After various proceedings in the mode of deeds, bonds &c.,
the legal title to a piece of property became vested in one person
and the equitable title in another.
The holder of the equitable title has a right to file a bill
against the holder of the legal title, to compel him to convey such
legal title upon clearing off the encumbrances.
This right is not destroyed by the circumstance that the holder
of the legal title had succeeded in a suit against another holder
of the legal title, to which suit the holder of the equitable title
was not a party.
The fact that neither party is in actual possession of the
premises is of no consequence, because the controversy is with
respect to the legal title.
This case was before this Court at a prior term, and is reported
in 59 U. S. 18
263. It is proper to remark that the bill, in this case, set forth
that the controversy in the state court, which was referred to in
18 How. had become terminated.
The facts of the case are stated in the opinion of the
MR. JUSTICE CATRON delivered the opinion of the Court.
The bill was demurred to, and the demurrer sustained below, and
the facts appear only on the face of the bill. Davis held the legal
title to the two lots Nos. 7 and 8 in dispute, lying in or near the
City of Milwaukee, in the State of Wisconsin. Davis held the legal
title as trustee for Otis Hubbard. In June, 1851, Hubbard, for a
good and valuable consideration, conveyed the premises to Joachim
Gruenhagin, by a deed in fee, by which the grantee became seized of
the entire interest of Hubbard.
Page 62 U. S. 242
In December, 1852, Gruenhagin, for a good and valid
consideration, conveyed the premises to James S. Brown; and in
January, 1853, Brown, for a valuable consideration, conveyed to the
complainant, Smith. The complainant afterwards also got deeds from
Davis and Knab.
Hubbard had sold two other lots in Milwaukee to one Schram, the
title to which was outstanding in the names of persons residing
beyond the State of Wisconsin. Schram required security for the
title from Hubbard.
Butler, a relation of Hubbard, got Knab to give a bond for
title, binding himself jointly with Butler, as security to
To secure himself against loss for his undertaking to Schram,
Knab required of Hubbard security to indemnify him should Hubbard
be unable to make a title to the lots sold to Schram, and Hubbard
got Davis, who held the legal title to the lots, to convey them to
Knab as security, and for no other consideration.
On the same day, 22d of July, 1848, that the title bond to
Schram was made, Knab executed to Butler a bond covenanting that if
Butler would procure the deed from the trustees of Hubbard, and
comply with the bond to Schram, he Knab would convey the lots to
Butler, for which he held Davis' deed; Butler failed to procure the
deed, and Hubbard did so himself.
In March, 1851, Butler assigned Knab's bond to Orton, the
Hubbard never received any consideration whatever for the lots
thus transferred, and it is alleged that the bond from Knab to
Butler was a secret and fraudulent contrivance on the part of
Butler, to cheat Hubbard and obtain his property, and that he was
Smith obtained a deed for the lots from Davis, and also one from
Knab, but as Davis had no interest, having long previously conveyed
to Knab, nothing passed by his deed, unless, as is assumed by the
bill, an equity of redemption resulted to Davis.
And, as Orton had filed a bill in a state court against
Page 62 U. S. 243
which was pending when Smith took his deed from Knab, and as
Knab was not allowed to disavow his own bond, Orton got a decree
against Knab for a conveyance of the legal title, which conveyance
was regularly made, and therefore the deed from Knab to Smith was
of no value. Having been made whilst the suit was pending, it could
only have any useful effect on the contingency of Knab's successful
Orton having succeeded, his decree related to the commencement
of the suit, and gave him the elder and better legal title, Smith's
deed being "subservient to the rights of the parties in
litigation." 1 Story's Com. Eq., S. 406
Orton has the legal title, beyond dispute. Smith is asserting
Hubbard's equity and Davis' right of redemption, and prays by his
bill, among other things, "that Orton be decreed to release to him
Smith all claim or interest in said lots."
Neither party has or ever had actual possession of the premises;
nor is this of any consequence, as the contest is for the legal
Butler certainly had neither a legal nor equitable interest in
the property when he sold to Orton. He held Knab's title bond, with
full knowledge that Knab held as trustee for Hubbard. And this bond
was assigned to Orton, who, according to the allegations of the
bill, took it with Hubbard's equity inhering to it.
What effect Orton's decree against Knab may have to protect
Orton under the legal title, on a plea of bona fide
purchaser of an equity, we decline to decide; nor will we discuss
the question, as this cause may again come before this Court, and
involve that question.
The remaining question for consideration is whether Smith can be
heard in a court of equity, being an assignee of an equitable
interest in contestation.
Gruenhagin purchased and took a deed for Hubbard's equity, and
was clothed with his interest before any litigation was instituted
affecting the title. And as neither Gruenhagin, Brown, nor Smith,
were parties to the suit of Orton against Knab, the decree against
Knab did not in any wise impair the equity obtained from Hubbard,
who likewise was no party to
Page 62 U. S. 244
that suit, and who had conveyed to Gruenhagin before it was
Hubbard's equitable title being distinct from the legal title in
controversy between Orton and Knab, no reason existed why it should
not be the subject of a bona fide
sale, and transfer by
deed, in like manner that a mortgagor's equity may be sold and
conveyed. After a mortgage debt is discharged, the mortgagor or his
assignee may compel the mortgagee or his assignee to surrender the
legal title. And that is substantially the case the bill makes, for
after Hubbard satisfied Schram's bond made for title by Knab and
Butler, Knab held the naked legal title, with an undoubted right in
Hubbard to call for its surrender. And his assignee stands on the
same footing. 4 Kent's Com. 157. And so the statutes of Wisconsin
in effect provide. Revised statutes of 1849, ch. 59, sec. 7; ch.
77, secs. 6 and 7
We are of the opinion that the court below erred in
sustaining the demurrer to the bill, and order the decree to be
reversed, and remand the cause, with directions that the district
court proceed in it according to the 34th rule of this Court,
governing chancery proceedings.