Osterman v. Baldwin

APPEAL (submitted) from the District Court for the Eastern District of Texas.

In 1839, prior to the admission of Texas into our Union, and that country being then an independent republic, Baldwin, a citizen of New York, and an alien, of course, to Texas, purchased and paid for three lots in Galveston, from the Galveston City Company, a corporation created by law, with power to sell real estate, and which owned the lots sold. As the company was not at the moment ready to execute deeds, he received certificates of the purchase. These described the purchased lots, acknowledged the receipt of the purchase-money, and added that Baldwin was entitled to receive a conveyance, so soon as the company was prepared to execute deeds in proper form. These certificates were made out in Baldwin's own name. The constitution of Texas, however, prohibiting aliens from holding lands there, he transferred them to James S. Holman, a Texan; the purpose having been 'to place the lots in the hands of a citizen to watch over and protect them, for the payment of taxes and otherwise.' No consideration moved from Holman, and the transfer was on an express agreement (made only by parol, however), that Holman was to hold the lots, and take a conveyance of them from the company, as Baldwin's trustee. The certificates were placed in an envelope, on which was indorsed a memorandum, thus:

'No. 113.

'JAMES S. HOLMAN.

'Lots No. 5 and 11, in block 617, &c. &c.,

'In trust.'

This envelope, with the certificates inclosed, was subsequently found in the office of the company, having, as was said by the one side, been left there for safe keeping at the time, and by the other, having been brought there in order that a deed might issue to Holman, and surrendered and filed on the issue of a deed accordingly. The letters and figures, 'No. 113,' indicated the number of the deed to be issued for these lots.

In September, 1846, the lots were levied on by the sheriff of Galveston County, upon a judgment obtained by one McKinney against Holman. Notice was given to McKinney of Baldwin's ownership of the lots, and that Holman had never had any interest in them, except as trustee for Baldwin.

At the sale, October 6th, 1846, full notice was read aloud by Baldwin's agent, to the persons assembled, of Baldwin's claim to the lots, and of the exact state of his title. The sale was then proceeded with, and one lot was struck off to Osterman, others to other persons. The purchasers took possession.

In May, 1850, that is to say, more than three years after the sale, Baldwin filed a bill in the District Court for the District of Texas, making the Galveston City Company, Holman, Osterman, McKinney, and others, defendants; and praying that the Galveston City Company might be directed to execute a conveyance in fee simple to him, that the sale and proceedings under the judgment and execution against Holman might be declared void, and the defendants enjoined from setting up title under the same, and be ordered to deliver up possession of the lots held by them respectively.

The defences set up were:

1. Baldwin's alienage and consequent incapacity to hold; that even if the lands were meant to be held by Holman in trust for him, the trust was void; that on this part of the defence it mattered not whether there was a deed or certificate, Holman's estate, if but equitable, being liable to levy and sale; that however a deed was made.

2. That if these defences failed, the suit was barred by the statute of limitations of Texas.

As to the fact whether any deed had been made to Holman, the testimony was not quite consistent. On the one hand, the secretary of the company, the complainant's witness, testified thus:

'Whenever the holder of a certificate wished a deed, he produced his certificate to the company and delivered up the same, and the company issued a deed to him. The certificate was then filed away in the records of the company. Books were kept showing the issue of deeds upon the certificates, by memorandum entered against the number of the lot. All the certificates in this case were filed away in the records of the company, in the same place and manner, with the certificates upon which deeds had been issued. The books and records of the company bear the same evidence of a deed to Holman on these certificates, that they do of the issue of any deed whatever. If the records of the company are true, a deed issued to Holman. The memorandum No. 113, in the envelope, indicates that that was the number of the deed issued on the certificates.'

On the other hand, Holman himself remembered no deed: and one Edmunds, the agent of McKinney, who seemed to manage the whole matter of the execution under a bargain for a large contingent share of its proceeds, twice examined the books of the City Company, once by himself and once ('thinking it an important matter') with another person, an attorney-at-law,-and found that the books 'showed that no deed had then been issued,' and that 'the title still appeared to be by certificates in the name of Holman.'

As respected a bar by the statute of limitations, the second defence set up, it appeared that the Texas act in its fifteenth section ran thus:

'Every suit to be instituted to recover real estate as against him, her or them in possession under title or color of title, shall be instituted within three years next after the cause of action shall have accrued, and not afterwards. By the term title as used in this section, is meant a regular chain of transfer from or under the sovereignty of the soil; and color of title is constituted by a consecutive chain of such transfer down to him, her or them in possession, without being regular; as if one or more of the memorials or muniments be not registered or not duly registered, or be only in writing, or such like defect as may not extend to or include the want of intrinsic fairness and honesty; or when the party in possession shall hold the same by a certificate of head-right, land warrant or land scrip, with a chain of transfer down to him, her or them in possession.'

The District Court decreed in favor of the complainant. The purchasers appealed; Holman and the company not denying Baldwin's equities, and acquiescing.

Messrs. Adams, Coombs, and Ballinger, for the appellants:

1. The evidence of the deed's having issued, greatly preponderates over that of its having not issued. The possession by the company among its papers, of the certificates, the only evidence of individual ownership, an the testimony of the secretary of the company, offered a strong presumption that there was a deed. The purpose of conveying to Holman was that a deed should issue to him. It matters not, however, as respects this branch of the defence, whether Holman's title were legal or equitable, if he had the real title-of any kind. Equities can be levied on in Texas as well as legal estates.

2. He had such title. It having been illegal for the complainant to hold lands in Texas at the date of these assignments, the law did not imply, create or allow any trust whatever in his favor, nor create one in favor of the government of Texas; but Holman took and held the property free and clear of any trust or right whatever for or on the part of Baldwin or the government.

Nor did the admission of Texas into the Union help the matter. The law not having previously raised or recognized any trust in behalf of Baldwin, nor of the government as the sovereign, by escheat or other paramount right, no trust or right of any kind in his favor was created by that political act.

At best, the only evidence of any trust in favor of Baldwin was parol; a dangerous sort of proof on which to rest the title to real estate; and a sort which the British statute of frauds would not allow to be given in such a case.

3. If Holman was thus the sole owner-either legal or equitable-Baldwin had no title, and the various notices were of no value. They were notices of nullities.

Waiving all these points, however, we have above and independent of the other defence—4. The Statute of Limitations. If the Galveston City Company made a deed to Holman, then the appellants had a 'regular chain of transfer' with the single exception from its regularity that the deed to Holman was not recorded, a circumstance which confessedly would not affect it. We have referred to the evidence of the existnece of the deed. 'A regular chain of transfer' relates to the deeds, the muniments, the paper evidences of right. If on their face, they constitute a title, the actual nature of that title, arising from extrinsic facts, from the existence of a superior or better title, either in the first link by a previous grant from the government, or in any subsequent link by a previous better conveyance, is unimportant. If possession be held three years under a chain of deeds from the sovereignty of the soil, by the 15th section the character of the actual title at any point of the chain is unimportant. 'Intrinsic fairness and honesty' is not a question where a regular chain of transfer is shown. They apply to color of title where the transfers are not regular. But the meaning is, not that the consecutive chain of transfer, or any link of it, must be fair and honest in relation to the adverse, better title, but simply that if one or more of the links, instead of being a regular deed-for instance, from A. or B.-is such a transfer of the right of A. or B., whatever that right is, as amounts fairly and honestly to a conveyance of it, then it constitutes color of title. In short, 'title' is legal; 'color of title' is equitable.

Messrs. Sherwood and Goddard, contra.

Mr. Justice DAVIS delivered the opinion of the court.