French v. Edwards, 80 U.S. (13 Wall.) 506
Case details
Bluebook Citation
French v. Edwards, 80 U.S. (13 Wall.) 506
Full caption
French v. Edwards et al.
Country
United States
Jurisdiction
Federal
Court
Supreme Court of the United States
Dissent
Miller (Justice)
Majority
Bradley (Justice)
Dissent
Field (Justice)
French v. Edwards et al.
1. Statutory requirements intended for the guide of officers in the conduct of business devolved upon them and designed to secure order, system, and dispatch in proceedings, and by a disregard of which the rights of parties interested cannot be injuriously affected, are not usually regarded as mandatory, unless accompanied by negative words importing that the acts required shall not be done in any other manner or time than that designated. But requirements intended for the protection of the citizen, and to prevent a sacrifice of his property, and by a disregard of which his rights might be and generally would be injuriously affected, are not directory but mandatory. The power of the officer in such cases is limited by the manner and conditions prescribed for its exercise.
2. The provision of a statute of California, that the sheriff, in selling property upon a judgment recovered by the State against the property for delinquent taxes, shall only sell the smallest quantity of the property which any purchaser will take and pay the judgment and costs, was intended for the protection of the taxpayer, and is mandatory upon t e officer and not directory merely.
3. The recitals in a deed of a sheriff as to the manner in which he execute a judgment directing the sale of property are evidence against to grantee and parties claiming under him. Accordingly a deed of t is officer reciting a sale of property under a judgment for taxes to tie highest bidder, when he was authorized by the statute only to sei t smallest quantity of the property which any one would take an pay the judgment and costs, was held to be void on its face.
4 A bill of exceptions dated during the term at which the trial was > though some days after the trial, is sufficient if it show that the ex p tions were taken at the trial.
Error to the Circuit Court ot the United States for the
District of California.
This was an action for the possession of a tract of an p. 507situated in the county of Sacramento, in the State of California, “commencing at the corner of Main and Water Streets of the town of Sutter, at the east bank of the Sacramento River; running thence, in a northerly direction, up and along said river one-half of a mile; thence in an easterly direction one mile; thence southerly, at right angles, one-half mile; and thence westerly, at right angles, one mile, to the place of beginning, containing three hundred and twenty acres.”
The plaintiff derived his title by deed from a certain R. H. Vance, dated March 1st, 1862. Vance acquired his title through sundry mesne conveyances from John A. Sutter, to whom a grant of land, including the premises in controversy, was made in June, 1841, by the then governor of the Department of California. This grant was, in March, 1852, submitted to investigation under the act of Congress of March 3d, 1851, to ascertain and settle private laud claims in California, and was adjudged valid and confirmed by a decree of the Board of Commissioners created under that act, and by the District Court and the Supreme Court of the United States, to which the decision of the board was carried on appeal. A patent of the United States pursuant to the decree followed to the grantee, bearing date in June, 1866. As this patent took effect by relation as of the day when the 1 din^s for its acquisition were instituted, in March, 1852, all the title and rights, which it conferred to the premises in controversy, enured to the benefit of the plaintiff c aiming under the patentee, although the deed to him was executed before the patent was issued.
The defendants asserted title to the premises under a deed executed by the sheriff of Sacramento County upon a sale on a judgment rendered for unpaid taxes assessed on the property for the year 1864, and the whole case turned upon the validity of this tax deed.
y an act of California, passed in 1861, the district attor-
^S.° i^'e several counties of the State are authorized and
11 commeuce actions for the recovery of taxes esse upon real property and improvements thereon, p. 508which remain unpaid after a prescribed period.* Such actions are to be brought in the name of the people in the courts having jurisdiction of the amount claimed in the counties where the property is situated, against the parties delinquent, the real property and improvements assessed, and against all owners or claimants of the same, known or unknown. The manner in which process issued in such actions shall be served, actually upon the defendants if found, and constructively upon defendants absent from the county, and upon the real property and improvements, is specially prescribed. The answers which shall be allowed therein are also designated, and all acts required between the assessment of the taxes and the commencement of the actions are declared to be directory merely. Personal judgments are only authorized against defendants, who are actually served with process or who appear in the actions; but judgments can be rendered, upon service of process by posting, against the real estate and improvements for the taxes assessed, severally against each, if they belong to different owners and are separately assessed, and jointly against both if they belong to the same owners.
The act regulating proceedings in civil cases generally in the courts of the State, passed in 1851, and its several amendments, so far as they are not inconsistent with the special provisions of the act of 1861, are made applicable to proceedings under the latter act for the recovery of delinquent taxes, subject to the proviso that the sheriff in selling the property under the judgment “ shall only sell the smallest quantity that any purchaser will take and pay the judgment all costs.” By the act of 1851 the sheriff is required to se property under ordinary judgments to the highest biddei.
A further act of the State, passed in May, 1862, in re a tion to suits of this character, provides for service of process by publication in a newspaper, as well as by posting, an authorizes the court, in enforcing the lien for taxes, to exer p. 509cise all the powers which pertain to a court of equity in the foreclosure of mortgages, but at the same time it declares, that when the decree of the court contains no special directions as to the mode of selling, “ no more of the property shall be sold than is necessary to pay the judgment and costs. ”*
*
Act to provide revenue for the support of the government of the approved May 17th, 1861, g 39, Statutes of California of 1861, p.
The judgment under which the sale was made for which the deed in suit was executed to the defendants, was rendered in October, 1865, in an action brought against R. H. Vance, who had transferred his interest to the plaintiff in March, 1862, and against John Doe, Richard Roe, and the real estate in controversy. It found that $113.75 of taxes were due on the property for the year 1864, and for that sum, and the taxed costs, $37.65, and accruing costs, it directed that a sale of the property, or so much thereof as might be necessary, should be made in accordance with the statute, and the proceeds applied to pay the judgment and costs.
The deed of the sheriff did not show a compliance in the sale of the property with the requirements of the statutes
mentioned. It did not show that the smallest quantity of the pioperty was sold for which a purchaser would pay the judgment and costs, or that any less than the whole property was ever offered to bidders, or that any opportunity was a oided them to take any less than the entire tract and pay t ie judgment and costs. The recitals of the deed were that the sheriff sold the land described to “ the highest bidder,” and for the largest sum bid for said property,” language w nch imported that the entire tract was offered in one body, pL. theie were more than one bidder, and of course that
uitterent sums were bid for it in this form.
The court instructed the jury to find for the defendant; Ylich instruction the plaintiff excepted. Verdict was sio-nai6 ^-Prih 1867; the bill of exceptions was
g»ed and dated on the following 13th, and judgment on h WS eiUtered 011 the followinS 26th, the court not saving adjourned until after this date.
On error brought by the plaintiff the main question was
*
Statutes of 1862, p. 520.
whether the departure of the officer from the requirements of the statutes rendered the sale invalid; a minor one—of practice—being to the bill of exceptions.
Messrs. E. Casserly and D. Lake, in support of the ruling below:
1. The bill of exceptions, not having been tendered and signed at the trial, forms no part of the record, and, therefore, cannot be considered on this writ of error.*
2. The recitals in the sheriff’s deed show compliance with the statute. Every presumption is in favor of the deed, which was made as the result of an action at law, and bears no analogy to a conveyance by a tax collector. The “ highest bidder” was the man who offered to pay the judgment and costs for the least quantity of land, and “ the largest sum bid ” was the amount of the judgment and costs in connection with the least quantity of land, in other words, the sum which involved the highest appraisement of the value of the tract purchased.
3. Policy and presumptions are in favor of purchasers under sheriff’s deed.f
4. The statute of California is directory as to the mode of executing the writ, especially under the decisions of the Supreme Court of that State.|
5. The remedy of the judgment debtor for a violation of law by the sheriff in the manner of executing the writ is by application to the court to set aside the sale. The sherift is also liable in damages.!
*
160
f 4 Kent, *431, note a (p. 478, ed. 1866), note b, *431. See cases, no e, *432; Cunningham v. Cassidy, 17 New York, 278; Neilson v. ei so, Barbour, 565, 568, 569. |g0 J Blood v. Light, 38 California, 654; Hunt«. Loucks, lb. 377, see Jones v. Clark, 20 Johnson, *51; Crocker Sheriffs, § 506, referring to 504 (last edition). Wendell § Jackson«. Sternberg, 20 Johnson, 51; Jackson «. Roberts, . 88; Hooker «. Young, 5 Cowan, 269-70; Blood v. Light, 38 Californ, San Francisco ». Pixley. 21 Id. 58, 59.
6. Recitals in a sheriff’s deed, when not required in law, do not vitiate.*
Mr. S. 0. Houghion (a brief of Mr. J. Reynolds being filed), contra, for the plaintiff in error.
Mr. Justice FIELD having stated the case, delivered the opinion of the court, as follows:
There are undoubtedly many statutory requisitions intended for the guide of officers in the conduct of business devolved upon them, which do not limit their power or render its exercise in disregard of the requisitions ineffectual. Such generally are regulations designed to secure order, system, and dispatch in proceedings, and by a disregard of which the rights of parties interested cannot be injuriously affected. Provisions of this character are not usually regarded as mandatory unless accompanied by negative words importing that the acts required shall not be done in any other manner or time than that designated. But when the requisitions prescribed are intended for the protection of the citizen, and to prevent a sacrifice of his property, and by a disregard of which his rights might be and generally would be injuriously affected, they are not directory but mandatory. They must be followed or the acts done will be invalid. The pdwer of the officer in all such cases is limited by the manner and conditions prescribed for its exercise.
These positions will be found illustrated in numerous cases scattered through the reports of the courts of England and of this country. They are cited in Sedgwick’s Treatise on Statutory and Constitutional Law,f and in Cooley’s Treatise on Constitutional Limitations.^
Tested by them the sale of the sheriff in the case before us cannot be upheld. The provision of the statute, that he
son BJapkS°? J°ne8’ 9 Cowen’ 191-2; Jackson V. Streeter, 5 Id. 530; Jack•t_ ° J°hnson» 386; Averill ».Wilson, 4 Barbour, 183: Arm-
g s essee v. McCoy, 8 Hammond, 135; Blood v. Light, 38 California,
t Pages 368-378.
J Chap, iv, pp. 74-78. p. 512shall onZy sell the smallest quantity of the property which any purchaser will take and pay the judgment and costs, is intended for the protection of the taxpayer. It is almost the only security afforded him against the sacrifice of his property in his absence, even though the assessment be irregular and the tax illegal. The proceedings in the actions for delinquent taxes are, as against absent or unknown owners, generally ex parte, and judgments usually follow upon the production of the delinquent list of the county showing an unpaid tax against the property described. Constructive service of the process in such actions by posting or publication is all that is required to give the court jurisdiction; and the delinquent list certified by the county auditor is made prima facie evidence to prove the assessment upon the property, the delinquency, the amount of taxes due and unpaid, and that all the forms of law in relation to the assessment and levy of such taxes have been complied with. When the owner of the property is absent and no appearance is made for him, this primd facie evidence is conclusive, and judgment follows as a matter of course. From the sale which ensues no redemption is permitted unless made within six months afterwards, except in the case of minors and persons laboring under some legal disability.
It is evident from this brief statement of the character of the proceedings and of the evidence permitted in these actions for delinquent taxes, that the provision in question is of the utmost importance to non-resident or absent taxpayers, and that in many cases it affords the only security they have against a confiscation of their property under the forms of Jaw.
It is plain to us, upon a consideration of the different statutes of California upon this subject, that whilst the legislature of that State intended to prevent by the strictest pio ceedings the possibility of any property escaping its proportional burden of taxation, it also intended by the provision in question to guard against a wanton sacrifice of the pi°P erty of the taxpayer. ......... ,
In the present case, real property situated near the secon p. 513city in size of California, and the capital of the State, extending one-half a mile along the river Sacramento, and running back one mile, was sold, according to the recitals of the deed, in one body, for less than one-twentieth of its assessed value. It is hardly credible that a less portion than the whole of this large tract would not have been readily accepted and the judgment and costs, amounting to only one hundred and fifty-five dollars and forty cents, been paid, had any opportunity to take less than the entire tract been afforded to purchasers. Be this, however, as it may, it was incumbent upon the officer to afford such opportunity, and not to offer the whole tract at once to the highest bidder.
By the laws of Georgia, of 1790 and 1791, the collector of taxes in that State was authorized to sell the land of the delinquent only on the deficiency of personal estate, and then only so much thereof as would pay the amount of the taxes due, with costs. In Stead’s Executors v. Course* which came before this court, it appeared that a sale was made under these laws of an entire tract of four hundred and fifty acres, without specifying the amount of taxes actually due for which the land was liable; and the court said, Mr. Chief Justice Marshall delivering its opinion, that the sale ought to have been of so much of the land as would satisfy the tax in an ear; and it the whole tract was sold when a smaller pait would have been sufficient, the collector exceeded his authority; and a plea founded upon the supposed validity of the title conferred by the sale could not be sustained.
By a law of New Hampshire, in force in 1843, it was provided that so much of the delinquent taxpayer’s estate s wuld be sold as would pay the taxes and incidental charges. In ¿izworiA v. Dean,-\ which came before the Supreme State, it appeared that a fifty-acre lot was
? ered and sold in one body, and the court held the sale to »e void, observing that no regard appeared to have been pm to the provision mentioned in the statute, and that no eason was given why the law was not complied with, “if,
4 Crunch, 403.
Vol. im.
indeed, any reason could be considered as sufficient.” A similar decision was made by the Supreme Court of Maine upon a similar clause in one of the statutes of that State.* And numerous analogous adjudications will be found in the reports.! They all proceed on the principle stated by the Supreme Court of Michigan, that “ what the law requires to be done for the protection of the taxpayer is mandatory, and cannot be regarded as directory merely.”!
But it is contended that inasmuch as the sale in the present case was had under a decree of a court, the same presumptions must be indulged to sustain the action of the sheriff that would be entertained to uphold ordinary sales made by him under execution ; and that he is not to be held to the same strictness in his proceedings that he would be if he had acted without the decree, solely under the statute. And several cases are cited from the reports of the Supreme Court of California, showing that all reasonable presumptions are indulged in support of sales on execution, and that such sales are not rendered invalid by reason of a want of conformity to statutory provisions as to the time, notice, and in some particulars, manner of the sale.§
But the obvious answer to this position is, that here theie is no room for presumptions. The officer recites in his deei the manner in which he sold the property, and from the recitals it appears that the sale was made in conformity wit i directions which the statute, applicable to the case, in effect declares shall not govern sales upon judgments for de m quent taxes. Presumptions are not indulged to sustain irregular proceedings of this character, when the irregu larity is manifest. Presumptions are indulged to suppl) 11 place of that which is not apparent, not to give a new c ai^ acter to that which is seen to be defective. The coui»e prescribed for the officer in the conduct of sales upon o*§ p. 515nary judgments under the act of 1851, and upon judgments for delinquent taxes under the act of 1861, are entirely unlike, and usually lead to different results. The general authority of the officer in judicial sales under the act of 1851, in the exercise of which he has a large discretion, is limited and defined when applied to sales under judgments for delinquent taxes, by the provision declaring that the sheriff in selling the property assessed “ shall only sell the smallest quantity that any purchaser will take, and pay the judgment and all costs ”—language which imports a negative upon a sale in any other way. The fact that in some cases no purchaser at the sale may, perhaps, be willing to take less than the whole property and pay that amount, does not dispense with the duty of the officer to comply with the law. It is also contended that the recitals in the deed were not required, and therefore do not vitiate the deed, but the cases cited fail to support the position as broadly as here stated. They only show that a defective or erroneous recital of the execution, under which a sheriff has acted, will not vitiate his deed if the execution be sufficiently identified. Every deed executed under a power must refer to the power. As an independent instrument of the holder of the power it would not convey the interest intended. The deed of a sheriff forms no exception to the rule. But it is not essential that the execution, or judgment under which he acted, should be set out in full, or that his proceedings on the sale
should be detailed at length. It is sufficient if they be re-erred to with convenient certainty, and any misdescription not actually misleading the grantee would undoubtedly be considered immaterial. But if the manner in which the power is exercised is recited, it being a proper matter for recita, then the recital is evidence, not against strangers, ut against the grantee and parties claiming under him. us it a sheriff should refer in his deed to an execution issue to him, and recite that in obedience to it and the
th v/6 such case provided, he had sold the property to e ighest bidder, it would be presumed that he had done utj in the piemises, given the proper advertisement, and
Opinion of Miller, J., dissenting.
made the sale at public auction in the proper manner. But if he should go farther and recite that he had sold’the property, not at public auction, but at a private sale, the deed would be void on its face, the sale by auction being essential to a valid execution of the authority of the sheriff. The vendee, by accepting the conveyance with this solemn declaration of the officer as to the manner in which his power was exercised, would be estopped from denying that the fact was as recited.*
It is unnecessary to express an opinion whether in any case of a sale on a judgment for taxes under the special provision of the statute of California, any presumption can be indulged that the officer had complied with its directions when the fact does not affirmatively appear. It is sufficient that the recitals in his deed of what he did with respect to the sale under consideration show that these directions were disregarded by him in that case. It may also be added that the return of the officer corresponds with these recitals.
The objection to the bill of exceptions, that it does not purport to have been tendered and signed during the trial, is not tenable. It shows that the exceptions were taken at the trial, and that is sufficient.* It is dated during the term, and was in fact filed before the judgment on the verdict was entered.
Judgment reversed, and the cause remanded for a new TRIAL.
Mr. Justice MILLER, dissenting.
I do not agree that when the State obtains a judgment on the taxes due her by regular proceedings in the courts, t a the sale under that judgment is opeu to all the rigid ru es which apply to tax sales made ex parte and without t e ai of such judgment. The judgment in this case is not assai e by the court, and the sale under it is a judicial sale, an e titled to all the presumptions which the law makes in avo of a purchaser at such a sale. _______ _
*
Robinson v. Hardcastle, 2 Term, 252; Jackson v. Roberts E
11
Wendell, 427-435; Den v. Morse, 7 Halsted, 381.
The law of California, while it required the sheriff to offer the smallest portion of the land which any one would take and pay the judgment and costs, undoubtedly contemplated that if no one would take any less than the -whole of the land and pay the judgment and costs, that then it should be sold to the highest bidder. If this were not so, the State could not collect the taxes in half the cases, because the right of redemption left no inducement to bidders for a smaller amount than the whole.
It is, therefore, a fair presumption from the recital in the deed, that although the sheriff sold the land to the highest bidder, it was because no one wTould take less than the whole and pay the taxes and costs. And the recital that is made, as well as that which is omitted, are neither of them necessary to the validity of a deed made in a judicial sale.
Railroad Company v. Soutter et al.
A. railroad belonging to an incorporated company, and then under a first and second mortgage, was sold on execution and bought in by certain bondholders, whom the second or junior mortgage was given to secure. These purchasers organized themselves (as they were allowed to do by statute in the State where the road was) into a new corporation, and worked the road themselves, and for their own profit. After a certain e, the mortgagees under the first or senior mortgage pressed their ebt to a decree of foreclosure; and to prevent a sale of the road the new corporation paid the mortgage debt. Subsequently to this, and on a creditors’ bill, the sale made to the creditors under the second mortgage was set aside as fraudulent and void as against other creditors of corporation which owned the road originally tbat no biU .n
tho fl 7°U 16 y new corporation against the mortgagees under whnf h a“°rtgafe’to bo Paid back (as paid under a mistake of fact), roffatefi1! fT" \US t0 tllem tbe new corporation, or to be subrogated to their decree of foreclosure.
frOm the Circuit Court for the District of Wisvoiibin, biiu! Mllwaukee and Minnesota Railroad Company filed a equity, m June, 1859, against Soutter (survivor of p. 518Bronson), Russell Sage, and several other natural or individual persons, as also against the Milwaukee and St. Paul Railway Company, a corporation, to recover back certain large sums of money, amounting in all to $462,057.80, which they had paid into court, in December, 1865, in part liquidation of certain bonds held by the individual defendants, in this suit, which bonds had been issued by the La Crosse and Milwaukee Railroad Company in 1857, and were se. cured by a mortgage upon a portion of the railroad of the last named company. By way of alternative relief, the complainants prayed that they might be subrogated to the benefit of the decree of foreclosure of the mortgage, under which they had paid the money in question. The Milwaukee and St. Paul Railway Company were made defendants because they were the parties now in possession of the railroad and other mortgaged premises, and asserted themselves to be the owners thereof.
The facts, on which the complainants rested their claim, as set forth in their bill, were substantially as follows:
The La Crosse and Milwaukee Railroad Company, in 1858, after giving the bonds and mortgage above mentioned, gave two other mortgages, one on their road and one on their land grants, to secure certain other bonds issued by them. Failing to pay the interest coupons on the latter bonds, William Barnes, the trustee named in the mortgages, in May, 1859, sold the mortgaged premises, and all the franchises of the company, at public auction, and became the purchaser thereof, in trust for the bondholders, under the laws of Wisconsin, for the sum of $1,593,333. The bondholders thereupon, in May, 1859, organized a new company by the name of the Milwaukee and Minnesota Railroad Company (the corporation now complainant in the case\ and Barnes convened the property to the said company; which thereafter conducte its business under and in pursuance of the charter of the La Crosse and Milwaukee Railroad Company, and immediate y entered into possession of the said property and franchises.
But the prior mortgage of 1857 still subsisted on a poi tion of the road. Of this mortgage Bronson and Soutter p. 519were the trustees, and they filed another bill to foreclose their mortgage, and, after protracted litigation (of which the part in this court is reported in Bronson v. La Crosse Railroad Company) obtained a final decree in 1865,* for the amount of interest coupons due on the bonds secured thereby, amounting to upwards of $450,000; which decree contained a proviso, that if the Milwaukee and Minnesota Railroad Company (the now complainants) should pay the amount of the decree before a sale of the mortgaged premises, the receiver (the road being then in the hands of a receiver) should deliver the property to them; that is to say, they had the usual privilege of redeeming the property by paying the decree. Thereupon, the complainants, on the 30th of December, 1865, paid into court the amount of $462,057.80, as above stated, the money being afterwards distributed to the holders of the various bonds secured by the Bronson and Soutter mortgage, who are the individual defendants in this suit. The money thus paid was paid by the complainants as purchasers, and claiming to be owners, of the property, upon an acknowledged incumbrance, and in relief of the property claimed.
Prior to this payment, however, certain judgment creditors of the La Crosse and Milwaukee Railroad Company filed in the United States District Court for Wisconsin a creditor’s bill against the present complainants, alleging that the sale by aines was fraudulent and void, and praying that it might e set aside as such, and that the complainants might be enjoined from any further interference with the property or franchises of the La Crosse and Milwaukee Railroad Company. This suit had been pending for some considerable period and was pending here on appeal—the case of James road Company^ when the complainants paid their oney into court, as before stated, and, some time after its p and distribution, a decree W’as made on said credior s bill, m accordance with the prayer thereof, and directlllg that the property should be resold, and the proceeds
* 2 Wallace, 283.
t 6 Wallace, 752. p. 520applied, after payment of prior liens, to <he satisfaction of the judgments on which the creditor’s bill was founded.
The complainants accordingly now asked to have their money returned to them, on tlYe ground that they paid it under a mistake. Their allegation was that they supposed they owned the property when they did not; that they supposed they were lifting an incumbrance off of their own property, when they were, in fact, lifting it oft’ of property decided to belong to other parties. Their bill, speaking ot the order allowing them to pay the amount of the decree, represented that the “ said order was made by this court upon the understanding and theory entertained and believed by the judges of said court, and by your orator, and by all persons and parties interested in said cause, that your orator was the owner of said equity of redemption.” And again, that “your orator paid said sum of money into this court, this court distributed the same, and the several persons hereinbefore named in that behalf received the same with, upon, and under, and only with, upon, and under, the belief, understanding, and theory, that your orator was the owner of the equity of redemption of the mortgaged premises and property in said cause, and that your orator was thereby paying and extinguishing a lien, charge, and incumbrance upon property owned by your orator as aforesaid. It further stated that “ after paying the money, your orator foi the first time discovered that the said foreclosure of the Barnes mortgage was fraudulent and void as to the creditors of the La Crosse and Milwaukee Railroad Company, and as against the said last-named company, and that, in fact and in law, your orator never was the owner of the said equity of redemption, and that the payment made by your oratoi into court, and the distribution of the said moneys and the it ceipt thereof by the said defendants was made, had, an received in mistake of fact as aforesaid.”
The bill further stated that Russell Sage, one of the defendants, who received a large portion of the money pai into court, was also a large holder of bonds under the mortgages, and had advised and encouraged. the sa e
Argument in favor of the recovery.
Barnes, and participated in the organization of the complainants’ company; and alleged further that the board of directors of the corporation complainant became totally changed, and was, at the time of such payment, wholly composed of persons who had not participated personally in the foreclosure of the Barnes mortgage; and that a large majority of the stockholders and directors at the time of the said payment were persons who had no interest at the time of the foreclosure, and no participation in the proceedings.
The defendants demurred to this bill, and on the hearing of the same the demurrer was sustained, and the bill dismissed. From the decree dismissing the complainants’ bill, this appeal was taken.
Messrs. C. B. Smith and M. H. Carpenter, for the appellant:
Whether money paid under a mistake of law can or cannot be recovered back, it is certain that money paid under a mistake otfact, may be so recovered, and by suit in equity.* Mistake is one of the original heads of chancery jurisdiction ; it is one of the great trinity of subjects from which all equity jurisdiction flows. No chancellor would be anything without fraud, accident, and mistake.
This money was paid under a mistake of fact. In almost every instance of the payment of money the ultimate determination rests upon some legal conclusion of the parties’ right to, or interest in the subject-matter to be affected by such payment. The conclusion must rest upon facts to which it is attempted to apply the legal principle. And the rule is that if any one of a supposed complicated state of facts is unfounded, and that supposed fact induced, or tended to induce, the payment of the money, the party paying is entitled to relief. A man’s title to property is always a question of law, after facts are ascertained. But if a man acts upon the belief that he is the owner of property and that belief is based upon a supposed state of facts, which if we founded, would in law make him the owner, and such
*
Wilkins V. Woodfin, 5 Munford, 183.
Argument in favor of the recovery.
supposed, facts are misapprehended, the erroneous conclusion of ownership is a mistake of fact, not of law.
In this case the Minnesota company paid this money into court upon the supposition that it was the owner of the equity of redemption; that supposition being a legal conclusion based upon certain supposed facts, one being that the Barnes mortgage was a valid incumbrance. But unfortunately for the company the supposed state of facts did not exist. The mistake, therefore, under which the company acted in paying the money was a mistake in regard to the existence of certain facts; or in other words the company paid the money under a mistake of fact.
This view of the subject is established by the single consideration that this court, which cannot make any mistake of law, expressly declared in its opinion in Bronson v. La Crosse Railroad Company* that the foreclosure of the Barnes mortgage had vested the equity of redemption in the Minnesota company. This tribunal knew all law when it made this decision just as well as it did when in the subsequent case of James v. Railroad Company,f it decided that the Minnesota company had no interest whatever in the premises.
The different conclusions reached by that court, first, that the company did own the property, and second, that it did not, were both sound in law as applied to the cases made by the respective suits.
The difference between the two, in other words, is a difference of fact, not of law. In the first suit, it appeared to the court that the case before mentioned did exist, and theiefore the law said: “The Minnesota company is the ownei of the equity of redemption.” In the second case, the case was shown not to exist, and the law said, “The Minnesota company is not the owner of the equity of redemption, was the mistake in regard to the facts that induced the com to say, and induced the company to believe, that the company was such owner. And the mistake of the company v,as t e same as that made by the court; and as the couitcanno make a mistake of law, it follows that the company a
* 2 Wallace, 304. t 6 Id> 752,
The true distinction between a mistake of law and a mistake of fact is well stated by the court in Hurd v. Hall* and there can be no doubt that the money in this instance was paid under a mistake of fact.
An action for money had and received, is maintainable wherever the money of one man has, without consideration, gone into the pockets of another, f
Hr. J. W. Cary, contra, contended that on the face of the bill no case was made, and that judgment was rightly given on the demurrer for the defendants.
Mr. Justice BRADLEY, having stated the case, delivered the opinion of the court.
The bare statement of the claim, even presenting it in the language of the bill itself, seems to us sufficient to condemn it Who are the complainants? Are they not the very bondholders, self-incorporated into a body politic, who, through their trustee and agent, effected the sale which was declared fraudulent and void, as against creditors, and made the purchase which has been set aside for that cause ? Was it ever known that a fraudulent purchaser of property, when epiived of its possession, could recover for his repairs or improvements, or for incumbrances lifted by him whilst in possession ? If such a case can be found in the books, we iave not been referred to it. Whatever a man does to benefit an estate, under such circumstances, he does in his own wrong. He cannot get relief by coming into a court of eqmty. By the civil law, the possessor, even in bad faith, niay have the value of his improvements, if the real owner oose to take them. The latter has an option to take them or o require their removal. But this rule has never obtained e common law, nor in the system of English equity.
ue of the maxims of the latter system is, « He that hath * 12 Wisconsin, 124. & Welsh ^^inson, 4 Maule & Selwyn, 478; Kelly v. Solari, 9 Meeson BarnAwon a A Chatfleld v- Paxton, note, 2 East, 471; Milnes v. Duncan, 6 « Cresswell, 671; Townsend v. Crowdy, 8 C. B. (New S.) 477. p. 524committed iniquity shall not have equity.” And various illustrations of it are furnished by the books.*
But the complainants are wrong in asserting that the property was not theirs. It was theirs. Their purchase was declared void only as against the creditors of the La Crosse and Milwaukee Railroad Company. In other words, it was only voidable, not absolutely void. By satisfying these creditors they could have kept the property, and their title would have been good, as against all the world. The property was theirs; but, by reason of the fraudulent sale, was subject to the incumbrance of the debts of the La Crosse company. This was the legal effect of the decree declaring their title void. Therefore, they were, in fact, paying off an incumbrance on their own property when they paid into court the money which they are now seeking to recover back.
They are wrong also in asserting that, they made the payment under a mistake of fact. If it was made under any mistake at all, it was clearly a mistake of law. They mistook the legal effect of transactions of which they were chargeable with notice. They were the persons for whose benefit the purchase was made, which was declared to be fraudulent. They were the principal defendants in the creditors’ bill, upon which this decree was rendered. All the evidence in that suit had been taken when they made the payment in question. The cause was pending, on appeal, in this court. There was not a fact, therefore, of which they were ignorant. They had full and actual notice of all the transactions, and all the evidence on which the decree was ultimately founded.
All this appears from the statements of the bill in t is case. We do not see how such a bill can possibly be sus tained. The pleader who drew it evidently felt the force o these objections, and interjected some special circumstances for the purpose of showing that the case is distinguis a e from the class of cases referred to. It is stated that Busse Sage, one of the defendants, who received a large poitio p. 525of the money paid into court, was also a large holder of bonds under the Barnes mortgages, and advised and encouraged the sale by Barnes, and participated in the organization of the complainants’ company. All these facts may betrue, and on the demurrer to the bill must be taken as true; but they do not show, nor is it alleged, that Sage was personally a participant in the fraud which was committed in the sale under the Barnes mortgage. And if it were so alleged, can one fraud-doer obtain relief in equity against his particeps crimirds ?
*
See Francis’s Maxims, Maxim VII.
Again, it is alleged that the board of directors of the complainant was totally changed, and was, at the time of such payment, wholly composed of persons who had not participated personally7 in the foreclosure of the Barnes mortgage; and that a large majority’ of the stockholders and directors at the time of the said payment were persons who had no interest at the time of the foreclosure, and no participation in the proceedings. This cannot alter the case. A corporation aggregate retains its identity through all the changes that may take place in its individual membership. This corporation, by its own statement, was adjudged to be the child ot a fraudulent and corrupt transaction, and entered upon its career as purchaser of the property, with all the nsks of its illicit origin and fraudulent purchase upon its head. Change of membership cannot change its rights. If it can, when is the change effected ? How many, or what proportion, of the members must be changed ?
It is needless to pursue the subject further. If the present individual stockholders of the complainants have been Pronged that wrong cannot be redressed in this proceeding wit out violating the clearest principles of equity jurisprudence. The bondholders who received the money that was Paid into court were entitled to that money. It was due t em. Had not the complainants interposed they could ave sold the property and realized their claim from the proceeds. How can they be called to account ? The present « the r°ad haVe Purcha8ed (it is to be presumed) t e pioceedings had in favor of the judgment p. 526creditors. How can their title be disturbed by the complainants? What equity would there be in subjecting the property in their hands to an incumbrance from which it was free when their purchase was made?
The decree must be
Affirmed.
Mr. Justice FIELD, dissenting.
I differ from Brother Bradley in the construction of the bill in this case, and, therefore, differ from him in the conclusions to be drawn from the facts which it discloses. To my mind it presents a clear case,- where money, amounting to over four hundred and sixty thousand dollars, was paid under a mistake of fact, into which the complainant was led by the decision of this court. And it would be, in my judgment, only administering simple justice to the company to compel the defendants to make restitution, or to give to the company the benefit of the decree in the foreclosure suit, upon which the money was paid. I, therefore, dissent from the judgment rendered.
The CHIEF JUSTICE and Mr. Justice MILLER also dissented.