Pittsburg Mortgage Inv. Co. v. Sneed

• Decision Date: 25 July 1916
• Docket Number: 7545.
• Parties: PITTSBURG MORTGAGE INV. CO. ET AL. v. SNEED.
• Court: Oklahoma Supreme Court

159 P. 515

60 Okla. 98

PITTSBURG MORTGAGE INV. CO. ET AL. v. SNEED.

No. 7545.

Supreme Court of Oklahoma

July 25, 1916

Syllabus by the Court.

A mortgage, executed by an entryman upon the lands acquired by him under the provisions of the United States statute for the homesteading of public lands, being a voluntary act, the consideration therefor being money advanced to enable the entryman to commute his land and the balance thereof being paid after the final receipt was issued to him, may be enforced by a sale of said lands for the satisfaction of the debt thus created, and this is true, even though the final certificate issued to the entryman was afterwards canceled and he was ordered to make other proof which he did and received a final certificate and a patent to said lands. It is held that the title thus acquired by him inured to the benefit of the first mortgagee, who furnished him the money with which to commute his land, and other money after the first final certificate was issued to him.

The cases of Stark v. Glaser, 19 Okl. 503, 91 P. 1040 and Stark v. Fallis, 26 Okl. 358, 109 P. 66, in so far as the same are in conflict with this opinion, are hereby overruled.

Commissioners' Opinion, Division No. 3. Error from District Court, Texas County; W. C. Crow, Judge.

Action by Edna B. Sneed against the Pittsburg Mortgage Investment Company and another. Judgment for plaintiff, and defendants bring error. Reversed and remanded, with directions.

Nelson Case, of Oswego, Kan., for plaintiffs in error.

John L Gleason, of Guymon, for defendant in error.

HOOKER C.

Prior to May 16, 1906, Clay S. Mason made settlement as a homesteader on the land in controversy here, and continued to reside on said land from the time of his settlement until December 30, 1913. A short time prior to March 30, 1909, the Pittsburg Mortgage Investment Company agreed to loan said Mason $500, of which sum enough should be paid to him at once to enable him to make commutation of his original settlement to a cash entry of the land settled upon and the balance of said amount was to be paid to him as soon as he had made his proof and received his receipt. This loan was to be represented by a promissory note and secured by a first mortgage upon the land, which mortgage was to be executed by Mason as soon as entry had been made. Thereupon the company paid Mason something over $200, which sum was paid by him on March 30, 1909, to the land office at Woodward, Okl., for the entry of said land, and the said Mason did then and there receive from the proper officers thereof a certificate of purchase or final receipt, which he had at once recorded. On April 1, 1909, Mason executed to the Pittsburg Mortgage Investment Company his note and mortgage in the usual form on the real estate involved here, which mortgage was recorded in the office of the register of deeds of Texas county, and was afterwards sold to the other defendant here. Thereafter Mason sold and conveyed said real estate to one L. B. Sneed, who as a part of the consideration therefor agreed by a provision inserted in the deed of conveyance to assume and pay the aforesaid debt to the Pittsburg Mortgage Investment Company. At the time of the execution of the note and mortgage by Mason to the Pittsburg Mortgage Investment Company it was believed by Mason and the company that the entry of said Mason of said land was valid, and that he (Mason) would, in due time, receive a patent therefor, and that he had the absolute right to mortgage the land as he was doing, and neither party knew of any defect in the entry proceedings but acted in good faith in the transactions.

In May 1910, the Commissioner of the General Land Office directed the cancellation of Mason's certificate of entry because of the failure upon the part of Mason to strictly comply with the rules of the Land Department, but the Commissioner expressly ordered that his original entry should remain in full force, and that he should be allowed to complete settlement and proof thereunder, which he did on July 10, 1913, by making proof at the government land office and complying with all the requirements of the Land Department, which proof was accepted as sufficient and upon which another certificate of entry was issued to him for said land, and on April 13, 1914, a patent was issued to said Mason for said land upon said entry.

On December 30, 1913, after the second certificate of entry was issued to Mason, but before the patent was issued to him, Mason conveyed the land to Edna B. Sneed, the wife of the aforesaid L. B. Sneed, "subject to any legal lien existing at this time," and the deed of the said Mason was acknowledged before L. B. Sneed, the husband of Edna B. Sneed, as a notary public. Thereafter Edna B. Sneed commenced suit in the district court of Texas county, alleging Mason's original settlement, final proof and certificate of entry, the execution of the note and mortgage thereon, the subsequent cancellation of the certificate, Mason's second proof and second certificate of entry to him and conveyance to her and a patent to Mason, and she alleged that the mortgage thus executed by Mason to the Pittsburg Mortgage Investment Company was void and constituted a cloud on her title and asked to have the same canceled.

The answer here sets forth the facts stated above and sought a lien upon the real estate to secure said mortgage, but a demurrer was sustained thereto, and from such ruling an appeal is had to this court.

It will be seen from the facts alleged that the Pittsburg Mortgage Investment Company furnished to Mason the money with which to make commutation and pay to the government the amount required by it from him before the government would issue a patent to Mason. Mason paid this money to the government, and received from it a final receipt, and after the final receipt was issued to him the Pittsburg Mortgage Investment Company furnished him $300 more money, and accepted his note secured by a mortgage upon this real estate. Thereafter, for some reason the government canceled the final receipt, but did not cancel the original entry, but permitted Mason to file additional proof in order that he might receive his final receipt, which Mason did, and a final receipt was issued to him and subsequently a patent also.

The validity of mortgages upon public lands executed by claimant under the homestead acts prior to patent or final proof has oftentimes been before the courts of this country. And it is very generally held that the sections of the homestead laws providing that the land shall not be liable for debts incurred prior to the issuance of a patent are for the benefit of the homesteader, and that the law does not prevent a voluntary subjection of the land as security for debts created prior to the patent. The prohibition simply prevents the land being taken from the homesteader for the satisfaction of past debts. This court in the early case of Fariss v. Deeming Investment Company, 5 Okl. 496, 49 P. 926, said:

"It has been held by numerous courts that after a settler has resided upon the land and cultivated the same in accordance with the law for a period of five years, and made proof of such fact and received his final certificate, he at once becomes entitled to a patent therefor, and the owner of the land, and that his right to convey and pass title thereto is absolute."

And in Newkirk v. Marshall, 35 Kan. 78, 10 P. 571, the court, by Justice Valentine, uses the following language:

"Under the United States homestead laws, and by a compliance with them, a person entering a homestead, or in case of his death, his widow, or in case of death of both, his heirs or devisees, obtain a vested right in the homestead at the expiration of five years from the entry thereof, and upon making proper proof is entitled to a patent to the land from the United States. And as soon as a person is entitled to a patent, although it may not yet have been issued, and may not be issued for [five] years, he or she may contract or be contracted with concerning the land. * * * Equity, in order to do justice, and protect the rights of the parties, and to prevent frauds, will generally consider that as having been done which ought to be done; and, in order to protect the rights of all parties, where a patent is due, but has not yet been issued, equity will consider such rights precisely the same as though patent had in fact been issued on the very first day on which it ought to have been issued."

Also, in the case of Stark v. Duvall, 7 Okl. 216, 54 P. 453, it is said:

"It is provided by section 2291 of the Revised Statutes of the United States [[U. S. Comp. St. 1913, § 4532] that no certificate should be given or patent issued before the expiration of five years from the date of entry; that before final receipt an affidavit must be filed by the entryman averring that 'no part of such land had been alienated.' * * * 'Alienation' is the voluntary and complete transfer from one person or another, and, if it be concerning the transfer of property, it involves the complete and absolute exclusion, out of him who alienates, of any remaining interest, or particle of interest, in the thing transmitted. It involves the complete transfer of the property and possession of land, tenements, or other things to another. And, while other views were formerly held by some of the courts, the doctrine was announced in Mudgett v. Railroad Co. [ 8 Land Dec. Dept. Int. 243-248] by Secretary Vilas, that the 'alienation prohibited by the statute is an absolute alienation of the land, or a part thereof, whereas the mortgage given by Mudgett was simply a pledge for the security of a debt, to be avoided on payment of the debt,' and that 'there is no good reason why a

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