McDonald v. Smalley, 26 U.S. 620 (1828)

U.S. Supreme Court

McDonald v. Smalley, 26 U.S. 1 Pet. 620 620 (1828) McDonald v. Smalley

26 U.S. (1 Pet.) 620

APPEAL FROM THE

CIRCUIT COURT OF OHIO

Syllabus

Where the record from the court below contained the whole proceedings in the case and exhibited all the matters either party required for a final disposition of the case, and the counsel for both the appellants and the appellees were willing to submit upon argument the whole case to the final decision of the court, but it appeared that the Circuit Court of Ohio had not decided any question but that which had been raised upon the jurisdiction of the court, the counsel were directed by this Court to argue the point of jurisdiction only.

It cannot be alleged that a citizen of one state having title to lands in another state is disabled from suing for those lands in the courts of the United States by the fact that he derives his title from a citizen of the state in which the lands lie.

M., a citizen of Ohio, apprehensive his title to lands in that state could not be maintained in the state court and being indebted to the plaintiff, a citizen of Alabama, to the amount of $1,110, offered to sell and convey to him the land in payment of the debt, stating in the letter by which the offer was made that the title would most probably be maintained in the courts of the United States, but would fail in the courts of the state. The property was estimated at more than the debt, but in consequence of the difficulties attending the title, he was willing to convey it for the debt, which was done. The plaintiff in error, after the land was conveyed to him, gave his bond to make a quitclaim title to the land on condition of receiving $1,000. Held that the title acquired by the purchase gave jurisdiction to the courts of the United States.

The motives which induced M. to make the contract for the purchase of the land can have no influence on its validity. A court cannot enter into the consideration of those motives when deciding on its jurisdiction.

In a contract between a mortgagor and mortgagee, being citizens of different states, it cannot be doubted that an ejectment or bill to foreclose may be brought ins court of the United States by the mortgagee residing in a different state.

The rules which govern the practice of the circuit courts in chancery have been prescribed by this Court, and ought to be observed.

This was an appeal from the Circuit Court of Ohio by the complainant in that court on a bill filed in the chancery side of the court, the object of which was, through the aid of that court, to obtain a conveyance of a tract of land situated in the State of Ohio.

The complainant, a citizen of the State of Alabama, derived title under a conveyance from Duncan McArthur, a citizen of Ohio, and the only point decided in the circuit court was upon the question of jurisdiction. The circuit court dismissed the bill for want of jurisdiction, and the complainant appealed to this Court.

Page 26 U. S. 621

Before the argument commenced, the counsel for both parties asked instructions of the court upon the question whether, as the record contained the whole of the proceedings in the cause, and exhibited all the matters either party required for a final disposition of the case, in this Court, upon all the points in controversy, this Court would permit the argument to go to the whole case, so that a decree could be given here upon the whole case, or whether an opinion upon the jurisdiction only having been given in the circuit court, the argument should be confined to that question. The court having advised upon the subject, directed the counsel to argue the point of jurisdiction only, as no other than that had been decided in the court from which the appeal had been taken.

In the Circuit Court of Ohio, the defendant suggested, that McDonald, the complainant in the bill, was not a citizen of Ohio, and according to a practice in the courts of the State of Ohio, under the authority of a law of that state, interrogatories were exhibited to the complainant, to which answers were given. This law was passed subsequent to the act of Congress establishing the judiciary system, and was admitted not to be authority in the courts of the United States. The facts stated by the complainant, in answer to those interrogatories, with other testimony, furnished the ground taken against the jurisdiction of the court.

On 14 November, 1823, Duncan McArthur conveyed by deed of indenture the land in controversy to the complainant, the consideration expressed in the deed being $1,100, the amount of a debt he owed to the complainant, for land purchased from him. In reply to the interrogatory

"Whether he was the beneficial owner, or was prosecuting the suit for the benefit of some resident in Ohio, and whether he is the real prosecutor of the suit, and was so at its commencement, or whether his name was used for the benefit of a citizen of the State of Ohio?"

the complainant answered, by referring to a letter from Duncan McArthur to him, dated July 18, 1823. In that letter, Duncan McArthur offers to give the land in question, 1,266 acres, alleged to be worth five dollars per acre, to pay a debt of $1,100, suggests that the title is good if prosecuted in the federal court; "but state Judges do not understand land causes, and a claimant in the military district might as well toss up heads and tails as sue in a state court." It contains also this suggestion:

"should you accept this offer, and not wish to prosecute the claim yourself, you can make something handsome, I have no doubt, by selling it to some of your neighbors,"

and it concludes with offering "any assistance in my power, should

Page 26 U. S. 622

a suit be brought for recovery of the land in the circuit court."

He also stated in his answer that the deed under which he claimed was executed for the purpose of giving jurisdiction to the court of the United States, because he believed that court safer than any other in the State of Ohio; that the contract was made by letter, of which he had not retained a copy; and that at the time the deed was "written," there was no special agreement between him and McArthur, but perhaps propositions by letter. "I give my bonds to a third party for a quitclaim title to said lands on condition of their paying me $1,100."

The complainant insisted that the deed from McArthur conveys to McDonald such a title as will enable him to sustain the suit in a federal court; that it is sufficient, if he has any interest; that by accepting the deed, McDonald has been paid his debt, and though he may be only mortgagee, he may sue in this Court.

The respondents contended that the answer of McDonald shows that he is not the owner of the land, and his manner of answering, leaves no doubt, but that the owner is a citizen of Ohio, and that the jurisdiction of the court, therefore, cannot be maintained.

Page 26 U. S. 623

MR. CHIEF JUSTICE MARSHALL delivered the opinion of the Court.

This suit was instituted in the Circuit Court of the United States for the Seventh Circuit, and District of Ohio, to obtain a conveyance of a tract of land, lying in what is termed "the military district;" claimed by the complainant under a patent, younger than that under which it is held by the defendants. The complainant is a citizen of Alabama, and claims the land under a conveyance from Duncan McArthur, who is a citizen of Ohio. The defendants objected to the jurisdiction of the court, and after hearing the parties upon this point, the court dismissed the bill, being of opinion that its jurisdiction could not be sustained. From this decree, the complainant has appealed, and the cause is now before this Court on the question of jurisdiction.

The bill states the complainant to be a citizen and resident of the State of Alabama and the defendants to be citizens and residents of the State of Ohio. It has not been alleged and certainly cannot be alleged that a citizen of one state having title to lands in another is disabled from suing for those lands in the courts of the United States by the fact that he derives his title from a citizen of the state in which the lands lie; consequently the single inquiry must be whether the conveyance from McArthur to McDonald was real or fictitious?

The transaction as laid before the court appears to be this; McArthur was apprehensive that his title could not be sustained in the courts of the state, in which alone he could sue, and being indebted to McDonald in the sum of $1,100, offered to sell and convey to him the land in controversy in payment of

Page 26 U. S. 624

this debt. The letter in which this offer was made, expresses the opinion that his title was good, and would most probably be established in the courts of the United States, but would fail in the courts of the state. He estimates the property as being worth much more than the sum he is willing to take for it, but in consequence of the difficulties attending the title, he is willing to convey it in satisfaction of the debt. He suggests that if McDonald should be disinclined to engage in the controversy himself, he might make an advantageous sale to some of his neighbors, who might be disposed to emigrate to Ohio, and offers to render any service in his power to the proprietor of the land, in the prosecution of the claim in the courts of the United States.

The contract was concluded by a letter, written in answer to that which has been stated, of which the said McDonald retained no copy. There was no special agreement between the plaintiff and McArthur when the deed was written, but perhaps some proposition by letter. He gave his bond to a third party for making a quitclaim title to the land, on condition of receiving from him $1,100.

This testimony, which is all that was laid before the court, shows, we think, a sale and conveyance to the plaintiff, which was binding on both parties. McDonald could not have maintained an action for his debt, nor McArthur a suit for his land. His title to it was extinguished, and the consideration was received. The motives which induced him to make the contract, whether justifiable or censurable, can have no influence on its validity. They were such as had sufficient influence with himself, and he had a right to act upon them. A court cannot enter into them, when deciding on its jurisdiction. The conveyance appears to be a real transaction, and the real as well as nominal parties to the suit, are citizens of different states.

The only part of the testimony which can inspire doubt, respecting its being an absolute sale, is the admission that the plaintiff gave his bond to a third party for a quitclaim title to the land, on paying him $1,100. We are not informed who this third party was, nor do we suppose it to be material. The title of McArthur was vested in the plaintiff, and did not pass out of him by this bond. A suspicion may exist that it was for McArthur. The court cannot act upon this suspicion.

But suppose the fact to be avowed, what influence could it have upon the jurisdiction of the court? It would convert the conveyance, which on its face appears to be absolute, into a mortgage. But this would not affect the question. In a contest between the mortgagor and mortgagee, being citizens of different states, it cannot be doubted that an ejectment or a bill

Page 26 U. S. 625

to foreclose, may be brought by the mortgagee, residing in a different state, in a court of the United States. Why then may he not sustain a suit in the same court, against any other person being a citizen of the same state with the mortgagor. We can perceive no reason why he should not. The case depends, we think, on the question whether the transaction between McArthur and McDonald was real or fictitious, and we perceive no reason to doubt its reality, whether the deed be considered as absolute or as a mortgage.

A question has been made whether the circuit court ought to have noticed the testimony on the conveyance under which the plaintiff claims, because it was brought irregularly before them.

By a law of the state, interrogatories may be propounded by the defendant in his answer, which the plaintiff is compelled to answer as if they had been propounded in a cross-bill.

Although this point has become unimportant in this cause, the Court thinks it proper to say that the rules which govern the practice of the circuit courts in chancery have been prescribed by this Court, and ought to be observed.

We think there is error in the decree of the circuit court dismissing the complainant's bill, and that the same ought to be

Reversed and the cause remanded for further proceedings according to law.

This case came on, &c., and was argued on the point of jurisdiction, on consideration whereof, this Court is of opinion that there is error in the decree of the said circuit court dismissing the complainant's bill. It is therefore decreed and ordered by this Court that the decree of the said circuit court in this cause be and the same is hereby reversed and annulled. And it is further ordered that the cause be remanded to the said circuit court for further proceedings to be had therein according to law and justice.