Chapman v. County of Douglas
107 U.S. 348 (1883)

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U.S. Supreme Court

Chapman v. County of Douglas, 107 U.S. 348 (1883)

Chapman v. County of Douglas

Decided February 5, 1883

107 U.S. 348

Syllabus

A. conveyed, March 6, 1859, to a county in Nebraska certain lands for a "poor farm," and they were thereafter used as such. The county, pursuant to its agreement, made one cash payment, and for the remainder of the stipulated consideration gave its notes secured by mortgage, and payable respectively in one, two, three, and four years. A. assigned the notes to B. Sometime thereafter, the supreme court of the state decided that, by the purchase of lands for such a purpose, a county could not be bound to pay at any specified time the purchase money, or to secure it by mortgage upon them, but was limited to a payment in cash and to the levy of an annual tax to create a fund wherewith to pay the residue. A. and B., the notes remaining unpaid, filed, Sept. 10, 1877, a bill praying for a reconveyance and an accounting, or, should the county elect to retain the lands, then for a decree for the value of them.

Held:

1. That in view of that decision, the contract being unauthorized only so far as it relates to the time and mode of paying the purchase money, and the title to the lands having passed by the conveyance, the county holds that title as a trustee for the benefit of B., and that he is entitled to the relief prayed for.

2. That unless the sum due on account of the purchase money, after a proper allowance shall be made as a compensation for a failure of A.'s title to a small part of the lands, be paid within a reasonable time, to be fixed by the court below, having reference to the necessity of raising the same by taxation, as prescribed and limited by the statute, the county be required to execute and deliver a deed, releasing to A. all the title acquired under his deed, and that he convey the same to B.

3. That the suit is not barred by the Statute of Limitations.

This is a bill in equity filed Sept. 10, 1877, by Chapman, a citizen of Tennessee, and the representatives of Charles A. Ely, deceased, citizens of Ohio, against the County of Douglas, a municipal corporation of Nebraska.

The object of the bill is declared to be, and the prayer corresponds to it, to compel the county to surrender possession of two certain tracts of land therein described, one of one hundred and sixty acres and one of ten acres, and to reconvey and release the title thereto, which the county acquired under a deed made by Chapman to the county on March 5, 1859, and for an account of the rents and profits thereof; or,

"in case said County of Douglas and the corporate authorities thereof shall elect and request to be allowed to retain and hold the land described, then and in that case to compel said county and the corporate authorities thereof to pay to or for your orators,

Page 107 U. S. 349

as the court shall direct, the reasonable price and value of said land, as stated in said deed of conveyance, with lawful interest thereon from the date of said deed to the time of the making of such payment."

It appears that on March 4, 1859, an agreement in writing and under seal was entered into between Chapman and the County of Douglas, the latter acting by the county commissioners, whereby Chapman agreed to sell and convey the premises in controversy

"on the following conditions, to-wit, that the party of the second part shall pay to the party of the first part at the ensealing and delivery of a warranty conveyance from the party of the first part to the party of the second part of the real estate aforesaid, two thousand ($2,000) dollars in county orders of the County of Douglas aforesaid on the treasurer of said County of Douglas, and the balance of six thousand ($6,000) dollars in four equal annual payments, together with interest on the amount due at ten (10) percent per annum until paid, and the said party of the first part will, when required, resign to and give up the possession of said property to the party of the second part, or its assigns or agents, immediately on the payment of the first payment hereinbefore enumerated, and put the said County of Douglas or its agents in full and peaceable possession of said described property. And the said party of the second part agrees to purchase said property on the terms aforesaid of the from the party of the first part, and for the security of the deferred payments, as hereinbefore set forth, to give a mortgage upon said described property to the party of the first part."

On the next day, March 5, 1859, in pursuance of this agreement, Chapman and wife executed and delivered to the county commissioners a deed to the County of Douglas for the land, which was accepted and placed by them on record. The first installment of the purchase money, $2,000 in county orders, was paid at that time, when, also, the county commissioners, in the name of the county, executed and delivered to Chapman the four promissory notes required by the agreement, payable in one, two, three, and four years from that date, respectively, and a mortgage, in the usual form of a conveyance in fee, with a defeasance to secure the payment of the same, which was accepted and recorded.

Page 107 U. S. 350

The property was purchased for the use of the county for a poorhouse and farm. Possession of it was taken immediately by the county authorities, and it has been improved and used for that purpose continuously ever since. The title of Chapman as to the one hundred and sixty-acre tract was perfect, but as to the ten-acre tract has failed.

On November 26, 1860, the notes and mortgage were assigned, for value, to Charles A. Ely, who having since deceased, his rights have devolved upon his legal representatives. On June 13, 1868, William A. Ely, a minor and the devisee of Charles A. Ely, by his next friend and guardian, commenced a suit in the district court for Douglas County for the foreclosure of the mortgage, to which a demurrer was interposed, on the ground that the notes and mortgage were void ab initio for want of power on the part of the county to make them, and also because any action on them was barred by the statute of limitations. This demurrer having been sustained, the plaintiff dismissed the action on July 21, 1868, without prejudice. On August 8, 1868, a similar suit, by bill in equity, was begun in the circuit court of the United States, which, on November 19, in the same year, was dismissed without prejudice, and on March 15, 1869, a similar bill was filed in the same court, to which the same defenses, as above stated, were raised upon a demurrer, which was sustained, and subsequently, on December 30, 1872, the bill was dismissed without prejudice.

The answer to the present bill admits that no part of the $5,000 of the original purchase money has been paid, and that the rents, issues, and profits of the premises, since the county has been in possession of them, exceed the amount of the first installment which was paid, and sets up the same defenses as before, that the mortgage and notes are void for want of power on the part of the county to make them, and that any action accruing to the complainants is barred by lapse of time and the statutes of limitation. It also admits

"that both the said commissioners and the said Chapman believed that the said county had full power and authority to purchase said lands and execute the said notes and mortgage for the unpaid part of the purchase price, and that all the actings and doings of the said parties in that behalf were had, made, and done in

Page 107 U. S. 351

perfect good faith, and for good and sufficient considerations, in all things conformable to equity and good conscience, save as hereinafter stated."

This saving is that

"the sum paid by this defendant for said lands, to-wit, $2,000, was the full, fair value thereof at the time of the said purchase and sale, and the amount of the said notes and mortgage was just so much in excess of the true value thereof. This defendant is informed and believes, and now here charges, that the said notes and mortgage were made between the said Chapman and the said commissioners, acting in the name of said county, with the full knowledge on the part of all of them that the full and fair value of the premises had been already paid therefor by the said county, and that the agreement to give the said notes and mortgage was unjust and oppressive toward the said county, and that, in fact they were without consideration, and that the giving thereof was induced by some secret and fraudulent agreement or understanding between the said commissioners, or some of them, on the one side, and the said Chapman on the other."

It also admits that during the delay of the complainants in bringing their suit, "the evidences of the fraudulent, corrupt, oppressive, and unjust contract of purchase have disappeared." No evidence in support of the alleged fraud is therefore offered, and the defendant is constrained to rely upon the statutes of limitation, if any cause of action ever existed. In reference to the allegation of the oppressive amount of the price agreed to be paid, in addition to the fact admitted in the answer that the rents and profits accrued to the county since it has been in possession amounted in value to more than the payment made, it is also urged in argument by its counsel, against a rescission of the contract, that

"there has been such a change of circumstances that that mode of relief would be most oppressive. This land, purchased when the county was very sparsely settled, and situated very near to a town which has recently grown to great importance, must have greatly appreciated in value. Besides which fact there is the further one already adverted to, that the county has improved it to the extent of $30,000."

It is therefore insisted that the county should be permitted to retain the land without paying for it.

Page 107 U. S. 352

On final hearing the bill was dismissed, and the decree to that effect is brought here for review by this appeal.

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