United States v. Chicago, M. & St. P. Ry. Co.

• Decision Date: 14 August 1909
• Citation: 172 F. 271
• Parties: UNITED STATES v. CHICAGO, M. & ST. P. RY. CO. et al.
• Court: U.S. District Court — District of Minnesota

172 F. 271

UNITED STATES v. CHICAGO, M. & ST. P. RY. CO. et al.

United States Circuit Court, D. Minnesota, Second Division.

August 14, 1909

C. C Houpt, U.S.D. Atty., and Paul A. Ewart, Asst. U.S. Atty.

W. H Norris, for defendant railroad companies.

Durment & Moore, for other defendants.

WILLARD District Judge.

This is a bill in equity filed by the United States under authority of Act Cong. March 3, 1887, c. 376, 24 Stat. 556 (U.S. Comp St. 1901, p. 1595), providing for the adjustment of land grant made by Congress to aid in the construction of railroads, and for a forfeiture of unearned lands, etc.

The grant in question in this case is contained in the act of Congress passed on the 4th day of July, 1866 (chapter 168, 14 Stat. 87); it being the same grant which was before the Supreme Court in the case of the United States v Chicago, Milwaukee & St. Paul Railway Company, 195 U.S. 524, 25 Sup.Ct. 113, 49 L.Ed. 306. At the trial the government conceded that as to all the lands described in the bill of complaint, except 160 acres, the suit was barred by the limitation of five years contained in Act Cong. March 2, 1896, c. 39, 29 Stat. 42 (U.S. Comp. St. 1901, p. 1603). The defendant Evans claims to be the owner of the S.W. 1/4 of the S.W. 1/4 of section 21, township 104, range 26, being a part of the 160 acres as to which the government did not admit that the suit was barred by the statute of limitations; and, as to this tract, he claims to be a bona fide purchaser within the provisions of the acts of Congress above cited, 24 Stat. 556, and 29 Stat. 42. The Supreme Court in the case of the U.S. v. Winona & St. Peter R.R. Co., 165 U.S. 463, 17 Sup.Ct. 368, 41 L.Ed. 789, and in the case of the U.S. v. C.M. & St. P. Ry. Co., 195 U.S., 524, 25 Sup.Ct. 113, 49 L.Ed. 306, has defined the meaning of the phrase 'bona fide purchaser' as it occurs in these acts. The brief of the government contains a statement of the facts relating to the Evans purchase from the railway company as such facts appear from the evidence, and from that statement it clearly appears that Evans is within the decisions above cited a bona fide purchaser of the tract claimed by him, and the bill therefore as to him cannot be maintained.

Another tract included in the said 160 acres, as to which the government did not admit the bar of the statute of limitations, is the N.E. 1/4 of the S.E. 1/4 of section 31, township 104, range 25.

On the 1st day of May, 1886, the railway company conveyed this tract by warranty deed to Jacob Klenk, and on the 12th day of July, 1904, Jacob Klenk conveyed the same property to the defendant Frederick Klenk, who on the 10th day of January, 1905, mortgaged it to the defendant the Northwestern Mutual Life Insurance Company. The facts resulting from the evidence, as the same are stated in the brief of the government, show that also with regard to this tract Jacob Klenk was a bona fide purchaser thereof within the decisions above referred to. The bill therefore cannot be maintained either against Frederick Klenk or against the Northwestern Mutual Life Insurance Company.

Of the 160 acres above referred to there remains the S. 1/2 of the N.E. 1/4 of section 31, township 104, range 25. One Gillson made a homestead entry of this land on the 16th of January, 1872. He was in possession thereof, claiming adversely to the railway company until 1880, and he exercised control over the same until 1886 or 1887. During this time the defendant Jacob Klenk rented this land from Gillson, and occupied the same as his tenant for three years. Before Klenk bought the land from the railway company, he told Gillson that he was going to make such a purchase, and Gillson then stated to him that he, Gillson, claimed to own the land. Upon this evidence there can be no doubt that the defendant Klenk was not a purchaser in good faith, and without notice of defects in the title of the railroad company. This action was commenced in February, 1901. Jacob Klenk was at that time made a defendant herein, but his son Jacob C. Klenk was not made a party to the suit until the 7th day of March, 1905. Prior to that time, and in July, 1904, the defendant Jacob C. Klenk bought the land from his father Jacob Klenk, who by warranty deed conveyed the same to him in that month. This deed was duly recorded in the proper office on the 13th of July, 1904. The evidence shows that Jacob C. Klenk had no notice or knowledge of any defects in his father's title, and, under such evidence, was a bona fide purchaser within the decisions above referred to, unless the pendency of this suit at the time he bought in 1904 charged him with notice of such defects. The claim of the government is that he acquired his right over three years subsequent to the date of the filing of the original bill of complaint, that he was a purchaser pendente lite, and took his title subject to the result of the pending suit. The claim of the defendant Jacob C. Klenk upon this point is that by the laws of Minnesota then in force (section 4389, Rev. Laws Minn. 1905) the pendency of an action was notice to purchasers or incumbrancers only from the time of the filing of the notice thereof in the office of the register of deeds of the county where the land was situated. In the case of Romeu v. Todd, 206 U.S. 358, page 362, 27 Sup.Ct. 724, page 725, 51 L.Ed. 1093, there was presented a similar question to the one presented in this case. By the Spanish law in force in Porto Rico the pendency of an action was notice to subsequent purchasers only from the time of the filing of the notice of such pendency in the proper register's office. The United States court for Porto Rico held:

'As this is a proceeding on the equity side of the court, it is governed by the principles of equity followed by the federal courts as distinguished from suits at law where local statutes are adopted.

As local laws have no binding force upon the United States courts in matters of procedure in equity and maritime law, the laws of Porto Rico relating to the filing of notice of lis pendens have therefore no application in this case, and the sufficiency of this bill must be determined by the rules and principles followed in like proceedings in the courts of the United States.'

That court held that the pendency of an equity cause in the courts of the United States affecting real property constituted constructive notice as to third parties, any rule of a state law notwithstanding. That case was taken to the Supreme Court of the United States, but the question decided in the lower court was not passed upon by the appellate court. That court held that the laws in force in Porto Rico had been by the Foraker Act (Act April 12, 1900, c. 191, 31 Stat. 77) adopted as the laws of the United States, and that, therefore, a court of the United States sitting in that island, created by an act of Congress, had no authority to disregard a local law which Congress by express legislation directed to be continued in force. In reaching that conclusion the court assumed, for the sake of the argument:

'That an innocent third party would be affected by the constructive notice resulting from the pendency of an equity cause in a Circuit Court of the United States sitting within a state, * * * although there had been no compliance with a statutory rule of property prevailing in such state requiring the recording of a notice of the pendency of suits affecting real property, in order to make the same operative against innocent third parties.'

Whether or not that assumption is correct is the question to be decided in this case. It does not fall within the provisions of section 914 of the Revised Statutes (U.S. Comp. St. 1901, p. 684), which declares that:

'The practice, pleadings, and forms and modes of proceedings in civil cases other than equity and admiralty causes, in the circuit and district courts, shall conform, as near as may be, to the practice, pleadings, and forms and modes of proceeding existing at the time in like causes in the courts of record of the state within which such circuit or district courts are held, any rule of court to the contrary notwithstanding.'

The case falls rather within the rule, speaking generally, which requires a Circuit Court sitting within a state to enforce the laws of that state, so far as they relate to real property. Thus in the case of Hinde v. Vattier, 5...