McGoon v. Scales
76 U.S. (9 Wall.) 23, 19 L. Ed. 545 (1869). (Note)
[76 U.S. 23, 23]
RICHARD H. McGOON, Plff, in Err.,
SAMUEL H. SCALES.
(See S. C. 9 Wall. 23-32.)
U. S. land not taxable Wisconsin Statute of Uses passive trusts judgment not collaterally questioned when appearance admits jurisdiction judicial sale not invalidated by reversal of judgment state decision.
Land owned by the United States is not subject to state taxation. In Wisconsin, by the Statute of Uses and Trusts, passive trusts are abolished.
The deed or instrument by which a passive trust is created, or attempted to be, takes effect as a conveyance directly to the cestui que trust, in whom the legal title vests, and the trustee acquires no estate or interest whatever.
Land held under a passive trust is liable to be subjected to judicial sale for the debts of the cestui que trust.
If a court had jurisdiction to render the judgment which it did, no error in its proceedings will render the judgment void nor can such errors be considered, when the judgment is brought collaterally into question.
Where parties appeared and contested a suit, they cannot deny a jurisdiction to which they voluntarily submitted.
A State can pass laws to subject the lands of a corporation, whose charter has expired, to the debts which it owes to the citizens.
Where a sale was made under a judgment while it was in force, to one who was no party to the suit, the reversal of the judgment cannot affect the purchaser.
State decision as to amendment of an execution issued under its laws, controls this court.
Argued Nov. 30, 1869. Decided Jan. 24, 1870.
IN ERROR to the Circuit Court of the United States for the District of Wisconsin.
An action of ejectment was brought in the court below, by the plaintiff in error, which resulted in judgment for the defendant. The plaintiff thereupon sued out this writ of error.
The case is further stated by the court.
Messrs. William P. Lynde, M. M. Cothren, Henry S. Magoon and J. M. Carlisle, for plaintiff in error:
By virtue of Hezekiah H. Gear's trust deed to James Campbell, dated Nov. 2, 1842, grantee, Campbell, became clothed with the whole estate in law and equity, subject only to the execution of the trust.
The sales under Corwith's execution were void, being without seal; and the purchaser had a perfect remedy against Corwith, the execution creditor, for the purchase money and interest. "All writs, … shall be sealed with the seal of the court from which the same may issue."
Wis. R. S. 1849, P. 493; see Ins. Co. v. Hallock, 6 Wall. 556, 18 L. ed. 948.
The sheriff's deed to defendant, Scales, being executed more than two years after issue joined, made it incumbent on defendant to give notice before trial by proper plea or answer, that he would read the same in evidence.
The defendant and his alleged assignor, Earnest, being purchasers with notice, also being indemnified, by statute and by Corwith, from all loss, are entitled to no protection and could acquire no title, upon the judgment subsequently reversed.
The sheriff's deed to defendant, Scales, based upon a judgment that bad been reversed twelve years before, was absolutely void. The Corwith judgment was rendered Oct. 20, 1854, and reversed Nov. 17, 1855. The sheriff's deed to Scales was not executed until Mar. 17, 1868.
All judgments in Wisconsin cease to be a lien in ten years from docketing.
There was no legal evidence of any assignment by Earnest to Scales, of the certificate of sheriff's sale. There was no such corporation as the "State Bank of Illinois," and the court never acquired jurisdiction of the Corporation named the "President, Directors and Company of the State Bank of Illinois," said Corporation having expired before Corwith's suit was begun. The two Acts of the Wisconsin Legislature, July 12, 1853, and March 23, 1864, in so far as they seek by legislation to devest granted estates, and impair the obligation of contracts, are unconstitutional.
Martin v. Water Power Co. 27 how. Pr. 161; Green v. Biddle, 8 Wheat. 1; Bronson v. Kinzie, 1 How. 311.
Mr. Matt H. Carpenter, for defendant in error:
Hezekiah H. Gear had no title to the land in question, when he made his quitclaim deed therefor to the plaintiff in error, because the moment he acquired the fee from the United States by the patent dated Sep. 1, 1852, that title either vested in James Campbell, under the covenants in the trust deed made by Gear, Nov. 19, 1842, or in the State Bank of Illinois, in virtue of the Statutes of Wisconsin upon the subject of uses and trusts above recited; or that fee vested in the bank under Gear's covenants in his prior mortgage to the Bank.
If the fee vested in Campbell under the covenants in Gear's trust deed to him, then he took and held that fee for the uses and upon the trusts and conditions contained in the deed, by which he had any right or title as trustee. The great and important one was, that he should sell and convey the lands therein described, for such sums as the bank should direct. Without such direction, he had no power whatever to sell or convey.
The execution sale made in July, 1855, and the sheriff's deed thereon, passed all the interest and title of the Bank to the land in question to the defendant in error; whether legal or equitable, and whether acquired by estoppel or rebutter, under Gear's covenants in his mortgage to the bank, or in his deed of trust to Campbell, is immaterial. And this as well by the Statutes of Wisconsin.
Act approved July 12, 1853, Seas. L. p. 102;
NOTE. Title and transfer by deed or devise governed by lex loci rel sitæ see note to Clark v. Graham, 6 Wheat. 577; note to Elmendorf v. Taylor, 10 Wheat. 152; note to Darby v. Mayer,, 10 Wheat. 465, and note to Jackson v. Chew, 12 Wheat. 153
Sale of land for taxes strict compliance with statute necessary see note to Williams v. Peyton, 4 Wheat. 77.
[19 L. Ed. 545]
and the same Act perfected in the Sess. Laws of 1854, pp. 48, 51, as by Rev Stat of 1859 p. 542, sec. 65; Rev. Stat 1858, p. 788, sec. 37.
If the title was merely equitable which the defendant, Seales, acquired under the execution sale with the legal title in James Campbell, by virtue of the deed of trust to him from Gear, then the sole power, once vested in the bank, was vested in the defendant Seales, to direct the sum for which the lands in question could or should be sold or conveyed by Campbell to McGoon, the plaintiff, or to anyone else, as there is no pretense that time defendant, Scales, even gave any direction to Campbell to sell or convey the land. This exhausts all the evidence of title in the plaintiff in error, except the quitclaim from LaFayette County, based on the tax deed. No title passed by that deed, as the land in 1817 belonged to the United States and was not subject to taxation. After this year and in 1851, the land was purchased by Gear, and he got his patent therefor in 1852.
The land lying in the State of Wisconsin, could only be lost or acquired as provided by the laws of that State. Those laws provided that the land in question might be attached and sold on execution, and upon the sale being completed by the execution of a deed by the officer making the sale, or by his successor in office, the statute declares that "The grantee in such deed shall be deemed vested with the legal estate from the time of the sale on such execution, for the purpose of maintaining an action for any injury to such real estate."
This sale to Earnest, the assignor of the sheriff's certificate of sale, was sustained by the Supreme Court of Wisconsin.
Corwith v. State Bk. of Ill. 18 Wis. 565; Vide, also, S. C. 15 Wis. 289. and S. C. 8 Wis. 376.
Were it conceded that the sheriff's deed to the defendant, Seales, did not relate back to the sale for title, yet as it was made before trial, the deed was evidence of the title in the defendant, and it was a title which he, to protect his possession, might have bought, with certificate of sale included, after this action was commenced.
Tucker v. Keeler, 4 Vt. 163; Jackson v. Given, 5 Johns, 140; Jackson v. Smith. 13 Johns. 413.
Mr. Justice Miller delivered time opinion of the court: This was an action of ejectment brought by the plaintiff in error, and both he and the defendant trace their title from Gear, who is grantee of the United States. The record contains a bill of exceptions of many pages, setting forth with minuteness the evidence on which both plaintiff and defendant relied, and the ruling of the court on thirty prayers by the plaintiff for instruction to the jury, to every one of which there is an exception, and also to divers rulings concerning the admission of evidence.
It is unnecessary and unprofitable to notice all this, and the shortest and most satisfactory mode of showing the reasons for our judgment is to examine the title of defendant, which the Jury were told was the true one.
On the 2d of November, 1842, Gear and wife conveyed the land in question to James Campbell as trustee of the State Bank of Illinois, the land being in Wisconsin Territory, and through the patent from the United States issued to Gear ten years later, it is conceded [76 U.S. 23, 27] by both parties that its effect was to make good the title conveyed to him by Campbell. In 1853, Henry Corwith commenced a suit in the State Court of Wisconsin against the State Bank of Illinois, and attached these lands. In this action he recovered a judgment under which the lands were sold to James H. Earnest, who transferred for value his certificate of purchase to the defendant. After many efforts in the state courts to set aside this sale, it was finally affirmed in the Courts of Wisconsin, including the Supreme Court, and defendant received the sheriff's deed on that sale, on the 17th March, 1868.
If the attachment proceedings conveyed a good title, it must prevail: and we proceed to an examination of some of the objections to it.
1. It is claimed that the land was sold for State taxes in April, 1849, and that the title under that sale became vested in plaintiff.
The answer to this is, that the land was then owned by the United States and was not subject to state taxation, the sale to Gear having been made in 1851, and the Patent issued in 1852.
2. It is claimed that at the time the attachment in favor of Corwith was levied on these lands. in his suit against the State Bank of Illinois, they were not subject to attachment and sale for the debts of that institution.
In establishing this proposition it is first asserted that the legal title never vested in the bank.
The deed from Gear to Campbell, in our judgment, did vest the legal title in the Bank after the Act of 1850. It is a principle too firmly established to admit a dispute at this day, that to the law of the State in which land is situated must we look for the rules which govern its descent, alienation and transfer, and for the effect and construction of conveyances.
A statute of Wisconsin, passed in 1850, abolishes uses and trusts, except as preserved in that Act, and one of its provisions is that, "every person who, by virtue of any grant, assignment or devise, now is, or hereafter shall be, entitled to the actual possession of lands, and the receipt of the rents and profits thereof in law or equity, shall be deemed to have the legal estate therein." Other provisions of the same statute define the only cases in which valid express trusts may be made.
The effect of this statute was to abolish all passive trusts in which the trustee held a mere naked or dry trust for the use of the cestui que trust, and to vest the title in the beneficiary. And the only question [76 U.S. 23, 28] to be decided in this connection is whether the deed of Gear to Campbell is of this character.
That deed, after reciting that Gear is indebted to the State Bank of Illinois in the sum of $50,000, to satisfy which the Bank had agreed to take the real estate mentioned in the deed proceeds to convey the lands to Campbell, who is to stand seised of said premises upon the trust and confidence that they shall be sold by him for such a sum as shall be directed by said Bank, and the proceeds are to be applied, after deducting costs and expenses, to the sole use and benefit of said Bank, and if not sold, then
[19 L. Ed. 546]
said Campbell is to stand seised to the use of said Bank and its assigns.
The Bank buys the land of Gear for $50,000, the amount of its debt against Gear, which is thereby satisfied. Campbell does not sign the deed or accept the trust otherwise than by silence. If the land is not sold, he holds the naked legal title to the use of the Bank and its assigns. The only possible event in which he may be called into action is on a sale of the land. It is equally clear, that in this sale the only part to be performed by him was to make conveyance. He is to sell for such sum or sums as shall be directed by the president, directors, etc., of the Bank, and they are to receive the proceeds of sale. In other words, they find a purchaser at such price as they may be willing to take, they receive the purchase money, and Mr. Campbell makes a conveyance. It is difficult to conceive of a more passive trust, or one in which the trustee may be called upon to do less than in this.
A case decided recently by the Supreme Court of Wisconsin is produced to us in manuscript, and much relied on as holding views adverse to those above stated. But we think it supports them. That court says, that "By the Statute of Uses and Trusts passive trusts are abolished. By passive trusts we mean those which are express, or created by the words of some deed or other instrument of writing, and not those arising or resulting by implication of law. Every express passive trust is abolished, and the deed or instrument by which it is created, or attempted to be, takes effect as a conveyance directly to the cestui que trust in whom the legal title vests, and the trustee acquires no estate or interest whatever. A conveyance of land from A to B to the use of or in trust for C, the trustee having no active duties to perform, constitutes a passive trust." Goodrich v. City of Milwaukee.
We think this is a sound construction of the statute, and that the deed to Campbell comes within it. In the case before the Wisconsin court the trustee was directed to bargain, sell and convey, to lease, demise and mortgage the lands as he might be directed by the cestui que trust, and to [76 U.S. 23, 29] pay over to her all the moneys arising from said property, whether from rents. sale or mortgage, and take her written receipt, therefor, and to reinvest the same from time to time as she should in writing direct.
There can he no doubt that this trust was an active one and as little that the one before us was not.
But if this were otherwise. a statute of Wisconsin in force when the land was sold under Corwith's judgment declares, that "lands, tenements, and real estate holden by any one in trust for another, shall he liable to debts, judgments, decrees, executions and attachments against the person to whose use they are holden." So that if the trust in Campbell was a valid one, these lands were still liable to be sold on execution for the debt of the Bank. Nor can it be doubted that such a sale, when lawful in all other respects, and completed by the conveyance of the sheriff, vested in the grantee the legal title to the land.
But it is said, secondly, that conceding the title to have been vested in the Bank, that corporation had made a conveyance of the lands, before Corwith's proceedings were instituted, to Uri Manly, John Calhoun, and Nicholas H. Ridgely, for the benefit of the creditors of the Bank and for the payment of its debts.
There is no question that such a deed was made, nor is it denied that a valid deed of assignment, for the benefit of creditors, generally places the property so assigned beyond the reach of the ordinary process of attachment or execution directed against the property of the assignor.
But the deed in question was a peculiar deed, and made under very peculiar circumstances. For many years before it was made, the Bank had been embarrassed, and several statutes were passed by the Legislature of Illinois for the purpose of enabling and compelling it to close its business and pay its liabilities. The last of these, approved March 1, 1847, required the officers of the Bank, if they should not have closed up its affairs prior to the first day of November, 1818, to turn over to three persons to be named by the Governor all the property, rights and credits of the Bank, when the trustees were to proceed to wind up its affairs. The Governor, under this Act, named Manly, Calhoun and Ridgely as the persons to take charge of the Bank, and on the day before the power of the Bank to act ceased by law, this conveyance we have mentioned was made by order of the Board of Directors. In this deed of conveyance they recited that it was made in pursuance of the Act of March 1, 1847, for the purpose of carrying into effect its provisions, and that it was made to those persons because they had been so appointed by the Governor under the Act.
Under the circumstances it cannot be doubted that the effect of this conveyance is to be measured by the terms of the Act, and that if any of its provisions are in conflict with that Act they must to that extent give way. Now, the very last section of that Act, after the previous sections. and, indeed, previous statutes had fully defined the duties and powers of these trustees, declares expressly that "The real estate of said Bank shall be liable to taxation and sale on execution in the same manner as the property of individuals." So far [76 U.S. 23, 30] then, as this conveyance by the Bank to the trustees affected the liability of these lands to judicial sale for the debts of the Bank. it left them in precisely the same condition they were before, and this whether the deed to Campbell is to be construed as a passive or an active trust, and the title of the Bank under it a legal or an equitable one.
It must, therefore. be taken as established that the land in question was liable to be subjected to judicial sale for the debts of the Bank, and the only remaining question concerns the validity of the proceeding under which this was attempted.
Most of the objections urged under this head relate to the regularity of those proceedings, and many errors are pointed out which are supposed to affect the title acquired under them. But the doctrine of this court, and of all the courts of this country, is firmly established, that if the court in which the proceedings took p1ace had jurisdiction to render the judgment which it did, no error in its proceedings which did not affect the jurisdiction will render the
[19 L. Ed. 547]
proceeding void; nor can such errors be considered when the judgment is brought collaterally into question. With this cardinal principle in mind many of the alleged errors in the proceeding under the attachment must be disregarded.
There can be no question of the right of the Legislature of Wisconsin to pass such laws as will subject property within her territory, held or owned by nonresidents, to the payment of the debts of such owners; and the manner of doing this is also entirely within the legislative control, provided it does not violate some of the provisions of the Federal or State constitutions.
The court in which these proceedings were had was a court of general jurisdiction, and had undoubted authority to attach the property of the Bank for the payment of its debts, and every presumption must be made in favor of the validity of its proceeding not inconsistent with the record.
We will, however, notice a few of the alleged errors which are supposed to touch the point of the court's jurisdiction.
1. It is said that the Bank was dead in law, and that as [76 U.S. 23, 31] the suit was instituted against the Bank by name, no jurisdiction was acquired.
It is by no means certain that the Bank had no capacity to sustain a suit, notwithstanding the expiration of its charter and the transfer of its property to trustees. But, however this may be, those very trustees, in whom plaintiff claims that the title was vested, and from whom he derives title by deed, appeared to this suit and moved to dissolve the attachment, and the Bank appeared by attorney and defended the suit. Both must then be bound by these proceedings, and neither can deny a jurisdiction to which they voluntarily submitted.
2. The Legislature of Wisconsin had made provision by special statute for a case in which a bank, whose functions had ceased, but which yet owned property and owed debts in Wisconsin, might be sued and the property subjected to the payment of those debts. The constitutionality of this Act is denied; but no provision of the Constitution of Wisconsin or of the United States is pointed out which is opposed to such legislation. It would, on the contrary, be a strange defect in the legislative power if, under such circumstances, a State could not frame laws which would enable her citizens to subject the lands of corporation whose charter had expired to the debts which it owed to her citizens.
3. It is said that the judgment under which this sale was made was reversed, and this is true.
But the sale was made while the judgment was in force to one who was no party to the suit, and the reversal of the judgment could not, as is well settled, affect the purchaser.
4. It is said the sale was void because made under an execution which had no seal.
The court from which the execution issued permitted it to be amended after sale by affixing a seal. Whether the sale would have been void without the seal, and whether the amendment was rightfully made were questions of Wisconsin law, and this and all other such questions were decided in favor of the sale by the Wisconsin court on motion to set aside the sale. That decision must control us as to all that concerns the regularity of these proceedings. [76 U.S. 23, 32] As we have examined all that can he said to affect the jurisdiction of the court and the authority of the officer to make the sale, we need inquire no further.
The judgment of the Circuit Court is affirmed.
[19 L. Ed. 548]
(Note) Title and transfer by deed or devise governed by lex loci rel sitæ see note to Clark v. Graham, 6 Wheat. 577; note to Elmendorf v.Taylor, 10 Wheat. 152; note to Darby v. Mayer, 10 Wheat. 465, and note to Jackson v. Chew, 12 Wheat. 153.
Sale of land for taxes strict compliance with statute necessary see note to Williams v. Peyton, 4 Wheat. 77.