NATIONAL NICKEL CO. v. NEVADA NICKEL SYNDICATE, Limited, 112 F. 44

MORROW, Circuit Judge, after stating the foregoing facts, delivered the opinion of the court. The demurrer to the answer was properly overruled. The general rule that in -actions in ejectment in United States courts the strict legal title prevails, to the exclusion of an equitable defense, as stated in Hickey v. Stewart, 3 How. 750, 11 L. Ed. 8x4, and Foster v. Mora, 98 U. S. 423, 25 L. Ed. 191, is subject to certain well-defined exceptions. One of these is the defense of an equitable estoppel. This defense was sanctioned by the supreme court of the United States in Kirk v. Hamilton, 102 U. S. 68, 26 E.

Ed. 79, and in some of its features that case is like the present one. The action was ejectment brought in the circuit court for the District of Columbia in 1872 by Kirk to recover possession of certain lots of land in the city of Washington. In 1859 a suit in equity had been commenced against Kirk and others to obtain satisfaction of several unpaid judgments against Kirk.

The action resulted in a decree and an order in i860 that the lots described in the bill should be sold, or so much thereof as might be necessary for the payment of the complainant’s claim, and others who might come in as creditors of the said Kirk by petition in the manner and form required by law and the practice of the court. A trustee was ■ appointed to sell the property, who sold one lot, the proceeds of which were sufficient to satisfy the claims provided for in the bill and decree, leaving a sur-' plus in the hands of the trustee. The sale was confirmed by the court in October, 1862.

In November, 1863, certain creditors of Kirk filed petitions seeking the payment of numerous judgments and claims against him. After publication of notice of these claims against Kirk and his codefendants, and no one appearing to answer the demands, they were taken as confessed, and referred to the auditor of the court, with instructions to state the trustee’s account- and make distribution of the balance of the fund in his hands. A report of distribution was made, showing that judgments and claims had been proven in excess of the fund remaining in the hands of the trustee.

The report was approved by the court in 1864, and thereupon the trustee, without any further order, and by virtue of the original decree of i860, advertised and sold at public auction the premises afterwards involved in the ejectment suit. The sale was confirmed by the court, and the cause referred to the auditor to state the account of the trustee, and report a distribution of the proceeds of this last sale.

The report showed that upon this reference Kirk had appeared by counsel, and, not admitting the simple contract debts, had required that before they, should be allowed by the auditor they should be established by competent proof. No such proof appears to have been offered. The report was confirmed, and, the purchase money having been paid, the trustee conveyed the premises to Hamilton, who thereupon went into possession, and was afterwards made the defendant in the ejectment suit.

In this last suit the plea of the defendant was, “Not guilty,” and upon the trial, to sustain his defense, he offered in evidence the record in the equity suit. The plaintiff objected that the record of that suit was insufficient in law to maintain the issue on defendant’s behalf. The record was admitted. The verdict of the jury and júdgment of the court were in favor of the defendant. The case was taken to the supreme court of the United States' upon a bill of exceptions, which in various forms presented the question whether the sale of the property by the trustee in 1864 was not a mere nullity.

Among other objections, it was urged that the circuit court was entirely without jurisdiction to make a second order of sale, and did not in fact assume to exercise any such power, and that, the second sale by the trustee having been made without any previous order of the court, its confirmation .and the deed subsequently made to Hamilton were absolutely null and void.

The court held that it was unnecessary to pass upon these several objections; that if it were assumed that the record in the equity suit was of itself insufficient in law to devest Kirk of title to the premises in dispute, or to invest Hamilton with title, the question would still remain whether the facts disclosed by the bill of exceptions did not constitute a defense to the action.

In referring to these facts, the court said: “After the confirmation of the sale of April 19, 1864, before any deed had been made, and while the cause was upon reference for a statement as well of the trustee’s accounts as for distribution of the fund realized by the sales, Kirk, it seems, appeared before the auditor, by an attorney, and made objection to the allowance of the simple contract debts which had been proven against him in his absence. So far as the record discloses, no other objection to the proceedings was interposed by him.

Undoubtedly he then knew—he must be conclusively presumed to have known, after he appeared before the auditor—all that had taken place in that suit during his absence frota the District, including the sale of the premises in dispute, which took place only a few months prior to his appearance before the auditor.

If that sale was a nullity, the court, upon application by Kirk, after his appearance before the auditor, could have disregarded all that had been done subsequently to the first sale, discharged Hamilton’s bond, returned the money he had paid, and in addition placed Kirk in the actual possession of the property. No such application was made. No such claim was asserted. No effort was made by him to prevent the execution of a deed to the purchaser at the second sale.

So far as the record shows, he seemed to have acquiesced in what had been done in his absence.” These and other acts of the plaintiff of a like character were deemed by the court to amount to an equitable estoppel, and, as such, constituted a defense to the action, notwithstanding the sale may have been- a nullity, and the plaintiff entitled to repudiate it as a valid transfer of his right of property.

This case, upon the facts stated, is an authority in the present case, and disposes of the question as to the right of the defendant to set up an equitable defense to the cause of action; and it also determines the admissibility of the evidence to which objection was made, and the sufficiency of such evidence to establish an equitable estoppel.

In the present case the special master carried out the directions of the decree of foreclosure and order of sale, including the direction as to the publication of the notice ; and the sale was made to the defendant in error, and confirmed by the court, in accordance with the terms of the decree.

It is conceded by the court below, and cannot be denied, that, had the plaintiff in error made objection to the order of sale at the proper time, the court would have been obliged to modify the decree, and order the sale of the property upon, notice published and posted as required by the act of'Congress;- and even after sale the objection would still have been good, had it been made at any time before confirmation by the court.' But although both the attorney and managing agent of the plaintiff in error were duly served with copies of the decree of foreclosure and order of sale, and were given prior timely notice of the hearing of the motion for confirmation ,of the sale, the plaintiff in error took no: steps whatever toward obtaining a correction of the mistake in the method of advertisement; and it was not until: some six months- after the decree of confirmation had been entered;-.and a like period-after the defendant in error had been placed in possession, of the.property as a purchaser at-.the foreclosure Isale, - that, the attention of the court was called to- the act of con-gross, and a motion made by the plaintiff in error to vacate the sale pf the special master.

The law does not permit a party to feta-nd by in -silence while judicial proceedings are in progress affecting his rights, and withhold objections to erroneous procedure until other rights have intervened, and then challenge their validity on account of such-erroneous procedure. He who has been silent as to.his alleged rights when he ought in good faith to have spoken shall' not be heard to speak when he ought to be silent.' Bank v. Lee, 13/Pét. 107, i(VL.

Ed. 8i. '. '/.• Tlg,e..present'action is subject to the further .objection that it is ¿.¡collateral atta'ck upon the decree in the equity case, wherein the plaintiff in- error'ha's" had his day in court. The plaintiff in error was the defendant'injthe action of foreclosure. The court had jurisdiction :of the causé pf .action .and of the defendant, and, although all, the .-proceedings. prior to the decree were closely contested, no appeal was taken by the plaintiff in error from the decree of foreclosure, or'from the .order'.confirming the sale.

There has, therefore, been a1 ¡final determination-' of all the issues of that case, and one of the issues so determined, was the regularity -of the proceedings resulting in the:sale-.of the property-.- The. general and well-settled rule of law in such case is.that when the- proceedings are collaterally drawn in .-question,- and it áppeará'upoh the face of "them that the subject-mat,ter was-within, the'jurisdiction of the court, they are voidable ohly. ,The -errors and irregularities, if any exist, are to be corrected by som'e direct proceeding, .either before the' same court to set asidesuch faulty proceedings,or in .an appellate court.

Thompson v. Tolmie,.:2 -Pet. -157,.163, 7, L. Ed; 381; Voorhees v. Bank, 10 Pet. 469, 9 L. Ed. 490; Cooper v. Reynolds, 10 Wall. 308, 319, 19 L. Ed. 931-- Burley v. Flint, 105 U. S. 247, 26 L. Ed. 986. The judgment of the circuit court is affirmed.