Cobban v. Conklin , 125 C.C.A. 431 ( 1913 )

GILBERT, Circuit Judge

[1] (after stating the facts as above). The contention is made that tlie court below was without jurisdiction of the cause of suit for the reason that the suit is brought to remove a cloud from title, and that such a suit may be maintained in a federal court only when the plaintiff is in possession, or the land is vacant and unoccupied, for the reason that otherwise the plaintiff has an adequate remedy at law, citing Whitehead v. Shattuck, 138 U. S. 146, 11 Sup. Ct. 276, 34 L. Ed. 873, and Lawson v. United States, 207 U. S. 1, 28 Sup. Ct. 15, 52 L. Ed. 65. The rule so invoked was well established before it was expressed in section 723 of the Revised Statutes (U. S. Comp. St. 1901, p. 583), which provides that suits in equity shall not be maintained in either of the courts of the United States in any case where a plain, complete, and adequate remedy at law may be had. Referring to the provisions of that section, Mr. Justice Brown said:

“These provisions are obligatory at all times and under all circumstances and are applicable to every form of action,, the laws of the several states to the contrary notwithstanding.” Wehrman v. Conklin, 155 U. S. 314, 15 Sup. Ct. 129, 39 L. Ed. 167.

But the rule was devised and the statute was enacted mainly to secure to the defendant the privilege of a trial by jury, and this he may waive. If in a suit in equity he answers and submits to the jurisdiction of the court, he cannot thereafter object that the plaintiff has a plain, complete, and adequate remedy at law, provided that the subject-matter of the suit is of a class over which a court of chancery has jurisdiction, and it is competent for the court to grant the relief sought. Reynes v. Dumont, 130 U. S. 354—395, 9 Sup. Ct. 486, 32 L. Ed. 934; Kilbourn v. Sunderland, 130 U. S. 505, 9 Sup. Ct. 594, 32 L. Ed. 1005; Wylie v. Coxe, 15 How. 415, 14 L. Ed. 753; Tyler v. Savage, 143 U. S. 79, 97, 12 Sup. Ct. 340, 36 L. Ed. 82; Southern Pacific Co. v. United States, 200 U. S. 341, 26 Sup. Ct. 296, 50 L. Ed. 507; Hapgood v. Berry, 157 Fed. 807, 85 C. C. A. 171.

In Reynes v. Dumont the court quoted the rule as stated in Daniell’s Chancery Practice that:

“If a defendant in a suit in equity answers and submits to the jurisdiction of the court, it is too late for him to object that the plaintiff has a plain and adequate rernedy at law. This objection should be taken at the earliest opportunity. The above rule must be taken with the qualification that it is competent for the court to grant the relief sought, and that it has jurisdiction of the subject-matter.”

In Wylie v. Coxe the court said:

“The want of jurisdiction, if relied on by the defendant, should have been alleged by plea or answer. It is too late to raise such an objection on the hearing in the appellate court, unless the want of jurisdiction is apparent on the face of the bill.”

The equitable jurisdiction to remove clouds from title to real estate is old and well settled. The bill in the case at bar contained all the essential averments to show jurisdiction of such a cause of suit. It alleged that the title was in the appellee, and that the lands were not in the possession of either of the parties to the suit, but were vacant, unoccupied timber lands in the possession of no one. The answer, admitted that the lands were wild and uncultivated timber lands but alleged that they were in the possession of the Payette Lumber & Manufacturing Company. No evidence whatever was taken on the subject of the possession. The appellants point to the language of the opinion of the court below in which it was said that it was “not improbable that expenses aggregating considerable amounts had been incurred * * * in caring for the timber growing thereon and in paying taxes and other charges”; and they argue that this indicates that they were in possession. But nothing can be asserted upon a mere conjecture of the court, unsupported by evidence. For aught that the record shows to the contrary, it was true, as alleged in the bill, that neither party to the controversy was in possession of the lands. However that may be, the controlling facts are that the appellants answered the bill on the merits and made no objection thereto on the ground that the appellee had an adequate remedy at law, and now present" that objection for the first time in this court on the appeal. It is clear that it comes too late.

[2] The appellants contend that the court below erred in that it awarded relief which was not authorized by the allegations of the bill, that the gravamen of the bill was fraud and conspiracy between the appellants, but that the relief afforded was based upon the finding that the insertion of the names of attorneys in the powers of attorney by Cobban was unauthorized and void; and they invoke the rule that the decree cannot go beyond the scope of the bill, that it is not enough that the proof show that the complainant is entitled to some relief, but that it must show that he is entitled to relief which is predicable upon the allegations of his bill, and that this is especially true in cases where the charge is fraud. We may concede the doctrine, which is contended for, that the relief must be founded upon and consistent with the facts set up in the bill or with some theory of the case on which the bill is based, and that a bill to set aside a conveyance on the ground of fraud will not sustain a decree granting such relief on an entirely distinct ground of equitable jurisdiction, such, for instance, as mistake. Hendryx v. Perkins, 52 C. C. A. 435, 116 Fed. 1020; McKinney v. Big Horn Basin Dev. Co., 93 C. C. A. 258, 167 Fed. 770; Fyre et al. v. Potter et al., 15 How. 41, 14 L. Ed. 592; Burk v. Johnson, 76 C. C. A. 567, 146 Fed. 209. In Price v. Barrington, 7 Eng. Law & Eq. 260, Lord Truro said:

“When the bill sets up a case of actual fraud and makes that the ground of the prayer for relief, the plaintiff is not entitled to a decree by establishing some one or more of the facts, quite independent of fraud, but which might of themselves create a case under a totally distinct head of equity from that which would be applicable to the case of fraud originally stated.”

But we think that the appellants’ contention involves a misconception of the case which is made by the bill. While the bill charges fraud, it cannot be said that the decree is not based upon fraud. It is true that not all the allegations of fraud are sustained by the proof, and that the court found that the charge of conspiracy and fraud which was made against Cobban, Weirick, and the Payette Lumber Company was not justified by the evidence. But the fraud of Benson was proven, and it was the proof of his fraud which justified the decree. Benson fraudulently procured the execution of powers of attorney in blanl< and fraudulently procured the possession thereof after their execution. There is no evidence that the appellee knowingly and intentionally executed those papers or placed them in Benson’s hands under such circumstances as to charge her with knowledge of his purpose to use them as he did. If such had been the case, she would have no standing in a court of equity to complain of Cobban’s act of inserting names and descriptions in the blanks. But the findings of the lower court, while they fall short of sustaining all the charges of fraud, found fraud sufficient whereon to rest the decree. It was not necessary that the defendants should have participated in Benson’s fraud. It was enough that they derived their title through it. The decree, therefore, is not inconsistent with the frame and theory of the- bill, and it does not rest on a ground entirely distinct from that which the bill presents.

[3] It is urged that the appellee, having intrusted Beirson with the papers, gave him the power to make, a perfect record title in any purchaser, and that the appellant Payette Lumber & Manufacturing Company purchased the lands in good faith for value, and without notice, and took the legal title wholly discharged from the claims and equities of the appellee. The evidence is that the appellee, while she signed the papers which were placed before her, never acknowledged the execution of any of them, and that the certificates of acknowledgment were attached thereafter, when they came into the possession of Benson, and that she signed them relying on the fact that they came from the office of Campbell, Metson & Campbell, and without examining them or understanding their contents, but supposing them all to be the deeds which the contract contemplated. If, however, she is to be charged with knowledge of the contents of papers to which she appended her .signature, the fact remains that she never in any way delivered or authorized or consented to the delivery of the powers of attorney to Benson. J. C. Campbell testified that he did not deliver them to Benson and did not authorize their delivery, and that he did not know of their existence, and that there was no agreement at any time that the title was to pass .until the lands were paid for through the Anglo-California Bank. It is the general rule that the delivery of a deed with the consent of the grantor is essential to pass title, and that an instrument of conveyance never delivered but obtained without the knowledge or consent of the grantor does not divest the grantor’s title. Henry et al. v. Carson, 96 Ind. 412; Allen v. Ayer, 26 Or. 589, 39 Pac. 1; Steffian v. Bank, 69 Tex. 513, 6 S. W. 823; Tisher v. Beckwith, 30 Wis. 55, 11 Am. Rep. 546; Bowers v. Cottrell, 15 Idaho, 221, 96 Pac. 936.

[4] There having been no delivery, therefore, to Benson, the rules respecting a purchaser in good faith do not protect the Payette Lumber & Manufacturing Company, for the good faith of the purchaser cannot create a title where his grantor has none, and nothing can be founded upon a deed which is absolutely void. Sampeyreac v. United States, 7 Pet. 222, 241, 8 L. Ed. 665; Lindblom v. Rocks, 77 C. C. A. 36, 146 Fed. 660; Texas Lumber Mfg. Co. v. Branch, 8 C. C. A. 562, 60 Fed. 201. The case stands upon ground entirely distinct from those cases in which execution and delivery have been procured by fraud so that the conveyance is voidable only, and the fraud cannot be alleged to defeat the right of a purchaser in good faith who pays value without notice and who thus brings himself within the protection of the general equity principle that, wherever one of two innocent persons sutlers loss on account of the wrongful act of a third, he who has enabled the third person to occasion the loss must be the person to suffer.

[ Si ] Again, the court below reached the conclusion from the evidence, correctly, we think, that by the terms of the contract the papers after their execution were to be deposited by J. C. Campbell in escrow with the Anglo-California Bank, with instructions to deliver them to Benson only upon the receipt of the stipulated purchase money, and that Campbell, having failed to deposit them in escrow, must be deemed to have retained them in the capacity of an escrow depositary. If so, the subsequent delivery of them was ineffectual to convey title, for it is the general rule that the unauthorized delivery of an instrument of conveyance held in escrow conveys no title, even in favor of an innocent purchaser without notice. 16 Cyc. 581; Provident Trust Co. v. Mercer County, 170 U. S. 593, 18 Sup. Ct. 788, 42 D. Ed. 1156; Balfour v. Hopkins, 93 Fed. 564, 35 C. C. A. 445; Fearing v. Clark, 16 Gray (Mass.) 74, 77 Am. Dec. 394; Tyler v. Cate, 29 Or. 515, 45 Pac. 800; Bradford v. Durham, 54 Or. 1, 101 Pac. 897, 135 Am. St. Rep. 807.

The decree is affirmed.