Bush v. Marshall/Opinion of the Court

This suit originated in the District Court for Dubuque county, in the Territory of Iowa. It was a bill in chancery to foreclose a mortgage given by the appellant, Bush, to Whitesides. The property mortgaged consisted of two lots (numbered 7 and 194) in the town of Dubuque, which Whitesides had sold and conveyed on the same day to the mortgagor, for the sum of $3,000; and the mortgage (dated 8th February, 1839) was given to secure the sum of $1,500, the balance of the purchase-money.

At the time of this transaction, the United states had not yet offered the lands on which the town of Dubuque was situated for sale. But notwithstanding the occupants of lots were mere tenants at sufferance only, they proceeded to make valuable improvements, under the expectation of the grant of a right of pre emption from the government, or, at least, that they could complete their title by purchase from it, when the lots should be offered for sale.

These possessions and improvements were treated as valid and subsisting titles by the settlers, and were the subjects of contract and sale by conveyances in the forms usual for passing a title in fee. On one of the lots which was the subject of the mortgage in question, a tavern-house and other improvements were erected, for which the tenant paid a rent of seventy dollars per month at the time of this purchase. The deed from Whitesides to Bush was not put in evidence, but, from the recitals of the mortgage and admissions of the answer, it appears to have been a deed in fee simple, with a covenant of general warranty. The mortgagor is estopped by his deed from denying seizin, and cannot make out a sufficient defence unless by proving payment of the money, want of consideration, or fraud which will avoid the contract.

Accordingly, the appellant, in his answer, has set up two grounds of defence by way of avoidance of his deed. First, fraudulent misrepresentation by the vendor to induce him to make the purchase; and, secondly, want of consideration from failure of title.

1st. The fraudulent misrepresentation charged consists of three particulars. First, that the vendor represented, 'that he held a valid pre emption right to the lots, by virtue of the laws of the United States in relation to town lots in the town of Dubuque'; secondly, that he represented that the fixtures in the tavern, to wit, the bar shelves and counter, formed a part of the property sold, whereas they were claimed and taken away by Hale, the tenant, and the house much injured by the moving and tearing away of said fixtures; and, thirdly, that by falsely representing Hale, the tenant, to be punctual in his payments, Bush was prevailed on to give his note to the complainants for the sum of $290, for the rent of the unexpired term; whereas Hale was not punctual, and defendant was unable to collect the rent from him.

The latter two of these charges may be summarily disposed of by the remark, that there is no evidence in the case of any representations by the complainants on the subject; and as the matter alleged in the answer is not responsive to the bill, but set up by way of avoidance, the defendant was bound to prove it.

But the first is the one chiefly relied on in the argument, and deserves more particular notice.

It is proved by Davis, the scrivener who drew the deed and mortgage, that Whitesides told Bush 'that he, Whitesides, had a pre emption to the property.' Was this representation false? The only evidence on the subject is in the testimony of Petrikin, the register of the land-office, who swears, 'that the commissioners, appointed under the act of Congress laying off the towns of Dubuque, &c., filed in the land-office certificates in favor of Whitesides's pre emption to these lots, No. 7 and No. 194.' He states, also, 'that the land-officers had instructions from the general land-office to expose all lots to public sale, where the claimants should relinquish their right of preemption to the United States.' He states, moreover, 'that the land-officers were not satisfied with the regularity or sufficiency of Whitesides's certificate'; but whether these doubts or opinions were well founded or not does not appear from any testimony in the case. The facts, also, that Whitesides was permitted to relinquish the pre emption right to the United States, and that no other person laid any claim to the possession and pre emption of these lots except Whitesides, and Bush, claiming under him, are conclusive, when taken in connection with evidence of a certificate in his favor by the commissioners, to show that the representation of Whitesides was not false or fraudulent, and that defendant has wholly failed to support this allegation, as set forth in his answer.

But it has been contended, that this relinquishment, made by Whitesides to the United States against the consent of Bush, was fraudulent, and injurious to the interests of Bush. To this argument two answers may be given, either of which is conclusive. First, that there is no allegation in the pleadings on the subject; and, secondly, the evidence clearly shows, that, although Whitesides did relinquish his pre emption to the United States, and that, too, without the consent of Bush, yet the act was not fraudulent, as it was not intended, and did not tend, to do any injury to Bush. Whitesides, by his warranty, was bound, under penalty of $3,000, to obtain a good title for Bush, cost what it may, while Bush was bound to pay only the minimum or pre emption price. The relinquishment of his preemption right by Whitesides was not intended as an abandonment of his claim, but was a plan adopted by himself, in common with the other claimants of lots in Dubuque, as the most convenient method of obtaining a title. By thus suffering them to be exposed to auction, they ran the risk of being compelled to pay more than the minimum or pre emption price for a title, but could not get it for less. The record admits that Bush knew 'that Whitesides's object in having the lots put up to sale was expressly with a view that the title to them might be perfected in said Whitesides, in order that he could make a good title to Bush.' It is not easy to apprehend how fraud can be predicated of the conduct of Whitesides, who, it is admitted, was using every endeavour to fulfil his contract, and obtain a good title for his vendee. As to the alleged fraud on the government by the conduct of the people in Dubuque on this occasion, it is sufficient to say that the question is not raised in the pleadings, nor the fact proved in the evidence.

We are of opinion, therefore, that the appellant has wholly failed to show any fraud or misrepresentation on the part of his vendors, which would justify a court of chancery in annulling an executed contract.

Indeed, the facts of the case tend rather to show that the fraud, if any, in this transaction, may be more justly charged to the party who is so liberal in imputing it to others.

If Bush could have thwarted Whitesides in his endeavours to procure the legal title for him, if he could hold the lot on which the tavern-house and improvements were situated (and valued at $2,200) for his bid of less than twenty dollars, and then recover the $2,200 from Whitesides, on his warranty, he will have effected what is commonly called a speculation; but one in the perpetration of which he ought not to expect the aid of a court of equity. The anxious disavowal of an intention 'to defraud or wrong the complainants,' contained in the defendant's answer, was not called out by any charge in complainants' bill, but seems rather to have resulted from a consciousness that his conduct was justly liable to such an imputation.

II. The other ground of avoidance is failure of consideration.

The answer alleges, that, at the public sale by the United States, lot No. 7 was purchased by defendant himself, and therefore the vendor is unable to comply with his contract by making him a title, and, moreover, that Whitesides has become the purchaser of lot No. 194, and therefore he, Bush, was without title to it.

This defence seems founded on an entire mistake or ignorance of the law; as the facts alleged lead to a directly contrary conclusion, 'and show that the defendant has a complete legal title. If Whitesides sold to him with covenant of warranty, and afterwards purchased the legal title, as the answer asserts, with regard to lot No. 194, then is the title vested in Bush, the vendee, by estoppel, and no further conveyance is necessary.

As to lot No. 7, Bush, having obtained possession under Whitesides, cannot, by the purchase of an outstanding title, defeat the claim of his vendor. It is a well-established rule of equity, 'that if a vendee buys up a better title than that of the vendor, and the vendor was guilty of no fraud, he can only be compelled to refund to the vendee the amount of money paid for the better title.' 'Equity treats the purchaser as a trustee for his vendor, because he holds under him; and acts done to perfect the title by the former, when in possession of the land, inure to the benefit of him under whom the possession was obtained, and through whom a knowledge of a defect of title was obtained. The vendor and vendee stand in the relation of landlord and tenant; the vendee cannot disavow the vendor's title.' (See Galloway v. Findlay, 12 Peters, 295, and cases there cited.)

In the present case, the vendee has bought in, for twenty dollars, the legal title to a property worth more than two thousand, the possession of which he received from his vendor; and not only so, but, contrary to good faith and fair dealing, he has interfered to overbid his vendor, who was using every endeavour to purchase the title for the use of his vendee, in fulfilment of his own covenants. The appellant has paid no more (or, if more, so little as to be unworthy of notice) than he agreed to pay for the purpose of getting the legal title. He has got a good title to the property, and ought in justice and equity to pay for it the full consideration which he has covenanted to pay.

The decree of the Supreme Court of Iowa must therefore be affirmed, with costs, with leave to the appellees to sell the mortgaged property in the mode prescribed by law, unless the appellant shall pay the amount of said decree, with interest thereon and the costs, within sixty days from the filing of the record in this case in the proper court of the State of Iowa.

This cause came on to be heard on the transcript of the record from the Supreme Court of the Territory of Iowa, and was argued by counsel. On consideration whereof, it is now here ordered, adjudged, and decreed by this court, that the decree of the said Supreme Court in this cause be and the same is hereby affirmed, with costs and damages at the rate of six per centum per annum, with leave to the appellees to sell the mortgaged property in the mode prescribed by law, unless the appellant shall pay the amount of said decree, with interest thereon, and the costs, within sixty days from the filing of the mandate in this case in the proper court of the State of Iowa.