Insley v. United States

Statement by Mr. Justice BROWN:

This was a bill in equity brought by the United States to redeem lot 1, block 104, Ft. Scott, Kan., the title to which lot is now held by Elizabeth McElroy, the real defendant in the case. A demurrer was originally filed to the bill upon the ground of laches, and was sustained by the court below, (25 Fed. 804;) but the decree dismissing the bill was reversed by this court, (U.S. v. Insley, 130 U.S. 263, 9 Sup. Ct. 485,) and the case remanded, with a direction for further proceedings.

The substantial facts were that on August 3, 1869, one Moses McElroy became surety upon a bail bond for the appearance of Joseph H. Roe and C. A. Ruther, who had been arrested upon a complaint charging them with a violation of the internal revenue laws. On October 12, 1869, the recognizance was forfeited, and a writ of scire facias ordered to issue from the district court of the United States for the district of Kansas against the sureties, requiring them to appear and show cause why the forfeiture should not be made absolute and execution issue. This virit was served upon McElroy, who appeared and moved to quash the writ. This motion was denied, the forfeiture made absolute, judgment for $2,000 entered against McElroy, and execution issued April 27, 1871, and levied upon the lot in question. This lot, with another also levied upon, had been bought by McElroy of one Bryant on August 5, 1869, for $6,000. At the time of this purchase, and to pay for one property, McElroy borrowed of one Palmer $3,500, for which he gave a mortgage upon the lots to secure the loan. On May 30, 1871, four weeks after the levy was made, Palmer brought suit to foreclose his mortgage, but did not make the United States a party defendant. On June 6, 1871, the United States bought lot 1 at the execution sale in satisfaction of its debt. On October 4th Palmer obtained judgment of foreclosure in the sum of $3,764.16, with costs. On October 16th the sale to the United States was duly confirmed, and a deed ordered. The deed, however, was not executed until October 30, 1883. On October 25, 1871, Palmer took out execution against McElroy, and on December 4th the property was sold under this execution, and bought in for the debt by Palmer. The sale was confirmed January 4, 1872, and a sheriff's deed executed to Palmer.

On January 4, 1872, the title stood as follows:

(1) The property had been sold to the United States by sale confirmed October 16, 1871, on a second lien.

(2) The property had been sold to Palmer by a sale confirmed December 26, 1871, on a first lien, the United States not being a party defendant.

(3) The United States, not having been made a party, had the right to redeem, and treat the sheriff's deed as a mortgage in the hands of Palmer, and Palmer as a mortgagee in possession.

Nothing was done for over 12 years, when, on November 28, 1884, the United States filed this bill, having never been in possession of the property. McElroy and wife remained in possession of this lot, with consent of Palmer, under an agreement to purchase, until the death of Palmer, in November, 1872, after which the agreement lapsed. Afterwards the Palmer heirs, desiring to sell, made another agreement with McElroy, who acted as agent for his wife, that they would sell the land to Mrs. McElroy, defendant herein. Payments on the property began, and slowly progressed through a series of years. The property had an earning capacity, and the rents and profits went to Moses McElroy. He died in August, 1881, leaving the property partly unpaid for. In the agreed statement of facts it was admitted that the agreement with the Palmer heirs vested the title and ownership in said land in Mrs. McElroy, except as affected by the claim of the United States in this action, if it should be determined that any such claim or interest existed. After the agreement of purchase had been made by defendant, she improved the lands by erecting buildings at an expense of several thousands of dollars, collected the rents, and enjoyed the use and benefit of the property; the rents and profits exceeding, by a small amount, the principal and interest which would be due under the mortgage of 1869, by way of redemption. The property was finally deeded by the Palmer heirs to the defendant about five years after her husband's death, and after the filing of the bill in this suit.

Upon the hearing in the circuit court upon an agreed statement of facts, the bill was again dismissed, and the United States appealed to the circuit court of appeals. That court reversed the decree of the circuit court, and a decree was directed in favor of the United States. 4 C. C. A. 296, 54 Fed. 221. From this decree an appeal was taken by Insley to this court.

J. D. McCleverty, for appellants.

Sol. Gen. Maxwell and E. F. Ware, Sp. Atty., for the United States.

Mr. Justice BROWN, after stating the facts in the foregoing language, delivered the opinion of the court.