140 F. 273 | 8th Cir. | 1905
after stating the case as above, delivered the opinion of the court.
The lien for taxes paid did not rest for its support on the validity of the mortgage held by complainant. Neither was it necessarily coextensive with the lien of the mortgage, if valid; but it was an underlying lien resting upon the entire estate, and in this respect the decree is now conceded to be erroneous. Again, it is conceded by all the lien of the mortgage binds the life estate of Mary Burns. The first contested proposition naturally arising for decision in this case is the effect to be given, under the circumstances of this case, to the sale made by the guardian of the estate of his wards, and the guardian’s deed based thereon; for, if this sale be declared valid, it then follows, ■of necessity, the lien of the mortgage sought to be foreclosed attached to the (entire estate and is a valid lien thereon, inferior only to that of complainant for taxes paid, unless a consideration of this question is foreclosed and set at rest by the decree entered in the state court at the suit of the minor children.
"The contention of cross-appellant, Cooper, trustee, on this branch of the case is twofold: (1) That under the laws of the state of Nebraska the proceedings by a guardian to sell the real estate of his wards is a proceeding in rem, and the decree of a court having jurisdiction binds all parties in interest and the property, and is conclusive; (2) that appellant, Mary Burns, is barred by the statute of limitations of the state of Nebraska from interposing the defense of the invalidity oE the guardian’s proceedings and deed as a defense to this suit, for that more than five years had elapsed from the date the minors attained «their majority before such defense was sought to be interposed in this
In Michoud et al. v. Girod et al., supra, Mr. Justice Wayne, delivering the opinion of the court, said:
“We concur with the learned judge in the Circuit Court in setting aside the purchases by which Nicolas Girod and Jean Francois Girod became the possessors of their testator’s entire estate. But the morality and policy of the law, as it is administered in courts of equity, induce us to add that those; purchases were fraudulent and void, and may be declared to be so, without any further inquiry, upon the ground that they were made by the intervention! of persons who were nominal buyers of the property for the purpose of conveying it to the executors. Such a transaction carries fraud upon the face oS' it. Lord Hardwicke v. Vernon, 4 Ves. 211; 14 Ves. 504; 2 Bro. Ch. 410, note; It matters not, in such a case, whether the sales are made with or without the sanction of judicial authority, or with ministerial exactness. The rule of equity is, in every code of jurisprudence with which we are acquainted', that a: purchase by a trustee or agent of the particular property of whieh he has-the sale, or in which he represents another, whether he has an interest in if or not — ‘per interpositam personam’ — carries fraud on the face of it.”
Nor is it deemed material the minors may have obtained some benefit from the transaction. Rowe v. Griffith, 57 Neb. 488, 78 N. W. 20; Bachelor v. Korb, 58 Neb. 122, 78 N. W. 485, 76 Am. St. Rep. 70; Wilkinson and another v. Filby, 24 Wis. 441; Requa v. Holmes, 26 N. Y. 338. In cases of actual fraud, as here, no inquiry of benefits-accruing to the beneficiary of the trust will be indulged. Section 85, c. 23, of the Compiled Statutes of Nebraska, prohibits the purchase by-executors, administrators, or guardians at sales made by them in their representative capacity, as follows:
“The executor or administrator making the sale, and the guardian of any minor heir of the deceased shall not directly or indirectly purchase, or b©*278 interested in the purchase of any part of- the real estate so sold; and all sales made contrary to the provisions of this section shall be void; but this section shall not prohibit any such purchase by a guardian for the benefit of his ward.”
This statute has been construed by the Supreme Court of the state of Nebraska, and the word “void” employed therein has been held to mean, voidable at the suit of any proper party in interest. Veeder v. McKinley-Lanning Loan & Trust Co., 61 Neb. 892, 86 N. W. 982. In view of this statutory provision, as construed by the highest judicial tribunal of the state, and upon general principles of right and justice as well, we have no hesitation in declaring the proceedings- of the guardian in this case with relation to the trust estate of his wards, and his deed as guardian based on such proceedings, fraudulent in fact and voidable. Do the public records of the county afford evidence sufficient to charge one dealing with the property in question with notice of the fraudulent character of the guardian’s deed, and the consequent invalidity of subsequent conveyances and incumbrances based thereon, and was the cross-complainant, Cooper, trustee, chargeable with notice of what the public records of Platte county contain? As has been seen, the deed of Martin Burns, as guardian, to Cooney, and the deed of the latter to Martin Burns, were executed on the same day, filed for record, at the same time, and express an identical consideration. These facts are shown by the public records of the county. The construction and effect to be given the recording acts of the state of Nebraska is a question of local law, governed by the decisions of the Supreme Court of that state, and controlling here.
In Bachelor v. Korb, supra, that court, in dealing with a transaction similar in character to the one in question, said:
“An intending purchaser of this real estate, looking at the record of its title, would have seen in this transaction of a sale by the guardian to Kriz and a deed to him for $2,TOO, and three days afterwards a deed from Kriz for $2,TOO to the guardian’s wife, sufficient to have aroused the inquiries and suspicions of any prudent man, and these inquii'ies, if pursued with any diligence whatever, would have probably revealed the fact that Kriz never paid anything for this real estate; that the entire proceeding instituted and carried on by this guardian was for the purpose of depriving his wards of the title to their property and vesting it in his wife.”
The case of Veeder v. McKinley-Lanning Loan & Trust Co., supra, was a case wherein an administrator indirectly purchased at his own sale, under circumstances very similar to those in the case at bar. It is there held:
“A subsequent purchaser or mortgagee of real estate sold by an administrator is chargeable with notice of what is contained in the public records, evidencing the chain of title through which the party claims, and with all information imparted thereby; and where such records make it apparent that an administrator, in violation of law, was indirectly the purchaser of the property at such sale, and to whom the properly was immediately transferred, or where the facts are- sufficient to put an ordinarily prudent man on inquiry, such subsequent purchaser or mortgagee is not a good-faith grantee for value, and without notice of the infirmity in the title held by his grantor.”
This also appears to be the rule in other jurisdictions. Obert v. Obert, 10 N. J. Eq. 98; Smith v. Drake, 23 N. J. Eq. 303; Fisher et
Applying this rule, it must be held, any one dealing in relation to the title of the real estate in controversy, or the security afforded by that title, were chargeable with notice of what the public records of the county disclosed with reference to that title, and in this case sufficient facts were of record to impart notice of the invalidity of the title of the guardian, Martin Burns, and all subsequent conveyances or incumbrances resting thereon alone for their support.
A statute of Nebraska (section 2578, Comp. St. 1901) provides, in substance, no action can be maintained by a ward, or any one claiming under him, to recover land sold by his guardian unless the action be commenced within five years next after the termination of the guardianship; and as more than five years had elapsed after the minors attained their majority and the guardianship was terminated before the mother, Mary Burns, claiming to hold under them, sought in this foreclosure suit to interpose the fraudulent character of the guardian’s sale and the consequent invalidity of the mortgage lien resting thereon, it is contended by cross-appellant that the statute cuts off and bars this defense. It is not necessary to consider what under other circumstances would be the effect of the statute. This is a suit in equity, in which cross-appellant is asserting a purely equitable right and is seeking purely equitable relief, and the question whether or not the defense of the invalidity of the mortgage is barred, if it could ever be so considered, is not to be resolved strictly according to the inflexible rule of the statute of limitations, but according to the doctrine of laches applied in courts of equity. Stevens v. Grand Central Mining Co., 67 C. C. A. 284, 133 Fed. 28, 31; Farmers’ Loan & Trust Co. v. Denver, etc., Railroad Co., 60 C. C. A. 588, 126 Fed. 46. In the circumstances of this case neither Mary Burns nor the wards under whom she claims are fairly chargeable with laches. The title or estate conveyed by the guardian’s sale was recovered by the wards in an appropriate suit before they attained their majority and before the termination of the guardianship. That title or estate subsequently passed to Mary Burns. The Investment Company, the only record claimant at the time under the mortgage here in controversy, was a party to that suit, and the decree included a cancellation of the mortgage. If it be true that the decree is not conclusive upon cross-appellant, because his predecessor in interest, Percival Bonney, was not a party to the suit, it yet remains that cross-appellant and his predecessor have never held the title or estate wrongfully conveyed by the guardian, but at most a mortgage lien thereon, which could be enforced only by a suit in equity. Non constat that either would” ever endeavor to enforce the mortgage. Certainly one who holds the legal title to real property is not guilty of laches which will prevent him from asserting the invalidity of the mortgage thereon in defense of a suit to foreclose the same, merely because he has not instituted a suit to avoid the mortgage. It is time enough for him to present his objections to the mortgage when it is attempted to be asserted against his
It follows, from what has been said, the mortgage sought to be foreclosed, when made, operated only on the life estate of Mary Burns. It did not bind the estate of the minor children. They were free to assert its invalidity as against their interests, as is their successor in interest, Mary Burns, by way of defense to this suit, unless, as shall be subsequently seen, she is concluded on other grounds. This view of the case renders a consideration of the legal effect of the decree obtained in the state court at the suit of the minors unnecessary, and the same has been adverted to in this opinion solely for the purpose of effectively disclosing lack of acquiescence on their part in the fraud practiced upon them by their guardian and for the further purpose of' disposing of the question of laches. Since the execution and delivery of the mortgage in suit, as has been seen from the facts stated, appellant, Mary Burns, has lawfully succeeded to the title and estate of her'minor children in the land, charged in her hands, however, with the payment of the purchase money paid by Blake Maher, appellee, to her daughter, Mary E. Dill.
The sole question remaining for decision depends upon her power to bind this after-acquired estate, or to estop herself from .claiming it by her covenants found in the mortgage executed jointly by her and her husband to the Investment Company. The solution of this problem depends upon the statute law of the state enacted with reference to the power of married women to convey or incumber their real estate, as construed by the highest judicial tribunal of that state. This is thought to be the substantial and meritorious question in this controversy, and requires not alone the consideration of the terms of the statutes relating to the power of married women to contract with reference to their real property, in force at the date of the execution of the mortgage, but, as well, a review of the decisions of the Supreme Court of that state construing such enactments; it being obvious to all, such decisions, if any, rendered prior to the date of the mortgage are controlling and decisive here. As has been seen, the mortgage was jointly executed by Martin Burns and Mary Burns, his wife, for the benefit of the husband. 'At this time the legal title to the property appeared of record in the husband, the life estate only in the wife. The covenanting clause of the mortgage reads as follows:
“And the said parties of the first part do hereby covenant and agree that at the delivery hereof they are the lawful owners of the premises above described, and are seised of a good and indefeasible estate of inheritance therein, free and clear of all incumbrances, and that they will warrant and defend the same in the quiet and peaceable possession of said party of the second part, and its successors and assigns, forever, against the lawful claims of all persons whomsoever.”
There are two legislative acts of the state of Nebraska bearing upon the question here involved. The first was passed in 1866, and now forms chapter 73, Compiled Laws of 1885, and relates to real estate. The sections of this act material to a consideration of this case
Section 42 reads:
“Any real estate belonging to a married woman, may be managed, controlled, leased, devised or conveyed by her, by deed, or by will, in the same manner and with like effect as if she were single.”
Section 48 reads:
“A married woman shall not be bound by any covenant in a joint deed of herself and husband.”
Section 50 reads:
“Every conveyance of real estate shall pass all the interest of the grantor therein, unless a contrary intent can be reasonably inferred from the terms used.”
By section 46 of this act the term “deed” is defined to be any instrument in writing by which any real estate or interest therein is created, aliened, mortgaged, or assigned.
Section 51 reads:
“When a deed purports to convey a greater interest than the grantor was at the time possessed of, any after-acquired interest of such grantor to the extent of that which the deed purports to convey, shall accrue to the benefit of the grantee.”
The second act was passed in 1871 (Laws 1870-71, p. 68), now forms chapter 53, Compiled Laws of the state, and relates to married women. The first three sections of this act alone are material here.
Section 1 reads:
“The property, real and personal, which any woman in this state may own at the time of her marriage, and the rents, issues, profits, or proceeds thereof, and any real, personal or mixed property, which shall come to her by descent, devise or the gift of any person except her husband, or which she shall acquire by purchase or otherwise, shall remain her sole and separate property, notwithstanding her marriage.”
Section 2 reads:
“A married woman, while the marriage relation subsists, may bargain, sell, and convey her real and personal property, and enter into any contract with reference to the same in the same manner, to the same extent, and with like effect as a married man may in relation to his real and personal property.”
Section 3 reads:
“A woman may, while married, sue and be sued, in the same manner as if she were unmarried.”
The latter act being the latest expression of the legislative will, when in conflict with the former, of course, must control. At the common law a married woman was not sui juris, and could not, for want of power, bind herself by her contracts or covenants. In equity, her separate estate, under certain conditions, might be charged with the payment of her obligations. For the purpose of modifying or entirely abrogating this want of power to contract, the several states have passed what is commonly called the “Married Woman’s Act.” These several acts are couched in different phraseology, in many cases requiring different constructions. This difference in phraseology, in
“Thus it will be observed the Legislature has to some extent removed the common-law disability of a married woman. In 'this- state she may acquire and hold property in her own right, and may engage in business on her separate account, and her earnings derived either from such trade or business or from her labor or services she owns in her own right. The implied power of a feme covert to’contract is given by the last section quoted; but this only*283 extends to her separate trade or business and to contracts with reference to her personal services. The express authority conferred upon married women to enter into contracts is to be found in section 2 copied above. But this statute does not expressly, nor by implication, enlarge a wife’s capacity to contract generally. She can buy and sell property in her own name and upon her own account, and enter into valid contracts with reference to her separate estate the same as if she were a feme sole, or as a married man may in relation to his property. The statute does not undertake to confer' upon a married woman an unrestricted power to make contracts, but such right is limited to contracts made with reference to, and upon the faith and credit of, her separate property or estate. Upon such contract she is liable, but all her other engagements and obligations are void as at common law. To hold unqualifiedly that a married woman has the same right to enter into contracts, and to the same extent, as a man would be to disregard the qualifying clause of said section 2, which confers upon her the authority to ‘enter into any contract with reference to the same, [her property! in the same manner, to the same extent, and with like effect as a married man may in relation to his real and personal property.’ If the Legislature had intended to wholly remove the common-law disabilities of a married woman, and give her general power to make contracts of all kinds, this intention, doubtless, would have been expressed in apt and appropriate language. It would have expressly enacted that she could bind herself and her property by her general engagements whether made or entered into for the benefit, or on account of, her separate property or not, instead of empowering her to contract alone with reference to her own property, trade, and business. In construing this statute it is important to bear in mind that the Legislature was not attempting to impose disabilities upon married women, but was engaged in removing some of those already existing. She can contract only so far as her disabilities have been so removed by the Legislature. The statute requires that contracts, to be valid, must be entered into with reference to her separate property, and it is for the courts to so construe this enactment as to carry out the legislative will. It is true section 3 permits a married woman to sue and be sued, but this does not authorize the recovery of a judgment against her when no cause of action exists, nor does it attempt to declare what contracts of hers will support an action; what are valid or what are nugatory. The construction we have given the statute is in accord with numerous decisions of this court. Davis v. First Nat. Bank of Cheyenne, 5 Neb. 242, 25 Am. Rep. 484; Hale v. Christy, 8 Neb. 264; Spaun v. Mercer, 8 Neb. 357, 7 N. W. 245; State Savings Bank v. Scott, 10 Neb. 83, 4 N. W. 314; Barnum v. Young, 10 Neb. 309, 4 N. W. 1054; Gillespie v. Smith, 20 Neb. 455, 30 N. W. 526; Eckman v. Scott, 34 Neb. 817, 52 N. W. 822; Godfrey v. Megahan, 38 Neb. 748, 57 N. W. 284; Buffalo County Nat. Bank v. Sharpe, 40 Neb. 123, 58 N. W. 734; McKinney v. Hopwood, 46 Neb. 871, 65 N. W. 1055.”
Thus the power of a married woman to bind herself or her property by her contracts in Nebraska may now be said to be clearly settled by the Supreme Court of that state, and the question at issue, the power of a married woman to bind her after-acquired real estate by Covenants in a joint mortgage with her husband, made on his property for his benefit, is denied. Had these decisions been promulgated prior to the date of the mortgage in suit, and thus entered into and become a part of the great mass of the law of that state, they would, at least in principle, be controlling here. However,.as they were announced subsequently to the date of the mortgage, they are entitled only to that persuasive weight accorded by this court to the decisions of the highest judicial tribunal of a state when construing the statutory law of such state. It becomes necessary, therefore, to examine the prior decisions of the state, cited and relied upon in support of these decisions, to determine what the law was on the question under investigation at the time the mortgage in suit was made. Davis
“But the rule must be observed, that all such contracts of a feme covert must be with the reference to, and upon the faith and credit of, her separate estate.”
This ruling was adverted to in Hale v. Christy, supra, as follows:
“It is urged by counsel for Mrs. Christy that owing to her coverture she incurred no personal liability by signing said note. This, no doubt, is true, and the finding of the court below that she was liable cannot be upheld. Even under the very liberal provisions of our more recent legislation respecting the rights of married women, this court has already held that to bind her the contract must be made with reference to and upon the faith and credit of her separate estate.”
This is also the effect of the decision in Stover v. Tompkins, 34 Neb. 465, 51 N. W. 1040.
In State Savings Bank v. Scott, supra, it was held:
“A wife is bound by her contracts, when made with reference to or upon the faith and credit of her separate estate, but she is not bound as surety upon a promissory note, unless It appears that she intended thereby to bind her separate estate.”
A like ruling was made in Barnum v. Young.
Godfrey v. Megahan, supra, was an action against a husband and wife upon a promissory note executed by them for a pre-existing debt of the husband; the 'wife signing the same as surety. The syllabus in that case reads:
“(1) The disability of a married woman to make a valid contract remains-the same as at common law, except in so far as such disability has been removed by our statutes.
“(2) The statute has removed the common-law disability of a married woman to make contracts only in case where the contract made has reference to her separate property, trade, or business, or was made upon the faith and credit thereof, and with intent on her part to thereby bind her separate property.
“(3) Whether a contract of a married woman was made with reference toiler separate property, trade, or business, or upon the faith and credit thereof, and with intent on her part to thereby bind her separate property, is always a question of fact.”
In Buffalo County Nat. Bank v. Sharpe, supra, it was held where a married woman executes a mortgage on her real estate to secure the debt of her husband, her separate estate to the extent of the property mortgaged is bound for the payment of such debt. In Briggs v. First National Bank of Beatrice, 41 Neb. 17, 59 N. W. 351, a married woman executed a note as surety. The note contained a clause pledging her separate estate for its payment. She was held liable because by the express terms of the note she bound her separate estate. From an examination of the decisions of the Supreme Court of Nebraska, we have failed to find any case in which it has been held the common-law disability of a married woman to bind herself by her contract has been abrogated by statute. On the contrary, the rule that her contracts, to-
We are of the opinion the decisions of that court in the late cases of Grand Island Banking Company v. Wright, supra, and Kocher v. Cornell, supra, are the logical and necessary result of the prior decisions of that state. The case of Real v. Hollister, 17 Neb. 661, 24 N. W. 333, cited to the contrary, is not thought to be out of harmony with the prevailing doctrine.' In that case, while the. wife, Ellen Real, claimed to own and was in possession of the real estate, she jointly, with her husband conveyed it by warranty deed with full covenants. Hollister, as a subsequent grantee holding under this deed, was evicted because Ellen Real did not have title to the property when she conveyed. The action was brought to recover against her and her husband for breach of covenant. She defended on the ground her covenants were contained in a joint deed with her husband. Therefore, she was not liable under section 48 of chapter 73, Comp. St. 1885, being section 53 of the law of 1866. The court held :
“Under the provisions of the act of the Legislature of 1871, commonly known as ‘the Married Woman’s Act,’ a married woman is liable upon her covenants of warranty in the sale of real estate which is her separate property, whether she be joined by her husband in such conveyance or not; section 48 of chapter 73, Comp. St. 1885, having been passed in 1866, being by said act abrogated to that extent.”
In that case the liability of Mrs. Real for the breach of her covenants was expressly placed on the ground that the conveyance containing the covenants was made in relation to her separate property. Such ruling was not a departure from the former decisions of the court.
From the facts stated above, it is seen the legal title to the property described in the mortgage was in the husband, Martin Burns, at the date of the execution of the mortgage. A-life estate alone was in his wife, Mary Burns. The mortgage was made for the use and benefit of the husband. At this time the beneficial interest of the remainder was in the minor children because of the fraudulent character of their guardian’s deed. The mother, Mary Burns, at the time, had no interest in this remainder. She did not contract with reference to it, for she owned no interest in it. She was given no credit •on the strength of it being her separate property, for the public records showed she did not own it and had no interest in it. By the •execution of the note and mortgage she evidenced no intention of binding any separate property then belonging to her, or of which she might thereafter become possessed, save her life estate alone. By the terms of the mortgage she did bind her then interest in the property, her life estate, to the payment of the debt of her husband. This she might do. Further than this, the common-law rule, as modified by statute in that state, as such statutes were construed by the Supreme •Court at the date of the transaction, did not permit her to go. This ■construction finds support in the language employed in the acts. As has been seen, by the common law, Mary Burns was without power 4o bind herself or her life estate by the covenants contained in the
Nor is she estopped from now claiming the property free from the lien of the mortgage. The law is well settled that a covenant in a deed or mortgage made without power, and therefore not binding as a contract, does not work an estoppel to claim an after-acquired interest in the property. In Bank of America v. Banks, 101 U. S. 240, 25 L. Ed. 850, Mr. Justice Clifford, delivering the opinion of the court, said:
“Much discussion of the question of estoppel is unnecessary,- as it is clear that a married woman cannot, by her own act, enlarge her capacity to convey or bind her separate estate. * * * In order to work an estoppel,, the parties to a deed must be sui juris competent to make it effectual as a contract. Hence, a married woman is not estopped by her covenants.”
See, also, Wight & Others v. Shaw, 5 Cush. (Mass.) 66; Comstock v. Smith, 13 Pick. (Mass.) 117, 23 Am. Dec. 670.
The conclusion reached may indirectly work a benefit to the party originally guilty of the fraud that made possible this controversy, a consummation not desired, but unavoidable in view of the rights of .innocent parties directly interested.
It.follows, from what has been said, in so far as the decree entered confined the lien of the taxes to less than the entire estate in the property involved, it is erroneous, and must be reversed on the cross-appeal of complainant below. It is so ordered. It is further found, in so far as the decree fixed the lien of the mortgage in suit upon a greater interest in the property described therein than the life estate of appellant, Mary Burns, as held by her at the date of the mortgage, it is erroneous, and must be reversed on the appeal of Mary Burns, and it is so ordered. It is further ordered that a decree enter in conformity with this opinion.
