In 1858, H. loaned to W. a sum of money, receiving from him his
note payable in one year with interest. No part of the sum on the
note was ever paid, either to H. in his lifetime or to his
representatives. Simultaneously with the loan, H. conveyed to K. as
trustee a tract of land in Nebraska to secure the payment of the
note. The remaining interest of W. in the tract subsequently came
to T. through sundry mesne conveyances. H. paid the taxes on the
property from March, 1862, until his death in 1876. Shortly before
his death, he gave directions to have the trust deed foreclosed,
and proceedings were taken to that end, a judgment was obtained,
the property was sold to H., and a deed made to him accordingly. H.
verified the petition which was the foundation of these
proceedings, but the day before it was filed, he died. The deed to
him after the sale was delivered to his children, who in good faith
filed the same for record and continued to pay taxes on the
property, claiming to be owners. During all that time and down to
1888, neither W. nor anyone claiming under him except H. and his
representatives ever exercised any right of ownership of the land.
Then T. commenced proceedings in a state court of Nebraska, which
were removed into the federal court, to have the tax sale deed set
aside and declared void and to redeem from that sale, and such
proceedings were had that a decree was entered allowing redemption.
Held that the doctrine of laches was applicable; that the
claim was stale; and that no court of equity would be justified in
permitting the assertion of an outstanding equity of redemption
after such a lapse of time and in the entire absence of the
elements of good faith and reasonable diligence.
February 27, 1858, Eugene L. Wilbur entered the west half of the
northeast quarter of section 33, township 29, range 9 east,
situated in Dakota County, in the then Territory of Nebraska,
paying therefor the sum of $1.25 per acre. On the same day, Wilbur
executed and delivered a trust deed to Augustus Kountze, as
trustee, conveying said land to secure to Isaac Harter, the father
of appellants, the payment of a promissory note for one hundred
forth dollars, bearing that date, and due one year thereafter, with
interest at the rate of four
Page 158 U. S. 449
percent per month after maturity. No part of the interest or
principal due upon this note was ever paid to Isaac Harter or to
appellants. On March 2, 1860, Wilbur and wife, by a quitclaim deed,
conveyed the eighty acres to William F. Lockwood, and on February
6, 1861, Lockwood and his wife, Mary A. by warranty deed, conveyed
the same to James W. Virtue for a consideration of forty dollars in
money and twenty-five dollars in property, who, on February 3,
1863, by warranty deed, conveyed an undivided one-half interest to
Mary A. Lockwood. Virtue was the witness to the trust deed to
Kountze, and it was acknowledged before him as notary public. The
record further shows that Isaac Harter, now deceased, paid the
taxes on the property from 1862, to the time of his death, which
occurred February 27, 1876; that Isaac Harter had placed the trust
deed and the notes secured thereby in the hands of his attorney to
foreclose the same, and that a petition for such foreclosure had
been verified February 21, 1876, and was filed February 28, 1876,
in the District Court of Dakota County, Nebraska; that the
defendants in the suit were William F. Lockwood, Mary A. Lockwood,
his wife, and Augustus Kountze, the trustee; that they were brought
in by publication, and, constructive service on them having been
thus duly obtained, a decree foreclosing the trust deed was entered
June 5, 1876 at the June term, 1876, of the court in favor of Isaac
Harter and against William F. Lockwood, Mary A. Lockwood, and
Augustus Kountze, and such proceedings were thereupon had that the
property in controversy was sold by the sheriff under the decree to
Isaac Harter, August 12, 1876. It further appeared that the amount
due on the promissory note June 5, 1876, was $1,248, and that the
property was appraised at $880 before the sheriff's sale. May 10,
1877, the sale having theretofore been approved by the court, a
deed to Isaac Harter was duly executed by the Sheriff of Dakota
County, Nebraska, for the eighty acres in question, and by him
delivered to the attorney of Isaac Harter, who delivered the same
to appellants, and they, not realizing that there was any
irregularity connected with the proceedings, and believing they had
a good and sufficient title to the property, filed the same on
Page 158 U. S. 450
June 10, 1877, for record with the county clerk of Dakota
County, and thereafter, and until the commencement of this cause,
held themselves to be the owners thereof, paid the taxes thereon,
offered the same for sale, had correspondence with divers parties
concerning the land, and exercised all the rights of property and
dominion over the same which were exercised by any person from June
1, 1877, to December 21, 1888, when this action was commenced, the
acts of ownership being such that the tract was generally known in
the community where it was located as the "Harter land." The land
remained of comparatively little value up to the spring of 1887,
when a railroad bridge was built across the Missouri River to Sioux
City and to South Sioux City, where a town was laid out, and it
then rose rapidly in value until, at the time of the commencement
of this action, it was worth $100 to $150, and, pending this suit,
$200, per acre.
In the summer of 1888, James P. Twohig was the Clerk of the
District Court of Dakota County, Nebraska, when an affidavit was
filed therein by Isaac Harter, one of the appellants, for the
purpose of perfecting the title to another piece of real estate in
that county, belonging to appellants and which they were about to
sell, which affidavit showed that Isaac Harter, the father of
affiant, died February 27, 1876. Thereafter James P. Twohig
obtained a quitclaim deed from James W. Virtue of the eighty acres
for a consideration of $350, bearing date September 3, 1888, and
filed for record September 22, 1888. Twohig then wrote appellant
Isaac Harter a letter stating that he had title to the land and
demanding a settlement, which was the first information that
appellants had of any claim whatever against their title. On
December 21, 1888, Twohig filed his petition against appellants in
the District Court of Dakota County, Nebraska, which was
subsequently duly removed into the Circuit Court of the United
States for the District of Nebraska, praying judgment that the
decree in favor of Isaac Harter, deceased, of June 5, 1876, and the
sheriff's deed based thereon, might be set aside and declared void,
and Twohig be allowed to redeem the undivided half of the real
estate from the lien of the trust deed to
Page 158 U. S. 451
Kountze on paying to defendants the amount legally and equitably
due them. While the suit was pending, and on or about January 28,
1889, Twohig obtained a quitclaim deed from Mary A. Lockwood and
William F. Lockwood for an undivided one-half of the land for a
consideration of $50, and on November 20, 1890, filed his
supplemental petition in the circuit court, praying the same relief
as to the whole of the land.
It appeared that, in 1866, William F. Lockwood and his wife,
Mary A. left Dakota County, Nebraska, and never returned to that
state, and that, two years before, James W. Virtue left that county
and went to Washington Territory, where he has since resided.
Neither Virtue nor Mr. or Mrs. Lockwood, from 1864, ever exercised
any rights of ownership whatever over the land in controversy,
which land had never been cultivated or fenced, and up to the year
1887 was wild land.
Appellants answered and set up the defenses of the statute of
limitations, of abandonment, of title by adverse possession, and of
laches. On a reference certain findings of fact were made which
have been substantially anticipated in the foregoing statement.
Thereupon it was held by the circuit court that the decree which
ordered a sale of the premises in the suit of Isaac Harter, Sr.,
was absolutely void; that neither complainant nor defendants was
ever in the actual possession of the land, and the statute of
limitations did not apply; that Virtue was not a party defendant to
the foreclosure case, and, in any event, his grantee ought to be
permitted to redeem; that defendants were entitled to the return of
taxes paid, with interest, and payment of the indebtedness secured
by the trust deed to Kountze, with interest, and a final decree was
entered allowing redemption on payment of the amount found, from
which decree both parties appealed to this Court.
MR. CHIEF JUSTICE FULLER, after stating the facts in the
foregoing language, delivered the opinion of the Court.
Page 158 U. S. 452
In respect of the nature of a conveyance in mortgage at common
law, the legal title vested in the mortgagee, and was forfeited
upon default, but equity established the right of redemption after
default. And, variously modified, where the common law doctrine
prevails, a mortgage is still regarded as a conveyance in fee,
although a conveyance as a security, while in many of the states
this has been changed, chiefly by statute, so that a mortgage is
regarded merely as a pledge. The common law, so far as applicable
and not inconsistent with the Constitution of the United States or
the organic law of the territory or with any law of the territorial
legislature, was adopted and declared to be law within the
Territory of Nebraska by Act of March 16, 1855, Laws Nebraska 1855,
p. 328; but by section 30 of an act approved February 21, 1855,
Laws Nebraska, 1855, p. 166, it was provided that "in the absence
of stipulations to the contrary, the mortgagor of real estate
retains the legal title and right of possession thereof." Thus,
irrespective of the terms of the instrument in particular cases,
instead of the mortgagee's being entitled to immediate possession
of the mortgaged property as an incident of the title, the
mortgagor was entitled to possession until foreclosure. The
conveyance in this case was, however, a trust deed, and not a
mortgage, and by section 676 of the law of the territory, also
approved March 16, 1855, Laws Nebraska 1855, pp. 55, 119, it was
provided:
"Deeds of trust of real or personal property may be executed as
securities for the performance of contracts, and sales made in
accordance with their terms are valid. Or they may be treated like
mortgages, and foreclosed by action in the district court."
This recognized the distinction between a trust deed and a
mortgage, and, while providing that a trust deed might be treated
like a mortgage and foreclosed as mortgages might be, did not
undertake to deal with the legal title which passed by the
conveyance to the trustee. The section was in terms adopted from
the Code of Iowa of 1851 (Code Iowa, 1851, c. 118, § 2096; Laws
Nebraska 1855, p. 55), which Code likewise contained the provision
as to the retention of the legal title by the mortgagor above
quoted from the law of Nebraska of February 21, 1855 (Code Iowa,
1851, § 1210).
Page 158 U. S. 453
And it has been repeatedly held by the Supreme Court of Iowa
that the legal title vests in the trustee under such a deed.
Devin v. Hendershott, 32 Ia. 192, 194;
Newman v. De
Lorimer, 19 Ia. 244;
Tucker v. Silver, 9 Ia. 261;
Cook v. Dillon, 9 Ia. 407.
It is true that in
Webb v. Hoselton, 4 Neb. 408,
decided at January term, 1876, the Supreme Court of Nebraska held
that a conveyance in the form of a deed of trust to secure the
payment of a promissory note, conditioned that in case of failure
to pay the trustee shall sell, or, upon payment, reconvey, is in
effect only a mortgage. Of course, in many particulars, the
attributes of deeds of trust and mortgages with a power of sale are
the same. Both are intended as securities. In both, if not
controlled by statute, the legal title passes from the grantor, but
in equity he is, before foreclosure, considered the actual owner,
and in both the grantor has the right to redeem. But that case did
not involve the application of the territorial act to which we have
referred, and changes had taken place in legislation during the
intervening period.
The land in question was unoccupied and wild land, and, there
being no adverse holding, upon breach of condition, if not before,
the legal title which Kountze held drew to it the possession,
although in subjection to the right of redemption in Wilbur and his
grantees, so that when this bill was filed to redeem from the trust
deed, the question at once arose whether there was then an equity
of redemption outstanding which complainant could assert and which
a court of equity would recognize.
Although actual possession by a mortgagee under a claim of
ownership, continued for the time required by statute, might be
requisite to convert a mortgage title into a title absolute, yet
notwithstanding that, in a case such as this, whether or not
redemption will be accorded depends upon the equities between the
parties.
Twenty-nine years had elapsed after the breach of condition
before this bill was filed, but in the meantime, the proceedings
for foreclosure complained of had been had. This was in 1876, the
sheriff's deed being given in 1877 -- eleven years before
Page 158 U. S. 454
complainant's bill was filed. It is settled law in Nebraska that
a judgment rendered against a person or in his favor is reversible
after his death if the fact and time of death appear upon the
record, or in error
coram nobis if the facts must be shown
aliunde. The judgment is voidable, and not void, and
cannot be impeached collaterally.
Jennings v. Simpson, 12
Neb. 558;
McCormick v. Paddock, 20 Neb. 486. Here,
however, the petition to foreclose was filed after the death of
Isaac Harter, and, without pausing to examine the other
irregularities relied on, it is sufficient to say that we think the
foreclosure decree was void. But if the initiation of those
proceedings operated to acknowledge an outstanding right of
redemption at that time, their culmination and the deed of the
sheriff must be recognized as evidence of the assertion of an
extinguishment of such equity.
By section 6 of chapter 57 of the General Statutes of Nebraska
of 1873 (Gen.Stat. 525) it was provided that:
"An action for the recovery of the title or possession of lands,
tenements, or hereditaments, can only be brought within ten years
after the cause of such action shall have accrued. This section
shall be construed to apply also to mortgages."
In
McKesson v. Hawley, 22 Neb. 692, a sale had taken
place under a trust deed, and grantees under the purchaser at the
trustee's sale -- one Hartley -- had taken and held adverse
possession of the land for more than ten years prior to the
commencement of the action, which was brought to redeem from the
trust deed on the ground that the proceedings to sale under it were
invalid. The Supreme Court of Nebraska held that the provisions of
the above section applied; that an action to redeem from a mortgage
was barred in the same time an action to foreclose would be, and
could not be maintained after ten years from the date when the
right of action accrued, which was, in that case, as soon as
adverse possession was taken under the alleged purchase from the
trustee, and the court said:
"But it is contended by plaintiff that the possession of
defendant and her grantors was not adverse; that the title of the
trustee was a recognition of the plaintiff's title, and that, as
the foreclosure proceedings were void, defendants could hold
Page 158 U. S. 455
only as assignees of the rights of the trustees, and therefore
not adverse. Such, to our mind, cannot be the law. Notwithstanding
the fact that the foreclosure proceedings might have been void, it
is clear that the purpose of such proceedings was to cut off and
destroy the title of plaintiff, and therefore the conveyance by the
trustee to Hartley, had it been legal, would have terminated
plaintiff's title. The grantees of Hartley taking and holding the
property or asserting their right to hold it under warranty deeds
from him was clearly adverse to plaintiff. They held as owners, and
the statute would run in their favor."
Even if in the case in hand the possession may be regarded as
constructive merely, yet, as the legal title was in the trustee,
and not in Wilbur, and only a bare right to redeem could be
transferred to and by Wilbur's grantees, we hold that the same
principle by analogy applied to them and to Twohig, which could
only be overcome, if at all, by superior equities on his part. And
we do not perceive that any such equities existed.
It appears from the record that from 1867 to 1877, inclusive,
the land was assessed and taxed in the name of Isaac Harter; from
1878 to 1885, inclusive, in the name of Isaac Harter, Jr., one of
the heirs of Isaac Harter, and from 1886 to 1889, inclusive, in the
name of H. W. Harter, another of said heirs; that after the
maturity of the trust deed, Isaac Harter paid the annual taxes from
and including those of 1861 to the day of his death, and that his
heirs, the appellants, paid the annual taxes from that time down to
and including those for 1888; that the land was treated during all
this time as belonging to Harter and his heirs, and notoriously
known as the "Harter land." It further appears that both Lockwood
and Virtue knew of the outstanding trust deed, which was, indeed,
acknowledged before Virtue, and the claim of Harter thereunder, and
that Lockwood and his wife knew of the pendency of the foreclosure
suit; that Mr. and Mrs. Lockwood left the county and state in 1866,
and Virtue in 1864, and never returned, except that Virtue paid a
temporary visit there in the summer of 1888, when he conveyed to
Twohig, and that the Lockwoods and Virtue paid no attention
Page 158 U. S. 456
whatever to the land, nor asserted any ownership therein, after
their departure. The record discloses another fact: that when
Virtue left Dakota City, he placed his business affairs in the
hands of an agent, who attended thereto, and that taxes were paid
on certain lands in Dakota City as late as 1877 on behalf of
Virtue, while no attention was given to the land in controversy. In
the summer of 1888, the affidavit of Isaac Harter, Jr., was filed
in the county court in the course of disposing of other real estate
than this, to the effect that Isaac Harter, upon his decease, had
left no debts unpaid, and therefrom it also appeared that Isaac
Harter died February 27, 1876, whereupon the clerk who had filed
the affidavit obtained a quitclaim from Virtue, and set up this
claim to the land. The land, which was worth perhaps $120 in 1858,
had suddenly increased in value to about $12,000 in 1888, chiefly
within the year or two preceding.
Under these circumstances, we think the doctrine of laches was
applicable, that the claim was stale, and that no court of equity
would be justified in permitting the assertion of an outstanding
equity of redemption after such a lapse of time, and in the entire
absence of the elements of good faith and reasonable diligence.
Decree reversed, and cause remanded with directions to
dismiss the bill.
