside, for equity will not disarm such a purchaser, but will act upon the wise policy of the common law, to protect and quiet lawful possessions, and strengthen such titles."
"This leads to the reason for protecting an innocent purchaser, holding the legal title, against one who has the prior equity. A court of equity can act only on the conscience of a party. If he has done nothing that taints it, no demand can attach upon it, so as to give any jurisdiction. Strong as a plaintiff's equity may be, it can in no case be stronger than that of a purchaser who has put himself in peril by purchasing a title, and paying a valuable consideration, without notice of any defect in it, or adverse claim to it."
See also Lea v. Polk County Copper Co., 21 How. 497, 62 U. S. 498; Croxall v. Shererd, 5 Wall. 268.
"It [the United States] certainly could not insist upon a cancellation of the patents so as to affect innocent purchasers under the patentees."
"It is fully established by the evidence that there were in fact no actual settlements and improvements on any of the lands, as falsely set out in the affidavits in support of the preemption claims and in the certificates issued thereon. This undoubtedly constituted a fraud upon the United States, sufficient, in equity, as against the parties perpetrating it, or those claiming under them with notice of it, to justify the cancellation of the patents issued to them. But it is not such a fraud as prevents the passing of the legal title by the patents. It follows that to a bill in equity to cancel the patents upon these grounds alone the defense of a bona fide purchaser for value without notice is perfect."
The land company therefore had a right to set up a special plea, and the plea which it did set up -- that of a bona fide purchaser -- was sufficient, if true. And this brings us to an inquiry as to whether this plea was sustained by the testimony.
"The essential elements which constitute a bona fide purchase are therefore three: a valuable consideration, the absence of notice, and presence of good faith."
showing the certificates of the governors of the completion of the work, together with an opinion from the firm of Mitchell and Dolph, two of the leading lawyers in the State of Oregon, that the title of the road company was perfect.
"when the governor of said state shall certify to the Secretary of the Interior that any continuous ten miles of said road are completed, then another quantity of land hereby granted, not to exceed thirty sections, may be sold, and so from time to time until said road is completed."
"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"
(1 Cranch 5 U. S. 170-171), legislative, (4 Wheat. 17 U. S. 423; 27 U. S. 2 Pet. 412; 4 Pet. 29 U. S. 563), judicial (11 Mass. 227; 11 S. & R. 429, adopted in 2 Pet. 27 U. S. 2 Pet. 167-168), or special (20 Johns. 739-740; 2 Dow P.C. 521, etc.), unless an appeal is provided for, or other revision by some appellate or supervisory tribunal is prescribed by law."
See also the following cases: Foley v. Harrison, 15 How. 433, 56 U. S. 448; Johnson v. Towsley, 13 Wall. 72, 80 U. S. 83; Smelting Company v. Kemp, 104 U. S. 636, 104 U. S. 640; Shepley v. Cowan, 91 U. S. 330, 91 U. S. 340; Moore v. Robbins, 96 U. S. 530, 96 U. S. 535; Quinby v. Conlan, 104 U. S. 420, 104 U. S. 426; Steel v. Smelting Co., 106 U. S. 447, 106 U. S. 450; Lee v. Johnson, 116 U. S. 48, 116 U. S. 51; Wright v. Roseberry, 121 U. S. 488, 121 U. S. 509.
of the state, the grantee named in the congressional act, had officially determined that the road was completed, there being nothing in any of the circumstances surrounding the parties to suggest a suspicion of wrong. Can it be that they must be adjudged derelict in diligence because they did not make a personal examination of the road, and determine for themselves whether it was in its entire length completed so as to satisfy all of the terms of the grant? If a patent from the government be presented, surely a purchaser from the patentee is not derelict, and does not fail in such diligence and care as are required to make him a bona fide purchaser, because he relies upon the determination made by the land officers of the government in executing the patent, and does not institute a personal inquiry into all the anterior transactions upon which the patent rested.
denying absolutely that a party taking a quitclaim deed could be a bona fide purchaser, and in the later case of McDonald v. Belding, 145 U. S. 492, it was held, in a case coming from Arkansas, and in harmony with the rulings of the Supreme Court of that state, that while ordinarily a person holding under a quitclaim deed may be presumed to have had knowledge of imperfections in his vendor's title, yet that the rule was not universal, and that one might become a bona fide purchaser for value although holding under a deed of that kind, and in that case the grantee so holding was protected as a bona fide purchaser; while in the case of Moelle v. Sherwood, just decided, ante, 148 U. S. 21, the general question was examined and it was held that the receipt of a quitclaim deed does not, of itself, prevent a party from becoming a bona fide holder, and the expressions to the contrary in previous opinions were distinctly disaffirmed.
"The said parties of the first part have aliened, released, granted, bargained, sold, and by these presents they do alien, release, grant, bargain, sell, and convey, unto the said parties of the second part, their heirs and assigns, in proportions hereafter specified, the equal undivided one-half (1/2) of all and singular the lands lying and being in the State of Oregon, granted or intended to be granted to the State of Oregon by act of Congress,"
"To have and to hold, all and singular, the lands and premises hereby conveyed, to-wit, said undivided one-half of all the above-described grant of lands, listed and to be listed, and all the right, title, and interest of the party of the first part therein."
and release. It is a deed of bargain and sale, and will convey an after-acquired title. Such is the ruling of the Supreme Court of Oregon. Taggart v. Risley, 4 Or. 235. Now even in those courts in which the rule was announced that one who takes under a quitclaim deed cannot be a bona fide purchaser, it was sometimes limited to the grantee in such a deed, and not extended to those cases in which a quitclaim was only a prior conveyance in the chain of title. Snowden v. Tyler, 21 Neb. 199, and this is certainly a most reasonable limitation, because the rule is obviously, at the best, arbitrary and technical, for a party who receives a quitclaim deed may act in the utmost good faith, and in fact be ignorant of any defect in the title, and this although he has made the most complete and painstaking investigation and only takes the quitclaim deed because the grantor, for expressed and satisfactory reasons, declines to give a warranty. It would be unfortunate, in view of the fact that in so many chains of title there are found quitclaim deeds, to extend a purely arbitrary rule so as to make the fact of such a deed notice of any prior defect in the title.
conveyances made therefor, was the act of 1874 passed, providing in terms for patents. The claim of the road company was that their title was a perfect legal title, even without a patent, and yet, there being a doubt in respect thereto -- a doubt which was solved only by the act of 1874 -- it was not strange that it preferred to quitclaim its interest in the granted lands, rather than to formally convey them by a warranty of the legal title. But it is not to be inferred therefrom as a matter of law that the road company in any way doubted its full equitable title, or that, by the fact of a quitclaim, it notified the purchasers of any other matter than this omission in the statute. On the contrary, the plain import of the language used in the conveyance from the road company to Pendra was that it intended to convey the lands which it had received under the grant, and to which it believed it then had a full equitable, if not legal, title. Our conclusions, therefore, are that the decision of the circuit court and the court of appeals was correct.
action of the elements, and so it may be that those who in 1884 and 1885 investigated the matter found little semblance of a road, and hence concluded, though erroneously, that none was ever constructed, and from this the complaint, the memorial, and the litigation proceeded, and this is consistent with the fact that the road company fully discharged its duty, and fairly earned the lands. Of course this is a mere suggestion, but it has the probabilities in its favor, and relieves all parties from condemnation. But whether this be true or not, for the reasons we have heretofore stated, our conclusion is clear that the title of the purchasers and the land company is beyond challenge.

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