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fraud, but where the patent is the result of nothing but fraud and perjury, it is enough to hold that it conveys the legal title, and it would be going quite too far to say that it cannot be assailed by a proceeding in equity and set aside as void, if the fraud is proved and there are no innocent holders for value. We have steadily held that, though in the absence of fraud the facts were concluded by the action of the land department, a misconstruction of the law, by: which alone the successful party obtained a patent, might be corrected in equity; much more when there was fraud and imposition.
If, by the case as made by the bill, Spence's claim had covered all the land patened to Minor, it would present the question whether the United States could bring this suit for Spence's benefit. The government, in that case, would certainly have no interest in the land when recovered, as it must go to Spence without any further compensation. And it may become a grave question, in some future case of this character, how far the officers of the government can be permitted, when it has no interest in the property or in the subject of the litigation, to use its name to set aside its own patent, for which it has received full compensation, for the benefit of a rival claimant. The question, however, does not arise here, for half the land covered by the patent would revert to the United States if it was vacated; and, as between the United States and Minor it was one transaction evidenced by one muniment of title, the question does not arise; certainly not on demurrer to this bill.
The result of these considerations is that the first and second questions are answered in the affirmative; the third, fourth, sixth, and seventh in the negative; and the fifth is immaterial. The decree of the circuit court is reversed, and the case remanded for further proceedings not inconsistent with this opinion.
(114 U. S. 247)
DOE o. HYDE, Assignee, etc.
(April 13, 1885.) BANKRUPTCY-STATUTE OF LIMITATIONS.
D., a creditor of a bankrupt, holding two securities therefor, after being cited in a proceeding commenced against him by the assignee in bankruptcy, by petition, to obtain the delivery of the two securities, as being unlawfully in his possession, delivered up, one of them to the assignee, in July, 1871. In November, 1872, the assignee sued D. to recover the other security, and in 1877 it was decided in that suit that D. was entitled to hold it. There being a deficiency on the debt, and the assignee having collected the security delivered to him, D., in 1879, sued the assignee to have its proceeds applied*on the debt. Held, that the right of action accrued to D. in July, 1871, and was barred by the two-years' limitation prescribed in section 2 of the bankruptcy act of March 2, 1867, (14 St. 518,) and section 5057 of
the Revised Statutes. Appeal from the Circuit Court of the United States for the District of Cal. ifornia.
W. W. Cope, for appellant. No appearance for appellee.
BLATCHFORD, J. This is an appeal by Bartlett Doe, the plaintiff in a suit in equity, brought in the district court of the United States for the district of California, from a decree of the circuit court for that district, affirming the decree of the district court, dismissing the bill on demurrer. The defendant is Henry C. Hyde, assignee in bankruptcy of the City Bank of Savings, Loan, and Discount, a California corporation, which was adjudicated a bankrupt by the district court in December, 1870. The case made by the bill is this: In December, 1869, Doe lent to the bank $10,000, on its promissory note, at two years, secured by the assignment of six promissory notes and six accompanying mortgages of real estate, made by other parties, amounting to $20,550. By an instrument executed by the parties at the time, it was agreed that the bank should be at liberty to substitute other securities of equal value with any of the assigned notes and mortgages in their place, at any time before the maturing of the $10,000 note. In April, 1870, four of the six collateral notes and mortgages, amounting to $10,550, were, by consent, given up, and three other promissory notes and three like mortgages, made by other parties, amounting to $3,900, were substituted. In February, 1871, the assignee in bankruptcy presented to the district court a petition, alleging that Doe had unlawfully possessed himself of the five notes and five mortgages, which he then held, amounting to $13,900, and praying that he be cited to show cause why he should not be ordered to deliver them up to the assignee. After Doe had been so cited, the assignee demanded from him the delivery of the three notes and the three mortgages, so substituted in April, 1870, and Doe, “believing him to be entitled to the custody thereof, delivered the same to him.” Before the assignee collected any moneys on them, Doe appeared to the petition, and in July, 1871, filed an answer, setting forth the indebtedness of the bank to him, and how it was secured, and the facts attending the substitution of securities, before mentioned, and averring that he was entitled to the possession of those which he had so delivered to the assignee, and to the moneys collected or which might be collected on them.
In November, 1872, the assignee filed a bill in equity, in the district court, against Doe, to obtain a decree for the delivery up of the two remaining notes and mortgages, amounting to $10,000, on the ground that the bank had no right to transfer them to Doe. Doe answered the bill, setting forth the transactions between the bank and himself respecting the loan and the securities transferred for securing it, and particularly the facts attending such substitution of securities; and averring that the assignee had collected the money due on the securities so delivered to him, and that he (Doe) was entitled to have them applied on the debt of the bank to him. In 1876'an interlocutory decree was made in that suit, to the effect that the assignee was entitled only to the surplus which should remain after applying the two notes and the two mortgages to the payment of the $10,000 note, of December, 1869, and that an accounting should be had as to the amounts severally due on that note, and on those securities. The accounting was had, and on January 29, 1877, the district court decreed that on January 1, 1877, there was a balance due to Doe of $7,096.82, after applying the securities retained by him. The assignee appealed to the circuit court, but the appeal was dismissed, for want of prosecution, before July 2, 1877. The amount of the deficiency remains due to Doe. The assignee collected the three notes and three mortgages which Doe delivered to him, collecting on one, June 19, 1872, $1,301.07;
on another, May 19, 1875, $500; and on the third, June 19, 1872, $293.80,—the assignee giving the debtor an acquittance of the remainder. After the decree was rendered in the equity suit begun in November, 1872, and after the appeal therefrom was dismissed, and after Doe had ascertained it would be necessary to resort to the three notes and three mortgages he had delivered to the assignee, for the payment of the amount due to him from the bank, he demanded from the assignee the delivery of those securities, or the payment of the moneys thereby secured, which the assignee refused.
The bill in the present suit was filed February 25, 1879. Its prayer is for a decree that Doe
the eficial owner of the securities which he delivered to the assignee, and of the moneys represented by them, and is entitled to have them applied on the indebtedness of the bank to him, and that the assignee pay over the proceeds, with interest, to Doe. The demurrer sets forth various causes of demurrer, and, among them, that eight years had elapsed, before the bill was filed, after Doe delivered to the assignee the securities in question, and that any right of action to recover them or their proceeds was barred by section 2 of the bankruptcy act of March 2, 1867, (14 St. 518,) and by section 5057 of the Revised Statutes of the United States. The limitation referred to is that no suit at law or in equity shall in any case be maintainable by or against an assignee in bankruptcy, or by or against any person claiming an adverse interest touching any property, or rights of property, of the bankrupt, transferable to or vested in the assignee, in any court whatsoever, unless the saine be brought within two years from the time the cause of action accrued, for or against the assignee.
The contention of the appellant is that the necessity for resorting to the securities which were delivered to the assignee was not determined until the decree of the district court, ascertaining the amount of the deficiency, became final by the dismissal of the appeal to the circuit court; and that the cause of action did not accrue until that time, which was within two years before the filing of this bill. It does not distinctly appear when the appeal was taken, or when it was dismissed, except that those events occurred between January 29, 1877, and July 2, 1877. But this is unimportant, because it is quite clear, on the averments of the bill, that this suit was barred.
In the proceeding instituted in the district court by the assignee, in February, 1871, the petition alleged that Doe had unlawfully possessed himself of all the collateral notes and mortgages, five of each, which he then held, and prayed for an order that he deliver all of them up to the assignee. The bill in this suit avers that after Doe had been cited to appear to the petition, the assignee applied to him for, and demanded the delivery to him, as assignee, of, the three notes and three mortgages in question, and that Doe, “believing him to be entitled to the custody thereof, delivered the same to him.” As the bill alleges that the answer of Doe to the petition was filed before the assignee collected any of the moneys on those securities, it must be inferred that that answer was filed after the securities were delivered by Doe. Nothing further is alleged to have been done on the petition. The three notes and the three mortgages selected from the whole number, though the petition covered all, having been delivered to the assignee, he allowed the matter to rest from July, 1871, till November, 1872, when he brought the equity suit in respect only of the two notes and two mortgages which had not been delivered to him. The averment of the bill in this suit is that, on a demand by the assignee on Doe for the delivery to him of the three notes and three mortgages, Doe delivered them to him. It is not averred that the delivery was accompanied by any express qualification or condition, or any agreement or arrangement or reservation made between the parties. The delivery followed the claim which the assignee had made in the petition, that the securities were unlawfully in the possession of Doe, and was made after Doe bad been cited to appear to the petition.
The statement in the bill that Doe, believing the assignee to be entitled to the custody of the securities, delivered them to him, is only the statement of what Doe now remembers as to the uncommunicated motives which operated on him to deliver the securities. The assignee obtained the securities directly from Doe, under an assertion of title, and, if Doe desired to make available the claim set up in regard to them, in July, 1871, in his answer to the petition, it became then his duty to procure a judicial decision of the matter, the assignee having accomplished the object of his proceeding. But the litigation dropped, and was not renewed, respecting those securities. The allegation of Doe, in his answer to the bill filed by the assignee in November, 1872, in regard to the securities retained by Doe, that Doe was entitled to have the assignee apply on the debt to Doe the securities which Doe bad delivered to: the assignee, amounted to nothing, because such a claim could not be litigated in that suit. It was not a set-off or counter-claim to any relief sought by the assignee in that suit. The cause of action in regard to the securities delivered to the assignee by Doe accrued to Doe at the time of such delivery. It did not depend upon or arise from the existence or ascertainment of any deficiency of the other securities to meet the debt. If Doe was entitled at all to have the securities which were delivered to the assignee applied to his debt, he was, on the showing of the bill, as much entitled to have them so applied as to
have the other securities so applied, and as much entitled to their possession for that purpose as to the possession of the other securities. His right of action to that effect accrued, therefore, when the assignee came into the possession of the securities, on their delivery to him by Doe.
(114 U. S. 244)
(April 13, 1885.)
In a suit to foreclose a mortgage on land in Louisiana, given to secure the pay. ment of negotiable promissory notes to their holder, it was held, on the facts, that the plaintiff was never the owner of the notes, as against the mortgagor, or those holding the land under him by deeds in which they assumed the payment of the notes and mortgage.
Appeal from the Circuit Court of the United States for the Eastern District of Louisiana.
J. D. Rouse and Wm. Grant, for appellants. R. H. Marr, for appellees.
BLATCHFORD, J. This is a suit in equity brought by Daniel Weaver, in April, 1881, in the circuit court of the United States for the Eastern district of Louisiana, against Spencer Field, Sr., Spencer Field, Jr., and Frederick T. Field. The bill prays that the defendants be decreed in solido to pay to the plaintiff the amount of three promissory notes, made by Spencer Field, Sr., to his own order, and indorsed by hin, dated November 1, 1873,--one for $2,000, at one year, one for $1,500, at two years, and one for $1,500, at three years, with interest at the rate of 8 per cent. per annum from maturity; and that certain land covered by a mortgage, of even date with the notes, given by Field, Sr., to one Williams, to secure the payment of the notes to their holder, be sold, and the notes be paid out of the proceeds. The other two Fields are made parties as having successfully become grantees of the land, and assumed, each in the deed to himself, which he executed, the payment of the notes and the mortgage. Weaver having died in July, 1881, the suit was revived in the names of the appellants, as his heirs, in February, 1882.
The bill avers that Weaver is the holder and owner of the notes. The an. swer of the three defendants, filed in June, 1882, avers that Weaver never was the owner of the notes, and never the holder of them for value or in good faith; that the notes and mortgage were made by Field, Sr., for the sole purpose of enabling him to raise money for his own purposes by the sale, or discount, or other use, of the notes; that the mortgage was made in favor of Williams, or any future holder, in order to facilitate the use of the notes; that Field, Sr., was not indebted to Williams; that Williams gave no consideration for the notes, and was merely the nominal•mortgagee, without interest; that the notes were never the property of Williams, nor did he ever have them in his possession with the knowledge or consent of Field, Sr.; that, from the date of the notes, they remained in the possession of Field, Sr., until he used them, and delivered them to one Folger, as security for a loan; that, when such loan was paid, Folger returned the notes to Field, Sr., who retained them in his possession until on or about June 8, 1874, when he deposited them with Weaver, to be used, if practicable, to raise money for the uses and purposes of Field, Sr.; that, after the notes had so been deposited, and while they were in the possession and custody of Weaver, Weaver caused Williams to pledge the notes to him (Weaver) as security for the note of Williams for some $2,000; that Williams had no power to make such pledge, and the same was a mere nullity, for the reason that Williams did not have the notes in his possession, and they did not belong to him, at the time the
19. C. 16 Fed. Rep. 22.
pledge was made; that the notes, at that time, belonged to Field, Sr., and were in the custody and possession of Weaver, to whom the facts with respect to the ownership and the possession of the notes were necessarily known at the time the pledge was made; that Field, Sr., did not, at any time after the notes were so returned to him by Folger, negotiate them, or issue or deliver them to any person for value; that, by reason of the premises, the notes and mortgage were extinguished and became of no effect; and that Weaver never had, nor have any persons deriving title from him, any right or cause of action against the defendants, or any one of them, on the notes or the mortgage.
There was a replication, and proofs were taken, Field, Sr., and Williams being witnesses for the defendants. The bill was dismissed by a decree which states that the court considered that, by the undisputed evidence of Field, Sr., and Williams, and the circumstances of the case, it was shown that the notes in suit, after being issued and delivered to Folger, were taken up by, and came into the possession and ownership of, the maker, and were thus, under the laws of Louisiana, extinguished by confusion; that Weaver had notice of, all this, and that, by the extinguishment of the notes, the mortgage fell.
*Without reference to the ground stated by the circuit court as that on: which it dispissed the bill, we are of opinion that the dismissal was proper. The matters of fact averred in the answer, as above set forth, are established by the evidence. It is shown that Weaver never acquired any title to the notes as owner, or as holder of them as security for any indebtedness from Field, Sr., to him; and that he received them from Field, Sr., as agent, to raise or advance money on for or to Field, Sr., and failed to do so, and retained them tortiously, and without the assent of Field, Sr. When Weaver first, in February, 1878, took legal proceedings to enforce the mortgage, Field, Sr., in the petition in the suit he brought against Weaver, in March, 1878, more than three years before Weaver died, to restrain Weaver's proceedings, denied that Weaver held or owned the notes, and alleged, in substance, the same facts set up in the answer in the present suit. We have carefully considered the argument on the facts made on the part of the appellants, but do not deem an extended opinion upon them necessary. The property in the hands of the grantees was bound only to the extent it was bound in the hands of the mortgagor, and only to respond to a lawful holder of the notes.
(114 U. 8. 224) FIRST NAT. BANK OF XENIA, OHIO, 0. STEWART and another, Adm'rs, etc.
(March 30, 1885.)
1. EVIDENCE-TESTIMONY OF AGENT AS BINDING PRINCIPAL.
The declarations made by an officer or agent of a corporation in response to timely inquiries properly addressed to him, and relating to matters under his charge, in respect to which he is authorized in the usual course of business to give informa
tion, may be given in evidence against the corporation. 2. SAME-LETTER OF CASHIER OF BANK-ADMISSIBILITY.
A letter written upon the paper of a bank, and by the person shown to be its cashier, and appearing with reasonable certainty to refer to the business of the bank and to the matter in controversy, is admissible in evidence when there is nothing in the case to show that any other letters passed between the writer and the person
to whom such letter was addressed. 3. SAME-INSOLVENCY_PAYMENT OF SPECIFIO DEBT.
A failure to pay a specific debt cannot be shown by proof of the insolvency of the
debtor. 4. SAME-HEARSAY-QUESTION CALLING FOR GENERAL INFORMATION.
A question calling for the information, which, from any source may be in the possession of the witness, ni ust be excluded.