Northern Pac Co v. Paine
| Decision Date | 10 January 1887 |
| Citation | 119 U.S. 561,30 L.Ed. 513,7 S.Ct. 323 |
| Parties | NORTHERN PAC. R. CO. v. PAINE. 1 |
| Court | U.S. Supreme Court |
W. P. Clough, for plaintiff in error.
E. M. Wilson, for defendant in error.
This case was brought by Paine, the plaintiff below, against the Northern Pacific Railroad Company for taking and converting to its own use 6,180 pine saw-logs, alleged to be his property, and of the value of $10,442. The defenses set up are legal and equitable, a proceeding permissible by the laws of Minnesota, in which state the action was brought.
The legal defenses were two: First, a denial of the ownership of the logs by the plaintiff, and of the conversion of them by the defendant, and of their value beyond $7,832; second, that the logs were cut by the Knife Falls Lumber Company, a corporation of the state, with the knowledge and consent of the plaintiff, and were by that company sold and delivered to the defendant prior to the commencement of this action.
The equitable defense was substantially this: That in 1880 the defendant was the owner of the lands from which the lo § in controversy were cut, and that its land commissioner, under whose charge the sales of its lands were conducted, and his clerk, conspired with the plaintiff to defraud the company by procuring a sale of the lands to be made, nominally to him but really for the benefit of the three, at a price representing only a small fraction of the actual value of the property; that, in execution of this fraudulent purpose, the land commissioner made out a contract of sale, in the form commonly used by the company, promising, for the price named, to convey the lands to the plaintiff; and that the company, upon receiving in its preferred stock at par the amount of the consideration mentioned, and being ignorant of the facts and of the character and value of the lands, and relying upon its commissioner to protect its interests, executed a conveyance of the lands in the usual form to the plaintiff, and placed it in the hands of the commissioner for delivery to him; that the lands thus sold were pine timber lands, and the company was ignorant of their character and value until April, 1881, when it repudiated and disaffirmed the sale, and filed a bill in the circuit court of the United States for the district of Minnesota for its annulment, and the reconveyance to it of the lands, offering at the same time to return to the plaintiff the cost of the preferred stock received, which bill is now pending and undetermined.
The relief prayed in the answer was: First, that the plaintiff take nothing by his action; second, that the alleged purchase of the lands in the name of Paine be adjudged void as against the defendant; third, that an account be taken of the cost of the shares of preferred stock received in payment for the lands, and that, on the repayment by the company of such cost, the plaintiff be decreed to release and reconvey the lands to the company.
The plaintiff filed a replication, denying the allegations of fraud and fraudulent combination stated in the equitable defense, and any license or assent by him to the lumber company to cut the logs.
The case was then removed, on application of the defendant, from the state court to the circuit court of the United States. In that court the equitable defense could not be made available. In the court of the United States, to legal actions legal defenses only can be interposed. If the defendant have equitable grounds for relief against the plaintiff, he must seek to enforce them by a separate suit in equity. If his equitable grounds are deemed sufficient, he may thus stay the further prosecution of the action at law, or be furnished with matter which may be set up as a legal defense to it. Upon the removal, therefore, of the action to the circuit court, the equitable defense could not be considered. It would have been entirely proper for the defendant to have amended his answer by striking out that portion embracing this defense. But he did not take that course, and the plaintiff relied upon its allegations as evidence. If the pleadings are construed as in the state court, there was an admission by them of an important fact in the case; namely, of title by a deed from the former owner of the lands. In the state courts, where an answer sets up several distinct defenses, a denial in one is held...
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