Irvine v. Marshall/Dissent Nelson

Mr. Justice CATRON, Mr. Justice GRIER, and Mr. Justice CAMPBELL, dissented, and concurred with Mr. Justice NELSON in the following dissenting opinion:

In this case, Marshall bought at the request of Irvine and Barton a quarter section of land, at a land sale in Minnesota Territory, for which two hundred dollars was paid, and a patent certificate given to him in his name. One hundred dollars of the money was furnished by Irvine, and one hundred by Barton, and the land according to the arrangement was to be held in trust by Marshall, for their benefit. Barton, for some reason not explained, afterwards claimed the whole instead of an undivided half of the section, and demanded a conveyance of the same from Marshall, the trustee. Irvine afterwards applied to the trustee for a conveyance of his undivided half, which was refused, in consequence of the previous claim of Barton to the whole section. This suit is brought by Irvine, against Marshall, the trustee, to compel him to make the above conveyance.

The court below, on a demurrer to the complaint which contained the facts substantially as above stated, gave judgment for the defendant, refusing to compel the execution of the conveyance.

The question presented would be a very plain one at common or equity law upon the doctrine of trusts as administered by courts unaffected with any local legislation. The facts would present the case of a resulting trust for the benefit of the persons who had furnished the purchase-money, and the trustee compelled to convey accordingly the interest belonging to the respective parties.

But the Legislature of Minnesota have passed a law modifying the doctrine of uses and-trusts, and especially in respect to resulting trusts of the character in question. It has provided, that when a grant is made for a valuable consideration to one person, and the consideration paid by another, no trust shall result in favor of the person paying the consideration, but the title shall vest in the person named as grantee, subject only to two exceptions: 1. In favor of the creditors of the person paying the consideration money; and 2. When the person taking the conveyance in his own name shall have taken it without the knowledge or consent of the party paying the consideration, or when the trustee shall have purchased, in violation of his trust, with moneys belonging to another person. (R. S. of Minnesota, pp. 202, 203, secs. 7, 8, 9.)

It is admitted that the present case does not fall within either of the exceptions, and on this ground the relief in the court below was denied.

This provision in the laws of Minnesota will be found adopted in several of the States. This precise modification of a resulting trust was incorporated into the laws of the State of New York as early as 1830, and from which, as is said, it was taken and engrafted in the statutes of this Territory.

The object of the change is to prevent secret and fraudulent conveyance of property, with the view of defrauding creditors. A common and successful contrivance for this purpose, is by placing the title of the property in the name of a third person, while the whole of the beneficial interest is in another, thereby concealing it from the creditor, and embarrassing his remedy against the property of the debtor.

The provision is designed to deter parties from engaging in this contrivance, by subjecting the property, thus concealed in the name of another, to the peril of being claimed and held by him as his own. The question is one of State policy, in regulating the terms and conditions of holding and disposing of the property within the State, so as to encourage open and frank dealing with the same, and to prevent concealed and covenous trusts as a cover for defrauding creditors. It may be wise or unwise; that we suppose is a question with which courts have nothing to do, as the power of a State to regulate the subject is unquestionable, and in this respect the power in the Territory is the same.

It is insisted, however, that the nature or character of the property in question, impressed upon it by the law of Congress providing for and regulating the sales of the public lands, takes it out of the system of municipal law which, it must be admitted, governs and controls parties in dealing with property in general in the States and Territories. If this be so, it constitutes certainly a very important exception; for it is, perhaps, not hazarding too much in saying that in the new States, and in the Territories for many years after their organization, the largest portion of the real property owned and cultivated by the inhabitants is held and enjoyed under a title similar to that in question, namely, a patent certificate. And we may, I think, in respect to property in this predicament, ask, under what system of laws is it to be held and regulated, if the municipal laws of the State are to be set aside? It is true, the laws of Congress provide for and regulate the sale of the public lands, and, in doing so, provide for this inchoate title to be given to the purchaser, on paying the purchase-money. And, if any one undertakes to question this title, the law of Congress is called in as the highest evidence of it. Thus far the law of Congress operates, of whatever nature or character that may be. But beyond this, whether A or B owns this inchoate title, whether A has made a good sale and transfer of it to another, or such a one as the municipal law will give effect to, are questions which do not concern the law of Congress or the Federal authorities. They are questions arising purely under the municipal laws. Whether the original purchaser who has received the certificate has himself settled on the section under it, or whether he has transferred it to another settler, are questions in which the Federal Government has no interest. They being to the State within which the lands are situate. Indeed, the land department so determined at an early day, and in case of a dispute as to the ownership of the certificate, it gives the patent to the person named in it, leaving the parties to settle their disputes in the courts of law. The question in this case is not whether a title has been derived from the Federal Government under the act of Congress-that title is admitted, indeed it is that which gives value to the right in dispute-the question is, who has acquired the right to the property, after the title has been acquired from the Government; in other words, who owns this inchoate title secured by the patent certificate? That is a question depending upon local law. The point was well put by Judge Barbour, in delivering the opinion of the court in Wilcox v. Jackson, (13 Pet., 517.) 'We hold,' he observed, 'the true principle to be this: that whenever the question in any court, State or Federal, is, whether the title to land which had been once the property of the United States has passed, that question must be resolved by the laws of the United States; but that, whenever according to those laws the title shall have passed, then that property, like all other property in the State, is subject to State legislation, so far as that legislation is consistent with the admission that the title passed according to the laws of the United States.'

Now, it is upon this principle that the lands held under the patent certificate have become property in the State, and subject to its legislation, that they are subject to judgment and execution against the owner; to conveyance by deed or devise; to descend to his heirs at law on his decease, or to sale by a court of probate to pay his debts. And it may well be asked, if the title is thus subject to the municipal laws concerning judgments and executions, deeds of conveyance, devises, of descent, and of administration in the probate court, how the title can be exempt from the law of trusts? The general principles of equity can no more be invoked in respect to them than in respect to either of the other matters referred to, when they have been the subject of regulations by the local law. That law then becomes the rule of property to govern them, the same as it governs the inheritance, or any other lawful disposition made of it. We do not see the reason or propriety of setting aside the local law in respect to this class of property as to trusts, while it is admitted to regulate every other legal disposition made of it; and I must therefore, for the reasons given, dissent from the opinion of the majority of the court.