| U.S. Circuit Court for the District of California | Feb 24, 1874
(after stating the facts.) It is settled without any authority.
The Wheelock judgment having been fully paid before its assignment to complainant, and before any sale under it, there can be no doubt that the sale was void. There was no vitality in the execution issued by complainant’s direction, and there was no power in the sheriff to sell. This is the legal aspect of the case. But complainant’s counsel insists that, at the time of the assignment of the judgment, Coffee led complainant to believe that the judgment was still unsatisfied, and that, conceding the sales to be void at law, he, and those claiming under him, are in equity estopped from alleging the prior payment of the judgment, and the invalidity of the sales under it. Whatever the equitable rights of the parties might be, if the question had arisen between complainant and Coffee alone, I am unable to take that view of the case as it is now presented. Immediately after the assignment of the Wheelock judgment, and the confession of judgment in favor of complainant. Coffee confessed another judgment in favor of Preanor, which at once became a lien upon the land, subject only to the rights of complainant then vested — the prior lien of complainant’s own judgment. This was before any steps had been taken by complainant to enforce the satisfied Whee-lock judgment. Complainant had paid noth■ing whatever for the Wheelock judgment. He had at that time parted with nothing. Hehad in no particular placed himself in a worse position than he was in before in consequence of the assignment. At the time he took the assignment, he also took a confession of judgment for the entire amount of his debt, which became a lien on Coffee’s lands, and of itself without reference to the assignment, gave him all the advantage he could by any possibility have obtained by the attachment proceedings, which he forbore, and put him even in a better position than the attachment would have done. The only possible object to be obtained by the assignment of the Wheelock judgment was to get ahead of the Haggin and Tevis judgment, the lien of which had already attached; and even for this purpose no consideration was paid or given.
Besides, the assignment .of the Wheelock judgment was taken under very suspicious circumstances, to say the least. Complainant dealt, not with the judgment creditor, but the judgment debtor. The judgment debtor professed to control the judgment against himself. The judgment debtor, not the judgment creditor, procured, brought to him and delivered the assignment, and without any new consideration. This is a circumstance that ought of itself to have excited the suspicion of a prudent man, and put him upon inquiry, as to how it happened that the debtor controlled the debt apparently due from himself to another. It doubtless would have excited inquiry, had the complainant intended to pay any consideration for the judgment, or had he been actuated by any other motive than a desire to get into a better position that he could occupy by any act of his own by obtaining a preference over a vested lien already attached in favor of Haggin and Tevis. For this purpose it was evidently not desirable to scrutinize the claim assigned to him too closely, as his knowledge would only make him particeps criminis in the wrongful act. For any other purpose the assignment was useless, as his own confessed judgment took precedence over all others, and afforded him all the security and all the advantages that the Wheelock judgment could give. The Wheelock judgment had cost complainant no new consideration — he had parted with nothing — at the time when Freanor’s lien attached; and with reference to him he was not, under the circumstances at that time, a bona fide purchaser of the judgment for a valuable consideration.
Freanor’s right vested at the time his lien attached, and at that time the Wheelock judgment had been fully paid; and, as to him, there was then no matter of estoppel in favor of complainant. Subsequent to that time, no act of either Coffee or the complainant, or both combined, could affect the rights of Freanor.
The subsequent issue of execution upon the Wheelock judgment, the sale thereunder, and the allowing of complainant’s lien under his
If I am right in this view, then Freanor’s deed to Thomas J. Haynes conveyed a complete title, irrespective of the proceedings in equity, in which the sales and conveyances to complainant under the Wheelock judgment were declared void. But, if wrong in this, the view I take upon the other points would lead to the same result. I am by no means clear that the power of attorney to J. W. Haynes is not of itself ample to empower him to authorize Col. Crockett to appear in the case of Freanor v. Lee, and consent to the decree entered. It is true that there is no express power to convey land, or authority in so many words to abrogate titles to land. But is not the power assumed by Haynes, under the circumstances of this case, incidental to other powers granted? It does authorize Haynes to collect, demand and receive all money due complainant, to sue Therefor, and employ counsel to appear for him as he may deem expedient for the recovery of the same, and for that purpose ‘.‘to submit to arbitration, and compound the same,” and “particularly to prosecute through final process any and all judgments to me belonging, and at the sale under the execution issued thereon to become the purchaser in my name of any lands,” etc.
This power of attorney was executed on .July 5th, 1SD9 — the day on which complainant left California, and four days after the first sale on the Wheelock judgment. The subsequent sale on the second execution issued on that judgment was made by Haynes himself, August 1, in pursuance of this power of attorney and instructions from complainant. The power of attorney then was made in part with special reference to collecting the money from Coffee on these judgments, the object at the time being to obtain money, not land. The title even on the first sale had not yet vested in complainant. He had only got an inchoate, contingent interest, which might be defeated on paying the money and redeeming within the time appointed by law. The subject matter, then, upon which this power of attorney was intended to operate was in part these judgments, and executions, and with a view to se- ! curing the money due thereon, and to that end the attorney was authorized to act as to him it should seem best for the interest of his principal; to employ counsel in relation thereto, and “to arbitrate or compound the same.” The end to be accomplished was to obtain a real substantial satisfaction of these judgments by collecting the money, and the attorney was authorized to bid in the property, in case it should be deemed necessary or advisable, at the contemplated sale; j and to receive the redemption money in case ¡ it should be paid on the sale already made, j and other sales to be made. Haynes proceeded to sell, and there being no other satisfactory bidders he purchased for complainant, the amount being credited on the judgment. It turned out that he got no money, and in the opinion of his counsel no land, and consequently no real, although an apparent, satisfaction of the judgment. He had, as he had good reason to suppose, utterly failed to accomplish his trust — had failed to collect the money or obtain an equivalent, the title having failed through an incurable vice in the judgment through which he sought to make the money. An opportunity occurred, however, by which, through a compromise or compounding of the matter, he could effect the object of the power and still secure payment. Even if he erred as to complainant’s real legal rights, there was the strongest reason to fear the loss of the property. It is difficult to see wherein this fails to come within the purview of the power. The contest is not yet ended. The fruits of his efforts are about to slip from his grasp, unless he proceeds further, and he does proceed, and through a compromise secures the full amount due his principal. It appears to me that this power to enter into the arrangement by which he ultimately secured complainant’s debt, is incident to the main power conferred to collect these judgments. But however this may be, this power of attorney was not the only authority Haynes had. It is not necessary that authority should be conferred by a formal technical power of attorney. After these sales had taken place, and after the execution of the sheriff's deeds. Haynes had informed complainant by at least two letters received by him at Washington, before the war broke out, that his title was likely to be contested by Coffee’s creditors, on the grounds already discussed; and in one of these letters Frea-nor was particularly referred to as one who claimed the title under the Wheelock judgment to be void. In answer to these letters, and in reference to the threatened contest mentioned therein, he writes to Haynes, and in a letter bearing date April 6. 1861. among other things, says: “As to the Oakland property, you must be governed by your own judgment as to its management, and, should it be necessary to go to law, employ whom you think best.” In a letter dated April b, 1SGT, in answering the letter referring to
In my judgment, under this power of attorney, and these subsequent instructions taken together, Mr. Haynes was fully empowered to employ counsel in the case of Freanor v. Lee, subsequently commenced; and that both they and the counsel employed were authorized to pursue the course they did, if in their judgment that course was most conducive to the interests of complainant That they acted in good faith, I see no good reason to doubt. Soon after the last letter from complainant referred to was written, the war of Rebellion broke out, and complainant resigned his commission in the United States army, and withdrew himself within the rebel lines, where he continued in the rebel service during the war, and there was no further opportunity to communicate with him in relation to the matter. Freanor filed his bill against complainant to remove the cloud from his title. Mr. Haynes consulted Col. Crockett, who had been complainant’s attorney, and whom complainant had directed him to consult in all matters pertaining to his interest. The facts of the case having been fully investigated, both Col. Crockett and Mr. Rogers, Haynes’ own attorney, were of opinion that complainant had no title. Upon this hypothesis, the action was in no sense necessary to give Freanor a title, for that he already had. A decree would only serve to remove a cloud upon a title already perfect at law. Complainant was without title, and without the means, so far as anything to the contrary appears, to satisfy his own judgment from any other source. Upon negotiations between Freanor and Haynes, brought about through Coffee, it was ascertained that by an appearance in Freanor’s suit on behalf of complainant, and consenting to a decree removing the cloud, Freanor would consent to a sale of the land, and the payment of the proceeds, first, on his own demand against Coffee; secondly, the demand of complainant; and, lastly, that the balance should go to Coffee’s other creditors. By this means the complainant would get all the money due him, thereby accomplishing the original object of his judgment, while on the other hand he was likely to lose all. Upon the hypothesis assumed, Freanor was in a position to hold the land himself. Nothing could be done without his assent, and he was not willing to surrender his rights for the benefit of complainant, although he would do it for Coffee’s benefit. It was, therefore, in the minds of complainant’s agents, and their counsel, only a question whether it was for complainant’s interest to permit the cloud to be removed in consideration of getting the moneys due him, or by refusing to enter into the arrangement, risk losing all. The former course was pursued, and I think wisely. It was such a course as any prudent counsel would be likely to advise, and any prudent business man to adopt, if present and acting for himself. I see no good ground for supposing that there was any fraud perpetrated by any of the parties engaged in this compromise. It matters not whether Freanor in surrendering his right was actuated by motives of friendship for Coffee, or by a due regard for the intrinsic justice of the case. He was in a condition to prescribe terms, and it cannot be denied that he acted with liberality, and a due regard to the just claims of all. The arrangement agreed upon was subsequently carried out, and the result was that Freanor obtained his money; complainant his; Coffee’s other creditors theirs; and Coffee was partially, if not wholly, relieved from the inconvenience of insolvency. By the conditions of the arrangement under which Freanor conveyed to Thomas J. Haynes, complainant was only entitled tp receive the amount due him. That he received, and after receiving his money, he had no further interest in the property; and it was no concern of his what became of it or its proceeds.
I do not think that either Haynes or Crockett, under the circumstances, either exceeded his powers, or improvidently or unwisely exercised them. But if I am mistaken as to the powers of Haynes and Crockett, 1 think still that the judgment entered upon the appearance and consent of Col. Crockett in Freanor v. Haynes, is valid as to the vendees of Haynes without actual notice for a valuable consideration. The judgment is in all respects regular on its face. Col. Crockett was an attorney of the court He appeared as such in the case. It is true, his appearance refers to his authority as derived through Haynes as attorney in fact of complainant, and the written authority to appear is filed and made a part of the judgment roll or record. But the power of attorney to Haynes is not in the record. The record stops with the authority given to Crockett by Haynes. 'Whether Haynes was
A point is made, and pressed with some earnestness, that if the object of - the transaction by which the decree in Freanor v. Lee was permitted to be taken, and the property conveyed by Freanor to Haynes was to get the title out of complainant in order to protect it from confiscation, the proceedings were all void, because complainant was at the time an alien enemy, and the act, on that ground, unlawful.
This may have been an additional motive in the mind of the counsel of complainant to assent to the arrangement contemplated. But if so it was merely incidental to the main object, which undoubtedly was to secure the money due to complainant, which was in imminent danger of being lost other-■u ...;e than by confiscation. Besides, there is nothing to show that Freanor was in any way influenced by such considerations. The title conveyed and the trusts imposed by him, at least as to parties other than complainant, cannot be affected by the secret motives which actuated the representatives of the latter in consenting to the decree.
It is further claimed that a valid judgment could not be obtained removing the cloud upon Freanor’s title, even if the court could get a service of process in any mode recognized by law. or acquire jurisdiction by means of an appearance made by an attorney duly authorized. The decisions of the supreme court settle that question. In U. S. v. Grossmayer, 9 Wall. [76 U. S.] 75, it seems to be conceded that “a resident in the territory of one of the belligerents may have in time of war an agent residing in the territory of the other, to whom his debtor could pay his debt in money, or deliver to him property in discharge of it. but in such case the agency must have been created before the war began.” Now that is the case in hand. Coffee was the judgment debtor of complainant, whose power of attorney to Haynes, and all whose subsequent instructions, verbal and by letter, relating to this business, were given before the war broke out. If Haynes had power to receive the debt or property in discharge of the debt, he must have had power, notwithstanding the war, to enter into these arrangements by means of which the money or property could be received. Besides, at the present term, the supreme court of the United States has held in University of Missouri v. Finch, 18 Wall. [85 U. S.] 106, that a sale of real estate under a power contained in a trust deed given to secure a debt executed before the late Civil War is valid, notwithstanding the fact that the grantors in the trust deed were citizens and residents of the state in insurrection at the time of the sale made while the war was flagrant; and the court say: “But this court has never decided, nor intentionally given expression to the idea that the property of citizens of the rebel states located in the loyal states was, by the mere existence of the war, exempted from judicial process for debts due to citizens of the loyal states contracted before the war. A proposition like this, which gives an immunity to rebels against the government not accorded to the soldier who is fighting for that government in the very locality where the other resides, must receive the gravest consideration, and be supported by unquestioned weight of authority before it receives our assent. Its tendency is to make the very debts which the citizens of one section may owe to another an inducement to revolution and insurrection, and it rewards the man who lifts his hands against his government by protection to his property, which it would not otherwise possess, if he can raise his efforts to the dignity of a civil war.”
So, also, at the present term, in the case of Masterson v. Howard, 18 Wall. [85 U.S.] 99, the court say that the existence of war “does not prevent citizens of one belligerent from taking proceedings for the protection of their own property in their own courts against the citizens of the other, whenever the latter can be reached by process."
In McVeigh v. U. S., 11 Wall. [78 U. S.] 267, the court holds that an alien enemy may be sued, though he may not have a right to bring suits in our courts, and that when he is sued he has a right to appear and defend, and say: “Whatever may be the extent of the disability of an alien enemy to sue in the courts of the hostile countrj', it is clear that he is liable to be sued.” These decisions cover this case. If the citizen may sue to recover a debt in his own courts due from an alien enemy, he may sue to enforce any other right. Frea-nor having a right of action, as he claims, against Lee to remove a cloud upon his title, filed his bill in equity for that purpose. The statute of California provided for procuring service against non-residents in such cases by publication of summons, so that service could have been had in a mode provided by law. as well against an alien enemy as against other nou-residents. Section 22 of
It ought to be added that I find no offer on the part of the complainant in his bill to return the money he has received under the arrangements which he now seeks to set aside! If he demands the lands after the large increase in value which has accrued during the ten years’ growth of the city of Oakland, before the commencement of this action, also enhanced by the improvements put upon them by the parties since the transactions set out have occurred, he certainly ought to offer to return the amount of the debt received by him in lieu of the lands. But aside from this defect in the bill, by failing to offer to do equity, I find no ground for equitable relief. On the contrary, I think, under the circumstances shown, the complainant has abundant reason to be satisfied with the acts of his agents and attorneys, and to congratulate himself, that'In his efforts to obtain an undue advantage over prior lien-holders, he did not ultimately lose the advantage to which he was justly entitled. The bill must be dismissed with costs, and it is so ordered.