The courts of the United States enforce vendor's and grantor's
liens if in harmony with the jurisprudence of the state in which
the action is brought.
It being conceded that a vendor's lien is recognized in
Colorado, such a lien will be recognized and enforced in a federal
court in that district.
On the contracts in this case, set forth in the opinion of the
court, and the circumstances attending the making of them as
therein detailed, this Court holds that the plaintiffs below
retained a vendor's lien upon their mining property in Colorado
which they conveyed to the defendants below, and affirm the decree
of the court below to that effect.
The facts in this case are as follows: in and prior to the month
of October, 1886, the plaintiffs below, Ellen R. Seymour and
William G. Pell, were the owners of certain mining property
Page 153 U. S. 510
in the Gold Hill mining district, Boulder County, Colorado,
known as the "Slide and Spur Lodes." There had been some
negotiations with one John Haldeman with the view to a sale of this
property, and on October 19, 1886, the plaintiffs, by their agents,
made the following proposition to him:
"Dear Sir: I agree that in case you cannot raise the required
sum within the specified time in your contract, dated about the 9th
day of October, between W. F. Bruff, acting under our authority,
and yourself, to change the conditions as follows,
viz: to
sell you the Slide mine for $750,000; 25 (M) thousand dollars to be
paid one week after the receipt in London of Foster's report, this
to be the first payment on the property; the balance of the
purchase price, $725,000, to be paid within two months from the
date of the payment of $25 M; one 1/2 in cash and one-half in fully
paid common shares of the company to be formed. In case the second
and last payment is not made when due, the agreement cancels
itself, and the $25 M is forfeited. No ore to be taken from the
mine after first payment. I further agree to give you a call at par
for two months from date of issue upon the shares received as part
payment for the property."
"[Signed] J. F. Seymour"
"A. B. Davis"
Thereafter, said Haldeman, in accordance with the understanding
at the time of giving this option, went to England and secured the
organization, under the laws of Great Britain, of the defendant
corporation. The purpose for which this corporation was organized
was, as expressly stated, to purchase and develop the Slide and
Spur Mines, though the articles of incorporation gave authority for
the purchase and development of other properties. So far, however,
as appears from the testimony in this case, it was simply an
organization on paper, with a view of acquiring title to, and
subsequently working, these mines.
The provision in its charter as to capital stock was as
follows:
Page 153 U. S. 511
"The capital of the company is 400,000 pounds, divided into four
hundred thousand shares of 1 pound each, the whole or any portion
of which, and any future capital of the company, may be issued as
full or partly paid shares, and at a discount or premium, and with
the benefit of any preference or priority in the distribution of
assets or payment of dividends, and with power also to increase or
decrease such capital stock, and to issue any part or parts of the
increased or decreased capital as consolidated stock, or any shares
at such times, in such manner, and on such terms as the company
shall determine."
The organization of this corporation was completed on the 24th
of May, 1887. On August 18, 1887, Haldeman having theretofore made
partial payments to the plaintiffs, an agreement was entered into
between himself and J. Fenton Seymour, as their agent, which
agreement was as follows:
"Memorandum of agreement made this 18th day of August, 1887,
between John Haldeman, of 38 Old Jewry, in the City of London, and
J. Fenton Seymour, of Denver, Colorado, in the United States of
America, acting for himself and partners, the owners of the Slide
and Spur gold mines, situate in Boulder county, Colorado, United
States of America:"
"The said John Haldeman agrees to pay forthwith the sum of ten
thousand pounds sterling in addition to twelve thousand five
hundred pounds already paid on account of the purchase money of the
said mines, such sum of ten thousand pounds to be paid through
Messrs. Wells, Fargo & Co. (who now hold the deeds of the said
property in escrow), and to be held by them, and paid over to the
said J. Fenton Seymour upon the titles of the said mines being
registered in the name of the 'Slide and Spur Gold Mines, Limited,'
free from all charges and encumbrances, and the said J. Fenton
Seymour hereby undertakes and agrees to register the titles as
above upon the said ten thousand pounds being deposited with
Messrs. Wells, Fargo & Co."
"The said J. Fenton Seymour hereby undertakes and agrees to have
the Slide mine worked to its full capacity, and, after the due and
legal registration of the title to the
Page 153 U. S. 512
said company, he further agrees that the returns from the said
mine shall be cabled weekly to the said company in the form of
cables sent herewith, it being understood and agreed that the money
value of the first weekly returns so cabled shall not be less than
the sum of two hundred pounds sterling, and that each successive
weekly return shall show a moderate increase over that sum."
"The said J. Fenton Seymour hereby undertakes and agrees to take
the control of the management of the said property until the
payments hereinafter mentioned are completed, and it is understood
and agreed that he shall retain such control until the said
payments are completed. The said John Haldeman agrees that three
hundred and seventy-five thousand shares of one pound each in the
above company shall be transferred to Mr. Clarence Preston Elder,
as trustee, and deposited with Messrs. Wells, Fargo & Co., in
London, to the intent that the said shares shall be held as
security for the due performance of the following conditions,
viz.:"
"1st. The payment of ten thousand pounds, in addition to the
above-mentioned twenty-two thousand (J. F. S.) five hundred pounds,
within three days (J. F. S.) after the receipt of the third
successive weekly return from the mine, as hereinbefore mentioned;
and,"
"2d. The balance of forty-five thousand pounds at the expiration
of ten days after the receipt of eight successive weekly returns of
the nature and value above specified. Upon the completion of the
above-mentioned payments. the said J. Fenton Seymour hereby
undertakes and agrees to release the above-mentioned three hundred
and seventy-five thousand shares, less seventy-seven thousand five
hundred to which he is entitled, and also less the number of shares
sold with the consent and under the supervision of the aforesaid
Clarence Preston Elder, acting for the said J. Fenton Seymour."
"In case the weekly returns cabled from the mine shall from any
cause fall below the sum of two hundred pounds sterling per week,
then, in that case, such returns shall not count, but the time for
paying the second ten thousand pounds and the balance of forty-five
thousand pounds shall
Page 153 U. S. 513
be extended
pro rata; but should the successive weekly
returns amount to two hundred pounds sterling per week (J. F. S.),
with a moderate increase weekly, as hereinbefore mentioned, and the
said John Haldeman shall make default in the payment of the balance
of forty-five thousand pounds, then, in that case, the said J.
Fenton Seymour shall have the right to forfeit the amounts already
paid, and to claim the above-mentioned three hundred and
seventy-five thousand shares."
"As witness the hands of the said parties the day and date first
above written."
"[Signed] J. Fenton Seymour"
"Jno. Haldeman"
Subsequently, there were some further payments. On October 5,
1888, the larger portion of the purchase money still remaining
unpaid, the plaintiffs, through their agent, J. Fenton Seymour,
made to the company this proposition:
"1st. On payment of 3,500 pounds to Wells, Fargo & Co., we
agree to start the mine at work in name of Co., said sum to cr. of
Col. Seymour."
"2d. Company to send cashier and engineer (if they think fit)
& Col. Seymour to be resident manager and director for the
period of one year."
"3d. All proceeds to be transmitted to company bankers."
"4th. Mr. Elder to deliver 75,000 shares to the Scotch
subscribers and 45,000 to Mr. Rust on payment of said sum."
"5th. The balance of shares to remain in Mr. Elder's hands, as
trustee, until a final settlement can be made, inside of three
months after acceptance of this proposition."
"6th. Col. Wilson, or whoever pays the �3,500, to receive 15,000
shares from Mr. Elder on the final settlement (not later than three
months), and meantime receive a legal obligation from Mr. Elder as
trustee."
"7th. On resignation of Mr. Elder as a director, Mr. Allen to be
elected."
"8th. �3,500 to be paid so soon as the company can register the
transfer of the 75,000 shares."
"[Signed] J. F. Seymour"
Page 153 U. S. 514
This proposition was accepted, and the �3,500 mentioned in the
first clause were paid on December 15, 1888. In pursuance of the
agreement of August 18, 1887, the plaintiffs delivered to the
defendant a deed for the property, which deed was duly recorded in
the office of the recorder of Boulder County on September 16, 1887.
A large portion of the purchase money still remaining unpaid, on
February 16, 1889, the plaintiffs filed their bill in the Circuit
Court of the United States for the District of Colorado, in which
bill they prayed for an accounting, that the amount of purchase
money found due be adjudged a lien upon the property, and that such
lien be foreclosed, and a sale ordered.
The defendant answered, proofs were taken, and on July 8, 1890,
a decree was entered finding the amount of the unpaid purchase
money to be $250,800, decreeing it a lien upon the property, and
ordering a foreclosure and sale. From such decree the defendant has
appealed to this Court.
Page 153 U. S. 516
MR. JUSTICE BREWER, after stating the facts in the foregoing
language, delivered the opinion of the Court.
It is conceded that a vendor's lien is recognized in Colorado,
Francis v. Wells, 2 Colo. 660, and such a lien therefore
will be recognized and enforced in a federal court. As said in
Fisher v. Shropshire, 147 U. S. 133,
147 U. S.
139:
"The courts of the United States enforce grantors' and vendors'
liens if in harmony with the jurisprudence of the state in which
the action is brought, and the principle upon which such a lien
rests has been held to be that one who gets the estate of another
ought not, in conscience, to be allowed to keep it without paying
the consideration.
Chilton v. Braiden, 2 Black
458; Story's Eq. Jur. § 1219. "
Page 153 U. S. 517
Such a lien is one which appeals strongly to the favorable
consideration of a court of equity. In
Baum v. Griggsby,
21 Cal. 172, 176, it was declared to be a right not arising from
any agreement of the parties, but a creature of equity,
"founded upon the natural justice of allowing a party to reach
the property, which he has transferred, to satisfy the debt which
constitutes the consideration of the transfer."
So, in
Refeld v.
Woodfolk, 22 How. 318,
63 U. S. 327,
this Court said:
"A court of chancery regards the transfer of real property in a
contract of sale, and the payment of the price, as correlative
obligations. The one is the consideration of the other, and the one
failing leaves the other without a cause."
An intent to abandon it is not to be presumed, and while, of
course, like any other right, it may be abandoned or waived, the
evidence of an intent to so abandon or waive should be clear and
satisfactory. 2 Story's Eq.Jur. § 1226, and cases cited in notes.
In
Cordova v. Hood,
17 Wall. 1, it was held that while the taking of security may raise
a presumption of a waiver of the lien, it is a presumption which is
open to rebuttal. In 2 Story's Eq.Jur. § 1224, the author says that
"if, under all the circumstances, it [the waiver] remains in doubt,
then the lien attaches." And in the case of
Fisher v.
Shropshire, supra, the Chief Justice observed:
"Undoubtedly, a lien of the character we are considering may be
defeated if the grantor or vendor do any act manifesting an
intention not to rely on the land for security, but this must be an
act substantially inconsistent with the continued existence of the
lien, and cannot be inferred from the mere fact that the parties
may not have contemplated the assertion of the lien in the first
instance."
There is nothing in the cases cited from the English courts
inconsistent with the authorities heretofore cited or questioning
the general rule therein laid down in respect to a waiver of
vendor's lien. The case
In re Brentwood Brick & Coal
Company, 4 Ch.D. 562, was one in which the property was
transferred to a corporation, not for a fixed sum to be paid
absolutely, but, as stated, thus:
"Fifty percent of all sum or sums of money received or to be
received by the
Page 153 U. S. 518
company on the sale of its shares, and the like sum of fifty
percent upon all money by way of capital to be at any time borrowed
by the company until the payments so made,"
should amount to the sum of 6,000 pounds. It was held that the
vendor had waived his lien. James, L.J. saying:
"I am of opinion that the order of the Vice-Chancellor must be
affirmed. The case of the appellant may be a hard one, but the
nature of the transaction excludes vendor's lien. This is not the
case of a simple agreement to sell for �6,000. No doubt, the vendor
got a higher price by agreeing to accept payment in the way he did,
and taking his chance of capital being subscribed or capital being
borrowed to an amount sufficient to pay him. He says, in fact,
'half of the first capital moneys that come in to the extent of
�6,000 is to be my purchase money.' No day for payment was named.
He agreed to receive his purchase money if and when capital should
come in. He got for his property a charge upon and a right to the
capital of the company, to the extent of �6,000, when it came in.
To my mind it is clear that he intended to rely on that fund for
payment, and intended that the company should have the means of
borrowing. This is quite inconsistent with a lien which would
probably make the company unable to pledge their property. I am
therefore of opinion that the Vice-Chancellor came to a correct
conclusion."
And Baggallay, J. A. adding: "I think it is evident that the
party selling did not intend to rely on the security of the estate,
but on the funds of the company." In
Kettlewell v. Watson,
21 Ch.D. 685, on appeal, 26 Ch.D. 501, the appellate court held,
while recognizing the general rule that the vendor has a lien for
his purchase money, that the circumstances disclosed a knowledge on
the part of the vendors or their agent that the vendees sought a
registry of the deed of conveyance for the purpose of subdividing
the property and selling it in lots, and with that knowledge
assented to such registry, and also knowledge that the vendees were
selling lots, and hence that they should not be permitted to assert
a lien as against the
bona fide purchasers of such lots,
who had paid full price therefor to the vendee. The decision was
rested on the doctrine
Page 153 U. S. 519
of estoppel, the court saying:
"In our opinion, the conduct of Dibb [plaintiffs' agent] induced
purchasers of the portions of the estate sold reasonably to believe
that Richardson & Watson [the vendees] had power to deal with
the estate as absolute owners free from the lien now insisted on,
and, as he so acted, the plaintiffs, who left everything to him,
cannot in our opinion assert their lien against lots purchased
without notice that the trustees desired to insist on their lien,
even though such purchasers have an equitable title only."
It is not questioned in this case that a large part of the money
consideration for the sale of these mines remains still unpaid, and
the defendant is in the attitude of one who, admitting that the
vendors have not received the money for which they sold the land,
nevertheless insists upon retaining the property, discharged of any
obligation for its payment. Its contention is that the plaintiffs
sold to Haldeman, and that Haldeman sold to it, and that inasmuch
as the terms of the original proposition of October 19, 1886, were
not complied with, a new agreement was made on August 18, 1887, by
which the plaintiffs were to pass a title "free from all charges
and encumbrances," and to rely for their security upon a portion of
the stock of the grantee deposited with one of its directors. But
the provision that the property should be free from charges and
encumbrances obviously refers to prior charges and encumbrances,
and does not exclude any which arise out of the conveyance itself.
It means simply that the grantors shall have removed all burdens
which rested upon the property prior to the time of making their
deed, and that that deed shall pass the title perfect and
unencumbered, but not that the grantee shall take it free from all
obligation of payment, or discharged from the lien for the purchase
price which rests upon real estate until such price is paid. The
language of the covenants in the deed is in harmony with this
thought, for after the covenant of seisin and of the right to sell
follows one that the premises "are free and clear from all former
and other grants, bargains, sales, liens, taxes, assessments, and
encumbrances of whatever kind or nature soever." It will be noticed
that this agreement was not between
Page 153 U. S. 520
the grantors and grantee, but between the grantors and a third
party, who was seeking to accomplish, with profit to himself, a
sale from the plaintiffs to the defendant at the price they
demanded, and who was seeking to utilize the stock of the defendant
in securing money for the cash part of the consideration. There is
no presumption from the delivery of the deed that the plaintiffs
intended to waive their lien for the purchase money. Indeed, it is
characteristic of a vendor's lien, as distinguished from a contract
lien, that it arises upon a transfer of title. It is a doctrine of
equitable jurisprudence which says that land, which is immovable,
is the best security for its own price, and that title thereto
should therefore pass subject to the equitable burden of such
security. The actual conveyance of the title to the company was not
for the interest or the benefit of the plaintiffs. They were not
thereby placed in any better position, or given any new advantage.
It is said that the agreement, in terms, provides that 375,000 out
of 400,000 shares of stock in the defendant company shall be
transferred to one of its directors, as trustee for the plaintiffs,
and held as security for the payment to them of the unpaid purchase
money. But the obligation of the company, and its duty to pay, an
obligation and a duty resting upon it as the representative of all
its shares of stock, are clearly of more value than the security
obtained by the deposit of a portion of its shares, for in the one
case, even if there were no personal liability of the stockholders,
the promise of the company could be enforced to the extent of the
appropriation of all of its property, and thus the exhaustion of
the value of all its shares, while in the other the transfer of a
portion of its shares of stock would enable the vendor, in case of
a failure of payment to obtain relief, not to the full extent of
the property owned by the corporation, but only to that fractional
portion thereof represented by the number of such shares. It must
be borne in mind that this corporation had no other properties than
these mines. It had a nominal capital stock of 400,000 pounds, with
authority, apparently, to increase it without limit; yet this thing
of paper contends that it bought of Haldeman
Page 153 U. S. 521
these valuable mining properties upon the sole consideration of
15/16 of its shares of stock, and that the plaintiffs sold to
Haldeman, and intended by their agreement and conveyance to part
absolutely with the title, to abandon every lien, and trust for the
payment of the purchase money entirely to the security of these
shares, transferred to one of the directors of the corporation. It
will be perceived that at first there was not even this security,
for the agreement provides for the registry of the title not upon
the issue, transfer, and deposit of the shares, but upon the
deposit with Wells, Fargo & Co. of 10,000 pounds. Is it to be
supposed that they delivered the deed upon the deposit of that
money to their credit, and, waiving all lien upon the property,
were relying alone upon the promise of Haldeman to obtain from the
company (their vendee) the issue of 375,000 shares, and to then
make transfer to Elder, and deposit with Wells, Fargo & Co.? If
there had been no stipulation in respect to the control of the
property, it would be difficult to sustain the contention that the
provision for the transfer and deposit of a portion of the shares
of the company was sufficient evidence of an intent to abandon the
vendor's lien. But the agreement furnishes direct evidence to the
contrary. It is made by J. Fenton Seymour, "acting for himself and
partners, the owners" of the property (the plaintiffs in this
case), and contains this clause:
"The said J. Fenton Seymour hereby undertakes and agrees to take
the control of the management of the said property until the
payments hereinafter mentioned are completed, and it is understood
and agreed that he shall retain such control until the said
payments are completed."
This negatives the idea that the plaintiffs were relying for the
payment of the unpaid purchase money solely upon the security of
these shares of stock. It is an express affirmation that their
dominion over the property is not to cease until the purchase money
is all paid. It thus makes the property itself the security for the
price. In the face of this stipulation, it would require very
cogent testimony to convince anyone that the plaintiffs had
abandoned all lien upon the property itself, and were resting alone
upon the security of the shares.
Page 153 U. S. 522
There is no such testimony, nothing which makes against this
express purpose of the plaintiffs to retain control of the property
until the purchase price was paid.
The transaction with what is called in the record the "Scotch
Syndicate" does not seem to us to have the significance which
counsel contends, and this notwithstanding the recitals in the
agreement respecting it. That transaction was this: the 10,000
pounds which, by the agreement of August 18, 1887, Haldeman was to
pay immediately were advanced by that syndicate, and on the 19th of
August, the day after the contract between Haldeman and Seymour,
Seymour entered into an agreement with the representatives of the
syndicate that 75,000 of the 375,000 shares should be held for its
benefit. This, instead of supporting defendant's contention, tends
to show that the plaintiffs were not relying upon these shares as
their security, but, having a lien upon the property itself, were
willing that Haldeman or the corporation should use the shares for
the purpose of securing money with which to make payment. And while
there is in the agreement signed by J. Fenton Seymour a recital
which to some extent makes against the claim of the plaintiffs in
that it states that by the agreement of August 18. the company was
to issue to John Haldeman 375,000 fully paid up shares "in payment
in full for the said mines, against a clean transfer of the
property to the company, free of all encumbrances and liabilities
whatsoever," yet that recital is qualified by that which follows
immediately thereafter, to the effect that the shares are "to be
transferred to the said Clarence P. Elder, a director of the
company, as trustee for behoof of all concerned," and also to be
deposited with Wells, Fargo & Co.
"as a guaranty for the fulfillment by the said John Haldeman of
the terms of said agreement, so far as incumbent upon him, all as
fully set forth in the said agreement."
These last words refer to the agreement of August 18 as
disclosing fully the agreement between the plaintiffs, Haldeman,
and the defendant. Evidently there was no thought in this of
enlarging the scope or adding to the significance of that
agreement. If it be said that here is an interpretation by the
Page 153 U. S. 523
parties of its meaning, it will be seen that all that it asserts
is that the corporation transfers to Haldeman the shares in full
payment for the property, or, in other words, that it leaves to him
the perfecting of the title free from encumbrances, and in
consideration therefor issues the 375,000 shares. It contains no
assertion, directly or by implication, that the plaintiffs either
take these shares in payment or accept them as the only security
for payment. It recites that they are transferred to the trustee
not for the plaintiffs, but for behoof of all concerned, thus
plainly implying that they are to be used by Haldeman, with the
assent of the plaintiffs, as a means of obtaining money for the
purpose of completing the payment to them. But there is in none of
these recitals, either in terms or by fair implication, an
agreement or a statement on the part of the plaintiffs that they
forego their vendor's lien and that they intend to look thereafter
simply to those shares, and to the good faith of the trustee and
the depositary for the payment of the purchase price. There surely
is in all this nothing to convince that the plaintiffs intended to
abandon the lien upon the property which existed when they executed
the deed to the company, and which the agreement for a retention of
control by their agent directly asserted.
We see therefore no reason to question the conclusions reached
by the circuit court, and its decree is
Affirmed.
