Potter v. Rio Arriba L. & C. Co. , 4 N.M. 322 ( 1888 )

Henderson, J.

The plaintiff in error, John Gerald Potter, an alien, having been for many years the owner in fee of certain lands in the county of Rio Arriba, N. M., entered into negotiations for their sale, which were pending prior to March 3, 1887, which resulted in the formation of an English joint-stock company called the “Rio Arriba Land & Cattle Company, Limited,” •and the execution and delivery of a contract dated March 3, 1887, between the said John Gerald Potter of the first part, the said company of the second part, and Yalentine Walbran Chapman of the third part, providing for the acquisition by the said company from the said John Gerald Potter of the said lands, as well as of certain personal property and his beneficial interest in a certain leasehold, whereof the legal title was vested in the said Yalentine Walbran Chapman, and providing for a relinquishment of said leasehold interest by the said Yalentine Walbran Chapman to the said company, and containing the covenant of the said company to pay to the said John Gerald Potter the consideration of £110,000 in its corporate shares of stock, or in cash in the manner set forth in the contract recited at large in the bill of complaint. This contract was duly executed several hours before the alien act became a law by the approval of the president, although on the same day. All the parties, as appears by the pleadings in the case, are satisfied with the bargain •and contract as the same stood under the laws in force when the contract was solemnized; but the company alleges that the alien act is an obstacle to the performance of the contract on its part, and although the plaintiff in error has performed, or tendered performance, on his part, and demanded the purchase money or consideration, the company refuses to perform on the pretense that, if it should acquire the legal title to the land in question, it could not hold the property without danger of its forfeiture at the suit or by the act of the United States. The bill is for specific performance of the contract against the other parties. The defendant, Yalentine Walbran Chapman, by his answer, disclaims any adverse interest, and submitted himself to the will of the court. The defendant company, by its answer, admitted all the facts set up in the bill, but set up the alien act and its provisions as ground for resisting in equity the assertion of any claim against it for specific performance. The cause was submitted to the district court for the county of Rio Arriba, on the bill and the answers, the only issue being whether the provisions of the alien act would, upon the facts alleged in the pleadings, subject the real estate so •contracted to be conveyed to forfeiture in the hands of the defendantcompany in ease it should accept the legal title in performance of the contract. The ■district court dismissed the bill for want of equity, and to reverse its decree the complainant below sued out the present writ of error. Plaintiff in error •assigns the following errors: (1) The district court erred in dismissing the said bill of complaint. (2) The district court erred in its opinion that the complainant below was not entitled to the relief prayed in and by his said bill. ■(3) The district court erred in its opinion and decision that the act of congress certified in the pleadings restricted and prohibited the performance of the contract in the said bill set forth. (4) The district court erred in refusing to grant the relief prayed in and by the said bill. Defendant admits that the plaintiff in error is entitled to a specific performance of the contract in •question, unless the defendant corporation by accepting the legal title would be exposed thereby to forfeiture of the estate thus purchased, by force and •effect of the act of congress approved March 3, 1887, entitled “An act to restrict the ownership of real estate in the territories to American citizens,” etc. The plaintiff in error, in like manner, admits that upon equitable principles, he cannot demand specific performance if the result would be so disastrous to the corporation. The only question, therefore, presented by this record is the true construction of the alien act as applied to the case made by the pleadings. That act is as follows:

“Be it enacted by the senate and house of representatives of the United •States of America, in congress assembled:

“Section 1. That itshall be unlawful for any person or persons, not citizens of the United States, or who have not lawfully declared their intention to be•come such citizens, or for any corporation not created by or under the laws of the United States, or of some state or territory of the United, States, to hereafter acquire, hold, or own real estate so hereafter acquired, or any interest therein, in any of the territories of the United States, or in the District of Columbia, except such as may be acquired by inheritance, or in good faith, in the ordinary course of justice in the collection of debts heretofore created: provided, that the prohibition of this section shall not apply to cases in which the right to hold or dispose of lands in the United States is secured by existing treaties to the citizens or subjects of foreign countries, which rights, so far as they may exist by force of any such treaty, shall continue to exist so long as such treaties are in force, and no longer.

“Sec. 2. That no corporation or association, more than twenty per centum of the stock of which is or may be owned by any person or persons, corporation or corporations, association or associations, not citizens of the United States, shall hereafter acquire or hold or own any real estate hereafter acquired in any of the territories of the United States, or of the District of Columbia.

“Sec. 3. That no corporation other than those organized for the construction or operation of railways, canals, or turnpikes, shall acquire, hold, or own more than 5,000 acres of land in any of the territories of the United States; and no railroad, canal, or turnpike corporation shall hereafter acquire, hold, or own lands in any territory other than as may be necessary for the proper operation of its railroad, canal, or turnpike, except such lands as may have been granted to it by act of congress. But the prohibition of this section shall not affect the title to any lands now lawfully held by any such corporation.

“Sec. 4. That all property acquired, held, or owned in violation of the provisions of this act shall be forfeited to the United States, and it shall be the duty of the attorney general to enforce every such forfeiture by bill in equity, or other proper process. And, in any suit or proceeding that may be commenced to enforce the provisions of this act, it shall be the duty of the court to determine the very right of the matter without regard to matters of form, joinder of parties, multifariousness, or other matters not affecting the substantial rights either of the United States, or of the parties concerned in any such proceeding, arising out of the matters in this act mentioned. ”

The defendant corporation is an alien company, and within the prohibitions contained in the act of congress, and complainant, Potter, and defendant Chapman are alien subjects of Great Britain. It is conceded on both sides that the defendant corporation is not within any of the expressed provisos or exceptions contained in the statute. The naked question, therefore, for our consideration is, does the act of congress above recited, when construed with reference to the true intent and purpose of that body in its enactment, apply to executory contracts under which equitable titles are acquired in good faith, prior to the passage of the act, in such manner as to prevent the parties from converting equitable into legal estates, and to deny to the courts the right to compel the performance of contract obligations by specific performance ? It is not denied that congress has power to impair even vested rights, where the purpose and intention clearly expressed is to that effect. Whatever, therefore, that intention was, if clearly expressed, must be carried out. By the first section of the act it is declared 'to be unlawful for any person or persons, not citizens of the United States, or who have not lawfully declared their intention to become such citizens, or for any corporation not created by or under the laws of the United States, or of some state or territory of the United States, to hereafter acquire, hold, or own real estate so hereafter acquired, or any interest therein, in any of the territories of the United States, or in the District of Columbia, except such as may be acquired by inheritance, or in good faith in the ordinary course of justice in the collection of debts heretofore created, provided that the prohibition of this section shall not apply to cases in which the right to hold or dispose of lands in the Union is secured by existing treaties. The second section denies to corporations the right to hold or hereafter acquire any real estate within the territories or the District of Columbia where more than 20 per centum of the stock of such corporation shall be owned by aliens. The third section limits purchases by corporations other than such as are organized for the operation or construction of railways, canals, and turnpikes, to 5,000 acres, except grants heretofore made to such corporations by congress; but the prohibition of the section does not affect the title to any land lawfully held by any such corporation at the date of the passage of the act. The fourth section declares that all property acquired, held, or owned in violation of the provisions of the act shall be forfeited to the United States, and it shall be the duty of the attorney general to enforce every such forfeiture by bill in equity, or other proper process. It is conceded by counsel for defendant in error that, under the laws of congress and this territory, at the date of the execution of the contract an alien had a right to acquire, hold, and own real estate in New Mexico. It is further admitted that the contract between the parties was duly made and executed prior to the approval of the alien act by the president. Defendant does not resist a specific performance of the contract except upon the ground of an apprehended forfeiture should it accept a title. The contract was executed several hours before the president approved the act, and in a ease like this fractions of a day will be considered. In re Richardson, 2 Story, 571; Burgess v. Salmon, 97 U. S. 381; Louisville v. Bank, 104 U. S. 469.

It is our duty to examine the act in question, and ascertain therefrom the objects and purposes had in view by congress in its enactment, and to give it effect as intended, regardless of consequences, provided such intention is clearly manifested by the language employed, or follows as a necessary implication from the language and the purposes intended to be accomplished by the act. The real intention of the law-making powmr must govern in the interpretation of an act. The duty of a court is performed by exploring an act of legislation, and gathering from all of its provisions the real purpose in the mind of the enacting body, and, if within its power to pass, to carry out such purpose. Keeping this well-understood principle of interpretation in mind, let us inquire into the real object and purpose of this alien act. Its purpose, as expressed in the title, was and is to restrict the ownership of lands in the territories of the United States to American citizens. The principal motive inducing the enactment was the prevention of citizens and subjects of other countries from hereafter acquiring real estate in the territories. It was the policy of the act to preserve the land within its control for the use of American citizens. To accomplish this purpose an inhibition was placed upon alien acquisition in the future, and in order to insure the enforcement of this policy, the attorney general was commanded to institute legal proceedings, by bill in equity or other process, to enforce a forfeiture of such estates conveyed in violation of its terms. It is declared to be unlawful for aliens “to hereafter acquire, hold, or own real estate so hereafter acquired. ” There is nothing in the act that even suggests the idea that congress intended to destroy, or even impair, either legal or equitable titles acquired prior to the passage of the act. The act does not in express terms apply to existing titles to lands, nor is there any reason dedueible from the terms employed to justify the conclusion that congress intended to impair or render valueless executory contracts under which equitable estates had matured or vested. This much is in effect admitted by counsel for defendant in error, but they contend that it was the clearly expressed purpose of the law-making power to arrest and suspend the execution of further titles, or the acquisition of further interests in lands, in the territories. To convert an equitable estate into a legal one is, in fact, to acquire an additional or different quality of estate, it is true, but it has none of the elements of an entirely new estate. The language used to designate the estates upon which the forfeiture would take effect shows that the estate must be acquired after the passage of the act. If A. holds an equitable estate in possession, and has paid the purchase price, neither the vendor nor the United States can disturb his possession, or impeach his title. His right to the possession came from a valid and lawful contract of purchase, and his payment of the purchase money discharged all- his covenants with the grantor. The grantor could never recall the possession. The United States could not insist upon a forfeiture, and yet, if the intention of congress was to cut off alien rights, or prevent executory contracts of purchase, valid when made, from ripening into legal estates, by the operation of the statutes of limitation, some remedy should have been provided by which a forfeiture could have been enforced. Can we fairly and reasonably conclude that congress meant to say that one may enjoy forever his estate if it be legal in quality, but an equitable-one, although protected so long as it remains purely of that class? Yet the identical estate, the instant it is merged in a legal title, comes within the mischief of the statute, and under the condemnation of the law? This would be, as we think, against the spirit and reason of the act itself, without invoking the aid of equitable fictions to protect the legal estate from forfeiture. The act forbids future purchases. To “acquire” means to gain something, and that something, within the true intent and meaning of the act of congress, is a new estate or interest in lands, not the addition of a legal, to an already existing equitable, title. It could not aid the policy of the act, or further the interests of American citizens, by refusing the right to make perfect and absolute in form a title protected against interference or invasion from either the vendor or the government. The estate would continue in the hands of the alien whether he held under the legal or equitable title. By doing what is demanded by the bill in this case the court would only execute a valid and perfectly lawful contract by its decree. It would not violate the policy of the law, because that policy is to take effect and operate only on future purchases or holdings. Congress clearly intended to guard and protect existing contract rights.

In Chew Heong v. U. S., 112 U. S. 559, 5 Sup. Ct. Rep. 255, in construing an act of congress prescribing the certificate which shall be produced by Chinese laborers as the only evidence permitting them to establish a right of reentry into the United States, it was held that its provisions in this respect were not applicable to a certain class of Chinese laborers, although the statutory phraseology was literally sufficient to apply to that class, as well as others. The class in question was held under the protection of a prior treaty, and, notwithstanding the conceded powers of congress to enact laws in contravention of a treaty, the court refused to imply such an intent, and in effect disregarded the literal wording of the statute, under the presumption — First, that the treaty provision was not designed to be abrogated; and, second, that retrospective" legislation was not intended. The court said; “We have stated the main reasons which, in our opinion, forbid that interpretation of the act of congress. To these may be added the further one that the courts uniformly refuse to give to statutes retrospective operation whereby rights previously vested are injuriously affected, unless compelled to do so by language so clear and positive as to leave no room to doubt thatsuch was the intention of thelegislature. In U. S. v. Heth, 3 Cranch, 398, 413, this court said that ‘ words in a statute ought pot to have a retrospective operation, unless they are so clear, strong, and imperative that no other meaning can be annexed to them, or unless the intention of the legislature cannot be otherwise satisfied, and is the settled doctrine of this court.’ Murray v. Gibson, 15 How. 421, 423; McEwen v. Den, 24 How. 242, 244; Harvey v. Tyler, 2 Wall. 328, 347; Sohn v. Waterson, 17 Wall. 596, 599; Twenty Per Cent. Cases, 20 Wall. 179, 187.” In adopting the language of the court in Chew Heong v. U. S., supra, in construing that act, we say of this, so far from the court being compelled by the language of the act of congress to give it a retrospective operation, the plain, natural, and obvious meaning of the words, interpreted with reference to the general scope and the declared purpose of the statute, utterly forbids the conclusion that there was any intention to impair or destroy rights previously granted. In Twenty Per Cent. Cases, 20 Wall. 187, Mr. Justice Clifford, in delivering the opinion of the court, said: “Courts of justice agree that no statute, however positive in its terms, is to be construed as designed to interfere with existing contracts, rights of actions, or with vested rights, unless the intention that it shall so operate is expressly declared, or is to be necessarily implied, and pursuant to that rule courts will apply this statute only to future cases, unless there is something in the nature of the case or in the language of the new provision which shows that they were to have a retroactive operation. Even though words of a statute are broad enough in their literal extent to comprehend existing cases, they must yet be construed as applicable only to eases that may hereafter arise, unless the language employed expresses a contrary intention in unequivocal terms.” Citing Potter, 1 Dwar. St. 161; Wood v. Oakley, 11 Paige, 403; Butler v. Palmer, 1 Hill, 325; Jarvis v. Jarvis, 3 Edw. Ch. 466; McEwen v. Den, 24 How. 242; Harvey v. Tyler, 2 Wall. 329; Blanchard v. Sprague, 3 Sum. 535; U. S. v. Heth, 3 Cranch, 399. On the 3d day of March, 1887, when the alien act became a law, the statute of this territory gave the unrestricted right to acquire real estate to aliens. See Comp. Laws, §§ 1851, 2614, 2746, 2748. Also Cowell v. Springs Co., 100 U. S. 55; Christian Union v. Yount, 101 U. S. 352. On principle we see no reason for imputing to congress a greater degree of reluctance to impair rights derived under a treaty than for imputing to that body a like reason in favor of rights vested under contract or upon the faith of a prior statute. The principle of. interpretation announced by the supreme court, as seen by the cases cited, has been adopted by state courts almost universally. In Couch v. McKee, 6 Ark. 493, Judge Oldham said: “The great injustice of retrospective legislation has been frequently exposed by courts of justice, and their disapprobation of such laws has been expressed in the strongest language. We think it cannot be denied that the contract for the conveyance of the lands described in the bill was an existing contract, and conferred upon complainant a right of action in the courts, when the alien act became a law, and applying the language of the supreme court of the United States in the Twenty Per Cent. Cases, supra: “Courts of justice agree that no statute, however positive in its terms, is to be construed as designed to interfere with such existing contract, rights of actions, or with vested rights, unless the intention that it shall so co-operate is expressly declared or is necessarily implied, and pursuant to that rule will apply new statutes only to future eases, unless there is something in the nature of the ease or in the language of the new provision which shows that they were intended to have a retroactive operation. And even though the words of the statute are broad enough in their literal extent to comprehend existing cases, they must be construed as applicable only to cases which may hereafter arise, unless the language employed expresses a contrary intention in unequivocal terms.” There is nothing in the alien act nor in the nature of the case before us to show that the act was intended to have a retroactive operation, so as to cut off or in any way impair the right of complainant to have his equitable estate perfected into a legal one. This new statute was expressly designed to apply to future eases only and to alleged rights springing out of contracts of purchase made subsequent to the date of passage of the alien act. Should the alien act be construed so as to prevent the present lawful and safe vesting of estates previously contracted to be conveyed, it must be deemed to operate as a repeal of existing covenants. 1 Add. Cont. § 227; Touteng v. Hubbard, 3 Bos. & P. 291; Odlin v. Insurance Co., 2 Wash. C. C. 312, 321; and in this view of the case the covenant must be deemed annulled by operation of law. As we have seen, no such intention can be gathered from the language employed in the act. The facts in this case do not call for nor demand the application of the doctrine obtaining in equity in some eases to the effect that where a contract has been entered into for the purchase of real estate equity will convert the real estate into personalty for the purpose of avoiding either an escheat or forfeiture. As we think no forfeiture will be incurred by the. acceptance of the deed by the grantee it is not necessary to invent a fiction or adopt a subtle line of reasoning to save the estate in the hands of the grantee.

We think the court below erred in dismissing complainant’s bill. The decree of the court below will be reversed and a decree entered here awarding specific performance as prayed in and by complainant’s bill, and it is so ordered.

Long, C. J., and Brinker, J., concurred.