The statute of limitations of Nebraska of four years as to an
action for relief on the ground of fraud, and the doctrine of
laches, apply to a suit by a county in Nebraska, brought in the
Circuit Court of the United
Page 139 U. S. 685
States for the District of Nebraska, to set aside a decree of
the same court for fraud.
Facts stated which supported the defenses of the statute of
limitations and of laches.
The case is stated in the opinion.
MR. JUSTICE BLATCHFORD delivered the opinion of the Court.
This is a bill in equity, filed on the 9th of June, 1883, in the
Circuit Court of the United States for the District of Nebraska, by
the County of Boone, a municipal corporation of the State of
Nebraska against the Burlington and Missouri River Railroad Company
in Nebraska, a Nebraska corporation, and Horatio H. Hunnewell, a
citizen of Massachusetts.
The bill avers that during the years from 1873 to 1877, both
inclusive, the railroad company owned certain lands of which a
schedule is annexed to the bill; that for those years taxes were
assessed upon those lands by the proper authorities of Boone
County, amounting in all to $68,666, which, with legal interest,
costs, and penalties, amount now to more than $90,000; that on the
4th of March, 1878, said Hunnewell filed a bill in the Circuit
Court of the United States for the District of Nebraska against the
railroad company, and the Board of County commissioners of Boone
County, and one Bollman, treasurer of the county, to compel the
cancellation of said taxes and procure a decree declaring them to
be illegal and void; that on the same day, without the issue of
process, the then Board of County Commissioners of Boone County, by
M. H. Sessions, a solicitor of the court, pretended to appear and
file a stipulation consenting to the taking of the bill
pro
confesso, and to the entry of a decree in favor of Hunnewell
for the relief prayed, granting a perpetual injunction against the
collection of any of the taxes, declaring the same to be illegal
and void, and relieving the lands from the lien thereof, which
decree was entered on the 8th of March, 1878. A copy of the bill
filed by Hunnewell is annexed. It set forth that the
Page 139 U. S. 686
plaintiff and all the stockholders of the company, who numbered
over one thousand, were citizens of the United States other than
Nebraska, and that the defendants were citizens of Nebraska. Its
prayer was for a decree that the taxes were illegal and void, for
an injunction restraining the treasurer from enforcing them and
from selling any of the land, and restraining the company from
paying the taxes; for a decree ordering the treasurer and the board
to cancel the taxes and the record thereof on the books of the
county, and for general relief. The gravamen of the Hunnewell bill
was that the taxes were all of them illegal and void for reasons
set forth in the bill, and that the plaintiff was, and had been for
more than four years, the owner and holder of 2,316 shares of the
stock of the company, and had requested its board of directors to
take efficient measures to protect it from said illegal taxes,
which request the board of directors refused, and the company was
about to pay the taxes.
The decree of March 8, 1878, was as follows:
"And now comes as well the said plaintiff, by his attorney, as
the said defendants, by their attorneys, and thereupon this action
comes on for trial before the court upon the issues joined between
the parties, on consideration whereof the court doth find the issue
in favor of the plaintiff, and doth find that the taxes set forth
in said petition of plaintiff are void, as in said petition the
said plaintiff has alleged. It is therefore ordered and adjudged
that an injunction be, and the same is hereby, allowed as prayed
for in said petition of plaintiff, and the same is hereby made
perpetual, and that the said defendants, the county commissioners
and the treasurer of said county, or their successors, are hereby
perpetually enjoined from collecting, or in any way attempting to
collect, or in any way intermeddling with, the taxes set forth in
said petition, and that the successors in office of the said
defendants be, and the same are hereby, perpetually enjoined from
collecting or in any way intermeddling with said taxes, and it is
further considered that the said plaintiff recover against the said
defendants his cost in and about this suit in this behalf expended,
taxed to be _____ dollars. "
Page 139 U. S. 687
The bill filed June 9, 1883, further sets forth that the taxes
were legal and valid, and had not any of them been paid, and were
subsisting liens upon the lands. It further avers that in January,
1878, the then County Commissioners of Boone County and the county
clerk thereof went from that county to the City of Lincoln, in
Lancaster County, Nebraska, at the special instance and request of
the railroad company; that at Lincoln, on January 30, 1878, the
then county commissioners, pretending to act as the Board of
Commissioners for Boone County, met with certain agents, attorneys,
and officers of the railroad company, and with one Adam Smith, of
Chicago, and those parties, confederating for the purpose of
defrauding the county, undertook, fraudulently, and without any
authority of law, to enter into a stipulation or agreement, which
the commissioners signed and delivered to the company. It is dated
at Lincoln, January 30, 1878, and is signed by Thomas T. Wilkinson,
chairman of the board of commissioners, by the other two
commissioners, Edwin Broadbent and T. H. Bowman, and by M. H.
Sessions as attorney for Boone County, and reads as follows:
"Memorandum of an agreement made by and between the Burlington
and Missouri River Railroad Company in Nebraska, first party, and
the County of Boone, Nebraska, by its commissioners, of the second
part, and the Nebraska Land and Livestock Company, of the third
part. Whereas, parties of the first and third parts have this day
entered into an agreement and bonds for the performance of certain
obligations conditional on the absolute release by the second party
of all illegal taxes levied upon the lands of the first and third
parties in the County of Boone for the years 1873 and 1877,
inclusive, now therefore the party of the second part hereby
agrees, by its commissioners and by its authorized attorney, M. H.
Sessions, to enter into the necessary stipulation, and to have
decree of court entered up in the Circuit Court of the United
States for the District of Nebraska eradicating the whole of the
taxes now charged against the lands of the first and third parties
for the above years, all of said taxes having been examined and
agreed upon as being illegal and void. "
Page 139 U. S. 688
The bill avers that there was no consideration for the
agreement; that the commissioners acted as individuals, and not as
a board; that their action had no binding or valid effect, and that
the pretended consideration for the agreement was the executing at
the same time of two documents, for whose execution there was no
warrant in law, and the commissioners had no authority to become
parties thereto. One of these documents was dated January 30, 1878,
and recited a contract made July 17, 1877, between the County of
Boone, through its commissioners, and Adam Smith, wherein Smith
agreed to purchase certain lands of the railroad company and pay
all legal taxes thereon for the year 1878 and thereafter, and to
make certain improvements in the county, in consideration of which
the commissioners agreed at some future day to take the necessary
legal steps for the wiping out of all the illegal taxes claimed to
be due upon the lands of the company for the years from 1873 to
1877, both inclusive. It further recited that Smith was prepared to
enter into the necessary obligations for the payment promptly
thereafter of the legal taxes; that the commissioners had that day
taken the necessary legal action to wipe out all the illegal taxes
claimed to be due for those five years, and that Smith had
transferred his rights to the Nebraska Land and Livestock Company,
which had assumed all his duties and obligations. By that document,
the latter company bound itself to pay all legal taxes for the
years 1878 to 1882, inclusive, which might be levied upon the lands
purchased by it from the railroad company in Boone County, and
bound itself also to pay all taxes which might be levied upon the
lands of the railroad company in Nebraska for the years 1878 to
1882, inclusive, if the railroad company failed to pay them. By the
other document, the railroad company bound itself to pay all legal
taxes for the years 1878 to 1882, inclusive, upon all its lands in
Boone County which had not been absolutely sold and deeded to the
Nebraska Land and Livestock Company or to other parties.
The bill further avers that at the same time and place the
commissioners, pretending to act for the county, and as officers
thereof, and intending to defraud the county out of said taxes,
Page 139 U. S. 689
signed a writing purporting to be an employment of Sessions as
attorney for the county. Such writing was dated January 30, 1878,
and signed by Wilkinson, as chairman of the board, and by Broadbent
and Bowman, the other two commissioners, and read as follows:
"That whereas the taxes on the lands of the B. and M. R. Co. in
Nebraska, in Boone County, both state and county and school taxes,
are unpaid for the years 1873, 1874, 175, 1876, and 1877, and
whereas, the said company dispute the legality of said taxes, and
it is necessary to test their legality, therefore, be it resolved
that the board employ M. H. Sessions as its attorney to defend any
suit that may be brought against the county or to bring any suit he
may deem best to test the legality of said taxes, and if he deem
that any of said taxes are illegal, he may make such compromise in
the matter with the said company as he may deem best for the
interest of the county in the premises, and the said M. H. Sessions
is hereby authorized to enter an appearance for the County of
Boone, Nebraska, in any suit which may be brought by the said
Burlington and Missouri River Railroad in Nebraska, or by any
stockholder thereof, and to take action as directed by said
commissioners, and to waive issuance and service of a subpoena in
the case."
The bill avers that in signing such writing, the commissioners
acted as individuals, and not as officers of the county; that they
had no authority to execute the writing or to confer upon Sessions
the power pretended to be conferred upon him; that to induce the
commissioners to enter into such an arrangement, the railroad
company and Smith agreed to pay and did pay all the expenses of the
commissioners in going from Boone County to Lincoln and returning,
and all their expenses at Lincoln; that the railroad company and
Smith fraudulently induced the commissioners to pretend to employ
Sessions as attorney for the county on an agreement that the
company and Smith would pay for his services; that Sessions was so
employed by the railroad company and Smith as an attorney to act in
their interest and against the interest of the county, while
pretending to act as the attorney of the county; that his fees and
expenses for so doing were agreed by the company
Page 139 U. S. 690
and Smith to be paid by them; that in all he did, pretending to
act as attorney and counsel for the county, he had acted for the
company and its interest, in pursuance of such arrangement; that
Hunnewell was a party to such fraudulent arrangements, and in
pursuance thereof the suit was commenced in a collusive and
fraudulent manner; that Sessions brought the bill to Omaha, with
the stipulation and a decree all prepared for entry, and filed the
same, paying the fees therefor on behalf of the railroad company
and Hunnewell; that the decree was null and void; that the railroad
company was the real plaintiff, and, fraudulently conspiring with
the board of county commissioners and with Sessions, caused the
bill to be brought in the name of Hunnewell for the sole purpose of
obtaining jurisdiction for the bill in the court in which it was
filed, all the other parties thereto being citizens of Nebraska.
The bill waives an answer on oath, and prays that the decree of
March 8, 1878, be set aside as fraudulent and void, and that the
taxes be declared valid and subsisting liens on the real estate,
and for general relief.
The railroad company and Hunnewell put in an answer to the bill
taking issue on its material allegations. The answer also set up
that, after the entry of the decree of March 8, 1878, the railroad
company and the Nebraska Land and Livestock Company expended large
sums of money in getting persons to settle upon the lands, and
commenced at once to sell them, the purchasers buying on the faith
that the taxes were perpetually enjoined, and not a lien upon any
of the lands; that since the decree was entered, and prior to the
commencement of this suit, the railroad company, without any
knowledge that Boone County intended to litigate or reopen the
decree, had sold all of the lands, largely to actual settlers, who
had moved in and taken possession of them, and had made valuable
improvements on them, relying on the fact that the taxes were not a
lien upon the lands; that the railroad company now owned none of
the lands, but all of them had been deeded to other parties; that
Adam Smith died some two years ago; that since the decree, the
railroad company had deeded 60,000 acres
Page 139 U. S. 691
of the land to the Nebraska Land and Livestock Company, and the
latter company had sold the greater part of the land to actual
settlers, who had settled upon the same in good faith, relying upon
the fact that the taxes for the years 1873 to 1877, both inclusive,
were not a lien upon it, and had put on it a large amount of
improvements; that, as the County of Boone had allowed them to buy
the land and settle upon it and had taken no steps for a period of
over five years after the decree was entered, it ought to be
estopped, and its laches had been so great that it would be
inequitable to set aside the decree, which would have the effect to
create a lien upon all of said land so sold to and settled upon by
the persons who had bought in good faith and knew nothing about any
effort that would be made to set aside the decree; that in June,
1880, the railroad company sold to the Chicago, Burlington and
Quincy Railroad Company 77,229 acres of the land, the latter
company having no knowledge that any effort would ever be made to
set aside the decree, but purchasing in good faith, believing that
the taxes in question were no liens upon the land; that it would
not have purchased had it known that there would be any attempt to
open up the decree; that, prior to the bringing of this suit, the
last-mentioned company had sold 75,000 acres of the land, largely
to actual settlers, mostly in tracts of 160 acres to each, and at
much expense had induced persons to buy, relying on the fact that
the taxes in question had been declared null and void, a large part
of the lands sold by both of the railroad companies having been
sold in 1879 and 1880; that, under the circumstances, Boone County
ought to be estopped, and its laches had been so great that it
could not now disturb the settlers who had bought in good faith;
that it ought not to maintain this suit because it had failed to
bring the same within four years from the time it discovered the
pretended fraud set up in the bill; that it allowed over five years
to elapse after it had full knowledge of the transaction as to the
entry of the decree complained of, before it took any steps to
annul the same; that it was barred of any relief by the statute of
limitations of Nebraska, as well as by laches in not commencing
this suit until the lands had been sold to
Page 139 U. S. 692
parties who knew nothing about the circumstances under which the
decree was entered, and that the board of county commissioners, and
each one of them, and the officers and taxpayers of the county, had
full knowledge of all the circumstances under which the decree of
March 8, 1878, was entered more than four years before this suit
was brought. There was a replication to the answer, proofs were
taken, and the circuit court, on a hearing, dismissed the bill for
want of equity, on the ground of laches on the part of the
plaintiff. From that decree the plaintiff has appealed to this
Court.
The appellant contends (1) that the circuit court had no
jurisdiction in the
Hunnewell case; (2) that the taxes in
question were valid; (3) that the proceedings to secure the decree
cancelling the taxes were a fraud on the appellant, and an
imposition on the court; (4) that if those proceedings were not
void for fraud, they were void for want of legal authority in the
board of county commissioners to stipulate that the decree be
entered cancelling the taxes, and (5) that this suit is not barred
by the statute of limitations or by laches.
We are of opinion that this suit was barred by the statute of
limitations of the State of Nebraska and by laches, and that the
bill was properly dismissed.
By section 12 of title 2 of chapter 57 of the General Statutes
of Nebraska of 1873, it is provided that an action for relief on
the ground of fraud can only be commenced within four years after
the cause of action shall have accrued, but the cause of action in
such case shall not be deemed to have accrued until the discovery
of the fraud. There is no allegation in the bill in this case that
the county or its officers were at any time after the entry of the
decree of March 8, 1878, ignorant of the facts and circumstances
connected with and attending its entry. The board of county
commissioners consisted of three persons, of whom two were a
controlling quorum. It appears from the evidence that the personnel
of the board was changed on the 1st of January, 1879, more than
four years and five months before this bill was filed, Wilkinson
and Bowman having gone out of office by or before January
Page 139 U. S. 693
1, 1879. There is no allegation in the bill, nor is there any
proof, that the board of county commissioners was under hostile
control down to a period within four years of the filing of the
bill; nor is there any averment in the bill as to the time when the
alleged fraud was discovered. The decree was a matter of public
record. It decreed that the taxes generally were void, meaning all
of them, as alleged in the bill filed by Hunnewell, and it granted
a perpetual injunction against the collection of all of the taxes.
The parties who took part in the proceedings were accessible. Smith
was then alive, and Sessions, who was examined as a witness in this
case, could have been inquired of.
Stearns v.
Page, 7 How. 819;
Moore v.
Greene, 19 How. 69;
Beaubein
v. Beaubein, 23 How. 190;
Badger v.
Badger, 2 Wall. 87,
69 U. S. 95;
Case of Broderick's
Will, 21 Wall. 503,
88 U. S. 518;
Brown v. County of Buena Vista, 95 U. S.
157;
Wood v. Carpenter, 101 U.
S. 135;
Graham v. Boston, Hartford &c.
Railroad, 118 U. S. 161;
Kirby v. Lake Shore &c. Railroad, 120 U.
S. 130;
Societe Fonciere &c. v. Milliken,
135 U. S. 304;
Norris v. Haggin, 136 U. S. 386,
136 U. S. 392;
Mackall v. Casilear, 137 U. S. 556,
137 U. S.
566.
The appellant seeks to apply to the county and its officers in
this case the established rule that laches will not be imputed to a
government for a failure on the part of its officers to perform
their duty.
United States v.
Kirkpatrick, 9 Wheat. 720;
United
States v. Van Zandt, 11 Wheat. 184;
United States v.
Nicholl, 12 Wheat. 505;
Dox v.
Postmaster General, 1 Pet. 325;
Gaussen v.
United States, 97 U. S. 584. But
this doctrine is not extended to such a municipal corporation as
the County of Boone.
Metropolitan Railroad v. District of
Columbia, 132 U. S. 1,
132 U. S. 11-12.
The principle of ratification by laches or delay is as applicable
to such a municipal corporation as it is to a private corporation
or to an individual person. 1 Dillon on Municipal Corporations, 4th
ed. ยง 548;
Clark v. City of
Washington, 12 Wheat. 40;
School Directors v.
Georges, 50 Mo. 194;
City of Cincinnati v. Evans, 5
Ohio St. 594. The statute of limitations of Nebraska makes no
exception in favor of such a municipal corporation as the County of
Boone, and the doctrine of laches applies to it and to its board of
county commissioners.
Page 139 U. S. 694
By the General Statutes of Nebraska of 1873, chapter 13, section
1, the county was made a body corporate, and it was provided by
section 4 that suits by or against it should be brought by or
against the board of County Commissioners of the county, and by
other provisions power was conferred upon the board to levy and
collect taxes. It therefore had authority to act for the county in
respect to the collection of taxes. Indeed, that it its only
authority for the bringing of the present suit, coupled with the
provision found in section 93 of chapter 13 of the General Statutes
of Nebraska of 1873, that the county commissioners are authorized
to employ attorneys in any case, either civil or criminal, in which
their county is interested when the cause is taken to the supreme
court of the state or before any United States court, and are
authorized to pay a reasonable compensation for such services.
Decree affirmed.
MR. CHIEF JUSTICE FULLER did not sit in this case or take any
part in its decision.