The act of Congress, passed 1 May, 1820, 3 Stat. 568, enacts,
"That no land shall be purchased on account of the United States,
except under a law authorizing such purchase."
Where land was conveyed to trustees for the purpose of paying a
debt due to the United States, and the highest court of a state
decided against a title set up under that deed upon the ground that
the deed was in violation of the act of Congress, this Court has
jurisdiction, under the twenty-fifth section of the Judiciary Act
to review that decision.
The deed to the trustees being an authority to sell so much of
the land as might be necessary to pay the debt, this was not such a
purchase as is forbidden by the statute. Nor does the act of
Congress prohibit the acquisition directly by the United States of
the legal title to land when it is taken by way of security for a
debt.
Where the trustees purchased, and paid for out of money
belonging to the United States, the equitable title, where the
legal title to the land had been previously conveyed to them, the
acquisition of this equitable title was nothing more than relieving
the land of an encumbrance, and was not such a purchase as was
forbidden by the statute.
Where the grounds of the decision of the supreme court of the
state are not stated in the record, this Court will look into the
bill of exceptions taken in the court of original jurisdiction to
see what points were carried up to the supreme court, and whether
they were necessarily involved in the judgment of the supreme
court.
A deed to trustees and their successors in trust to sell and
convey a fee simple absolute vested such an estate in them without
the insertion of the word "heirs" in the deed.
This case originally stood in the name of Wilson Lagow, the
ancestor of the present defendants in error.
The point involved was the construction of the Act of Congress
passed on 1 May, 1820, 3 Stat. 568, which forbids land from being
purchased on account of the United States except under a law
authorizing such purchase.
At a preceding term of this Court, a motion was made to dismiss
the case for want of jurisdiction, which is reported in
48 U. S. 7 How.
772. A brief history of the case is there given, and a more
particular one is given in the present opinion of the Court, which
renders any further statement by the reporter unnecessary.
Page 53 U. S. 102
MR. JUSTICE CURTIS delivered the opinion of the Court.
This case comes here by a writ of error to the Supreme Court of
the State of Indiana. The record shows that Lagow, the defendant in
error, instituted an action of disseisin in a circuit court of the
State of Indiana, whereby he sought to recover of Neilson, the
plaintiff in error, a tract of land described in the counts. The
tenant having pleaded the general issue, the case was committed to
a jury. At the trial, it appeared that Lagow, together with
Nathaniel Ewing, John D. Hay, and Caroline Smith, whose title, if
any, Lagow is alleged to have afterwards acquired, were in
possession of the demanded premises in the
Page 53 U. S. 103
year 1820, claiming to own the same, and upon this evidence of
title he rested his case. The defendant then introduced a deed,
bearing date September 19, 1821, from Lagow, Ewing, Hay, and Smith,
conveying to the Bank of Vincennes, the State Bank of Indiana, the
lands in controversy, excepting a certain square therein described.
He also put in evidence another deed from the bank to Badollett,
Harrison, and Buntin, conveying the same lands acquired by the bank
under the deed last mentioned, and also transferring to the
grantees some equitable title to the square excepted out of that
deed. This conveyance is made to the grantees and their successors
in the trusts declared by the deed, which are:
"until the sale hereinafter authorized shall be made, the
trustees, or a majority of them, or their successor or successors
herein appointed, or who may hereafter be appointed agreeably to
the mode hereinafter directed, shall and may demise or lease the
whole or any part of the said lands, lots, and houses, until such
time or times as a sale or sales thereof can be made, and receive
and take the rents and profits thereof, also foreclose the said
mortgages and collect the said notes, in trust nevertheless, for
the use of the Secretary of the Treasury of the United States in
extinguishment of the debt due by the said Bank of Vincennes to the
United States, and upon this further trust and confidence that the
said trustees, or a majority of them, and their survivor or
survivors herein appointed, or which shall hereafter be appointed,
agreeably to the mode hereinafter directed, shall and do, whenever
thereto requested by the Secretary of the Treasury of the United
States, for the best price that can be got, sell and dispose of,
for cash or on credit, on such terms, and in such parts or parcels,
as to them shall seem most advantageous, all or any part of the
above-described and conveyed lands, tenements, and hereditaments,
to any person or persons who may be inclined to purchase the same,
and to execute and to acknowledge, in due form of law, deed or
deeds of conveyance, unto the purchaser or purchasers, his heir or
their heirs and assigns in fee simple absolute and upon the further
trust that they, the said trustees, or a majority of them, or the
survivors of them herein appointed, or hereafter to be appointed
agreeably to the mode hereinafter directed, shall and do pay and
apply, of and every the sum and sums of money or other proceeds to
be raised or paid by the rents or sales of the said lands and
collections of the said notes, or any part or parts thereof, to the
proper use of the United States, until the sum of one hundred and
twenty thousand three hundred and eight dollars, which is now
agreed upon by the said parties of the first part, of the one part,
and the Honorable Jesse B. Thomas, as the legally authorized agent
of the United States, of the other part, as the sum now due,
together with interest
Page 53 U. S. 104
on the said sum of money, at the rate of six percentum per annum
until paid, retaining thereout, however, their, the said trustees',
expenditures, and a reasonable compensation for their trouble and
services, returning and paying the overplus, if any, to the said
president, directors, and company of the said Bank of Vincennes,
their successors or assignees, and also upon this further trust, as
to all such parts of the said lands and premises, either in fee or
under mortgage, as shall remain unsold, that they, the said
trustees, and their successors, shall stand seized thereof to the
use of the United States until the debt aforesaid shall be fully
brk:"
paid and discharged, and there afterwards to the use of the said
president, directors, and company, their successors and assigns
forever, provided always, and it is hereby expressly agreed and
declared by and between the parties of these presents, that in case
of the death of either or any one or more of the said trustees
hereinbefore named, or of any trustees hereafter to be appointed,
it shall and may be lawful, to and for the said Secretary of the
Treasury of the United States for the time being, at any time or
times thereafter, by deed duly executed, to fill up such vacancies,
and the said trustees, when so appointed by the Secretary of the
Treasury as aforesaid, shall all of them have the like power and
authority to act in the several trusts according to the true intent
and meaning of these presents, as fully and amply, to all intents
and purposes, as if such new or other trustee or trustees had been
actually named herein by the said president, directors, and company
of the said Bank of Vincennes; and provided also that no trustee
now appointed, or to be hereafter named and appointed as above
directed, shall in any event be liable for any more than he shall
receive, nor for any loss or damage not occasioned willfully and
designedly by such trustee, or through his gross and willful
negligence.
Neither the
habendum nor the grant in this deed
contains the word heirs.
The tenant further offered in evidence, proceedings under a
judicial sale of the title to the excepted square above mentioned,
by which Badollett, Harrison, and Buntin, the trustees under the
deed of the bank, became the purchasers of the legal title to that
square, which was conveyed to them in fee simple in 1827, and also
introduced evidence to show that he was in possession under the
trustees with a contract to purchase of them the entire tract of
land demanded.
The plaintiff then put in evidence the record of a
quo
warranto against the bank, by which it appeared that in July,
1822, a judgment of forfeiture was rendered against that
corporation, and all its franchises and property seized into the
possession of the state, and he offered proof that Badollett,
Harrison and
Page 53 U. S. 105
Buntin purchased the legal title to the reserved square as
trustees, and that the money paid by them was from the finds of the
United States, supplied by the order of the Secretary of the
Treasury, and that all the trustees were deceased when the action
was brought.
At the request of the plaintiff the court gave the following
instructions:
1. That on the proof of possession as owners by the Steam Mill
Company in 1820, and of the conveyance by the company to Lagow, of
June, 1827, Lagow, the plaintiff, is entitled to recover, unless
the defendant has shown a better title.
2. That the 7th section of the Act of Congress of 1 May, 1820,
forbids "the purchase of any land on account of the United States,"
unless authorized by act of Congress.
3. That the term "purchase of land" in law, and in the act of
Congress, means any and every mode of acquiring an interest in real
estate other than by inheritance.
4. That if the government is prohibited from purchasing land
directly in its own name, it is also prohibited from purchasing
indirectly in the name of an agent or trustee.
5. That if there is any act of Congress or law authorizing the
conveyance from the bank to the trustees, it is incumbent on the
defendant to show it, and from the fact that the defendant does not
set up any such act or law, the jury may infer there is none.
6. That all acts, deeds, and agreements, contrary to the plain
language, or even to the policy, of an act of Congress, are
void.
7. That if the deed of trust from the bank is contrary to the
letter or to the spirit and meaning, or to the policy of the act of
1 May, 1820, it is void, and the interest which the bank then had
in the land remained in the bank.
The court refused to give the following instruction requested by
the defendant:
"That it was competent for the Bank of Vincennes to make a deed
to trustees for the benefit of the United States, and such a deed
is valid and lawful for the purpose for which it was made. To which
refusal of the court the defendant at the time excepted."
A verdict having been rendered in favor of the plaintiff, a
motion for a new trial was made and refused, and in conformity with
the practice of that court, exceptions were taken to such refusal,
and having been allowed, the case went by appeal to the Supreme
Court of Indiana, which is the highest court of that state. So that
the record, presented to the supreme court an assignment of three
alleged errors, being the same relied on as causes for a new trial
in the court below,
viz.:
1. For the error of the court in misdirecting the jury.
Page 53 U. S. 106
2. For the refusal of the court to give the instructions to the
jury asked by the defendant.
3. Because the verdict is contrary to the law and evidence.
The supreme court affirmed the judgment of the circuit court,
and under the 25th section of the Judiciary Act, 1 Stat. 117, the
defendant has brought the record to this Court, by a writ of
error.
To present intelligibly, the legal merits of the case at one
view, and to show what question is here for decision, it should be
stated, that by the law of Indiana, as expounded by the supreme
court of that state,
State v. State Bank, 6 Blackf. 349,
whatever real property was held by the bank, when its charter was
annulled, went to the grantors thereof; that as Lagow and others,
whose rights he is alleged to have acquired, were the grantors of
this land to the bank, it became material to ascertain whether the
bank had any and what title to the land, when its franchises were
seized; that the bank having conveyed by deed to Badollett and
others as trustees before the forfeiture took effect, the validity
of that deed was necessarily drawn in question; that the court did
in effect decide that according to the true construction of section
7 of the Act of Congress of May 1, 1820, 3 Stat. 568, the defendant
could take no title under or through that deed, the same being void
by force of that act, and consequently the title remained in the
bank and passed to Lagow when the charter of the bank was
vacated.
The question, therefore, which arises upon this writ of error is
whether the Supreme Court of Indiana rightly construed the act of
Congress, which is in these words: "That no land shall be purchased
on account of the United States, except under a law authorizing
such purchase."
The deed in question conveyed the land to Badollett and others
in trust to sell so much thereof as might be necessary to raise
sufficient money to pay a debt due from the bank to the United
States. It is clear this was not in any sense a purchase of land on
account of the United States. In the land itself, the United States
acquired by the deed, no interest. They were not even clothed with
an equitable right to acquire such an interest through the aid of a
court of equity; for their title was not to the whole proceeds of
the lands, whatever they might be, but only to so much of them as
might be necessary to pay the debt of the bank. To this extent,
both the creditor and the debtor had the right to insist on a sale,
and whatever residue of land should remain, was by force of the
deed, operating by means of a shifting, or secondary use, to go to
the bank upon payment in full of the debt due to the United States.
It is true, the deed
Page 53 U. S. 107
contains some language, which, taken by itself, might raise a
use, executed in the United States; but it is well settled that
such language is controlled, by an intent, manifested in the
instrument, to have the legal estate remain in trustees, to enable
them to execute a trust which the deed declares; and where, as in
this case, the trust is to sell and convey in fee simple absolute,
a legal estate is vested in the trustees commensurate with the
interest which they must convey in execution of the trust.
Mott
v. Buxton, 7 Ves. 201;
Leonard v. Sussex, 2 Vern.
526; and the cases in note (
f) to
Chapman v.
Blissett, Cas.Talbot 145-156;
Trent v. Hanning, 7
East 99;
Doe v. Willan, 2 Barn. & A. 84.
It is clear, therefore, that these trustees, and not the United
States, took the land under this deed, and that the latter acquired
no interest in the land as such. This Court has applied the same
principles to the case of an alien, in
Craig v.
Leslie, 3 Wheat. 50, which settles that a devise of
land to a citizen as a trustee, upon a trust to sell the land and
pay over the proceeds to an alien, is a valid trust, and the
interest of the alien is not subject to forfeiture.
See also
Anstice v. Brown, 6 Paige 448. If it were necessary,
therefore, we should hold that the act of Congress was not
applicable to this conveyance, because by it no title to land was
purchased on account of the United States.
But we do not think it necessary to rest the decision of the
case exclusively on this ground; for in our judgment, the act of
Congress does not prohibit the acquisition by the United States of
the legal title to land, without express legislative authority,
when it is taken by way of security for a debt. It is the duty of
the Secretary of the Treasury to superintend the collection of the
revenue, and of the Comptroller of the Treasury to provide for the
regular and punctual payment of all moneys which may be collected,
and to direct prosecutions for all debts which may be due to the
United States. 1 Stat. 65, 66. To deny to them the power to take
security for a debt on account of the United States, according to
the usual methods provided by law for that end, would deprive the
government of a means of obtaining payment, often useful, and
sometimes indispensably necessary. That such power exists as an
incident to the general right of sovereignty, and may be exercised
by the proper department if not prohibited by legislation, we
consider settled by the cases of
Dugan's
Ex'rs v. United States, 3 Wheat. 172;
United States v.
Tingey, 5 Pet. 117;
United
States v. Bradley, 10 Pet. 343;
United
States v. Linn, 15 Pet. 290.
These cases decide, that the United States being a body politic,
as an incident to their general right of sovereignty, have a
capacity to enter into contracts and take bonds by way of
security,
Page 53 U. S. 108
in cases within the sphere of their constitutional powers, and
appropriate to the just exercise of those powers, through the
instrumentality of the proper department, when not prohibited by
law, although not required to do so by any legislative act, and we
think this same power extends to and includes taking security upon
property for a debt already due. The assumption that Congress
intended by the act in question to prohibit the just exercise of
this useful power, is wholly inadmissible. In
United
States v. Hodge, 6 How. 279, a postmaster had made
a mortgage of property, real and personal, to secure to the Post
Office Department the sum of sixty-five thousand dollars, or such
other sum as might be found due on a settlement six months after
the mortgage.
This mortgage embraced debts already due, and gave time to the
debtor. The sureties on his official bond relied on its giving time
as discharging them from their obligation. It is manifest that if
the mortgage were void there was an end of the case, yet it is
nowhere suggested that it was invalid, and it is treated by the
court as an operative and effectual instrument. The object of any
form of conveyance by way of security is not to acquire the
dominion and ownership of land, nor even to invest funds therein,
but simply to obtain payment of the debt secured. This is the
principal thing to which all others are incidental. It may happen
that, by the foreclosure of a mortgage containing no power of sale,
the mortgagee may become the owner of the land under the mortgage;
but this is not the object which the parties have in view when the
mortgage is made, and takes place only because their main end is
not attained, and by force of proceedings which ensue afterwards
because their main end is not attained. Such a transaction is
essentially different from a purchase of land in which the parties
have nothing in view but to exchange for the present dominion and
title of the land acquired by the purchaser, the money, or other
price paid to the seller, and in analogous cases the distinction
between these transactions has been recognized. An alien cannot
have an action to enforce the title to land which he has taken by
way of purchase; but this Court has decided, in
Hughes v.
Edwards, 9 Wheat. 489, that an alien mortgagee may
have the aid of a court of equity to foreclose a mortgage by a
sale, because the debt is the principal thing and the land only an
incident. So, though a corporation was by its charter authorized to
take mortgages for debts previously contracted, it has been held
that a mortgage to secure a debt contracted at the time the
mortgage was given, was valid, because the intention of the
legislature was only to prevent the corporation from purchasing
lands, and not to prohibit it from taking security, in good faith,
for the payment of its debts.
Silver
Page 53 U. S. 109
Lake Bank v. North, 4 Johns.Ch. 370;
Baird v. Bank
of Washington, 11 Serg. & R. 411. It is the opinion of the
Court that by the true construction of the act of Congress now in
question, the government are not prohibited from taking security
upon lands, through the action of the proper department, for debts
due to the United States, and that the court erred in giving the
act such a construction as to avoid the deed from the bank to the
trustees.
The trustees purchased, at a judicial sale, the legal title to
the reserved square, and paid for it out of the money of the United
States, but they had previously taken in trust, by way of security,
an equitable title thereto, and this transaction, though under the
forms of a purchase, was in truth nothing more than relieving this
parcel of land of an encumbrance, so that when they should sell,
they might obtain the entire benefit of the security. The purpose
was precisely the same as that which induced the conveyance to them
by the bank, and is not a purchase by the United States prohibited
by the act of Congress, for the same reasons that the original
conveyance is not within that act.
It remains to consider another view taken in argument by the
counsel for the defendant in error. The argument is that the
Supreme Court of Indiana may have affirmed the judgment of the
circuit court upon the ground that the deed to the trustees not
containing the word heirs, conveyed only a life estate, the
reversion remaining in the bank; and that as the trustees were all
dead when the action was brought, the estate in fee simple in
possession had reverted to the plaintiff, Lagow. It has been
settled, by a series of decisions in this Court, beginning with
Miller v.
Nichols, 4 Wheat. 311, and coming down to
Smith v.
Hunter, 7 How. 738, that it must appear from the
record that the highest court of the state passed on one of the
questions described in the twenty-fifth section of the Judiciary
Act, and different modes in which this may appear by the record are
pointed out in
Armstrong v. Treasurer of
Athens County, 16 Pet. 281. It has never been held
that the record of the proceedings of the highest court must state
in terms a misconstruction by that court of the act of Congress. It
is enough that it is an inference of law from the inspection of the
whole record that the highest court did thus misconstrue an act of
Congress and annul a right or title, otherwise valid, by reason of
such misconstruction. Any other rule, confining this Court to an
inspection of that part of the record which sets out the
proceedings of the highest court alone, would be a departure from
the general principle that the whole of an instrument is to be
looked at to determine the effect of each part of it, would present
for decision an artificial and not a real case; and inasmuch as
Page 53 U. S. 110
the highest state court often simply affirms or reverses the
judgment below, would, in all such cases, deprive the citizen of
the rights secured to him by the Constitution and the twenty-fifth
section of the Judiciary Act. And it has been the practice of this
Court, whenever necessary, to look at the record of the proceedings
of the inferior state court in connection with the proceedings of
the highest court, in order to deduce therefrom the points decided
by the latter. Now the bill of exceptions taken in this case in the
circuit court shows that the construction of the act of Congress
was in question in that court, was misconstrued there, and a deed,
under which the plaintiff in error deduced title, was decided to be
void by reason of such misconstruction.
This decision being excepted to was by the appeal brought before
the supreme court, and when that court determined that the judgment
of the circuit court be in all things affirmed, it must be taken
that the supreme court affirmed the correctness of the decision
thus excepted to unless it appears by the record that they
proceeded on some other ground, and so the inquiry still remains,
whether the supreme court did not affirm the judgment of the
circuit court, upon the ground suggested in argument by the counsel
for the defendant in error, that the deed in question conveyed only
a life estate, which had terminated before action brought. We
cannot make that deduction from this record. It does not appear
that the question, what that deed conveyed, if valid, was in any
manner raised in the circuit or supreme court; and, assuming that
the supreme court were not confined on the appeal to points raised
in the court below, but might have decided upon any ground shown by
the record before them to be tenable, we cannot infer that the
decision rested on this ground, because we are of opinion it is not
tenable. If it had appeared affirmatively in the record that the
supreme court did decide that the deed conveyed only a life estate,
this Court would not inquire into the correctness of that decision;
but when put to infer what points may have been raised, and what
that court did decide, we cannot infer that they decided wrong;
otherwise nothing would be necessary in any case to prevent this
Court from reversing an erroneous judgment under the twenty-fifth
section of the Judiciary Act, but that counsel should raise on the
record some point of local law, however erroneous, and suggest that
the court below may have rested its judgment thereon.
Now on looking into the deed from the bank to the trustees, we
find that the grant is to them and their successors in trust to
sell and convey in fee simple absolute. The legal estate, being in
trust, must be commensurate therewith, and will be
Page 53 U. S. 111
deemed to be so without the use of the usual words of
limitation.
Newhall v. Wheeler, 7 Mass. 189;
Stearns
v. Palmer, 10 Met. 32;
Gould v. Lamb, 11
id.
84;
Fisher v. Fields, 10 Johns. 505;
Welch v.
Allen, 21 Wend. 147. As the execution of the trust required
the trustees to have a fee simple, in order to convey one, we are
of opinion that the deed to them conveyed a fee, and consequently
we cannot infer that the state court decided that only a life
estate passed by the deed.
The opinion of the court is that the judgment of the court below
should be
Reversed and the cause remanded for another trial to be had
therein.
Order
This cause came on to be heard on the transcript of the record
from the Supreme Court of the State of Indiana, and was argued by
counsel. On consideration whereof, it is now here ordered and
adjudged by this Court that the judgment of the said supreme court
in this cause be and the same is hereby reversed with costs, and
that this case be and the same is hereby remanded to the said
supreme court for further proceedings to be had therein in
conformity to the opinion of this Court.