Third National Exchange Bank v. Smith

OPINION OP THE COURT. BOBEBTS, C. J. (after stating the facts as above)— When this case was before this court at a former hearing (17 N. M. 166, 125 Pac. 632), the court had for consideration only the complaint, answer, and demurrer thereto. The answer proceeded upon the theory that the notes and trust deed were illegal, in that they were made in the course of, and.as a part of, a deed of sale and assertion of exclusive possession of vendor and vendee of public lands of the United States, of which appellees had notice, being parties to said illegal transaction. The answer also set up the federal statute (Act Feb. 25, 1885, c. 149, 23 Stat. L. 321, 6Fed. Stat. Ann. 533 [U. S. Comp. St. 1913, § 4997-5002]), and alleged that the parties were holding, using, and occupying said lands in violation of the same. In holding that the answer stated a good defense we said: “If issue should be joined upon the allegations of the answer, and the proof should establish, as it did in the ease of Tidwell v. Chiricahua Cattel Co. [5 Ariz. 352] 53 Pac. 192, that Beinhart held the land in good faith, under conveyance, he would' then bring himself clearly within the doctrine laid down, and his act would not be in contravention of the act of Congress in'question.” Upon this appeal, the only question which requires consideration is • whether the evidence shows that Beinhart had “no claim, or color of title made or acquired in good faith” to the land in question at the time he conveyed the same. If he did not, the judgment must bé reversed; oil the other hand, if he had color of title to the land, made or acquired in good faith, the judgment entered was proper and must be affirmed. The federal statute under which it is claimed Keinhart’s possession and occupancy was illegal reads as follows : • “That all inclosures of any public lands in any state or territory of the United States, heretofore or to be hereafter made, erected, or constructed by any person, party, association, or corporation, to any of which land included withing the inclosure the person, party, association, Or corporation making or controlling the inclosure had no claim or color of title made or acquired in good faith, or an asserted right thereto by or under claim, made in good faith, with a view to entry thereof at the proper land office under' the general laws of the United States at the time ' any such inclosure was or shall be made, are hereby declared to be unlawful, and the maintenance, erection, consfrúction, or control of any ■ such inclosuro is hereby forbidden and prohibited; and the assertion of a right to the exclusive ''use and occupancy*of any part of the public lands '■"'of the United States in any state or any of the territories of the United States, without claim, color of title, or asserted right as above specified as to inclosure, is likewise declared unlawful, and hereby prohibited.” 23 Stat. L. 321. The Supreme Court of the United States, in the case of Cameron v. United States, 148 U. S. 301, 13 Sup. Ct. 595, 37 L. Ed. 459, construed this section of the statute, saying: ■“The act of Congress which forms the basis of this proceeding was passed in view of a practice which had become common in the Western territóries of inclosing large' areas of lands of the United States by associations of cattle raisers, 'who were mere trespassers, without shadow of title to such lands, and surrounding them by barbed-wire fences, by which persons desiring to become settlers upon such lands were driven or frightened away, in some cases by threats or violence. The law was, however, never intended to operate upon persons who had taken possession under a bona fide claim or color of title; nor was it intended that, in a proceeding to abate a fence erected in good faith, the legal validity of the defendant’s title to the land should be put in issue. It is a sufficient defense to such a proceeding to show that the lands inclosed were not public lands of the United States, or that defendant had claim or color of title, made or acquired in good faith, or an asserted right thereto, by or under claim made in good faith, with a view to entry thereof at the proper land office under the general laws of the United States. As the question whether the lands enclosed by the defendant in this case were public lands of the United States depends upon the question whether he had claim or color of title to them, the two 'questions may be properly considered together.” The deed from Potter to Keinhart constituted color oi title, so that the only question of any practical importance for determination is whether Eeinhart’s title was acquired and held in good faith, within the meaning of the act of Congress. The purpose in view by Congress in enacting the statute is clearly pointed out by the United States Supreme Court in the foregoing quotation. It was never intended to operate upon persons who took and held possession of government land under a bona fide claim or color of title, as pointed out by that court. [1] In the same case the court says: “Color of title exists wherever there is a reasonable doubt regarding the validity of an apparent title, whether such doubt arises from the circumstances under which the land is held, the identity of the land conveyed or the construction of the instrument under which the party in possession claims his title.” [2] And in the case of Searl v. School District, 133 D. S. 553, 10 Sup. Ct. 374, 33 L. Ed. 740, Chief Justice Fuller for the court said: “As remarked by Beckwith, J., in McCagg v. Heacock, 34 Ill. 476, 479 [85 Am. Dec. 327] : ‘The good faith required by the statute, in the creation or acquisition of color of title, is a freedom from a design to defraud the person having the better title,’ and ‘the knowledge of an adverse claim to or lien upon, property, does not, of itself, indicate bad faith in a purchaser, and is not even evidence of it, unless accompanied by some improper means to defeat such claim or lien.’ ” [3] Tested by this rule, in connection with the evident purpose of the statute, do the facts in this case bring Beinhart without the rule? It is true he was fully conversant with all the facts regarding the status of his title. He knew that his lands were not within the confirmed portion of the Befugio colony grant, but that the same were within the Marmon & Elkins survey, and claimed by his grantors, and others similarly situated, to have been within the limits of the original grant, as made by the Mexican government. It is probably true that he, as well as the other claimants, were legally precluded from asserting title thereto as against the United States, but, in view of the policy of Congress in disposing of public lands, we do not think that it can be contended that the people who had established homes and settlements upon the allotments made by the commissioners of the grant, which said allotments were of small tracts of land, could be said to be acting in bad faith in holding possession of said lands after the confirmation of said grant and the approval of the survey, .even though their lands were not within the confirmed portions of the same. It has been the policy of Congress to encourage citizens to establish their homes upon, improve, and cultivate land, and increase the material wealth of the country. These people had all acted in good faith, and in full reliance upon the validity of their titles. In the present case much money had been expended in improving the land and bringing it under cultivation. Under the facts in this ease it would be a violent presumption, we believe, to assume that the national government would oust these bona fide settlers from the lands in question, take from them their homes, and deprive them of the usufruct of years of toil and labor. Nor is it any evidence of bad faith on their part that they continued to reside upon the lands, assuming that they knew the legal title to the same rested in the United States government. While Eeinhart may have been within the strict letter of the statute (act of Congress supra!, he was not within its spirit. Smith, the appellant, testified on the witness stand that he or his grantees were now in possession of the land, claiming to own it. While thus holding possession and enjoying the benefits of the property he obtained from Eeinhart, and refusing to restore to him the title and possession of the same, he seeks to avoid liability for the balance due. Fortunately, under the facts in the case, the law will not permit him to do this. The judgment of the trial court will be affirmed; and it is so ordered.. Hanna, J., and Abbott, District Judge, concur.