Rannels v. Rowe

HOOK, Circuit Judge, after stating the case as above, delivered the opinion of the court. The deeds to the railroad company, under which complainant claims, were executed by three executors and they contained covenants of warranty by them in their representative capacities. One of the ex [299] ecutors was the widow of the deceased owner of the lands and under the will she took a half interest therein. The deeds were void as executors’ conveyances because no authority to make them had been procured from the court having jurisdiction; but they nevertheless operated as conveyances of the widow’s individual interest. This results from the doctrine of estoppel. A trustee acting within his powers does not render himself liable on his contracts and conveyances ; but whenever he exceeds his powers and undertakes to transfer rind convey without authority he becomes personally answerable to the grantee on his covenants. Coe v. Talcott, 5 Day (Conn.) 88, 92; Morris v. Watson, 15 Minn. 212 (Gil. 165); Tarver v. Haines, 55 Ala. 503; Allen v. De Witt, 3 N. Y. 276, 280; Brown v. Edson, 23 Vt. 435; Poor v. Robinson, 10 Mass. 131; Heard v. Hall, 16 Pick. (Mass.) 457. Another executor who joined in executing the deeds was a sou of the testator and also a devisee, but by reason of an advancement made to him which the will required to be adjusted it does not affirmatively appear that he took any interest in the lands upon the settlement of the estate. The other devisees not being parties to the deeds were not concluded by them, and their interests, aggregating one-half of the whole, afterwards became vested in the defendants Boice and Sharpe by sundry conveyances. The remaining part of the controversy is therefore confined to the half interest in the lands which formerly belonged to the widow. A most important question in the case is that of the character of the executors’ deeds — whether they were upon conditions precedent that were never performed or upon conditions subsequent that required affirmative action to create a forfeiture of the estate conveyed. In each deed the consideration is recited as being a specified sum of money, one-fourth in first mortgage bonds and three-fourths in the capital stock of the railroad company, paid by it, and “in consideration of the building and completion of said railroad in three years from date hereof.” At the end of the habendum clause is this: •‘Provided that said railroad shall be built and completed within the three years after date hereof.” The warranty clause concludes with these words: “Subject only to the conditions that if said railroad be not built and completed within three years from date hereof said lands shall revert to Edmund MeGehee’s heirs and administrators and this deed to be void.” The defendants contend that the foregoing conditions are precedent, and that as the railroad was not built and completed within the time limited no estate ever passed from the widow to the railroad company. The complainant’s claim is that the conditions are subsequent and that therefore the title passed and vested in the grantee when the deeds were delivered subject to a right of forfeiture which was not asserted in time. In a condition precedent no title passes or vests until it is performed, while a condition subsequent operates by way of defeasance of a title that has once vested. Davis v. Gray, 16 Wall. 229, 21 L. Ed. 447. Various technical rules have been suggested for determining whether a condition in a deed or devise is of the one kind [300] or the other, but the true test is that of intention which is to be-gathered from the context of the instrument read in those lights which are properly employed in the construction of writings. In Finlay v. King’s Lessee, 3 Pet. 346, 7 L. Ed. 701, Chief Justice Marshall said: “The same words have been determined differently and the question is always a question of intention. If the language of the particular clause or of the whole will shows that the act on which the estate depends must be performed before the estate can vest the condition is of course precedent; and unless it be performed the devisee can take nothing. If, on the contrary, the act does not necessarily precede the vesting of the estate but may accompany or follow it, if this is to be collected from the whole will, the condition is subsequent.” To the same effect 2 Washburn on Real Property, *446. The following have been held as exhibiting instances of conditions subsequent: A conveyance to a railway company upon condition that it should construct a certain length of road within a given time and upon default that the granted estate should revert (Schlesinger v. Railway, 152 U. S. 444, 14 Sup. Ct. 647, 38 L. Ed. 507) ; a conveyance upon condition that a county should build a jail upon the property within two years and so occupy it forever (Skipwith v. Martin, 50 Ark. 141, 150, 6 S. W. 514); a grant to a railway company of a right of way upon the express condition that it should construct its road within a time limited (Nicoll v. Railroad, 12 N. Y. 121) ; a conveyance upon the express understanding and condition that an institution be permanently located on the land within a }ear • and in case of failure the title should revert to the grantors upon repayment of the purchase money. Mead v. Ballard, 7 Wall. 290, 19 L. Ed. 190. The lands in controversy were conveyed to the railroad company to aid it in constructing its railroad and part of the consideration was in the stock and bonds of the company which the deeds recited as having •been paid. These securities must have been regarded as possessing value and in the very nature of such things it cannot be assumed that their value wholly depended upon the completion of the road within three years. It is reasonable to infer that the bonds of the company, part of which went to the grantors as consideration, were secured upon other property than the lands in question. That it afterwards turned out that the bonds were of little or no value is hot important. The intention of the parties which controls is the intention existing when the deeds were executed, not that of a later period. The question is not affected by the disaster which finally overtook the grantee. The fact that other considerations than the conditions inserted in the deeds were given to and received by the grantors tends to show a purpose to pass the title subject to a right of subsequent defeasance upon the failure of the grantee to perform the conditions within the time limited. Again, when the lands were conveyed they were subject to tax claims held by the state of Arkansas. In order to encourage the building of railroads and thereby promote the development of its resources the state, through an act of its Legislature, offered to remit and discharge its claims if the owners of the lands so incumbered [301] would donate or subscribe them in aid of such an enterprise. In this case the state officer designated by the statute was furnished with a list of the lands as having been so subscribed and there was at least a suspension for some years of the claims of the state. This was an additional consideration moving from a third party. Moreover, the language of the conditions at the end of the warranty clauses in the deeds is plainly inconsistent with the contention that such conditions are precedent. Express provision was made that the lands should revert if the road was not built or completed within three years. A title that has never passed cannot be said to revert. While the other recitals in the deeds are of more doubtful import they are not inconsistent with the conclusion which we have reached that all things considered the conditions were intended to operate if unfulfilled as a ground of subsequent forfeiture of an estate conveyed and that performance need not precede the vesting of the title. It is also contended that assuming the conveyances to the railroad company to have been upon conditions subsequent, nevertheless the conditions were not complied with, the right of forfeiture was seasonably asserted and the estate of the company thereupon came to an end. It is true that the conditions were not performed within the stipulated period, but is it also true that the estate was terminated before the railroad was finally completed? A breach of condition subsequent does not per se produce a reversion of the title. The estate continues in the grantee until the proper step has been taken to consummate a forfeiture, and this requires a re-entry or some act that may be considered as a lawful substitute therefor. Ruch v. Rock Island, 97 U. S. 693, 696, 24 L. Ed. 1101 ; Schulenberg v. Harriman, 21 Wall. (U. S.) 44, 63, 22 L. Ed. 551. .The grantor may waive a breach of the condition entirely or postpone compliance therewith and his consent to a continuance of the estate in the grantee is presumed from his silence and inactivity. To effect a forfeiture there must be some affirmative, positive act which manifests the intention of the grantor. It may be done'by re-entry upon the lands conveyed, by the declaration of a forfeiture or by the commencement of a suit for that purpose. There was no re-entry in this case; the lands were wild and unoccupied and continued so. No suit was brought in court involving that question prior to the completion of the railroad. The only thing that challenges our attention in this connection is the execution by the devisees of McGehee of the deeds under which the defendants claim. But this alone is not sufficient. The company was not charged by the registry act with notice of the deeds recorded after it secured title and put its own deeds upon record. Birnie v. Main, 29 Ark. 591, 595. The deeds were not brought to the attention of the railroad company, no declaration of forfeiture in connection therewith was made, and the company was allowed to proceed until, by virtue of its contract, a railroad was finally constructed and completed as originally contemplated, though not within the time. An entry or an equivalent act designed to work a forfeiture is not a mere matter of form which may be dispensed with; it is regarded as being of substance because intended to destroy an estate (Tallman v. Snow, 35 [302] Me. 342), and whenever acts or words are relied upon as a substitute for a re-entry upon the land they must be of such' a character as to distinctly admonish the grantee that thenceforth there is no waiver of his breach of condition and that his title is at an end. Willard v. Henry, 2 N. H. 120, 122. An intention to forfeit formed in the mind but undeclared is ineffectual. And for the same reason is a forfeiture declared to a third person but not communicated to the grantee. These rules are especially applicable where the condition prescribed is the doing of something within a time limited and the grantee after-wards proceeds and does it or causes it to be done in ignorance of the grantor’s purpose to assert a forfeiture. In such a case the grantor should be held upon plain principles of justice to have waived the temporary default, as was his privilege. Three other matters require brief notice. The Arkansas statute authorizing an owner of an interest in lands in the adverse possession of another to sell and convey the same (Sand. & H. Dig. § 701) was not intended to change the rule requiring entry or an equivalent act to forfeit an estate upon condition subsequent. Such provisions are common in the legislation of the states and their purpose is to abrogate an ancient rule of the common law which has no relevancy to the subject under discussion. The contention that the railroad company was not a corporation, and therefore took no title because the laws of Arkansas were not in some respects complied with in its organization cannot be sustained. It is not for the defendants or those under whom they claim and who dealt with the corporation as such to make the objection. Town of Searcy v. Yarnell, 47 Ark. 269, 281, 1 S. W. 319. Equally untenable is the defense that the railroad company and its grantees were guilty of laches in failing to assert their claims for so many years. The lands were wild and unoccupied, and. there was no occasion for any action on their part, o Moreover, the delay in the adverse assertion of the conflicting claims was mutual. Penrose v. Doherty, 70 Ark. 256, 261, 67 S. W. 398. It follows from the foregoing conclusions that the complainant is entitled to a decree quieting his title to an undivided half interest in the lands in controversy. The decree of the Circuit Court is therefore reversed, with directions to enter one in accord with this opinion.