21 F. Cas. 60 | U.S. Circuit Court for the District of Illinois | 1850
This is an action of ejectment brought for a tract of land in Madison county. A question as to the admissibility of certain depositions taken on the part of the defendants, which the plaintiff seeks to exclude, has been argued before me. and this, by an understanding between the parties, has brought up directly for consideration all the merits of the cause, most of the facts upon which the controversy is to turn, being matters of agreement. The opinion of the court is desired upon the law of the case.
It appears that a man by the name of Howard, being indebted to the plaintiff, in 1S35 gave him a mortgage on some real property to secure the debt, which included the tract in question. The plaintiff in 1841, foreclosed his mortgage by a proceeding on the equity side of this court. [Case No. 12.156.] The State Bank of Illinois was made a party defendant, and filed an answer to the bill, alleging that Howard was largely indebted to the bank, for which indebtedness a mortgage had been given by Howard, but subsequent to that of the plaintiff, and which included several parcels of land covered by the plaintiff’s prior mortgage, but not the lot in controversy. At this time Howard was insolvent, and the bank asked that the lands not included in their mortgage should first be sold to pay the plaintiff’s debt, and that the lands included in the mortgage of the bank (and which' were also in the plaintiff’s mortgage) should be sold only-in the event of the other lands not being sufficient to pay the plaintiff’s debt. The court decreed accordingly, and ordered, that unless the plaintiff’s debt were paid within twenty days, the land should be sold by a commissioner. It was sold in pursuance, of the decree. At the sale the bank purchased the tract in controversy, and a deed was made to the bank by the commissioners. The defendants claim through the bank. The plaintiff received the purchase money paid by the bank. Howard being liable to the plaintiff, for other indebtedness, suit was brought against him by the plaintiff, judgment recovered, execution issued, and the tract in question levied on and 6old. At that sale the plaintiff was the purchaser, and he now holds a deed for the premises. Both parties claiming through Howard, his title is not questioned. It is admitted that this tract of land was not required for the accommodation of the bank in the transaction of its business, and that the same was not mortgaged to the bank, but that the only title held by the bank was by virtue of the sale made under the decree already mentioned. The possession of the defendants is also admitted. The title depends upon the validity of the sale made to the bank under the decree. Could the bank become the purchaser of the lot in question at that sale? The bank was a corporation created by an act of the legislature of Illinois, passed 12th Feb., 1835. the 5th section of which was as follows: “The real estate which it shall be lawful for said bank to purchase, hold, and convey, shall be: 1st. Such as shall be required for its immediate accommodation in the transaction of' its business: or such as shall have been mortgaged to it in good faith by way of security for loans previously contracted, for money due; or, 2d. Such as shall have been conveyed to it in satisfaction of debts previously contracted in the course of its dealings: or. 3d. Such as shall have been purchased at sales upon judgments, decrees, or mortgages obtained or made for such debts; and said bank shall not purchase, hold, or convey real estate in any other case, or for any other purpose,” &c. The plaintiff contends that the purchase by the bank was made in violation of the express provisions of the charter, and was consequently void. It is admitted by the defendants, that it was contrary to the letter of the law, but it is insisted it comes within the equity of the statute, and even if this be not the case, the plaintiff is estopped from controverting the title of the bank.
By the common law every corporation had the right to purchase, hold, and convey real property. This right has been very much restricted in England by various statutes, passed from time to time, usually called statutes
An authority has been referred to by the plaintiff’s counsel, which is relied upon as conclusively settling the question against the validity of the bank’s purchase — a recent case decided by the supreme court of New York Chautauqua Co. Bank v. Risley, 4 Denio 480. An examination of it will show how near it approaches the present case. There were various judgments binding the real •estate of one Sexton. The bank was a judgment creditor. The lot in question was sold on an execution issued on a judgment of older date than that of the bank, and one White became the purchaser. There was a judgment between this older judgment, and those held by the bank. The bank assigned their judgments to a creditor who held a judgment subsequent to that of the bank. This judgment creditor redeemed the land from the first sale to White, in his own name, as well as in the name of the bank. The creditor who held the judgment -prior to that of the bank’s, assigned his judgment to still another judgment creditor, whose lien was of the same date as his who had redeemed. This last judgment creditor also redeemed the land from the first sale to White. But neither of these persons redeemed from each other. The person who redeemed first, as signed his interest to the bank, having acted as their agent. The person who last redeemed also assigned his claim to the bank, which thus, under the law, was entitled to a deed. The sheriff executed a deed to the bank, which recited that the bank had redeemed the land as judgment creditors of Sexton. Under these circumstances, the bank brought an action of ejectment to recover the possession of the land described in the sheriff’s deed, and the question arose, whether the bank could purchase the land. The charter of the bank contained a restriction, similar, in all respects, to that in the charter of the State Bank of Illinois, and the prohibition as to real estate, was in the precise words of the charter of 1S33: “The said corporation shall not purchase, hold, or convey real estate in any other case, or for any other purpose.” The court decided that the
In the case just referred to, the bank was a subsequent judgment creditor, having a lien upon property bound by a prior lien. It did not redeem, but chose to purchase at a sale made or redemption had under the prior lien. It is a stronger case than this, in favor of the bank’s right to purchase, because here the bank had no lien upon the lot in controversy. It had merely the equitable right of compelling the plaintiff to resort in the first place to the property not held by the bank. It is said, however, conceding that the bank could not purchase, hold, or convey the property; that is, that the sale was illegal, it will not follow, the title of the bank and of its grantees is invalid, so long as no action is taken on the part of the state; that it may be likened to the case of an alien. Formerly, an alien could not hold or inherit real property, but it has been decided that an alien could hold it till a proceeding was instituted on the part of the sovereign power to deprive him of it. This old rule of the common law is now, in many of the states, changed by legislative authority, and aliens can hold real property as well as citizens. Several authorities have been adduced to show that the same principle was applicable to corporations, as to aliens, and that under such circumstances, they, or the third person to whom they may convey, hold a title defeasible by the sovereign power alone. Baird v. Bank of Washington, 11 Serg. & R. 418: Banks v. Poitiaux, 3 Rand. (Va.) 136; Silver Lake Bank v. North, 4 Johns. Ch. 370. But in the case of thealien, and in the authorities cited, it was so decided because the alien and the corporation could take or purchase real estate. In Baird v. Bank of Washington, the prohibition was to purchase and hold, and the supreme court of Pennsylvania decided that the bank might purchase, but could not hold, as against the state alone. It was a defeasible title. In the case in- Virginia, the prohibition was to hold, and the court of appeals decided the banks might purchase. If, however, the prohibition is absolute as to the taking or purchasing, there is an entire incapacity to acquire the title. In this ease the bank could neither purchase, nor hold, nor sell real estate, except under certain circumstances. These circumstances do not appear to have existed in this case; consequently the State Bank did not acquire any title at the sale. Where, then, was the title? It still remained in Howard. It had not been divested. A title by deéd implies a contract, or, at least, competent parties. A deed to a person having no existence is generally inoperative, and passes'no title from the grantor. Even in the case of an escrow, the title remains in the grantor till the condition is complied with, and the deed delivered, when it will relate back for certain purposes to the time when it was delivered by the grantor as an escrow. If a man grant his estate to an imaginary corporation which exists only in his own mind, no title passes, and it is precisely the same if it is granted to a corporation rendered incapable by its charter of taking the grant. As to that particular faculty it is not a corporation.
But is is contended that the decree of foreclosure divested the title of Howard. The language of the decree is in the form usually adopted in such cases — that the party be forever barred from his equity of redemption. However it may be in some of the states, where the practice of strict foreclosure prevails, that is, where the mortgagee takes the premises without a sale, in Illinois, the uniform practice, both at law and in equity, is to order a sale. It was the course pursued in this instance. It is said, if the money had not been paid within the twenty days, it might have been in the power of the mortgagee to insist on a sale. But I doubt whether he would even have had that right upon the tender of the debt, interest, costs, &c., before the sale. But there can be no doubt, if the money had been paid by the mortgagor, and received by the mortgagee before the sale, it would have extinguished the debt and the mortgage, and no conveyance would have been necessary to vest the property in Howard. To show that this view of the case is correct, it is only necessary to inquire where the title was after the event of foreclosure. It was certainly not in abeyance, for that is never true except in certain specified cases, as where the title remains in that condition till there is a grantee capable of taking, or where there is to be a grantee, in futuro. If the decree vested the title anywhere, it must have been in the mortgagee, and that would not help the defendants. The modern authorities regard a mortgage mere; ly as a security for the debt, and with us. until there is a sale of the promises tmder a judgment at law or decree in chancery, the
But it is insisted, that the plaintiff cannot avail himself of these principles, because, having received the money from the bank, sound policy requires that he should not set up the illegality of the sale, and the incapacity of the grantor, to defeat the title of the bank. The court has nothing to do with the propriety or delicacy with which parties may act. It can only look to their rights and their remedies. The question is, Is the plaintiff estopped by the mere receipt of the money under the circumstances of this case, from contesting the sale to the bank?
A very brief examination of this branch of the law will furnish us with an answer. It is not pretended that it is a case of technical estoppel by matter of record, or by deed; but it is said, it is an instance where the law Of equitable estoppel, in pais, applies. The law of this last species of estoppel was fully investigated in a recent case in New York.— Dezell v. Odell, 3 Hill, 215. The court differed in opinion as to the application of the law to that ease, which was, where a party had given an officer a receipt for goods seized on execution, promising to deliver them up on a certain day, and afterwards claimed them as his own; the majority of the court held he was estopped by his receipt. The court, however, agreed that the definition of an estoppel, in pais, given by Judge Nelson, in the case of Welland Canal Co. v. Hathaway, 8 Wend. 483, was correct: “A party will not be permitted to deny his own acts or admissions which were expressly designed to influence the conduct of another, and did so influence it, and when such denial operates to the injury of the latter.” There can be no doubt, that while the courts in recent times have been inclined to restrict the law of technical estoppel, they have much enlarged the limits of the law of equitable es-toppel. But let us take the most liberal view of estoppel in pais possible, and apply it to this case. What act did the plaintiff do, or what admission did he make, which was designed to influence the conduct of the bank? How was it influenced by the plaintiff? Granting that the plaintiff’s denial of the right of the defendants to the property, may operate to the injury of the bank, the other ingredients, and the essential ones, of an es-toppel in pais, are entirely wanting. So far from the bank making the purchase influenced by anything on the part of the plaintiff, it appears that they (the plaintiff through his attorney, the plaintiff himself not being present at the sale) were competitors at the sale in bidding, and it was only because the bank bid more than the plaintiff’s attorney, that it became the purchaser. Was the plaintiff bound, through his attorney, to inform the bank that it could not legally become the purchaser? Certainly not. It does not appear that the slightest act was done on the part of the plaintiff to induce the bank to buy. Admitting that a case could be so presented that the doctrine of estoppel in pais, would apply, so as to enable the bank to hold land not authorized by its charter — as to which I express no opinion — it would have been necessary for the plaintiff to design expressly to influence the bank in this pretended purchase; and there cannot be the least pretext of anything of the kind on the part of the plaintiff. It can, in no sense, be considered the same as if the plaintiff had himself sold land to the bank.
It only remains to consider whether the mere fact of receiving the money estops the plaintiff from denying the validity of the sale, and of the title of the bank; and it would seem as though the mere statement of such a doctrine were enough to show its unsoundness. A has a judgment against B. The officer under the execution issued upon the judgment, levies on and sells the land of A, the plaintiff. He receives the money. It is said he is estopped from denying the title of the purchaser, and proving that it was his own land that was sold. This would be the result of the doctrine, even if it did not go further, and by implication, make every plaintiff in an execution, when he receives the purchase money, a guarantor of the pur