LA-THAM
v. 'V.
J3A-RNBoY.
4:33
L\THAM
and another
BARNEY and others. December Term, 1882.)
(Girt;uit Gourt, D. Minnesota.
1.
RELEASE TO AmnNISTRATOR, RATIFYING SALE OF LANDS-FAILURE TO RESCINl>, OON'rRACT VOID-LACHES, ETC.
Decedent, in his life-time, was possessed of a certain interest in lands which he heid with others. His acting administrator, who ow.ns a part interest in the same lands, obtains the assent ot two of decedent's heirs to the sale of decedent's interest in the said land, and forthwith conveys the same to himself 'ani his associates. Thereafter all decedent's heirs, including the complainants, sign a release discharging him from all liability "on account of the assets and property: of the deceased in his possession or under hiscontrol." In the suit brought by two of these heirs against the acting administrator and his associ· ates, purchasers of the land aforesaid, asking for an accounting of proceeds of sales made by them, and for a conveyance to complainants of the undivided interest in. the lands still unsold, held, that the release from the heirs of decedent t.o the administrator, considered in the light of a sale of their interest in the lands by such acting administrator to himself and associates, or as an agreement ratifying such a sale previously made by him, was wholly invalid, and that' this being so, and it not appearing that the complainants accepted any benefit from the sale· after the facts were known, they are not estopped to assert the invalidity of the sale by reason of laches, failure to rescind, and the like.
2.
PROTECTION TO BONA FIDE PORCHASERS.
The protection extended to a bona fide helongs only to the purcllaser of the legal title without notice of an outstanding equity.
In Equity. On the thirty-first day of October, 1867, a written contract was entered into between Danford N. Barney, Jesse Hoyt, Angus Smith, William G. Fargo, Benjamin P. Cheney, Charles F. Latham, Ashbel H. Barney, Samuel M. Hoyt, and Alfred M. Hoyt, parties of the first part, and the Winona & St. Peter Railroad Company, party of the sec. and part. By this agreement it was recited that the parties of the first part had loaned and advanced to the party of the second part large sums of money, and had made, constructed, and equipped for it 105 miles of its railroad in the state of Minnesota, whereby the said party of the second part had become indebted to the parties of the first part in a large sum of money. Tlae contr!!oct also provides for .certain payments upon said indebtedness, and for a. conveyance of a portion of the land grant owned by the railroad company in settlement of the residue. This latter portion of the contract is as follows: "Now, for the resiUue of the said indebtedness of the said party of the second part to the said parties of the first part, the said party of the second part hath agreed to sell and convey to the said parties of the first part as many
v.14,no.8-28
PEDBRALBEPORTER.
acres of land heretofore granted by congress to the state of Minnesota as the said party of .the secoridpart shall receive from the said state by reason of the construction of the portion of the Winona & St. Peter Railroad heretofore constructed, to-wit., 105 miles thereof, extending westwardly from Winona, excepting and reserving,. nevertheless, any and all parts and parcels of such lands (if any such there be) which may be necessary for the track of said railroad, or the right of way, or any depot or depot ground3 thereof, or any other purpose incidental to the operation of the said railroad constructed, or to be constructed, or any part thereof; whiQh said lands hereinbefore agreed to be sold, shall be conveyed to the said parties of the first part, or as they shall in writing direct, whenever and as soon as the said party of the second part shall obtain a title thereto under such acts of congress. The lands to be conveyed as 'Uforesaid shall be selected as follows: " Beginning at 'Winona aforesaid, and from thence proceeding on each side of the said railroad on a course running parallel therewith, embracing each of the six, ten, fifteen, and twenty mile limits of the congressional land grants, and in proceeding taking all lands within each and all of said limits which shall be received by the said company under said acts of congress, or either of them; it being understood that on each side of said railroad an uniform line of advance westwardly, embracing all the lands in said limits, be maintained, as nearly as may be, until a':l many acres shall have been selected and taken as the said company shall have received, for the construction of the portion of the said railroad now completed, which is estimated to be 105 miles thereof, extending northerly and westerly from Winona aforesaid; it being understood that the. said parties of the first part shall receive as many acres as shall be received by the party of the second part for the construction of the said 105 miles, or so much thereof as is now constructeJ, notwitbstanding that hoder the acts of the said,' lands are certified upon the completion of sect.ions of not less than 10 miles of railroad, but reserving, excepting, and deducting from the said number of acres all lands for the track of said railroad, or the right of way, or depots or depot grounds, or other . pUi'poses incidental to the operation of said railroad. "And the said party of the second patt agrees to acquire the title of said lands as fast as it may be permitted to do under said acts of congl'ess,an1 to l'elease and convey to the said p:uties of the first part, or ,to such person or persons in such manner and from time to time as may be devised by said parties of the first part, or their counsel, o.n the request of the said parties of the first part, or a majority of them, and will do any and every other act and thillg necessary and proper to secure the said parties of the first part said lauds, and every part and parcel .thereof, and proceeds thereof, if it shall be hereaftercdetermined that the be sold by the said party of the part for the said parties of the first part j and until the thaI shall be made in reference thereto, the title shall beheld by the said party of the second· part; and as some time is necessary to fmable said parties of thefirstpal·t to confer and agree upon the. details in relation to' the holding of the title and the mode of disposing of said lands.this ciauae i1 inserted toexpressthcragreement of thereto."
. LATBAIIV·. BABNm:o
495
.
486
PEDERAL BEPORTER.
from the railroad company, the said Barney being one of them. On or about the day last named the defendant Barney caused to be prepared a statement at account between himself and the said estate, and a release to be signed by each of the heirs. A sufficient num· ber of copies of this statement were prepared to provide one copy for each heir and one for said Barney, and they were all sent by express together to each heir to be signed, and, after signing, one executed copy was sent to each. Among the copies of this statement and release was one which differed from the others in a particular to be hereafter stated. All but that one were in the following form: "Whereas, Charles F. Latham, late of' irvington, county of West Chester and state' ot' York, died intestate, leaving a considerable estate, consisting of pE'l'sonal property, to be distributed among his next of kin, he, said Latham, having survived his wife and parents, and leaving no children or representative of a child; "And whereas, the next of kin of said Latham, entitled to participate in the distribution of said estate, for the purpose of saving the delay and expense incidental to legal proceedings to effect such distribution, have agreed among themselves as to the division of said estate, and the amount going to and receivable by each of the next of kin, whether in money, bonds, stock, or other property; · "And whereas, the persons entitled to participate in such distribution, and who have agreed upon the same, are the following, and their rellpective places of residence: William H. Latham, a brother of deceased, Indianapolis, Indiana; Henry M. Latham, a brother, Thetford, Vermont; James K. S. Latham, a brother, San Francisco, California; Edward P. Latham, a brother, Waseca, Minnesota; Lucy H. Kelly, wife of Thomas M. Kelly, sister of deceased, Cleveland, Ohio; Mary Baker, wife of John G. Baker, a sister, Orange, New Jersey; Julia A. Murphy, wife of Gardner B. Mhrphy,a sister, Cleveland, Ohio; Sarah A. Stotkwell, wife of Nathaniel H. StOCkwell, a sister, Orang.e, New Jersey; AZliha F. Barney. wife of Danford N. Barney, a sister, Irvington, New York; the three children of Arthur Latham, a deceased brother, to-wit, .Arthur and Jeanette, of Thetford, Vermont, and Julia A" wife of Francis of Chicago, Illinois, and all of whom are of full age except Arthur, who is herein represented by his mother, Lura A. Latham, 'Who is guardian of his personal estate. "And whllreas, each of the above-named parties-that is to say, the brothers and sisters of the said 'Charles F. Latham-are entitled to one-tent.h of said estate. anu the children Of Arthur are entitled to one-thh;d of a tenth thercof; except, whereas, the 'said Charles F.Latham, in his life.:Ume, advanced to the said Sarah A. Stockwell all that part or portton of estate to' which she would become entitled on his death, and such advancement was accepted and received by her upon the understanding that she would make no claim whatllv_crupon hiE! lllltll.te On but w9uld to the, Qthe;J: parties entitled thereto all interest in said estate, to be divided among the others next of kin to said Latham.
LATHAMV. BARNEY.
4:37
"And whereas, it is now the intent to give full force and effect to such understanding: Sow, therefore, ,said Sarah A. fltockwell, in consideration of such advancement, doth hereby release all claim on the estate of said Charles F. Latham. and agrees to of the same among the next of kin, exclusive of h('rself; that is, to each brother and sister a ninth pari thereof, <Iud to eadl of the chHdren of Arthur Latham one-third 6f a ninth thereof. " Xow, therefore, in consideration of the premises, and also in consideration of the distribution made to each of us of that part or portion of the estate of the Charles F. Latham to which we, and each of us, are entitled, as above set forth and declared, the receipt whereof we, and each of us, do hereby acknowledge, we, and each of ns, have released, remised, and forever discharged, and do hereby, each for himself, his heirs, his executors, administrators, and assigns, remise, re:ease, and forever discharge the others and each of them, their heirs, executors, and administrators, from all claims and demands for the amount so received by them, and each of them, in his or her distributive share of the estate of the said Charles F.l"atham, and from all debts, demands, and actions, and causes of action, growing out of or which may resll1t from the aforesaid d:stribution. "And wllereas, Ashbel n. Barney, of the city of New York, at the time or subsequent to the death of the said Charles F. J"atham, had in his possession, or under his control, certain of the assets and property of the said Charles F. Latham. which he has surrendered and delivered to the next of kin to the said Latham, and which properly and assets entered into the aforesaid distribution. and passed to the next of kin: "Now, this agreement further witnesseth that the said parties hereto, in considt'ration of the premises, and of the surrender and delivery to the sail1 lleJlt of kin of the aforesaid property and assets, have, and each of them hath, released, remised, and discharged, and they and each of them do for himself or for their heirs, executors, and administrators, remise, release, and forever disch;Lrge the said Ashbel H. Barney, his heirs, executors, and admiIiistrato1'1'" of and from all claims, demands, actions, and causes of action on acCOUllt of the said assets allli property of the said Charles F. Latham, so in his possession or under his control; .. In witness whereof the said parties have hereunto set their hands and seals tbis - day of - - - , ill the )'ear one thousand and eight hundred and seventyOllP."
Sealed an(l delivererl in presence of
nDJllB.U.j
Schedule showing, the estate of whioh the late Charles F, Latham ilied possessed, and the distribution among the of kin in the )oregoing agreement mentioned. ESTATE.
LURA.'ll!: ·V. BARNEt'.;
439 · $118,357 48 10,00000 22,00000 · 13,160 00 3.000 00 700 00 2iO 00 · 12,750 00 7,725 00 8187,962 48
Sep.
Amount brought forward,-' fl. Int. on W. & St. P. lands, estimated, 22 W. & St; P. bonds, 1st nige., estimatlldat 100, · 14 W. & St. P. lands, mge., at 94, 3 La Crosse, T. & P. bonds, estimated.at 100, 7 West Side Elevated, 20, 19 shares W., F. & Co., 6, at 21, 2.')0 shares U. S. Ex. Co., 51, 103 shares Pawtucket Horse R. Co., 75, BEQUESTS.
2,500 00 Home Missionary Society, · · 2,500 00 :Foreign Missionary Society, 5,000 00 Thetford Mil. Academy, Jeanette Latham awarded - 2,500 00 2,500 00 A. W. C. Latham, Thetford W. R. Junctioo, 19 shares W. F. & Co., taken from Miss J. Latham at 957 00 67, $1,273; less amt. rec'd for same, $316, 4,00000 Monuinent and legal expenses, ---
19,957 00
$168,005 48 NOTE-Besides the property herein specified, there is certain real estate in Oalifornia, to-Wit, a 50 Vara lot, corner of California and Octavia streeta, and a .two-thirds interest in 20.06 acres in Alameda county. Said property Charles F. Latham desir¢ should be given to his brother J. K. S. Latham, and a deed. of which will be forwarded for the heirs to sign.
There were also debts to quite a large amount against Dr. William Latham, Gardner B. Murphy, and Payson Latham, which Mr. Charles Latham wished to have canceled and not included in any division of his estate with the legal heirs. The remaining statement was an exact duplicate of the above, ex· cept· as to the item referring to the lands, which item was as follows: Thislatteris the "Interest in W. & St. P. land sales, say one s'elit to and returned by'complainantE. P. Latham. . , The complainants, alleging that the foregoing and the 6:{eeution by them under the circumstances of the release above named, did not divest them of their interest in the lands' aforesaid, bring this'suit for an accounting as to proceeds of sales heretofore made, and for a conveyance to them of 'fuEl undi"ided interest' in the lands still. unsold. The 1urthEit fa'cts, in 80 fir as it is deemed n6ces.sary to Btate thein,' will bef01ind in bhe opinion..
440
FEDERAL REPORTER.
Gordon E. Cole, for complainants. Thomas Wilson, for defendants.
MCCRARY, C. J. We are clearly of the opinion that upon the facts above stated, without more, it cannot be held that the complainants divested themselves of the interest in the lands in controversy, which they acquired by inheritance from their brother, Charles F. Latham. It does not appear that either of the complainants were cODs9lted about the sale of their interest to the defendant Barney and his associates, much less that they ever authorized the sale by such writing as the law requires, and the question, therefore, is whether the instrument signed by them and set forth in the foregoing statement can be held to be a valid release or conveyance, or effectual to estop complainants on the ground that it is a ratification 01' affirmance of the sale previously made by the said Barney. There can be no pretense that there was anything in the paper left with the complainant E. P. Latham that can be construed into an assent to or confirmation of such sale, for in that instrument there is no reference to any sale of the. interest of the heirs in the lands, but only a charge for the interest of the heirs in the "Winona & St. Peter land sales." There is, of course, a wide difference between the interest of the heirs in the land sales and their interest in the lands themselves. Let I1B assume, however, that both complainants are bound by all the statements signed by them, and thus view the question from the stand-point of the defendants. It is more than doubtful whether the release and schedule signed by complainants, considered merely with reference to its terms, can be construed as a release of their interest in the real estate in question. They were dealing with the administrator of their relative's estate, and they must be presumed to have known that an administrator could deal only with the personal estate. This is not the less true because the defendant Barney was acting as such administrator without legal anthority. He was at least bound by the rules which would apply to a lawful administrator. With this rule in mind let us look at the instrument signed by complainants and now relied upon as a release of their interest in the lands in controversy. The very first recitation in this instrument is that "Charles F. Latham, late of the county of West Choster and state of New York, died intestate, leaving ,a considerable estate, consi.gting of personal property, to be distributed among his next of kin." In tne Bubsequent recitals the property to be distributed is refer,red to both as "said estate" and as. "the estate of said Charles F. La-
LATHAM V. BARNEY.
441
tham," and the release proper from the heirs to defendant Barney is, as will be seen by reference to the instrument, simply a release of said Barney from responsibility for the assets and property in his possession or under his control, and which had been "surrendered and delivered to the next of kin of said Latham." Surely there is nothing in the recital of this instrument that can be construed into a ratification or approval of any previous sale by the defendant Barney of the interest of the heirs of Latham in any real estate, and there is very much which would lead even the most oareful reader to conclude that it was a rele!Lse only as to the assets or personal property which Barney had possessed, controlled, and distributed. We should be very reluctant to hold that the insertion of one item in the schedule which accompanies the release, by which defendant Barney charges himself with "Int. in W. & St. P.lands, estimated at $10,000," was of itself sufficient to constitute the transaction a release by the heirs of all their interests in the lands, even if the release had been executed to a stranger with whom they were dealing at arms-length, and upon temlS of equality. In this connection it is worthy" of remark that another item in the same schedule is couched in the very same terms, and yet confessedly refers to the proceeds of land sales', and not to a sale of land. We refer to item of date July 27th, which reads: "Int in W. & St. P. lands, $280." If, however, we assume that there was enough on the face of the instrument to advise complainants that they were receiving and giving a receipt and release for the proceeds of the sale by defendant Barney of all their that it interest in the lands in question, we are still of the did not bind complainants so far as the sale of the land is concerned, nor estop them from claiming their interest therein, for the reason that even the most formal conveyance executed by heirs of Charles F. Latham to defendant Barney, while the latter had possession of the el'tate and was acting as administrator, would, under the circumstances, have been absolutely void. The case of Michaud v. Girod, decided by the supreme court of the Uni.ted States in 1846, (4 How. 503,) is very instructive, and eatisfactory authority upon this question. It is there held that a purchase by executors of property of the estate, even though made at open sale, and where they were empowered by the' will to sell the estate for the be.neut of heirs and legatees, a part of which heirs and legatees they themselves were, carried fraud upon the face of it, and was void. The rule is laid down without qualification that a person cannot legally purchase on his own account, or as an agent for others, that
442
'JIlI)EnAL RE,PORTE.R.
which his duty or trust requires him to sell on account of another. He is not allowed to unite the .two opposite characters of buyer and seller, and the sale then under consideration was set aside, after a lapse ofovel" 25 years, notwithstanding the admitted fact that "the sale was a public auction, bona fide, and for a fair price." "The inquiry," say the ,court, "is not whether there was or was not fraud in fact. The purchase is void, and will beset aside at the instance of the cestui .que trust and a resale ordered, on the' ground that the temptation to abus6"and the danger of imposition, are inaccessible to the eye of the court." The court proceeds to discuss the question whether such; sales are void, or only voidable, a:rd, while admitting that cases may he found asserting that they are voidable only, the court declares with emphasis that there should be. no rela,){ation of the doctri,ne ,that a.n elecut,or cannot become the purchaser of the prope:rtywhich he repres6ots, or any portion of it, evan for a fair ,price, without fraud" and at a public. ,sale; much less, of course, can he puriJhase from the heirs at private sale, and withoutdisclosiug to them any facts concerning the character or value of the property. Numerons dtherauthorities to the same effect might be cited, but a single decision by the supreme court of the United States, directly in point, is sufficient. It follows that the execution of the release above mentioned, from complainant to defendant Barney, considered in the light of a sale of their interest in the lands by Barney to himself and associates, or as ,an agreement approving and ratifying such a sale previously made by him, was wholly invalid. It cannot be doubted that if the defendant Barney was incapable of acquiring the interest of the complainants by direct purchase, he could not acquire it by transferring the property to himself and others without the knowledge or consent of comfrom them a release from all plainants, and afterwards liability on account of the lands. If complainants sold their interest to Barney, it was by the execution of the release. Theywereparties to no previous sale, and, so far as appears from the evidence, knew nothing of any such sale, except as advised by the face of the instrumentitself. Further argument is not needed to show that the complainants are npt estopped to claim their interest in the lands, unless it is by something that has transpired since the execution of the rele.ase; and thit? briIlgs us .to the consideration of the defenses which have been pressed: upon our consideration by the learned counsel for the defendants. They are; (1) That complainants have been guilty of laches,
4:43
in that they. did not, when advised of the fraud, at once rescind the eontraet, and tender baok the oonsideration received; (2) that the complainants have ratified and confirmed the sale by aocepting, after being fully advised, a balance of purchase money from defendant. Barney. As to the defense of laches and fa.ilure to rescind and return consideration, it may be said in the first place that the transaction complained of, being, as we have seen, absolutely void, there is nothing to rescind. The complainants have never parted with any interest in the land.· The contract under which it is claimed that they have done so, being contrary to sound morality and public policy, is in fact and in law no oontract, and it is, to say the least, doubtful'whether it is capable of confirmation or ratification, even by affirmative action. 'fhe only effect of a failure to rescind is to ratify and make valid that which is otherwise voidable. Equity regards a purchase by a trustee or executor of the property or estate plaoed in his hands to manage for others as immoral, and contrary to public policy; and so the supreme court declares, in the case above cited, that the general rule which prohibits such purchases "stands upon our great mora,l obligation to refrll,in from placing ourselves in relations which ordinarily excite a conflict between self-interest and integJ;ity." We should be very reluctant to hold that such a contract is ratified, confirmed, and made valid by the failure of the cestu,i qu-e trust to rescind at once upon disco\'ering the facts. It is not necessary to decide the question whether the heirs, in such a case as the present, can, after being fully advised, by an affirmative act confirm such a sale, for no such question is before us. The voluminous correspondence which is in evidence shows that complainants distinctly disaffirmed the sale as soon as they were fully advilled, lLnd that the parties entered into no negotiations respecting the repayment to defendant Barney of the sum distributed by him to the heirs as proceeds of the sale of the lands. Again, we are of the opinion that the doctrine we are considering has no application to a purchase by lL trustee from his cestui que trust, especially where there is an accounting to be had between them, and the trustee has in his hands funds belonging to the cestui que trust. In such a case the latter may. at any time within the statute of limitations, bring a suit to set aside the sale, by offering to submit to an accounting, and to pay any balance which may be found due the trustee. We have seen no case, nor do we think one can be found, in which the rule with respect to rescission and the return of the price has been applied to such a sale as the one now under consideration.
444
That rule applies only to contracts entered into between parties who deal at arms-length. This is well illustrated in the case we have already oited, (Michaud v. Girod,) where the defense of laches was relied upon and overruled. In that case the executors of Girod had purchased the property of the estate at public sale in the year 1814, and in 1817 two of the complainants had executed formall'eleases to the executors for their share of the proceeds. It was not until about the year 1844 that suit was brought to set aside the sale to the ex· ecutors, and, yet there was no allegation of an offer to rescind the reo leases, and to return the money received prior to the bringing of the suit. It was held that the rights of the complainant were not affected by the releases, because they had been executed without "full knowledge of all the circumstances connected with the disposal and man· agement of the estate;" but it was not suggested, either by the eminent counselor by the court, that they were bound to rescind at once upon discovering the fraud. Where a trustee, in violation of its trust, pnrchases the estate of his cestui que trust, the right of the latter to relief does not depend upon his having formally rescinded the sale. All that is required is that he shall apply for relief within a reasonable time, and this, as we have seen, may sometimes be a long term of years, and relief "will be granted upon the terms of the cestui qlle trltst's repaying to the trustees the amount of the purchase money paid by him, together with interest, '" · '" while the trustee, or the pnrchaser with notice, will have to account to the cestui que trust for the rents and profits of the estate." Hill, Trust. 539. In other words, there is to be an accounting, and, in all such cases, all that is necessary is that the party seeking the relief shall offer to submit to an accounting, and to pay over any balance in his hands. If this were not the rule, it might result that the cestui que trust would be required, as a condition precedent to his right to recover,to pay over to the trustee more than his due. The present case well illustrates this rule. These complainants received two-ninths of $10,000 from defendant Bamey, which the latter insists was their share of the proceeds of the sale of their interest in the lands. The said Barney and his associates, having control of the complainant's interests in said lands, went OIl and made numerous sales. Before the complainants were fully advised of all the facts, and of their rights, a large sum had doubtless been realized by defendant Bamey from such sales. Clearly, it cannot lie maintained that complainants were bound to retum the whole amount received. It does not appear how much was due. The duty of
LATHAM: 'V. BARNEY.
445
Harney to pay over the proceeds of sales was just as imperative as that of complainants to return the consideration. All that either party could demand was a settlement,-an accounting,-and the payment of any balance due. In view of these considerations, without adverting to others, we are constrained to hold that complainants are not by laches, nor by their failure to fo'rmaJJy rescind and tender back the consideration. It is contended, in the next place, that complainants are estopped from denying the validity of the sale in question because they received a part of the consideration after a knowledge of the fraud, and thereby confirmed the transaction. The general rule, no doubt, is that the taking of any benefit under a contract, after knowledge of the alleged fraud, is a ratification of the contract. We will not stop to consider whether this doctrine applies to a contract that is absolutely void as against good morals and public policy, for, even conceding that it does, we are clearly of the opinion that it has no application to the facts of this case. It appears that the statement and schedule quoted in the foregoing statement were presented to complainants and the other heirs as a full and final settlement and distribution of all personal estate in the hands of defendant Barney. It appears upon its face to have been intended as a final distribution. There was, however, one item credited to said Barney designated "monument and legal expenses, $4,000." This sum was left in the hands of the said Barney for the purposes named. Some time afterwards it was determined not to erect a monument, but to substitute a tombstone of comparatively small cost. This, of course, left a balance in Mr. Barney'shands and made a further distribution necessary. In the stateI;nents sent to complainants with a remittance of their respective shares of this balance, no mention is made of the land sales, or their proceeds. It seems to have been understood that it was a separate and distinct matter. A long correspondence about the sale of the land and the disposition to be made of the $10,000 distributed on that account, had preceded the disposition arising from the non-use of the monument fund, and was still pending. The matter of the alleged sale of the interest of the heirs in the land for $10,000 had been long discussed by itself as a separate and distinct matter, and the evidence very clearly shows that complainants did not understand that they were adjusting that matter by accepting the last balance sent them. On the contrary, it appears beyond a doubt that they understood exactly
446
PEDERAL REPORTER.
the contrary, for it is'shown that when that balance was first sent to them it was accompanied by a formal release of defendant Barney from all claim on account oftha proceeds of the sale of the lands, and a confirmation of said sate, which release and confirmation they both refused to sign. They refused to receive the money tendered them on condition that they woutd sign this document, and gave as a reason their unwillingness to confirm the alleged sale, and subsequently Mr. Barney sent them the money and accepted a simple receipt for it. Rere is conclusive evidence that there was no intention to ratify the sale of the land by accepting this balance, and we apprehend that the rule of law relied upon by counselfor defenda.nts rests upon the fact that the receipt of part of the consideration for a contract with fuU knowledge that it is fraudulent, shows a purpose to accept the benefit of the contract, and is therefore an affirmance of it. In the present case, the evidence does not show that complainants actually received a part of the $10,000 after they were advised of all the facts. It only shows that they settled with Barney for the balance left in his hands for "monument fund and legal' expenses," and not used for those purposes, and that the sattlement was made when a separate negotiation was :n progress with respect to the land matteI', and it shows that complainants regarded the two as separate and distinct. We hold, therefore, that complainants are not estopped to assert the invalidity of the sale in question upon the ground that they ratio fied and confirmed it by accepting a benefit from it after being advised of all the facts. It was suggested in the argument that some of the defendants are bona fide purchasers of .interests in the lands without notice of com. plainants'rights. This point is not well taken. The legal title is in the railroad company, and the equitable title only in the purchasers under the contract of sale. The protection extended by a court of equity to a bona fide purchaser belongs only to the pnrchaser of the legal title without notice of an outstanding equity. He who purchases no legal title is not protected, even though without actual notice.. Butler v. Donglass, 1 McCrary, 630; [8. C. 6 FED. REP. 228 ;] Story, Eq. Jur. § 1502; Vattier v. Hinde, 7 Pet. 252. We are not advised that any of the defendants claim to have purchased from the railroad company without notice of the contract, or of the rights of the purchasers under it: If any such claim is made it can be considered hereafter.
UJ'jJTED &TATES V. BHINN.
Our conclusion is that the attempted purchase of the interests of the complainants; in the lands in question by the defendant Barney for himself and his assoCiates was and is void, and that the complainantS.are entitled to a decree so decla.ring, and to an accounting. The case will be J:eferred to a master to take further proof and report to the conrt as follows: (1) The number of aCJ:esof land sold or disposed of out of the lands described in the bill sipce September 9, 1871, the dates of sales, theprice8 at whioh sold, and the sum total realized therefor. this sum total the master will add interest on the several (2) sums at7 .per cent. per Rnuumfrom the. date when received, and from deduct the sums received by complain. tbe total thus obtained ilonts respectively from defendant Barney; also .llol1 necessary and reasonable expenditures by the defendant, or anyoftbem, in making sUl,lh sales, and for the Pl1yment of taxes, with like interest on each of said SUP1s.· (3) And he wi!l find and report what sum, if any. is due the com· plainants as their share of the proceeds of such Bales· . (4) Said master will also find and what nnmberof acres of said land remains unsold, and a description thereof. NELSON,
D.
J., concurs.
UNITED STATES .,. SHINN.
(Otr/Juit OO'U'1't, D. Oregon. December 16, 1. AFFmA'r.T USED UNDER TIMBBR-CuLTURE ACT. By virtue of section 5 of the crimes act of March 3, 1857, (11 St. 2M" and seetion6 of the timber-culture act of June 14, 1878,(20 St. 130,) an affidavit taken before a county clerk of this state may be used before the regiRter and receiver in any proceedbg or question arising under said last-'llam<.>d act in which an affidr.vit is allowed or authorized by any law of the United States or regulation of the land department thereof; and it such affidavit is willfully and knowingly or corruptly false in any material matter, an indictment for perjury may be maintained thereon in the proper United States court. 2. PERJURY,. Swearing to a false statement is not perjury unless the matter material to the issue, question, or purpose about or for which the statement is made, or unless it is intended and calculated to give probability to a material statement or cr,edibility to the affiant. .