« ForrigeFortsett »
passed the entire title, though the suit had been filed in a single jurisdiction. A modern method of accomplishing the same end has grown into favor, and that is to have identical decrees entered in each jurisdiction. The legal effect of this is to confirm the decree ordering the sale of the line within each jurisdiction as one entire line. The result of such confirmation is to make a unit instead of a fragmentary sale, and the title of the purchaser to the whole property is complete under each identical decree. The same end is reached that would have resulted from a decree requiring a deed from all having any interest in any part of the line. This method of selling a railroad lying within two or more states obviates many of the objections to the plan adopted in Muller v. Dows, and makes it possible to make a unit sale where either the mortgagor or some trustee has not personally appeared, and could not be required to make a deed. It is believed to be a plan now generally adopted, the operativeness of which I have never before heard questioned. It is next said that the Indiana mortgagees have waived the benefit of the Ohio statutory lien on the Ohio Division by failing to set it up in the foreclosure cases. By this must be meant that this additional security was not asserted in the original pleadings, for its assertion now is an assertion of the claim in the foreclosure proceedings, so soon as it became material to claim the benefit of it. The question as to the existence of any such lien had been decided adversely to the lienors by the supreme court of the United States in the case of Railway Co. v. Ham, reported in 114 U. S. 587, 5 Sup. Ct. 1081, and decided in 1885. That was supposed to be a class suit, and to be conclusive upon all who might have asserted such a lien. The foreclosure proceedings were begun in February, 1887. During the pendency of these suits the Ohio supreme court decided the Compton Case, and refused to follow the Ham decision in the construction of the Ohio Statute. This decision was made in 1888. Subsequently, Compton was made a defendant, as a person claiming some interest or lien upon the property sought to be sold free from all incumbrance. He had not answered or filed any pleadings when the foreclosure decree was made, and a sale ordered reserving his rights. When he did plead, and asserted this lien, it was found not to be a lien exclusively for his benefit, but one which inured to the equal benefit of all who are unpaid creditors of the Toledo & Wabash Railway Company. Though he sought to avail himself of it for his exclusive benefit, yet this court is agreed in holding that the lien must inure in behalf of all within the benefits of the statute. The contention that the Indiana bondholders are entitled to share in the benefits of this lien and of Compton's redemption is presented, not in a new or subsequent suit, nor in a collateral proceeding, but in the very suit in which the existence of a class lien is declared, and a remedy for its enforcement is to be awarded. When the circuit court refrained from deciding any question involved in Compton's assertion of this lien, and reserved jurisdiction to thereafter adjudge his rights in their relation to all the other parties to the proceeding, it necessarily operated as a reservation of the rights of all others who were defendants, who might have an interest under the class lien asserted by him. If, when the foreclosure sale had been made, it had appeared that in the pro rata of the unit price assignable to the Indiana Division there was a deficiency in the fund applicable to the Indiana divisional bonds, and an excess in the fund assignable to the Ohio Division, after paying the Ohio bonds, the question would have arisen as to the rights of the unpaid Indiana mortgagees in this excess. No such excess appeared, and no such question was therefore material. But if the Ohio Division is to be separately redeemed by Compton, for the benefit of all entitled to share therein, the question of who are the beneficiaries under the lien does become relevant. No redemption, entire or partial, can be had that does not involve—First, an adjudication that the foreclosure was defective, and the purchaser's title subject to redemption; second, a determination of the rank and rights of the statutory lienors in relation to the rank and rights of mortgagees, both junior and senior, to the lien under which redemption is to be had; and, finally, an ascertainment of the beneficiaries under the redemption. Now, if the purchaser's title is defective, it is entitled to stand as the equitable assignee of the debts secured under the mortgages foreclosed, as well as of the security for those debts. If Compton succeeds in establishing that the Indiana bonds have a double security, the second being a result of the successful assertion of a lien upon the Ohio Division subordinate only to the Ohio divisional mortgages, then the equitable assignee of the Indiana bonds is entitled to the benefit of this second security. It may be accountable to the mortgagees for all it shall realize after reimbursing its own expenditure, but that is a matter which does not concern Compton. In any view of the case, I am clearly of opinion that, if Compton is accorded a separate redemption of the Ohio property, it must inure to the equal benefit of the unpaid second Indiana mortgagees. 8. If I am right in regarding Compton's remedy as redemption, and that in determining what he shall redeem the remedy accorded him by the Ohio court cuts no figure, then I think it must follow that the Indiana decree, disallowing separate redemption, and requiring him to redeem all or none, is a conclusive adjudication of the question, and may be relied upon to sustain the motion to dismiss or affirm. The parties and the subject-matter were the same. That court had jurisdiction over both, through the power reserved by the Indiana decree over Compton and the purchaser. If this court, reviewing the decree of the circuit court for the Northern district of Ohio, has the authority to consider the question involved in the insistence for an entire redemption, then the Indiana circuit court could, under like pleadings, and a like reservation of jurisdiction over Compton's lien, grant him proper equitable relief. This failure to appeal from the decree requiring him to redeem all or none is conclusive as an estoppel. Finally, I think that whether Compton redeems the entire road covered by his lien, or a part thereof, the purchaser is not subject to an accounting for rents and profits. The liability to an account depends upon whether the purchaser was in possession as first mortgagee. “In order,” says Mr. Pomeroy, “that these special rights and liabilities may arise from his possession, it must be a possession taken and held by him as mortgagee.” Pom. Eq. Jur. § 1215; Jones, Mortg. §§ 1114–1121. The liability for an accounting is only to the mortgagor, or a subsequent mortgagee; and it proceeds upon the theory that the possession was as trustee for the mortgagor, and therefore accountable for rents in equity. Pom. Eq. Jur. § 1218; Jones, Mortg. § 1115. The mortgagor in possession is therefore not accountable while suffered to remain in possession by a mortgagee. Neither would a mortgagee who entered under a purchase of the mortgagor's equity of redemption be accountable to a junior mort. gagee. Gray V. Nelson, 77 Iowa, 63, 41 N. W. 566. Nor could a Senior mortgagee call a junior mortgagee to an accounting, for he has no right to redeem the junior incumbrancer, and therefore no right to hold him to an accounting. A junior mortgagee in posses. sion would be responsible alone to the mortgagor, or to a lienor junior in rank. Jones, Mortg. § 1116. If, therefore, the purchaser's possession was as purchaser or assignee of the mortgagor, or as a junior incumbrancer, it is not liable to an accounting to Compton. In fact, its possession was under a judicial foreclosure which operated to bar and foreclose mortgages both junior and senior to the lien of Compton, and to forever bar the mortgagor's equity of redemption. That decree was not void, for it expressly foreclosed all those rights, titles, and equities, subject to the lien of Compton, if any he had. Where the purchaser's title and possession depend on a void decree, they have been held to operate as an assignment of the mortgage sought to be foreclosed; and in such case the purchaser's possession is that of a mortgagee by assignment, in possession, and accountable to One entitled to redeem. Id. § 1118. Most of the cases in which a senior mortgagee has been held liable to an accounting have either been because possession was taken before foreclosure, or where the mortgagor had not been barred. If the purchaser in possession has failed to obtain the mortgagor's title, for any reason, he is liable to account to the mortgagor, when he seeks redemption, or to a junior incumbrancer. All that is said in Russell v. Southard, 12 How. 153, concerned an accounting to the mortgagor, and a redemption by him. The purchaser's title is perfect, save in so far as Compton's lien is to be regarded as unforeclosed. Holding such a title, it cannot be said that the foreclosure sale operated only as an assignment of the mortgages foreclosed. Its effect was to confer an absolute legal title, subject to an intermediate lien, the place of which was to be determined with regard to its relation to other lienors. Jones, Mortg. § 1395. The cases of Catterlin v. Armstrong, 79 Ind. 514, and Renard v. Brown, 7 Neb. 449, are upon the very point now considered. The reasoning is sound, and entirely meets my approval. The decree on this point should be affirmed, as well as in all other respects, save only as so modified as to hold that Compton's redemption must inure to the benefit of all other creditors of the same class.
SOUTHERN PAC. R. CO. W. BROWN et al.
PUBLIC LANDS—RAILROAD LAND GRANTs–RESERVATIONS—MEXICAN GRANTs. In cases of Mexican grants by specific boundaries, lands claimed by the granteeS to be Within those boundaries are not public lands, Within the operation of a railroad land grant, if, at the date of the latter, the question of the true location of the boundaries of the private grant is pending and undetermined.
Actions by the Southern Pacific Railroad Company against David R. Brown and others, and Nathaniel Bray and others, to determine the title to land.
Joseph D. Redding, for plaintiff.
ROSS, Circuit Judge. There is but a single question in these cases, which have been submitted together and upon the same briefs, and that is whether the lands which have been patented to the defendants Brown and Bray, respectively, passed by or were excluded from the grant made by congress to the complainant com: pany March 3, 1871 (16 Stat. p. 573). Confessedly, they are parts of odd sections, and are situated within the primary or 20-mile limits of that line of complainant's road, as located, built, and accepted, that the grant of March 3, 1871, was made to aid; and, if they were public lands at the time that grant took effect, they undoubtedly passed to the railroad company, and complainant is entitled to the relief sought. But, on the part of the respective defendants, it is claimed that they were not then public lands, because then included within the claimed limits of a Mexican grant called “Jurupa.” The evidence shows that the grant of that rancho was made on September 28, 1839, by the then governor of California, to Juan Bandini, to whom juridical possession was given by the proper officer on December 5th following. The grant was one by specific boundaries, and the claim to it was presented to the board of land commissioners created by act of congress for the settlement of private land claims in California, and by that board confirmed October 17, 1854, and afterwards, on appeal, by the United States district court. That decree of confirmation became final by dismissal of the appeal from it, and a survey of the grant, under the instructions of the United States surveyor general for California, followed in June and July, 1869. It was made by Deputy United States Surveyor Reynolds, and included the lands here in controversy. It was made under and by virtue of the provisions of the act of congress of July 2, 1864 (13 Stat. 356), which directed the surveyor general, in surveying claims of the character mentioned, to follow as closely as practicable the decree of confirmation, where such decree designated the specific boundaries of the grant. Reynolds’ survey was approved by the United States surveyor general for California, February 26, 1872, but on May 13, 1876, was rejected by the commissioner of the general land office, whose action in that particular was approved by the secretary of the interior February 21, 1877, and a new survey of the grant ordered. That new survey was made in November, 1878, by William Minto, whose survey met with the approval of the department of the interior, and upon it a patent was issued by the government May 23, 1879. As surveyed by Minto and patented, the lands in controversy were excluded from the grant, but the evidence shows that, not only at the time the complainant's grant took effect, these lands were embraced by the survey of Reynolds, which then stood approved by the United States surveyor general for California, but that, for years before, they were claimed by those holding under the Mexican grant title to be within the boundaries of the rancho. Moreover, the evidence shows that another and adjoining tract of land, called El Rincon, was granted by the same governor to Bandini on the 28th day of April, 1839, which grant, having been confirmed by the United States board of land commissioners, was, on appeal to the United States district court, at its December term, 1856, confirmed, as an addition to the Rancho Jurupa, and in the decree of confirmation was described as bounded on the east by that rancho. It is true that, as finally surveyed and patented by the government of the United States, the two ranchos do not join, and that it was determined by the officers of the land department that there was some public land lying between them, part of which public land, after being surveyed, the defendants, Brown and Bray, respectively, were allowed to enter as pre-emptors. But this determination of the of: ficers of the land department respecting the true boundaries of the Mexican grants, while conclusive upon those holding under them, did not become final until long after the grant to the complainant railroad company made by the United States took effect. At that time the lands here in controversy were not only claimed by the holders under the Mexican grant Jurupa to be within the boundaries of that rancho, but they were then included within those boundaries by a survey made under the sanction of the government of the United States, which survey had met the approval of its surveyor general for the state of California. They were not, therefore, “public lands,” within the meaning of the grant to the complainant railroad company. My views in respect to this point were fully expressed in the case of U. S. v. Southern Pac. R. Co., 45 Fed. 604—609, and subsequent reflection has but confirmed me in them. In brief, they are these: While the final result of the proceedings respecting the Jurupa grant was a conclusive determination that, as a matter of fact, none of the lands in controversy ever were within the true lines of that grant, they also show beyond doubt that they were claimed by the grant claimants to be within its boundaries, and that such claim was made and maintained at the time of the congressional grant to the Southern Pacific Railroad Company of March 3, 1871. That fact is determinative of the question as to whether the lands in controversy were embraced by the grant to the complainant. It is not the validity of such claim, but the fact that it was made, that excludes the lands embraced by it from the category of public lands,