Smith v. Mariner , 5 Wis. 551 ( 1856 )

By the Court,

Oole, J.

The testimony taken upon the hearing of this cause does not materially vary the case as it stands upon bill, answer and replication. It, therefore, becomes necessary, for a proper understanding of the charge of fraud and mistake, which are relied upon as grounds of relief in this case, to look at the principal allegations of complainant’s bill, containing that charge, and such parts of the answer of the defendant, Mariner, as are responsive thereto.

The bill was filed in the Circuit Court of Milwaukee county, on the 8th of June, among other matters, stating in substance, that on the 15th of June, 1850, at a sale of school and university lands in the county of Milwaukee, in accordance with the provisions of chapter 24, Revised Statutes, Clinton Walworth became and was the purchaser of lot No. 18, in the southeast quarter of section 16, town 7, north of range 22 east, containing seven and 19-100 acres, for the sum of $539.97, of which he paid at the time of purchase $54.97 of the purchase money, and $18.38 for interest upon the balance unpaid up to January 1, 1851, taking from the commissioners a duplicate certificate, bearing date upon that day, in which the purchase of the lot, at the time, and for the amount and for the payment of the sum aforesaid, were recited and admitted, and in which said certificate it was provided that if the said Walworth, his heirs or assigns, should within ten years, pay the balance of the purchase money, interest annually in advance, at the rate of 7 per cent., and the taxes properly assessed thereon; that then said Walworth, his heirs or assigns, should be entitled to a patent for the said lot; and that the certificate also provided that in case of default in the payment of the balance of the purchase money when due, or of tbe interest and taxes as aforsesaid, that then tbe commissioners might take possession of, and resell tbe said lot.

And further, that tbe certificate was properly assigned by Walworth to complainant on tbe 24th day of June, 1850, and that be took possession of tbe lot; also, that be paid the interest in advance for tbe year 1851, but neglected to pay tbe interest due for 1852 and 1853 ; that after default, and at any time before a re-sale of tbe lot by tbe commissioners, he bad a right to redeem by paying 'the interest due, with 5 per cent, upon tbe purchase money, and all costs occasioned by tbe delay, and revive the said certificate thereby in its full original force.

That in tbe latter part of July, 1858, be was informed that tbe lot was advertised for sale on tbe 11th of August, 1853, for tbe non-payment of tbe interest, but that be bad never seen tbe notice of sale; and that on the 4th of August previous to tbe sale he applied to tbe defendant, Mariner, for a loan of money to enable him to pay tbe interest, damages and costs, and revive bis contract, stating to Mariner that be was informed the lot was advertised for sale on tbe 11th of August.

That Mariner declined accommodating him with tbe money, saying that be bad not got it to spare, and also saying that be bad understood that tbe sale bad been published for tbe 11th, and' bad sent money to pay interest due upon bis lots advertised to be sold at tbe same time as complainants; but that he^ need not be in a burry, as tbe sale of the lot would not take place until tbe 29th of August, as be bad learned from a letter sent to him by bis agent at Madison, which letter was to that effect, and that there could be no mistake about it.

Further, that the sale did take place on tbe 11th of August, at which time tbe lot was sold, and bid in by Mariner through bis agent at Madison ; and tbe complainant alleges that the only reason why be did not pay tbe interest, &c., before tbe 11th, was, that be fully believed tbe statements and representations of Mariner as to tbe time the sale would take place; and that tbe first intimation be received to tbe contrary of such statement was from Mariner, who informed him directly after the sale, that the lot bad been sold and bid off for him by bis agent.

The bill charges, that at tbe time of making these representations, in reference to the time of the sale, Mariner knew they were false, knew that complainant owned the certificate, knew when the sale would take place, and had employed an agent at Madison to attend the sale, and bid off the lot for himself, Mariner ; that these statements and representations, in connection with the previous arrangement for purchasing the lot, and the subsequent purchase, were calculated to deceive, and did deceive him, the complainant, and were a fraud upon his rights.

The bill prays for an answer, under oath, and that Mariner be decreed to assign over the certificate to the complainant upon being paid the amount of his disbursements and interest on the same.

Mariner answered, under oath, admitting the complainant had a claim to the lot set forth in the bill, and states that on or about the 8th of June, 1853, he was at Madison, and while there was informed that the delinquent school and university lands were advertised For sale, and that the sale would take place on the 1st day of August, next thereafter; that he then employed an agent to attend the sale, and bid for him upon such lands; that he returned to Milwaukee about the 20th of June, and shortly-after met the complainant in the street, and had a conversation with him concerning the lot in controversy; that complainant said he knew the lot was advertised for sale, and that he meant to redeem it if he could get the money to do so, and asked the defendant? to loan him the necessary funds for that purpose; to which request the defendant replied that he had no money to loan, and should have to borrow money to pay interest for himself, and that afterwards, and about the 3d day of August, the defendant had another conversation with the complainant, in which he told him that he had SGnt the money to pay his interest, but that he need not have been in so great a hurry, for he had a letter from his correspondent at Madison, -saying that the sale would not take place till the 19th, and that he thought that the letter was reliable, that he should depend upon it, but did not say there could be no doubt but the sale would take place on the 19tb. Mariner further says that these statements were made to the complainant in casual conversations; tliat it was the best information upon the matter he possessed, and that when he gave it he believed it to be true; also when he made these statements, he gave his authority and means of information ; and that they were made concerning a matter of which the complainant had equal facilities for knowing. He denies that he knew, previous to such sale, that it would take place on the 11th of August; insists that the only persons from whom he even heard that the sale would take place on that day was the complainant — and that he supposed, up to the 80th of July, and until after he had sent the money to pay his own interest, that it would take place upon the 1st of August.

In the allegations in the bill above set forth it will be seen that the complainant charges Mariner with telling what was false in reference to the time of sale, knowing himself when it would be, and that he made these statements with a fraudulent purpose, with the intention to induce him to act upon them, so that he might obtain an undue advantage over complainant by buying in the land for himself. If these allegations were sustained by the answer of Mariner, or established by the proofs, it would constitute a clear case of fraud. “ For,” says Justice Story (1 Eq. Jur., § 192), “ where the paTty intentionally, or by design, misrepresents a material fact, or produces a false impression, in order to mislead another, or to entrap or cheat him, or to obtain an undue advantage of him; in every such case there is a positive fraud, in the truest sense of the terms; there is an evil act with an evil intent; dolum malum ad circumre niendum. To the same effect are the cases of Pasby vs. Truman (3 Durnf. and East, 23); Evans vs. Bicknell (6 Ves. 193); Taylor vs. Ashton (11 M. & W. 400).

But Mariner most distinctly and pointedly denies, in his answers, that when he had these conversations with the complainant, he knew the sale was advertised for the 11th of August, or would take place upon that day. On the contrary, he says that his impression, up to the 30th of July, had been, that it was advertised for the 1st of August; and that he had acted upon this presumption by remitting money to pay interest upon his own lots. He states he told the complainant he had received a letter from his agent at Madison, saying the sale would take place on the 19th of August; that he thought the letter was reliable; thus giving just such information as he possessed, the correctness of which he did not doubt. If Mariner had received a letter of this import, and we must presume he had, as his answer in this respect is uncontradicted, and we think this matter is strictly responsive to the bill, it was natural he should place confidence in its statements. This sale was to take place at Madison, where the writer of the letter lived, and the notice of sale was given in the newspaper published there. The writer therefore possessed superior means of information about the sale, and it is not surprising that Mariner trusted him. But it is made a matter of observation in the argument, and properly, too, that this letter was not produced upon the hearing, or its absence accounted for; and it is said this circumstance casts suspicion upon the truth of the answer. And so, to some extent, perhaps it does. Still we have said we considered this part of the answer as being responsive to the bill, and consequently by a familiar rule of practice, must stand until overcome by at least one witness, and strong corroborating circumstances.

Another circumstafice relied upon by the complainant to show a meditated fraud, is, that Mariner had employed an agent to bid upon this property, and that he concealed that fact from him. It will be admitted that Mariner had a perfect right to bid at this sale, as much so as any citizen. He says that he employed an agent for that purpose when at Madison, in June. Nor was he, in conscience and duty, bound to disclose this to the complainant ? Or will the concealment of that fact authorize us in inferring that it was done with a fraudulent motive ? There was no peculiar relation, no fiduciary character existing between the parties. And I think he might innocently withhold from the complainant the knowledge of his having employed an agent to bid upon the land.

Stress is laid upon another matter, that Mariner came to the ■ complainant on the 3d of August, and communicated this wrong information as to the time of sale. But it does not very clearly appear whether the complainant applied to Mariner,' or whether the latter put himself in the way of the complainant and volunteered the information. Mariner says that the statements about the sale were made in casual conversations. There does not seem to have been any purpose or design to mislead, and in the absence of that most important ingredient of fraud, I think it quite immaterial whether Mariner sought him or not.

Again; it is said. to be wholly immaterial whether Mariner thus misrepresented a fact he knew to be false, or made an assertion about the sale not knowing it to be true ; for that the affirmation of what one does not know or believe to be true, is equally in morals and law as unj ustifiable as the affirmation of what is known to be positively false. And that even if the party innocently misrepresents a fact by mistake, it is equally conclusive ; for it operates as a surprise and imposition on the other party. 1 Story Eg. Jur., § 193. In answer to the first proposition it is sufficient to say, that Mariner swears he gave the complainant such information in regard to the sale as he possessed, giving his means and source of information, and believing it at the time to be true.

And upon the point of mutual mistake, it must be borne in mind, that this was a public sale, that notice of the time it would take place, had to be by law, and was actually given in a newspaper published at Madison ; that the means of information as to the sale were open to both parties; that Mariner had no control over the sale or over the commissioners, under whose directions it was to be made; and further, Mariner had not been employed professionally or otherwise to ascertain when the sale would take place. Neither were the complainant and Mariner holding the relation of contracting parties. Had they been upon a treaty for any contract, and had Mariner made a false representation upon the subject of the contract innocently, without any fraudulent motive, by which the complainant was misled, equity would grant relief and compel Mariner to make the representation good. To that effect are the cases of Buxton vs. Lister (3 Atk. 385); McFerson vs. Taylor et al. (3 Cranch, 270); Smith vs. Richards (13 Peters, 26); East vs. Mathews (2 A. K. Marsh. 192); Taylor vs. Fleet (1 Barb. Sup. Ct. R. 473); Lewis vs. McLemon (10 Yer. 206); Adams Eq. p. 176 et. seq., cited upon complainant’s brief, and many others of tbe same import found in tbe boobs. Or bad not tbe means of information about tbe sale been equally open to tbe parties, and bad tbe complainant applied to Mariner, being a party immediately interested in tbe subject matter of inquiry, as in Pearson vs. Morgan (2 Bro. Ch. R. 305); Burrows vs. Lock (10 Ves. 472); or Bacon vs. Bronson (7 J. Ch. R. 193); and bad been misled, be would bave been entitled to relief. But sucb was not tbe case. These parties bave a casual conversation about a public sale, and tbe defendant states be is informed and believes it takes place several days after it does. At this sale tbe land is bid in for tbe defendant by an agent employed some weeks before. In consequence of this misinformation tbe complainant says be did not redeem bis land before sale. Suppose tbe land had not been bid in by Mariner, but by somebody else, could tbe complainant bave sustained an action at law for damages against Mariner, for misleading him as be did ? Tbe answer is obvious. He could not, unless be could show that be bad sustained damage, not by tbe mistake, but by tbe fraudulent design and deceit of the defendant. If be could not sustain his action at law for damages arising from this mistake, I am unable to see, bow, under tbe circumstances of this case, and tbe relation of tbe parties to tbe sale, subject matter, and each other, be can be relieved from tbe consequences of the mistake in a court of equity.

But tbe complainant places bis title to relief upon another ground. It is insisted that tbe object of tbe forfeiture provided for in tbe act, for tbe sale of tbe school lands, was to secure tbe payment of tbe unpaid purchase money, and that, therefore, this case falls within tbe principle applicable to all cases of penalties and forfeitures intended to secure the payment of money only. I am unable to accede to this proposition. Section 15, chapter 24, R. S., provides that in case of non-payment of principal or interest, when due, according to tbe terms of tbe certificate of sale, sucb certificate shall become void from tbe time of sucb failure, and tbe purchaser shall forfeit all right and interest in tbe land. Subsequent provisions authorize the commissioners to advertise and sell forfeited school lands. This is not a contract between parties, where compensation can be given for the breach of a condition, or for the non-payment of money when it fell due; but it is a case where, by express enactment, the right and interest of the purchaser in the land are to determine upon default in paying principal or interest as it becomes due. Now, is it competent for this court to relieve against such a forfeiture ? to say that the legal consequences expressly declared by the statute shall not ensue ? Can it say that where the law prescribes there shall be a forfeiture, there shall be none; and for instance here, say that the second sale shall be null and void; thus virtu ally repeal and nullify an act of the legislature ? I should require very clear and strong authority to show that courts had done this, before I would presume to go that length. But we have been referred to no case where a court has thus interfered to mitigate a forfeiture imposed by statute. The cases of Peachy vs. The Duke of Somerset (1 Str. R. 447); Keating vs. Sparrow (1 B. & Beat. 373, 374, also cited in Leading Cases in Eq., Vol. II part 2, p. 448), whatever they may determine, certainly give no countenance to this doctrine, but the contrary. And those cases are relied upon by Justice Story to sustain the very opposite doctrine, in see. 1326, Vol. If Kq. Jur. The expression of the legislative will is, in this case, most clear and explicit; shall it be defeated upon the ground and for the reason that the law is harsh and severe in its character ? Grant that the law is oppressive, inequitable, rigorous in its operation; that by its provisions the purchaser, on the least default, occasioned, perhaps, by a temporary inability to obtain money to pay what was due on the certificate, or by misfortune, was liable to lose all his rights under the sale; yet I cannot see that he can annul or disregard those provisions. I do not feel called upon at this time to attempt a vindication of this act of the legislature, and to show that it is not justly obnoxious to any such strictures. But I remark in passing, thabsection 16 enables the purchaser, at any time before a re-sale, to revive the original contract by paying the amount due with interest, and all costs occasioned by the delajr, and five per cent, damages on tbe purchase money. Besides tbe re-sale could not take place without -notice thereof being given in some newspaper. That was done in tbe present case, and it appears the re-sale did not take place until a year and a half after the first default was made. But it is not for us to pass upon the sound policy and wisdom of this law. Such considerations are properly addressed to the legislature, :which has power to repeal or amend it. We can only inquire whether the act as it now stands, is in conflict with any provision of the constitution of this state. And this brings us to the last, and most difficult and important point in the case.

And in entering upon the discussion of this point, I observe, that while I should feel it to be a very delicate and unpleasant duty to. declare an .act of the legislature unconstitutional,.particularly one like that under consideration, undér which, so many sales of real- estate have been made, and so many rights become vested, yet I should feel it to be a duty from which I could not shrink, in a case free from all rational doubt.. But if such a case were not presented, if I can give to the constitution and the law a reasonable interpretation, such an one as will permit the law to stand, I then feel it to be my imperative duty so to do, and declare the law valid. . And this is a rule as I understand of all courts, which will not, in a doubtful case, pronounce an act of the legislature to be contrary to the constitution.. 4 Whea. 625; Cow. 564. But to return to the question, is chapter 24, B. S., in those provisions relating to the sale of the school lands, in conflict with section 8, article 10, of the Constitution of this state ? The first two clauses of that section of the constitution are the only ones which have .any bearing upon the question and read as follows:

“ Provision shall be made by law, for the sale of-all the school and university lands, after they shall have been appraised; and when any portion of such lands shall be sold, and the purchase money shall not be paid at the time of the sale, the commissioners shall take security by mortgage upon the land sold, for the sum remaining unpaid, with seven per cent, interest thereon, payable annually, at the office of the treasurer. The commissioners shall be authorized to execute a good and sufficient conveyance to all purchasers of such lands, and to discharge any mortgages taken as security, when the sum due thereon shall have been paid.”

What is the obvious meaning, scope and design of this provision ? It evidently contemplates that the school lands, or a part of them, at least, might be sold upon credit; that thel egis-lature, in the exercise of its discretion over them, looking to the situation of the country, the educational interests of the state, and the best method of enlarging the school fund, might thus determine and provide. But what is the nature and kind of the sale here spoken of, and which was contemplated by the constitution to take place ? In its popular and general sense, the word “sale” does not always convey the same precise meaning. We speak of a man’s having made sale of his farm, when he has only made a contract to sell. In the above provision the word is used in a more restricted and technical sense. It is here used to denote a transaction, where the fee to the land sold passes out of the state, and becomes absolutely vested in the purchaser. That this is the nature of the sale here spoken of, is apparent from the Context. -For it provides, that when such a sale is made upori credit- — that is, a sale within the purview of its provisions ■ — the commissioner shall take security by mortgage upon the lands sold, for the sum remaining unpaid. Now, the giving of a mortgage, in its general acceptation, implies the conveyance of the légal estate, as security for the payment of a debt. The sale then contemplated by the constitution, and intended to be regulated by it, was a sale, in the absolute sense of the term, where and by which the purchaser becomes completely vested with the legal title to the land sold. And when that took place, and the money was not all paid at the time, then the commissioners were to take security bj' way of mortgage. And why were they required to take a mortgage in such a case ? What was the object and end of the constitutional provision? What evils was it intended to prevent, what mischief to guard against? Was it designed to protect the purchaser of the school lands ? to guard his interests? to establish the mortgage relation between him and tli?. state, for tbe purpose of giving him the benefit of an equity of redemption? Or bad it an entirely other and different object in view ? Was not its main, its primary, its only object, the protection of the school fund? to guard that from being squandered and lost? to prevent the legislature from making any provision for the sale of the school lands upon credit, without having, at least, the land sold as security for the debt? Otherwise, the legislature might have provided for the sale of the lands upon credit, permitting personal security to be taken, or security upon lands where the title was doubtful, or of less value than those sold. Hence, this restriction upon the legislature and the commissioners, that when the lands should be sold upon credit, and the title pass out of the state, and become fully vested in the purchaser, a mortgage, by way of security, should be taken upon the lands sold. Such seems to be the meaning, scope and end of the constitutional provision. Does the statute violate it as thus interpreted ?

A material distinction will be at once noticed between the sale contemplated by the constitution, and the one which takes place under the provisions of the statute. For though by the statute the school lands are sold upon credit, and though the word “ sale ” frequently occurs in the statute, yet that word has a different signification in the statute from what it has in section 8, article 10. This is manifest from the connection in which it is used. The sale made under the statute is not attended with the same legal consequences as the one spoken of in the constitution. The fee to the land does not pass by it to the purchaser; it remains in the state. Section 19 says: “ The title or fee of all school and university lands shall remain in the state until patents shall issue for the same, and no such patent shall issue except upon full payment of the purchase money and interest.” By the sale mentioned in the constitution, the purchaser acquired, or would acquire, a perfect title to the lands — the right of possession and the right of property. He would be the substantial owner of the land, and might exercise the rights of an owner over it, providing, of course, he did not commit acts of waste. But I think the estate acquired by the certificate of sale is inferior to that of a mortgagor. He bas tbe right to the possession for the purpose of cultivation and improvement. But this right is liable to be forfeited under the act, and by the very terms of the certificate, upon default in paying principal or'interest, or taxes, as they become due, or thirty days thereafter. Section 24 would likewise seem to limit and qualify this estate. See also section 106. But, however this may be, I think the nature of the sale provided for under the statute different from the one contemplated by the constitution, and to which the constitutional inhibition applies.

Furthermore, it seems to me that the main purpose, the great objects of the constitutional provision, are completely accomplished by the statute. If, as already observed, that object were the preservation of the school fund, holding the land as security for the sum due, that end is fully obtained. The state does now hold the lands as security until all is paid. The means of security proposed by the statute, are less expensive, equally safe, and in all respects for the state, more desirable than the giving of a conveyance and taking a mortgage. The situation of the purchaser might have been better, and his interests more secure, if upon the sale, the lands had been conveyed to him in fee, and a mortgage taken by the state. But the school fund, and the interests of the state, would not be as well protected as now; and should the law be declared unconstitutional for that reason ? Is it a good and solid objection to the validity of this law, that it proposes a method of disposing of the school lands, equally, if not more, efficacious and safe, and as fully accomplishing all the objects of the constitution as the method prescribed in that instrument? It will not be denied that 'in the absence of this constitutional inhibition, the legislature might have made any provision for the sale of the lands it had deemed proper, applying the proceeds to the purposes of the grant. Its power over them is now restricted, so that they cannot be sold upon credit, transferring the title, without taking mortgage security.

It would be fatal to the complainant’s case to hold this act unconstitutional, and the sales under it null and void. He derives title from a sale under the act, and if that should fall, his rights ■wceuld fall with it. To escape this inevitable conclusion, be is forced to maintain that the law is not wholly unconstitutional, but is rather an act of imperfect.legislation; that the legislature having acted upon the subject matter and attempted to make provisions for the sale of these lands, but not having conformed in all respects to the requirements of the constitution, it is in the power of this court, and its duty, to supply the defect and effectuate the objects of the constitution. I have already stated that I conceive these objects more fully attained by the statute. But suppose I am wrong, it is not very intelligible to my mind how this , court can supply the defect. It possesses no legislative power. That is vested in the legislature. To the legislature also belongs the duty of making provision for the sale of the lands. If it has acted imperfectly, can the court interfere and make a law for it ? Can this court say, “true, the legislature has attempted to make provision for the sale of these lands, but has failed," or not made a suitable provision, and therefore I will make it ?” It is said to be analogous to a ease where equity aids a defective execution of a power in order to effectuate the intention of the parties. Courts of equity do this undoubtedly, so that the manifest intention and object of the parties may not be defeated by any blunder or mistake they have made. I do not think the analogy holds good, for the reasons already suggested. .But suppose it does, and that it is competent for. the court, not only to expound the law as it is, but to give it new scope and import, as it conceives it should have ; is the attitude of the complainant’s case improved if we hold the sales under the act good, and- that the certificate of sale stands at once in place of a deed conveying the fee and a mortgage-for the purchase money ? If the certificate of sale is considered to be an equitable .mortgage, is there not upon the re-sale a statute foreclosure of the equity of redemption ? True, the statute says nothing about foreclosing an equity of redemption. The statute goes upon the idea that the certificate is rather a contract of sale, than an absolute sale and conveyance of the title: that the fee remains in the state until the patent issues. But by the re-sale it does most clearly profess to to cut off and bar all the rights and interest of the purchaser under the certificate, whatever those rights may be. If upon the re-sale the land brings more than sufficient to pay the amount due upon the certificate, interest, costs and five per cent, damages on the purchase money, the residue goes to the original purchaser. Sec. 17. The act also provides that he shall be paid for his improvements upon the land. Secs. 24, 30, 31, 45, 46. Rut it seems to me that all his rights, legal and equitable are barred and cut off under the act by the re-sale, so that in whatever light I view the case, it seems to me the decree of the court below in dismissing the complainant’s bill, must be affirmed, with costs.