SOUTHERN PINE CO. v. HALL, 105 F. 84

SHELBY, Circuit Judge, after stating the case as above, delivered the opinion of the court. This is a suit in equity to quiet the title of the plaintiff to a large tract of swamp or overflowed lands in Mississippi against the claim of the defendant to an adverse interest in the premises. The plaintiff seeks to have £he defendant’s pretended titles produced and canceled. The defendant, after answering, filed a cross bill seeking to have the plaintiff’s alleged titles canceled and her right to the lands established.

The court decided in favor of the defendant and cross complainant, and the plaintiff appeal's to this court. The first question raised is as fo the jurisdiction of the circuit court. The original bill was filed in the chancery court of Pearl River county, Miss. The plaintiff was a Mississippi corporation, and the defendant a citizen of Michigan. The value of the land exceeded $2,000. On petition of the defendant the case was duly removed from the state court to the circuit court of the United States for the Southern district of Mississippi.

The plaintiff moved to remand the case to the state court because the circuit court “has no jurisdiction in the premises, there being no ground of equity jurisdiction stated upon the face of the bill of complaint, save under a statute of the state of Mississippi, which cannot enlarge the equity powers of the federal courts.” The court overruled the motion, and its order.is assigned as error. The statute referred to in the motion is

section 500 of the Annotated Code of Mississippi of 1892, and is as follows: “See. 500.

When a person, not the rightful owner of any real estate, shall have any conveyance or other evidence of title thereto, or shall assert any claim or pretend to have any right or title thereto which may east doubt or suspicion on the title of the real owner, such real owner may file a bill in the chancery court to havé such conveyance or other evidence or claim of title cancelled, and such cloud, doubt or suspicion removed from said title, whether such real owner be in possession or not, or be threatened to be disturbed in his possession or not, and whether the defendant be a resident of this state or not; and any person having the equitable title to land may,' in like cases, file a bill to divest the legal title out of the person in whom the same may be vested, andi to vest the same in the equitable owner.” The seventh amendment to the constitution of the United States declares that “in suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved.” This amendment is a limitation on the equity jurisdiction of federal courts.

If the legislation of states, providing for the trial of common-law cases in equity, was binding on federal equity courts, this amendment of the constitution could be made useless. Such state statutes do not control the federal courts. A state statute, therefore, which confers jurisdiction of common-law cases on state equity courts, thus dispensing with trials by jury, will not be administered in federal courts of equity. Scott v. Neely, 140 U. S. 106, 111, 11 Sup. Ct. 712, 35 L. Ed. 358; Cates v. Allen, 149 U. S. 451, 13 Sup. Ct. 883, 37 L. Ed. 804.

It is well settled, however, that an enlargement of equitable rights may be administered as well by the United States courts as by state courts. Clark v. Smith, 13 Pet. 195, 10 L. Ed. 123; In re Broderick’s Will, 21 Wall. 503, 520, 22 L. Ed. 599; Greeley v. Lowe, 155 U. S. 58, 75, 15 Sup. Ct. 24, 39 L. Ed. 69; Smyth v. Ames, 169 U. S. 466, 18 Sup. Ct. 418, 42 L. Ed. 819. Courts oí equity from time immemorial have exercised jurisdiction to cancel spurious titles and to remove clouds upon the title of real estate, thus preventing anticipated wrongs or mischiefs.

To maintain such suit it was generally necessary for the plaintiff to be in possession of the real estate, and that his title should have been established at law, or founded on undisputed evidence or long-continued possession. The statute quoted distinctly relates to equitable rights. 11 enlarges such rights. It dispenses with the necessity for the plain-till’s possession. This enlargement of equitable rights will be administered in the United States courts. Holland v. Challen, 110 U. S. 15-26, 3 Sup. Ct. 495, 28 L. Ed. 52.

The bill in the case at bar contains no specific averment as to the actual possession of the real estate. It alleges title in the plaintiff, hut not possession. It does show, however, that the defendant is not in, actual possession of the property. The lands are shown to be in Mississippi. She is shown to reside in Michigan. She is sued and served as a nonresident of Mississippi, ito tenants are shown to be in possession. It does not: appear from the record that a remedy by the action of ejectment was available to the plaintiff.

An examination of the cases will show that the jurisdiction in equity in the United States courts to enforce statutes enlarging equitable remedies depends on the question whether or not the enforcement of the statute deprives a party of the constitutional right of trial by jury.

Section 723 of the Revised Statutes of the United States, and the law as administered without regard to this statute, forbid equity to take jurisdiction where there is a plain and, adequate remedy at law. If the record in this ease showed that the defendant was in actual possession of the.lands, so that an action of ejectment could have been brought against her for the lands, then it would appear that there was an adequate remedy at law, and jurisdiction in equity would not exist in the United States courts, although the statute conferred such jurisdiction on the Mississippi state courts. Whitehead v.

Shattuck, 138 U. S. 146, 147, 11 Sup. Ct. 276, 34 L. Ed. 873. The result of the decision of the supreme court is that a state statute which enlarges equitable rights will be enforced and administered in the United States courts in all cases where its enforcement and administration do not conflict with the right of the parties to a jury trial. Clark v. Smith, 13 Pet. 195, 10 L. Ed. 123; In re Broderick's Will, 21 Wall. 503, 22 L. Ed. 599; Hipp v. Babin, 19 How. 271,15 L. Ed. 633; Thompson v. Railroad Co., 6 Wall. 134, 18 L. Ed. 765; Insurance Co. v. Bailey, 13 Wall. 616, 20 L. Ed. 501; Grand Chute v.

Winegar, 15 Wall. 373, 21 L. Ed. 174; Buzard v. Houston, 119 U. S. 347, 7 Sup. Ct. 249, 30 L. Ed. 451. See, also, Harding v. Guice, 25 C. C. A. 352, 80 Fed. 162; Green v. Turner (C. C.) 98 Fed. 756. To review and quote from these cases would serve no useful purpose. That work has already been done by Judge Taft, speaking for the United States circuit court of appeals for the Sixth circuit, in Grether v. Wright, 23 C. C. A. 498, 75 Fed. 742. We will, however, quote the following from an opinion of the supreme court delivered by Mr.

Justice Brown: “This court has held in a multitude of eases that where the laws of a particular state gave a remedy in equity, as, for instance, a hill hy a party in or out of possession to quiet title to lands, such remedy would he enforced in the federal courts, if it did not infringe upon the constitutional rights of the parties to a trial by jury.” Greeley v. Lowe, 155 U. S. 58, 75, 15 Sup. Ct. 28, 39 L. Ed. 75. It is conceded that the bill makes a case within the jurisdiction of the Mississippi chancery court, for the statute quoted dispenses with the necessity of the plaintiff’s possession.

As it appears that the defendant was not in possession of the lands, and that the plaintiff has no adequate remedy at law, and that the defendant is not deprived of the right of a trial by jury, there is no valid objection to the jurisdiction of the United 'States circuit court. The other assignments of error relate to the merits of the case. On the 3d of February, 1858, the lands in controversy were patented by the United States to the state of Mississippi.

The litigation in this case is to settle the question as to the ownership of these lands; it being agreed that they are owned either by the appellant, the Southern Pine Company, or the appellee, Olivia B. Hall. The parties both deraign title from the state of Mississippi. On April 8, 1871, the legislature of Mississippi chartered the Pearl River Improvement & Navigation Company, hereinafter called the “Pearl River Company.” This company was authorized to receive from the governor and the secretary of state of Mississippi patents for the-land.

On June 7, 1871, the secretary of state and the governor of Mississippi issued a patent for the lands to the Pearl River Company, which was duly recorded in the counties where the lands lie. The Pearl River Company on November 20, 1872, conveyed the lands, for a valuable consideration, to Matthew S. Baldwin. Baldwin on the 17th day of April, 1873, sold and conveyed the lands to Israel Hall for a consideration of $40,000. On November 5,1874, Hall conveyed the lands to his wife, the appellee. The patent and all the deeds were duly recorded.

Soon after the patent issued to the Pearl River Company the lands were listed for taxation, and the appellee and her vendors have paid taxes on them to the state of Mississippi since that time to the beginning of this suit. On the 7th of December, 1893, the state of Mississippi issued other patents to the lands in question. The appellant, the Southern Pine Company, by several conveyances has become the owner of whatever right and title these patentees obtained from the state. It will be seen by this statement that the appellee claims under the prior grant.

The act of 187.1 which incorporated the Pearl River Company required it within 60 days after the passage of the act to deposit with the secretary of state of Mississippi “a bond in the smh of $50,000, with two or more good securities, who shall make oath that they are worth the penalty of the bond, over and above all liabilities and exemptions,.which securities shall reside in this state, to be approved by the governor.” On the filing of such bond the act provided that patents were to be issued by the governor and the secretary of state to the Pearl River Company, which patents were to vest the fee-simple title to the lands in the company.

Before the patents were issued the Pearl River Company filed a bond in the proper office in the sum of $50,000, which was duly approved by the governor of Mississippi on May 12, 1871. The bond was not signed by, and did not purport to bind, the Pearl River Company. The bond is in due form, and is signed by four obligors. The objection urged to the bond by the appellant is that it is not the bond of the company. It is claimed that the legislature, in requiring the Pearl Eiver Company to file “a bond * * * with two or more good securities,” meant that it should be bound on the bond as principal.

It is aleo said that the act provides that in “certain contingency it is the duty of the governor to commence a suit on the bond of said company.” These expressions in the bond, it is said, show that the act required the filing of a bond executed by the Pearl River Company as a condition precedent to the issuance of the patent. The act does not say that the bond is to be executed by the Pearl River Company.

The language used is that it shall “file in the office of the secretary of state a bond in the sum of $50,000, with two or more good securities, who shall make oath that they are worth the penalty of the bond, over and above all liabilities and exemptions, which securities shall reside in this state, to he approved by the governor.” The purpose and intention of the legislature was to secure indemnity or security to the amount of $50,000. That was the leading purpose and thought. The makers of the bond were required to mala: oath that they were worth the amount of the bond.

If it became “apparent to the governor that the said company had not complied with the act, it shall' become Ms duty to commence suit on bond of said company.” These provisions make it clear that the purpose of the bond was indemnity or security to the state. The company would he liable, with or without bond, to suit for failure to perform the trust created by the act. It was liable to such suit whether it had been required to give bond or not. The state lost nothing in the way of security by the failure of the company to join in the execution of the bond.

A solvent bond for the required sum being given, the purpose of the legislature was .complied with. The bond was accepted by the governor as a satisfactory compliance with the act. This contemporaneous construction of the act by the executive of tlie state, who was vested with the authority by the legislature to approve the bond, is entitled to consideration and respect. In Edward’s Lessee v. Darby, 12 Wheat. 207, 210, 6 L.

Ed. 604, the supreme court said: “In tlie construction of a doubtful and ambiguous law, the contemporaneous construction of those who were called upon to act under the law, and were appointed to carry its provisions into effect, is entitled to very great respect.” The bond being approved and the patents issued, the state received taxes on the lands from the patentee and those claiming under the patentee for a period of over 20 years. On April 19, 1873, the legislature, by

an act of that date, formally recognized that “the lands had been patented to said company in compliance with the act of incorporation.” Acts Miss. 1873, p. 120. It appears, therefore, that both the executive and legislative branches of the state government have recognized the sufficiency of the bond to authorize the issuance of the patent under which the appellee claims. It does not appear clearly from the language of the act that it was intended by the legislature that the Pearl River Company should sign the bond. Rut, if it be conceded that such was the meaning of the act, it is a matter of minor importance.

The important and essential purpose was to secure an indemnity by bond for $50,000. A good bond for that sum was given and accepted. After the acceptance of the bond and its approval by the governor, and the subsequent ratification of the governor’s action by the legislature, the courts should he reluctant to disturb titles acquired in good faith by purchasers for value who relied on the patents issued by the governor and the secretary of state. The case of Hardy v. Hartman, 65 Miss. 504, 4 South. 545, is relied on by the appellant.

The court in that case said it did “not appear from the record that any patent signed by the governor and countersigned by the secretary of state was ever issued to the company for the land in question. * * *” The observation, therefore, at the conclusión of the case, that if a patent had issued it would have been void, must be regarded as an obiter dietuih. This case, we think, cannot be held a judicial construction of the statute on the point here involved.

If it should be so considered, although we would have great respect for the conclusion of that able and impartial court, we should be required, on the facts of this case, to exercise an independent judgment in the construction of the statute in question. The appellee in this case having acquired the rights here asserted before the decision of the supreme court of Mississippi just cited was rendered, she is entitled to invoke the independent judgment of this court as to the proper construction of the statute. In Bartholomew v. City of Austin, 2,9 C. C.

A. 568, 85 Fed. 359, this court (Judge Pardee delivering the opinion) held: “Where contracts or transactions have been entered into, and rights have accrued thereunder, before state laws applicable to them have been construed by the state courts, the federal courts will place their own

interpretation on such laws, though the state courts have since adopted a different construction." This view is fully sustained by the supreme court. In Burgess v. Seligman, 107 U. S. 20, 33, 2 Sup. Ct. 21, 27 L. Ed. 365, the court said: “When contracts and transactions have been entered into, and rights have accrued thereon, under a particular state of the decisions, or when there has been no decision, of the state tribunals, the federal courts properly claim the right to adopt their own

interpretation of the law applicable to the case, although a different

interpretation may be adopted by the state courts after such rights have accrued.” The. appellee has urged on our attention the fact that her vendor .purchased and paid full value for the lands without notice of defect, if any, in the bond given by the Pearl River 'Company, and that she should be protected as a bona fide purchaser for value, without notice. It is also claimed that the state was by the facts estopped to issue the second patent for the lands. As we have determined that ' the bond given was a substantial compliance with the act of the legislature, we do not deem it necessary to examine these last-named contentions. The decree of the circuit court is affirmed.