Hafemann v. Gross/Opinion of the Court

The case turns upon the construction of the contract and its alleged conflict with § 2262, Rev. Stat., the pertinent part of which is:

'Before any person claiming the benefit of this chapter is allowed to enter lands, he shall make oath before the receiver or register of the land district in which the land is situated. . . . That he has not settled upon and improved such land to sell the same on speculation, but in good faith to appropriate it to his own exclusive use; and that he has not, directly or indirectly, made any agreement or contract, in any way or manner, with any person whatsoever, by which the title which he might acquire from the government of the United States should inure, in whole or in part, to the benefit of any person except himself.'

The defendants in error insist that the title was to be in no manner affected by the contract; that it was simply a promise on the part of the pre-emptor to pay a certain sum of money, the amount thereof to be determined by the proceeds of a sale which he might subsequently make; that he was under no obligations to make any sale, and, if he did not, they would have no claim upon him. On the other hand, the plaintiff in error invokes the doctrine laid down in Anderson v. Carkins, 135 U.S. 483, 34 L. ed. 272, 10 Sup. Ct. Rep. 905, that, by the terms of the contract, the title which he acquired from the government was in part to inure, indirectly, at least to the other parties to the contract. He insists that the purpose of Congress was to secure to the pre-emptor the full benefit of the property patented to him; that this purpose is emphasized by the use of the words 'directly or indirectly;' and that any contract by which third parties were to acquire a portion of the property or a share in the proceeds of any sale of the property was really a contract which operated indirectly to transfer the title in part of such third party. Under such construction a contract by which the pre-emptor should agree to mortgage the land after acquiring title would be void, because, on failure to pay, and by foreclosure of the mortgage, the mortgagee might acquire title.

The question is not free from doubt. The contract did not directly affect the title; that was to be absolutely vested in the patentee, undisturbed by any claim of the defendants in error. He was not bound to do anything by which any portion of the title should pass to them, directly or indirectly. On the other hand, its effect was to cast a limitation on the full benefit of the property, for, while the patentee was under no obligation to sell, he was required to divide the proceeds if and when he made a sale.

It may be well to examine the decisions of the courts, Federal as well as state, and also the rulings of the Land Department. Before doing so, however, we quote the corresponding provisions of the Federal statutes respecting homesteads. Rev. Stat. §§ 2290, 2291, and 2295, U.S.C.omp. Stat. 1901, pp. 1389, 1390, 1398. In his application for a homestead entry the applicant must make affidavit that his 'application is made for his exclusive use and benefit, and that his entry is made for the purpose of actual settlement and cultivation, and not either directly or indirectly for the use or benefit of any other person.' And before a certificate or patent is issued he must make affidavit 'that no part of such land has been alienated, except as provided in section 2288 (U.S.C.omp. Stat. 1901, p. 1385).' That section refers to the transfer for church, cemetery, or school purposes, or for the right of way of railroads. The land shall not 'in any event become liable to the satisfaction of any debt contracted prior to the issuing of the patent therefor.' [Rev. Stat. § 2296, U.S.C.omp. Stat. 1901, p. 1398.]

Under these provisions it has been held that a contract to convey the whole or part of the land, made prior to the perfection of his equitable right, by one seeking pre-emption or a homestead, is void, will not be enforced in the courts (Anderson v. Carkins, 135 U.S. 483, 34 L. ed. 272, 10 Sup. Ct. Rep. 905), and, if known to the Department, will prevent the passing of the legal title. Such has been the uniform ruling of the Land Department, as well as of the courts, state and Federal.

With respect to a mortgage or deed of trust executed under like circumstances, the decisions of the Land Department have been all to the effect that such mortgage or deed of trust is not an alienation within the scope of the homestead statute, or forbidden by the pre-emption law, especially where, in the case of a pre-emption, the mortgage is given to secure money borrowed to complete the purchase of the land. See, in reference to pre-emptors, Larson v. Weisbecker, 1 Land Dec. 409, Opinion of Secretary Teller; Re Ray, 6 Land Dec. 340, Opinion of Acting Secretary Muldrow; Haling v. Eddy, 9 Land Dec. 337, Opinion of Secretary Noble; Murdock v. Ferguson, 13 Land Dec. 198, Opinion of Secretary Chandler. With reference to a homestead entryman, see Mudgett v. Dubuque & S. R. Co. 8 Land Dec. 243, Opinion of Secretary Vilas; Dawson v. Higgins, 22 Land Dec. 544, Opinion of Secretary Smith; Kezar v. Horde, 27 Land Dec. 148, Opinion of Secretary Bliss. In addition, see Lawson v. Reynolds, 28 Land Dec. 155, in which Secretary Hitchcock held that a 'written agreement executed by a homesteader, and operating as a mere lease of a part of the premises and the grant of an easement, the use of which would tend to improve and increase the value of the land as a homestead, is not an alienation of any part of such land, and no bar to the perfection of the entry.' See also Kingston v. Eckman, 22 Land Dec. 234, in respect to an entry under the timber and stone act of June 3, 1878 (20 Stat. at L. 89, chap. 151), as amended by the act of August 4, 1892 (27 Stat. at L. 348, chap. 375, U.S.C.omp. Stat. 1901, p. 1434), the provisions of which statute in reference to the oath of the applicant are similar to those in the pre-emption act.

There has been some division in the courts upon the question. In Brewster v. Madden, 15 Kan. 249, the supreme court of that state, in an opinion deliered by the writer of this, held that a mortgage given by a pre-emptor prior to the entry of the lands was void, reaching this conclusion largely on the proposition that, at the time the pre-emption act [5 Stat. at L. 453, chap. 16] was passed (1841), mortgages, always in form conveyances, were then regarded by the profession generally as conditional alienations. To like effect were the early rulings of the supreme court of Minnesota (McCue v. Smith, 9 Minn. 252, 86 Am. Dec. 100, Gil. 237; Woodbury v. Dorman, 15 Minn. 338, Gil. 272), though these rulings were subsequently distinctly overruled by the same court. Jones v. Tainter, 15 Minn. 512, Gil. 423; Lang v. Morey, 40 Minn. 396, 12 Am. St. Rep. 748, 42 N. W. 88. Bass v. Buker, 6 Mont. 442, 12 Pac. 922, deciding the same way, was also overruled in Norris v. Heald, 12 Mont. 282, 33 Am. St. Rep. 581, 29 Pac. 1121. The large majority of state decisions follow these later rulings. See, in case of pre-emptions, Wilcox v. John, 21 Colo. 367, 52 Am. St. Rep. 246, 40 Pac. 880; Christy v. Dana, 34 Cal. 548; Christy v. Dana, 42 Cal. 174; Camp v. Grider, 62 Cal. 20; and in reference to homesteads, Fuller v. Hunt, 48 Iowa, 163; Dickerson v. Bridges, 147 Mo. 235, 48 S. W. 825; Weber v. Laidler, 26 Wash. 144, 90 Am. St. Rep. 726, 66 Pac. 400; Spiess v. Neuberg, 71 Wis. 279, 5 Am. St. Rep. 211, 37 N. W. 417; Kirkaldie v. Larrabee, 31 Cal. 455, 89 Am. Dec. 205; Orr v. Stewart, 67 Cal. 275, 7 Pac. 693; Stark v. Duvall, 7 Okla. 213, 54 Pac. 453. In Orrell v. ''Bay Mfg. Co.'' 83 Miss. 800, 36 So. 561, the court held that the prohibition of the alienation of public land by parties who have taken the preliminary steps to acquire the same under the homestead laws, and who have not perfected their entries, has reference to an absolute sale of the land, or some part of it, and in that case the leasing of trees on the land for turpentine purposes, and the sale of trees, was held not an alienation within the meaning of the statute.

Obviously, the trend of the authorities is strongly in favor of the proposition that a mortgage or deed of trust by one seeking an entry under the pre-emption or homestead laws of the United States, made prior to the perfection of his equitable right, is valid These authorities would fully sustain the decision of the supreme court of Minnesota in the present case.

Further, in the case at bar, there was no mortgage, deed of trust, or agreement for a specific lien of any kind. It was simply a promise to pay money in case of a sale by the patentee, the amount of the payment to be determined by the sum received on the sale. It was a promise which, in no event, could be enforced against the land. It was only a personal obligation of the patentee. It might never be enforceable against him, and could not be except upon his sale of the land. Of course, it would not be contended that a mere promise to pay money by one seeking to acquire title under a homestead was not binding, and if the only effect of the contract is to measure the sum which the patentee agrees to pay by that which he may receive when he sells the land, it cannot be held that a contract has been made for an alienation of the title in whole or in part, or that the land was not acquired for the sole use and benefit of the patentee.

The judgment of the Supreme Court of Minnesota was right, and it is affirmed.

Mr. Justice White, with whom concur Mr. Justice McKenna and Mr. Justice Holmes, dissenting: