HOUSTON V. CITY AXD COUNTY OF SAN FRANCISCO.

337

HOUSTON V. CITY AND COUNTY OF SAN FRANCISCO

et al.

(Circuit C01trt, D. Cal'ifornla.

August 15,1891.)

t.

SUIT TO R.ECOVER LAND-DISHONEST PURPOSE-DISMISSAL OF BILL-ATTORNEYS.

Attorneys admitted to practice in the United States courts in California, and who bring suits founded upon gl'ants of land by the former Mexican govel'nment, are ,presumed to know the provisions of Act Congo March 3, 1851, declaring, among other things. that all lands, the claims to which shall not, have been presented to the board of land commissioners for the settlelpent of private claims in California, "within two years after the date of this act, shall be deemed, held, and considered as part of the public domain of the United States;" and also to be cognizant of the decisions of the supreme court of the United States in More v. Steinbach, 127 U. S. v. Dominguez, 130 U. S. 255,9 Sup. Ct. Rep. 81, 8$up. Ct. Rep. 1067, and 525, holding that no Mexican title not thus could be of any validity; and where one brings a suit against numerous land-owners in San Francisco on a Mexican title which was not presented to the board, but makes no attempt for nearly two years to have the subpcenas 6er.ved, in the mean time obtaining money by way of compromise from numerous owners ignorant of the law, it will be presumed that the suit was instituted with a dishonest purpose, and the bill will be dismissed. When the attorney of record in a suit affecting land lives in another state, the court has the authority to dismiss the action after service of notice on him at his residence.

2.

DIS:MISSAL OF BILL-NOTICE TO ATTORNEY.

3.

SOURCES OF LAND TITLE IN SAN FRANCISCO.

There are but five valid sources of title to lands in the city of San Francisco: (1) ,Original ¥exican grants to individuals or associations, which were presented to the board of land commissionel's for the, settlement of private claims, under Act Cong.Match 3, 1851, and confirmed either bY'the board itself, or, after rejection, by the district or supreme court of. the United States, and subsequently surveyed and patented by the government. '1'hese patents cannot be collaterally assailed by private parties either as to the validity of the grants confirmed or their extent and boundaries. ,If erroneous, the government alone can vacate or correct them in a direct proceeding for that purpose. (2) The pueblo claim, which was confirmed to the city of San Francisco by the decisions of the United States courts, and confirmatory acts of congress, and wllich was surveyed and patented to the city by the United States. Neither the title nor boundaries of this claim can now be questioned collaterally. (3) Reservations made'by the president of the United States, under the law, for public purposes. These are all clearly defined and marked, and can easily be ascertained from the city maps. (4) Tide-lands lying outside the line of ordinary high water as it existed July 7, 1846, the title whereof belonged to the state,which, by Act Cal. March 2tl, 1851, granted the use of certain tracts to the ,'City for 99 years. This high-water line has been surveyed and established by the · ,r 'United States, and is shown on the patent issued. Its correctness cannot be att,acked by private parties. (5) Lands lying on the south side of the pueblo, which, by Act pong. Dec. 20, 1886, were ceded to the city and county of San Francisco, and to those persons and their successors in interest to whom the city and county had previously conveyed, under the erroneous impression that these lands were within the pueblo claim.

In Equity. Suit by David D. Houston against the city and county of San Francisco and numerous land-owners, to recover lands under a Mexican grant. .On motion to dismiss the amended bill. John H. Durst, Attorney for the City and County of San Francisco, for the motion. Philip Teare, Esq., appeared for the solicitor of the complainant, and applied for a postponement of the hearing of the motion, which application was denied. It .as then shown that the notice of motion was personally served upon the complainant's counsel at his residence at Seattle, in the state.of,Washington,' and also upon the clerk of the court. The motion was, then heard. I v.47F.no.5-22

338

FEDERAL REPORTER,

vol. 47.

FIELD, Justice. This is a motion to dismiss the amended bill of com. plaint upon the ground that no effort has ever been made by the complainant, or his solicitor, to procure servi.::e upon tbe defendants. or any of them, of the al'ias subpcena issued in the cause. The motion is made upon the papers filed, and the affidavits of the mayor of the city and county of San Francisco, and of the deputy-marshal of the United States; the city and county appearing specially for that purpose and no other. The affidavit of the lllayor statel3 that the original bill ofcomplaint was filed on the 20th of June, 1889; that the city and county and about 100 pe'rsans were named 11S defendants; that, no subpcena was ever issued thereOli, as the affiant is informed and believes; and that no application was ever made to the\.llerk of the court by the complainant or his solicitor, or by any other person, for the issue of such subpama; that all the .ofJune, 1890,the cor:nplaibal1t filed an amended bill of complaint. 'in which all of the defendants in the original bill. and about 15,000 other persons, were named as defendants; that thereupon a subpama was directed ,to t1;\eQl,cotnrnanding them to appear and answer the amended bill; that, as the affiant is informed and believes, the subpama was never placed by any one in the ,han,ds ,of the United States marshal for the district·. or of any other officer, Jar· service, and that there. was no effort J?Yllny person, to procure service upon any ofdhe defendants".and tbat no such service was ever made; that on, .4th of Allgpst, without service; and on the same day an alias suhpcena was issued, dibut wdSne\'erplaced i,i;lthehands of the marrected to the shal, or any other person, for service, and that no ,effort "as made to secure such service;' that at all U1l1esservice, cotildhave ,been made on the city and county of San Francisco"a,nd,"as tbe 'affiant is informed and helieves, upon the other defendailts; that none of the defenda,nts have appeared in the suit, amd that alL the defendants,.' other than the ,city and county of San Fran'p'isco, claim through that muqicipality.' None of the allegations of. this affidavit; made, upon information· and belief, are controverted, as they might hay¢been if not correct. Th,eymust, be taken on this motion as ,true. The affidavit of the deputymarshal states that from June 20, 1889, he has had gelieralphargeand control of all su bpcenas left with or placed in the hands of the United States marshal fur the district for service, and that neither the. original subpama, nor the alias subpcena issued in the cause,was ever left or deposited with, or placed in the handsaf the marshal by the complainant or his solicitor, or by any other person, for service upon the defelldants; and that the marshal has neVer been requested Or directed ,by any one to procure such service upon any of the defendants. These affidavits show concl usively the failure of the complainant to any effort to obtain service of the subpcena, or ofthe alias su bpcena, upon any of the defendants from tbB ,filing of the original bill of complaint, 'June 20,1889, to the present time, though' such service was readily obtam.able. For such failure :to prosecute' ,the suit the amended bilI, and, indeed, the whole case, may be .properly dismissed. For ,it

HOUSTON V. PITY .A.ND COUNTY' OF SAN FRANCISCO.

339

nOr reasonable or just excuse hns been or Cflu be It was not acdclental, but was intended."anp, it is apparent; was in the execution· of a dishonest and corrupt purpose on the part of the complainant and his solicitor. The bill of complaint is ostensibly for the purpose of ing the defendants, about 15,000 persons besides .the city and county of San Francisco, as trustees for the complainant of a tract of land, including a large part of the city and county, of the value of many millions of dollfl.rs and compelling them to convey it to him. In the minds of the number of persons in possession of the property claimed, not faD1iliar with. the laws affecting titles in this city and county , the filing of the Gomplaint and the pendency of the suit were calculated to create doubt and uneasiness as to the validity of their own titles, and naturally to induce them to seek a release of the claim asserted. For such a· release a pecuniary compensation was. exacted, and it is notori0l1S that its payment was obtained in a multitude of instances. Yet, in looking over the complaint, we see no cause of action, legal or equitable, disclosed, for the release of which any compensation could be honestly required. The cause of action is the alleged grant of the pre.l;nises by officers of the former Mexican government to one Fernando Machina, and mesne conveyances under him. The alleged grant, if one ever existed, was not presented. (or examination and confirmation to the board of land commissio,ners for the settlement of private land claims in California, under the act of congress of March 3, 1851. The land embraced. within the alleged grant thus became, by the expressed declaration of congress in that act, which was passed to carry out our treaty obligations with .Mexico, and by the decisions of the supreme court of the United States thereon, public land, 110 longer subject to any private ownership by virtue of the .grant. Section 13 of that act declares that all lands j the claims to which have been finally rejected by the commissioners,as therein provided, "or which shall decided to be invalid by the district or supreme court, and all lands, the claims to which shall not have been presented to the said commissioners within two years after the date of this act. shall be deemed, held, and considered as mrt of the public domain of the United States." 9 St. U. S. 633. In Morev.Steinbach, 127 U. S. 81, 8 Sup. Ct. Rep. 1067, it was held by the supreme court of the States that "the ascertainment of exi13ting: {'Jaims was a matter of vital importance to the government in the its policy respecting the public lands,.and congress might well declare that a f(l.ilure to present a claim should be deemed an abandomnen! of it, and that the lands by it sh(;>u!d· be considered a part of the public domain."· And in Botiller v. Dominguez, 130 U. S. 255, 9LI?HP.Ct. Rep. 525, that court said:
"We are quite satisfied that upon principle, as we ha.ve attempted to show, there can be no doubt of the proposition that no title to land in California dependent upon Spanish or Mexican grants can be of any validity which has not been submitted to and confirmed by the board provided for that purpose in the act of 1851, or, if rejected by that board, COD firmed by the district or suprelDe court of the UnitedSj;atel\."

340

FEDERAL REPORTER,

vol. 47.

The alleged grant upon which the bill is filed does not purport to be a grant under the pueblo or its successors ,'and therefore its holder could in no respect claim any benefit under the confirmation of the pueblo title. It was a grant hostile to the claim of the city. Everyone admitted to the bar of any of' the courts of the United Slates, instituting suits founded upon grants of the former Mexican government, is presumed to know the law of congress respecting stich grants, and the decisions of the supreme court of the United States thereon. No lawyer of those courts can justify his action with respect to such lands upon any pretense of ignorance of. that law and of those decisions. Where it is manifest, as in the case before us, that he desires to postpone the determination of the character of the grant presented by preventing the appearance of tbe parties to the suit brought, an unworthy and dishonest motive may be justly imputed to him. Intended, as such suitsgenerally are, as a means of extorting moneys from the rightful possessors of the property claimed, they become little less than instruments of robbery. When such purpose is seim, the suit should be dismissed, and the lawyers who have lent themselves to its prosecution should be removed from the bar. They ate unworthy to be members of a noble profession, amI are only a reproach to it. In this case the dishonest purpose of the complainant and of his solicitor is manifest from the intentional 'fitil" ure to bring the alleged controversy to a hearing and determination. No effort since the of the complaint 'has been made by them to get the parties before' the court. ' The complainant's solicitor cannot plead ignorance of the act of congress, and of 'what the supreme court has said thereon; and must'have known that the case would be thrown out of court,the moment its merits were examined. Both he and the complainant wanted to keep it in court undetermined that it might, by the doubts it would 'create in the minds of many of the occupants of the land as to their title, lead to a successful exaction of money for its release. The affidavit of John K. Moore, that he has been ever since the commencement of this action, and now is, the attorney in fact for the complainant, and empowered to act in all matters pertaining to the action; that George W. Tyler, the solicitor for the complainant, has been absent from the state more thah two' months, 'and is a resident of Seattle, in the state of Washington; and that he (Moore) has been endeavoring to secure the services of another solicitdr to act in his behalf, but has been unable to do so, so as to advise him of the' merits and facts of the suit, and enable him t:o properly resist this application ror dismissal,-rnerits no consideration. There'wasno'infdrmation 'which he could give to excuse the delay in the prosecution of this suit, and,if there had been; it could all have been 90mmunicated to an,y lawyer in an hour. Notice of this Ihotjon \\'as seryedpponTylerpersonally at Seattle, .theOourt. Where an and notice fpr him attorney or solicitor in ,3, land,leav!ls tbe state, and no, one is appointed in hispla the authority of the court, to dismiss such .e, suit, where there is a failure to prosecuteit,'is not defeated.· It can be

HOUSTON V. CITY AND COUNTY OF SAN FRANCISCO.

341

exercised upon notice served upon the attorney or solicitor at his place of residence in another state, or by filing the same, under the rules of the court with the clerk of the court. Besides, the counsel who asked for a postponement of the hearing of the motion appeared as the representative of Tyler, the solicitor of record for the complainant, and such appearance is sufficient for the hearing of the motion. In disposing of the motion in this case, I remarked that I would write out my opinion, and indicate the original sources of title to real property in this city, to the end that suits like the present one may be readily detected and defeated. There is no other city in the world where the sources of title to real property are so clearly defined, nor any city where more numerous attempts are constantly made to defeat or impair them. There are only five original sources of title to such property: Fir8t. The original Mexican grants' to individuals or associations, which were presented for confirmation under the act of congress of March 3, 1851, and which were confirmed and subsequently surveyed and patented by the United States. The patents in these cases cannot be collaterally assailed by private parties, either as to the validity of the grants confirmed or as to their extent and boundaries. If erroneous in any particular, they can only be vacated or corrected by the action of the government in direct proceedings for that purpose. Second. The pueblo claim. Whatever differences of opinion prevailed originally as to the title of the pueblo to landu pon which the city and county of San Francisco are situated, all doubt upon that subject has been put to rest by the confirmation of its claim and its survey and patent under the direction of the tribunals of the United States and of the landdepartment. As said by the supreme court of the United States in a decision made as late as March 2cl of the present year, (1891:)
",The confirmation of the claim of the city necessarily took effect upon its tilleas it existed upon the acquisition of the country. InconfirrnJng it the United States, through its tribunals, recognized the validity of that title at the date of the treaty,-at least, recognized the validity of the claim to the title as then existing; and in the execution of its treaty obligations no one could step in between the government of the United States and the city seeking their enforcement. * ** Its rights were dependent upon Mexican laws, and when Mexico established those laws she was the owner of tidelands as well as uplands, and could have placed the boundaries of her pueblos Wherever she thought proper. It was for the United States to ascertain those boundaries when fixing the limits of the claim of the city, and that was done after the most thorough and exhaustive examination ever gi ven to the consideration of the boundaries of a claim of a pueblo under the Mexican government. After hearing all the testimony which could be adduced, and repeated arguments of counsel, elaborate reports were made on the subject by three secretaries of the interior. They held, and the patent follows their decision, that the boundary of the bay, which the decree of confirmation had fixed as that of ordinary high-water mark, as it existed on the 7th of July, 1846, crosses the mouth of all creeks entering the bay." San lhancisco Oity and County v. LeRoy, 138 U. S. 671,672, 11 Sup. Ct. Rep. 364.

FEDERAL REPORTER,

vol. 47.

Third.; Reservittionsmade by the president of the United Stites, . UDderthe law, for public purposes, of lands within the limits of the pueblo., These are all clearly defined and marked, and can easily be ascertained upon the maps of the city .·. Fourth. Tide-lands lying outsideof:the liniits of ordinary high-water mark of the bay existing on the 7th of July, 1846. The title to the lands beyond that line belonged to.the state, and by her legislature an act was passed Oll March 26, 1851, by which the use of certain lands beyond that line, described therein, was conveyed to the city for a period of gg years.' St. Cal. 1851, p. 307. That line was then designated to a certain extent by what was known as the" Red-Line Map," and since then it has been definitely established and surveyed by the land departmentof the United States, and is shown in the patent issued. The correctness of that line, as thus established and embodied in the patent, can never be assailed, except hy direct proceedings instituted by the United States for that purpose. Its correctness cannot be attacked 001laterally. Any efforts in thaLdireetion must necessarily prove futile, unless the land policy of the United States is changed, and a reversal is had of numerous decisions of their highest tribunal. Fifth. After the patent of the United States to the city of San Francisco and its successors was issued, there was a cei"sion made by congress on December 20, 1886, to the city and county of San Francisco, of lands on the south side of the pueblo, and to those persons and their successors in interest to whom portions of the land bad been previously conveyed on behalf of the city and county. The principal object of the act was to give security to the parties who had acquired the title under the impression that the property belonged to the pueblo, but which, by the survey and patent, were excluded therefrom. U. S. St. at Large, 351. I have made these observations respecting the sources of title to real property in San Francisco because I have a profound conviction that the future prosperity of the city will greatly depend upon the security and stabili(y or its land'titlesj and I h:tve thought that they might possibly to prevent that uPi"crupulous and vile system of annoydo ancewhich is now pursued in a great number of cases, for the purpose of extortion', by certain 'persons in this city,. and I have made no statements beyond the settled adjudications of the supreme court of the lJnitedStates, the only tribunal which C,i-,ln speak authoritatively and finally .llPonthe subject. By the order and decree Qf the entered Qn the 12th just. the amended bill and the suit thereon were dismissed as to all the defendants"at the cost of the complainant.

AMERICAN LOAN & TRUST CO.

v.

TOLEDO, C. & S. RY. CO.

343

AMERICAN LOAN

&

TRUST CO. V. TOLEDO, C.

& S. Ry.

CO.

et al.

(Circuit Court, N. D. Ohio, W. D.

October 24, 1890.)

1.

COl<TRACT-COMMISSIONS.

A finance company agreed to negotiate the sale of $800,000 of railroad bonds for a commission of 10 per cent. payable in tbe bonds. Afterwards the parties to this agreement entered into an agreement with a third person, in wbich the latter agreed to make a loan to be secured by pledge of part of these bonds, and it was p,rovided that $80,000 of the bonds should be appropriated to the finance company in payment of its claims for commission. ReId, that the second agreement passed title to the $80,000 of bonds to the finance company, although it had not then negotiated a sale of the $800,000 of bonds. A contract between the owner of a railroad and a finance company provided fOl' theorgallization of a new company, of whose directors a majority should be named by said owner, who should be president, and whose bonds should be sold, by the finance company. Reld, that the failure to elect the former owner president, and to allow him to name the directors, was not ground for his rescinding the contract, where the election of the president and directors took place at a meeting at which he was present, and voted 'for the persons elected. Said cOlltraotdid not limit the time within which the bonds were to be sold. He/iI, that the failure to sell them' within 16 months was not ground for rescinding the contract.

2.

SAME-RESCISSION-WAIVER.

3.

SAME-REASONABLE

In Equity. Upon exceptions to master's report. Blair & Rudd and E. D. Potter, Jr., for complainants. .Doyle, Scott & Lew'i8 and Robert Ludlow Fowler, for defendants. BROWN, Justice. This proceeding involves the ownershi p 0[112 bonds of the defendant company, 80 of which are claimed by Burke &.Hickox, assignees of Theophilus P. Brown, upon the one hand, and by holders . deriving their title from the American Finance Company, upon the other. This suit was originally begun to foreclose a mortgage given to secure these and a large num berof other bonds. A decree of foreclosure and sale was entered in July, 1887, and sale was made under such qecree in October, 1888, and an order confirming the same was entered in February, 1889. Messrs. Burke & Hickox became the purchasers of the road under the foreclosure and sale; The decree adjudged that 825 bonds ofthe defendant company had been issued and were "outstanding as legal and valid obligations of said defendant It was also found that 89 others of such bonds were outstanding, the validity. of which was denied. The question of such validity was continued for further hearing. The decree provided that the property should be sold for not less than $600,000, with a proviso that at least $100,000 should be paid in cash to be returned into the court for distribution. It was further ordered that all matters involved in the various intervening petitions, together with the validity and ownership of the 89 bonds mentioned, should be referred toa special master, to report the testimony, with his findings of law and fact, to the court. The bonds in controversy' in this case form no part of the 89 mentioned in the decree, but were all embraced in the 825, the validity of which was adjudged. Subsequently this decree was modified so far as to permit Burke & Hickox to file a bond, with mre-