LEIGI;lTON V. YOUNG.

439

LEIGHTON

et al. V. YOUNG et· al.

(Cirauit Court of AppeaZ8, Eighth Otrcuit. September 20, 1892.)

No. 123. 1.

EJECTMENT-OCCUPYING CLAIMANTS-FEDERAL COURTS-EQUITY JURISDICTION.

The rights given by the' Nebraska law (Cobbey, Consol. St. c. 47, §§ 4386-4389) to an occupying claimant after a judgment in ejectment. against him are enforceable in thafederal courts, and when such court has obtained jurisdiction in equity by means of a bill to enjoin the execution of a writ of possession it will retain the cause for the purpose of enforcing all the rights given by the statute, especially as such enforcement requires the ascertainment of the value of the lands and the improvements, and an accounting of rents and profits, which matters are not exclusively cognizable in law. In enforcing such rights. however, the federal court Is not bound to follow the method of· procedure prescribed by the statute, namely, thE" appointment of. three appraisers to ascertain the value of tbe land, the improvements, and the rents and profits, but may refer the 'Cause to one or more commissioners, or to a master, according to its ordinary procedure.

2. SAME-REMEDIES-FEDERAL PROCEDURE.

8.

SAME-CONSTITUTIONAL L A W . '

Cobbey, ConsoL St. Neb; 1891, c. 47 §§ 4385-4889, providing that a successful plaintiff in ejectment shall, at his eiection, either pay the occupant the present value .of the improvements, or convey title to him, and receive in return the value of the 'land as of the date at which the occupant entered thereon, is a valid exercise of the legislative power of ,the state. The last clause of section 4380, containing an implication that, unless the OOCUpant'tia;ys the value of the· land on demand of the owner, he must be turned out of posse8jl1onJ which was a part.of..a previous act, but il! in conflict with subsequent sections oI.this act in amendment thereof, is superseded by such sections. The object the act being to prevent a forfeiture of the interests of either occupant or owner, a court of equity should treat them as having rights in the property in propOrtion to the value of the improvements aud the land, respectively; and, in case neither party is willing to cC)mpensate the other as provided in the act, the court, upon motion of either, will decree a sale, and distribute the proceeds in such proportion. When a federaloourt construes a state statute with reference to a new question, and the state court of last resort subsequently interprets it differently, the federal court should thereafter conform to such interpretation.

4. SAME.,.-CONFLICTING SECTIONS-REPEAL.

5. SAME-FORIlEITURES....EQUITABLE REMEDIES.

FEDERAL COURTS-FOLLOWING STATE DECISIONS.

Appeal from the Circuit Court of the United States for the District of Nebraska. In Equjty. .Bill by Harriet W. Leighton and Charles M. Leighton ,against Rowena Young, Ellis L. Bierbower, United States marshal, and James H. McMurtry, to restrain the execution of a writ of possession by the United States marshal until the value of certain improvements should be paid. Injunction granted, and decree for complainants on <:ertain conditions. Complainants appeal. Reversed. Statement by CAWWELJ" Circuit Judge: In 1884, Rowena Young brought suit in ejectment in the circuit court ()f the United States for the district of Nebraska Harriet Leighton and Charles M. Leighton for the land which gave rise to this suit. On the trial of the ejectment suit the land was adjudged to belong to the plaintiff in that suit. The defendants were bona fide occupants and claimants of the land, and entitled to the rights secured to such occupant$ by the occupying claimant's law orthat state.

440

FEDERAL REPORTER,

vol. 52.

In answer to an inquiry submitted to them by the court, at the rethe jury in the ejectment suit returned a Rpecial quest of the finding to effect that the land was worth $6,000 without the improvements, and that the improvements were worth $11,000. The statutory mode of proceeding to ascertain the value of the land and the improvements was not observed, and the special finding returned by the jury was Ilot made the basis of ,allY orfier or judgment of the court in the case. On the,17th day of December, 1888, judgment was entered in favor of the. plaintiff for the of the land. See 37 Fed. Rep. 46. In this state· of the record, the l>lailltiff in that suit, on the 19th day of March,1889.,without payingorteqflering to the defendants the value of their improvements, caused a writ of possession to issue on the judgment in ejectment, and the marshal was about to put the defendants out of possession of the land, when they filed the present bilI against the plaintltl"in the' ejectment and the marshal, setting up the foregoing facts, and their rights as occupying claimants, and' praying that the execution of the writ of possession be enjoined until the complainants bad been paid the value of their improvements on the land. The injunctioDwllS granted. The answered the bill,. admitted the special finding of the jury in the ejectment suit, but denied that it· was binding on either and improvements; alleged that it was party as to the value of merely made "for the pUl'pose of that hearing, and for the purpose of appeal, ifnecessary;" that Janl! was worth more, and, the improvements less, than was stated in the special finding; admitted the defendant had sued 'out a writofposs\3ssion upon the judgment in ejectment, "and that ,this de'fendant desires possession of said property, or that the said proceed according to law to have the value of said property fixed, and duly tender to this defendant the value of said property. " The Qause was heard on answer, and replication before Mr. Justice BREWER, then circuit judge, and it was decreed that the special verdict did not estop the parties on the question of the value of the land and improvements, and a master was appointed, with directions to ascertain and ,report (1) the value of the lasting and valuable improvements erected oli the land by the complainants before they received actual notice' of ,the defendant's claim; (2) the net annual vahle of the rents and profits received by the complainants after they received notice of the defendant's title by of process, which amount was to be deducted from the value of the improvements; (3) the value of the land at the time the cornplainants went into possession thereof, or when they to pay taxes thereoll; as the case might be. On the 8th of that the value of the lasting imNovember, 1890, the master provements put upon the land by the complainants prior to receiving notice of the defendant's claim to,the land waS $10;368; that the value of the rents since the service ·of the. process in ejectment was $180, leaving $10,188 as the net value Of the improvements after deducting the rents; that the value of the land at the time the complainants became the actual occupants thereof, which was on the 28th day of April, 1881,

LEIGIITON V. YOUNG.

441

was $1,300. The order of reference to the master embraced only these matters, but the parties stipulated that the master might report the value of the land without improvements at different dates, which he did as follows: The value of the land March 12, 1886, the date of the verdict in the ejectment suit, was $2,000; 12th of December, 1888, the date of the judgment in the suit, $.4,500; 27th of December, 1889, the date of the order of reference to the master, $5,000; and at the date of the master's report, 8th of November, 1890, $5,500. No exceptions were filed to the master's report. J. H. McMurtry, having purchased the land from Rowena Young, was, upon his own motion, substituted as defendant. The court below decreed "that the defendant has the right to elect whether he will take the value of the land or shall pay for the improvements; and, the defendant having filed in court his election to take the value of the land, and tendered his deed therefor, and placed .the same in the hands of the clerk of this court for future delivery, it is therefore considered and adjudged that, unless said plaintiff within ninety days pay to said defendant the sum of five thousand five hundred dollars, with interest from the date of the master's report, November 8, 1890, at seven per cent. per annum, this injunction shllll standdissolved, and this cause be dismissed, at plaintiff's costs.» From this decree the complainant appealed. The sections of the Nebraska statute most material to the consideration of the case read as follows: . "4386. If upon the final hearing there shall be found a balance in favor . of the occupant or unsllccessful claimants, the person proving the better title may either demand of the occupant or claimant the value of the real e$tate without improvements, as shown by the appraisement, and tender a general warranty deed for the rf'al estate in question to such occupant or claimant, or he may pay into court the balance so found due such occupant or claimant within such time as the court shall allow in its final decree. "431;7. If the successful claimant shall elect to pay, and does pay, to the occupant or claimant the balance fou·nd due him on the final hearing within such time as the court shall direct, then a writ of possession shall be issued in his favor against such occupant, or decree shall be entered against such unsuccessful claimant, as tbe case may require. "4381;. If the successful claimant shall elect to receive the value of the real estate without improvements, to be paid by the occupants or claimant within such time as the court shall direct, and shall tender a general warranty deed for such real estate to the occupant or claimant, and such occupant or claimant shall refuse or neglect to pay said sum of money to the sq,ccessful claimant within the time allowed by the court for that purpose, then such successful claimant shall deposit with tbe clerk of the court the amount found due the occupant or claimant, and thereupon a writ of possession shall be issued in favor of sucb successful claimant, or decree shall be entered in his favor, as the case shall require. "4389. The occupant or claimant shall in no case be evicted from tbe possession, or deprived of his right in the premises, except as provided in the two preceding sections; and, in case the successful claimant shall neglect to elect to take said real estate with improvements, or to convey the same to tbe oc<Jupant or claimant within such time as the court shall direct, tht'n decree shall be entel'ed in favor of tbe occupant or claimant upon his paying into the court the value of the real estate without improvement. Such decree

442

FEDERAL

REPOR'1'ER,vol. 52.

sbrt.libave the effe<:ttotrllnsferandei>n·vey,tosuch occupant; or olailllant tbe title and rights oftbe·8l100eBsiu1 Qla;imant." Cobi;ley,Cou8()l.St. Neb.
. .

. 'iN-So Harwood, Johi:l; H/Ames, arid 'P. M. Marquett, for appellants. ,.'Joseph R., .Webster and R; S. Hall; 'for appellees. .' "Bef0te' OALi:>WEJ,L and SANBORN, Circuit Judges, and SHIRAS, District ' Judge.

'

'. .

. CALDWELL, Circuit JUdge, (after stating the facts.) It is objected by the appellees that the n10de of proceeding' adopted by the complainants does not conform to the requirements 'of the occupying olaimant's law, Ildd that the suit was ;bTaught out· of time. Where a state' statute ere,ates.a tight and prescribes a mode of proceeding to enforce it in the state courts, the courts,ot'the United States, in that state, will enforce tl;J.e(?ight, but not mode prescribed for enforcing it in courts. The' state courts may be authorized to enforce an equhable right by an· li6tion at law, or a legal demand by a suit in equ'ity, 01" toconfoond the two jurisdictions in the same suit. But in thecourts'ofthe United States the distinction between legal and equitable 'rights and modes of proceeding must be observed. Those courts will enforce the right by the appropriate remedy, having regard to these The Nebraska statute does not contemplate any proceeding to establish the occupant's claim for the improvements un,til after final judgment:h'as been rendered in favor oithe plaintiff in ,the ejectment suit; . Anytime after that, and while the occupant resecure the benefits of the statute byapIrnains in possession; plying to the court Jor.the appointment of three appraisers, who are Ito assess the value of t4e ,land at tpe time the occupant went into possession, and the value of the valuable and lasting improvements erected the occupant prior to the time he received actual notice of the owner's claim, and to take and state an account of the rents and ;profits of the land received by the occupant after he had notice of the .owner's title by the service. of prOcess. . The title to the land is no longer in controversy. That issue has been tried to a jury. What remains to be done is to ascertain the value of the land and improvem.ents, and take ail acCount of the rents and profits as a basis for a .decree. If these matters are solely' cognizable at common law, then, !}Iil. they they must, under 7 of the amend;¢ents to of the United States, be submitted to a dury. But they are not, and never were, exdusively cognizable at common law. The mode ·of procedure prescribed by the statute which creates the right dispenses with a jury I and conforms very DElal'ly to the established chancery praotice. That the bill for injunc'tion was well brought is indisputable. Whether the injunction should stand, and what decree should be rendered in the cause, depended upon the taking and stating of several accounts. The jurisdiction having attached on the. injunction, the, court will retain the cause, and take and state the accounts necessary to a final decree. Ober V. Gal-

LEIGHTON 'V. y6UNG.

443

Zagher, 93 U. S. 199; McMurray'v; Van Gilder, 56 Iowa, 605,9 N. W.Rep. 903. It would be no objection 1to the exercise of this jurisdiction if it called for adjudication upon purely legal rights, and conferred purely legal remedies, for, where theco1'ltroversy is one in which aeourt of equity only can afford the relief prayed for, its jurisdiction isunaffected by the character of the questions involved. Preteca v. Land Grant Co., 4 U. S. App. 326, 1 C. C. A. 607,50 Fed. Rep. 674; Holland v. Challen, 110 U. S. 15,25. 3 Sup. Ct. Rep. 495. Courts of equity always had concurrent jurisdiction with courts of law in matters of account, where they were too complex for a jury to deal with them understandingly, or where, as in this case, the stating the account is in aid of an equity or right not adequately available at law. In the course of the proceeding, orders and decrees have to be passed, which, if not within the exclusive competency of a court of chancery, are undoubtedly within its jurisdiction. It is obvious that the flexible forms and modes of proceeding of a court of equity are much better adapted to the execution of the law than is the machinery' of a common-law court. This was decided by the supreme court of the United States more than 60 years ago ina similar case. Bank v. Dudley, 2 Pet. 491. "It is not enough that there is a remedy at law; it must be adequate,or, in other words, as practical and as efficient to the ends of justice and its prompt administration as the remedy in equity." Boyce v. Grundy, 3 Pet. 215j Oelrichs v. Spain, 15 Wall. 211, 228; Preteea v. Land Grant Co., 4 U. S. App. 326, 1 C. C. A. 607, 50 Fed. Rep. 674. The case being one of equitable cognizance, the federal court, sitting in chancery, will execute the law by the customary chancery methods and modes of proceeding, and, if they are not adequate to the purpose, will devise methods that are. The equity practice in the courts of the United States is not regulated by the state statutes. Nevertheless, in the exercise of its chancery powers, the court below might have conformed to the state practice by directing the marshal to summon three appraisers, and this probably would have been the better way, as it is desirable, when a court of the United States is enforcing a right created by state statute, to follow, as near as may be, the practice prescribed by the state statute for the enforcement of the right secured thereby. But it was equally within the discretion of the court to appoint one or more commissioners, or to refer the matter, as was done, to a master. The appellees brought their suit in apt time, (Railroad 00. v. Dobson, 17 Neb. 457, 23 N. W. Rep. 353, 511; Page v. Davis, 26 Neb. 671, 42 N. W. Rep. 875,) and in the proper forum, (Bank v. Dudley, supra.) It is now too late to question the constitutionality of statutes which secure to occupying claimants compensation for their improvements. The reasoning by which they are supported as just measures of public policy, and their constitutional validity maintained, is too trite to require or justify repetition. If authority can ever silence contention, then the validity of the Nebraska statute, as the court construes it, is not open to debate. For a list of the cases, see Childs v. Shower, 18 Iowa,

444

J'EDERAJ. IiEPORTER,

voL 52.

2pl,269; Fee v. Cottldry. 45 Ark. 410; 10 Amer. & Eng. Ene. Law, tit. "Improvements." The cases cited by the learned counsel for the appellees have no application to the. Nebraska statute. In Green v. Biddle, 8 Wheat. 1, an early statute of Kentucky on the subject was held to be in conflict with the terms of the compact between Virginia and Kentucky and void for that reason. Nothing was decided affecting the constitutionality of such laws. In JfcCoy v. Grandy, 3 Ohio St. 468, it was decided that an act which gives to the occupant the first option to take pay for his improvements, or to pay for the land and keep it, was unconstitutional. Under the Nebraska statute, the first option is given to the owner to pay for the improvements, and keep the property. And the complaint of the owner, in this case, is not that the statute does not give him the option to pay for the improvements and keep the land,-for it is conceded that the statute does give him that right,-but the complaint is that it does not also give him a further option to compel the occupant to buy the land at its appraised value, or forfeit his possession and all claim for his impr()vements. In his answers he says that he "desires * * * that the said plaintiff shall proceed according to law to have the vaJue of said property fixed, and duly tender to this defendant the valueQf said property," and that, failing so to do, be be dispossessed. In the case of Child8 v. Shower, 18 Iowa, 261, a statute which authorizes a general money judgment against the owner in favor of the occupant for the value of the improvements, and a general execution to enforce its collection, was held unconstitutional; but under. the Nebraska statute the value of the improvements is simply declared to be a lien on the land, and there is no provision for enforcing it, either by general or special exeoution. Statutes providing tha.tthe value of the, improvements maybe adjudged to be alien on the land, and that the occupant may retain the possession until be has been, paid the value of the improvemeIj.ts, 'are held valid everywhere. Child8 v. Shower, 8upra; Fee v. Cowdry,8upr.a; Cla'!!P0ole v. King, 21 Kan.612; Stephen8 v. Ballou, 27 Kan. 594; Page,v. Davis, 26 Neb. 671. ·,42,N. W. Rep. 875; Dworak v. More, 25 Neb. 741, 41 N. W. Rep. 778; Beard v. Dansby, 48 Ark. 183, 2 S. W.Rep. ,701.. In Arkansas the land is not valued, but only the impl'ovements,-the value of which mUl3t be paid by the. owner before he can disposselz1s tho occupant. The value of the improvements is a lien on the land, .to satisfy which the land may be sold. Manst'. Dig. Ark. 0.55, §§ 2644, 2645. This statute, though retrospective in its operation, has always been held to be constitutional. Fee v. Cowdry, supra; Beard v. Dansby, And in some states the failure- of the owner to pay the assessed value of the improvements upon the land within the time fixed by the statute the order of the court operates to ext.inguish his right of property in the land, and vests it in the occupant. Flynn v. Lemieux, 46 Minn. 458, 49 N. W. Rep. 238; Craig v. Dunn, 47 Minn. 59,49 N. W. Rep. 396; Stump v.Hornback, 94 Mo. 26, 35, 6 S. W. Rep. 356. Complaintis made of the clause of the act which provides that the land sbal1be,valued as of the date of the occupant's entry. It will some-

LEIGHTON tl. YOUNG.

445

times occur that the land was more valuable at the date of the occupant's entry than it is at the time. of trial. As applied to such cases, is the provision obligatory? And is it only to be set aside when it would advantage the owner to do so? The question comes to this: Has the owner the exclusive right to fix the date for the valuation, and is this a right guarantied to him by the constitution of the state? We think not, and, if not, then it is a matter of practice and evidence resting in the discretion of the legislature or the courts. If the legislature does not fix the date, the courts must. The courts would probably differ as to what the date should be, and for the sake of uniformity, and to silence contention, it was a wise exercise of legislative discretion to make the rule uniform. The objection that the rule will not always operate equitably, if well founded in fact, cannot affect its constitutional validity; but it is by no means certain that the rule is inequitable. It is a familiar rule that the actual possession of land is notice to the whole world of the occupant's rights. In contemplatian of law, the owner has notice of the occupant's entry upon the land, and his right of action accrues at that time. Having this notice, he is silent, and makes no claim. His moral obligation to speak is great. In the mean time the brmafide occupant, who purchased and paid for the land, goes forward, and makes valuable improvements upon it, in the honest belief that he owns it. The owner finally breaks silence, and asserts his claim. After obtaining judgment for the land, he declines to pay the value of the improvements and keep his land, but demands of the occupant the value of the land. Is there any injustice in saying tO,such an owner, as this statute does in effect: "You were silent while the occupant in good faith was improving the land and adding to its value, aI).d if you now decline to pay for the improvements, made under these conditions, you must be content to have the land valued as of the date you 0lIght, in justice and fairness to the occupant, to have made known your claim." This is but applying to this class of cases a principle as old as jurisprudence itself. The equity of the statute finds support in another view. It is the actual occupants of the lands of the country who layout and open the public roads, build the schoolhouses, and erect and support churchea; and it is these and such like public improvements that are the chief. factors in increasing the value of the lands. As a rule, those who recover the lands from the bonafide settlers have contributed nothing towards these public improvements, and have done nothing to add to the value,of the lands. As to them, the increase in value from these and such like causes is an unearned increment. But with the settlers on the lands it is otherwise. Their time and money have been expended in making and maintaining these public improvements, which, while they operate to increase the value of the lands, add nothing to the value of the improvements on the lands when they come to be valued separately from the lands. It is not very obvious, therefore, what superior equity the plaintiff has over the occupant to the increase inthe value of the land, produced by the money lind labor of the occupant. But the statute is impartial. It fixes as a uniform date.for the valuation the date of the occupant's entry upon the

FEDERAL REPORTER, vol. 52.

regard t6! thli, bether the land ,vdrth' more 'atlhali"time thatl'a't atlQther. ,', 'In .niay sbtnMHnes mitkefor the the bwner,:but it cOinesas nellI'w()¥kiilg out' just results 6ther fixed genbeframed!on the sUbject. At ari)' rate, the legislatuM thlit'condudeS discussion. '" ' TWa ftibtmust'not beovei'1utlked that the improvements, are valued as of the 'date' when they are least valuable. The occupant iEl not entitled to their 'costs, nor to their value when new, but only to their value at the: tiirneof the' trial, whi<Jhmust be measured by the benefits which the ownet'WilHeceive frOtIl them in their then condition. Story, Eq. Jur. DaYj70 Iowll, 671,28 N. W. Rep. 476; Childs v. ShaWer; 8WJira. While time'may add to the value of the land, it is conand ditninishing the valuaof the hnprovements. Nebraska hils legislated twice on the subject of the rights ofoc<\upylngclaimants. The first act was passed in 1873. That act provided that the occllpllnt'should not be thrown Qut of possession until he had been paid the assessed value of the improvements, unless he re'upon demand ofthe owner, to pay the appraised value of the Janik Gen. St. Neb. 1873, c; 51, §l.' The owner was given the opt:'ln, to pay the occupant the value of the improvements or to sell the land to the occupant at its appraised value at the date of the judgment; and, if he eJected 'to "sell. and thaoccupant declined to pay for the land within the time' "flied· by the court, he forfeited his possession and his improvements. ld. §8l9. In practice it was found this act afforded:stnall protection to many occupants. As a ruie, the settlers who improved the lands were not opulent. rl'hey were most commonly poor men, who invested all their means in the firstpufchase of their lands and in improving them, and whim their titles 'failed they were 'without the means to purchase the·latids a second time. This was the plight of most of the'oecupants who stood in need of the protection afforded by an occupying daimant'slaw, but under this 'act there was no protection for thein, unless they had money enough to:blly the land a second time, and at its increased value. This they did not have, and as a result of theirpoverty'the actconfiseated the improvements to the use of the successful· plaintiff in: 'the ejectOlent suit. This was the state of the la\' when the act of February 23; 1883, was passed. That act was obviously passed for the purpose of affording to the occupant a larger measure of protection than he enjoyed under the aot of 1873. This was effected by amending the" statute in several important particulars. Under the act of 1873 the land was valued as of the date of the judgment. By the amendment of 1883 it is valued as of the date of the occupant's entry. Cobbey, Consol. St. Neb.i891, o. 47, § 4383. The first act provided there should be a judgment in favor of the occupant for the value of the improvements without defining its nature or effect. By the last act this judgmentls termed a "decree,"and it is declared "such decree shall constitute and be a lien on said real estate." Id. § 4385. By the first act, iithe oMupant failed to pay the value of the land upon

LEIGHTON

v.

YOUNG.

447

the owner's election to convey, he was dispossessed, and lost his improvements. By the last act, if the, ,Occupant declines to purchase the land whena conveyance istendered by the owner, the occupant still has the right ofpossessiori, until the 9wner deposits with the clerk of the court th,e value of the improvements. rd. § 4388. By the act of 1883 it is provided that "the occupant or claimant shall in no case be evicted fronithe possession, or deprived of his right in the premises, except as provided in the two * * *" Id. § :4389. The two preceding sections are 4387, and ,The first provides that, if the owner elects to pay the value of .the improvements, and does so, a writ of possession shall be issued in his fa.vor; and thesecond that, if the owner sell, and the occupant declines buy, then the owner must; dep08it the value of the improvementswiththe clerk of the cOUrt before he can have a writ of possession. The aCt as it appears in the general statutes stillcontaips a clause which, taken by itself, would indicate a di,fferent policy. Its presence in the statute will now be explained. The act is a long one.' In amending it the, old /let was copied in the"main, the amendments beingeffec,ted by striking gut ,short sentences here and .there in the sections and inserting others in thus maki[}g the changes we have indicated. The last clause oUhe first section of the act (section 4380) contains an ,implication to the effect that, unless the occupant pays tbe value of the ,land upon demand of the owner, he must be turned out of possession. This clause was in the original act, and was proper enough there, and in harmony with the oth,er provisions and the policy of that act; but it is now, plainly in conflict with the subsequent sections of the act as amended in 1883, and with the obvious policy and purpose of those amendments, and was superseded by them. effect of the amended act is to give the occuBriefly, then, the pant a lien on the land for the value of the improvements, and the possession of the land until the improvements are paid for. He does not forfeit his right of possession, or his right to receive pay for his improvements,by declining to accept the owner's offer to sell the land, as was the case under the act of 1873. Nor does the owner forfeit his land by failing to pay for the improvements. The amended act was designed to relieve the occupant from a forfeiture of his improvements upon his failure to pay for the land, and not to impose 011 the owner a forfeiture of his land upon his failure to pay for the improvements. The odious feature which forfeited the interest of one party in the property, if he was unable or unwilling to pay for the interest of the other, is eliminated from the statute. Their rights are reciprocal in the respect that they are nonforfeitable. The owner of the land has the election to pay the appraised value of the improvements and take the property. If he declines to do this within such time as the court shall direct, then the occupant, upon paying into court the appraised value of the land,is entitled to a decree vesting..the title in him. Id. § 43R9. Beyond this the statute in terms does not go. It makes no provision as to what shall be the owner declines to pay the appraised value of the imdone

to

448

FEDERAL REPORTER,

vot 52.

the declines to pay the appraised value of the land.,' Where this is the case, a court of chancery will not decree that t'ither party thereby forfaH-a his rights. Equity abhors penalties and forfeitures, and will enforce the rights of parties by more rational and equitable methods. A court of chancery may be compelled to' enforce a hard bargain, but never makes one itself. Equality is equity, and, in the absence of a statute expressly giving priority to a decree for the value of the land oVtjr'a decree for the value of the improvements, equity will treat the parties as having rights in the property in proportion to the value of the lands and improvements respectively, and will divide the property, or the fund derived from its sale, accordingl)'. The occupying claimant's law of Iowa, which has been in force for more than 40 years, makes the occupant and owner, if neither pays the other, tenants in common. 'iii proportion to the value of their respective interests. Referring to thisprovisioQ of the statute, the supreme court ofthat state says: "And we think the provision of the act of 1851, making the parties, if neither paid the other, tenants in common, a most equitable way of adjusting the respective rights of the innocent owner of the property and the bOnafide improver of the same." Okilda v. Sh(YUJer, supra. We agree with that court that the rule mentioned is an equitable and just method of adjusting the rights of the owner and occupant in such cases. Although what are usually termed "equitable considerations" may have induced the legislature to enact the statute securing to pay for his improvements, the right, when once the occupant the eSbiblished under the statute, becomes an absolute, vested, legal right, of equal dignity with the right of the owner to be paid the appraised value of the la:nd. Flynn v.Lemieux, 46 Minn. 458', 49 N. W. Rep. 238; Craig v. Dunn, 47.Minn. 59, 49 N. W. Rep. 398. Neither is entitled to preference over the other. The statute makes none, and the courts should not arbitrarily discriminate. As was said 'I:>y the supreme Arkansas in reference to the occupying c1aidtant's law of that state: "It is a rule for administering justice, and the principle of it is that no one ought to be enriched at the expense of another." Beard v. Dansby, 48 Ark. 183, ,2 S. W. .Rep. 701. The supreme court of Kansas, in a gt)ueral discussion of the occupying daimant's law of that state, holds that, if the owner elects to take the value of the land, and tenders a deed, thereupon "the land, in law and -equity, becomes the property of the" occupant, "and all the plaintiffis entitled to is the. value of the land." And the court adds: "In just what way he may recover that value the statute, as it now stands, does not prescribe. '" '" '" Under the statute before it was amended in 1873,· if the defendant dId not pay the value of the land to the plaintiff within arellsonable time,-to beflxed by the court,-the plaintiff might then have his wl'it of eviction to obtain possession of the land; but under the law as it .now stands he is to any such writ. Under the law as it now t1tands the plaintiff would probably be entitled to cDmmence an independent action to the land with the improvement to the payment of his claim, and to sell his land with .the improvements for that purpose, for undOUbtedly his claim is a lien, andaptior lien, upon the land. It is possible, however,

LEIGHTON V. YOUNG.

449

that theplalntitl' may have 80me other remedy. It is not necessary, however, in this case, to. determine what the plaintiffs' remedy; or their best remedy, is. ...... ..... Stephens v. Ballou, 27 Kan. 594.

The priority of lien in' favor of the owner for the value of the land under the Kansas statute, it would seem, if it exists at all, is obtained by making the occupant an involuntary purchaser of the land, and compelthe owner to foreclolie as upon a vendor's lien. We do not think this rule is applicable to the Nebraska statute. The spirit of that statute is what the letter of the statute is in 10wn; and where the owner does not pay for the improvements, and the occupant does not pay for the land, they should be regarded, in effect, as tenants in common in proportion to the value of their respective interests, with the sole right of possession in the occupant so long as the joint tenancy continues. How is· this condition of things to be terminated? In a court of chancery the solution of this question is not difficult. The court, upon the motion of either the owner or the o<Jcupant, will decree the sale of the property, and distribute the proceeds of the sale to the parties in proportion to their respective interests. We agree with the views expressed in the briefof the learned counsel for the appellees. that equity, having obtained jurisdiction, will retain it, to do complete justice, and finally settle the rights of the parties, and that to that end the court may decree a sale of the property and the distribution of the proceeds according to the rights of the parties. We have sought to follow the view of the supreme court of the state of Nebraska in its interpretation of this statute as far as it has been called upon to construe it. We recognize the fact that the judicial department of every government is the rightful exponent of its laws, and especially its supreme law; and, should the supreme court of Nebraska hereafter put a different construction on this statute, this court will thereafter conform to that interpretation. , '! The decree of the court below is reversed, and cause remanded, with instructions to the court to enter a decree confirming the master's report, and declaring that the value of the land at the date of the complainants' entry thereon was $1,300; that the value of the lasting and valuable improvements put upon the land by the complainants prior to receiving actual notice of the adverse claim of the defendant, after deducting therefrom the net annual value of the rents' and profits of the lands received by the complainants after having received notice of defendant's title by service of process, is $10,180; that said sum constitutes a lien on the land, and that the complainants are entitled to retain the possession of the land until said sum is paid, or the land is sold as provided by the decree; that the defendant has the option to pay the value of the improvements at any time within 90 days after the entry of the decree, and upon the payment thereof into the registry of the court all right and claim of the complainants to the possession of the land and the improvements thereon shall be thereby extinguished, and the defendant shall immetiiately be let into the possession of said property; that, if said defendant shall decline to exercise his option to pay for the imv.52F.no.5-29

FEDERAL

52.

}>l'ov.ements ·Q.nd,. th$ pz:opeliy t the complainanta shall, for, 90 daya option, have the ,ot:'tion to pay the after theexpimtionoMhe appraised value of the land, andi tipol'1the paymen1J'thereofinto the of tn-A defendant to the compJaillants,or tpe.clerk'soffice for them, l;l;. qeedJor said land, so to do" t.he decree shall operate. the legal title to il1 thecomplaiIlapt,s i that', if the defepdant .declines to exercise h,i.s ,o,ption to va)ueotthe improvementslUlp.take the property within .tlwtirne the complaimmtsdecline to exercise pay the: pf ·t4e land within the time then, their. of either' the. ;said ;de(epdant or .the. complainants, the upon. court Will.c:Jil'ect said l.anq, with theimprovemeIltsthereon, to oe sold by the mastel'" t\fter, giyingthe usul1-1nqtice, to the· highest. bidder for cash in hand., purchas!jr a de!ld for the which shall the effectto thE: purchaser aU the. right, titI.e, estate, aQdiJlte,l'Elst,of,the saiddefend,ant and co111plainants in- said Jandandthe tbere/:)ll.,l,lndsaid purchaSl:\r shall be let into the of the .Mwr paying, posts of .the suit, the ing S1l16,Q{ !¥lid land and improvements shall be paid tl;) the ,in the proportion that the value improvements belj.l'S!Ji> Vialue oftl;ie of

{

,

SEABOARD &;

rel. B:uN"r.l1reasurer, v.

R. R.

(OtrQuft,Oourt, E. D.·NpT,tJl, .OaroUna. September 20, 1892.)

i. ·tur'LROAn CoMPiNIEs-TUATION....:QoNiRAoT. ,.".". ' in 1847, (Laws N. O.' The charter of the Roanoke Railroad Company, granted

, ,As the right to the tax.dependedelitirely on contract, the fact thatthe statenever , demanded,liny tax, until ,1,891 it from, then assessing the tax ,for . year frOm whICh tllne llrofltshad exceeded 6 per cent. per annum. ·If laches cQuld.'beJmputable to the legislature in failing to make demand for so long a ti.\lle, it eX;cuse.d: by tjlllfallt that no report. of j:ha, compallv's business was evermad!l; as required by sectiol! 88 of the until 1889. ...'S;. SAHE-'-EtoFEOT <b'CONSOLIDATIO*. : . ·.. The Railroadlayen,tI.rely In NQrth bl,ltterminated at Margar. on the porder of Virginia., 4t therj:lexis.ted a cor-,., poratlOn\ ·the Seaboa/'d & Roanoke COmpany, ownmg a road' lymg mostly 10 that 'state, to Margarettsville·. In ·1849 the legislatures of the two stateil consolidated the two corporations, the North Carolina !loct declaring (Laws 1848-49, c. 83, § 12) thMl'ttiestookhOlders of the Seaboard & RoainOlte Company were thereby ; constitute\l. stollkholders in .the Roanoke Company, with same rights, powers,

2.

87/)Pfovides.insec,Uon.24taataIl the property of the company shllll be vested In the stockholders in );lI,'OP9rtion to their shares, and "the same shall be deemed p6raODaJ.estate, and shlill bEl exempt from any public or tax whatsoever fpr the t4lrIll of 15 years jandtb,ereaftel,'the legislature may im{lose a tax not 2(> cents per spare on each share of the capital stock whenevertlleannual prolltsthereofshallexoeed six per·cent." Section 38 requires th ....e o.f the com.'1>lIny to m. to the. . report of receIPts and expenditures. that the 1'1ght of the legislatUre to Impose the charge did not taxing power; but lipon the charter contract by which it grantedthe,fr.. properly payable by the corporation, and not by the individual shareholders. .