US SUPREME COURT DECISIONS

Where land was sold in New Jersey by order of the orphans' court of one of the counties, the conveyance was made not to the actual bidders, but to a person whom they appointed to represent them.

Afterwards, the supreme court of the state having decided that such a practice was irregular, the legislature passed a law enacting that, upon proof of the absence of fraud, such deeds might be given in evidence. This cured the defect in the title.

The purchasers were a company organized for the purpose of improving the land, and in their purchase there was neither actual or constructive fraud.

The law examined with respect to the bidding of associations at sales by public auction.

In this instance, the price obtained was greater than any previous estimate of the value of the property.

There was no constructive fraud, because, according to the evidence, the guardian of the minor children and the commissioners who decided that the property ought to be sold, did not become interested in the company until some time after the sale.

The circumstance that these persons became interested in the company before the first half of the purchase money was due is not a sufficient reason for setting aside the sale.

According to the preponderance of the evidence, the grave charge that the auctioneer who made the sale was one of the company, is not sustained. chanrobles.com-red

Page 56 U. S. 495

The bill was filed by Thomas and Horatio Kearney and their sisters, Catherine, Anastasia, and Anne, who were the children of Edmund Kearney, deceased. The complainants were citizens of several states, viz.: Thomas and Catherine of Mississippi, Anne of Connecticut, Anastasia of Michigan, and Horatio of Ohio. The defendants were all citizens of New Jersey, and were as follows, viz.: John I. Taylor, Edward Taylor, Isaac K. Lippincott, Ezra Osborne, John Hopping, Daniel Holmes, and also the heirs of the following persons, viz.: of Leonard Walling, of John W. Holmes, of James Hopping, and of Joseph Taylor.

The bill was dismissed by the circuit court, and the complainants appealed.

The case was this:

On the 30th of December, 1822, Edward Kearney, then of the County of Monmouth, in the State of New Jersey, died intestate, seised in fee of a tract of land situated in that county, called Key Grove, containing 781 acres. The land bordered upon Rariton Bay, at the foot of Staten Island, for a mile or more, with water of sufficient depth for the near approach of vessels.

At the time of his death, Kearney left the following children: James Kearney, born in December, 1801; Horatio N. Kearney, born in October, 1803; John Kearney, born in November, 1805; Mary Kearney, born in November, 1808; Thomas Kearney, born in September, 1810; Anastasia Kearney, born in October, 1813; Catherine Kearney, born in June, 1816; Anne E. Kearney, born in June, 1818.

In May, 1828, James Kearney sold all his interest in the land to Daniel Holmes and John W. Holmes.

A law of New Jersey passed in 1820, Revised statutes of New Jersey of 1821, page 776 et seq., directs that upon application made by the heirs of a person dying seised of lands or by any person duly authorized in their behalf or claiming under them, a division may be ordered, and the 19th section authorizes a sale when the land is so circumstanced that in the opinion of the commissioners, partition cannot be made without great prejudice to the owners, and upon satisfactory proof of that fact being made to the court.

On the 15th day of April, 1829, Daniel Holmes, on behalf of himself and John W. Holmes, filed a petition for partition in the Orphans' Court for the County of Monmouth at the April term, 1829, against the heirs of Edmund Kearney, setting forth their purchase of the undivided one-seventh part of the estate from James P. Kearney; that by reason of the minority of some of chanrobles.com-red

Page 56 U. S. 496

the tenants in common, no division could take place by agreement, and praying the court to order a division.

At the time of these proceedings, Joseph Taylor was the administrator upon the estate of Edmund Kearney and the guardian of all his infant children who resided in the State of New Jersey.

The court granted the petition and appointed James Hopping, Edward Taylor, and Leonard Walling commissioners.

The commissioners took the necessary oath to perform their duty faithfully, on the 2d of June, 1829.

On the 10th of July, 1829, the commissioners reported to the court that they had caused a survey and map of the premises to be made, and that in their judgment the said premises were so circumstanced that a division thereof could not be made without great prejudice to the interest of the owners.

At July term, 1829, the court passed an order that the commissioners should make the sale, at public auction to the highest bidder, giving at least sixty days' notice of the time and place of such sale by advertisements put up in five of the most public places in the county, and also in one public newspaper circulating in the same county.

In January, 1830, the commissioners reported that they had sold the land, as follows:

Lot No. one, containing 224 82/100 acres, to Isaac K.

Lippincott, at $30 per acre . . . . . . . . . . . . . . $ 6,744.60

Lot No. two, containing 56 42/100 acres, to Thomas

Carhart, for $28.25 per acre. . . . . . . . . . . . . . 1,593.86 1/2

Lot No. three, containing 32 85/100 acres, to Amos

Walling, for $26.75 per acre. . . . . . . . . . . . . . 878.73 3/4

Lot No. four, containing 18 43/100 acres, to Jonathan

Tilton, at $38.50 per acre. . . . . . . . . . . . . . . 709.55 1/2

Lot No. five, containing 59 52/100 acres, to Ezra

Osborn, Esq., for $22.50 per acre . . . . . . . . . . . 1,339.20

Lot No. six, containing 56 84/100 acres, to Ezra

Osborn, Esq., for $13.25 per acre . . . . . . . . . . . 753.13

Lot No. seven, containing 48 46/100 acres, to Isaac

K. Lippincott, for $25.25 per acre. . . . . . . . . . . 1,223.61 3/4

Lot No. eight, containing 24 11/100 acres, to Richard

S. Burrowes, for $43 per acre . . . . . . . . . . . . . 1,036.73

Lot No. nine, containing 7 34/100 acres, to Isaac K.

Lippincott, for $18.50 per acre . . . . . . . . . . . . 135.79

Lot No. ten, containing 16 51/100 acres, to Ezra

Osborn, Esq., for $11.75 per acre . . . . . . . . . . . 194.69 3/4

Lot No. eleven, containing 59 13/100 acres, to James

Sproul, at $33.50 per acre. . . . . . . . . . . . . . . 1,980.85 1/2

chanrobles.com-red

Page 56 U. S. 497

Lot No. twelve, containing 26 2/100 acres, to

Thomas J. Walling, for $33 per acre . . . . . . . . . . 858.56

Lot No. thirteen, containing 49 42/100 acres, to Amos

Walling, for $29.50 per acre. . . . . . . . . . . . . . 1,457.89

Lot No. fourteen, containing 40 35/100 acres, to Joseph

Carhart, for $7 per acre. . . . . . . . . . . . . . . . 282.45

Lot No. fifteen, containing 61 34/100 acres, to Horatio

Kearney, for $12.25 per acre. . . . . . . . . . . . . . 751.41

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$19,941.19

"Amounting, in all, to the sum of nineteen thousand nine hundred and forty-one dollars and nineteen cents, the one-half of which, by the conditions of sale, was made payable on the first day of April next, when deeds were to be made, and possession given to the purchasers; the other half was made payable in one year from the first of April next, without interest, by the purchasers giving approved security for the payment thereof."

"In witness whereof we have hereunto set our hands and seals, this twentieth day of January, in the year of our Lord one thousand eight hundred and thirty."

"JAMES HOPPING [L.S.]"

"EDWARD TAYLOR [L.S.]"

"LEONARD WALLING [L.S.] "

The court ratified the sale, and ordered the commissioners to execute deeds to the purchasers accordingly.

The lots numbered 5, 6, 7, 8, 9, and 10, were the subjects of there present suit.

On the 1st of April, 1830, the commissioners executed a deed for the above lots to John I. Taylor, reciting that they did so at the request of Osborn, Lippincott, and Burrowes.

About the time of the sale in the preceding November, a company was organized, under circumstances which will presently be explained, for the purpose of purchasing the above lots and laying out a town upon them. The company consisted of the following persons, viz., Joseph Taylor, administrator and guardian; John I. Taylor, his son; Leonard Walling, commissioner; David S. Bray; Ezra Osborn, son-in-law of Joseph Taylor; James Hopping, commissioner; John Hopping, his brother; Primrose Hopping, another brother and auctioneer; Isaac R. Lippincott.

The time, manner, and object of the formation of the company are thus stated, in the answers of some of the defendants:

"And the said John I. Taylor, for himself, further saith that sometime after the said sale, and before the deed to him from

Page 56 U. S. 498

said commissioners was executed, but the precise time when this defendant cannot now remember, he bought of Ezra Osborn the share of Richard C. Burrowes, by verbal agreement, the said Osborn having, as this defendant understood, bought out the said Burrowes, and he, the said J. I. Taylor, paid said Burrowes $40 for it, as an advance thereon. And the said John I. Taylor further says that he has no recollection of anything else relating to the purchase of said Key Grove property until, as he thinks, the meeting of the surveyors to lay out roads, in February, 1830, when it was proposed by someone interested, that the deed for lots 5, 6, 7, 8, 9, and 10 should be made to the said J. I. Taylor, as he was then young and unmarried, for the convenience of transfers and to save expense. And this defendant, in further answering, says that he does not know, of his own knowledge, how the said Ezra Osborn, David S. Bray, John Primrose, and James Hopping, Isaac K. Lippincott, Leonard Walling, came to [be] interested in the property, but believes, and has always so heard and been informed, that on the second day of the sale, viz., the fourth November, 1829, Daniel Holmes, who was anxious, and whose interest it was to make the property bring as much as possible, prevailed upon several gentlemen to join for the purpose of bidding for lot No. 8 aforesaid, and that John Hopping, Ezra Osborn, Richard C. Burrowes, Isaac K. Lippincott, Horatio N. Kearney, Septimus Stephens, and Primrose Hopping, joined for that purpose; and this defendant believes, and so charges the truth to be, that the only object of said Holmes in getting up said company was to increase the price of the property by creating competition; and that, but for the said company, the lot No. 8 would have been struck off to persons interested against improvement in that neighborhood, for about twenty-nine dollars per acre. And this defendant, the said John I. Taylor, in further answering, says, that said lot number 8 was a poor, barren, sandy soil, with wood of but very little value upon it, scarcely of value enough to pay for its own cutting, and worth but little for agricultural purposes; and that, in the opinion of this defendant, no other plan could have been hit upon which would have made the said lots 5, 6, 7, 8, 9, and 10, bring as much as they did bring. And the said John Hopping, in further answering for himself, says, that so far as he is himself concerned, he did not combine with any person whatever to bring about a sale of the Key Grove property, nor does he know or believe that anybody else did; that this defendant did not attend the said sale on either day of the sale, and previous to the said sale he did not know and had not heard that any company had been or would be formed for the purchase or sale of said Key Grove property; nor had he any idea or belief

Page 56 U. S. 499

that the said Key Grove property could be converted into a seaport town."

"And the said John Hopping further says that in the evening of the first day's sale, after the adjournment, or the morning of the next day, and before the sale commenced, in a conversation between this defendant and his brother, James Hopping, the said James Hopping told him that Daniel Holmes and Septimus Stevens talked of making up a company to buy the fishing point lot, viz., No. 8. This defendant then asked said James Hopping if he was going to take a share, to which the said James replied that he could not, as he was a commissioner; said James then said he expected that this defendant could have a share if he wished. This defendant then told him to tell Daniel Holmes that he would take a share; and this defendant, the said John Hopping, expects that his brother did so report him. And the said John Hopping, for himself, says, that the said James Hopping had no interest in said purchase of lots No. 5, 6, 7, 8, 9, and 10, at the time of said sale, nor until about three months after, when he consented to come in and advance a part of the purchase money, at the instance and request of this defendant and his brother Primrose. And this defendant, in further answering for himself, says, that neither the said commissioners, nor the said guardian, nor any or either of them, to the best knowledge or belief of this defendant, were interested, directly or indirectly, in said purchase at the time thereof, nor had he ever heard, until after the reading of the bill in this cause, that there had been any combination, unlawful or otherwise, to bring about a sale of said Key Port property. And these defendants, in further answering, say, that the said sale was in every respect fair, as far as these defendants know, and as they verily believe, and that they never heard of any allegation to the contrary, until about the time of the commencement of the suits in ejectment referred to in the bill of complaint; and this defendant, the said Ezra Osborn, answering for himself, absolutely denies that previous to said sale he combined with any person whatever to procure a sale of said property, nor did he ever know, hear, or believe, that such combination had been entered into by any person or persons whatever, nor did he know or believe at the time of said sale, nor does he now know or believe, that the said commissioners and guardian, or either or any of them, were at the time of said sale interested, directly or indirectly, in said purchase. And this defendant, Ezra Osborn, in further answering, says, that his object in attending said sale was to bid for lot No. 1, and that he did bid for it until it got up, in the opinion of this defendant, to its full value, when this defendant stopped bidding, and Isaac Lippincott bidding higher, it was struck off to the said Lippincott just before dinner on the

Page 56 U. S. 500

second day of sale. And this defendant, in further answering, says, that according to his best memory and belief, said lot No. 1 was adjourned on the first day of sale at twenty-three dollars per acre on this defendant's bid, and that he became acquainted with said Lippincott for the first time at said sale."

Lippincott, in his answer, thus describes the formation of the company.

"And that this defendant, inasmuch as he had then become the purchaser of lot No. 1, and it was evidently his interest that lot No. 8 should not fall into the hands of persons whose interest were adverse to the Key Grove property, consented to be one of several others to join and buy said lot No. 8; that said Daniel Holmes then proceeded to hunt for others to join in the said purchase, and left us for that purpose, as he said; after a short time, the said Holmes returned, and reported that he had found several who would join with us in buying said lot No. 8, and mentioned the names of Osborn and Burrowes; and in a consultation between the said Stephens, Holmes, Burrowes, Osborn, and this defendant, it was then agreed that lot No. 8 should be purchased on said joint account, and that said Burrowes should be the bidder."

"And this defendant charges the truth to be that said Holmes did not speak to either of the said commissioners or guardians to join in said purchase, or if he did, that they declined it, and that there was no understanding, directly or indirectly, that said commissioners or guardians should be interested in said purchase; or if there was, or if said Holmes spoke or agreed with either or any of them, this defendant expressly avers that it was without the knowledge and consent of this defendant."

"And this defendant further says that he was induced to join in said purchase by the said representation of said Holmes and Stephens, and that he did not want and had no intention of bidding for or buying said lot No. 8, nor did he want it on his individual account, and should not have joined in it but for the said solicitation of said Holmes and Stephens."

"And this defendant in further answering says that according to the best of his recollection and belief, that upon said sale's being re-opened in the afternoon of said 4th November, 1829, said Burrowes bid for said lot No. 8 in pursuance of said agreement, and that it was struck off and sold by the said commissioners openly and fairly to the said Burrowes for the said sum of $43 per acre as the highest bidder."

"And as this defendant then thought and believes and as he still thinks and believes the said Burrowes was the only person then known to the commissioners as the purchaser, and this defendant charges that he was the only person legally responsible

Page 56 U. S. 501

for the purchase money, and amply able to pay the same."

Holmes in his answer, thus speaks of it.

"And this defendant, in further answering, says that after he got upon the ground, upon the second day of sale, he went to work by going first to one person and then another to get up a company to bid for said lot No. 8 in opposition to the persons who it was understood were bidding from Middletown Point, and finally, after lot No. 1 was struck off to I. K. Lippincott, and with considerable difficulty, the following persons agreed verbally to join with this defendant in purchasing said lot No. 8: Isaac K. Lippincott, Richard C. Burrowes, Horatio N. Kearney, Ezra Osborn, Septimus Stephens, and he thinks Primrose Hopping. And this defendant says that after the adjournment of the first day of sale, he spoke also to James Hopping, one of said commissioners, to be interested, this defendant not then knowing that there was anything illegal in his becoming so, but the said James Hopping absolutely refused on account of his being a commissioner; this defendant then requested him to speak to his brother, John Hopping, when he went home, and see if he would not come in. And this defendant says that someone, either James of Primrose Hopping, reported next day that John Hopping would come in, and he was accordingly considered as one of the company at the sale."

"And this, defendant in further answering says, that said company was got up by this defendant on the spur of the occasion, and for no other purpose whatever but to create competition and make property bring more, and extended originally only to lot No. 8. And this defendant, in further answering says that neither James Hopping, Leonard Walling, [n] or Joseph Taylor, were [was] at the time of the sale a part of said company, or interested in any way in the purchase of any part of said lots 5, 6, 7, 8, 9, and 10."

The evidence of Primrose Hopping was as follows:

"Primrose Hopping being sworn, says: I was the crier of this vendue. I struck off No. 8 to Richard C. Burrowes. He was the highest bidder. William Walling and Richard C. Burrowes were the only two bidders some considerable time before it was struck off; one stood on my right hand and the other on the left. William Walling was on the left hand and Richard C. Burrowes on the right. They were bidding twenty-five or fifty cents per acre. William Walling was last bidder, except Richard C. Burrowes. Burrowes bid openly, and Walling by a wink. I had a timepiece, and gave warning that if I had not another bid I would strike it off to the highest bidder, and after I got a bid from Burrowes, I immediately turned to Walling

Page 56 U. S. 502

to get a bid, and did this repeatedly; and dwelt an unusual time to get a bid, but could get none. I dwelt because he looked at me as if anxious, but never bid; and finally I struck it off to Richard C. Burrowes. I gave fair warning that I was going to strike it off. I think it was put up at the first day, but don't recollect the amount it bid up to. I had no instructions from commissioners to strike it off to Burrowes. I had instructions from Edward Taylor several times not to dwell so long upon the property. The whole farm was struck off to the highest bidder, to my certain knowledge. Neither of commissioners or Joseph Taylor were interested in this property at the time it was sold. I got the highest possible price for each section of the property. It was much better to have the property sold than partitioned. I did not consider myself interested in this property at the time it was struck off. I think Richard C. Burrowes spoke to me about it. I don't recollect what I said. I don't recollect what the precise words were. I don't think I gave him a decided answer."

"I think Burrowes spoke to me on the second day of sale. I don't recollect that he told me who were concerned in the company. I can't say if any of the company lots had been sold when Burrowes spoke to me. I am not sure if Burrowes said it to me, or if was the common talk to try to make a landing there. When Burrowes asked me, I think I did not tell Burrowes I would not join. I extended the time several times in the sale of No. 8. I gave further time after Burrowes' last bid. I think Walling was a little farthest off. I did not know Van Pelt as a bidder. Van Pelt claimed the bid. I requested the property to be set up again. That was my custom. It was referred to commissioners, and they decided that it was stricken off fair and should not be set up again. I did have an interest in company property afterwards. I never paid any of the purchase money. James, and John, and self had two-thirds. They were my two brothers. My share was sold to Capt. Vanderbilt with the rest in 1839. I depended on my brothers. They made payments. Brothers received purchase money, and accounted to me at our settlement after. There was a balance paid me. We had other dealings. I can't remember when I came in partner with them. I can't say whose share of these lots James and John got. I don't know which of my brothers I got the share of, John or James. I don't know when, or if before deed to John I. Taylor. I have no knowledge when I came in a partner. John I. Taylor gave me some land in exchange for lot No. 17, and some money. He and Joseph Taylor gave me 7 1/2 acres back, next to Vandine's. The trade was made several years ago, before the commencement of suit &c. "

Page 56 U. S. 503

In April, 1830, twenty-four building lots were laid out upon part of lot No. 8, sixteen of which were distributed in severalty amongst the members of the company, and the residue left to be sold by John I. Taylor for their benefit. Other measures of improvement were adopted which it is not necessary to state particularly.

In the case of Doe v. Lambert, 1 Green's Law Reports 182, the Supreme Court of New Jersey decided that a deed made by the commissioners in partition proceedings to any other person than the one reported as purchaser was void.

In consequence of this decision, the heirs of Edmund Kearney instituted actions of ejectment in the Circuit Court of the United States for the District of New Jersey in order to recover the property, whereupon the company applied to the legislature for relief.

In March, 1841, the legislature passed an act which recited that deeds were sometimes made to other persons than the reported purchasers, and then declared as follows:

"Sec. 1. Be it enacted by the council and general assembly of this state, and it is hereby enacted by the authority of the same, that, upon proof being made to the satisfaction of the court or jury before whom any such deed or conveyance may be offered in evidence, that the lands or real estate therein mentioned were sold fairly and without fraud, and that such deed or conveyance was made and executed in good faith and for a sufficient consideration, and with the consent of the person or persons reported to the court as the purchaser or purchasers, the said deed or conveyance shall have the same force and effect as though the same had been made and executed to the purchaser or purchasers reported to the court."

In October, 1841, the bill in this cause was filed by the heirs of Edmund Kearney, charging a fraudulent combination between Daniel Holmes, Joseph Taylor, Leonard Walling, James Hopping, John I. Taylor, and others named in the bill, for the purpose of bring about a compulsory sale of the Key Grove estate with a view to establishing a seaport town on a part thereof; that to that end, Holmes made the purchase of James P. Kearney, instituted the proceedings in partition, and, through the fraudulent cooperation of Joseph Taylor, the guardian, and Leonard Walling and James Hopping, two of the commissioners, and Primrose Hopping, the crier, and others confederating with them, wrongfully and fraudulently brought about, under pretext and color of law, a sale of the entire estate, under the proceedings in partition. The bill makes a case of fraud in fact, as well as of fraud in law, growing out of the fiduciary relations which the guardian and commissioners and auctioneer chanrobles.com-red

Page 56 U. S. 504

respectively sustained to the estate and to the heirs to whom it belongs. The prayer is for an account of the proceeds of all wood and timber cut from the six lots conveyed by the commissioners to John I. Taylor; for an injunction to restrain waste; that the conveyance to John I. Taylor, and the sale of these lots by the commissioners, be declared void; and for other relief.

Extracts from the answers of the principal defendants have already been given.

In April, 1842, the trial at law of the ejectment came on before Judges Baldwin and Dickenson, and the court held that, under the provisions of the act of 1841, the defendant must prove that there was no fraud of any kind in the sale, in order to avail himself of the provisions of the act, but the jury not agreeing, no verdict was rendered in the case.

Whilst the present suit was pending, viz., on the 14th of February, 1844, the legislature passed a private act entitled "An act to confirm the sales of the real estate whereof Edmund Kearney, deceased, late of the county of Monmouth, died 'seised.'"

This act recited the circumstances of the sale, and that doubts had arisen respecting the title to the lots, and then declared:

"Section 1. Be it enacted by the council and general assembly of this state, and it is hereby enacted by the authority of the same, that the several deeds, so given by the said commissioners for the said several lots, shall be deemed and taken, and the same are hereby declared to be valid and effectual in law, to convey the estate therein and thereby intended to be conveyed; and that the said deeds, or any of them, and all subsequent conveyances of the said estate, or any part thereof, shall not be impeached in any court whatever for any such alleged interest in the said commissioners, or any of them, in the property so sold by them, as aforesaid, or for any alleged defect or informality in the execution of the powers of the said commissioners, or in the proceedings of the said orphans' court; and that the said deeds, or any of them, shall not be invalidated or impeached upon any other ground than that of absolute, direct, and actual fraud on the part of the said commissioners."

The defendants then filed a supplemental answer averring that there was no fraud and praying to be allowed the benefit of this act, and also filed a cross-bill the proceedings under which it is not material to notice in this report.

In September, 1851, the circuit court decreed that the bill should be dismissed with costs, from which decree the complainants appealed to this Court. chanrobles.com-red

Page 56 U. S. 515