Morenhout v. Barron

By the Court, Rhodes, J.: One of the questions which the Court proposed to counsel on the reargument was: Upon what particular ground of equity jurisdiction does the complaint rest? In view of the peculiar circumstances of the case, and of the numerous positions taken by the plaintiffs, it was very proper that they should state the ground, or, if they proceeded on more than one theory, the grounds on which they claimed relief. Instead of responding directly to the question, they have furnished us with long citations from the opinions in numerous cases in equity, in which questions similar to those discussed by counsel in this case were considered. They have in effect replied: The books furnish an answer to the question. Whatever may have been the grounds upon which the plaintiffs claimed relief, it is apparent from the findings of fact and conclusions of law that the Court tried the cause, and rendered judgment for the plaintiffs, on the theory that the deed of Montenegro to Forbes, of 'August 7th, 1848, had been rescinded, and that thereafter Forbes, and, after the conveyance by Forbes to Barron, the latter, held the title (including whatever was acquired by means of the confirmation of the title) in trust for Morenhout and his co-plaintiffs. The case will be considered on that theory. The grant to Montenegro, whatever may be its character as to being inchoate or imperfect, passed to him a legal title. That is the position of the plaintiffs, and it is not controverted by the defendant. (See Fremont v. U. S., 17 How. 557; Estrada v. Murphy, 19 Cal. 270; Wilson v. Castro, 31 Cal. 437.) Indeed, that position is sustained by all the cases in which a recovery in ejectment on Mexican grants has been had. The contract of August 23d, 1847, of Montenegro with Forbes, for the conveyance of the rancho to Forbes, it is not doubted was in all respects valid, and gave Forbes the [604] right to a conveyance, when he should become satisfied in respect to the quality, situation, and title of the rancho, and pay the remainder of the purchase money. He could, of course, waive the inquiry as to those matters, and take a conveyance of the rancho, if he so elected, without any investigation, or a complete investigation, as to the title, quality, or situation of the rancho, for that provision in the contract was intended solely for his protection. The deed of 1848 was executed under and in pursuance of that contract. By the execution of the deed all the purposes of the contract were accomplished. It no longer remained as a subsisting contract. The provision in the deed, that the contract should be attached to the deed, did not have the effect to keep the contract on foot. It amounted to no more than would a recital that the deed was made in pursuance and in performance of the terms of the contract. It makes no difference what may have been the understanding of the parties at the time the deed was executed, as to the right of Forbes to make a further examination in respect to the title or situation of the rancho; for it is a matter of legal construction that, upon the execution of the deed, all the title that Montenegro then held passed to and vested absolutely in Forbes. What has just been said develops a point which, in our opinion, is decisive of the appeal, on the theory on which it was tried by the Court below. -The plaintiffs set up the contract of 1847, and allege that prior to Montenegro’s return from Tepic to California, which was in 1848, it was agreed between him and Forbes that the latter should inquire into the condition of the title, etc., of the rancho, and if dissatisfied with the title, might rescind the sale; and that Forbes made inquiries as to the title, became dissatisfied therewith, and elected to rescind the sale. The precise date of the agreement mentioned in the complaint, giving Forbes the right to rescind, is not averred, and as no [605] facts are stated by which such agreement can be distinguished from that which is mentioned in the contract of 1847—that contract in effect giving Forbes the right to rescind, if dissatisfied with the title, quality, or situation of the rancho—the complaint will be construed as referring to the agreement contained in the contract. And the sale, which it is alleged Forbes had the right to rescind, is evidently the sale evidenced by the contract of 1847. This conclusion is strengthened by the admission of the plaintiffs, in one of their briefs, that they did not know of the deed of 1848 until after the commencement of the action. The Court finds the making of the contract of 1847, the execution and delivery of the deed of 1848; that there was an agreement contemporaneous with the execution of the deed by which Forbes had the right to rescind the sale; and that he exercised that right, and rescinded the sale. The finding, both as to the agreement reserving to Forbes the right to rescind the sale, and as to the rescission in fact, cannot be sustained for several reasons. The complaint does not aver the agreement reserving the right to rescind, which is found by the Court. FTor does the complaint aver that the sale, which is evidenced by the deed of 1848, was rescinded; but rather that which is mentioned in the contract of 1847, while the finding evidently has reference to the deed of 1848. A finding is useless and idle, unless the facts found are within the issues; and a judgment based upon such facts cannot be sustained. It is very apparent from the finding, and in some degree from the evidence, that the plaintiffs might, with propriety, have obtained leave to amend, so as to have made their attack upon the deed of 1848, instead of alleging that the contract of 1847 was rescinded—the latter after the execution of the deed being no longer a subsisting contract, and being for every purpose, except to show what were its terms, functus officio. The allegation and proof by the defendants of the deed of 1848 ended all [606] question as to the rescission of the contract of 1847. The deed of 1848 not having been attacked, it is impossible, in the present state of the pleadings, for the plaintiffs to maintain the position that any equity in favor of Montenegro arose out of the rescission alleged in the complaint—the rescission of the contract of 1847. Judgment and order reversed, and cause remanded for a new trial.