Schlesinger v. Kansas City S. Railway Company/Opinion of the Court

No question is made as to the validity of Bancroft's purchase of the property in dispute at the sale made under the order of the circuit court of the United States for the western district of Missouri, sitting in bankruptcy. Indeed, all parties to the present controversy claim title under him.

We have seen that the title passed from him to Hanna, McLean, and himself as trustees for those furnishing the money used in the purchase at the bankruptcy sale, and that those trustees conveyed to Brooks, January 13, 1880, upon certain express conditions. One of those conditions was that Brooks should build the railroad from Kansas City to Harrisonville or Bolton on or before January 1, 1881, and also to the coal fields of Bates county, to a point south of Butler, on or before July 1, 1881. Another condition was that if Brooks failed to build the railroad to the coal fields mentioned, as stipulated in the deed to him, then the property should revert to the trustees, and reinvest in them, 'the same as they now hold the same.' This condition of forfeiture was, by the terms of the conveyance to Brooks, to become void and extinguished only in the event Brooks expended $50,000 in the construction of a roadbed for said railroad commencing at Kansas City, and running southwardly.

The Kansas City & Southern Construction Company took the property under the two deeds to it from Brooks, dated, respectively, February 27, 1880, and April 1, 1880. But, of course, it took subject to the conditions upon which he received the property from the trustees. Neither of those conditions was performed. The road was not built from Kansas City to Harrisonville by the 1st day of January, nor to the coal fields of Bates county by July 1, 1881. Nor was $50,000, or any sum, expended by Brooks or by his grantee in the construction of a roadbed for the railroad. Indeed, as early as the 18th of May, 1880, the construction company gave formal notice to Naylor & Co. that they were unable to comply with their contract relating to steel rails, and consequently the enterprise was abandoned by it.

It results that when the 1st of July, 1881, came, the property had reverted to the trustees under their agreement with Brooks, subject to which agreement the construction company took the title. But on that day the Kansas City & Southern Railway Company were in possession under the agreement between it and the trustees of December 15, 1880, to say nothing of the deed of the construction company to the railway company of September 18, 1880. If it be said that the trustees had no right, under their agreement with Brooks, to treat the property as having reverted to them until after the expiration of the time limited for the building of the railroad to the coal fields, namely, until after July 1, 1881, the answer is (1) that the construction company had, by its formal notice to Naylor & Co. of May 18, 1880, indicated that it had no purpose, as the grantee of Brooks, to meet the conditions upon which he was to hold the property; (2) if the provision in the agreement of December 15, 1880, between the trustees and the railway company, annulling and rescinding the conditions imposed by the deed to Brooks, and prescribing other conditions as between the trustees and the railway company, was at that time of no effect, in law, as against Brooks or the construction company, it became valid and binding after July 1, 1881, when, beyond all question, the trustees were entitled to treat the property as having reverted to them, to do with it as to them seemed best. So that if we discregard altogether the deed of May 24, 1880, from the construction company to the Kansas City & Southern Railroad Company, as a nullity, no such corporation or company being in existence, and if we disregard, also, the deed of September 18, 1880, to the railway company, because it was not executed by any officer of the construction company, the fact appears that on and after July 1, 1881, the railway company were in actual possession of the property, under their contract with the trustees, Hanna, McLean, and Bancroft, who had elected, as they had the clear right to do, to treat it as having reverted to them. This was before Naylor & Co. had instituted their action at law, and sued out their attachments against the construction company. When that attachment issued, the construction company had no interest whatever in the property attached. The interest it originally had was acquired subject to certain conditions, upon the nonperformance of which the property, at the election of Manna, McLean, and Bancroft, trustees, reinvested in them.

It was not necessary to the reacquisition of title by the trustees that they should invoke the aid of the courts. In the case of a public grant, the right of the government to repossess itself of the estate granted may be asserted through judicial proceedings, or by some legislative act showing an assertion of ownership on account of the breach of the condition upon which the original grant was made. But judicial proceedings to that end are not absolutely necessary, unless they are prescribed by the grant itself; for, where land and franchises are held upon conditions to be subsequently performed, 'any public assertion by legislative act of the ownership of the estate after default of the grantee such as an act resuming control of them, and appropriating them to particular uses or granting them to others to carry out the original object-will be equally effectual and operative.' Farnsworth v. Railroad Co., 92 U.S. 63; New Orleans Pac. R. Co. v. U.S., 124 U.S. 131, 8 Sup. Ct. 417. In the case of a private grant, an entry by the grantor, or any act equivalent thereto, showing a purpose to take advantage of the breach of condition subsequent, and to reclaim the estate forfeited by such breach, is all that is required. What was done by the trustees, Hanna, McLean, and Bancroft, evinced, in the clearest possible manner, their purpose to reclaim the property and rights granted to Brooks because of the failure to perform the condition upon which he, or any one claiming under him, was entitled to hold the property.

Under the view we have expressed, it becomes unnecessary to consider other questions discussed by counsel; and it results, and we so adjudge, that the plaintiffs are not entitled to have the property in question, or any part thereof, sold in satisfaction of their judgment for $35,901.30 against the Kansas City & Southern Construction Company.

The decree below is affirmed.