Wright v. Shumway

MILLER, District Judge. It is contended on the part of the defendants, that the deed of the Shumways to complainants is a contract in violation of the act of congress, approved March 31, 1830 (4 Stat. 392), entitled “An act for the relief of the purchasers of public lands, and for the suppression of fraudulent practices at the public sales of the lands of the United States,” and is therefore void. [I do not think that this is a contract prohibited by this act of congress. The plaintiffs were merchants doing business in the city of New York, and not contemplating the purchase of this land,' or of any interest therein, either at a public sale by the government, or in any other manner, but merely desiring a security for their demand, accepted this deed for the purpose.] 2 1 do not think that this position is tenable. There is nothing in the deed tending to the formation of a combination of purchasers, or to prevent biddings for the land at a government public sale. But the improved portion of the land was not intended by the Shumways to be the subject of a public sale. As settlers and improvers, at the date of the deed, they considered that their right to pre-emption would be secured, which was afterwards perfected through Fitzgerald. The deed is not within the prohibition of the act. Private sales of pre-emption claims of settlers are recognized as valid, by the federal courts. Bush v. Marshall, 6 How. [47 U. S.] 2S4; Thredgill v. Pintard, 12 How. [53 U. S.] 24. At the date of the deed, the Shumways had peaceable and undisturbed possession of the land, with the tacit or implied assent of the United States, and had erected thereon a saw-mill, dwellings, a tavern stand and other buildings; and they had an inchoate right of pre-emption. In consideration of their indebtedness to the complainants, they made the deed as a security. The debt was then payable. A conveyance, covenant, or mortgage, founded on a past consideration, is valid. [But even if the land was to have been purchased by the Shumways at a public sale, there is nothing in this deed to prevent competition in bidding, or to stop these plaintiffs from becoming the purchasers; but on the contrary, the covenant on the part of the Shumways to purchase the land and then to mortgage it, might have induced competition, and required them to bid it off at a much higher rate than the minimum price. [The defendants objected to this deed as void for want of consideration; and also, that' if the debt was a consideration, it was then due and payable, and no time is mentioned for its payment, or for the purchase of the land, or giving the mortgage, and therefore it is vague and uncertain. A conveyance, contract, or mortgage founded on a past consideration is valid.] s When the money is due and payable, and no time is mentioned in the mortgage for its payment or redemption, a foreclosure will be decreed at any time. And a mortgage intended to secure a certain debt is valid in equity, for that purpose, whatever form the debt may assume. [This deed is declared to be for the security of the debt therein specified, with a covenant to purchase the laud and to mortgage it whenever it should be surveyed and offered for sale by the government.] 3 The consideration expressed in the deed is valuable and is sufficient to authorize the court to enforce performance of its covenants. • It is further contended, that the deed is of no validity, the premises not being legally vested in the Shumways. The deed does not purport to be a mortgage of the fee, but nevertheless it may be valid. In equity, whatever property, real or personal, is capable of an absolute sale may be the subject of a mortgage. Therefore, rights in remainder, and reversions, possibilities coupled with an interest, rents, franchises, and chos-es in action, are capable of being mortgaged. 2 Story, Eq. Jur. § 1021. And courts of equity support assignments of, or contracts pledging property, or contingent interests therein, and also things which have no present, actual, potential existence, but rest in mere possibility. Mr. Justice Story, in his opinion in Mitch [701] ell y. Winslow [Case No. 9,673], remarks: [“It seems to me a clear result of all the authorities, that, whenever the parties, by their contract, intend to create a positive lien or charge, either upon real or upon personal property, whether then owned by the assignor or contractor or not, or, if personal property, whether it is then in esse or not, it attaches in equity, as a lien or charge upon the particular property, as soon as the assignor or contractor acquires a title thereto against the latter and all persons asserting a claim thereto under him, either voluntarily or with notice.”] 4 If a mortgage be made of an estate, to which the mortgagor has not a good title, and then he who has the real title conveys to the mortgagor, or his representatives, a good title, the mortgagee will be entitled in equity to the benefit of it, for it will be considered as a graft into the old stock, and as arising in consideration of the former title. Seabourne v. Powel, 2 Vern. 10; Best v. Meddlenurst, 3 Atk. 376; Goodright v. Head, 3 Burrows, 1703; McGinnis v. Noble, 7 Watts & S. 454; [Porter v. Emery, 1 Ch. Bep. 97; Harmer v. Morris, Case No. 6,076; Id., 7 Pet. (32 TJ. S.) 544]. -The deed purports to be a mortgage of all the property or interest of the Shumways then existing, with express covenants “that they will purchase the land and mortgage it to the complainants to secure their indebtedness.” By this express written agreement to make a mortgage, a lien is created on the land, in equity, on the principle that what has been agreed to be performed, shall be performed. Hankey v. Vernon, 2 Cox, Ch. 12; 3 Pow. Mortg. 1049 a, b. An equitable mortgage springs from an agreement, express or implied, that there shall be a lien. The agreement in this ease to purchase the land, and then to mortgage it, is express, and is a specific lien, which will be enforced in equity. Finch v. The Earl of Winehel-sea, 1 P. Wms. 277; Freemoult v. Dedire, Id. 429; Deacon v. Smith, 3 Atk. 323; Tooke v. Hastings, 2 Vern. 97; Lyde v. Mynn, 4 Sim. 505; Laundell v. Berry, Id. 4S1; Met-calfe v. Archbishop of York, 6 Sim. 224; Burn v. Burn, 3 Ves. 573; Legard v. Hodges, 1 Ves. Jr. 477. The same principle also seems to be well settled in the courts of this country. In re Howe, 1 Paige, 131; De-laire v. Keenan, 3 Desaus. Eq. 74; Menude v. Delaire, 2 Desaus. Eq. 564; Dow v. Ker, Speer, Eq. 413; Campbell v. Moseby, 6 Litt. (Ky.) 358; Fleming v. Harrison, 2 Bibb. 171; Biehter v. Selin, 8 Serg. & B. 425; Tyson v. Passmore, 2 Bair [2 Pa. St.] 122; Longworth v. Taylor [Case No. 8,490]. I do not deem it necessary to enter into a minute statement of these cases, and also of many others, as I consider the principle to be settled beyond all controversy. The deed is an equitable mortgage, to be enforced by a bill in equity. The legal title to half the land Is in Fitzgerald, subject to the equity of the Shum-ways, to redeem on or before the day of payment specified in the bonds of Fitzgerald for conveyance. On or before the day of payment, Fitzgerald is obligated to convey to the Shumways, or to their assigns, or to the purchaser under a decree in this case, upon the payment to him of the amount he advanced for the land to the government, with interest, according to the. conditions of the bonds. The Shumways continue to hold actual possession of the land. The bonds of Fitzgerald for deeds, are not conveyances of the land, but obligations, whereupon the Shumways; or their representatives or assigns, may compel, by bills in equity, conveyances of the fee, upon the payment of the purchase money, according to the conditions. The purchase of the land by Fitzgerald, at the instance of the Shumways, the settlers and improvers in possession, and their acceptance of bonds for conveyances, are the same in equity as if they had made the purchases in their own names, with money borrowed of Fitzgerald, secured by mortgage of the land. It is not necessary to determine the question of priority of lien, as the complainants consent to a decree of sale of the two quarter sections entered by Fitzgerald, subject to his lien, according to the conditions of his bonds to the Shumways, the lands being considered quite valuable, and abundant for the payment of both liens. A decree of sale is ordered, according to the prayer of the bill. [The plaintiffs might have come into court with a bill praying specific performance of the contract to mortgage, but such a useless proceeding is not required. The deed under consideration is an equitable mortgage of the premises, and is considered in this court, as to these parties, the same as a mortgage executed and delivered in legal form.) 5 Footnotes [2] [From 2 Am. Law Reg. 20.] [3] [From 2 Am. Law Reg. 20.] [4] [From 2 Am. Law Beg. 20.] [5] [From 2 Am. Law Beg. 20.]