The former decision in this case,
140 U. S. 140 U.S.
599, imported that the pleas were sufficient in law, and remanded
the case only for an inquiry as to their truthfulness.
A defendant in equity may let the facts averred in the bill go
unchallenged and set up some special matter by plea sufficient to
defeat the recovery, and in such case, no fact is in issue at the
hearing but the matter so specially pleaded.
In these suits, those defendants who were not the original
wrongdoers had the right to set up any special matter of defense
which constituted a defense as to them, and then the inquiry was
limited to such matter as between them and the government.
The essential elements which go to make a
bona fide
purchaser of real estate are (1) a valuable consideration, (2) an
absence of notice of fraud or defect, (3) presence of good
faith.
It is again decided that when a statute of the United States
delegates to a tribunal or officer full jurisdiction over a subject
in which the United States are interested, his or its determination
within the limit of his authority is conclusive in the absence of
fraud.
A person holding under a quitclaim deed may be a
bona
fide purchaser.
Oliver v.
Piatt, 3 How. 333;
Van
Rensselaer v. Kearney, 11 How. 297;
May v. Le
Claire, 11 Wall. 217;
Villa v.
Rodriguez, 12 Wall. 323;
Dickerson v.
Colgrove, 100 U. S. 578;
Baker v. Humphrey, 101 U. S. 494, and
Hanrick v. Patrick, 119 U. S. 156,
questioned on this point.
A deed by which the grantor aliens, releases, grants, bargains,
sells, and conveys the granted estate to the grantee, his heirs and
assigns, to have and to hold the same and all the right, title and
interest of the grantor therein is a deed of bargain and sale, and
will convey an after-acquired title.
On July 2, 1864, Congress passed an act granting lands to the
State of Oregon to aid in the construction of a military road from
Eugene City to the eastern boundary of the State. 13 Stat. 355, c.
213. A proviso to the first and granting section was
"That the lands hereby granted shall be exclusively
Page 148 U. S. 32
applied in the construction of said road, and shall be disposed
of only as the work progresses, and the same shall be applied to no
other purpose whatever."
The third and fourth sections read:
"SEC. 3.
And be it further enacted that said road shall
be constructed with such width, graduation, and bridges as to
permit of its regular use as a wagon road, and in such other
special manner as the State of Oregon may prescribe."
"SEC. 4.
And be it further enacted that the lands
hereby granted to said state shall be disposed of only in the
following manner, that is to say that a quantity of land, not
exceeding thirty sections, for said road may be sold, and when the
governor of said state shall certify to the Secretary of the
Interior that any ten continuous miles of said road are completed,
then another quantity of land hereby granted, not to exceed thirty
sections, may be sold, and so from time to time until said road is
completed, and if said road is not completed within five years, no
further sales shall be made, and the land remaining unsold shall
revert to the United States."
On October 24, 1864, the Legislature of Oregon, in its turn,
granted these lands to the Oregon Central Military Road Company for
the purpose of aiding it in constructing the road. Laws of Oregon,
1864, p. 36. On June 18, 1874, Congress enacted:
"Chap. 305. An act to authorize the issuance of patents for
lands granted to the State of Oregon in certain cases."
"Whereas, certain lands have heretofore, by acts of Congress,
been granted to the State of Oregon to aid in the construction of
certain military wagon roads in said state, and there exists no law
providing for the issuing of formal patents for said lands,
therefore,"
"
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled, that in
all cases when the roads in aid of the construction of which said
lands were granted are shown by the certificate of the Governor of
the State of Oregon, as in said acts provided, to have been
constructed and completed, patents for said lands shall issue in
due form to the State of Oregon as fast as the
Page 148 U. S. 33
same shall, under said grants, be selected and certified unless
the State of Oregon shall be public act have transferred its
interests in said lands to any corporation or corporations, in
which case the patents shall issue from the General Land Office to
such corporation or corporations upon their payment of the
necessary expenses thereof: provided, that this shall not be
construed to revive any land grant already expired, nor to create
any new rights of any kind except to provide for issuing patents
for lands to which the state is already entitled."
18 Stat. 80.
On March 2, 1889, Congress passed an act, 25 Stat. 850, c.377,
entitled "An act providing in certain cases for the forfeiture of
wagon road grants in the State of Oregon," which commenced with
this recital:
"Whereas, the United States have heretofore made various grants
of public lands to aid in the construction of different wagon roads
in the State of Oregon, and upon the condition that such roads
should be completed within prescribed times, and whereas, said
grants were transferred by said state to sundry corporations, who
were authorized by the state to construct such wagon roads and to
receive therefor the grants of lands thus made, and whereas, the
Department of the Interior certified portions of said lands to the
State of Oregon upon the theory that said roads had been completed
as required by the granting acts of Congress, and upon the
certificate of the governor of the State of Oregon as to such
completion, and whereas, the Legislature of the State of Oregon has
memorialized Congress and therein alleged that certain of said
wagon roads, in whole or in part, were not so completed, and that
to the extent of the lands coterminous with unconstructed portions
the certifications thereof by the Department of the Interior were
unauthorized and illegal, therefore, . . . and directed the
Attorney General of the United States within six months to
institute suits in the Circuit Court of the United States for the
District of Oregon against all firms, persons, or corporations
claiming to own or have an interest in lands
Page 148 U. S. 34
granted to the State of Oregon by certain enumerated acts of
Congress -- among others, the act above referred to, of July 2,
1864 -- to determine the questions of the reasonable and proper
completion of said roads in accordance with the terms of the
granting acts, either in whole or in part, the legal effect of the
several certificates of the governors of the State of Oregon of the
completion of said roads, and the right of resumption of such
granted lands by the United States, and to obtain judgments, which
the court is hereby authorized to render, declaring forfeited to
the United States all of such lands as are coterminous with the
part or parts of either of said wagon roads which were not
constructed in accordance with the requirements of the granting
acts, and setting aside patents which have issued for any such
lands, saving and preserving the rights of all
bona fide
purchasers of either of said grants, or of any portion of said
grants, for a valuable consideration if any such there be. Said
suit or suits shall be tried and adjudicated in like manner and by
the same principles and rules of jurisprudence as other suits in
equity are therein tried, with right to writ of error or appeal by
either or any party as in other cases."
In pursuance of this act, on August 30, 1889, a bill was filed
in the Circuit Court of the United States for the District of
Oregon against the Oregon Central Military Road Company, the
California and Oregon Land Company, and certain named individuals.
The bill, it may be said in a general way, charged that the road
was not in fact constructed; that certificates of construction were
fraudulently obtained from the governors of the state; that, in
pursuance of such false certifications, a large number of tracts
had been certified or patented to the State of Oregon for the
benefit of the Oregon Central Military Road Company; that
thereafter these lands were conveyed to certain of the individuals
named as defendants, and by them finally to the California and
Oregon Land Company; and, further, that these parties received the
deeds with full knowledge of the fact that the road was not
constructed as required by the act, and that the certificates were
false, and fraudulently obtained. To this bill, on October 24,
1889, the
Page 148 U. S. 35
California and Oregon Land Company filed two pleas and an answer
in support thereof. The case was set down for hearing on the pleas,
and on February 18, 1896, they were sustained, and the bill
dismissed. From such decree of dismissal the United States appealed
to this Court. On May 25, 1891, the decision of the circuit court
was reversed, 140 U.S.
140 U. S. 599, and
the case remanded for further proceedings. The opinion of this
Court was announced by Mr. Justice Blatchford, and in that opinion
will be found a full history of all the matters affecting the
litigation up to that time. The conclusion reached was that the
circuit court erred in not permitting the United States to reply to
the pleas and in dismissing the bill absolutely. After the mandate
had been filed in the circuit court, issue was joined on the pleas,
testimony taken, and on December 7, 1891, a decree was again
entered sustaining the second plea and dismissing the bill of
complaint, as to the defendant, the California and Oregon Land
Company. From this decree an appeal was taken to the circuit court
of appeals, by which court, on March 10, 1892, that decree was
affirmed, 51 F. 629, and from this decree of affirmance the United
States appeal to this Court.
Page 148 U. S. 37
MR. JUSTICE BREWER, after stating the facts in the foregoing
language, delivered the opinion of the Court.
The burden of complaint in this case is that the circuit court
erred in restricting the scope of the inquiry. The government
sought to introduce testimony to show that the road was never in
fact constructed, as required by the act of Congress, and also that
the certificates of the governors, made as provided by section 4 of
the act of 1864, were obtained by fraud and misrepresentation, as
averred in the bill. But all of this testimony was excluded and the
inquiry limited to the single question whether the land company was
a
bona fide purchaser.
The first plea of the land company recited the fact that three
several certificates had been issued by governors of the State of
Oregon to the effect that the road had been completed as required
by the act of Congress, and added
"that each of said several certificates was made honestly and in
good faith, and without any fraudulent intent or procurement or
false representation by any person whomsoever."
But upon application to the circuit court this clause in the
plea was stricken out, leaving it to contain simply an averment of
the certificates of the governors, and, as these had been set out
at length in the bill, there was no issue of fact presented by this
plea. The other plea was that the land company was a
Page 148 U. S. 38
purchaser in good faith, and to that question, as heretofore
stated, the inquiry was restricted.
There was no error in this ruling. The decision of this Court,
as reported in
140 U. S. 140 U.S.
599, was that
"the decree of the circuit court, so far as it dismisses the
bill, must be reversed, and the case be remanded to that court with
a direction to allow the plaintiffs to reply to and join issue on
the pleas,"
and the mandate which was sent to the circuit court recited this
direction. That decision was the law of this case for the
subsequent proceedings in that court. There was no adjudication
that the pleas were insufficient in law; on the contrary, the plain
implication of the opinion was that they were sufficient, and the
question which was remanded to that court for inquiry was as to
their truthfulness. There was no adjudication of insufficiency, and
no rehearing ordered on that question. If the government was not
satisfied with the decision, it should have called our attention to
it, and have sought a modification or enlargement of the decree.
The circuit court properly construed it, and proceeded in obedience
thereto to permit the government to join issue on the pleas, and to
entertain an inquiry as to their truthfulness, and that was the
only matter open for inquiry.
Indeed, that would have been the rule if there had been no
decision of this Court, and if, in the first instance, issue had
been joined on the pleas. It is true that the statute directed that
these suits be brought "to determine the questions of the
seasonable and proper completion of said roads," and "the legal
effect of the several certificates of the governors," and upon that
counsel for the government insists that its mandate was that there
should be full inquiry as to these matters, but that statute also
provided
"that said suit or suits shall be tried and adjudicated in like
manner and by the same principles and rules of jurisprudence as
other suits in equity are therein tried,"
and the unquestionable right of a defendant in an equity suit is
to let the facts averred in the bill go unchallenged, and by plea
set up some special matter which, if established and sufficient,
will defeat any recovery. Even if it were within the competency of
Congress to compel every
Page 148 U. S. 39
party named as defendant to a suit in equity brought by it to
bear all the expenses and submit to all the delay of a prolonged
inquiry into the truth of the facts averred in the bill, it is
obvious from the language we have quoted from the statute that
Congress did not intend to deprive any party of the rights
ordinarily vested in defendants in suits in equity. If the sole
purpose were to ascertain by judicial investigation whether the
roads were in fact completed as required, that purpose could have
been accomplished by making defendants only the original parties,
the wrongdoers. If other parties than they were made defendants, as
is the fact here, such parties, within the terms of the statute,
had the right by plea to set up any special matter which, as to
them, constituted a full defense, and as between such parties and
the government the inquiry, by settled rules of equity, was then
limited to such matter.
In
Farley v. Kittson, 120 U. S. 303,
120 U. S. 314,
120 U. S.
315-316, the nature and functions of a plea were fully
discussed. It was said:
"But the proper office of a plea is not, like an answer, to meet
all the allegations of the bill; nor like a demurrer, admitting
those allegations, to deny the equity of the bill; but it is to
present some distinct fact, which of itself creates a bar to the
suit, or to the part to which the plea applies, and thus to avoid
the necessity of making the discovery asked for, and the expense of
going into the evidence at large. Mitford Pl. (4th ed.) 14, 219,
295; Story, Eq. Pl. §§ 649, 652."
"The plaintiff may either set down the plea for argument or file
a replication to it. If he sets down the plea for argument, he
thereby admits the truth of all the facts stated in the plea, and
merely denies their sufficiency in point of law to prevent his
recovery. If, on the other hand, he replies to the plea, joining
issue upon the facts averred in it, and so puts the defendant to
the trouble and expense of proving his plea, he thereby, according
to the English chancery practice, admits that if the particular
facts stated in the plea are true, they are sufficient in law to
bar his recovery, and if they are proved to be true, the bill must
be dismissed without reference to the equity arising from any other
facts stated in the bill. Mitford
Page 148 U. S. 40
Eq.Pl. 302, 303; Story, Eq.Pl. § 697. That practice in this
particular has been twice recognized by this Court.
Hughes
v. Blake, 6 Wheat. 453,
19 U. S.
472;
Rhode Island v.
Massachusetts, 14 Pet. 210,
39 U. S.
257."
And again:
"In a case so heard, decided by this Court in 1808, Chief
Justice Marshall said:"
"In this case, the merits of the claim cannot be examined. The
only questions before this Court are upon the sufficiency of the
plea to bar the action, and the sufficiency of the testimony to
support the plea as pleaded."
"
Stead
v. Course, 4 Cranch 403,
8 U. S.
413. In a case before the House of Lords a year
afterwards, Lord Redesdale"
"observed that a plea was a special answer to a bill, differing
in this from an answer in the common form, as it demanded the
judgment of the court, in the first instance, whether the special
matter urged by it did not debar the plaintiff from his title to
that answer which the bill required. If a plea were allowed,
nothing remained in issue between the parties, so far as the plea
extended, but the truth of the matter pleaded. . . . Upon a plea
allowed, nothing is in issue between the parties but the matter
pleaded, and the averments added to support the plea. . . . Upon
argument of a plea, every fact stated in the bill and not denied by
answer in support of the plea must be taken for true."
"
Roche v. Morgell, 2 Sch. & Lef. 721, 725-727."
The right therefore of this defendant, the California and Oregon
Land Company, to avail itself of a plea cannot be doubted, and the
plea which it made in this case -- that of a
bona fide
purchaser -- is one favored in the law. In the act directing these
suits was a clause
"saving and preserving the rights of all
bona fide
purchasers of either of said grants, or of any portion of said
grants, for a valuable consideration, if any such there be."
In Story's Equity Jurisprudence, section 411, the author
says:
"Indeed, purchasers of this sort [
bona fide purchasers]
are so much favored in equity that it may be stated to be a
doctrine now generally established that a
bona fide
purchaser for a valuable consideration, without notice of any
defect in his title at the time of his purchase, may lawfully buy
in any statute, mortgage, or other encumbrance upon the same estate
for his protection. If he can
Page 148 U. S. 41
defend himself by any of them at law, his adversary will have no
help in equity to set these encumbrances aside, for equity will not
disarm such a purchaser, but will act upon the wise policy of the
common law, to protect and quiet lawful possessions, and strengthen
such titles."
And the reason of this is given in
Boon v.
Chiles, 10 Pet. 177,
35 U. S. 210,
as follows:
"This leads to the reason for protecting an innocent purchaser,
holding the legal title, against one who has the prior equity. A
court of equity can act only on the conscience of a party. If he
has done nothing that taints it, no demand can attach upon it, so
as to give any jurisdiction. Strong as a plaintiff's equity may be,
it can in no case be stronger than that of a purchaser who has put
himself in peril by purchasing a title, and paying a valuable
consideration, without notice of any defect in it, or adverse claim
to it."
See also Lea v. Polk County Copper
Co., 21 How. 497,
62 U. S. 498;
Croxall v.
Shererd, 5 Wall. 268.
In
United States v. Burlington &c. Railroad Co.,
98 U. S. 334,
98 U. S. 342,
it was said:
"It [the United States] certainly could not insist upon a
cancellation of the patents so as to affect innocent purchasers
under the patentees."
And again, in
Colorado Coal Company v. United States,
123 U. S. 307,
123 U. S.
313:
"It is fully established by the evidence that there were in fact
no actual settlements and improvements on any of the lands, as
falsely set out in the affidavits in support of the preemption
claims and in the certificates issued thereon. This undoubtedly
constituted a fraud upon the United States, sufficient, in equity,
as against the parties perpetrating it, or those claiming under
them with notice of it, to justify the cancellation of the patents
issued to them. But it is not such a fraud as prevents the passing
of the legal title by the patents. It follows that to a bill in
equity to cancel the patents upon these grounds alone the defense
of a
bona fide purchaser for value without notice is
perfect."
The land company therefore had a right to set up a special plea,
and the plea which it did set up -- that of a
bona fide
purchaser -- was sufficient, if true. And this brings us to an
inquiry as to whether this plea was sustained by the testimony.
Page 148 U. S. 42
The purchase was made by a party of gentlemen living in
California, in the spring and fall of 1874, the first purchase
being of an undivided one-half, and the second of the remaining
moiety. Ten persons were named as grantees in the first deed, and
eleven in the second, some of whom were also grantees in the first.
The title remained thus distributed among these several individuals
until 1877, when, for convenience in the care and sale of the
property, they all united in a conveyance of their respective
interests to the California and Oregon Land Company, of which they
were the stockholders. The price for these lands -- $200,000 -- was
paid, and paid in cash, the several purchasers each contributing
his respective proportion. Since the purchase, they have expended
in the care of the property, including taxes, $140,000, while their
receipts for sales and rentals amount to only about $23,000. More
than half of the parties interested in the purchase died before the
taking of testimony in this suit. The survivors were all called as
witnesses, and each for himself testified, as strongly as language
can express it, that his purchase was made in good faith; that he
had no knowledge of any defect in the title, or of anything wrong
in the actions of the military road company, or of any failure on
its part to fully construct the road. There was no opposing
testimony, and if the question be one simply of fact, there can be
no doubt that these parties were
bona fide purchasers
within the rule laid down in 2 Pomeroy Eq.Jur. § 745, to-wit:
"The essential elements which constitute a
bona fide
purchase are therefore three: a valuable consideration, the absence
of notice, and presence of good faith."
Indeed, counsel for the government does not seriously dispute
that this is the necessary conclusion from the testimony. In this
connection, it is worthy of notice that the purchasers, when their
attention was called to the fact that this property was for sale,
sent an agent to Oregon, to examine into the matter. While such
agent is dead, and what he ascertained is therefore not
affirmatively shown, yet it does appear that, to the survivors at
least, of the purchasers, he brought no intimation or suggestion of
any defect in the title of the land. On the contrary, an abstract
of title was presented to them
Page 148 U. S. 43
showing the certificates of the governors of the completion of
the work, together with an opinion from the firm of Mitchell and
Dolph, two of the leading lawyers in the State of Oregon, that the
title of the road company was perfect.
Further, the significance of the certificates of the governors,
as an independent matter in this inquiry, must not be overlooked.
Under the decision in
Land Company v.
Courtright, 21 Wall. 310, the title to the first 30
sections did not depend on the completion of the road, and with
respect to the residue of the land, the fourth section of the act
of 1864 gave to the governor of the state the power to determine
when it should be fully earned; for it reads that
"when the governor of said state shall certify to the Secretary
of the Interior that any continuous ten miles of said road are
completed, then another quantity of land hereby granted, not to
exceed thirty sections, may be sold, and so from time to time until
said road is completed."
And because there was no express provision for the issue of
formal patents, the act of 1874, which took effect intermediate the
first and second deeds from the road company, provided that when
the roads were
"shown by the certificate of the governor of the State of
Oregon, as in said acts provided, to have been constructed and
completed, patents for said lands shall issue in due form to the
state"
or its grantee. Now it is familiar law that when jurisdiction is
delegated to any officer or tribunal, his or its determination is
conclusive. Thus, in the case of
United
States v. Arredondo, 6 Pet. 691,
31 U. S. 729,
this Court said:
"It is a universal principle that where power or jurisdiction is
delegated to any public officer of tribunal over a subject matter,
and its exercise is confided to his or their discretion, the acts
so done are binding and valid as to the subject matter, and
individual rights will not be disturbed collaterally for anything
done in the exercise of that discretion within the authority and
power conferred. The only questions which can arise between an
individual claiming a right under the acts done and the public, or
any person denying its validity, are power in the officer and fraud
in the party. All other questions are settled by the decision made
or the act done by the tribunal or officer, whether executive
Page 148 U. S. 44
(1 Cranch
5 U. S. 170-171), legislative,
(4 Wheat.
17 U. S. 423;
27 U. S.
2 Pet. 412; 4 Pet.
29 U. S.
563), judicial (11 Mass. 227; 11 S. & R. 429,
adopted in 2 Pet.
27 U. S. 2 Pet. 167-168), or
special (20 Johns. 739-740; 2 Dow P.C. 521, etc.), unless an appeal
is provided for, or other revision by some appellate or supervisory
tribunal is prescribed by law."
See also the following cases:
Foley v.
Harrison, 15 How. 433,
56 U. S. 448;
Johnson v.
Towsley, 13 Wall. 72,
80 U. S. 83;
Smelting Company v. Kemp, 104 U.
S. 636,
104 U. S. 640;
Shepley v. Cowan, 91 U. S. 330,
91 U. S. 340;
Moore v. Robbins, 96 U. S. 530,
96 U. S. 535;
Quinby v. Conlan, 104 U. S. 420,
104 U. S. 426;
Steel v. Smelting Co., 106 U. S. 447,
106 U. S. 450;
Lee v. Johnson, 116 U. S. 48,
116 U. S. 51;
Wright v. Roseberry, 121 U. S. 488,
121 U. S.
509.
It is true that the bill alleges that these certificates were
procured by the road company by an through the false and fraudulent
representations of its officers, agents, etc., and also true that
the averment in the first plea that the certificates were made
honestly and in good faith was stricken out, and testimony offered
to show the way in which the certificates were obtained was
rejected. Therefore, as the inquiry is now presented, it must be in
the light of the uncontested allegation that the certificates were
obtained through the fraudulent acts of the road company. It may be
that in view of this situation of affairs, the road company could
not avail itself of such determinations by the governors as
decisive of its title, and it may also be that the purchasers are
likewise precluded from claiming that these determinations are in
and of themselves conclusive in their favor; but at the same time,
they are significant with respect to that element of good faith
which consists in diligence. The testimony shows that the
purchasers knew of nothing wrong in respect to the title or the
proceedings of the road company or any officials connected with the
transfer of title. They knew that determination of the question as
to the completion of the road was committed by the statute to the
governor of the state. They saw his adjudication upon that
question, and it may well be held that they took all the active
measures which, under the circumstances, they could be required to
take when they ascertained that the authorized official, and that
official the chief executive
Page 148 U. S. 45
of the state, the grantee named in the congressional act, had
officially determined that the road was completed, there being
nothing in any of the circumstances surrounding the parties to
suggest a suspicion of wrong. Can it be that they must be adjudged
derelict in diligence because they did not make a personal
examination of the road, and determine for themselves whether it
was in its entire length completed so as to satisfy all of the
terms of the grant? If a patent from the government be presented,
surely a purchaser from the patentee is not derelict, and does not
fail in such diligence and care as are required to make him a
bona fide purchaser, because he relies upon the
determination made by the land officers of the government in
executing the patent, and does not institute a personal inquiry
into all the anterior transactions upon which the patent
rested.
As against these evidences and conclusions of good faith, but a
single proposition is raised, one upon which the dissenting judge
in the circuit court of appeals rested his opinion, and that is the
proposition that the conveyances from the road company were only
quitclaim deeds, and that a purchaser holding under such a deed
cannot be a
bona fide purchaser, and in support of this
proposition, reference is made to the following cases in this
Court:
Oliver v.
Piatt, 3 How, 410;
Van
Renesselaer v. Kearney, 11 How. 297;
May v. Le
Claire, 11 Wall. 217,
78 U. S. 232;
Villa v.
Rodriguez, 12 Wall. 323,
79 U. S. 339;
Dickerson v. Colgrove, 100 U. S. 578;
Baker v. Humphrey, 101 U. S. 494;
Hanrick v. Patrick, 119 U. S. 156. The
argument, briefly stated, is that he who will give only a quitclaim
deed in effect notifies his vendee that there is some defect in his
title, and the latter, taking with such notice, takes at his peril.
It must be confessed that there are expressions in the opinions in
the cases referred to which go to the full length of this
proposition. Thus, in
Baker v. Humphrey, 101 U.
S. 494,
101 U. S. 499,
Mr. Justice Swayne, in delivering the opinion of the Court, uses
this language: "Neither of them was in any sense a
bona
fide purchaser. No one taking a quitclaim deed can stand in
that relation." Yet it may be remarked that in none of these cases
was it necessary to go to the full extent of
Page 148 U. S. 46
denying absolutely that a party taking a quitclaim deed could be
a
bona fide purchaser, and in the later case of
McDonald v. Belding, 145 U. S. 492, it
was held, in a case coming from Arkansas, and in harmony with the
rulings of the Supreme Court of that state, that while ordinarily a
person holding under a quitclaim deed may be presumed to have had
knowledge of imperfections in his vendor's title, yet that the rule
was not universal, and that one might become a
bona fide
purchaser for value although holding under a deed of that kind, and
in that case the grantee so holding was protected as a
bona
fide purchaser; while in the case of Moelle v. Sherwood, just
decided,
ante, 148 U. S. 21, the
general question was examined and it was held that the receipt of a
quitclaim deed does not, of itself, prevent a party from becoming a
bona fide holder, and the expressions to the contrary in
previous opinions were distinctly disaffirmed.
But further, and even if the doctrine were now recognized to be
as heretofore stated, this fact would take the case out from the
reach of the rule. The title passed from the road company to the
purchasers by four conveyances, two from the road company to one
Pengra, its agent and superintendent, and two from Pengra to the
purchasers. Now the deeds from Pengra are not quitclaims. They do
not purport to be merely releases of his right, title, and
interest, but are strictly deeds of bargain and sale. The granting
clause is in these words:
"The said parties of the first part have aliened, released,
granted, bargained, sold, and by these presents they do alien,
release, grant, bargain, sell, and convey, unto the said parties of
the second part, their heirs and assigns, in proportions hereafter
specified, the equal undivided one-half (1/2) of all and singular
the lands lying and being in the State of Oregon, granted or
intended to be granted to the State of Oregon by act of
Congress,"
etc. And the
habendum is:
"To have and to hold, all and singular, the lands and premises
hereby conveyed, to-wit, said undivided one-half of all the
above-described grant of lands, listed and to be listed, and all
the right, title, and interest of the party of the first part
therein."
Such a deed is clearly something more than one of quitclaim
Page 148 U. S. 47
and release. It is a deed of bargain and sale, and will convey
an after-acquired title. Such is the ruling of the Supreme Court of
Oregon.
Taggart v. Risley, 4 Or. 235. Now even in those
courts in which the rule was announced that one who takes under a
quitclaim deed cannot be a
bona fide purchaser, it was
sometimes limited to the grantee in such a deed, and not extended
to those cases in which a quitclaim was only a prior conveyance in
the chain of title.
Snowden v. Tyler, 21 Neb. 199, and
this is certainly a most reasonable limitation, because the rule is
obviously, at the best, arbitrary and technical, for a party who
receives a quitclaim deed may act in the utmost good faith, and in
fact be ignorant of any defect in the title, and this although he
has made the most complete and painstaking investigation and only
takes the quitclaim deed because the grantor, for expressed and
satisfactory reasons, declines to give a warranty. It would be
unfortunate, in view of the fact that in so many chains of title
there are found quitclaim deeds, to extend a purely arbitrary rule
so as to make the fact of such a deed notice of any prior defect in
the title.
It may be said that the real transaction was between the road
company and the purchasers; that the agent and superintendent of
the road company was merely a go-between -- a conduit through which
the title passed from the road company to the purchasers, and that
the spirit, if not the letter, of the rule requires that the form
of conveyance used by the road company should be controlling as to
the
bona fides of the purchasers. But as it is, wherever
enforced, a merely technical and arbitrary rule, justice requires
that it should not be carried beyond its express terms, nor used to
disprove the good faith which, in this case, all the other
testimony shows in fact existed in the purchasers. And in this
respect it is well to consider the obvious reason for the
unwillingness of the road company to itself execute a warranty
deed. The original act of 1864 said nothing about patents. It
simply granted the lands to the state and authorized their sale,
and only after the arrangement had been made for the purchase of
one-half of these lands, and the
Page 148 U. S. 48
conveyances made therefor, was the act of 1874 passed, providing
in terms for patents. The claim of the road company was that their
title was a perfect legal title, even without a patent, and yet,
there being a doubt in respect thereto -- a doubt which was solved
only by the act of 1874 -- it was not strange that it preferred to
quitclaim its interest in the granted lands, rather than to
formally convey them by a warranty of the legal title. But it is
not to be inferred therefrom as a matter of law that the road
company in any way doubted its full equitable title, or that, by
the fact of a quitclaim, it notified the purchasers of any other
matter than this omission in the statute. On the contrary, the
plain import of the language used in the conveyance from the road
company to Pendra was that it intended to convey the lands which it
had received under the grant, and to which it believed it then had
a full equitable, if not legal, title. Our conclusions, therefore,
are that the decision of the circuit court and the court of appeals
was correct.
Before closing this opinion, we think it proper to notice one
matter which, though of no significance in determining the legal
rights of the parties, may throw light upon the transaction and
perhaps relieve the original donee of the grant by the state -- the
road company -- from the imputation of wrong cast upon it by the
filing of this bill. The grant was made in 1864, and the last
certificate of the Governor of Oregon was dated the 12th of
January, 1870. The memorial of the legislature of the State of
Oregon was adopted in 1885, that memorial which induced the act of
Congress and this litigation. In other words, the State of Oregon
and its citizens, including those living along this road, remained
silent for fifteen years after its alleged completion. The terms of
the original grant were limited to the construction of the road,
and imposed no duty of thereafter keeping it in good condition.
Having earned the grant by constructing the road, it may well be
that the road company took no further interest in it, and an
ordinary wagon road, uncared for during fifteen years, particularly
that part of it which runs through mountainous country, would be
almost completely destroyed by the
Page 148 U. S. 49
action of the elements, and so it may be that those who in 1884
and 1885 investigated the matter found little semblance of a road,
and hence concluded, though erroneously, that none was ever
constructed, and from this the complaint, the memorial, and the
litigation proceeded, and this is consistent with the fact that the
road company fully discharged its duty, and fairly earned the
lands. Of course this is a mere suggestion, but it has the
probabilities in its favor, and relieves all parties from
condemnation. But whether this be true or not, for the reasons we
have heretofore stated, our conclusion is clear that the title of
the purchasers and the land company is beyond challenge.
The decree is affirmed.
