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as located, it did not include all the land claimed. In the case of Huff v. Doyle, already cited, we held that land embraced in this Mexican claim, though not included in the final survey, was within the excepting clause of the proviso of the act of 1866. When this selection was made by the state in 1866, the land was not subject to such selection. The act of making such a selection was a nullity. It conferred no right to the state or its vendee, and when the United States made its remedial and confirmatory statute, it refused to confirm selections within the bounds of Mexican claims, and did not confirm this. But in the case of Huff v. Doyle, we held that after the grant was surveyed and the surplus thus restored to the public domain, and the congressional survey completed, the party might then present his claim under the selection, and if no superior right existed, he would be entitled to the land. We said, referring to this legislation: "In all this we see the purpose of congress to refer the exercise of the right of the state to select indemnity for school lands to the condition of the lands for which indemnity is claimed, as well as those out of which it is sought at the time the official surveys are made and filed in the proper office, or as soon thereafter as the right is asserted." In that case the claimant under the state made and proved up his claim as soon as the survey was made, and the land was accordingly certified to the state. His opponent, who had also made his declaration as pre-emptor while the land was still claimed under the Mexican grant, which claim was, for that reason, also void, and before the public survey or the survey of that grant was made, renewed his claim after that of plaintiff, and was rejected. To both parties the condition of the land, as liable to either claim at the time the claim was rightfully asserted, governed the case.
In the case before us, the pre-emptor was the first, after the land ceased to be a part of the Mexican claim and was restored to the public domain, to make application to the land-office and assert his right to appropriate it as public land. The officers of the department recognized his claim, as we think they were bound to do, for the land had only a few days before this become public land, and thus liable to pre-emption, or to the valid selection of the state. The invalid selection made at a time when the land was not subject to selection was not made good by the act of 1866 which expressly excluded it, and while we held that, after the land became public land and liable to selection the former selection might be made good, its validity could only relate to the time of its assertion in the land-office after it became so liable. But, if before this latter proceeding was had, or notice to the land-office of an intention to rely on the old selection was given, other rights had intervened, the state right of selection could not be made to the prejudice of those rights.
On this principle, we think all the benefit which could possibly be derived from the confirmatory act of 1866 in regard to such cases as this is had, while the just rights of others are preserved. The statute, in express language, gives the holder of the invalid state selection the same right as a pre-emption settler on unsurveyed lands, and no more. Here Bangs had asserted his right as soon as the land was released from the Mexican claim, and a few days before the congressional survey became fixed. The least that can be said of Bangs' claim is that it was of equal force when the maps of these surveys were filed, and, by his superior diligence in a lawful manner, he obtained the patent, and plaintiff has no superior equity which should take it
As to the allegation in the bill that Bangs made a forcible intrusion on the possession of complainant in September, 1870, before the land became public land, that was a question to be considered by land officers in the contest between the parties, and is not a fraud or mistake for which the patent can be held to inure to plaintiff's benefit. Nor does the plaintiff rely on it as sufficient. His claim to the benefit of defendant's title rests upon the selection
made under state authority. That is the question of federal law which this court must decide, and, as we have seen, that was well decided against him by the state court. Its decree is accordingly affirmed.
(114 U. S. 387)
AURRECOECHEA v. SINCLAIR and others.
(April 13, 1885.)
This case is submitted on the same facts and principles and the same briefs as the foregoing case, (ante, 892,) and the same judgment necessarily follows. The judgment of the supreme court of California is accordingly affirmed.
(114 U. S. 387)
AURRECOECHEA v. BANGS and others.
SAME V. GERK and others.
(April 13, 1885.)
In accordance with stipulations by the parties on file in this court, that the abovementioned cases should abide the result of the judgment in the case of the plaintiff against Amos Bangs, (ante, 892,) the judgments in the cases are affirmed.
(114 U. S. 387)
AMY, and another, Partners, etc., and others v. TAXING DISTRICT OF SHELBY Co. and others.
(April 13, 1885.)
1. Debtor and Creditor-CoMPROMISE-SET-OFF.
The legal and equitable right, in a general way, of a debtor to procure the obligations of his creditor, and use them as a set-off against his own debt, cannot be denied when the law of the state authorizes it, and such a law can be liable to no impeachment as divesting vested rights, or impairing the obligation of contracts. 2. SAME REPEAL OF THE CHARTER OF THE CITY OF MEMPHIS.
Act of the legislature of Tennessee, repealing the charter of the city of Memphis, and providing measures for receiving its back taxes and paying its debts, considered by the court.
In Error to the Supreme Court of the State of Tennessee.
Wm. M. Randolph, for plaintiffs in error. Minor Merriwether and 8. P. Walker, for defendants in error.
*MILLER, J. This is a writ of error to the supreme court of Tennessee. an act of the legislature of the state of Tennessee, approved January 29, 1879, the charter of the city of Memphis was repealed; and by another act, approved the same day, the territory which had constituted the city was created a taxing district, and the property of the city, and all debts due to it, and all uncollected taxes were vested in the state.
On March 13th, of the same year, another statute, familiarly called "Chapter 92," directed the appointment of an officer for each of the corporations, whose charter was repealed by the earlier statute, to be called the "Receiver of Back Taxes," who was to be under the control of a court of chancery in the collection and paying out of the taxes so collected by him. Section 2 of this act directs that "he shall distinguish in making such payments the respective sources from which the moneys paid in are derived, showing what is collected from taxes for general purposes, and what for taxes for special purposes, designating the particular or special purpose, so that the same may be kept separate in the state treasury, in order that the treasurer may pay the same ac
cording to any lien, priority, or equity, if any, which may be declared by the chancery court, touching any of said funds, in favor of any creditor or class of creditors." Another section authorized the receiver of back taxes to file a bill in chancery, in the name of the state, in behalf of all creditors, against all delinquent tax-payers, for the ascertainment and enforcement of the rights of the parties in regard to these back taxes unpaid. Such a bill was filed, and important proceedings have been had under it.
A bill was pending, however, in the circuit court of the United States before the bill authorized by this statute was filed, which sought to enforce the collection of taxes by certain parties, to which the receiver of back taxes was afterwards made a defendant, and under that bill a decree was rendered which treated the main provisions of this state legislation as void. On appeal from that decree this court reversed it, and announced certain principles which upheld the validity of the legislation of the state, but maintained the power of courts of the United States to enforce against the receiver and in his hands any decree or judgment by mandamus for levying and collecting taxes which had been made by such court prior to the beginning of this legislation. The case, a report of which contains the history of this legislation and the statutes above referred to, is that of Meriwether v. Garrett, 102 U. S. 472. Section 5 of the act last mentioned provided with some particularity for the receipt by the back tax collector, in payment of these back taxes, of certain classes of outstanding indebtedness of the city of Memphis, and fixed the rate, not always the same, at which they might be received, chiefly at the rate of 50 cents on payment of taxes for each dollar of indebtedness. The collection of these taxes and their distribution continued under the supervision of the court of chancery in the suit already mentioned, and many orders and decrees on the subject were made. The state in the mean time passed statutes which authorized the taxing district to compromise the indebtedness of the city of Memphis, by taking up its old obligations and issuing bonds of the taxing district at the rate of 50 cents of the latter for one dollar of the former. The two statutes on this subject, which are supposed to violate the constitution of the United States, were passed March 23, 1883. One of these acts, (chapter 170 of the acts of that year,) authorizes all municipal corporations and taxing districts to compromise and settle their debts, and to issue the bonds and coupons of taxing districts at the rate of 50 per cent. of the principal and past due interest; and a section of the act is as follows:
"Sec. 16. Be it further enacted that the acceptance and consummation by any creditor of the compromise provided by this act shall of itself operate to assign and transfer to said municipal corporation or taxing district all his rights to and claims against the uncollected taxes or other assets whatever of said municipal corporation, with the right in said municipal corporation or taxing district to enforce the same, either in its own name or in the name of the creditor; the funds that may be realized therefrom to be paid into the designated depository of such municipality or taxing district; and they are hereby devoted and appropriated exclusively to the payment of the bonds and coupons that come under the provisions of this act.
The other statute passed the same day is an act modifying the provision of chapter 92, March 13, 1879, as to what shall be received in payment of back taxes, and the rate at which the various items of debt should be received. One of these changes, made in evident relation to the act passed the same day for refunding this old indebtedness by bonds of the taxing district is in these words: "And provided further, that when any indebtedness of such extinct municipality shall be hereafter funded into new bonds at fifty cents on the dollar, such new bonds and matured coupons thereon shall be received in payment of the back taxes due such extinct municipality at the same rate as herein provided for Flippin compromise bonds." The Flippin compromise bonds were to be received at double their face value. The obvious reason for
this was that both the Flippin compromise bonds and the bonds to be issued under the new act just passed represented two dollars of old debt for one dollar on the face of the new bonds; and this new regulation was making all old indebtedness receivable at par. It was necessary, therefore, in order to place the holders of Flippin bonds who had compromised this old debt for 50 cents on the dollar, and those who might do the same under the new statute just passed at the same rate, on an equality with those who still held the old debt unchanged, to make this difference in the rate at which they might be received for back taxes. It is the decree of the supreme court of Tennessee holding this legislation valid which is assigned for error, and the principal error in the case.
The plaintiffs in error are parties who held and still hold debts against the city of Memphis, which were not secured by a lien or claim on any tax specially assessed for their payment. Their debts belonged to the unpreferred class. While a large part of the debt of the city during the time between the first and latest enactments we have mentioned was satisfied by using it in payment of back taxes at the rate of two dollars for one, or by exchanging it for the new bonds of the taxing district, the parties now complaining did neither, but still held their old bonds with accumulated interest. It is to be observed, also, that the special taxes assessed under writs of mandamus to pay judgments prior to the repealing law could only be paid in money, and as fast as it was paid it was appropriated to the payment of the debts for which it wase specifically assessed. And so also of all taxes assessed for any special purpose. One result of this process was that the back taxes were gradually being paid and satisfied by exchange for this old indebtedness, whereby the holders of it who sold it to tax-payers to be used for that purpose, were getting something for it, and both the indebtedness and the back taxes were being extinguished by a process of set-off. For, when a tax debtor became by purchase an owner of any part of this debt, the extinguishment of the tax and the debt was clearly within the doctrine of set-off of mutual obligations. When, however, the back tax receiver began to receive in payment, under the law of 1883, the new bonds of the taxing district, issued in compromise of the old indebtedness, these plaintiffs in error insisted that this could not be done to their prejudice; and by a petition to the chancery court they prayed its interference to prevent it. As the language of the statute was plain, they insisted that it was void, because forbidden by the constitution of the United States. The supreme court of the state held the law to be valid, and hence this writ of error.
The assignment of errors in plaintiff's brief points out no special provision of the constitution which forbids the legislation of Tennessee complained of, which, it is to be remembered, is only the more recent statutes we have referred to. The language of the brief, as repeated in several forms, is that the court erred because it did not hold that these statutes, as construed by the court, were a violation of the constitution of the United States, and divested the rights of plaintiffs as set out in their petition. This expression, when the argument in its support is examined, resolves itself into the proposition that chapter 92 of the acts of 1879 conferred on them some right, which they insist became a vested right, of which right they have been deprived by the later act. But we do not see what right was vested in them by that stat ute. It is to be remembered that their debts did not belong to any class which at the time the statute was passed constituted a lien on any part of these back taxes. Such liens as did exist, or such vested rights in any special class of taxes as then existed, were carefully preserved by the statute, and these taxes could only by its terms be collected in money and used to discharge these liens or special claims. It gave no lien of the general debtor on the back taxes, or any part of them. It provided for their collection, and for their use when collected, in payment of the debts of the city. In this respect it did not
change any existing law, but provided the means of enforcing the rights of the creditors of the city against its assets.
The legislature having assumed charge of the property of the defunct corporation, and undertaken to administer its assets, passed judicious laws for this purpose, and it is not asserted that the original act which allowed the use of the debt of the city in payment of the taxes was unjust, though it required two dollars of the former in satisfaction of one of the latter. All holders of the general city debt were placed on equality in this respect. Plaintiffs here could have used their debt or disposed of it in that manner as others did. The state did not come under any obligation to pay their debt, except as it could be paid in this manner, and it did not guaranty that the back taxes, whether paid in this manner or in any other, would give it a fund sufficient to pay all back indebtedness. It only undertook to do the best it could with the means it had.
The legal and equitable right in a general way of a debtor to procure the obligations of his creditor and use them as a set-off for his own debt, will hardly be denied when the law of the state authorizes it, and such a law can be liable to no impeachment as divesting vested rights or impairing the obligation of contracts. Blount v. Windley, 95 U. S. 173. Both the original act, (chapter 92,) and the two acts of 1883, did this. The fact that the later acts made a change in the rate at which this set-off should be allowed did no injustice to plaintiffs, but rather favored them, since it permitted their debt with its accumulated interest to be set off dollar for dollar, whereas this could only be done before at two dollars for one. It did them no injustice, and violated no right of theirs, nor any contract of theirs, that the new bonds exchanged for old indebtedness*should be receivable for back taxes at the same rate that the old indebtedness would have been received if no exchange had been made.
We see no vested right of plaintiffs which is violated by the decree, no contract of theirs impaired by the legislation complained of, and no injustice done them, and especially none which this court can remedy. The decree of the supreme court of Tennessee is therefore affirmed.
(114 U. S. 373)
(April 13, 1885.)
1. LAND GRANT ST. JOSEPH & DENVER RAILROAD-ROUTE "DEFINITELY FIXED.” The route was definitely fixed," within the intention of the act of congress of July 23, 1866, making a land grant to the St. Joseph & Denver Railroad Company, so that the grant attached to adjoining sections when the route was adopted by the company and a map designating it filed with the secretary of the interior. 2. SAME-ENTRY of LandS BY PRIVATE PARTY-NOTICE.
A party entering lands included in the grant of July 23, 1866, subsequently to the performance by the company of the conditions required in that act, is affected with notice, and can take no title.
See Van Wyck v. Knevals, 106 U. S. 360; 8. C. 1 Sup. Cr. REP. 336.
Appeal from the Circuit Court of the United States for the District of Nebraska.
D. A. Walden, for himself. J. M. Woolworth, for appellee.
FIELD, J. The questions presented in this case are similar to those considered and decided in Van Wyck v. Knevals, reported in 106 U. S. 360; 8. C. 1 SUP. CT. REP. 336. By the act of congress of July 23, 1866, there was granted to the state of Kansas, for the use and benefit of the St. Joseph & Denver Railroad Company, in the construction of a railroad from Ellwood in that state to its junction with the Union Pacific Railroad, or a branch thereof, not further west than the 100th meridian of west longitude, every