The judgment of the circuit court of appeals, sustaining the Act
of February 3, 1897, which provided that
"section 4742 of Mansfield's Digest of the Laws of Arkansas,
heretofore put in force in the Indian Territory, is hereby amended
by adding to said section the following:
Provided that, if
the mortgagor is a nonresident of the Indian Territory, the
mortgage shall be recorded in the judicial district in which the
property is situated at the time the mortgage is executed. All
mortgages of personal property in the Indian Territory heretofore
executed and recorded in the judicial district thereof in which the
property was situated at the time they were executed are hereby
validated,"
is sound as applicable to this case.
The plain purpose of Congress was to give effect to mortgages of
nonresidents, which had been, before the passage of the act,
recorded in the judicial district in which the property was
situated at the time the mortgages were executed.
The act as so construed and applied was a valid exercise of
Congressional power, and in circumstances like those of the present
case, cannot be justly impugned as depriving the attaching creditor
of property within the meaning of the Constitution.
The power of a legislature to pass laws giving validity which
was before ineffectual is well settled.
In the United States Court for the Northern District of the
Indian Territory, in April, 1897, an issue was tried between the
Evans-Snider-Buel Company, a corporation organized under the laws
of the State of Illinois, and William McFaddin & Son. One J. R.
Blocker was the owner and in possession of 6,775 head of cattle
pasturing in the Indian Territory. McFaddin & Son were judgment
creditors of Blocker, and, as such, levied an attachment on said
cattle. The Evans-Snider-Buel Company filed a proceeding by way of
interpleader in the attachment suit, claiming to have a prior lien
on said cattle by means of certain mortgages given by said Blocker,
who, as shown by the mortgages themselves, as well as the testimony
in the case, was a
Page 185 U. S. 506
resident of Bexar County, Texas, in which county some of the
mortgages relied on had been duly executed and recorded. The cattle
in question were grazing in the Creek Nation, Indian Territory, and
the mortgages were again recorded in the Northern District of the
Indian Territory at Muskogee and in the Creek Nation. The cattle at
the time of the levy were in the possession of Blocker, the
mortgagor.
After the filing of the interpleader, and on January 29, 1897, a
judgment was entered against the defendant Blocker, in the sum of
$55,875.71, and sustaining the attachment. There were several
trials in the case, but at the last trial in the Northern District,
where the plaintiffs, McFaddin & Son, for the second time lost
their suit, it was agreed that in case the judgment should be
reversed by the United States Court of Appeals for the Indian
Territory, judgment should be rendered against the
Evans-Snider-Buel Company, the interpleader. The judgment was
reversed by that court, and, pursuant to said agreement, on the
fourth day of January, 1900, judgment was entered against the
interpleader and its bondsmen for the sum of $72,250.35. From that
judgment, the interpleader prosecuted its writ of error to the
United States Court of Appeals for the Eighth Circuit.
At the time the attachment was levied upon the cattle in
controversy, the following laws in relation to the registration of
chattel mortgages were in force in the Indian Territory, being
sections 4742 and 4743 of Mansfield's Digest:
"SEC. 4742. All mortgages, whether for real or personal estate,
shall be proved or acknowledged in the same manner that deeds for
the conveyance of real estate are now required by law to be proved
or acknowledged, and when so proved or acknowledged, shall be
recorded -- if for lands, in the county or counties in which the
lands lie, and if for personal property, in the county in which the
mortgagor resides."
"SEC. 4743. Every mortgage, whether for real or personal
property, shall be a lien on the mortgaged property, from the time
the same is filed in the recorder's office for record, and not
before, which filing shall be notice to all persons of the
existence of such mortgage. "
Page 185 U. S. 507
As before stated, the attachment in this case was sustained on
the 29th day of January, 1897. On February 3, 1897, Congress
amended the law above quoted by an enactment which reads as
follows:
"Section 4742 of Mansfield's Digest of the Laws of Arkansas,
heretofore put in force in the Indian Territory, is hereby amended
by adding to said section the following: Provided, that, if the
mortgagor is a nonresident of the Indian Territory the mortgage
shall be recorded in the judicial district in which the property is
situated at the time the mortgage is executed. All mortgages of
personal property in the Indian Territory heretofore executed and
recorded in the judicial district thereof in which the property was
situated at the time they were executed are hereby validated."
Stat. 1896-1897, p. 510.
On November 19, 1900, the United States Circuit Court of Appeals
for the Eighth Circuit filed an opinion and judgment, Sanborn, J.,
dissenting, reversing the judgment of the United States Court of
Appeals in the Indian Territory, and affirming the judgment of the
United States Court for the Northern District of the Indian
Territory. Whereupon a writ of error was allowed and the cause
brought to this Court.
MR. JUSTICE SHIRAS delivered the opinion of the Court.
The controversy in this case is between mortgagee creditors and
judgment creditors of John R. Blocker. The mortgages were given to
secure the payment of notes executed by Blocker to the amount of
about $130,000, which were held by the Evans-Snider-Buel Company,
and represented money that had been advanced by that company to
Blocker to enable him to purchase the cattle embraced in the
mortgage. The mortgages were
Page 185 U. S. 508
recorded, within a day or two after their execution, in the
clerk's office of the United States Court for the Northern District
of the Indian Territory, that being the district in which the
mortgaged property was situated.
William McFaddin & Son had obtained a judgment against
Blocker in Jefferson County, Texas, in May, 1887, and on June 17,
1896, they sued out an attachment on that judgment in the United
States Court for the Northern District of the Indian Territory, and
levied on the cattle described in the mortgages.
It is not denied that McFaddin & Son had actual knowledge of
the existence of the mortgages at the time they sued out their writ
of attachment. Indeed, it appears that the description of the
cattle was taken by their attorneys from the record of the
mortgages before the attachment was issued.
But it is claimed that, under the laws of the State of Arkansas,
in force by act of Congress in the Indian Territory, as construed
by the Supreme Court of Arkansas, the mortgages as recorded did not
constitute a lien on the property described as against third
parties, although they had actual notice of their existence, and
that as McFaddin & Son had levied their attachment and obtained
judgment against Blocker before the act of Congress of February 3,
1897, validating the mortgages and their record, was passed, such
legislation was invalid and ineffectual to postpone the lien of the
attachment and judgment to the lien of the mortgages.
Elaborate arguments, oral and written, have been advanced,
pro and
contra, on the propositions that an
attaching creditor is not a purchaser for value; that an unrecorded
deed or mortgage creating a lien will take precedence over a
subsequent attachment; that notice to a subsequent purchaser of an
unrecorded mortgage is conclusive evidence of
mala fides
on his part; that a chattel mortgage, not fraudulent as to
creditors, made in good faith to secure an honest debt, is at
common law superior to a subsequent attachment of the same property
by a creditor of the mortgagor; that actual notice is equivalent in
law to constructive notice. But as we are of opinion that the
judgment of the circuit Court of Appeals, sustaining the
validity
Page 185 U. S. 509
of the Act of February 3, 1897, as applicable to the present
case, is sound, we do not consider it necessary to discuss the
other propositions urged upon us by the counsel of the defendants
in error.
The Fifth Amendment to the federal Constitution, which declares
that "no person shall be deprived of life, liberty, or property
without due process of law," is a limitation on the power of
Congress, and the question is open whether the act in question,
held applicable by the circuit court of appeals to the present
case, deprived the plaintiffs in error of property within the
meaning of that amendment.
We think it is impossible to successfully contend that the act
of Congress, when it in terms declared that
"all mortgages of personal property in the Indian Territory
heretofore executed and recorded in the judicial district thereof
in which the property was situated at the time they were executed,
are hereby validated,"
can be construed as intended to apply only to mortgages made
after the passage of the act, and had no retroactive effect. Such a
construction was adopted by the Court of Appeals of the Indian
Territory, and was approved by the dissenting judge in the Circuit
Court of Appeals for the Eighth Circuit. But the language of the
enactment is too express to permit such a view. The plain purpose
of Congress was to give effect to mortgages of nonresidents which
had been, before the passage of the act, recorded in the judicial
district in which the property was situated at the time the
mortgages were executed.
We think therefore that the trial court and the circuit court of
appeals were right in holding that the act of February 3, 1897, was
applicable to the mortgages of the defendants in error, and we are
to inquire whether the act, as so construed and applied, was a
valid exercise of congressional power.
The contention and behalf of the plaintiffs in error is that, by
the judgment in default against Blocker on January 29, 1897, they
obtained a vested interest in the cattle seized under the writ of
attachment, which could not be impaired by the subsequent
legislative enactment of February 3, 1897.
But it is to be observed that the only issues determined by
Page 185 U. S. 510
that judgment were those between McFaddin & Son, the
attaching creditors, and Blocker, the judgment debtor. Thereby any
controversy as to the indebtedness and the existence of proper
grounds of attachment were, as to those parties, concluded. But
this judgment by default did not preclude the Evans-Snider-Buel
Company from denying the right of the attaching creditors to a lien
prior to that of the mortgages. That was an issue that was still
pending and undetermined when the act of February 3, 1897, was
approved. Accordingly, when the issue between the two classes of
creditors came on to be tried in the United States Court for the
Northern District of the Indian Territory the only question was as
to the priority of the respective liens. It was not denied that the
mortgages constituted valid liens as against Blocker, the
mortgagor, nor was it denied that the mortgages had been recorded
in the district in which the mortgaged property was situated,
before the attachment was levied on the mortgaged property. That
the money secured by the mortgages was advanced to Blocker and used
by him in the purchase of the cattle, and that the attaching
creditors had actual knowledge of the existence of the mortgages
before they sued out the writ of attachment, were also admitted
facts.
What was claimed was, that the record of the mortgages was
ineffective as notice thereof to the attaching creditors, because
the mortgagor was a nonresident of the Indian Territory when the
mortgages were given, and that, under the registry law then in
force, the mortgages of a nonresident, though in fact recorded, did
not constitute liens as against third parties.
To this contention, the mortgagees pleaded the curative act of
February 3, 1897, where by it was provided that mortgages of
nonresidents of the Indian Territory should be recorded in the
judicial district in which the property was situated, and that all
mortgages of personal property in the Indian Territory theretofore
executed and recorded in the judicial district thereof in which the
property was situated at the time they were executed were thereby
validated.
As we have already stated, the trial court and the Circuit Court
of Appeals of the Eighth Circuit held that the Act of
Page 185 U. S. 511
February 3, 1897, was applicable to the case in hand, and, as a
valid exercise of power, was decisive of the controversy.
The condition of the plaintiffs in error is very different from
that of a purchaser for a valuable consideration without notice of
an alleged prior encumbrance. It cannot be said that they parted
with any money or other valuable consideration in reliance upon the
disclosures of the registry record. The indebtedness of Blocker to
them had accrued years before, and if the record did not, under the
decisions of the Arkansas Supreme Court, give them constructive
notice of the existence of the mortgage debts, it is admitted to
have given them the actual knowledge upon which they proceeded in
suing out the writ of attachment. The judgment in their favor in
the attachment suit, though conclusive as against Blocker, gave
them no property rights in the cattle as against the mortgagees,
and if their attempt to appropriate the mortgaged property is
defeated, they are in no worse position than if the defendants in
error had not advanced the money with which the cattle were
purchased. If the problem were made to turn upon the equities
between the two classes of creditors, the solution would be an easy
one. With the legal title to the property in the common debtor, no
court of equity would prefer the lien of a mere attachment to that
of a prior mortgage given to secure the money advanced to purchase
the property, if the attachment creditor had actual knowledge of
the existence and nature of the mortgage.
And we agree with the circuit court of appeals, that, while it
is not necessary to enter into the question of the comparative
equities of the parties, yet, when the validity of the curative act
is to be passed upon, that, in circumstances like those of the
present case, the act cannot be justly impugned as depriving the
attaching creditor of property within the meaning of the
Constitution.
In
Freeborn v.
Smith, 2 Wall. 160, the facts were these: Smith had
obtained a judgment against Freeborn in the Supreme Court of the
Territory of Nevada. To this judgment a writ of error went from
this Court, under the law organizing the territory, and the record
of the case was filed in this Court, December term, 1862. After the
case was thus removed, the territory
Page 185 U. S. 512
was admitted by act of Congress, March, 1864, into the Union as
a state. The act admitting the territory contained, however, no
provision for the disposal of cases then pending in this Court on
writ of error or appeal from the territorial courts. Motion was
made, in behalf of the defendants in error, to dismiss the writ, on
the ground that the territorial government having been extinguished
by the formation of a state government in its stead, and the act of
Congress which extinguished it having in no way saved the
jurisdiction of the court as previously existing, nothing further
could be done here. It was urged that the territorial judiciary had
fallen with the government of which it was part, and that the
jurisdiction of this Court had ceased with the termination of the
act conferring it. It being suggested, on the other side, that a
bill was pending in Congress supplying the omissions of the Act of
March, 1864, the hearing of the motion for dismissal was suspended
till it was seen what Congress would do. Congress finally acted,
and on February 27, 1865, passed an act providing that all cases of
appeal or writ of error theretofore prosecuted, and then pending in
the Supreme Court of the United States from the Supreme Court of
the Territory of Nevada, might be heard and determined by the
Supreme Court of the United States, and providing for mandatory
process, etc. The motion to dismiss the writ for want of
jurisdiction was then renewed, on the ground that the amendatory
act was a retrospective enactment interfering with vested rights,
and as an attempt to confer on this Court jurisdiction to review a
judgment which, by law at the time of its passage, was final and
absolute. This Court, through Mr. Justice Grier, thus disposed of
the contention:
"It is objected to the act of February 27, just passed, that it
is ineffectual for the purpose intended by it; that it is a
retrospective act, interfering directly with vested rights; that
the result of maintaining it would be to disturb and impair
judgments which at the time of its passage, were final and
absolute; that the powers of Congress are strictly legislative, and
this is an exercise of judicial power, which Congress is not
competent to exercise."
"But we are of opinion that these objections are not well
Page 185 U. S. 513
founded. . . . What obstacle was in the way of legislation to
supply the omission to make provision for such cases in the
original act? If it comes within the category of retrospective
legislation, as has been argued, we find nothing in the
Constitution limiting the power of Congress to amend or correct
omissions in previous acts. It is well settled that, where there is
no direct constitutional prohibition, a state may pass
retrospective laws, such as, in their operation, may affect suits
pending, and give to a party a remedy which he did not previously
possess, or modify an existing remedy, or remove an impediment in
the way of legal proceedings. . . . Such acts are of a remedial
character, and are the peculiar subjects of legislation. They are
not liable to the imputation of being assumptions of judicial
power."
The power of a legislature to pass laws giving validity to past
deeds which were before ineffectual is well settled. Thus, in
Watson v.
Mercer, 8 Pet. 88, 100 [argument of counsel --
omitted], the title to land in controversy was originally in
Margaret Mercer, the wife of James Mercer. For the purpose of
transferring the title to the husband, they conveyed to a third
person, who immediately conveyed to James Mercer. The deed of
Mercer and wife bore date of May 30, 1785. It was fatally defective
as to the wife, in not having been acknowledged by her in
conformity with the provisions of the statute of Pennsylvania of
1770, touching the conveyance of real estate by
femmes
covert. She died without issue. James Mercer died leaving
children by a former marriage. After the death of both parties, her
heirs sued his heirs in ejectment for the premises, and recovered.
The supreme court of the state affirmed the judgment. In 1826, the
legislature passed an act which cured the defective acknowledgment
of Margaret Mercer, and gave the same validity to the deed as if it
had been well executed originally on her part. The heirs of James
Mercer thereupon sued her heirs and recovered back the same
premises. This judgment was also affirmed by the supreme court of
the state, and that judgment of affirmance was affirmed by this
Court.
Watson v. Mercer was cited and followed by this Court
in
Randall v.
Kreiger, 23 Wall. 137, where it was held that it
was
Page 185 U. S. 514
competent for the legislature to validate a defective power of
attorney to convey land.
Similar principles were recognized in
Terry v.
Anderson, 95 U. S. 628;
Freeland v. Williams, 131 U. S. 405;
Baker v. Kilgore, 145 U. S. 487;
Louisiana v. New Orleans, 109 U.
S. 285. The case of
Green v. Abraham, 43 Ark.
420, was cited in the opinion of the circuit court of appeals.
There, a mortgage improperly acknowledged had been placed of
record, which by reason of the defective acknowledgment was not
notice to subsequent purchasers or lienors. Afterwards the
mortgaged property was attached under a writ against the mortgagor,
and thereafter the legislature validated the record of the
mortgage. The mortgagee having proceeded in replevin to recover the
attached property from one who claimed it under the attachment, it
was held by the Supreme Court of Arkansas that the interest of the
attaching creditor in the attached property was not vested, but
could be, and that it was in fact displaced by the subsequent
enactment validating the record of the mortgage.
Without pursuing the subject further our conclusion is that no
property rights of the plaintiffs in error were impaired by the act
of February 3, 1897. Their judgment against Blocker remained
unaffected, and the lien of the writ of attachment was not
destroyed, but continued to hold any surplus that might have
remained after the satisfaction of the mortgage liens. They have no
just ground in constitutional law to complain of the action of
Congress in giving legal effect to the equitable lien of the
mortgages.
Approving the careful opinion of the Circuit Court of Appeals
for the Eighth Circuit, reported in 105 F. 293, the judgment of
that court is
Affirmed.
MR. JUSTICE GRAY and MR. JUSTICE WHITE took no part in the
decision.
