M'Donald v. Smalley (26 U.S. 620)/Opinion of the Court

This suit was instituted in the Circuit Court of the United States for the seventh Circuit, and district of Ohio, to obtain a conveyance of a tract of land, lying in what is termed 'the military district;' claimed by the complainant under a patent, younger than that under which it is held by the defendants. The complainant is a citizen of Alabama, and claims the land under a conveyance from Duncan M'Arthur, who is a citizen of Ohio. The defendants objected to the jurisdiction of the Court; and after hearing the parties upon this point, the Court dismissed the bill, being of opinion that its jurisdiction could not be sustained. From this decree, the complainant has appealed, and the cause is now before this Court on the question of jurisdiction.

The bill states the complainant to be a citizen and resident of the state of Alabama, and the defendants to be citizens and residents of the state of Ohio. It has not been alleged and certainly cannot be alleged, that a citizen of one state, having title to lands in another, is disabled from suing for those lands in the Courts of the United States, by the fact, that he derives his title from a citizen of the state in which the lands lie: consequently, the single inquiry must be, whether the conveyance from M'Arthur to M'Donald was real or fictitious?

The transaction, as laid before the Court, appears to be this; M'Arthur was apprehensive that his title could not be sustained in the Courts of the state, in which alone he could sue; and being indebted to M'Donald in the sum of $1100, offered to sell and convey to him the land in controversy, in payment of this debt. The letter in which this offer was made, expresses the opinion that his title was good, and would most probably be established in the Courts of the United States, but would fail in the Courts of the state. He estimates the property as being worth much more than the sum he is willing to take for it, but in consequence of the difficulties attending the title, he is willing to convey it in satisfaction of the debt. He suggests, that if M'Donald should be disinclined to engage in the controversy himself, he might make an advantageous sale to some of his neighbours, who might be disposed to emigrate to Ohio; and offers to render any service in his power to the proprietor of the land, in the prosecution of the claim in the Courts of the United States.

The contract was concluded by a letter, written in answer to that which has been stated, of which the said M'Donald retained no copy. There was no special agreement between the plaintiff and M'Arthur when the deed was written, but perhaps some proposition by letter. He gave his bond to a third party for making a quit claim title to the land, on condition of receiving from him eleven hundred dollars.

This testimony, which is all that was laid before the Court, shows, we think, a sale and conveyance to the plaintiff, which was binding on both parties. M'Donald could not have maintained an action for his debt, nor M'Arthur a suit for his land. His title to it was extinguished, and the consideration was received. The motives which induced him to make the contract, whether justifiable or censurable, can have no influence on its validity. They were such as had sufficient influence with himself, and he had a right to act upon them. A Court cannot enter into them, when deciding on its jurisdiction. The conveyance appears to be a real transaction, and the real as well as nominal parties to the suit, are citizens of different states.

The only part of the testimony which can inspire doubt, respecting its being an absolute sale, is the admission that the plaintiff gave his bond to a third party for a quit claim title to the land, on paying him $1100. We are not informed who this third party was, nor do we suppose it to be material. The title of M'Arthur was vested in the plaintiff, and did not pass out of him by this bond. A suspicion may exist, that it was for M'Arthur. The Court cannot act upon this suspicion.

But suppose the fact to be avowed, what influence could it have upon the jurisdiction of the Court? It would convert the conveyance, which on its face appears to be absolute, into a mortgage. But this would not affect the question. In a contest between the mortgagor and mortgagee, being citizens of different states, it cannot be doubted that an ejectment, or a bill to foreclose, may be brought by the mortgagee, residing in a different state, in a Court of the United States. Why then may he not sustain a suit in the same Court, against any other person being a citizen of the same state with the mortgagor. We can perceive no reason why he should not. The case depends, we think, on the question, whether the transaction between M'Arthur and M'Donald was real or fictitious; and we perceive no reason to doubt its reality, whether the deed be considered as absolute or as a mortgage.

A question has been made, whether the Circuit Court ought to have noticed the testimony on the conveyance under which the plaintiff claims, because it was brought irregularly before them.

By a law of the state, interrogatories may be propounded by the defendant in his answer, which the plaintiff is compelled to answer as if they had been propounded in a cross bill.

Although this point has become unimportant in this cause, the Court thinks it proper to say, that the rules which govern the practice of the Circuit Courts in Chancery, have been prescribed by this Court, and ought to be observed.

We think there is error in the decree of the Circuit Court dismissing the complainant's bill, and that the same ought to be reversed, and the cause remanded for further proceedings according to law.

This case came on, &c. and was argued on the point of jurisdiction, on consideration whereof, This Court is of opinion, that there is error in the decree of the said Circuit Court dismissing the complainant's bill. It is therefore decreed, and ordered by this Court, that the decree of the said Circuit Court in this cause be and the same is hereby reversed and annulled. And it is further ordered, that the cause be remanded to the said Circuit Court for further proceedings to be had therein, according to law and justice.