855
'proposition explained. At the .end 0'('10 months plaintiff does not send to defendant the $1,500, which would be the balance of price of the property, but,only $1,000, and asks defendant to figurecup the balance. ·Plaintiff te<:tifies thllitheexpected the andexpenses for.procuring a patent to be includeQ representation, in this balAnce. This was not the proposition of defendant. The propO: sitian WM, that plaintiff' was topa)' $2,000, and was to have a deed for the one half of the Burner lode. l l his,was plain enough. There was no figuring to be done on the ba.lance. It was plainly stated by defendant in his letter to him what amount plaintiff was to pay as a bal. ance before receiving a deed. As defendant had undertaken to act as an agent. forplaintitf,he was requh·ed. to .be loyal to his trust. and not act for himself. But I do not think he was required to wait indefinitely to see Whether plaintiff would ratify his action in paying $2,000 for the property. PlaintHI' should have ratified the action of defendant within a reasonable time. Defendant says he wrote to plaintiff 'he must do this within. 30 days. Plaintiff testified that he received no such letter, and the evidence of defendant on this 'point is not as clear as it might be. But whether he wrote such a letter or not, it appears to me the delay of about 10 months in ratifying ,the action of defendant by plaintiff, as he should have done by paying to defendant the money he had expended, was unreasonable, and that defendant had the right to maintain that plaintiff had left him to shoulder the responsibility he had assumed, and to treat the purchase as his own. There is no pretense' but that defendant paid the full amount of $2,000 for the property. Although it might be held that the position claimed on the trial of the cause is only an immaterial variation from the case presented in the bill, still I do not think plaintiff is entitled to reCOVE'r, even upon this assumed position. The order of the court is that the bill be dismissed, and defendant have judgment for his costs.
DUNN
et al.
'V. BARNUM
(Oircuit Oourt
oJ AppeaZs, Etghth. Oircuit. July 19, 1892.) No. 105·.
L
PUllLIO LANDS-MILITARY LAND WARRANT-LoOATION ON SOHOOL I,ANDS.
The location of a military warrant upon land which has already been reserved by act of congress for school purposes is void, ,and neither the locator nor hill can acquire any legm or eql,litable rights thereunder to the land. Act JUly.27,I854, required the reinstatement of an entry by one P. under a mili-
B.
SAME-EFFECT 'OF CUR.ATIVE ACT.
tary warrant, of certa,n .land, theretofore .canceled by the commissioner of the
generlil land office, "so that the title to said lands may inure to the benefit of his grantees as far as he may have granted'the same, " provided that the money paid therefor, if Withdrawn, should. again 'be paid, and that a patent should thereUllon issue to him. Held;' that on the subsequent payment by P., and the issuance of a
I'EDER4L
REPORTER, voL 51.
to him, tbe title related back to tbe date of tbe first entry, and be and his grantieell were thereby Vested with the same title as they would have severally P9,!l811sseg. had tbe lir'Jt Ilntrybeen valid. 8. SAMB.
The act vested in: a grantee by a quitclaim deedot part of tbe lands, tll.DU,'b,the e,xisting ,reco, l',d of thed,eed by mistake omitte,d part" O,f the land from the .'
"
'
.. VBl'lDoR VBNDEB '!PitSSOMPTIONS.
.Am>
, ,ona who receives a deed ,of bargain and sale conveying lands worth $30,000 for a . consideration of '100 must be presumed to know of infirmities in his grantor's title, and cannot claim tbe 'protection' of the rule in favor of innocent purchasers, as bolding for value under a prior in, the recording of whlcn the land in question was omitted by mistake. S"ullE-QOITOLAIM DEED.
B,ONA ' '
FIDE PURCHASBRS -
INADEQUATE CONSIDBRATION ,
6.
in Mjnn,esota that one ,claiming under a quitclaim deed could not invoke the rule in \, favor. ot'bona fide purchasers wit.hout notice of defects in' title. McDona!d v. " BeZding,12 Sup. Ct. 145U. S. 492, distinguished. .
In ,1856, and until the, law was changed by the act, of 1875, It was the settled rule
.
4Ppea:l from tpe Gourt of the for the District of Minne$qta. "Affirmed. ' CALDVVELJ,., Circuit Judge: This suit was ,brought ,by Augustus K. Barnum. on behalf of himself and nUnlerqus other, who joined with him, in the state court, under 4, c.75.Gen. St. Minn. 1878, p. 814, to remove a cloud from, aijQ. quiet the title 10, the lands described in, the bill. The defendapta, the suit.to ,the circui t court upon the ground of diverse citize,uship. An answer ';ll,S filed and m,uch testimopy taken, and on thefinaJ: rendered a decreein accordance with bill, pte defenliants appealed. It would serve no useful purpose to set out at length the testimony in the case. ,,' ,to that, upon a: careful cO!lsideration ofthe we find the following facts: Thatqn the day qf 1850, Peter Poncin located. a military la,nd,w.arrant 011 th,eN, ! of the S. E. 1, and the S. ! of the N. E. 1, of section 36, township 29 N., of range 23 W'., in the districtof land subject to entry at Stillwater, Minnesota territory, containing 160 acres, and received from the proper officers of the United States land office a certificate of such location and eutry. The premises in controversyare a part of that tract, to wit, the S. W. 1 of the N. E. 1 of said section. On the 28th day of March, 1850, said Peter Poncin, for the consideration of $150,' conveyed the S. ! of the N. E. 1, except 20 acres off the east end thereof, and N. l of tbe S. E. 1 of section 36, township 29 N., of range 23 W., to Antoine Pepin by deed containing the usual covenants of warranty, which deed was duly recorded on the 2d day ofApril, 1850. On the 29th day of March, 1850, said Antoine Pepin, for the consideratiQn of $100, couveyed the N., W. t of the S. E. i, the S.W. t of the N.E. i, and the W. l of the S. E. i of the N. E. i, in the section, township, and rang(l aforesaid, to Alpheus R. French,by deed containing the, usual covenants of warranty, which 'deed wasdulStrecorded on the 15th ¢lay of Jauuary, 1851. .. Onthe 19th day of April,1850, the said Alpheus R. French executed and delivered to Louis O.! $lfelt and Chatl(ls D. Elfelt a bond. foradeed,whereby he
DUNN tl. BARNUlI.
857·
agreed to convey said land last described to said Elfetts for the consideration of a stock of saddlery and harness, valued at $500, which bond was recorded on the day of its date. The said Louis C. and Charles D. Elfelt paid for said lands in a mode satisfactory to said French, and thereupon the said French, on the 19th day of March, 1851, executed, acknowledged, and delivered to said Elfelts a quitclaim. deed for said lands, which deed was duly filed for record March 20, 1851; but, bya clerical mistake of the rpgister of deeds, said deed was not accurately and truly recorded at that time. The error in recording said deed consisted in this: Among the lands conveyed by said deed, and properly described therein, was the S. W. t of the N. E. t of the section, township, and range aforesaid, being the land here in controversy, but in recording said deed this 40-acre tract was onlitted, so that the record thereof did not show, as it should· have done, that this tract was R. part of the land conveyed by said deed. Subsequently the mistake in cording this deed was discovered, and on the 4th day of February, 1857, said deed was again filed for record, and duly recorded. The complainants, through sundry mesne conveyances, are the grantees of the said Charles D. and Louis C. Elfelt of the lots and parcels of land claimed by them respectively and which are situated upon, and in the aggregate comprise all of, the said S. W. t of the N. E. t of said section 36. Said 40-acre tract was laid out into lots, blocks, streets, and avenues, and the plat thereof duly recorded years ago, and it now constitutes a part of the city of S1. Paul, and is occupied by a large population, who purchased and paid full value for their lots, and have in good faith made lasting and valuable improvements, and paid. the taxes thereon. The aggregate value of their several holdings is from $600,000 to $1,000,000. Before Poncin's location and entry, the section in which the land was situated was reserved by act of congresafor school purposes, and Poncin's entry was therefore void, and was for that reason set aside by the commissioner of the general land office on the 10th day of October, 1852. On the 27th of July, 1854, congress passed the following act: ... An act authorizing a patent to be issued to Peter Poncin for certain lands therein described. Be it enacted by the senate and the house of representatives of the United States of America. in congress assembled. that the entry by Peter Poncin of the north half of the southeast quarter. and the south half ,of the northljast quarter. of section 36. in township number twenty-nine. gf range twenty-three. in the Stillwater land district. Minnesota. canceled 'by the commissioner of the general land office. be. and the llame is hereby, allowed and reinstated as of the date of said entry. so that the title to said lands may inure to the benefit of his grantees, as far as he may have conveyed the same: Providl'd. that the money paid for said land shall not have been withdrawn. or if withdrawn shall be again paid at said land offices. aDO that thereupon a patent shall issue in the name of said Peter Poncin for said land. Sec. 2. And be it further enacted that the superintendent of public schools in said territory of Minnesota be. and is hereby, authorized to select other lands in lieu of said section thirty-six. as far as the same has been granted or sold. Approved July 27. HI54." In compliance with the proviso of this act, Poncin paid into the United States land office the price of said land, and on the day of March, 1855, a patent was duly issued to him for the same under and I
Mter the .'9fthis act of cpnceivjngthat it gave him some, right to the land, pr,E1vious pf the same.;t9, tljle on the day of tl;le land Furber, the of$100. by deed or bargain Frenchwlj8 oat acquaintE!d <",ith Furber, and did npt see or have anything to do with him, personaHy, in this transactiop. Qne Gi bbs acted as agent f01;, Furber in procuring this conveyaI).ce from French, and knew before ,at the time he procured the conveyance to be made that Fren()h had previously convey,ed the land to the Elfelts. The agreemellt hetwElen Gibbs,;;acting. for. Furber, and. French was that French; and· Furber would "divide spoils of thisgroulld when they did get a title to it." Subsequently Gibbs. acting for Furber, agreed to pay French but that sum was' o,ot paid, and Furber never paid anything for the land. At ,the date. of.this conveYance the land embraced init was worth $30,000. On the 28th day of-June, 1856, Furber, for the ,expressed consideration of $150,conveyed the land by deed John P. Dunn. At the. date of this conveyance, the land of embraced iq)t was worth $5<).,000. ,It will be seen that French is the common source of title of both parties ,to the suit, the complainants claiming under and through thede.ed of French to the Elfelts made in defendants, who are th .heirs of Dunn, claiming under ! and deed from French to Furber made in 1856, and the deed, from' F'urber to their ancestor made.the same year., OharleB, If.c; I!unt, Frank H. M017-ill, and George H. White, for' appellants. . . , . , Dalli8,KelWgg.&- Severance, (Frank B. KeUogg, of counsel), for respond9nts.. . . Before CALDWELL and Circuit Judges, andSHlRAS, District Judge. CALDWELL, Circuit Judge. The original entry by Poncin was void, and in. virt\l' of that entry lleither he nor his grantees acquired any legal or equitable right or title to the land. But the act of congress provided·that, when Poncin paid the entrance money pursuant to the reqUirements of the act, the first entry Should be "allowed and reinstated of the date .0£ said entry, so that the title to said lands may inure to the benefit of.hisgrantees so far as he may have conveyed the same." When Poncin paid th,e entrance money and received a patent under this act, the title related back to the date of the first entry,and he and his grantees. however remote, werelherebyvested with the same right and title to the land which theywbuld have severally possessed had the first elitry been r l:"alid. uThe a'ct applied the doctrine of relation. It made distinction between with warranty and those without it," bonds were held,to be within its equity. McOarthy v. Mann, 19 Wall. 20. 2 Dill. 441. . The defend,ants' is that French never conveyed the land to the Elfelts, grthat, if .such a conveyance was made, it was not recorded when French conveyed to Furber, and that Furber was a, purchaser for
no.'
, .DUNN V. BARNUM.
3.59
value without notice, and as'such cquld and did convey a good title to "punn; and that, if this be not so, Dunn himself was a purchaser frorn Furber for value without notice of any infirmity in the title. Wfj:find the fnct to be that before the passage ofthe act of congress French had conveyed the land to the Elfelts, and the act, therefore, vested the title in' the Elfeltsand their grantees. It is true, the deed Nom French to the Elfelts. by reason of a mistake of the recorder in recording it, was 1I0t, at the date of the of the act of congress, dn record, so far as it related to the land here in controversy. But the operation of the act of congress was not restricted to such grantees of Poncin as had recorded their deeds. The deed had been duly executed, and was as effectual to vest the title in the Elfelts as if it had been duly recorded. It was subsequently duly recorded. There is abundant evidence to shOw that the last record of the deed expresses truly its contehts as it was originally executed. Both records of the deed state that it com'eys 100 acres, but the particular description of the land in the first record only gives 60 acres, thus showing an omission of one 40. The land conveyed by the deed, according to the second record of the same, is the land w4ichFrench had bound himself by title bond to convey to the Elfelts, and French himself testifies that he did convey the land that he sold to the Elfelts and which was described in his bond. For a discussion of the rules applicable, where there are two records of the same deed,which differ in a material respect, see Stinson v. Doolittle, 50 Fed. Rep. 12. The deed from French to Furber was made before the deed from Freneh to the Elfelts was accurately recorded, but not before the act of congr,ess had vested the title in the Elfelts and their grantees. It is undoubtedly true. that under the operation of the registration laws one may sell and make good a title to land which somebody else owns. If the seller appears to be the owner of record, the purchaser has a right to assume that the record title is the true title, and when he pays value, and has no notice, actual or constructive, of the previous veyance of the land by his vendor, he acquires a good title. ADpIying the registration laws of this state to the titles acquired by Poncin's grantees under the act of congress, we proceed to inquire whether Furber, and Dunn, the defendants' ancestor, or either of them, were purchasers in good faith and for value without notice. Furber, through his agent Gibbs, had full knowledge of the fact that French had previously veyed the land to the Elfelts. The transaction between French and Gibbs, acting for Furber, which ended in French executing a deed to Furber, was, according to the testimony of French himself, simply and purely a scheme to defraud the Elrelts and their grantees out of this land. The testimony of French on this point is full and conclusive. But, independently of French's testimony, the bad faith of the transaction is apparent upon the face of the deed when the value of the property is considered. The consideration expressed in the deed is $100, and at the time the deed was xecuted the land was worth $30,000, with a prospect ofa rapid increase in value, and it is now worth $1,000,000 or more. However it may have been in past ages, it is certain that in
360
FEDERAL REPORTER,
vol. 51.
tbisage, when capital is so abundant and dealers in land so nUlUerous IUl-/Jeager to purchase wherever the investment gives promise of a profit, .1Oao can openly. ,acquire in the market, at private sale, a good ap4' title to $30,000 worth of land for $100 without exciting the, gravest suspicions as to his good faith and the honesty of the transaction. It would seem that one could not purchase land worth $3Q,QOO. for $100 without a well-grounded suspicion either that the seUer. was insane or that his title was bad. In the judgment of aUmankilld-and there is no surer guide to the right than the universal consenStMlof opinion among men-such, a transaction. unexplained, implies or bad flJ,ith. The instant such a conveyance is set up as of a purchase it;l good faith and for value of a sound title, the irresistible that it was procured by fraud or for a fraudulent a conveyance passes the legal title, apd may be good l;>etween the parties as a gift, or as a conveyance to remove a cloud from the title, or as a sale of a confessedly doubtful and disputed title, and for such like purposes; but when it is set up and relied on under the registration laws of the .state as a means of taking lands from the real owner, because, and only because, his deed was not recorded, it will not be accepted as sufficient evidence that the vendee paid a valuable consideration and purchased without notice, either actual or constructive, ora well-grounded suspicion that his vendor had no title. A valuable consideration, actually paid, is an essential requisite. In the sense oUhis rule, as appUed to this class of cases, the .consideration expressed in the deed to Furber is not a valuable one. The same sum ·of monayis not equally a valuahle consideration in all cases. Whether it is so or not depends on the relation it bears to the value of the property claimed to have been purchased with it. When the consideration is infiniteshnal, merely nominal, compared to the value of the property, it wiU not be accepted as a valuable consideration by a court of equity, as against one claiming under a prior unrecorded del;ld. The enormous discrepancy between the consideration expressed in this deed and the value of theJand compels the conclusion that the grantee knew. or, what is the same thing in legal effect, had good reason to believe, there was, a fatal infirmity in the title he was acquiring, and so was not a purchaser in good faith. At that time numerous satisfactory sources of information were open to anyone desirous of learning the facts about the title to this,1and. One put upon inquiry and seeking the truth could .not have failed to learn the facts. An offer to sell land worth $30,000 for $100 was enough to arouse suspicion and excite inquiry in the most lethargic mind, and if inquiry was not made and the facts not learned it was hecause the purchaser deliberately and purposely abstained from doing 80, to avoid the actual kno,vledge of facts he with good reaS()ll ,believed to exist, and this is the legal equivalent of actual notice.: Hwme v. Ji}anzen, (Sup. Ct. Iowa, 1887,) 34 N. W. Rep. 490;,Knappv. Bailey, (Sup. Jud. Ct. Me. 1887,) 9 Atl. Rep. 122; \T. SaUA'lder8, (Sup. Ct.·\..rk.1888,) 7 S. W. Rep. 301j Happin v. Doty, 25 Wis. 573.
DUNN fl. BA.RNUM.
361
The deed from Furber to Dunn is infected with all the infirmities of that from French to Furber, and one additional fatal vice of its own. The land conveyed by this deed was worth at the date of the conveyance $50,000, and the consideration expressed in the deed is $150, and even this sum is not shown to have been paid, by any competent evidence. The effect of this mere peppercorn consideration compared to the value of the land has been considered in discussing the deed from French to Furber, and needs no further consideration. But the deed from French to Furber was one of bargain and sale, while. the deed from Furber to DLlnn is a mere deed of quitclaim. This quitclaim to Dunn was executed in 1856. It was then the settled law in this state that one claiming title by a quitclaim deed could not be regarded as a bona fide purchaser without that a deed of that character passed the title as the grantor held it, and that the grantee took only what the grantor could lawfully convey. Martin v. Brown, 4 Minn. 292, (Gil. 201;) Hope v. Stone, 10 Minn. 141, (Gil. 114;) Everest v. Fm'ris, 16 Minn. 26, (Gil. 14;) Marshall v. Roberts, 18 Minn. 405, (Gil. 365.) These decisions are obligatory on this court in this case, and they put an end to the defendants' claim under the Dunn deed. The doctrine of the Minnesota supreme court in the cases cited is in harmony with the general, and almost uniform; doctrine of the cases 011 this subject. McCarthy v. Mann, 19 Wall. 20; Prentice v. Stearns, 113 U. S. 435, 5 Sup. et. Rep. 547; Oliver v. Piatt. 3 How. 405; Gest v. Packwood, 34 Fed. Rep. 369; McClung v. Steen, 32 Fed. Rep. 374; j[ay v. Le Claire, 11 Wall. 217; Griswold v. Bragg, 6 Fed. Rep. 342; Dickersonv. Colgrove, 100 U. S. 578; Baker v. ;EIumphrey, 101 U. S. 499; Hastings v. Nissen, 31 Fed. Rep. 597; Bragg v. Paulk, 40 Me. 516; Nash v. Bean, 74 Me. 340; Vattier v. Hinde, 7 Pet. 269; Watson v. Phelps, 40 Iowa, 482; Johnson v. Williams, 37 Kan. 179, 14 Pac. Rep. 537. The rule as to the effect of a quitclaim deed was changed in Minnesota by statute in 1875, (Strong v. Lynn, 38 Minn. 315,37 N. W. Rep. 448,) but the act was not retroactive, and it is not claimed .that it had any effect on the rights of the complainants and their grantors, who acquired their title and whose deeds were on record long before the act was passed. See Gaston v. Merriam, 33 Minn. 271, 22 N. W. Rep. 614. In Arkansas one holding under a quitclaim deed is not precluded from showing that he paid full value, and is in fact a purchaser in good faith. McDcmald v. Belding, 145 U. S. 492, 12 Sup. Ct. Rep. 892. This case rested on special grounds. There was good faith in fact, and the odious feature of a nominal consideration was absent, the purchaser having paid full value for the property in cash. But in that state it is held that where" a person bargains for and takes a mere quitclaim deed, or deed without warranty, it is a circumstance, if unexplained, to show that he had notice of imperfections in the vendor's title, and only purchased such interest as the vendor might have in the property." Bagley v. Fletcher, 44 Ark. 153, 160; Miller v. Fraley, 23 Ark. 735,740. In Gaines v. Saunders, 50 Ark. 322,7 S. W. Rek-" 301, Judge BATTLE, speaking for the court, said:
362
B,Jl!OIf,l'ER,
the la:l,lllsJncontrQversYicost slxthou5tmd dollal'tl';,lttld'tblit there Was loaned' bri' them as security two thousand two liundr'M and tWenty dollars.' The deed executed by Whittaker to Mrs. Saunders Was aiquitelaim deed andwasteCGffied, and it stiltes.that the consideration J'eOOlIVOO for the lands was five dollars. Wasnottlils factsutIicient to put IIolJY on inquiry? possible that any !!lane man, having good title to.'lld worth two thousand or six thousand dollars, wO.uld sell it for five question"suggests itso}Vn answer. Add to this the fact that the COtl'vey$D'Ce executed was a' deed, and the .concillsion that Mrs. saunders did not acquire a good arid 'valid title, in the. absence of an explanation,would'be irresistible. It was at least sutlicip.nt tobava put appellants on inquiry. wbich, if they prosecuted, with ordinary diligence, would doubtto actual notioe of the facts as shown by the evidence in this :)Jlltthey prosecuted 0,0 inquiry, and it follows that they are not bona, ftd81hlfcliilsers DQiice. " , .' FlM'P!';r,.haviIlg no title, hill toVunn,pa,ssed none. As the .never had a,ny title to lose by laches, it is unnecessary to question., The decree of the circuit court is affirwed. i
TOWN8HIP OJ' WASHINGTON WI. CO'tlm ft Coun Q/ Eighth
at
O£rcuu..ruJT 1i,1899.)
No. 88. L' TO'W1'r8ltrl'tl-lbILllOUAID' BONDs-Au'l'B:OBITY TO I!I!lUII-CON8TBtfll'l'IOl'f 0:' VTII. ..'" . '
Bu'1'-
Laws Ka\l. ;1876, eo 1q7, autborizing munlciP.. al townsbiPs ,to subscribe for ru.ilroad . Itook, requires (sectioil, 1) a petition by two fiftbsof.the taxpayers, the county commilslonerlto lubmit to the towUBhip electors a proposition ot subscription; :sucbpetiti,n to dlisig'uate (section 2) th.e amount of the stock, "the terms ot , payment;" aJid l)ther l)f the sUbBcription; the propoSitiou to be accepted (seCtloUl) by· two thirds or those, votiug at tbe electiou held for that purpose, and tne bonils to b,ll,ve c;lOUPO,nsattached "as maY,be required by the terms of su.id prop.. osition; It the county commissioners to levy a tax (sectloIl6) "sufficient to pay the interest on suob bouda as, the same shall beoome due(.and to create a sinking fund , lufficieut to PIloY sucb maturity; It pf tbe to be made , payable (section 18) "at any 'time that· may be jilted in tbe propositIOn voted on, It not .er;ceed{ngllO yeo,rs. . Election 14 declarest 'among other tbings, that to the su.id bonds l\b.All be attacbed coupons tor annual Installments of "the principal and interest accruIng trom time to time by the terms ot the bonds.;' Held that, in view of the p.riO.r prov.iBions, th. lauguage quoted trom the.: last, se.ction did n.ot require that,lIJ.l issued under the act sbould provide for aunual payments on the , 'Prin.cIPat;:but merf'I.Y that,lt tbe proposition voted' on pro.vided tor'such anuuu.i paym.enta,ooupou8 therefor should be attached; and thetownsbip had authority by proper J;lr9posltion,vote, eto., to lasue bonds, the wlloie prinoipllJ. ot which should Dot matul'e untl1 80 y!lara. ' ,! ' In an ac;ti91l:byan iI/nQ\'!lnt a on railway ald bouds, Which on their face refer to the act authorIzlIIg tbeir issuance and specifically recite ,the takiilg oteach 'step:required :thereby. the tow-nehip Ie estopped to allege invlIJ.iditY,of boud.,on except. they issued in violation of IOUle constitutioiial or .\i£tutOry requirement.· , , " , ..
e
;.
,
In Error to the CirOuit Court of the United States for the District of Kansua. Affirmed.' (, i . , .,. .