Burns v. Cooper

• Decision Date: 09 August 1905
• Docket Number: 2,223,2,226.
• Citation: 140 F. 273
• Parties: BURNS v. COOPER et al. COOPER v. BURNS.
• Court: U.S. Court of Appeals — Eighth Circuit

140 F. 273

BURNS v. COOPER et al.

COOPER v. BURNS.

Nos. 2,223, 2,226.

United States Court of Appeals, Eighth Circuit.

August 9, 1905

(Syllabus by the Court.)

A sale made by a guardian of the real estate of his wards, in pursuance of lawful authority and in conformity with an order made by the proper probate court having exclusive jurisdiction of the persons of the wards and their estate, is voidable under the laws of the state of Nebraska and the general principles of equity as well, and may be set aside by the wards or any one lawfully claiming under them, if the guardian procures the property to be sold for the purpose of transferring the title thereof to himself, and in the execution of such purpose indirectly becomes the purchaser at his sale.

In such case of actual fraud, the fact that the wards may have received some benefit from the transaction will not estop them or one lawfully claiming under them from avoiding the sale, or from interposing the fraudulent character of the sale in defense of the rights of such wards, or any one claiming under them, in the property.

One who holds the legal title to real property is not guilty of laches which will prevent him from asserting the invalidity of a mortgage thereon, in defense of a suit to foreclose the same, merely because he has not instituted a suit to avoid the mortgage. It is time enough for him to present his objection to the mortgage when it is attempted to be asserted against his legal title.

The holder of a promissory note secured by mortgage on the real estate of the wards so sold and purchased by the guardian executed by the guardian after his purchase, is chargeable with notice of what is shown by the public records affecting the title and security afforded by his mortgage; and this notwithstanding such owner is a bona fide holder for value. And if the public records disclose either the fraudulent character of the guardian's deed found in the chaim of title, or a state of facts from which he should have known of its fraudulent character, he cannot rely on the strength of such title as a foundation for his mortgage security, on the strength of such title as a foundation for his mortgage security.

The common-law rule of disability of a married woman to contract in relation to her real estate is not entirely abrogated, but is in force in the state of Nebraska, except as modified by the Public Acts of that state in relation to real estate and in relation to married women, and, as construed by the entire course of judicial decisions of the Supreme Court of that state, only authorize a married woman to contract with reference to and upon the faith and credit of her separate property.

Prior to the date of the mortgage sought to be foreclosed in this suit, as the statute law of Nebraska was construed by the Supreme Court of that state, the common-law rule as to the legal disability of married women to bind themselves by their contracts or covenants in a joint mortgage made by her husband and herself, for his benefits, covering property in which she held and claimed to hold but a life estate; and this, for the reason that such indebtedness was not created and mortgage made in relation to and upon the faith and credit of her separate property, except to the extent of her life estate therein, and such mortgage binds her separate property to the extent of such life estate, and no further.

As the covenants of a married woman in such joint mortgage do not operate to bind her personally, or her separate estate, they do not operate to estop her from claiming an interest in the property described in the mortgage, lawfully acquired by her after the date of the mortgage freed from its lien.

For opinion below, see 133 F. 398.

This controversy involves the consideration and determination of an appeal and cross-appeal, based upon the same record and arising from the following state of facts:

Prior to the 5th day of July, 1877, one Daniel Foley was the owner of 150 acres of land in Platte county, Neb., occupied by himself, his wife, Mary Foley, and their minor children Jeremiah and Mary E. Foley, as a homestead. On that day Daniel Foley died intestate, the property descending under the laws of the state of Nebraska to the children, share and share alike, subject, however, to the right of homestead and the vested right of dower in the widow; these rights of homestead and dower, in practical effect, amounting to a life estate in Mary Foley. Thereafter, at some time not shown by the record, in the year 1883, the widow, Mary Foley intermarried with one Martin Burns. On the 23d day of August, 1883, Martin Burns was, by the probate court of Platte county, Neb., duly appointed guardian of the persons and estate of the minor children, Jeremiah and Mary E. Foley, and on the 20th day of February, 1884, in due form of law, applied to the probate court for a license to sell the interest of his wards in the real estate, which license was granted, and in pursuance thereof the interest of the minors in the land was advertised and sold to one James Cooney for the sum of $1,100. This sale was reported to the court, and by the court examined and confirmed, on the 20th day of June, 1884; and on the 23d day of June thereafter the guardian, Martin Burns, executed and delivered a guardian's deed to said Cooney. And on the same day, and as a part of the same transaction, Cooney reconveyed the property to the guardian, Martin Burns. These conveyances were on the same day filed for record and recorded in the proper public office in Platte county, Neb. At the time of this sale the minors were aged, respectively, seven and eight years. The guardian, Martin Burns, filed no account with his wards in the probate court until March 14, 1892, in which account, when filed, he charged himself with the sum of $1,000, as purchase money of the land received from James Cooney, June 12, 1884, and interest thereon at the legal rate; crediting himself with the sum of $265.65 paid in satisfaction of a mortgage on the land at the time it was sold, $150 court costs and attorney's fees, $75 doctor bill paid for his ward Mary E. Foley, and $1,250 for keeping, clothing, care, and maintenance of his wards. The purchase of the property by Cooney at the guardian's sale was made at the instigation of the guardian, Martin Burns. Nothing was paid thereon by Cooney. After the intermarriage of Martin Burns and Mary Foley, they, together with the minor children, continued to occupy the premises in question as a home.

On the 4th day of March, 1889, Martin Burns borrowed of the Globe Investment Company (hereinafter called the 'Investment Company') the sum of $1,800, evidenced by the promissory note of himself and wife, and to secure payment of the same he, together with his wife, made, executed, and delivered to the Investment Company a mortgage, with full covenants of seisin, warranty, and against incumbrance. On the same day he also, with his wife, made, executed, and delivered to the Investment Company their promissory note in the sum of $180 and a second or commission mortgage to secure payment of the same. At the time of the making of these mortgages the Investment Company examined the records in the office of the county clerk of Platte county, Neb., the appropriate public office for the filing and recording of instruments and conveyances affecting the title to real estate in said county, and had both actual and constructive notice of all the public records contain. The money represented by the promissory note for $1,800 and the mortgage securing the same was paid to and received by Martin Burns for his own use. On June 9, 1892, one J. Lowell Moore, trustee, the then holder of the commission note and mortgage, brought suit in the district court of Platte county, Neb., and obtained a decree foreclosing the same, subject, however, to the lien of the $1,800 first mortgage. After advertisement of the property for sale by the sheriff in execution of this decree, the minors, Jeremiah and Mary E. Foley, by their next friend, brought suit in the district court of Platte county, Neb., to restrain the sale by the sheriff of their interest in the land, and to cancel and set aside the guardian's deed to James Cooney, the deed from Cooney to their guardian, Martin Burns, and the two mortgages executed by Martin Burns and wife to the Investment Company, alleging as grounds therefor the fraud of their guardian in the sale of their property. To this suit, Moore, as trustee, and the Investment Company, answered, setting forth fully and relying upon the strength of the title obtained by Cooney as purchaser at the guardian's sale, the reconveyance to Martin Burns, and the mortgages based thereon. A trial was had, resulting in a decree enjoining a sale of their interest in the property by the sheriff, canceling the guardian's deed to Cooney and the reconveyance by Cooney to their guardian; also canceling the mortgages executed by Martin Burns and wife to the Investment Company, in so far as they purported to be a lien upon the estate of the minors in the property. This decree stands unreversed and unmodified. Thereafter, the life estate of Mary Burns in the land was sold under the decree foreclosing the second or commission mortgage, subject, however, to the lien of the first mortgage thereon and the rights of the minors in the property. At this sale the life estate, subject to the first mortgage, was purchased by attorneys representing Moore, trustee, who thereafter quitclaimed their interest to appellee, C. C. Muller. May 5, 1896, the daughter, Mary E. Foley, then unmarried and of age, conveyed her interest in the land to one Jeremiah Grady, who thereafter, on March 27, 1897, conveyed this interest to Jeremiah Foley. October 24, 1899, ...