148 F. 737 | 8th Cir. | 1906
after stating the case as' aboye, delivered the -opinion of the court.
'■In view of the allegations of the bill, on which the case was tried, that
. “It is a great misapprehension 1o suppose that one cause of action can bo stated in a bill of equity, and by some sort of comprehensive flexibility of chancery jurisdiction relief .can be administered growing out of a state of facts not embraced within the facts pleaded. The rule that under the general prayer for relief a. party may hare any relief to which he may show himself entitled is limited to relief founded on and consistent with the facts set out in the bill, and not such a« may be proven at the hearing. * * * A p¡wty is not entitled to a judgment, on a finding of fads different from any theory of the case sot up in cite petition or answer.”
In Phelps v. Elliott (C. C.) 35 Fed. 455, 461, Judge Wallace expressed the rule as follows:
“The proofs must be according to the allegations of the parties, and if the proofs go to matters not within the allegations, the court cannot judicially act upon them as a ground for decision, for the pleadings do not put them in con-testation. * * * A parly can no more succeed upon a case proved hut not alleged than upon a case alleged but not proved.”
If, as the bill alleges, Henshall entered into said trust agreement with Reed, in pursuance of which Reed conveyed the..interest in Plenshall to the Tbex Mining Company, it concluded the complainants as to this title, leaving them to an accounting with Reed as to their interest in any earnings received by him under the leases and their proportion of the purchase price'of the sale to said company.
In Johnston v. Standard Mining Company, 148 U. S. 369, 13 Sup. Ct. 588, 37 L. Ed. 480, Mr. Justice Brown said:
“If he assented to the formation of the corporation and to the transfer of the mine to it, he clearly waived his right to reclaim an interest in the mine itself.”
Passing beyond this, do the proofs and the law entitle the complainants to any relief whatever against the defendants ? The foundation of the suit is the existence and the terms of an unrecorded written contract, not presented in evidence, claimed to have created the relation of trustee and cestui que trust between Henshall and the complainants, alleged io have been executed in 1879, more than 14. years prior to the institution of this suit to enforce it. Where a suitor thus comes into court to enforce the provisions of such an undisclosed trust after such a lapse of time, and in respect of mining property constantly changing hands and shifting in value, under developments resulting from the expenditure of labor and money by its holders, every consideration of
“I met to-day Mr. .Tames Henshall, who was a resident of Leadville in 1879, and at that time I was prospecting there, and in 1878 I located the Independence claim and had it surveyed and recorded, and afterwards the Ilittle Johnny surveyed across my claim and others done likewise until it and other claims were "all in litigation, and in settling I and my father, N. A. Munn, agreed to quitclaim our interest in the Independence, and the agreement was made in the shape óf a contract, and the contract was put on record and the amount stipulated in contract. Now I understand that Judge Belford and Mr. Rockwell and others have all signed quitclaim deeds to the property, and received their compensation. My father and myself have not signed away our right in the Independence, and as we can only hold the Little Johnny to the amount of the contract on record, with interest from July, 1870, until the present time, I now demand that such amount, with interest, be paid us in full, and as.I understand you are one of the principal stockholders in the group of mines of which the Independence is one, I ask you to look after this matter, and advise me at your earliest convenience, and oblige.”
The reasonable import of this statement is that the consideration of the quitclaim deed to Henshall for their interest was a stipulated amount, and that they then understood that their only right was to claim “the amount of the contract” against the Tittle Johnny, with interest. If this information had been conveyed to the Ibex Mining Company before its acquisition of the legal title to the property, it would only entitle them to claim the amount of the purchase price stipulated for the quitclaim deed.
As proof that- Henshall himself was not publishing any trust relation respecting this property between him and the complainants, in a letter written by him February 1, 1890, to said Jeffery and Dale, judgment
“Yours of January 24lh only just received on my return from Clear Creek county. I note its contents, and would willingly give the deed asked, if you wish it after knowing the circumstances. The records will show that the Independence mine was located by an old man by the name of Munu, and a son, and a Mr. Brown and some one else. When the excitement was running high in .187!), and the Independence was overlaid with the Uncle Sam, Little Johnny, Gen’l Shields and others, the owners deeded to me, if I would fight the matter through. I gave them an obligation to pay them quite a large amount when the mine was sold or disposed of by me. If: you will accept the deed under these conditions, and release me from your judgment and costs, 1 will deed to you. My interest in the Independence is five-eighths. Rood can tell yon the relation tile Independence holds to the combination. The Little Link is subject to costs of patent. You know the condition of thing's, and can elect what you will do. or I will raise the money, and pay one-half of the judgment and costs, .$105.21, if I can be released from the judgment, and you hold Cunningham for the other hall'.”
This was a distinct statement by Henshall that the claim was deeded to him in consideration of his fighting through the contest of title, and the obligation in case of success “to pay them quite a large amount when the mine was sold or disposed of by me [him].” He had already placed the mine in the Archer Consolidation Syndiate, in pursuance of which trust agreement Reed afterwards conveyed absolutely to the Ibex Mining Company, whereby Henshall’s “obligation to pay them [the complainants] quite a large amount” became absolute, if the title or interest had not then passed under the sheriffs deed.
In the second amended hill the complainants, to affect the subsequent purchasers with notice of the existence of the trust agreement with Henshall, seek to attach or connect themselves with the trust instrument executed between said James S. Brown, Jr., and Henshall as to Brown’s undivided one-fourth interest in said mine, which instrument was duly put to record. As this agreement between Henshall and Brown was not executed for more than three months subsequent to the date, of Cartwright’s deed to Henshail and the making of the alleged agreement between them, the very reverse of what is claimed by counsel would seem to be the effect, to wit, that as Brown’s contract was put to record, and no such contract between the complainants and Henshall was of record, the clear implication would arise in favor of subsequent takers under Henshall that no like agreement was made by Henshall with complainants. By the terms of the Archer consolidation agreement, the interest of ITenshall, as the apparent owner of the property, was placed in Reed, as trustee, for the purpose of consolidating the conflicting claims to all the properties named, with power to dispose of upon the condition of the future determination and request of two-thirds of the beneficiaries in interest, they being designated as “the owners,” and until executed Reed had only a power to dispose of or sell as trustee. There was unquestionably, therefore, an equitable interest in Henshall as the beneficial owner pro tanto.
A majority of the court are of opinion that under the authority of Brandies v. Cochrane, 312 U. S. 344, 5 Sup. Ct. 391, 28 L. Ed. 760, the Archer agreement constituted an active, trust as distinguished from a technical trust power. This, however, does not dispose of
1 “Tlie term ‘real estate’ in this section shail be construed to include ail in-■1 orest-of the defendant, or any person to his use, held or claimed by virtue of 'any deed, bond, covenant, or otherwise,- for a conveyance or as mortgagee or •mortgagor of lands in fee, for life or for years.”
As under the decision of the Supreme Court of Illinois, where the .legal title to lands is in a trustee to subserve the purposes of an active trust, the judgment creditor acquired no lien at law, but could only secure one by a bill in equity, according to the chancery practice act, prescribed by the statute of. that state, it controlled the law of the particular case.
It will be observed .that the court adverted to the ruling in White v. McPheeters, 75 Mo. 286, that:
“That case arose under the Missouri statute, which appears to be broader than that of Illinois in- its definition of real estate subject to seizure and sale on executions at law, and, was, in fact, a proceeding in equity by a creditors’ bill to subject" the estate, which was subject to the power of appoint:ment, and .had been conveyed to a volunteer in pursuance thereof, to the satisfaction of judgments.”
; ’• The Colorado-statute (Mills’Ann. St. § 2539), in force at the time "of the-rendition of the Jeffery judgment, goes far beyond the provisions of the Illinois statute. It declares that:
“All and singular the goods and chattels, lands, tenements and real estate of every person against whom any judgment shall be obtained in any court of • record- * * * ' for any debt, • damages, costs or other sum of money, shall be. liable to .be sold on execution, * *■ .* and the said judgment shall be a , lien on. such lands, tenements and real estate, from the last day of the term ’of the court in which the same may be rendered, for the period of seven years. * * * The term real estate in tliis section shall be construed to ' include all interest of the defendant or any person to his use, held or claimed by virtue of any deed, bond, covenant, or otherwise, for a conveyance or as mortgagor of lands, in fee, for life or. for years.”
Section 2582 of said statute is as follows:
“Legal and Equitable Interests in Land Subject to Execution. — Every inter-ost in land, legal and equitable, shall be subject to levy and sale under exec-ution, and the claim or -possessory right of any defendant -in execution, in or to any public lands, may be levied upon and' sold under execution, in the same manner as if the same were held' by such defendant in fee simple; Provided, that nothing in this chapter contained shall be so construed as to give any plaintiff in execution the right to levy on- any land filed on by any person, in the land office of the Colorado Land District, and occupied as a homestead by the defendant in execution.”
It has been expressly held by the Supreme Court of Colorado that while such equitable interest in real estate may be properly reached
“In this view the judgment of McFarren, upon being filed in the office of the recorder, became a lien upon McGovney's interest in the land in dispute as assignee of the bond from Rose, which was an equitable interest, unless such interest passed by virtue of the prior assignment.”
The court further said:
“The assignment by the obligee or his assignee of a bond for the conveyance of real estate comes clearly within the provisions of this section, and unless recorded will not take effect as against a subsequent bona fide purchaser or incumbrancer without notice.”
In Barnes v. Beighly, 9 Colo. 479, 12 Pac. 908, the court said:
“Under our statutes all equitable interests in property are subject to levy and sale on execution. For the purpose of acquiring a lien on any real estate owned by a judgment debtor, or which he may acquire after judgment, situate in a different county from that in which the judgment is entered, it is provided by section 1839 that the creditor may file a transcript of his judgment with the recorder of such county.”
In O’Connell v. Taney, 16 Colo. 356, 27 Pac. 888, 25 Am. St. Rep. 275, the court, speaking of the provisions of the general statutes of the state, said:
“Every interest on land, whether legal or equitable, is made subject to levy and sale under execution. Under this provision, appellee might have caused the execution issued upon the judgment * * * to have been levied upon the latter’s interest in the very property here in controversy, and had the same sold in satisfaction thereof. Had this course been pursued, the purchaser thereafter could have maintained an action for the purpose of having his interest in the premises determined.”
In that case the judgment creditor resorted to a creditors’ bill, and the court only said that:
“The judgment creditor was not, however, compelled to resort to this mode of procedure |by execution sale]. The action which he did institute might be pursued with at least equal propriety.”
This same doctrine is again recognized in Mulock v. Wilson, 19 Colo. 301, 35 Pac. 534, where it is said:
“That a person having procured a sheriff’s deed to land, based upon valid proceedings, may maintain an action to set aside and cancel a deed given by the judgment debtor before the recovery of the judgment, with intent to defraud the judgment creditor. * * * A judgment creditor desiring to set aside a supposed fraudulent deed of real estate may bring his action therefor to test the validity of the deed before attempting to subject the premises to execution sale; or the purchaser, after such sale, may bring his action to remove the cloud from the title by canceling the supposed fraudulent deed, and to recover possession of the premises.”
“Where one purchases and pays for real property, causing title to be conveyed to another without consideration, a' trust results in favor of the former, by means of which the property may be subjected to execution.”
So in Stock Growers’ Bank v. Newton, 13 Colo. 246, 249, 22 Pac. 444, 445, the court said:
“A judgment creditor, desiring to set aside a supposed fraudulent deed of real estate, may bring his action therefor to test the validity of the deed before attempting to subject the premises to execution sale; or the purchaser, after such sale, may bring his action to remove the cloud from the title, etc. [Citing authorities.] It is scarcely necessary to add that by section 1883, Gen. St., every interest in land, legal and1 equitable, is subject to levy and sale under execution in this state.”
Freeman in his work on Executions, vol. 2 (3d Ed.) p. 953, adverting to statutes broader than the statute of 29 Charles II, said:
“In California, Colorado, Connecticut, Indiana, Iowa, Kansas, Maryland, Minnesota, Montana, New Hampshire, Nevada, Pennsylvania, Utah, and Washington, equitable estates are subject to execution much more extensively than under the statute' of 29 Charles II. In fact, in most of these states all beneficial estates are liable to be taken in execution, irrespective of the question of whether they are legal or equitable.”
The case of Fallon v. Worthington, 13 Colo. 559, 22 Pac. 960, 6 L. R. A. 708, 16 Am. St. Rep. 231, cited by complainants’ counsel to support the contention that such an equitable interest in land at bar cannot be sold under execution, is not in point. An examination of that case discloses that, although Fallon had an interest in the property at one time, and at one time held a trust deed thereon, that interest had been disposed of and the trust deed released; so when execution was levied upon the supposed interest of Fallon, he had neither a legal nor equitable interest therein, but simply a personal contract between himself and the grantee. Therefore, the court said:
“The entire legal title was in Worthington. He was in possession of the property. Fallon reserved no interest or estate in the land whatsoever.”
As the foregoing construction placed upon the local statute of Colorado by the Supreme Court of the state becomes a rule of property as affecting real estate situate therein, it is absolutely binding on the federal court.
In Hervey v. R. I. Locomotive Works, 93 U. S. 664, 671, 23 L. Ed. 1003, it was said:
“It was decided by this court in Green v. Van Buskirk, 5 Wall. (U. S.) 307, 18 L. Ed. 599; Id., 7 Wall. (U. S.) 139, 19 L. Ed. 100, that the liability of property to be sold under legal process issuing from the courts of the state where it is situated must be determined by the law there, rather than of the jurisdiction where the owner lives. These decisions rest on the ground that every state- has the right to regulate the transfer of property within its limits.” ■
So in Warburton v. White, 176 U. S. 496, 20 Sup. Ct. 409, 44 L. Ed. 555, it is-said: .
“Where state decisions have intei-preted state- laws governing real property, or controlling relations which are essentially of a domestic and state nature, —in other words, where the state decisions establish a rule of'property — this!*749 court, when called upon to Interpret the state law, will, If It is possible to do so, in the discharge of its duty, adopt and follow the settled rule of construction affixed by the state court of last resort to the statutes of the state, and thus conform to the rule of property within the state. It is undoubted that this rule obtains, even although the decisions of the state court, from which the rule of property arises, may have been for the first time announced subsequent to the period when a particular contract was entered into.”
In Christy v. Pridgeon, 4 Wall. (U. S.) 203, 18 L. Ed. 322, Mr. Justice Field says:
“The interpretation within the jurisdiction of one state becomes a part of the law of that state, as much so as if incorporated into the body of it by the Legislature.”
Tn an early case (McKeen v. Delancy, 5 Cranch [U. S.] 32, 3 L. Ed. 25) Chief Justice Marshall said:
“In construing the statutes of a state on which land titles depend, infinite mischief would ensue should this court observe a different rule from that which has been long established in the state.”
An examination of the cases cited by counsel for complainants will show that they either present distinguishing facts, or depend upon rules of decision where the statute of Colorado has supplied the very provisions wanting in the state, the absence of which left the court free to follow its own notion. Mrs. Jeffery, as the purchaser under the sheriff’s deed of the equitable interest represented by Henshall in the Archer consolidation agreement, sustained the same relation to that interest occupied by Henshall at the time of the sale, and was invested with all the rights and remedies at law or in equity for the protection and enforcement of that interest secured by Henshall as a party to the trust arrangement.
Contention is made by complainants’ counsel, in the attempt to liken the Colorado statute to that of 29 Charles II, subjecting lands, tenements, etc., to sale, that “trusts which come within the operation of the statute are only such pure and simple trusts as exist when the cestui que trust has the whole beneficial interest, and the trustee the naked legal title, and that any complicated trust, or where other persons are interested besides the judgment debtor, are not within the statute, and can only be reached through a court of chancery.” There are several answers to this: (1) The Colorado statute is broader than the English statute in subjecting any equitable interest in lands of the debtor to execution. (2) Under the trust agreement, each of the cestuis que trust owned an entire beneficial interest, in the ratio or proportion expressly designated and declared by the trust agreement, without any present, remote, or contingent interest in any one else, with no provision that any other interest under any contingency may be grafted thereon during the continuance prior to sale thereunder by appointment, as provided.
Underhill on Trusts & Trustees (Amer. Ed.) art. 58, title “Power of One of Several Beneficiaries Partially Interested in a Special Trust,” says:
“(1) The authority of one of several beneficiaries in a special trust in general depends upon the terms of the trust as construed by the court; but if sui juris, a beneficiary cannot be restrained from assigning his ©r her interest,*750 save only in the case of a married woman, who may, by apt words, in the settlement, be restrained from doing so during her coverture, but not before or afterwards.
“(2) An equitable tenant for life of land, within the meaning, of the settled land act, 1882, has all the powers of selling, enfranchising, partitioning, leasing, mortgaging, etc., conferred on tenants for life by that act. And such person may prevent the trustees exercising .their powers of the like character without his consent.”' See 2 Beach on Trusts & Trustees, § 712.
In Sparhawk v. Cloon, 125 Mass. 263, Chief Justice Gray said:
• “At law, any property, real or personal, .that a man owns, may be alienated by him, or may, unless specially exempted by statute, be taken for the payment of his debts; and no form of grant or device can enable the grantee or dev-isee to hold the estate without its being subject to alienation, attachment, and execution. From the time of Lord Eldon, the same rule has prevailed in the English Court of Chancery to the extent of holding that where the income of a trust estate is given to any person (other than a married woman) for life, the equitable estate for life is alienable by, and liable in equity to the debts of, the cestui que trust, and that this quality is so- inseparable from the estate, that no provision, however express, which does not operate as a cesser or limitation of the estate itself, can protect it from his debts. The English doctrine has been approved in many decisions and dicta in this country. On the other hand, it has been maintained bjr judges whose opinions are entitled to the highest respect that the founder of a trust may secure the enjoyment of it to other persons, the objects of his bounty, by providing that it shall not be alienable by them or be subject to be taken by their creditors; and that his intentions' in this regard, when clearly expressed by him, must bo carried out by the court.”
Obviously enough, the foregoing enunciation in no wise conflicts with the doctrine that the creator of a trust may so construct it in favor of the object of his bounty as to render it inalienable by him, or to place it beyond the reach of execution for his debts. There is in the Archer consolidation agreement no prohibition upon alienation by the cestuis que trust, expressed or implied, and consequently no exemption from levy and sale under execution under the Colorado statute, and there is no limitation of the use to which the income therefrom may be applied. See Farmers’ & Merchants’ Savings Bank v. Brewer, 27 Conn. 599, and note to article 58 of Underhill on Trusts and Trustees, American Edition.
No power of disposition was vested by the trust agreement in Reed, except upon the authorization by two-thirds in interest of the cestuis que trust. Even without this reservation of power in the beneficiaries, in the absence of express authority conferred on the trustee to alien or apply the income or proceeds to a third designated beneficiary, it remained in the cestuis que trust. The whole scope and purpose of the Archer consolidation agreement was to create a trustee to do certain things, for the exclusive benefit of the named beneficiaries as owners, under a conventional plan of organization among the conflicting claimants to the properties concerned, to do that which by concert of action they might have done themselves without the designation of the agent Reed. In the event of nonaction or nonconcurrence by the two-thirds in interest, the respective interests of the beneficiaries remained until such action, subject to the liabilities of the interest of each to respond to the obligations imposed under the Colorado statute to answer for his debts.
“All the right, title, and interest of James Ilensliall and 1\ ,J. Cunningham in and to the following described property, to wit: * * * The Independence lode, the Archer lode, the San José lode, the Utile Stella lode, the General Shields lode, the Jiurlington lode, the Winnemwlc No. 2 lode, and the tíñele Sam lode (these were the properties constituting' the conflicting claims), sil nato on Ureece Hill, in California .Mining District, Lake county, Colorado, and now standing in the name of Clinton Heed or C. Heed, trustee, on the records of said Lake county, known as and called the ‘Archer Consolidation.’ ”
'fhe criticism made, in its substantive effect, is that the description did not more specifically state what the interest of Hcnsliall was by saying it was an undivided one-half interest in the Independence mine. As already shown, the statute of the state subjected to execution every interest in lands, legal and equitable, and the claim or possessory right of any defendant in execution, in or to any public lands, in the same manner as if the same were held by such defendant in fee simple. Section 2582, Mills’ Ann. St. Colo. It is the generally recognized rule of law respecting levies and sheriffs’ deeds that a description is good and sufficient which, taken as a guide, will point the way to the land, and readily enable the inquirer to identify it, and for this purpose even parol evidence may he resorted to. “There may not be a certainty to every intent, nor is it necessary that there should be in such a case; certainty to a general intent, such as would put the owners and purchasers upon inquiry, affording the means of complete information, is all that can be expected.” By the decided weight of authority this description was sufficient. Blair v. Burns, 8 Colo. 397, 8 Pac. 569; Stevens v. Wait, 112 Ill. 514; Small v. Jenkins, 82 Mass. 155; Travelers’ Insurance Company v. Yount, 98 Ind. 454; Frey v. Clifford, 44 Cal. 335; Shewalter v. Pierner, 55 Mo. 216; Field v. Huston, 21 Me. 69; Freeman on Executions (3d Ed.) § 381; Devlin on Deeds, § 1435; Murfree on Sheriffs, §§ 1697, 697; Brown v. Smith, 7 B. Mon. (Ky.) 261; Smith v. Crosby, 86 Tex. 15, 23 S. W. 10, 40 Am. St. Rep. 818; Inman v. Kutz, 10 Watts (Pa.) 90; Laughlin v. Hawley, 9 Colo. 170, 11 Pac. 45.
The Independence mine had a local habitation and a name, well known in that mining region. The very situs of it was given in the levy and deed — “situate on Rreece Hill in the California Mining District, Lake county, Colorado.” More than that, it recited, “now standing in the name of Clinton Reed or C. Reed, trustee, on the records of said Lake county, known as and called the ‘Archer Consolidation’ ” —an instrument that declared what Henshall’s interest was.
It was competent for Frank R. Jeffery, in bidding off the property at execution sale, to transfer his purchase to his wife, who thereby became the recipient of the sheriff’s deed and invested with the title. Gwynne on Sheriffs, 376; Jamison v. Tudor, 3 B. Mon. (Ky.) 357; Frizzle v. Veach, 1 Dana (Ky.) 212; Massey v. Young, 73 Mo. 260. Mrs. Jeffery, however, would acquire thereby no better right or title than Frank R. Jeffery liad the deed been made to him. Baird v. Given, 170 Mo. 302, 70 S. W. 697. The title of Mrs. Jeffery having passed
Conceding, for the purposes of this contention, the existence of the trust in favor of complainants, what proof does this record furnish of notice of its existence or its terms to the subsequent purchasers ? In respect of the title acquired under the Jeffery and Dale execution sale and sheriff’s deed, contention is made that the letter written by James Henshall to Jeffery and Dale, of date February 1, 1890, imparted notice of an equitable interest in the complainants. Even if it were conceded that this letter suggested the existence of such a trust agreement between Henshall and the complainants as pleaded, the information was conveyed, not only after the judgment was rendered, which constituted a lien upon the Henshall interest in the property, but it was after the sale under the execution and the payment- of the purchase money. Under the Colorado statute (section 446, Mills’ Ann. St.) it is provided as follows:
“Notice Takes Effect Prom Filing Record, Except as to Parties Having Notice^ — All deeds, conveyances, agreements in writing of, or affecting title to real estate or any interest therein, may be recorded in the office of the recorder of the county wherein such real estate is situate, and from and after the filing thereof for record in such office, and not before, such deeds, bonds and agreements in writing shall take effect as to subsequent bona fide purchasers and incumbrancers by mortgage, judgments or otherwise not having notice thereof.”
In McFarren v. Knox, 5 Colo. 217, it was expressly held that, in respect of an assignment not recorded, the subsequent judgment lienor and purchaser without notice obtains the better title.
In Gates Iron Works v. Cohen, 7 Colo. App. 341, 348, 43 Pac. 669, the court said:
“By the terms of our statute concerning conveyances, instruments in writing affecting title to real estate do not take effect as to subsequent bona fide purchasers, or incumbrancers by mortgage, judgment, or otherwise, not having notice thereof, until they are filed for record in the office of the recorder of the county in which the real estate is situate. General Statutes, § 215. By these statutory provisions the lien of an attachment would take precedence of an outstanding interest in the land, where such interest is evidenced by an unrecorded deed or contract of which the attachment or judgment creditor had no notice. The statute changes the rule which, prior to its passage, was of universal application, so as to place attachment and judgment creditors upon the same footing with purchasers in respect of land, a legal or equitable interest in which has been conveyed, but the deed not recorded.” See, also, Wahrenberger v. Waid, 8 Colo. App. 200, 45 Pac. 518.
Although the sheriff’s deed was not delivered until the 1st of December, 1890, after the expiration of the period for redemption, when delivered it had relation back to the lien of the judgment. If, therefore,
Counsel for complainants in this connection, however, both in oral argument and brief, criticise with much severity the transaction bv which J. C. Brown obtained the deed of conveyance from [effery and wife; that Jeffery being in great financial straits, and his wife’s ill health demanding change of locality, it is urged that Brown took advantage of Jeffery's distress to obtain his property at an unconscionable sacrifice, and that the Ibex Mining Company, in whose interests Brown was acting, had in its possession at the time funds due to Henshall’s interest more than the purchase price. Without entering into detail, it is sufficient to say that the evidence shows that for a year or more preceding the consummation of this transaction Jeffery had been endeavoring to dispose of his interest in this property and a claim in connection with the Idlewild claim, connected with the Little Johnny group, respecting which there was some pending litigation. Brown was more particularly concerned in obtaining from Jeffery the Little Johnny interest. The importunities for sale came from Jeffery rather than from Brown. The evidence is that the consideration of $(5,000, expressed in the deed, was paid by Brown, as acknowledged in the deed. The share of the accrued royalties in the hands of Reed and the Tbex Mining Company. amounting to $166, was paid to Mrs. Jeffery afterwards. We are unable to find any just basis for the contention that these royalties in fact amounted to $1,200. The matter of the claim of $2,000 was no part, in fact, of the purchase price of said interest. It pertained to a disputed claim then in litigation, growing out of an option to purchase and mine, and to apply the proceeds on the purchase price in a collateral matter. Neither do we find any deceit practiced or misrepresentation made by Brown to mislead or overreach Jeffery in the transaction. Jeffery was not prevented from disclosing to Brown the facts of his situation or his reason for desiring to sell. The two parties to the deal were sui juris, and dealt with each other at arm’s length. We know of no authority or reason for holding that what Jeffery consented to take disentitles Brown to the position of a bona fide purchaser for value. If it were conceded that Jeffery was entitled to a claim for royalties growing out of the Little Johnny or other properties, greater than the consideration paid him by Brown, he knew the fact better than any one else. If, without duress or fraud practiced upon him, he consented to take less than the actual value, how the complainants in this controversy, to which Jeffery is not a party, can avail themselves of any injustice done him, challenges comprehension. With full knowledge
There is a broad distinction between a valuable and an adequate consideration, as applied to this situation. The consideration paid for' a conveyance may be so inadequate, coupled with other attendant circumstances, as to afford sufficient ground for the party wronged to' ask a court of equity to relieve him. The consideration paid may 'also be so greatly disproportioned to the actual value of the property as to appeal to' the discretion of the chancellor, in saying that such a purchaser did not buy in good faith. Buc it is well-recognized law that the consideration, while it must be valuable, need not be commensurate'with the. actual value of the property. The evidence in this record'presents no such- state of facts as to warrant the court in saying that Brown or thé Ibéx Mining Company was not a bona fide purchaser for value.
■ Neither is there foundation for the suggestion made that the'whole consideration for this conveyance to Brown was hot paid at the time suit was brought. The consideration for the Archer consolidation and the Idlewild interest was paid- on the 13th day of May, 1903. The deferred payment pertained solely to the interest in the Tittle Johnny claim owned by another person not connected witli the title to the premises, in dispute. ' .
■ Turning to the title derived through Clinton Reed under'the Archer consolidation 'agreement, what is there in 'this record to warrant a decree in favor of the complainants’predicated of notice to the'Ibex: Mining-Company of the existence of the alleged trust relation between Henshall an'd the complainants?' There is some shadowy evidence of dne Geo. Trimble, who afterwards became a stockholder and director in the Ibex Mining Company, having received information' as far back at 1878 of complainants being interested as locators of the Independence lode, But what of it? The record afterward showed that under a power of attorney: given by -the complainants to Cartwright the latter conveyed the absolute title to Henshall. There was no record evidence of any trust'agreement between the grantor and the grantee conditioning the transfer of the title. The Ibex Mining Company did not come into existence, until about 12 years thereafter. The letter from Munir to Trim-ble, of' date April 11, 1894-, was nearly a year after the Ibex Mining Company had obtained the title of Jeffery, and of Reed under the Archer consolidation agreement; and, even if it were conceded (which we do not find sufficient evidence to support) that J. C. Broryn obtained some information sufficient to excite inquiry during his dealings with Jeffery, as already shown, he was 'an innocent purchaser under the Jeffery judgment and execution sale.
, In. much of the contention of learned counsel for complainants respecting incidents invoked as a basis of notice to the Ibex Mining Company they seem to misconceive the correct rule of law applicable to the case. There has rarely been a more exact statement of the rule of notice in question than that expressed by Judge Vories in Hayward v.
“Tlie meaning must be that tlie notice must be given to the agent wiMe liis agency exists, and it must refer to business which comes within tlie scope of his authority. When this is the ease, I thinli that notice to tlie agent is notice to the principal; in fact there is no other way to notify a corporation than to notify an agent. A corporation only acts through and, by agents, and tlie proper and only way to give notice to a corporation is to notify an agent,- and generally it is sufficient to notify an agent, whose proper business is to attend to the matter in reference to which the notice is given.”
He then quoted from Story’s Agency, paragraph 140, as follows:
"Upon a similar ground, notice of facts to an agent is constructive notice thereof to tlie principal himself, where it arises from, or is at the time connected with, tlie subject-matter of liis agency; for upon general principles of public policy it is presumed that tlie agent has communicated such facts to the principal, and if he has not, still the principal, having intrusted tlie agent with the particular business, the other party has a right to deem his acts and knowledge obligatory on the principal; otherwise the neglect of tlie agent, whether designed or undesigned, might operate most injuriously to the rights and interests of such party. Hut unless notice of the. facts come to the agent while he is concerned for the principal, and in the course of the very transaction, or so near before it that the agent.must lie presumed to recollect it, it is not notice thereof to tlie principal; for otherwise the agent might; have forgotten it, and then tlie principal would be affected by his want of memory at ihe time of undertaking the agency. Notice, therefore, to the agent lief ore the agency is begun or after it lias terminated will not ordinarily affect tlie principal.” See, also, Mecliem on Agency. §§ 718, 719.
As notice to the principal is predicated of tlie fact of notice to the agent while engaged on the business of his agency, because of the obligation imposed, in fidelity to his principal, to impart the information to him, it must follow that when the condition on which the notice to the principal is presumed does not exist, notice to the principal cannot be assumed. See, also, Thompson on Corporations, vol. 4, §§ 5189, 5190, 5191, 5192, 5204; Phœnix Insurance Company v. Fleming, 65 Ark. 63, 44 S. W. 464, 39 L. R. A. 789, 67 Am. St. Rep. 900; Armstrong v. Abbott, 11 Colo. 223, 17 Pac. 517; Yerger v. Barz, 56 Iowa, 82, 8 N. W. 769.
In a general and indiscriminate criticism of the testimony of Charles Cavender, counsel for tlie complainants seek to create the- impression that he must have discovered something touching the complainants’ interest which should be imputed to the Ibex Mining Company. Caven-der ivas tlie attorney who examined for the company the Jeffery title to lilis property. So far from the evidence warranting the remotest inference that he acquired any information of any trust agreement between the complainants and Henshall, his testimony is full and explicit that he made a thorough examination, and finding that the records showed title in 'Henshall. and being of opinion that the deed from tlie sheriff effectually vested that title in Mrs. Jeffery, and having no notice of the complainants’ claim, he reported the title good. The law did not exact of him that without any admonition to excite such inquiry he should have inquired of lJcnshall if there might not be some unrecorded, undisclosed compact conditioning his record title. So far from Henshall imparting to the ibex Mining Company, or any one representing it, information respecting complainants' interest, in his letter of
“Your note received. I suppose I ha.ve lost my interest in the Independence. Judgment was obtained against me on a debt contracted by Pat Cunningham years ago, and the property was sold; so I suppose I am out, and if you find I am in it,, I will gladly sign.”
The Pat Cunningham debt referred to Henshill claimed he was only surety for, on which the said judgment was obtained against him.
Some other incidents have been discussed by counsel touching the question of notice, but they are so intangible and inconsequential as not to deserve consideration. As said in Scott v. Gallagher, 14 Serg. & R. 332, 16 Am. Dec. 508:
“Courts of justice view secret agreements with a jealous and scrutinizing eye. The owner of the legal title should have direct, express, and positive notice; otherwise he takes the property discharged of the trust which existed between the original parties. There would be no hardship in the case on Gallagher, because it was his own folly to place himself and others in the power of McCormick. If any person suffers it should be Gallagher, and not Scott, for this plain and obvious reason, that he has been the cause of the loss sustained. Equity says, if one of two innocent persons must suffer, he who has been the cause shall bear the loss.”
This rule has recently been affirmed in United States v. Detroit Lumber Company, 200 U. S. 321, 332, 333, 26 Sup. Ct. 285, 50 L. Ed. 499, in which Mr.-Justice Brewer, speaking for the court, said:
“No one is bound to assume that the party with whom he deals is a wrongdoer, and if he presents property, the title to which is apparently- valid, and there are no circumstances disclosed which cast suspicion upon the title, he may rightfully deal with him, and, paying full value for the same, acquire the rights of a purchaser in good faith. Jones v. Simpson, 116 U. S. 609, 615, 6 Sup. Ct 538, 29 L. Ed. 742. He is not bound to make a searching examination of all the account books of the vendor, nor to hunt for something to cast a suspicion upon the integrity of the title. * * * The rule in respect to constructive notice was thus stated in Wilson v. Wall, 6 Wall. (U. S.) 83, 90, 91, 18 L. Ed. 727: ‘A chancellor will not be astute to charge a constructive trust upon one who has acted honestly and paid a full andi fair consideration without notice or knowledge. On this point we need only to refer to Sugden on Vendors, p. 622, where he says: “In Ware v. Lord Egmont the Lord Chancellor Cranworth expressed his entire concurrence in what, on many occasions of late years, had fallen from judges of great eminence on the subject of constructive notice, namely, that it was highly inexpedient for courts of equity to extend the doctrine. When a person has not actual notice, he ought not to be treated as if he had notice, unless the circumstances are such as to enable the court to say, not only that he might have acquired, but also that he ought to have acquired, it but for his gross negligence in the conduct of •the business in question. The question, then, when it is sought to affect a purchaser with constructive notice, is not whether he had the means of obtaining, and might by prudent caution have obtained, the knowledge in question, but whether not obtaining was an act of gross or culpable negligence.” ’ And again in Townsend v. Little, 109 U. S. 504, 511, 3 Sup. Ct 357, 301, 27 L. Ed. 1012: ‘Constructive notice is defined to be in its nature no more than evidence of notice, the presumption of which is so violent that the court will not even allow of its being controverted. Plumb v. Fluitt, 2 Anst. 432; Kennedy v. Green, 3 My. & K. 699. * * * As said by Strong, J., in Meehan v. Williams, 48 Pa. 238, what makes inquiry a duty is such a visible state of things as is inconsistent with a perfect right in him who proposes to sell.' See,*757 also, Holmes v. Stout, 3 Green Ch. 492; McMechan v. Griffing, 3 Pick. 149, 15 Am. Dec. 198; Hanrick v. Thompson, 9 Ala. 409.”’
See, also, discussion of this question by Sanborn, J., in same case (United States v. Detroit Timber & Lumber Co., 131 Fed. 668, 67 C. C. A. 1).
It is next insisted that, as the fee to the Independence mine remained in the United States until patent issued, the purchaser under Hen-shall acquired only an equitable interest no greater than that of the complainants. Mining claims are by the Colorado statute (Mills’ Ann. St. § 456) declared to be real estate. This character of property possesses the quality of any other possessory title to land. It passes by inheritance, sale, mortgage, or execution sale. “Where there is a valid location of a mining claim, the area becomes segregated from the public domain and the property of the locator.” St. Louis Mining Co. v. Montana Mining Co., 171 U. S. 655, 19 Sup. Ct. 61, 43 L. Ed. 320. So long as the locator or his assignee performs the required amount of work, his right of possession is exclusive against every person and against the United States. He may never obtain the patent, but when it does issue, it has relation back to the location. For the purpose of attack and defense he is the owner, and when this title passes from him to an assignee or grantee, it is protected in the hands of such assignee or grantee by the registration statutes of the state against an equitable claim thereto or interest therein not of record and unknown at the time of the transfer. Revised Statutes of the United States, § 910 [U. S. Comp. St. 1901, p. 679]; Roseville Co. v. Iowa Gulch Co., 15 Colo. 29, 24 Pac. 930, 22 Am. St. Rep. 373; McFeters v. Pierson, 15 Colo. 201, 24 Pac. 1076, 23 Am. St. Rep. 388; Forbes v. Gracey, 91 U. S. 767, 24 L. Ed. 313; Belk v. Meagher, 104 U. S. 283, 26 L. Ed. 735; Manuel v. Wulfi, 152 U. S. 511, 14 Sup. Ct. 651, 38 L. Ed. 532; Butte Co. v. Frank (Mont.) 65 Pac. 1; Bakersfield Co. v. Kern County (Cal.) 77 Pac. 892.
Incidental and parallel to the latter contention, the further proposition is advanced that, as the fee to this property remained in the United States until patent issued, the position of the complainants, as equi ■ table owners, being prior in time to that of the purchasers under the locator, theirs is the superior equity. This question is so effectually settled against the contention of the complainants by the ruling (if this court in United States v. Detroit Timber & Lumber Company, 131 Fed. 668, 67 C. C. A. 1, affirmed by the Supreme Court in 200 U. S. 321, 26 Sup. Ct. 282, 50 L. Ed. 499, as to render further discussion a work of supererogation.
With apparent assurance of confidence, learned counsel for the complainants advance the ultimate proposition that the only light the Ibex Mining Company could possibly assert as against Henshall would be to offset what it paid for said interest against what was coming to him under the terms of the Archer consolidation, with the right in Heoshall to exact, within a reasonable time, a conveyance to him of his interest in the mine before refunding the purchase price paid by the company as the tenant in possession; such reasonable time being commensurate •Uth the duration of the lease and such time thereafter as might be
Even, however, if the relation of landlord and tenant existed between Henshall and the Ibex Mining Company when the title under Jefferv was acquired, the fact did not conclude the company from adversing the landlord’s title by acquiring it under a proceeding in invitum against the landlord. We understánd the law to be that the tenant may buy in the landlord’s title únder judgment and execution sale. In such case he may plead against the landlord that, although he had an interest in the premises at the time of the creation of the relation of landlord and tenant, it terminated by act of the law, or under voluntary grant of the fee by the landlord. Taylor’s Landlord & Tenant (9th Ed.) §§ 039, 705, 708; Hardin v. Forsythe, 99 Ill. 312; Elliott v. Smith, 23 Pa. 131-137; Camley v. Standfield, 10 Tex. 546, 60 Am. Dec. 219; Lamson v. Clarkson, 113 Mass. 348, 18 Am. Rep. 498. “It is always competent for a tenant to set up that the title of his landlord has come to an end subsequent to the date of the lease, and that whenever the enjoyment ceases by lawful title, rent, which is the recompense of enjoyment, also ceases.” Duff v. Wilson, 69 Pa. 316; Shields v. Lozear, 34 N. J. Law, 496, 3 Am. St. Rep. 256; Presstman v. Silljacks, 52 Md. 647; Jenkinson v. Winans, 109 Mich. 524, 67 N. W. 549.
Judge Cowen, in Nellis v. Lathrop, 22 Wend. (N. Y.) 121, 34 Am. Dec. 285, said:
“So long as lie [the tenant] is not expelled, he .has, in 'general, no right to question his landlord’s title. He cannot deny that he'had- a right to demise at the time of the lease. He cannot defend, on the ground that he has acquired an outstanding title adverse to that of the landlord. But I am not aware that the estoppel goes further. If the landlord part with his title ponding the lease, the duty of the tenant, including that of paying rent, is due to the assignee; and should the-tenant- buy in the assignee’s right, the'lease would be extinguished. So, should the landlord sell and release to the lessee. * * * Therefore, had there been a sheriff’s sale of -the whole reversion in the demised premises, and the tenant had redeemed or purchased under the .iudgment, no action could have been sustained; for a purchase or acquisition of title under a iudgment against the lessor is the same thing as if he had granted by' deed. It- is, to be sure, acquiring title indirectly and by operation of law from the,lessor, but it comes through his act and consent, or his'neglect, and*759 is, therefore, the same In legal effect as if he had granted or devised a reversion.” ....
In 17 Amer. & Eng. Encyc. of Raw (2d Ed.) p. 676, it is said:
“The general rule applies to the purchase by one tenant of the property at a judicial sale, and such purchase will inure to the benefit of his co-tenant. There is no rule of law, however, forbidding one tenant in common to purchase the interest of his co-tenant at such sale: this not being the purchase of a hostile or adverse title.” See, also, page 678.
In Bissell v. Foss, 114 U. S. 252, 262, 5 Sup. Ct. 851, 854, 29 L. Ed. 126, the court held that there was no relation of trust or confidence between mining partners, which is violated by the sale and assignment by one partner of his share'in the property and business to a stranger, or to one of his associates without the knowledge of the other. The court, while fully recognizing the rule that one of the tenants in common, holding by a common title, cannot purchase an outstanding title or in-cumbrance upon the joint estate for his own benefit, said:
“It is true that one of two or more tenants in common, holding by a common title, cannot purchase an outstanding title or incumbrance upon the joint estate for his own benefit. Such a purchase inures to the benefit of all, because there is an obligation between them, resulting from tbeir joint claim and community of interest, that one of them shall not affect the'claim to the prejudice of the others. [Citing authorities.] But this rule cannot apply to Hunter and Foss. They purchased no outstanding title or incumbrance to the prejudice of the other tenant in common. They did what any tenant in common with entiré good faith might do, namely, purchase the interest of some of their co-tenants without consulting the others. The title which they purchased of the Missourians was not antagonistic or hostile to the title of Bis-sell. Their purchase did not in any degree tend to injure or damage his interest. His share was just as valuable after as before the purchase, and his rights were the same. In such a purchase no trust or confidence is violated;”
If Henshall had been the entire owner of the property, and had leased the same to the Ibex Mining Company, could it be maintained that it could not, during the existence of the lease, purchase direct from him the fee, and thereby defeat eviction by the landlord? If, under the terms of the Archer consolidation, Reed, in execution of the power, could sell direct to the Ibex Mining Company all the interest of Hen-shall, could Henshall thereafter be heard to say that the Ibex Mining Company could not assert title under that purchase against the subsequent assertion of the landlord’s claim against it as tenant? If not, how can it be maintained under the Colorado statute, which subjected Henshall’s interest to sale under execution, that the company which acquired the title under operation of law could not plead a divestiture and termination of such landlord’s title? The title which the law of landlord and tenant forbids the tenant to acquire so long as he retains possession under his entry is an outstanding, hostile title, antagonistic to that of the landlord, so as to destroy it. Moreover, the lease with the option to purchase, made by Reed, was in strict conformity to the terms of the Archer consolidation agreement, to which Henshall assented. It was in force at the time of the execution sale. At that time neither Jeffery and Dale nor Mrs. Jeffery were tenants of either Reed or Hen-shall. By the sale and sheriff’s deed Henshall’s interest and title in the property ceased, and devolved upon Mrs. Jeffery.
“The Independence was entirely gone. There was no application, for a patent. All but 1.22 acres were patented to the Little Johnny, the Uncle Sam, and the San José claims, and that 1.22 acres had been covered by many relo-cations before the Ibex Mining Company or Mr. Campion had any interest in it”
He said it was a very doubtful proposition that in such condition a patent could be issued. He further said:
“I examined the ground — that is, traveled over it in connection with the engineer of the company — and found the discovery workings were gone— patented or relocated- — I forget which now; I think patented or relocated by some one else. All the ground that was not patented was covered by other locations or claims, so that there was virtually nothing to patent.”
When inquired of as to' whether he examined the proceedings in the land office, he answered:
“I think the San José took in all the workings, the discovery shaft, etc.— discovery tunnel I think it was. My recollection is that that was done by*761 the San José. The application for that claim, was in ’80 or ’81 — I forget the exact date — but some ten years before. The other portion of the ground, down the hill, was covered by several now conflicting locations. The discovery shaft had been taken in by a patent upon ¡mother claim. That would terminate the title, except that which had already been obtained by the San José, Uncle Sam, and Tittle Johnny.”
i le further testified that at the time the acts were done which resulted in this ground being absorbed by the other claims neither Camp-ion nor the Ibex Mining Company had any connection with the matter. It was in that condition when the lease and bond were given. In such low estimate was this property held that: at the public auction under the Jeffery and Dale judgment in 1889 it sold for only sufficient to satisfy a judgment for SMo.'ld and the costs of suit. In perfect indifference, the complainants lingered and remained about that mining region and points of easy access to it, with the public records of the couihy showing that whatever apparent title they had had been conveyed under their power o£ attorney to a third party, who, as the apparent absolute owner, was contracting debts and being prosecuted therefor unto judgment; dealing with the property as his own; conveying it to Reed; entering into a syndicate agreement, under which it was leased to strangers, who were working and developing it, and paying the rental to the trustee. And after the Ibex Mining Company was organized, taking over the lease and purchasing outright the title of Henshall, in pursuance of the option given under the lease contract, expending money in developing the property, proving it to be valuable, and its stock presumably passing into the hands of investors, these complainants went off to the state of Texas without proclaiming or asserting to said interested parties their secret claim until more than 14 years after its birth. So long hail they thus suffered this undisclosed trust to slumber, unnurtured and unattended, that when they came to ask the court to give it life and operation they were unable to recognize its features or specify its qualities, and only after long study, suggestion, and resort to analogy of their claim with some other found of record could they present even a plausible claim for specific relief. No fitter case has ever been presented for the application of the wholesome rule that “where one of two innocent: parties must lose, and one of them is in fault, the law throws the burden of the loss on him.” Hearne v. Nickols, 1 Salk. 289; Magee v. Manhattan Life Ins. Co., 92 U. S. 98, 23 L. Ed. 699.
The conclusion reached on the principal case renders it unnecessary to discuss the matter of the accounting.
It results that the appeal in No. 1,713, Clinton Reed (impleaded with the Ibex Mining Company et al.), appellant, vs. N. A. Munn and R. G. Munn, appellees, is sustained, and the decree of the Circuit Court therein is reversed; that the appeal in No. 1,890, the Ibex Mining Company, appellant, vs. N. A. Munn and R. G. Munn, appellees, is sustained, and* the decree of the Circuit Court therein is reversed; that the appeal in No. 2,319, the Ibex Mining Company, appellant, vs. N. A. Munn and R. G. Munn, appellees, is sustained, and the decree of the Circuit Court therein is reversed; and that the appeal in No. 2,320, V. A. Munn and R. G. Munn, appellants, vs. The Ibex Mining