Acord v. Western Pocahontas Corp., 156 F. 989

Acord v. Western Pocahontas Corp.

156 F. 989 | U.S. Circuit Court for the District of West Virginia | 1907

DAYTON, District Judge

("sitting specially, after stating the facts as above). All possible questions, technical or otherwise, 1 think, that could arise in this case, have been argued at great length and with ability, both orally and in briefs filed by counsel. I am not inclined to regard it necessary to enter into an extended consideration of the technical and formal requirements of the demurrer involved in the statement of its nine grounds and the nine written motions to exclude. The law is well settled that a bill of review is maintainable after the term of entry of final decree generally for two reasons: First, for error therein apparent upon its face; and, second, on account of newly discovered evidence, material in character, that could not earlier have been discovered with clue diligence. Bank of U. S. v. Ritchie, 8 Pet. 128, 8 L. Ed. 890; Clark v. Killian, 103 U. S. 766, 26 L. Ed. 607; Osborne v. San Diego, etc., Co., 178 U. S. 22, 20 Sup. Ct. 860, 44 L. Ed. 961; Hill v. Phelps. 41 C. C. A. 569, 101 Fed. 650; Beard v. Burts, 95 U. S. 434, 24 L. Ed. 485.

Where error of law is the ground assigned, this must be shown from the pleadings, proceedings, and decree, without reference to the evidence. No other question is open. Putnam v. Day, 22 Wall. 60, 22 L. Ed. 764; Willamette Co. v. Hatch, 125 U. S. 1, 8 Sup. Ct. 811, 31 L. Ed. 629. To such bill of review for error of law a demurrer is both admissible and proper, and it only admits such facts as are properly pleaded. As questions of fact arc not open for re-examination on a bill of review for errors in law, the truth of any fact averred in that kind of a bill of review, inconsistent with the decree, is not admitted by a demurrer, because no error can be assigned on such a fact, and it is, therefore, not properly pleaded. Shelton v. Van Kleeck, 106 U. S. 532, 1 Sup. Ct. 491, 27 L. Ed. 269.

When such bill of review is based upon newly discovered evidence, it can only be filed by leave of the court in its sound discretion, cautiously and sparingly exercised; and, even if such evidence would change the decree, the court may refuse to reopen the decree, if productive of mischief to innocent parties. Thomas v. Harvie’s Heirs, 10 Wheat. 151, 6 L. Ed. 287; Rubber Co. v. Goodyear, 9 Wall. 805, 19 L. Ed. 566; Ricker v. Powell, 100 U. S. 104, 25 L. Ed. 527; Craig v. Smith, 100 U. S. 226, 25 L. Ed. 577. The evidence must be new, *996or else such as the party could not by diligence have known. The failure to produce it, if existent at the time of decree, must be accounted for. It must be controlling, not merely cumulative, not mere impeachment of witnesses, or only increasing doubt as to the real truth. Beard v. Burts, 95 U. S. 434, 24 L. Ed. 485; Rubber Co. v. Goodyear, 9 Wall. 805, 19 L. Ed. 566; Easley v. Kellom, 14 Wall. 279, 20 L. Ed. 890; Freeman v. Clay, 2 C. C. A. 587-593, 52 Fed. 1; Southard v. Russell, 16 How. 569, 14 L. Ed. 1052; Society of Shakers v. Watson, 23 C. C. A. 263, 77 Fed. 512.

A bill of review for errors of law can be filed without leave of the court, but on account of newly discovered evidence only by such leave. The two grounds may be joined, but in such case 'the bill can only be filed by leave. Ricker v. Powell, 100 U. S. 104, 25 L. Ed. 527; Whiting v. Bank, 13 Pet. 13, 10 L. Ed. 33. The ground of error in law, with that of impeachment for fraud, it is true, is doubted in Kimberly v. Arms (C. C.) 40 Fed. 548-559, where Judge Jackson points out that a bill of review^to impeach for fraud designs a destruction of the decree in toto, while one based on errors of law has no other scope than to correct such errors. In fact, a bill to impeach for- fraud should be considered generally as an original bill. Where the grounds are to correct errors or modify the decree, either by reason of errors on its face or on account of newly discovered evidence, no good reason, it seems to me, is apparent why the two grounds should not be joined and the bill filed by leave of the court. If the objection of multifariousness be urged, it is always to be remembered that the determination of the question of whether a bill is multifarious is one largely within the sound discretion of the court, and dependent to a very considerable degree upon the particular facts of each case. United States v. Bell Telephone Co., 128 U. S. 315, 9 Sup. Ct. 90, 32 L. Ed. 450; Walker v. Powers, 104 U. S. 245, 26 L. Ed. 729; Brown v. Trust Co., 128 U. S. 403, 9 Sup. Ct. 127, 32 L. Ed. 468; South Penn Oil Co. v. Calf Creek Co. (C. C.) 140 Fed. 507-516.

Under the ruling of Camden v. Ferrell, 50 W. Va. 119, 40 S. E. 368, it is held that a bill of review based on newly discovered evidence does not lie to a decree by default; but I agree with plaintiffs’ counsel that this distinction is not made in federal practice, as shown by ruling in Thomson v. Wooster, 114 U. S. 104, 5 Sup. Ct. 788, 29 L. Ed. 105. Finally, it may be stated as a well-settled rule that, if neither error of law nor new evidence be shown, leave to file it may be refused, or, if granted, the bill may be' dismissed, because leave to file was improvidently granted.

With these well-settled principles before us, the grounds set forth in this bill of review for reversal of the decree can be reduced to two propositions: 'First, error in law, for that it is alleged the original plaintiff, having an adequate remedy at law, had no standing in equity; second, error in fact, in that a fraud upon the jurisdiction of this court was committed, the evidence of which existed at the time, but was not discovered until after the entry of said decree.

Considering the first proposition, it is well settled that a bill of review for errors of law is in the nature of a writ of error, and must be governed practically by the same rules governing appellate courts *997in considering writs of error. Story’s Equity Pleading, § 403. It has been held that where the subject-matter of a suit belongs to the class over which a court of equity has jurisdiction, and the objection that the complainant has an adequate remedy at law is not made until the hearing in the appellate tribunal, such objection is too late. Reynes v. Dumont, 130 U. S. 354, 9 Sup. Ct. 486, 32 L. Ed. 934; Tyler v. Savage, 143 U. S. 79, 12 Sup. Ct. 340, 36 L. Ed. 82. Also, failure to make before filial hearing the objection of equitable jurisdiction because of an adequate remedy at law is a waiver thereof, and authorizes the court to retain the cause, if the case be one of such a nature that equity might give the relief asked, or any part of it, or if the question of equitable jurisdiction be even a doubtful one. Waite v. O’Neil (C. C.) 72 Fed. 348. In this last case Judge Hammond points out that only-one other case (Dederick v. Fox [C. C.] 56 Fed. 714) applied this rule, relating generally to such objection in appellate courts, to courts of original jurisdiction, yet he reasons very forcibly that the rule was imported into the appellate courts of this country from the English High Court of Chancery and other courts of original cognizance, and therefore no sound reason exists for limiting the rule to appellate courts alone. However this may be in ordinary cases, I feel sure that the strongest reason exists for the application of such rule in a case like this, where the defense is set up for the first time in a bill to review a decree based upon a bill taken for confessed, and that the question narrows itself down to one of simply determining whether the original bill on its face would have been subject to demurrer as absolutely void of equitable jurisdiction. Its allegations of fact must be taken as absolutely true, because confessed; and it becomes, therefore, in a sense immaterial whether the exhibits in the nature of evidence he considered as parts of the bill or not. It is proper to state in that connection, however, that to hold that they are not, as contended for by plaintiffs’ counsel, would be to hold counter to a practice in this court and the courts of this state maintained without question for very many years.

From these allegations of fact we must hold (a) that the Western Pocahontas Corporation is a Virginia corporation; (b) that the defendants to said original bill were all residents of West Virginia; (c) that the amount in controversy exceeded $2,000 in value; (cl) that the corporation had absolute fee-simple title to the 28,113 acres of land in controversy, and (e) was in full and complete possession of the tract and every part of it; (f) that the defendants had no right, title, color, or claim of title whatever to it or any part of it; (g) that their possession was not adverse, but solely that of tenants for the corporation under written leases legally executed; (h) that, being so in possession, they unlawfully combined, confederated, and conspired together to defraud the corporation and secure illegally its said land; (i) that in pursuance of such combination and conspiracy they as tenants, in violation of their legal duty and obligation as such, executed many deeds one to the other of various parcels of said lands, which said deeds purported to convey and vest in the grantees therein 'full legal title to the parcels conveyed by specified metes and bounds fully descriptive of such parcels, and whereby they could be identified; and *998(j) that they caused these deeds to.be placed upon the public records and said parcels of land upon the assessment books for taxation purposes in the counties where said lands were situate.

Leaving out of consideration the further allegations of the bill touching multiplicity of suits, do not these facts present a basis for equitable intervention? I think clearly so. There is no better established ground for equitable jurisdiction than an appeal to remove cloud from and quiet title to real estate. It is recognized, not alone by decisions of the federal and state courts, but by federal statute as well. It is not only so recognized, but favored, for by Act March 3, 1875, c. 137, § 8, 18 Stat. 472 [U. S. Comp. St. 1901, p. 513], express exception to the law limiting jurisdiction of federal courts to civil suits brought in the district whereof the defendant is an inhabitant is made of suits “to enforce any legal or equitable lien upon or claim to, or to remove any incumbrance or lien or cloud upon, the title to real or personal property,” which suits may be brought in the district wherein .such property is situate.

The contention that these deeds, having no antecedent source of title, were void, and therefore constituted no clouds upon the title of the corporation, is wholly untenable. I entirely agree with counsel for the corporation that any deed, devise, or other instrument, judgment, or decree, not void on its face, which purports to convey any interest in or makes any charge upon land of the true owner, the invalidity of which requires proof by extrinsic evidence, is a cloud upon the legal title of the owner in possession. And, futher, any pretended conveyance which, if left undisturbed, may ripen into a perfect title, must necessarily create a cloud upon the true title. Statutes and decisions of courts of last resort of the several states defining what may or may not constitute cloud on title, what may or may not constitute title itself or claim or color of title, and what may by possession ripen into good title, although void in initio, are parts of the substantive law of such states, affecting real estate therein, and therefore are of controlling influence in federal courts held within such states, under well-settled authority. Looking to the decisions of the West Virginia Supreme Court of Appeals to guide us, we find the foregoing definitions of what may constitute cloud on title to be fully established by such cases as Smith v. O’Keefe, 43 W. Va. 172, 27 S. E. 383; Waldron v. Harvey, 54 W. Va. 608, 46 S. E. 603, syl. 21, 102 Am. St. Rep. 959; Robinson v. Lowe, 50 W. Va. 75, 40 S. E. 454; Bennett v. Pierce, 50 W. Va. 604, 40 S. E. 395; Ambler v. Leach, 15 W. Va. 677; Garrett v. Ramsay, 26 W. Va. 345; Moore v. McNutt, 41 W. Va. 695, 24 S. E. 682. There- can be no question, therefore, that these deeds did constitute such clouds upon title as would warrant an appeal to equity to remove them.

But it is insisted that equity can only remove such clouds when the plaintiff asking such removal,is in possession, and tha't on the face of this bill the plaintiff corporation admitted that it had instituted an action of ejectment against defendants therein, which could only be brought by one out of possession and which by the averments of its declaration declared itself to be out of and said defendants in possession. The first part of this contention, that equity can intervene only *999in behalf of a plaintiff in possession, is true beyond question; but the latter part, that such intervention is barred by the institution of the action of ejectment is untenable for two reasons:

First, because the action of ejectment, being an action at law, federal practice follows that of the state, and in West Virginia that practice, regulated by express statute, does not require a person to be out of possession in order to institute it. As pointed out by Judge Brannon in Moore v. McNutt, 41 W. Va. 695, 24 S. E. 682, by the Code of 1849 the writ of right was abolished and the action of ejectment was made applicable to perform its function of trying title. It became a “statutory action of ejectment.” As such, under chapter 90, Code W. Va. 1906, regulating it, it is expressly provided that it may be brought in every case where writ of right prior to 1850 could be brought. This writ, when in existence, could be brought, regardless of possession, to try title. It further prescribes in section 7 of that chapter the requisite averments for the declaration in ejectment, to the effect that, plaintiff being possessed of the premises on a certain day, the defendant entered into such premises and unlawfully withholds from the plaintiff the possession thereof, thereby retaining the old common-law form. Under such circumstances the institution of such a statutory action with such scope, but bounded by such form, could not constitute an estoppel to the owner to claim title and possession. Again, the defendant’s possession under many circumstances may be a limited possession, and not hostile and adverse. There can be no question, I think, under the wide scope given it by this statute, that this action can be brought by the landlord to recover possession from a tenant whose lease has expired, or who has violated its conditions, although the action of unlawful detainer may practically be more expeditious and less expensive.

But, second, the right to equitable intervention is not destroyed because, as Judge Brannon says in Moore v. McNutt, supra: “The plaintiff being in possession, had the right to go into equity. Even if he could maintain ejectment, that would not debar him from chancery, because the jurisdiction in such case in chancery, having been established long before the Code of 1849, which is the first time the right to maintain ejectment by one in possession arose, the jurisdiction of chancery would not be ousted by the new act.” To the same effect is the ruling of this court in Lasher v. McCreery (Judges Goff and Jackson sitting together) 66 Fed. 834, at pages 842, 843, and in Miller v. Ahrens, 150 Fed. 644. See, also, Smythe v. Henry, 41 Fed. 705. The conclusion follows that this bill of review cannot be maintained for the alleged errors of law.

As to the supplemental matter, it is to be borne in mind that the facts are presented solely to show that this court did not have jurisdiction; that a fraud had in fact been committed upon its jurisdiction, in that the transfer of this tract of land was effected from the Western. Pocahontas Coal & Lumber Company, the West Virginia corporation, to the Western Pocahontas Corporation, the Virginia corporation, solely to enable the suit to be brought in this, instead of the state, court. It is claimed the facts presented by this supplement bring this case squarely within the principles of a class of cases of which the *1000case of Lehigh Mining & Mfg. Co. v. Kelley, 160 U. S. 327, 16 Sup. Ct. 307, 40 L. Ed. 444, may be taken as the best example. I have gone over time and again these facts as presented here, each time with an increased conviction that in very many and very material particulars they do not, coincide with those of the Lehigh Case, and it must be conceded, in the very nature of things that the facts in each case are all essential to determine whether the principles enunciated there are applicable. In the Lehigh Case the agreed facts show that the conveyance from the Virginia to the Pennsylvania corporation was made direct, that the stockholders were the same in both companies, that the organization of the Pennsylvania corporation and the conveyance to it were expressly made to secure jurisdiction in the federal court over the controversy, and that both corporations are existent. Here the conveyance was not voluntarily and directly made. On the contrary, it is conceded that the West Virginia corporation was indebted' for purchase money due and unpaid for the land more than $700,000; that a valid mortgage subsisted upon the land' to secure this indebtedness; that suit, with process regularly served, was instituted in the circuit court of Raleigh county, W. Va., to foreclose this mortgage by the trustees to whom the debt was due and payable; that the debtor, the West Virginia corporation, answered the bill, admitting the indebtedness and decree of sale was entered, and sale publicly made and regularly confirmed by this state court of competent jurisdiction.

In the second pla.ce, it is not charged that the stockholders in the Virginia corporation, which became the purchaser, are precisely the same as in the West Virginia corporation, although the officers are said to have been at the time of organization of the former identical. On the contrary, it is charged that officers of the Chesapeake & Ohio Railway Company, nonstockholders of the West Virginia company, organized, dominated, and controlled the Virginia company; that the stock issue of this latter was fixed at $250,000, and was used, pending the foreclosure suit, in the purchase of the stock and payment of the debts of the West Virginia company having the equity of redemption in said land; that the new company executed its bonds for $750,000, which were guaranteed by the Chesapeake & Ohio Railway Company, with which the purchase price at the foreclosure sale was settled. It is true it is charged that the West Virginia corporation, with its large authorized capital, could as well have floated these bonds, and the railway could as securely have guaranteed its bonds as those of the Virginia corporation. This may have been true; but there was no obligation upon the railway company to indorse the bonds of either, and, if it was willing to indorse those of the one and not those of the other, no fraud can be imputed to its action on that account.

Finally, it appears by the public records of this state, of which I must take judicial notice, that in February, 1906, substantially four months before the institution of the original suit herein, the Western Pocahontas Coal & Lumber Company, the West Virginia corporation, was wholly dissolved and ceased to have any existence whatever. See West Virginia Corporation Report of Secretary of State, March 4, 1905, to March 1, 1907, page 874 (under head of dissolutions). Un*1001der these entirely different conditions I do not think the principles laid down in the Lehigh Case can apply. It is to be remembered that in that case an able dissenting opinion was filed by Mr. Justice Shiras, in which two other members of the court joined, from which we may reasonably assume that the facts as therein presented made the question a close one. I am therefore convinced, after a long atid careful study of the facts presented by this bill of review, that they are not sufficient to establish a collusive transfer to make parties, such as is contemplated by the inhibition of the acts of Congress of 1875, 1887, and 1888, and that I therefore originally erred in granting leave to the plaintiffs herein to file it.

But, in addition to this, I am convinced that to raise this question of jurisdiction for the first time by bill of review comes entirely too late. I carefully considered this question in Briggs v. Traders’ Co. (C. C.) 115 Fed. 354, and there pointed out the fact that prior to the act of 1875 the common-law rules touching the necessity of a plea in abatement to the jurisdiction prevailed in the federal courts, and a filing of a plea or answer to the merits waived the question of jurisdiction, as held in Farmington v. Pillsbury, 114 U. S. 138, 143, 5 Sup. Ct. 807, 29 L. Ed. 114; that this act of 1875 did not change the general scope of the rule enunciated in Farmington v. Pillsbury, but authorized the court as of right and duty without plea or motion, at any time during the progress and pendency of the suit, to stop all proceedings and dismiss the cause the moment a fraud on its jurisdiction was discovered, as held in Hartog v. Memory, 116 U. S. 588, 590, 6 Sup. Ct. 521, 29 L. Ed. 725, and Williams v. Nottawa, 104 U. S. 209, 211, 26 L. Ed. 719. A thorough reconsideration of the question convinces me that the provisions of this act do not either require or warrant the exercise of this power to the extent of reversing a final decree in an ended cause by reasons of extrinsic facts presented for the first time in a bill of review.

But, to go a step farther, if I had this power, I am finally convinced that the allegations of this bill as to diligence in discovering these facts fall short of the requirements of the law. It is admitted that they all existed prior to the entry of the decree and largely depended upon matters of public record. The essence of the reason assigned for their nondiscovery by these plaintiffs is their own poverty and ignorance and the default of their own counsel. No matter how much sympathy courts may have for the poor and ignorant, they must remember that they, are to administer justice without respect to persons, and do equal right to the poor and to the rich according to fixed laws and rules, ignorance of which can excuse no one, rich or poor, wise or ignorant. It is too well settled to need discussion that default, negligence, or misconduct on the part of counsel toward his client will not excuse that client of neglect to meet the law’s requirements, unless the attorney’s conduct be in fraud and collusion with his client’s adversary. No such charge is made here, and it is very apparent that when present counsel, employed after the decree complained of was entered, made his careful and searching investigation, he was able to discover these pre-existing facts.

Therefore in any and all phases of the case I must hold that the *1002demurrer to this bill of review, because of alleged errors apparent upon the face of the decree complained of, must be sustained, and as to the supplement the facts set forth therein are insufficient, and the leave to file the same was improvidently granted; and the bill in its entirety must be dismissed.