Norris v. Heald

• Decision Date: 23 May 1892
• Parties: NORRIS v. HEALD et al.
• Court: Montana Supreme Court

29 P. 1121

12 Mont. 282

NORRIS v. HEALD et al.

Supreme Court of Montana

May 23, 1892

Appeal from district court, Madison county; THOMAS J. GALBRAITH Judge.

Action by Alexander Norris against James D. Heald and others, to foreclose three mortgages given to secure payment of promissory notes. Judgment for defendants, on plaintiff's demurrer to answer. Plaintiff appeals. Reversed.

Luce & Luce, for appellant.

BLAKE C.J.

This action was commenced to foreclose three mortgages which were given to secure the payment of certain promissory notes. The court below, in passing upon a demurrer to the answer decided that the case of Bass v. Buker, 6 Mont. 442 12 P. 922, was applicable to the issue of law raised by the pleadings, and judgment was entered for the mortgagors. It appears from the record that Charles P. Bradley, Sr., made in the year 1877, a pre-emption filing upon the tract of land which is described in the pleadings and mortgages. Bradley died in the year 1879, and the answer alleges that "the final proof in said described premises was made by said Jennette C. Kelleher, as administrator for the estate of Chas. P. Bradley, deceased, for the heirs of said Chas. P. Bradley, Sr., deceased, and not otherwise, and patent duly issued to them on the 30th day of January, 1885; and that the said defendant Jennette C. Kelleher made and executed the said mortgage mentioned in said first cause of action prior to the issuing of the final receipt for said pre-emption claim." These allegations of facts must be treated as admitted upon this hearing. The first mortgage was executed November 23, 1880, by Jennette C. Bradley, the widow of Charles P. Bradley, Sr.; the second mortgage was executed February 21, 1881, by Jennette C. Bradley and Darwin J. Bradley a son of Charles P. Bradley, Sr.; and the third mortgage was executed February 26, 1881, by Jennette C. Bradley. At some time, which is not mentioned in the pleadings, Jennette C. Bradley married John C. Kelleher. An examination of the transcript in Bass v. Buker, supra, which is filed with the records of this court, and the report of the case, shows that Buker filed, March 5, 1874, his declaratory statement of a pre-emption claim to certain lands; that he executed, September 16, 1881, a mortgage thereon to Bass; that he sold, January 17, 1883, his interest in the premises to Fruen, and delivered the possession thereof; and that Fruen disposed of the same, August 7, 1883, to Warner, who filed thereon as a pre-emptor, and obtained, February 18, 1884, his final receipt from the United States. Bass, in September, 1884, brought an action to foreclose the mortgage against Warner and Buker. It will be observed that Buker did not perform any act to secure his title from the government after the filing of his claim in March, 1874, and that he abandoned the same in the year 1883, and that the rights of Warner were derived from the United States, and were not connected in any manner with Buker. It was adjudged in Bass v. Buker, supra, that the mortgage could not be enforced, by reason of the provisions of section 2262 of the Revised Statutes of the United States. Two sentences of this section should be examined. The pre-emptor is required to make oath, among other things, that "he has not settled upon and improved such land to sell the same on speculation, but in good faith, to appropriate it to his own exclusive use; and that he has not, directly or indirectly, made any agreement or contract, in any way or manner, with any person whatsoever, by which the title which he might acquire from the government of the United States should inure in whole or in part to the benefit of any person except himself." It is further provided that "any grant or conveyance which he may have made, except in the hands of bona fide purchasers for a valuable consideration, shall be null and void, except as provided in section twenty-two hundred and eighty-eight." It is evident that Buker did not have any interest in this land, in the year 1884, which could be incumbered by the mortgage, and the conclusion of the court is undoubtedly sound. The court did not discuss these propositions; and the opinion is confined solely to the effect of the section, supra, upon the mortgage. The rule is asserted therein, without any qualification, that a mortgage made by a settler upon land which is subject to entry under the pre-emption laws, before the issuance of the final receipt, is a grant or conveyance within the terms of the section, supra, and is therefore null and void. We have reconsidered Bass v. Buker, supra, and cannot yield our assent to this principle, which is upheld in the opinion. We are aware of the conflict in the authorities upon the construction of this section, and will present the different views. The supreme court of the United States has commented upon and explained the object of this legislation. In Myers v. Croft, 13 Wall. 291, Mr. Justice DAVIS, for the court, said: "It had been the well defined policy of congress, in passing these laws, not to allow their benefit to inure to the profit of land speculators, but this wise policy was often defeated. Experience had proved that designing persons, being unable to purchase valuable lands, on account of their withdrawal from sale, would procure middlemen to occupy them temporarily, with indifferent improvements, under an agreement to convey them so soon as they were entered by virtue of their pre-emption rights. When this was done, and the speculation accomplished, the lands were abandoned. This was felt to be a serious evil, and congress, in the law under consideration, undertook to remedy it by requiring of the applicant for a pre-emption, before he was allowed to enter the land on which he had settled, to swear that he had not contracted it away, nor settled upon it to sell it on speculation, but, in good faith, to appropriate it to his own use. *** The object of congress was attained when the pre-emptor went, with clean hands, to the land office, and proved up his right, and paid the government for his land." In Quinby v. Conlan, 104 U.S. 420, Mr. Justice FIELD refers to Myers v. Croft, supra, and says: "The act of congress forbids the sale of pre-emptive rights to the public lands acquired by settlement and improvement. The general pre-emption law declares that all transfers and assignments of rights thus obtained prior to the issuing of the patent shall be null and void. This court held, looking at the purpose of the prohibition, that it did not forbid the sale of the land after the entry was effected,--that is, after the right to a patent had become vested,-but did apply to all prior transfers. The policy of preventing speculation through the instrumentality of temporary settlers would otherwise be defeated."

It is not alleged in the answer that the mortgages were executed for the purpose of aiding speculators, or to cause the title which might be acquired from the United States to be assigned or transferred, or inure to the benefit of any person except the mortgagors. The language of the opinions in Myers v Croft, supra, and Quinby v. Conlan, supra, does not contemplate a mortgage, or an instrument of like character. This question was not investigated in these cases, and has not been directly determined by the supreme court of the United States. The decisions of the department of the interior and the general land office, relating to this matter, have been uniform during the past 10 years. Mr. Teller, the secretary of the interior, rendered, April 24, 1882, in Larson v. Weisbecker, 1 Dec. Dep. Int. 422, a decision, and construed the section supra. It is therein said: "I am aware that the former rulings of your office and of this department, following the precedent of an early decision, have held that an outstanding mortgage given by a pre-emptor upon the lands embraced in his filing defeats his right of entry, upon the ground that such mortgage is a contract or agreement by which title to the lands might inure to some other person than himself. A careful consideration of this section leads me to a different conclusion, and to the opinion that, unless it shall appear under the rules of law applicable to the construction of contracts, or otherwise, that the title shall inure to another person, it does not debar the right of entry; and that the mere possibility that the title may so result, as in the case of an ordinary mortgage, is not sufficient to forfeit the claim. *** The statute under consideration requires from a pre-emptor, in my opinion, in order to the defeat of his right of entry, a contract by force of which title to the land must vest in some other person than himself; and it must appear that such was his intention at the time of making it. If, on the contrary, the mortgage was a mere security for money loaned, and the contract does not necessarily divert the title from him, it was not a contract or agreement within the meaning of section 2262." This ruling was followed, October 11, 1887, in Appeal of Ray, 6 Dec. Dep. Int. 340, wherein it is said: "There is no law or ruling of this department now in force that prohibits a pre-emptor who has complied with the requirements of the pre-emption law, in good faith, from mortgaging his claim to procure money to prove up and pay for his land." To the same effect is Haling v. Eddy, 9 Dec. Dep. Int. 337, which was decided September 7, 1889. The reasons for this ruling of the department concerning the public lands are that the pre-emptor made a conditional alienation, when he might have executed an absolute conveyance, if his purpose had been different; and that by the payment of the loan the title could not inure to the benefit of the mortgagee. In the case at bar the patent had been issued to the...