A local rule of law, established by decisions of the state
court, which, on an issue of bona fide
notice for value, rests the burden of proof upon him who attacks
the legal title and asserts a superior equity, must be followed by
the federal court in a suit to quiet title brought by the legal
owner of record. P. 308 U. S.
This is not a matter of practice in courts of equity, but a
matter of substantial right -- a valuable assurance in favor of the
100 F.2d 294; 101 id.
Certiorari, 307 U.S. 617, to review the affirmance of a decree
of the District Court in favor of the respondents in a suit by the
petitioner to quiet its title to a piece of land.
Page 308 U. S. 209
MR. JUSTICE McREYNOLDS delivered the opinion of the Court.
This cause is here in order that we may decide whether the
Circuit Court of Appeals wrongly declined to follow the rule of the
Texas courts prescribing how and by whom the facts should be shown
where one party to a contest concerning ownership of land claims
the legal title as bona fide
purchaser. We have considered
that point only, and conclude the ruling below was error. In
consequence, the challenged judgment must be reversed. The cause
will be remanded for final determination upon the entire record
consistent with this opinion.
Prior to 1899, Louisa Rogers owned a rectangular tract of land
-- 320 acres -- in Gregg County, Texas. In February of that year,
her heirs -- J. F. Rogers and his three brothers -- divided this by
deeds, duly executed and recorded. One of these conveyed to J. F.
Rogers sixty-eight acres out of the northwest portion of the tract,
described by metes and bounds. The north line was said to begin at
a specified point and to run thence west 440 yards to "Wiley Davis
N.E. corner." There, the boundary turns south and runs for eight
hundred and eighty yards, thence east, &c. Measured on the
ground, 440 yards ends sixty-six feet east of Davis' corner. This
discrepancy gave occasion for the present controversy over the
sixty-six foot strip lying between a south line from Davis' corner
and a parallel one sixty-six feet to the east. The interest
asserted by respondents rests upon the theory that, by intention,
this was left undivided.
Page 308 U. S. 210
In 1930, J. F. Rogers' heirs granted an oil and gas lease to all
land described in the 1899 deed to him. By assignments and
succession, petitioner Oil Company became owner of this. The
conveyances were duly recorded.
In 1934, respondent Dunlap obtained from the three brothers of
J. F. Rogers and his heirs a lease of the major part of the
sixty-six foot strip above described. Title to this is the subject
of the present controversy.
Claiming that the land described in the Dunlap lease of 1934 was
within the boundaries of its earlier one (1930), petitioner filed
an original bill in the United States District Court to remove the
cloud. Dunlap and the Rogers appeared and denied the material
allegations. A cross-bill set up their recorded deed and alleged
that the call in the 1899 deed to J. F. Rogers for "Davis'
northeast corner" was inserted through inadvertence and mistake;
that the distance call controlled; that the purpose of the parties
was to establish the western terminus of the north line sixty-six
feet east of Davis' corner, and leave a strip on the west in common
Petitioner denied the allegations of the cross-bill and asserted
that it and its predecessors were purchasers of the recorded legal
title for value in good faith and without notice of mistake.
The District Court ruled in favor of Dunlap. The Circuit Court
of Appeals affirmed. 100 F.2d 294, 101 F.2d 314, 315.
In the latter court, petitioner maintained that, under the
established Texas rule, on an issue of bona fide
for value without notice, the burden of proof is upon him who
attacks the legal title and asserts a superior equity. It cited
White v. Hix,
104 S.W.2d 136, 139, 140, *
that Erie Railroad Co. v. Tompkins, 304 U. S.
, required observance of the local rule.
Page 308 U. S. 211
The court recognized the existence of the Texas rule as claimed,
but thought a different and better one was generally approved, and
should be followed. It said:
"In the present case, the appellant is the original complainant,
seeking a decree quieting its title. It has entered a court of
equity, asking equity and bound to do equity. The defendants, in
their answer, set up a mistake, correctable in equity, in the
partition deed made to complainant's grantor, J. F. Rogers.
Complainant replies, denying the alleged mistake and alleging
additionally in very general terms that it and its predecessors in
title purchased in good faith, paying value for the oil and gas
lease it holds in reliance on the deed as written, and without
notice or knowledge of the claim now asserted that the call for the
Wiley Davis northeast corner was inserted by mistake. There was no
further pleading. . . ."
"Issue stands joined on the new facts alleged by this
complainant's reply concerning its purchase for value without
knowledge or notice. It seems to us that the burden of proving
these facts ought reasonably to rest on the complainant, both
because it has alleged them and they are essential to its success,
and because they are peculiarly within its knowledge. . . . What
the complainant itself paid, and with what knowledge, it, of
course, knows and could easily prove. There is a failure of
evidence, not only as to bona fides
and want of
Page 308 U. S. 212
but as to what was paid and to whom, and when and how, the
details of which the maker of this plea has from the earliest times
been held bound to allege and, when put in issue, to prove."
"This seems to us a matter of practice or procedure, and not a
matter of substantive law. There is no question as to what are the
rights of a bona fide
purchaser, or as to whether the
facts established make complainant out such, but only a question of
how and by whom the facts shall be shown to the court. Such matters
are not within the decision in Erie R. Co. v. Tompkins
the cases following it. . . ."
"We have here not a case where a Texas statute has created the
right asserted, or has created a presumption, or is in any manner
to be applied as construed in Texas. The question is simply what is
the proper practice in courts of equity. The practice followed in
the State courts of Texas, where equity courts as such do not
exist, is not controlling."
We cannot accept the view that the question presented was only
one of practice in courts of equity. Rather, we think it relates to
a substantial right upon which the holder of recorded legal title
to Texas land may confidently rely. Petitioner was entitled to the
protection afforded by the local rule. In the absence of evidence
showing it was not a bona fide
purchaser, its position was
superior to a claimant asserting an equitable interest only. This
was a valuable assurance in favor of its title.
Central Vermont Ry. Co. v. White, 238 U.
, 238 U. S. 512
considered an analogous situation and pointed out the principle
presently applicable. Proof that petitioner did not purchase for
value and in good faith was "part of the very substance" of
Sundry arguments advanced here to support respondents' demand
for affirmance, notwithstanding the erroneous
Page 308 U. S. 213
pronouncement below, will be matter for consideration when the
cause comes again before the Circuit Court of Appeals.
"It is thoroughly settled that one who claims a superior
equitable title to land as against one who has purchased from the
holder of the legal title must show that such purchaser did not
purchase for value, or purchased with notice of the outstanding
equity. Teagarden v. R. B. Godley Lumber Co.,
616, 154 S.W. 973; Commonwealth B. & L. Assn. v.
61 S.W.2d 546; Moore v. Humble Oil & Ref.
85 S.W.2d 943, 944; Tarkenton v. Marshall,
S.W.2d 473. The same rule applies in favor of lien holders.
Texas Loan Agency v. Taylor,
88 Tex. 47, 29 S.W. 1057;
McAlpine v. Burnett,
23 Tex. 649, 650."
And see Ritch v. Jarvis,
64 S.W.2d 831, 834, 835.