1. In 1853, M. & Co., judgment creditors of A., filed their
bill in the Circuit Court of the District of Columbia against him
and others setting forth that he had, without consideration and
with intent to defraud his creditors, conveyed to the other
defendants his real estate in that district. It was adjudged, May
30, 1860, that certain lots of ground be sold by a trustee to pay
M. & Co. and such other creditors as might come in according to
the practice of the court. The trustee subsequently reported that,
having sold a part of the lots and realized more than sufficient to
pay M. & Co., he had discontinued the sale. His report was
confirmed Nov. 28, 1802. An order of the court, Nov. 14, 1883,
recites that certain other creditors of A. had filed petitions in
support of their claims, and directs that he being then a
nonresident, notice of the character and object of the petitions be
given him by publication. Publication was made accordingly, and,
the defendants
Page 102 U. S. 69
failing to appear, the bill was taken as confessed. The case was
referred to an auditor, who reported that the claims were in excess
of the proceeds of the sale remaining in the hands of the trustee.
His report was confirmed. Thereupon the trustee, without any order
other than that entered May 30, 1860, proceeded to sell the
remainder of the lots to B. for $950. The sale was confirmed and
the cause referred to an auditor to state the accounts of the
trustee and report a distribution. A. appeared before the auditor
and objected to the allowance of the simple contract debts. The
report of the auditor was confirmed, and the lots were conveyed by
the trustee's deed bearing date Dec. 14, 1860, to B., who entered
thereon and made improvements to the value of $4,000. A., who then
resided upon a lot adjoining the premises, asserted no claim to
them except as to three feet for an alley, and he afterwards
admitted that even in regard to that part he was mistaken. A., Dec.
21, 1872, claiming that the trustee's sale was void and passed no
title, and having obtained a deed from the party to whom he had in
trust previously conveyed the lots so purchased by B., brought
ejectment against the latter.
Held that without affirming
that the sale to B. was valid in the absence of a special direction
by the court to the trustee to sell after the first order had been
executed, A.'s failure to object to its validity and apply to the
court to set it aside, and his not asserting any title to the
premises although he had knowledge that B., claiming them under a
judicial sale confirmed by a court of general jurisdiction, was
expending money and making improvements thereon, constituted an
equitable estoppel which precludes the maintenance of the
action.
2.
Dickerson v. Colgrove, 100 U.
S. 578, cited and approved.
This was an action of ejectment brought Dec. 21, 1872, by George
E. Kirk against Charles O. Hamilton and Catherine Hamilton, to
recover parts of lots 7 and 9 in square 437 in the City of
Washington. The defendants pleaded not guilty. A verdict was
returned in their favor, and, a new trial having been refused,
judgment was entered on the verdict. Kirk sued out this writ.
Six bills of exceptions were taken by Kirk. The nature and scope
of the questions thereby raised will be understood from a statement
of the principal facts appearing in the record of a suit in equity,
commenced in the year 1859 by D. W. Moore & Co. in the Circuit
Court for the District of Columbia against him, Walter Lenox, Henry
Maylor, Naylor, Richard H. Clarke, A. Austin Smith, Hugh B.
Sweeney, John Robinson, Major Garnett, John H. Goddard, Jr., Job W.
Angus, Charles Stott, and William S. Martin, in order to obtain
satisfaction of several unpaid judgments against him, amounting to
less than
Page 102 U. S. 70
$200, previously rendered in favor of the complainants by
justices of the peace.
The bill alleged that the complainants did not know of any
property belonging to Kirk upon which execution could be levied;
that he was the owner of a large amount of real estate in
Washington, which he had conveyed for the purpose of hindering,
delaying, and defrauding them in the recovery of their judgment
debts, to-wit, lot 78 in the subdivision of square No. 465, and
parts of lots 7, 9, 10, 11, and 12 in square No. 437; that by deed
of August, 1853, he conveyed part of lots 7 and 9 to the defendants
Lenox and Naylor in trust to secure the Washington Building
Association the sum of money therein mentioned; that by deed of
March 24, 1856, he conveyed a portion of the same lots to the
defendants Clarke and Smith in trust to secure the defendant
Sweeney in the payment of a promissory note for $1,600; that by
deed of April 14, 1854, he had conveyed parts of lots 10 and 12 in
square 437 to the defendant Robinson in trust to secure the
defendant Garnett in four promissory notes of $131.25 each; that by
deed of Oct. 13, 1854, he had conveyed the west half of lot 11 in
square 437 to the defendant Goddard in trust to secure the
defendant Angus in the payment of a promissory note for $500; that
it was provided in the deeds that if the several debts respectively
mentioned therein were not paid at maturity, then the several
parcels of ground thereby conveyed should be sold, and the balance
remaining after satisfying the several debts to be paid to Kirk;
that Kirk had purchased of one William S. Martin lots 43, 44, 45,
and 46 in square 465, and for the purpose of defrauding, hindering,
and delaying his trustees had caused the latter, by deed of April
22, 1858, to convey the same to him, as trustee for his wife and
children; that the several pieces of property largely exceeded in
value the debts secured thereby, and that if the debts were genuine
and still unpaid (which was denied), then the interest of Kirk
therein was liable in equity for the payment of the judgments,
after satisfying any sums due on the debts described in the
conveyances.
The bill further alleged that on 22d March, 1856, Kirk, for the
pretended consideration of $4,000, conveyed to the defendant Stott,
his heirs and assigns, lot 78 in subdivision of square
Page 102 U. S. 71
465, and parts of lots 7, 9, 10, 11, and 12 in square 437; that
the deed was purely voluntary and with the intent to defraud and
delay the creditors of Kirk, and in any event, if a consideration
passed, it was upon a secret trust to reconvey to Kirk whenever the
sum of $4,000 was repaid.
It also alleged that the several deeds were duly recorded, and
prayed that the deed from Kirk to Stott be declared null and void
as against the complainants, and that the parcels of ground
mentioned in the several conveyances be sold for the payment,
"first, of such sums as were shown to be due on account of debts,
and next, of the amount or amounts due to complainants on their
judgments, and the costs" of suit.
Special interrogatories to the several defendants were embodied
in the bill.
On 21st November, 1859, summons was issued and returned 28th
November, 1859, as served on all the defendants except Garnett and
Martin.
At the May Term, 1860, a decree was, for want of an appearance
and answer at rules, entered
pro confesso against all of
the defendants except Garnett and Martin. It ordered that parts of
lots 7 and 9 in square 437, and lot 78 in subdivision of square
465
"be sold, or so much thereof as may be necessary, for the
payment of said complainants' claim and others who may come in as
creditors of the said George E. Kirk by petition, in the manner and
form required by law and the practice of the court, and that Edward
C. Carrington be and is hereby appointed trustee to make such
sale,"
&c.
After advertisement as required by the decree, the trustee sold
lot 78, with improvements, for $1,480. In his report of sale, he
says:
"Your trustee, having sold sufficient property to pay and
satisfy the claims provided for in said bill and decree,
discontinued the sale of the other property mentioned in said
proceedings."
On 28th October, 1862, the report of sale, no exception thereto
having been filed, was confirmed, and the cause referred to the
auditor to state the trustee's account and make distribution of the
fund realized. After satisfying the claims of Moore & Co. and
costs of suit, there was left a surplus in the trustee's hands of
$1,008.52.
Page 102 U. S. 72
In an order entered Nov. 14, 1863, it is recited that certain
creditors of Kirk had filed petitions, seeking the payment of
numerous judgments and claims against him. Upon the ground that he
was a nonresident living beyond the jurisdiction of the court, an
order was made that notice of the character and object of the
petitions be given him by publication, for six weeks, warning him
to appear in person or by solicitor, on or before the second Monday
of January, 1864, "at rules to be held in the clerk's office" of
the court, otherwise the petitions and claims would be taken as
confessed against him. Due proof of publication of that order was
filed Jan. 23, 1864. On 2d February, 1864, this order was
entered:
"It appearing to the clerk that the defendants Geo. E. Kirk,
Walter Lenox, Henry Naylor, R. H. Clarke, A. A. Smith, H. B.
Sweeney, John Robinson, J. H. Goddard, Jr., Job W. Angus, and
Charles Stott have failed to appear and answer in this suit, it is,
this second day of February, 1864, on motion of A. Lloyd (by Fred.
H. Norton), solicitor for complainants, ordered by the clerk that
the bill and the matters thereof be taken for confessed against the
above defendants."
By an order of the 12th of February, 1864, the cause, with the
said petitions and claims, was referred to the auditor of the court
with instructions to state the trustee's account and make
distribution of the balance of the fund in his hands. A report of
distribution was made showing that judgments and claims were proven
in excess of the funds remaining in the trustee's hands upon the
sale of lot 78. His report of distribution was approved April 9,
1864.
Thereupon the trustee, Carrington, without any further order,
and by virtue of the original decree of May 30, 1860, advertised,
and on the 19th of April, 1864, sold at public auction the demanded
premises, being the parts of lots 7 and 9 described in the bill, to
Charles O. Hamilton for $950. The sale was subsequently confirmed,
and by an order of Dec. 12, 1864, the cause was referred to the
auditor to state the accounts of the trustee and report a
distribution. In his report, the auditor says:
"Pending this last reference of December, 1864, and before the
case was confirmed, Kirk returned from the South, and has appeared
by Mr. Laskey, his counsel, upon
Page 102 U. S. 73
this reference. The simple contract debts are not admitted by
him, but he states that he has offsets in bar against some if not
all of them."
Appended to the auditor's report there is the following
paper:
"The defendant Kirk does not admit the simple contract debts,
but contests the same, and requires the said claims before they be
allowed by the auditor to be established by competent proof. R. H.
Laskey, atty. for deft."
The report was confirmed Feb. 5, 1865, and the purchase money
having been paid, Carrington, the trustee, by his deed of Dec. 14,
1865, conveyed the premises to Hamilton, who thereupon went into
possession. The remaining facts are stated in the opinion of the
Court.
MR. JUSTICE HARLAN, after stating the case, delivered the
opinion of the Court.
It appears from the first bill of exceptions that upon the trial
of the cause, the plaintiff, to maintain the issue joined, gave
evidence to the jury tending to prove title in himself to the land
in dispute as well as his actual possession of the premises under
that title; that he had fully discharged the indebtedness secured
by the two deeds of trust executed, one to Lenox and Naylor and the
other to Clarke and Smith; that Charles Stott, on the 14th of May,
1872, reconveyed to him all that portion of the premises which, on
the 22d of March, 1856, he had conveyed to Stott; that he had never
made nor authorized any other conveyances than those just named. He
also introduced a deed from Carrington, as the supposed trustee in
the case of
Moore & Co. v. Kirk &c., at the same
time, however, denying its validity and avowing that it was
introduced subject to his exceptions reserved, and to be thereafter
presented, as to its sufficiency in law to prove title in the
defendants or either of them. It was admitted by the court subject
to those exceptions. The plaintiff further gave evidence to prove
that defendants were in possession of the premises at the
commencement of the action, and then rested.
The bill of exceptions then shows that defendants, to
sustain
Page 102 U. S. 74
their defense, and to prove title out of the plaintiff, offered
to read in evidence the record of the equity suit of
Moore
& Co. v. Kirk &c. Plaintiff insisted that the record
of that suit was insufficient in law to maintain the issue on
defendants' behalf or to show title in them, and asked the court to
inform the jury that it should not then be admitted in evidence,
except subject to his exceptions as to its sufficiency in law, to
be thereafter presented to the court pending the further trial of
the cause. The record was so admitted. The defendants, further to
maintain their defense and to prove title in themselves, offered to
introduce testimony tending to prove that at the time of the
purchase of the premises at the sale made by Carrington, trustee,
in the suit of
Moore & Co. v. Kirk &c., the only
improvement thereon was a two-story four-room brick house, and
that, about the year 1868, the defendants erected an extensive
building on the property, at a cost of some $4,000; that when they
began such building, and for some time thereafter, the plaintiff
Kirk resided on the adjoining premises; that during all that time,
he well knew of said improvements, made no objection thereto, and
asserted no claim to the property, except the west three feet
thereof, adjoining his ground, and which he claimed as an alley,
and even as to such portion he subsequently informed the witness he
was mistaken, and lastly that the plaintiff, though residing in the
City of Washington ever since about the year 1865, never, to
defendants' knowledge, until the commencement of this action,
asserted any claim to the premises in dispute.
At that stage of the trial, the plaintiff interposed and asked
the court to inform the jury that the testimony thus offered in
reference to defendants' putting improvements on the premises was
inadmissible in law, and that such issue ought to be found for the
plaintiff. The court ruled that the testimony was admissible, to
which plaintiff excepted. The defendants then gave the said
testimony in evidence to the jury, who rendered a verdict against
the plaintiff upon to the jury, who rendered first bill of
exceptions.
The remaining bills of exceptions present, in different forms,
the general question whether the sale by Carrington, as trustee, on
the 19th of April, 1864, was or was not, upon the face of the
Page 102 U. S. 75
record of
Moore & Co. v. Kirk &c., a mere
nullity. Its validity is assailed by the plaintiff on various
grounds, the most important of which seem to be:
1. That as Moore & Co. sued in their own behalf only, and
not for the benefit of themselves and other creditors, the
jurisdiction and power of the court was exhausted by the first sale
(of lot No. 78), which raised an amount largely in excess of the
claims for which Moore & Co. sued.
2. That the utmost which the court, upon the pleadings, could
do, was to distribute such excess among the other creditors of Kirk
who should appear in proper form and establish their claims.
3. That the court was entirely without jurisdiction to make a
second order of sale, and did not assume to exercise any such
power.
4. That the second sale by Carrington, having been made without
any previous order or direction of the court, its confirmation, and
the deed subsequently made to Hamilton, were absolutely null and
void.
In the view we take of the case it is unnecessary to pass upon
these several objections. If it be assumed that the record of the
suit of Moore & Co. v. Kirk &c., was of itself insufficient
in law to divest Kirk of title to the premises in dispute or to
invest Hamilton with title, the question still remains whether the
facts disclosed by the first bill of exceptions do not constitute a
defense to the present action.
After the confirmation of the sale of April 19, 1864, before any
deed had been made, and while the cause was upon reference for a
statement, as well of the trustee's accounts as for distribution of
the fund realized by the sales, Kirk, it seems, appeared before the
auditor by an attorney and made objection to the allowance of the
simple contract debts which had been proven against him in his
absence. So far as the record discloses, no other objection to the
proceedings was interposed by him. Undoubtedly he then knew -- he
must be conclusively presumed to have known after he appeared
before the auditor -- all that had taken place in that suit during
his absence from the District, including the sale of the premises
in dispute, which took place only a few months prior to his
appearance before the auditor. If that sale was a nullity, the
court, upon application by Kirk, after his appearance before the
auditor, could have disregarded all that had been done subsequently
to the
Page 102 U. S. 76
first sale, discharged Hamilton's bond, returned the money he
had paid, and in addition placed Kirk in the actual possession of
the property. No such application was made. No such claim was
asserted. No effort was made by him to prevent the execution of a
deed to the purchaser at the second sale. So far as the record
shows, he seemed to have acquiesced in what had been done in his
absence. In 1868, three years after his return to the city and two
years after Hamilton had secured a deed in pursuance of his
purchase, he became aware that Hamilton was in actual possession of
the premises, claiming and improving them as his property. He
personally knew of Hamilton's expenditures of money in their
improvement, and remained silent as to any claim of his own.
Indeed, his assertion while the improvements were being made, of
claim to only three feet of ground next to the adjoining lot upon
which he resided, was in effect a disclaimer that he had or would
assert a claim to the remainder of the lots 7 and 9 which Hamilton
had purchased at the sale in April, 1864. And his subsequent
declaration that he was in error in claiming even that three feet
of ground only added force to his former disclaimer of title in the
premises. Hamilton was in possession under an apparent title
acquired, as we must assume from the record, in entire good faith
by what he supposed to be a valid judicial sale under the sanction
of a court of general jurisdiction.
The only serious question upon this branch of the case is
whether, consistently with the authorities, the defense is
available to Hamilton in this action of ejectment to recover the
possession of the property. We are of opinion that the present case
comes within the reasons upon which rest the established exceptions
to the general rule that title to land cannot be extinguished or
transferred by acts
in pais or by oral declarations. "What
I induce my neighbor to regard as true is the truth as between us
if he has been misled by my asseveration" became a settled rule of
property at a very early period in courts of equity. The same
principle is thus stated by Chancellor Kent in
Wendell v. Van
Rensselaer, 1 Johns. (N.Y.) Ch. 344:
"There is no principle better established in this court, nor one
founded on more solid considerations of equity and public utility,
than that which declares that if one man knowingly,
Page 102 U. S. 77
though he does it passively, by looking on, suffers another to
purchase and expend money on land under an erroneous opinion of
title, without making known his own claim, shall not afterwards be
permitted to exercise his legal right against such person. It would
be an act of fraud and injustice, and his conscience is bound by
this equitable estoppel."
P. 354.
While this doctrine originated in courts of equity, it has been
applied in cases arising in courts of law.
In
The King v. The Inhabitants of Butterton, 6 Durnf.
& E. 554, Mr. Justice Lawrence said:
"I remember a case some years ago in which Lord Mansfield would
not suffer a man to recover, even in ejectment, where he had stood
by and seen the defendant build on his land."
In 2 Smith, Lead.Cas., pp. 730-740 (7th Am. ed., with notes by
Hare and Wallace), the authorities are carefully examined. It is
there said that there has been an increasing disposition to apply
the doctrine of equitable estoppel in courts of law.
Again (pp. 733, 734):
"The question presented in these and other cases, which involve
the operation of equitable estoppels on real estate, is both
difficult and important. It is undoubtedly true that the title to
land cannot be bound by an oral agreement, or passed by matter
in pais, without an apparent violation of those provisions
of the Statute of Frauds which require a writing when the realty is
involved. But it is equally well settled that equity will not allow
the statute to be used as a means of effecting the fraud which it
was designed to prevent, and will withdraw every case not within
its spirit from the rigor of its letter if it be possible to do so
without violating the general policy of the act and giving rise to
the uncertainty which it was meant to obviate. It is well
established that an estate in land may be virtually transferred
from one man to another without a writing by a verbal sale
accompanied by actual possession or by the failure of the owner to
give notice of his title to the purchaser under circumstances where
the omission operates as a fraud, and although the title does not
pass under these circumstances, a conveyance will be decreed by a
court of equity. It would therefore seem too late to contend that
the title to real estate cannot be passed by matter
in
pais without disregarding the Statute of Frauds, and
Page 102 U. S. 78
the only room for dispute is as to the forum in which relief
must be sought. The remedy in such cases lay originally in an
application to chancery, and no redress could be had [except] in a
merely legal tribunal, except under rare and exceptional
circumstances. But the common law has been enlarged and enriched
under the principles and maxims of equity, which are constantly
applied at the present day in this country, and even in England,
for the relief of grantees, the protection of mortgagors, and the
benefit of purchasers, by a wise adaptation of ancient forms to the
more liberal spirit of modern times. The doctrine of equitable
estoppel is, as its name indicates, chiefly, if not wholly, derived
from courts of equity, and as these courts apply it to any species
of property, there would seem no reason why its application should
be restricted in courts of law. Protection against fraud is equally
necessary, whatever may be the nature of the interest at stake, and
there is nothing in the nature of real estate to exclude those wise
and salutary principles, which are now adopted without scruple in
both jurisdictions in the case of personalty. And whatever may be
the wisdom of the change, through which the law has encroached on
the jurisdiction of chancery, it has now gone too far to be
confined within any limits short of the whole field of
jurisprudence. This view is maintained by the main current of
decisions."
This question in a different form was examined in
Dickerson
v. Colgrove, 100 U. S. 578.
That was an action of ejectment, and the defense, based upon
equitable estoppel, was adjudged to be sufficient. We there held
that the action involved both the right of possession and the right
of property, and that as the facts developed showed that the
plaintiff was not in equity and conscience entitled to disturb the
possession of the defendants, there was no reason why the latter
might not, under the circumstances disclosed, rely upon the
doctrine of equitable estoppel to protect their possession.
Applying these principles to the case in hand, it is clear, upon
the facts recited in the first bill of exceptions, and which the
jury found to have been established, that the plaintiff is estopped
from disturbing the possession of the defendants. He knew, as we
have seen, that the defendants claimed the property
Page 102 U. S. 79
under a sale made in an equity suit to which he was an original
party. The sale may have been a nullity, and it may be that he
could have repudiated it as a valid transfer of his right of
property. Instead of pursuing that course, he, with a knowledge of
all the facts, appeared before the auditor and disputed the right
of certain creditors to be paid out of the fund which had been
raised by the sale of his property. He forbore to raise any
question whatever as to the validity of the sale, and by his
conduct indicated his purpose not to make any issue in reference to
the proceedings in the equity suit. Knowing that the defendants'
claim to the premises rested upon that sale, he remained silent
while the latter expended large sums in their improvement, and in
effect disclaimed title in himself. He was silent when good faith
required him to put the purchaser on guard. He should not now be
heard to say that that is not true which his conduct unmistakably
declared was true and upon the faith of which others acted.
The evidence upon this point was properly admitted, and operated
to defeat the action independently of the question whether the sale
by Carrington, the trustee, and its confirmation by the court, was
itself a valid, binding transfer of the title to the purchaser.
What has been said renders it unnecessary to consider the
questions of law presented in the remaining bills of
exceptions.
Judgment affirmed.
