Neilson v. Lagow (53 U.S. 98)

THIS case was brought up from the Supreme Court of Indiana, by a writ of error issued under the 25th section of the Judiciary Act. It originally stood in the name of Wilson Lagow, the ancestor of the present defendants in error.

The point involved was the construction of the act of Congress, passed on the 1st May, 1820, (3 Stat. at L., 568,) which forbids land from being purchased on account of the United States except under a law authorizing such purchase.

At a preceding term of this court a motion was made to dismiss the case for want of jurisdiction, which is reported in 7 How., 772. A brief history of the case is there given; and a more particular one is given in the present opinion of the court, which renders any further statement by the Reporter unnecessary.

It was argued by Mr. Gillet and Mr. Crittenden, (Attorney-General,) for the plaintiff in error, and Mr. Judah for the defendant in error.

The counsel for the plaintiff in error contended, that the exposition of the statute, given by the court, if true, renders null the security given by the bank for the debt of $120,308, and interest due to the United States; renders null all other securities taken for the benefit of the United States upon lands, in any form or manner, from their debtors for thirty years last past; and until after that statute of May 1st, 1820, shall be modified or repealed, it annuls the titles of all purchasers of lands under securities given to the United States within that period by their debtors; for the instruction, says the act of Congress, 'means any and every mode of acquiring an interest in real estate other than by inheritance;' 'and the interest which the bank then had in the land remained in the bank.'

This construction, applied to the facts of the case, has extended a disabling effect of the act of Congress to the uttermost; has strained the disability to a mischievous end, not within the reason, meaning, and intent of the act; has misconceived the purpose of the statute; has overlooked the settled distinctions between legal titles and requisites, between titles to lands and securities for money, or for the performance of an act deemed valuable in law; it has overturned the established principles respecting deeds of trust executed to assure the payment of money; in fine, it has perverted a statute made to prevent the Secretaries of the Treasury, War, and Navy Departments, from diverting the moneys appropriated from the objects of appropriation, from spending the public money, and running the government in debt on account of purchase of lands, into a statute to inhibit them from securing and collecting debts due to the United States.

By the deed of trust the trustees had a discretion to demise and lease the whole or any part of the said lands, lots, and houses, until such time or times as a sale or sales thereof could be made, and receive and take the rents and profits; 'also to foreclose the said mortgage and collect the said notes,' (to wit, the notes of Willis Fellows, of $7000, for the purchase of the square lot surrounded by streets, and the mortgage on the square lot to secure the purchase-money, which notes and mortgage were assigned by the deed of trust to the trustees, and the subject of the decree of sale, and sale and deed to the trustees, given in evidence by Neilson;) they had a discretion vested in them, or a majority of them, as to the sales to be made, 'for cash, or on credit,' 'on such terms, and in such parts and parcels, as to them shall seem most advantageous,' 'retaining thereout, however, their, the said trustees', expenditures, and a reasonable compensation for their trouble and services,' and, after paying the debt and interest due by the bank to the United States, to return the surplus to the bank, and also all such parts of the said lands and premises, either in fee or in mortgage, as shall remain unsold,' &c., pp. 10, 11, 12. Such being the terms of the deed, the land must remain in the trustees to enable them to perform the trust. Therefore, the statute of uses, or statute for transferring uses into possession, did not operate so as to transfer the land, or the title, or the possession, to the cestui que use, or cestui que trust, the United States. 2 Bl. Com., ch. 20, p. 336.

Upon the deed of trust it is palpable that the United States are not the purchasers of the land, the title is not in them, nor the possession; all that they have a right to is the money arising out of the rents, issues, and profits, and sales, when made by the trustees; the money, to the sum of the debt and interest due from the bank, as mentioned in the deed of trust, was all that the United States had a right to demand and have from the trustees; all that the United States could rightfully demand and enforce in a court of equity, with costs of suit. The land itself the United States could not rightfully demand and have, either by a suit at law or in equity, nor the possession of the land. The deed of trust was but a security for money, not a sale and purchase of the land between the bank and the United States.

That the defendant, Neilson, was subjected to the action of Lagow, and to judgment of eviction from the land, and mulcted in costs, was induced solely by the erroneous construction of the statute given by the court. From such a suit, such a judgment, and such costs, the defendant, Neilson, had the right and privilege to be exempted; he claimed his right, privilege, and exemption, but was deprived of them by the erroneous construction of the statute as contained in the bill of exceptions taken in the Circuit Court. The errors assigned in the Supreme Court of Indiana brought up for review the construction of the statute as contained in the bill of exceptions. The Supreme Court of Indiana affirmed the judgment of the Knox Circuit Court in all things.

Upon the jurisdiction of this court to revise the decision of the Supreme Court of Indiana, as being a case properly within the 25th section of the Judiciary Act, it is sufficient to cite the cases of Crowell v. Randell, and Shoemaker v. Randell, 10 Pet. 391 to 399, in which fourteen previous cases upon this 25th section are noticed, and the doctrine is reaffirmed: 'That it is not necessary that the question should appear on the record to have been raised in direct and positive terms ipsissimis verbis, but it is sufficient if it appears, by clear and necessary intendment, that the question must have been raised and must have been decided in order to have induced the judgment.'

No such verdict and judgment could have been rendered against the defendant, Neilson, in the Knox Circuit Court, if it had not been induced by the erroneous exposition of the statute of May 1, 1820, given by the Circuit Court; and the affirmance in the Supreme Court of Indiana clearly and necessarily decides that question raised by the assignment of errors, and affirms that erroneous exposition of the statute of the United States.

Mr. Judah, for the defendants in error. The question is,

Had the bank any interest in the premises after executing the deed of the 1st July, 1822, to the trustees?

And this question resolves itself into these:

1. Was that deed valid?

2. If that deed was valid, did it convey the whole interest of the bank?

1. We assert that the deed was void by virtue of the seventh section of the act of Congress of the 1st May, 1820, in relation to the Treasury, War, and Navy Departments. That section is as follows: 'That no land shall be purchased on account of the United States, except under a law authorizing such purchase.'

That this law was understood by the proper officers at Washington to be in force in 1822, and so late as 1824, is proven by a letter of Mr. Pleasanton, then Agent of the Treasury, to the House of Representatives, 8th March, 1824, and printed in the American State Papers. Public Lands, vol. 3, 563. And this, too, is shown by the act of May 26th, 1824, which gives to the officers of the Treasury a limited power to purchase on execution. It is decided that the United States may 'enter into contracts not prohibited by law.' United States v. Tingey, 5 Pet. 115, 128; United States v. Bradley, 10 Id., 343, 359. But where, in the bond or deed, there is a condition or grant which is prohibited, that is illegal and void. United States v. Bradley, 10 Pet., 363.

If it is said that the interposition of trustees will take this case out of the statute, we reply,

1. That such a contrivance would be a fraud on the statute. Coke's rule is as follows:-Quando aliquid prohibetur fieri ex directo, prohibetur et per obliquum. Co. Lit. 223, b; and see 2 T. R., 251-2, quotations from Lord Northington; and Doe v. Carter, 8 T. R., 300.

2. We assert that, by the deed from the bank, only a life estate was conveyed to Badollett, Harrison, and Buntin.

Indiana is a common law state. In its courts the distinction between the jurisdiction at law and that in equity is strictly preserved. The present is a common law action, and the question is as to the legal title. The words in the deed, 'and their successors,' are mere surplusage, not sufficient to pass a fee-simple. Clearwater v. Rose, 1 Blackf. (Ind.), 137; Roberts v. Forsythe, 3 Dev. (N. C.), 26; 4 Cruise, Dig., 335, 336.

A grant to a natural person and his successors, passes only an estate for life. Co., Lit., 9, v. And hence, if the deed is void, the title remained in the bank, and, on its forfeiture, reverted to the Steam-Mill Company, and passed to Lagow. If the deed is valid, but only passed a life estate, the reversion in fee remained in the bank, reverted to the Steam-Mill Company, and passed to Lagow, and, on the determination of the life estate by the deaths of the grantees, took effect in possession. In either case Lagow has the legal estate, and is entitled to recover at law. If the law, on either of the above positions, is with the defendants in error, we presume this court will decide in their favor. But there is another view of the case which the counsel for the defendant in error is unwilling to abandon.

The Supreme Court of Indiana were required to determine whether a new trial should have been granted, and that depended on the question whether, on the whole case, the verdict was right. This required the solution of one, or of two questions. If the deed only conveyed a life estate, and the grantees were dead, it was not material whether the deed was valid or invalid. We deny that there is anything in this record to show that the court did determine the validity of the deed. It is true that there are instructions on the record in which this question is made, but it is as true that there are on the record the facts from which the other question does necessarily arise. Both questions might have been determined; but it is usual for appellate courts to pass over questions not necessary for the determination of the case before them. And hence we ask, Is it a 'necessary intendment' that the Supreme Court of Indiana did decide both the questions in this case? For we understand that it must appear to this court, if not expressly, by 'necessary intendment,' that some question within the jurisdiction of this court did arise and was decided; that it is not enough that such question might have arisen and might have been decided. Smith v. Hunter, 7 How., 738, 742; 16 Pet., 281, 285; 10 Id., 368, 391.

Mr. Justice CURTIS delivered the opinion of the court.