United States v. California & Oregon Land Co.

after stating the case, delivered the opinion of the court.

The burden of complaint in this case is, that the Circuit Court erred in restricting the scope of the inquiry. The government sought to introduce testimony to show that the road was never in fact constructed, as required by the act of Congress; and also that the certificates of the governors, made as provided by section 4 of the act of 1864, were obtained by fraud and misrepresentation, as' averred, in the bill. But all of this testimony was excluded, and the inquiry limited to the single question whether the Land Company was a Iona fide purchaser.

The first plea of the Land Company recited the fact that three several certificates had been issued by governors 'of the State of Oregon, to the effect that the' road had been completed as required by the act of Congress, and added, “ that each-of said several certificates was made honestly and in good faith and without any fraudulent intent or procurement or false representation by any person whomsoever.” But upon application to the Circuit Court, this clause in the plea was stricken out, leaving it to contain simply an averment of the certificates of the governors ; and as these had been set out at length in the bill, there was no issue of, fact presented by this plea.. The other plea was that - the Land Company was a

There was no error in this ruling. The decision of this court, as reported in 140 U. S. 599 ,-was that “the decree of the Circuit ■ Court, so far as it 'dismisses the bill, must be reversed and the case be remanded to that court with a , direction to allow the plaintiffs to reply to and join issue on the pleas,” and the mandate which was sent to the Circuit Court recited this direction. That decision was the law of this case for the subsequent proceedings in that court. There was no adjudication that the pleas were insufficient in law; on the contrary, the plain implication of the opinion was that they were sufficient, and the question which was remanded to that court for inquiry was as to their truthfulness.' There was no adjudication of insufficiency and no rehearing ordered on that question. If the government was not satisfied with the decision, it should have called, our attention to it. and have sought a modification or enlargement of the decree. The Circuit Court properly construed it, and proceeded in obedience thereto to permit the government to join issue on the pleas, and to entertain an inquiry as to their truthfulness, and that was the only matter open for inquiry.

Indeed, that would have been the rule if there had been no decision of this court, and if in the first instance issue had been joined 'on the pleas. It is true that the statute directed that these suits be brought ." to determine the questions of the seasonable and proper completion of said roads,” and “ the legal effect of the several certificates of the governors;” and upon that counsel for the government insists that its mandate was that there should be full inquiry as to these matters; but that statute also provided “ that said .suit or suits shall be tried and adjudicated in like manner and by the same principles and rules of jurisprudence as other suits in equity are therein tried;” and the unquestionable right,of a defendant in an equity suit is to let the facts averred in the bill go unchallenged, and by plea set up some special matter, which, if established and sufficient, will defeat any recovery. Even if it were within the competency of Congress to compel every

In Farley v. Kittson, 120 U. S. 303 , 314, 315, 316, the nature and functions of a plea were fully discussed. It was said: “ But the proper office of a plea is not, like an answer, to meet all the allegations of the bill; nor like a demurrer, admitting those allegations, to deny the equity of the bill; but it is to present some distinct fact, which of itself creates a bar to the suit, or to the part to which the plea applies, and thus to avoid the necessity of making the discovery asked for, and the expense of going into the evidence at large. Mitford Pl. (4th ed.) 14, 219, 295; Story Eq. PI. §§ 649, 652.

'“The plaintiff may either set down the plea for argument, or filé a replication to it. If he sets down the plea for argument, he thereby admits the truth of all the facts stated in the plea, and merely denies their sufficiency in point of law to prevent his recovery. If, on the other hand, he replies to the plea, joining issue upon the facts averred in it, and so puts the defendant to the trouble and expense of proving his plea, he thereby, according to the English chancery practice, admits that, if the particular facts stated in the plea are true, they are sufficient in law to bar his recovery; and if they are proved to be true, the bill must be dismissed, without reference to the equity arising fror, any other facts stated in the bill. Mitford

And again: “In a case so heard, decided by this court in 1808, Chief Justice Marshall said: ‘In this case the merits of the claim cannot be examined. The only questions before this court are upon the sufficiency of the plea to bar the action, and the sufficiency of the testimony to support the plea as pleaded.’ Stead v. Course, 4 Cranch, 403 , 413. In a case before the House of Lords a year afterwards,'Lord Kedesdale ‘observed, that a plea was a special answer to a bill, differing in this from an answer in the common form, as it demanded the judgment of the court, in the first instance, whether the special matter urged by it did not debar the plaintiff from his title to that answer which the bill required. If a plea were allowed, nothing remained in issue between the parties, so far as the plea extended, but the truth of the matter pleaded.’ ‘ Upon a plea allowed, nothing.is in issue between the parties but the matter pleaded, and the averments added to support the plea.’ ‘ Upon argument of a plea, every fact stated in the bill, and not denied by answer in support of the plea, must be taken for true.’ Roche v. Morgell, 2 Sch. & Lef. 721, 725-727.”

The right, therefore, of this defendant, the California and Oregon Land Company, to avail itself of a plea cannot be doubted; and the plea which it made in this case, that of a bona fide purchaser, is one favored in the law. In the act directing these suits was a clause “ saving and preserving the rights of all bona fide purchasers of either of said grants, or of any portion of said grants, for a valuable consideration, if any such there be.” In Story’s Equity Jurisprudence, section 411, the author says: “ Indeed, purchasers of this sort \bonafide purchasers] are so much favored in equity, that it may be stated to be a-doctrine now generally established, that a bona fide purchaser for a valuable consideration, without notice of any defect in his title at the time of his purchase, may lawfully buy in any statute, mortgage or other encumbrance upon the same estate for his protection. If he can

In United States v. Burlington &c. Railroad Co., 98 U. S. 334 , 342, it was said: “It [the United States]-certainly could» not insist uppn a' cancellation of the patents so as to affect innocent purchasers under the patentees.” And, again, in. Colorado Coal Company v. United States, 123 U. S. 307 , 313: “ It is fully established by the evidence that there were in fact no actual settlements and improvements on any of the lands, as falsely set out in the affidavits in support of the preemption claims and inNthe certificates issued thereon. This undoubtedly constituted a fraud upon the United States sufficient in equity as against the parties perpetrating it, or those claiming under them with notice of it, to justify the cancellation of the patents issued to them'. But it is not such a fraud as prevents-the -passing of the legal title by the patents. It follows that to a bill in equity to cancel, the patents upon these grounds alone the defence of a bona fide purchaser for value without notice is perfect.”

. The Land Company, therefore, had a right to set up a special plea, and the plea which it did set up, that of a bona fide purchaser, was sufficient if true. And this brings us tó au inquiry as to whether this plea was sustained by the testi

Further, the significance of the certificates of the governors, as an independent matter in this inquiry,'must not be overlooked. Under the decision in Land Company v. Courtright, 21 Wall. 310 , the title to the first thirty sections did not depend on the completion of the road, and with respect to the residue of the land, the fourth section of the act of 1864 gave to the governor of the State the power to determine when it should be fully earned ; for it reads that “ when the governor of said State shall certify to the Secretary of the Interior that any continuous ten miles of said road are completed, then another quantity of land hereby granted, not to exceed thirty sections, may be sold, and so from time to time until said road is completed.” And because there was no express provision for the issue of- former patents, the act of 1874, which took effect intermediate the first and second deeds from the Koad Company, provided, that when the roads were “ shown by the 'certificate of the governor of the State of Oregon, as in said acts provided, to have been constructed and completed, patents for said lands shall issue in due form to the State ”'or its grantee. Now, it is familiar law that when jurisdiction is delegated to any officer or tribunal, his or its determination is conclusive. Thus in the case of United States v. Arredondo, 6 Pet. 691 , 729, this court said: “It is a universal principle, that, where power or jurisdiction is delegated to any public officer or tribunal over a subject-matter, and its exercise is confided to his or their discretion, the acts so done are binding and valid as to the subject-matter; and individual rights will not be disturbed collaterally for anything done in the exercise of that discretion within the authority and power conferred. The only questions which can arise between an individual claiming a right under the acts done, and the public, or any person denying its validity, are, power in the officer, and fraud in the party. All other questions are settled by the decision • made, or the act done by the tribunal or officer; whether ex

It is .true that the bill alleges that these certificates were procured by the No ad Company by and through the-false and fraudulent representations of its officers, agents, etc., and also true that the averment in the first plea, that the certificates weft made honestly and in good faith, was stricken out, and testimony offered to show the way in which the certificates were obtained was rejected. Therefore, as the inquiry is now presented, it must be in the light of the uncontested allegation that the certificates were obtained through the fraudulent acts of the Hoad Company. It may be that, in view of this situation of affairs,.the Koad Company could not avail itself of such determinations by the governors as decisive of its title, and'it may also-be that the purchasers are likewise precluded .from claiming that these determinations are in and of themselves conclusive in-their favor, but at the same time they are significant with' respect to that element of good faith, which consists in diligence. The testimony shows that the purchasers knew of nothing -wrong in respect to the title, or the proceedings of-the Hoad Company, or any officials connected with the transfer of title, -They knew that determination of the question as to the completion of the road was committed by the statute to the governor of the State. They saw his adjudication upon that question, and it may well be held that .they took all the active measures which under the circumstances they could-be required to take'wben they ascertained that the authorized official, and that official the chief executive

As against these evidences and conclusions of good faith but a single proposition is raised, one upon which the dissenting judge in the Circuit Court of Appeals rested his opinion, and that is the proposition that the conveyances from the Road Company were only quitclaim deeds, and that a purchaser, holding under such a deed cannot be a bona fide purchaser, and in support of this proposition reference is made to the following cases in this court: Oliver v. Piatt, 3 How. 333 , 410; Van Rensselaer v. Kearney, 11 How. 297 ; May v. Le Claire, 11 Wall. 217 , 232; Villa v. Rodriquez, 12 Wall. 323 , 339; Dickerson v. Colgrove, 100 U. S. 578 ; Baker v. Humphrey, 101 U. S. 494 ; Hanrick v. Patrick, 119 U. S. 156 . The argument, briefly stated, is that he who will give only a quitclaim deed in effect notifies his vendee that there is some defect in-his title, and the latter,'taking with such notice, takes at his peril. It must be confessed that the.re are expressions in the opinions in the cases referred to which- go to the full length of this proposition. Thus, in Baker v. Humphrey, 101 U. S. 494 , 499, Mr. Justice Swayne, in delivering the opinion -of the court, uses this language: “ Neither of them was-in any sense a bona fide purchaser. No one taking a quitclaim deed can stand in that relation.” Yet it may be remarked that in none-of these cases, was it necessary to go to the full extent of

But, further, and even if the doctrine were now recognized to be as heretofore stated, this fact would take the case out from the reach of the rule. The title passed from the Edad Company to the purchasers by four conveyances: two from the Eoad Company to one Pengra, its agent and superintendent'; and two from Pengra to the purchasers. Now, the deeds from Pengra are not quitclaims; they do not purport to be merely releases of his right, title and interest; but are strictly deeds of bargain and sale. The granting clause is in these words: “ The said parties of the first part have aliened, released, granted, bargained, sold, and by these presents they do alien, release, grant, bargain, sell and convey unto the said parties of the second part, their heirs and assigns, in proportions hereafter specified, the equal .undivided one-half (■£) of all and singular the lands lying and being in the State of Oregon, granted or intended to be granted to the State of Oregon by act of Congress,” etc. And the habendum is: “ To have and to hold all and singular the lands and premises hereby conveyed, to wit, said undivided one-half of all the above-described grant of lands listed and to be listed, and all the right, title and interest of the party of the first part therein.”

Such a deed is clearly something more than one of quit

It may be said that the real transaction was between the Road Company and the purchasers; that the agent and superintendent of the Road Company was- merely a go-between, a conduit, 'through which the title passed from the Road Company to the purchasers; and that the spirit, if not the letter of the rule, requires that the form of conveyance used by the Road Company should be controlling as to the bonafides of the purchasers. But as it is, wherever enforced, a-merely-technical and'’arbitrary rule, justice requires- that it should not be carried beyond its express terms, nor used to disprove the good faith which, in this case, all the. other testimony shows in fact existed in the purchasers-. And in' this respect it is well to consider the obvious reason for the unwillingness of the Road Company to itself execute a warranty deed. The original act of -1864 said nothing about patents; it simply granted the -lands to the: State, and authorized their sale; and only after the arrangement had been made fpy the' purchase of onedialf of these la,nds, and-: the

Before closing this opinion, we think it proper to notice one matter which, though of no significance in determining the legal rights of the parties, may throw light upon the transaction, and perhaps relieve the original donee of the grant by the State, the Road Company,'from, the imputation of-wrong' cast upon it by the filing of this bill. The grant was made in 1864, and the last certificate of the governor of Oregon -was dated'the 12th of January, 1870. The memorial of the -legislature of the State of Oregon was adopted in 1885, that memorial which induced the act of Congress and this litigation. In other words, the State of Oregon and its citizens, including those living along this road, remained silent for fifteen years after its alleged completion. Thé terms of the original grant were limited 4o the construction of the road, and imposed no duty of thereafter keeping it in good condition. Having earned the grant by constructing the road, it may well be that the Road Company took no further interest in it, and an ordinary wagon-road, uncared for during fifteen years, particularly that .part of it which runs through mountainous country, would be-almost completely destroyed by the

The decree is affirmed.