Case Name: HERAN, Respondent, v. ELMORE, Appellant
Court: South Dakota Supreme Court
Jurisdiction: South Dakota
Decision Date: 1916-05-01
Citations: 37 S.D. 223
Docket Number: File No. 3887
Parties: HERAN, Respondent, v. ELMORE, Appellant.
Judges: 
Reporter: South Dakota Reports
Volume: 37
Pages: 223–229

Head Matter:
HERAN, Respondent, v. ELMORE, Appellant.
(157 N. W. 820.)
(File No. 3887.
Opinion filed May 1, 1916.)
1. Public Lands — Federal Domain — Mortgage on Federal Home- . stead — Agreement for Mortgage — Federal Statute.
Rev. Stat. U. S., ;Sec. 2996 (TJ. S. 'Comp. St. 1913, Sec. 4551), providing that no- lands acquired under the .provisions •of the Homestead Act of May 20, 1862, Ch. 75, 12 Stat., 392, shall in any event become liable to the satisfaction of any debt contracted prior to the issuance of patent therefor, does not prohibit voluntary good-faith alienation by way of mortgage; said Sec. 229 6 not 'having been intended as an avenue for the commission of fraud. So held, in a suit to cancel a certificate of execution sale of federal homestead land, in which suit defendant set up, as a basis of said sale, a judgment in a former action on a promissory note executed by the present plaintiff in connection with an oral agreement to execute a mortgage 'upon homestead land by plaintiff, a federal homesteader, in consideration of a present loan to him by defendant, evidenced by the note, to enable him to enter the homesteaded land and to pay land office fees, make necessary improvements, and to reside upon and cultivate the same.
2. Same — Mortgage on Federal Homestead Before Entry — Estoppel to Deny Validity of.
One who has given a mortgage upon his government homestead before final proof may, after issuance of patent, be es-topped to deny the validity of t'he mortgage.
3. Specific Performance — Mortgage of Realty — Oral Agreement to Give, Enforcement.
An oral agreement, by a federal homestead entryman, to execute a mortgage upon the land after patent issues, in consideration of a present loan to him, is capable of being specifically enforced in a court of equity.
4. Public Lauds — Federal Homestead, Agreement to Execute Mortgage on — Validity of Agreement — Federal Statute.
Under Rev. St. U. S., Sec. 229 6, providing that no land acquired under the Homestead Act shall in any event become liable to the satisfaction of any debt contracted prior to issuance of patent, held, that a homestead occupant, prior to date of making final proof, can make a valid contract to give a mortgage theireon.
5. Specific Performance — Part Performance, to What Agreements Applicable.
The doctrine of part performance of oral contracts applies only to such agreements as would have warranted specific performance hiad the contract been in writing instead of oral. So held, in determining the rights of one who loaned money to a federal homesteader upon an oral agreement by the latter to execute a mortgage upon the land after patent issued, or to procure a loan thereon from a third party with the proceeds of which the loan in question would be paid.
6. Same — Part Performance — Restoring Lender to original Condition — Insolvency of Borrower as Affecting Specific Perform- . anee — Pleading.
To warrant specific performance, such acts of part performance must exist that the complaining party cannot be replaced in his original position, or adequately compensated by damages; the payment of the money loaned, by lender, not being of itself sufficient part performance, since, unless the borrower is insolvent, the -lender may recover at law. Therefore, held, in a suit to set aside an execution sale certificate upon a judgment in a former action on a promissory note executed by .the present plaintiff in connection with an oral agreement to execute a mortgage upon a federal homestead, after patent issued, in consideration of a present loan to the homesteader, that it was necessary for defendant in the present suit to allege insolvency of plaintiff and that plaintiff had not other property than said homestead from which a judgment at law might be satisfied.
7. Execution — Cancellation of Sale Certificate Based Upon — Title Through Execution Sale of Federal Homestead — Federal Statute.
Under Rev. St. U. S., Sec. 2996, .providing that no lands acquired under provisions of the Homestead Act shall in any event become liable to the satisfaction of any debt contracted before t'he issuance of patent, held, that, the owner of government homestead land, after patent issued, may have cancelled a sheriff’s certificate of sale of the lands based upon an execution levied thereon under procedure in an action at law to recover a debt incurred before the entryman made final proof on the land and issuance of patent, defendant having failed to allege in defense that plaintiff, defendant in the action in which the execution sale certificate was issued, is insolvent and has no other property than said land from which to satisfy the judgment in .the former suit.
Appeal from Circuit Court, Tripp County. Hon. Wiuuiam Wiixiamson, Judge.
Action -by John W. Heran, against Frank R. Elmore, to set aside an -execution sale certificate, and praying a decree- that same is not a lien- upon -realty. From an order sustaining a demurrer to a portion of defendants answer, he appeals-.
Order affirmed1, and -cause remanded.
N. D. Burch, for Appellant.
No- appearance on -behalf of Respondent.
(1) To point one -of the op-iniom, Appellant cited1: Weber v. Laid-l-ef, 26 Wash. 144; go Am. St. Rep. 726; Ea-rson v. Weis-becker, 1 'D-ec. Dept. In-t. 409; N-o-rri-s v. Heald, 12 Mont. 282: 33 Am. St. Rep. 581. See -ateo- Wil-cox v. John, 21 Colo. 367; 62 Am. St. R-ep-. 246; Spies® v. Neu-berg, 71 Wis. 279; 5 Am. St. Rep. 211; Lang v. M-orey, 40 Minn. 396. 12 Am. St. Rep. 748; .Ris-don v. Davenport, 4 S-. D. 555; 57 N1. W. 482.
(2) To point two -of the opinion, Appellant -cited: Christy v. Dana 34 C'ai. 548; Rirkaldie v. Larrabee, .31 Cal. 455.
(3) To point three- o-f the lop-iniom, Appellant cited: Baker v. Baker, 2 S. D. 261, 49 N. W. 1064; See also- S'ch-ool Dist. No. 1 v. Holt, 226 Mo. 406 136 A-m. St. Rep. 651.

Opinion:
McCOY, J.
This is an appea-l from an order sustaining a -demurrer to a -portion of -defendant's answer, from- which order defendant appeals. It, in sub-stance, appears from- th-e -complaint that the defendant in this action, ais- plaintiff in -another action, on the 9'th day oif January, 1913, re-cowered a judgment in -the circuit court o-f Tripp- co-un-ty against the plaintiff in this action, as -defendant in that a-cti-on, for the sum of $439.60, -on a promissory note executed and delivered by the plaintiff, respondent, to the defendant, appellant, on the 1st day of March, 1910; that on the 27th day (off June, 1913, the appellant, as plaintiff in that action., -caused- an -execution under said judgment to- be levied upon a certain quarter section of land ini Tripp county then owned by the respondent, as1 defendant in said prior action, and under and by virtue of which- execution -and levy said land was soid at sheriff's sale to the appellant, and a sheriff's certificate of sale wats -thereupon- issued and delivered to him as such purchaser; that the indebtedness upon which said judgment was based, being said promissory note made on the 1st day of March, 1910, was incurred long prior to> the time when this plaintiff made final proof on said1 land' and long prior to the time when the patent for .said land! was issued to this plaintiff by the government under the homestead laws of the United States; that this defendant now. claims title and interest in and to said' land adverse to plaintiff, hut plaintiff alleges that this defendant has no title, claim, or interest to< said' land in law or equity as against the title of this plaintiff under his patent from the United States; plaintiff prayed judgment and1 decree canceling said sheriff's certificate of sale and decreeing the same not to be a lien on said land. The defendant by answer admitted the rendition of said prior judgment and the sale of said land- and issuance of said sheriff's certificate of .sale, and that said judgment was 'based on the said note made on the 1st day of March, 1910, and-also1 admitted that he claims title and interest in said land adverse to plaintiff, and for •an affirmative defense alleged1 that on or about the 1st day of March, 1910, the defendant and plaintiff, and plaintiff's wife, entered into an oral contract whereby it was agreed that if defendant would loan toi plaintiff anld wife the sum of $375 to enable them to enter the said land under the homestead laws of the United States', and to pay the land office fees, and h> make necessary improvements, and to reside upon and cultivate the same, that tire plaintiff and hiis wife would, as soon as they could acquire title thereto, procure a loan on -said land and repay the defendant the amount so. loaned, and that in the event the plaintiff and wife sholuld be unable to make a loan, thereon, that they would execute and deliver to this defendant a first mortgage lien on said premises, and that defendant should at all times have a first lien on said land for all said moneys so loaned or advanced until the same should he fully repaid; that under and by virtue of said1 contract and in 'Compliance therewith this defendant advanced and loaned to the plaintiff and, wife the sum of $375 which plaintiff and wife accepted, received and used in acquiring 'title to said land; that the defendant did all that was required idf him to be done under the terms of said contract; that during tfihe year 1911 plaintiff made final proof on said land and acquired title under the laws of the United States; that 'thereupon this, 'defendant demanded of plaintiff and his wife that they specifically perform said contract and- make a loan on said premises amdl pay him the amount then due, or that they execute and deliver to him a first mortgage lien thereon; but plaintiff and his wife refused! and failed1 to comply with said demand or to1 eioimp'ly with the term© of the1 contract heretofore set forth, and retained and kept all tire consideration and mioney received under said contract, and have failed1 and neglected' to pay defendant or in any manner satisfy said indebtedness; that the indebtedness upon wlhiob the judgment mentioned in plaintiff's complaint is based1, and- upon which an execution and a sale .and ai certificate was issued to defendant, is' the same indebtedness incurred under the aforesaid' contract; that this, defendant now claim© title by virtue of said certificate oif sale, and that plaintiff ought not at this time he .allowed' to assert any title or interest in and to said land adverse to this defendant, by reason of his having accepted' the consideration thereunder and upon an express agreement to allow defendant a lien thereon to secure said indebtedness, and that he is now estopped from1 setting up or asserting title against 'the interest of defendant; that defendant relied' upon plaintiff's promise to' give him1 a first mortgage, and but for said promise -would not have made said loan. To this answer .plaintiff interposed a demurrer upon the ground that -the same did not state facts sufficient to cotostitute a defense to- plaintiff's: -complaint. The 'demurrer was sustained1, and which ruling of the court, the defendant now urges as error.
We are of the view that the learned' trial court ruled properly upon said demurrer. We are of the view that the facts of this case clearly fall within the purview of Section 2296, Rev. Stat. U. S., in substance providing that no lands acquired1 under the provisions lolf the Homestead Act shall in any event become liable to the satisfaction of any debt -contracted .prior to the issuance of -the patent therefor. Gould v. Tucker, 18 S. D. 281, 100 N. W. 427; Van Doren v. Miller, 14 S. D. 264, 85 N. W. 187; 6 Fed. Stat. Ann. p. 307; Seymore v. Sanders, 3 Dill. 437, Fed. Cas. No. 12,690. But this section 2296 of the federal statute was never intended as an avenue for the commission of fraud, and it does not .prohibit voluntary goodHaitb alienation by way of mortgage. It seem© to foe generally held that one who. has given a mortgage on ¡his government homestead before final proof may, after the issuance of patent, be estopped to deny the validity of such, mortgage. Klempp v. Northrop, 137 Cal. 415, 70 Pac. 284; Kirkaldie v. Larrabee, 31 Cal. 436, 89 Am. Dec. 205; Weber v. Laidler, 26 Wash. 144, 66 Pac. 400, 90 Am. St. Rep. 726; Stark v. Duvall, 7 Okl. 213, 54 Pac. 453. The agreement alleged in the answer of defendant constitutes an oral contract to give a mortgage 00 real property capable of being- specifically enforced in a court of equity. Baker v. Baker, 2 S. D. 261, 49 N. W. 1064, 39 Am. St. Rep. 776. If plaintiff might 'have given a mortgage on his homestead he also could have entered into a contract to give a mortgage thereon. This answer of defendant must be tested by what would have been necessary for him, as a plaintiff, to have alleged in a complaint for specific performance of an oral contract on the ground1 of part performance.
The doctrine of part performance of oral contracts applies only to1 such agreements' as would have warranted specific performance had the contract -been in writing instead of being oral. Pom. Cont. § 99. To warrant a decree of specific performance there must be such acts of part performance that the complaining party cannot be replaced in his original position, or adequately • compensated by damages. "Acts may therefore be done by one, party in part ¡performance of the contract, and in reliance upon it, and which would not have 'been done without it, but which nevertheless' will not entitle him to a decree of specific performance, because he may -be restored to his former condition and his loss made up by a legal remedy; for this reason the payment by a purchaser is not of itself a sufficient part performance, since he may recover it at law." P'om. Gont. § 106. It was necessary for dlefend'ant to 'allege the insolvency of plaintiff and that plaintiff had no other property from; which the judgment in the legal action might be satisfied. Brown v. Gin Works, 141 Ala. 580, 39 South. 243, 6 L. R. A. (N. S.) 585. Defendant has alleged no such facts. For aught that appears from the answer plaintiff and wife may be perfectly solvent and the owners of both personal and -real property in abundance, liable to execution, and out of which the judgment in the legal action might be satisfied. It was incumbent upon 'defendant in the counterclaim contained in his answer to allege facts showing that bis remedy at law was not 'adequate, anid that it was impossible for him to place himiself in his former .condition by means of' the legal remedy, and until he: has done so. he has not alleged- cause for equitable relief.
The defendant not having alleged facts entitling him to equitable relief, as against plaintiff's alleged cause of action-, the question presented to us: is clearly within the purview of section 2296. The plaintiff seeks to cancel a certificate of sale based on an execution, levied on the -land in: question, under -procedure in a law action. Section 2296 prohibits the -acquiring of title by such means. Weber v. La-idler, supra.
The order -appealed from is affirmed, and the cause remanded.