McGoon v. Scales - 76 U.S. 23 (1869)
U.S. Supreme Court
McGoon v. Scales, 76 U.S. 9 Wall. 23 23 (1869)
McGoon v. Scales
76 U.S. (9 Wall.) 23
1. A sale of the public land for state taxes while the land is still owned by the United States is invalid.
2. The law of the state in which land is situated governs its alienation and transfer, and the effect and construction of deeds conveying it, wherever they may be made.
3. The statute of Wisconsin of 1850 abolishes all passive trusts which require no duty to be performed by the trustee, and vests the title in the cestui que trust.
4. The statutes of Illinois of March 1, 1847, and those previous thereto, and the deed of the late Bank of Illinois made under them to close its affairs, left the real estate of the bank liable to execution for its debts.
5. The proceedings of a creditor of the bank to subject such real estate lying in Wisconsin to the payment of its debts, had in the courts of Wisconsin, must be governed by the laws of that state made for such cases.
6. The State of Wisconsin had a right to pass laws to subject such lands to the payment of the debts of the bank, though the corporation bad ceased to exist as such by the laws of Illinois. The only limitations on the right of the legislature to prescribe the mode of doing this being the constitution of the state and of the United States.
7. A sale made to one not a party to the suit under a judgment or decree will be valid though the judgment may afterwards be reversed.
8. If the court rendering the judgment had jurisdiction and the officer who sold had authority to sell, the sale will not be void by reason of errors in the judgment or irregularities in the officer's proceedings which do not reach the jurisdiction of the one or the authority of the other.
McGoon brought ejectment against Scales in the court below for a piece of land in Wisconsin Territory which the United States had granted to one Gear. Both parties claimed under Gear.
The defendant Scales' title, which it will most conduce to clearness to consider first, was thus:
On the 2d of November, 1842, Gear and wife conveyed the land in question to James Campbell as trustee of the State Bank of Illinois, and though the patent from the United States issued to Gear ten years later, it is conceded
by both parties that its effect was to make good the title conveyed by him to Campbell. The deed, after reciting that Gear was indebted to the bank in the sum of fifty thousand dollars to satisfy which debt the bank had agreed to take the real estate mentioned in the deed, conveyed the land to Campbell, who was to stand seized of the premises upon the trust and confidence that they should be sold by him for such a sum as should be directed by the bank, and the proceeds applied to the sole use and benefit of the bank, and if not sold, then that Campbell was to stand seized to the use of the bank and its assigns.
Campbell did not sign the deed nor accept the trust otherwise than by silence.
In 1850, the Legislature of Wisconsin passed a statute which abolished uses and trusts except as preserved in the act. One of the provisions of the statute was that:
"Every person who, by virtue of any grant, assignment or devise, now is or hereafter shall be entitled to the actual possession of lands, and the receipt of the rents and profits thereof in law or equity, shall be deemed to have the legal estate therein."
Other provisions of the statute defined the only cases in which valid express trusts might be made.
On the 31st October, 1848, the bank made a conveyance of the lands to Manly, Calhoun, and Ridgely for the benefit of the creditors of the institution and for the payment of its debts. The deed, however, was special in form, and made under circumstances which it is necessary to state. For many years before it was made the bank had been embarrassed, and several statutes were passed by the Legislature of Illinois for the purpose of enabling and compelling it to close its business and pay its liabilities. The last of these, approved March 1st, 1847, required the officers of the bank, if they should not have closed up its affairs prior to the 1st day of November, 1848, to turn over to three persons to be named by the governor, all the property, rights, and credits of the bank, when the trustees were to proceed to wind up its affairs. The
governor, under this act, named Manly, Calhoun, and Ridgely as the persons to take charge of the bank, and on the day before the power of the bank to act ceased by law, the conveyance we have mentioned was made by order of the board of directors. In this deed of conveyance they recited that it was made in pursuance of the Act of March 1, 1847, and for the purpose of carrying into effect its provisions, and that it was made to those persons because they had been so appointed by the governor under that act.
The last section of the act just referred to, after that previous section of it, and, indeed, previous statutes had fully defined the duties and powers of these trustees, declared that "the real estate of said bank shall be liable to taxation and sale on execution in the same manner as the property of individuals."
In this state of things, a statute of Wisconsin having declared that
"Lands, tenements, and real estate holden by anyone in trust for another shall be liable to debts, judgments, decrees, executions, and attachments against the person to whose use they are holden,"
one Henry Corwith, in August, 1853, commenced a suit in the state court of Wisconsin against the State Bank of Illinois and attached these lands. Manly, Calhoun, and Ridgely entered an appearance to the suit and moved to dissolve the attachment, and the bank, by its attorney, appeared and defended the suit.
Under these proceedings (the Legislature of Wisconsin having made provision by special statute for a case in which a bank, whose functions had ceased but which yet owned property and owed debts in Wisconsin, might be sued and the property subjected to the payment of those debts), Corwith got judgment; and by a writ of execution, which had no seal at the time, though one was afterwards put by order of the court upon motion to amend, sold the land to one Earnest (no party to the suit), who transferred his certificate to Scales, the defendant. The judgment under which this sale was made was afterwards set aside, but after many efforts in the state courts to set aside this sale, it was finally affirmed
in the courts of Wisconsin, including the supreme court, and the defendant Scales received the sheriff's deed on that sale on the 17th March, 1868.
Such was the defendant's title. The plaintiff claimed under several different titles. Among them was:
1st. By deed of quitclaim from Gear, U.S. dated January 17, 1867.
2d. By deed dated July 12, 1865, from James Campbell, trustee under Gear's trust deed of November, 1842.
3d. By deeds under tax sales in 1849 from the clerk of the board of supervisors of the county in Wisconsin where the lands were to the county, and from the county to him, McGoon, the plaintiff.
The court below told the jury that the defendant's title was the true title, and the verdict and judgment having gone accordingly, the case was now here for review.