« ΠροηγούμενηΣυνέχεια »
as the “legal holder of the unpaid notes.” After this Hyde paid Hammond & Bogue the money they had advanced to take up the notes from the bank. Hammond, also, at different times, released a part of the lots in block 2 from the lien of the deed of trust to him for the security of Richardson. The 19 lots which had been sold, and from the proceeds of which the $6,000 came that was paid to the bank upon the notes on the fifteenth of January, were released when that sale was made. The other releases were executed when the advances of Hammond & Bogue were repaid by Hyde.
Henry J. Traver first heard of the release of the lien on block 2 under the trust in favor of Dickson a short time before the fifth of April, 1875, and at that date he brought suit in the circuit court of Cook county against Michael Traver, Hyde, Bogue, Ayres, Hammond, and others who had become interested in the property, not, however, including Richardson, to obtain a release of block 1 from the lien under the Ayres trust deed, on the ground that the Dickson notes had been paid. In this suit he obtained a preliminary injunction restraining Hyde, Bogue, and Ayres from enforcing the trust deed, or selling or disposing of the two Dickson notes. On the thirtieth of June, 1875, while this suit was pending, Hammond & Bogue sent Richardson, in Boston, where he resided, a draft for $400 “in paym't of coupon of James C. Hyde due 28th inst. to 1st prox.” In their letter to Richardson inclosing the remittance, Hammond & Bogue made no mention of any change in the form of his securities, or of the suit which had been *begun by Henry J. Traver. On the seventh of October, 1875, Hyde and Hammond & Bogue answered the bill of Traver, and on the 8th Ayres filed his answer. In the answer of Hammond & Bogue they state that “on or about the time when the first of said two Dickson notes became due, the said Hyde requested these de fendants to allow him to pay up said notes for $6,000 and $4,000 then held by said Richardson, and to purchase the said two Dickson notes. And these defendants, acting as the agents of said Richardson, at the request of said Hyde, agreed to and did receive payment of said $6,000 and $4,000 notes, secured by the deeds of trust to this defendant Hammond on said block 2, and this defendant Hammond released the greater portion of said block 2 from the lien of said trust deeds, made to this defendant Hammond as trustee, there being about 10 lots yet remaining not formally released, but this defendant Hammond was and is ready to release the same at any time at request of said Hyde, unless enjoined by the court. And the said Hyde, having paid up the interest on said two Dickson notes and a sufficient amount of the principal to reduce the same to the sum of $10,000, these defendants agreed to and did take said notes by purchase, acting for and in behalf of said Richardson, and the said Richardson is now the legal and equitable owner of the same for full value. And these defendants, as such agents, consented to extend the time of payment of said Dickson notes first becoming due for the period of one year. And these defendants, also at the request of said Hyde, consented to the release of said block 2 from the lien of said trust deed to said Ayres as trustee, and this defendant, Bogue, signed said release, joining with said trustee, but these defendants at that time supposed and believed that said IIyde was the owner of both block 1 and block 2, and knew nothing of the said agreement between said complainant (Henry Traver] and said Michael Traver, and between said Michael Traver and said Hyde. And these defendants, for and in behalf of said Richardson, extended the time of payment of said Dickson note first payable for the term of one year; and the said Dickson notes are now in the hands and possession of these defendants*as the agents of the said Richardson, who is the legal and equitable owner of the same, and who paid full value therefor." The answer of Hyde was in substance the same.
On the eighth of December following, Hammond & Bogue wrote Richard. son as follows: "With regard to the Traver loan, we have to say, from pres
ent appearances we do not think there is a prospect of any payment being made at present; but we are of opinion it will be for your interest to institute prompt proceedings to forclose, if nothing is paid. The security on this loan was modified by us from the form as originally taken as follows: At the time of negotiating for the loan there was existing a prior purchase-money security of the same character as that taken by us. Our first arrangement, at the time of the negotiation of the loan, was to have this original incumbrance released, in order that your loan should be a first lien. Instead of the release, we had the original security (being the purchase-money paper secured by deed of trust) transferred to us, for your account, in substitution of the security first taken, and which we hold for your security as a first and prior lien, and we think it advisable, in case no payment is made this month when the payment is due, (December 19th,) that proceedings for foreclosure in the United States court be commenced immediately. We are legally advised and believe that this course will result in procuring an early settlement, but, if not, it will be a speedy proceeding by which a final result may be reached much sooner than is the case in the other courts. We would like you to advise and direct us in regard to immediate proceedings to foreclose, as we may deem necessary for our interest. An early reply is important. Send all papers of both loans.” Richardson at once sent forward the two notes and deeds of trust, and their receipt was acknowledged by Hammond & Bogue, under date of the thirteenth of December. On the twenty-eighth of December suit was begun by Richardson, in the circuit court of the United States for the Northern district of Illinois, against the Travers, Ayres, Hammond, and certain purchasers of the property, to enforce the lien of the Ayres deed of trust on block 1 for the security of the two Dickson notes. In the bill Richardson stated that “on or about the fifteenth of January, 1875," he had, “for a good and valuable consideration, purchased from the said John Dickson the two notes aforesaid.” Thereupon Henry J. Traver filed a supplemental bill in his suit in the state court, under which he brought in Richardson as a party. Richardson appeared, and, on his petition, the case was removed to the circuit court of the United States for the Northern district of Illinois. When it got there, it was consolidated with the suit which had been begun by Richardson. The circuit court, on final hearing, disinissed the bill of Richardson, and rendered a decree in favor of Traver, canceling the lien of the deed of trust to Ayres on block 1. From that decree Richardson has appealed.
After a careful consideration of the evidence we are satisfied with the decree below. To our minds it is clear that the Dickson notes have been paid by Hyde, not bought by Richardson. Richardson never heard of the transaction in reference to the Dickson notes until nearly a year after it occurred. He held all the time his original notes and the deeds of trust which were given for their security. Long after the time when it is claimed the notes were paid, Hyde, through Hammond & Bogue, remitted him the interest when it fell due, according to the terms of the notes he had in his own hands, and did not intimate in any way that those notes had been paid and others substituted for them. The books of Hammond & Bogue contain nothing to connect Richardson with the taking up of the Dickson notes. The $6,000 which Hyde handed to Bogue, and which he used in taking up the notes on the fifteenth of January, was neither entered to the credit of Hyde nor Richardson. In fact, it nowhere appears in any account on the books. The $5,641.87 which Hammond & Bogue did advance was charged directly to Hyde, and his payments on that account were passed to his credit. In all the conversations with Bogue which have been testified to, he did not intimate that Richardson was the owner of the notes. It is, no doubt, true the parties supposed that hy keeping the notes uncanceled they might be so used as to make the lien under the Ayres trust*on block 1 available as additional security for the ultimate payment of the Richardson notes; but as Hyde, not Richardson, paid
the bank for them, if Hyde could not charge Henry Traver's property with their payment, Richardson cannot. Michael Traver bound himself to Henry to pay the notes, and discharge block 1 from the lien of the trust created for their security. Hyde bound himself to Michael Traver to carry out this agreement which had been made with Henry. When the notes were afterwards taken up from the bank, where they were sent for collection, with the money of Hyde, they were, in legal effect, paid, and from that time the lien on block 1 was discharged. Hyde could not himself enforce them against that property; neither can Richardson. Although Hammond & Bogue advanced a part of the money to take up the notes, it was afterwards repaid to them by Hyde, and that made all the money paid for the notes his own. Hyde, Hammond, and Bogue all swear, with more or less directness, that Hyde paid the Richardson notes, and that this money was used to buy the Dickson notes; but this is contradicted by the well-established facts in the case, and it is apparent, from their own testimony, taken as a whole, that, until long after the Henry Traver suit was begun, they had no idea that they were doing anything more than keeping the Dickson lien alive, as additional security for Richardson. The testimony satisfies us beyond doubt that both Hammond and Bogue knew all about the obligation of Hyde to discharge the lien of those notes on block 1, and that the pretense of a payment of the Richardson notes, and the use of the money so paid to buy them, was all an after-thought. There is not a single act or fact which appears in the transaction to indicate that anything of the kind was in the minds of the parties at the time.
It is said, however, that parol evidence of the agreements between Henry and Michael Traver and between Michael Traver and Hyde not admissible, because the “agreements were contradictory to the acknowledgments and in opposition to the plain import of the covenants contained in the deeds. If, by possibility, they could be held as of force between the original parties, they were ineffective and nugatory as to third parties.” Neither Michael Traver nor Hyde deny that the parol agreements were made precisely as charged in the Traver bill, and it is elementary learning that evidence may be given of a consideration not mentioned in a deed, provided it be not inconsistent with the consideration expressed in it. 1 Greenl. Ev. 286; 2 Phil. Ev. 353. In both these deeds a valuable consideration is expressed, and it is not inconsistent with the considerations so expressed to show that the actual considerations were the agreements to pay the Dickson notes. The question here is not as to the liability of Henry J. Traver or Michael Traver upon the covenants in their respective deeds. Undoubtedly their covenants, such as they are, run with the land, but Richardson is not now claiming under the conveyances. The title, if any, which he has to the land embraced in those conveyances is not now disputedl. He is suing to collect the Dickson notes by enforcing their lien on property not included in his original security, and the question in the case is whether they have been paid, and in that is involved the further question, whether Hyde, through whom he got the notes, was bound to pay them. To show that Hyde was so bound, his agreement to that effect, as the consideration for the conveyance to him, was proven. As Richardson does not, in this suit, claim anything under that deed, the covenants cannot be used as an estoppel in his favor. The actual facts may therefore be shown.
It is also claimed that “Richardson is entitled to hold the Dickson security by way of subrogation.” But relief is not asked, either in the bill of Richardson or in his answer to the Traver bill, on that account. In both his bill and answer he puts his claim entirely on the ground of the purchase and ownership of the Dickson notes, and makes no mention whatever of his original loan to Hyde, or of the security which was taken therefor. In the answers of Hammond, Bogue, and Hyde it is distinctly stated that Richardson's notes were paid and the Dickson notes bought with the money realized
by this payment. Hammond & Bogue having advanced part of the money to * take up the notes, could undoubtedly have held them to secure the repayment of their advances; but, as that repayment has been made, the case stands precisely as it would if Hyde had himself furnished the money originally. But if relief had been asked on the ground of subrogation, it could not have been granted on the facts as they now appear. The notes were paid by Hyde under his obligation for that purpose, and that discharged the security on block 2 as well as on block 1. The question is not whether, if the notes had not been paid by Hyde, and Dickson were now endeavoring to enforce his security, Richardson could require him to exhaust his lien on block 1 before coming on block 2; nor whether, if Richardson's security on block 2 had been diminished by a compulsory sale of that block for Dickson's benefit, he could resort to block 1 to make good his loss; but whether, having voluntarily released his security on block 2, without the consent of or notice to Henry Traver, to enable Hyde to raise the money to take up the notes, he can hold the notes with a lien on block 1 in place of the security he gave up. The doctrine of subrogation, which is a creature of equity, has never been carried to that extent. If Richardson had in good faith paid the notes with his own money to protect himself under his junior security, he would have been put in the place of Dickson as the owner of the notes, and, upon a foreclosure, his rights in block 2 as against those of Henry Traver in block 1 could have been ascertained and protected. But such is not the case. His agents and trustee saw fit, without consulting Henry Traver, to allow Hyde to use block 2 to pay the notes. This block Hyde owned subject to the liens (1) in favor of Dickson, and (2) in favor of Richardson. As against Hyde, Henry Traver had the right to have block 2 sold to pay the Dickson debt before block 1 was resorted to, because Hyde was bound to pay the Dickson debt and release block 1 from incumbrance on that account. Whether, as against Richardson's junior incumbrance on block 2, Traver could requiro Dickson to sell that block before coming on block 1, depends entirely on the effect of Henry Traver's covenants in his deed of release and quitclaim to Michael, about which we*express no opinion, because to our minds it is clear that Richardson, by voluntarily releasing, without the consent of Henry Traver, a part of his junior security on block 2 to enable Hyde to raise the money to discharge the debt to Dickson, was not subrogated to the rights of Dickson under his original security on block 1. If Traver had been consulted, and had consented to the keeping alive of the Dickson notes to take the place of the security of Richardson which had been released, the case would have been different; but as property bound for the Dickson debt was in fact used to pay it with the consent of the junior incumbrancer, no lien upon other property for the security of the Dickson debt can be kept alive for the benefit of the releasing junior incumbrancer without the consent of those whose interests in the other property are to be affected. The payment to Dickson discharged the debt, and all that pertained to its continued existence.
(112 U. S. 414)
(October Term, 1884.) 1. STATE-TERRITORY-CORPORATIONS.
The admission of a territory as a state into the Union, and the consequent change in its form of government, in no respect affects the essential character of the corporations, or their powers or rights, deriving their existence from the legislature of
the territory. 2. SAME-FEDERAL COURT-RAILROAD COBPORATIONS-JURISDICTION.
Where a federal court can take jurisdiction of controversies between citizens of different states or of the same state, it will take jurisdiction of like controversies between corporations, and treat them as citizens of the state under whose laws they
were created, or continue to exist. 8. SAME-Acts or CONGRESS-GRANTS FOR RAILROAD PURPOSES-CONSTRUCTION.
In July, 1862, congress passed an act granting to the Kansas Pacific Railway Company, for every mile of the road constructed by it, five sections of public land des ignated by odd numbers on each side of it within the limit of 10 miles, not already sold, or otherwise appropriated at the time its line was fixed. On the second of July, 1864, an amendatory act was passed doubling the grant, and extending the limits, within which the lands were to be withdrawn, to 25 miles. On the sixth of February, 1866, the odd-numbered sections of land within 20 miles of the road were withdrawn from sale and reserved for its use. On the third of March, 1863, congress passed an act granting lands to the state of Kansas for railroad purposes, and these lands were the alternate sections, designated by odd nunibers, for 10 sections in width on either side of a road. The grant was accompanied with a proviso that in case it should appear when the lines or routes of a road should be definitely fixed, that any section granted had been sold, reserved, or otherwise appropriated, an equal amonnt of land, nearest the tiers of sections specified, should be selected, not previously sold, etc., to be held by the state of Kansas for the like uses and purposes. Under the provisions of this act the Atchison, Topeka & Santa Fe Railroad Company entered on its work of constructing its road, but its line was not definitely fixed until 1866, when it appeared that a large part of the lands lying within the limits of 10 miles of it had been sold by the United States, and had been greatly diminished in other ways. To supply the deficiency, the secretary of the interior selected lands lying within 20 miles of the plaintiff's road, and a patent was issued therefor to the defendant. Held, that the grant to Kansas by the act of congress of March 3, 1863, did not cover the title to these lands; that the act of 1862 should be construed as if the larger number had been originally inserted in it; and that the increased quantity of land, with the exceptions mentioned, passed to the grantee at the date of the original act.
Appeal from the Circuit Court of the United States for the District of Kansas.
J. P. Usher, for appellant. James Hagerman, A. T. Britton, J. H. MCGowan, and A. B. Browne, for appellee.
FIELD, J. The plaintiff and the defendant were incorporated by the territorial legislature of Kansas; and the question in controversy relates to land which they respectively claim under grants from the United States. The plaintiff's original name was the Leavenworth, Pawnee & Western Railroad Company, and it is thus termed in the act of congress of 1862 creating the Union Pacific Railroad Company. After the territory became a state that name was changed to the Union Pacific Railroad Company, Eastern Division, and the corporation was so called in subsequent legislation of congress until some time in 1869, when it received its present designation. The admission of Kansas as a state into the Union, and the consequent change of its form of government, in no respect affected the essential character of the corporations, or their powers or rights. They must, after that change, be considered as corporations of the state; as much so as if they had derived their existence from its legislation. As its corporations they are to be treated, so far as may be necessary to enforce contracts or rights of property by or
IS. C. 13 Fed. Rep. 106.