In carrying out the settlement provided for in the said agreement, $ 10,000 in the hands of the adminis- [155 U.S. 13, 17] trator were invested in the purchase of certain pieces of real estate in the city of Cincinnati from one Moritz Loth, who conveyed the same to James Hampden Robb and Charles E. Strong, trustees by a deed dated February 5, 1885. This deed expressed a consideration of $10,000 as paid by the said Robb and Strong, as trustees, but did not define a trust or name any cestui que trust. By an instrument bearing date the same day, Robb and Strong, trustees, leased the same property to Moritz Loth during the joint life of Ellen W. Robb and Mary Robb, and during the life of the survivor, Loth, as lessee, agreeing to pay to the trustees a rent of $500, payable semiannually, and to purchase the same property, on the death of Mary and Ellen W. Robb, for the sum of $10,000.
Robb and Strong, the trustees, were residents of the city of New York, and Ellen W. Robb, Mary Robb, and Moritz Loth resided in Hamilton county, Ohio, and the deed and lease were duly recorded in that county.
On March 30, 1885, Moritz Loth mortgaged his interest in said property and in other real estate to one William Stix, to secure a loan of $ 10,000.
In November, 1885, one Meyer Gugenheim, a judgment creditor of Moritz Loth, brought an action in the court of common pleas of Hamilton county, Ohio, to subject all the real estate of Loth to the satisfaction of his judgment, making parties defendant a number of creditors of Loth, who held title to or liens upon the property claimed to be his, including Robb and Strong. trustees, and William Stix. A summons in that action was issued for Robb and Strong, trustees, and also for William Stix, as well as for the other defendants. On the 19th day of November, 1885, Kebler accepted service of that summons for Robb and Strong, trustees, and for William Stix, as follows:
The sheriff returned the summons: 'Service accepted by Kebler & Roelker, attorneys for Charles E. Strong and James Hampden Robb, trustees, and for William Stix, as per acceptance above written.'
On December 18, 1885, Kebler filed the answer and cross petition of Robb and Strong, trustees, correctly setting forth their title to the premises, and prayed that their interest be protected therein. He answered under oath the interrogatories as attorney for Robb and Strong, trustees, assigning as a reason therefor that they were nonresidents of the state, and absent therefrom.
Kebler also filed in the same case the answer and cross petition of said William Stix, and at a later stage of the case he filed an amended answer and cross petition of William Stix, setting up the maturity of several of the mortgage notes, breach of condition of the mortgage, and prayed a sale of the leasehold in the premises now in controversy, and of other property mentioned in that cross petition. To these pleadings of Stix, Kebler filed answers for Robb and Strong, trustees, which he himself swore to.
On February 15, 1887, he consented to an elaborate decree on the cross petition of William Stix, selling all the property described in the petition, and appointing George Sidney Tyler master commissioner to make the sale. That part of the [155 U.S. 13, 19] decree which referred to Robb and Strong, trustees, was as follows:
By proceedings under this decree, on April 16, 1887, the property in question was sold, a part thereof to August Vos and a part to William Stix, and on May 24, 1887, conveyed, by a master, to them in fee simple; Vos paying into court the amount of his bid, $9,100, and Stix paying $3,131.32.
In the final decree of distribution it was ordered that the sum of $ 11,361.66, being principal and interest, should be paid over by the master to Robb and Strong, trustees, or Kebler, Roelker & Jelke, attorneys, and $ 7,926.02 to William Stix or Kebler, Roelker & Jelke, attorneys; and those sums were paid to Charles A. Kebler, attorney.
On June 23, 1887, Charles A. Kebler gave to F. G. Roelker a conveyance of lands as security for moneys due by Kebler to Roelker, and also to indemnify the latter against any loss he might sustain or liability that he might be under by reason of the partnership business of Kebler & Roelker, attorneys.
On November 25, 1887, Charles A. Kebler died by his own hand, intestate and insolvent.
In January, 1888, in the court of common pleas of Hamilton county, Ohio, at No. 79,812, William J. Coppock, as administrator of Charles A. Kebler, deceased, filed a petition, setting forth, among other things, the death of Kebler, intestate and insolvent; that there was a large amount of real estate which it was necessary to sell in order to provide means to pay debts; that certain persons had, or claimed to have, title to or liens against said real estate, etc. The minor children of Kebler and F. G. Roelker were made parties defendant. To this petition Roelker filed an answer, in which he alleged [155 U.S. 13, 20] the existence of the conveyance or mortgage made to him in June, 1887, by Kebler, and that J. Hampden Robb and Charles E. Robb, as trustees, claimed to have had dealings with Charles A. Kebler, acting and professing to act as a partner of him, the said Roelker, whereby they claimed that the said partnership and the said Roelker were indebted to them; that he, the said Roelker, did not know, and was unable to state, the particulars of said transactions; that they were concealed from him by the said Charles A. Kebler during his lifetime, etc.; and that he, Roelker, if liable by reason of said transactions, was entitled to the protection of the said conveyance of June, 1887; and he further alleged that the said Robb and Strong, trustees, were necessary parties to the determination of the rights of the parties to the litigation, and asked that they be made defendants, and be called upon to answer to and set up their claims, etc.
In this suit Robb and Strong, trustees, appeared, and filed an answer and a cross petition, in which they set forth the particulars of their title to or interest in the lands described in their conveyance to Moritz Loth, and the lease of the latter to them, and the proceedings in the Gugenheim Case. In respect to that case their averments were as follows;
Subsequently, on May 17, 1888, Robb and Strong, trustees, obtained leave of court to withdraw their said answer and cross petition; and filed a demurrer on the ground that they were not proper parties to the case, which demurrer was sustained by the court, and Robb and Strong were on May 26, 1888, dismissed, with their costs.
On May 12, 1888, Robb and Strong, trustees, at No. 43,368 of the superior court of Cincinnati, Hamilton county, Ohio, brought a suit against August Vos and William Stix. In the petition, after reciting the conveyance by themselves to Moritz Loth, and the lease of the latter to them, they set forth the proceedings in the Gugenheim Case, and allege as follows:
In the superior court case, summons was issued May 12, 1888, and served on August Vos, May 18,1888.
On June 7, 1888, Vos filed his answer and cross petition in said case, denying that the alleged acts of Kebler for the said Robb and Strong, trustees, in the Gugenheim Case, were without their authority, knowledge, or consent; admitting the sale to him under the proceedings in that case, and that the transactions between them and said Loth were in fact a loan by them to him of $10,000 at 6 per cent. interest, secured in the form of said deed and lease; but denying that they have any lien on said premises therefor, or that any part thereof remains unpaid. By way of cross petition, the said Vos sets up the proceedings in the said Gugenheim Case, and avers their regularity, and that said proceedings, orders, decrees, sale, and deed vested in him a valid title in fee simple to the said real estate purchased by him thereunder, free from all claims of said appellants and other parties to said cause, his payment therefor of $9,100, and his possession thereof ever since the conveyance to him, May 24, 1887. He prays 'that the said claim and interest of the said Robb and Strong, trustees, in and to said real estate, may be adjudged to be null and void, and that his title aforesaid may be quieted against the same, and for all other proper relief.'
On June 8, 1888, upon motion of said Robb and Strong, trustees, their said petition was dismissed; and, as to the said cross petition of Vos, the cause was continued for further proceedings. On July 7, 1888, the said Robb and Strong, trustees, filed their petition in said cause 43,368, superior court [155 U.S. 13, 26] of Cincinnati, for a removal of the same on the cross petition of said Vos to the circuit court of the United States in and for the southern district of Ohio, western division, and the order of removal was made.
In said petition they say that they are citizens and residents of the state of New York; that August Vos is a citizen and resident of the state of Kentucky, and William Stix is a citizen and resident of the state of Missouri. They further say that the said suit 'is one of a civil nature, where the matter in dispute exceeds, exclusive of interest and costs, the value of $2,000, and is one in which there is a controversy on cross petition between citizens of different states.' They then state the facts, in substance, averred in their said petition filed May 12th, and in said cross petition of August Vos, the dismissal of their said petition, June 8th, and their remaining in the case only as defendants to said cross petition of Vos.
On October 2, 1888, the transcript of the record in said case was filed in the said circuit court, and numbered therein 4,182.
On October 4, 1888, the said Vos filed his motion in said circuit court for the remanding of said cause No. 4,182 to the superior court of Cincinnati, for want of jurisdiction in said circuit court.
On November 17, 1888, the circuit court overruled said motion, to which overruling the said Vos then entered his exception.
On November 26, 1889, on motion of the said complainants, said cause No. 4,182 was consolidated by order of court with said cause No. 4,148, all further proceedings to be had under the latter number.
In No. 4,148, complainants' bill states the citizenship and residence of the parties as in their petition in the superior court case. They were all noncitizens and nonresidents of Ohio. It alleged that said Robb and Strong, trustees, owned certain valuable real estate in the city of Cincinnati, Ohio, which was in the possession of tenants under a lease for the life of two persons for whom said trustees acted. A judgment creditor of the lessee sought by judicial proceedings in the [155 U.S. 13, 27] court of common pleas of Hamilton county, Ohio, to subject his interest in these and other lands to payment of his claim. The petition was in the nature of a creditors' bill, and made parties defendant a number of persons, including said trustees, holding deeds from the lessee, and charged that these deeds were intended as mortgages, and prayed that they be so decreed, and the property sold to satisfy said judgment.
The trustees were nonresidents, and Kebler, of the law firm of Kebler & Roelker, and purporting to act for that firm, entered their appearance in the case, and consented to a sale of the fee, it is alleged, without their authority or knowledge. The property was sold at judicial sale, and the proceeds received by Kebler, and not paid over or accounted for by him to said trustees. The defendants, Vos and Stix, were purchasers. The bill seeks to avoid the title so acquired by them, on the ground that the sale was absolutely void, by reason of the fraud of Kebler.
On August 2, 1888, the defendant Vos filed a demurrer to said bill.
On August 28, 1888, the court held the bill 'good on its face substantially,' and overruled the demurrer, and allowed Vos until the first Monday of October, 1888, to plead or answer to the bill. 36 Fed. 132.
On September 14, 1888, Vos filed a plea to said bill, setting forth the judicial proceedings referred to in said bill, and contained in Exhibits A, B, C, and D, made part thereof, under which he purchased and acquired title; that he was 'a bona fide purchaser of said premises, for a good and valuable consideration, and without notice or knowledge that the acts and proceedings of said Charles A. Kebler and of the firm of Kebler & Roelker on behalf of said complainants, alleged in said bill, were unauthorized by said complainants, and without their knowledge, or that said complainants did not consent to said sale, or of the alleged fraud on the part of said Kebler;' and that he had no such notice until after May 12, 1888, when said complainants filed their said petition in the superior court of Cincinnati.
On September 27, 1888, the court overruled said plea, to [155 U.S. 13, 28] which said Vos entered his exception, and was allowed 30 days to answer, which time was, on November 26, 1888, extended to December 10, 1888
On December 8, 1888, said Vos filed his answer to said bill.
In this answer, Vos admits specifically all the allegations of said bill, except the following, which he denies, to wit: He denies that the said Kebler and Kebler & Roelker had no authority to accept service of summons for said complainants in said Gugenheim Case. He denies that said complainants had no notice or knowledge of their answer and cross petition in said case filed by said Kebler, or of their answer to the cross petition of William Stix filed therein by said Kebler, or that said Kebler was not authorized to file the same. He denies that said Robb and Strong, trustees, did not consent that said premises should be sold free from their claim and title thereto, or that said claim and title should be transferred to or reserved in the proceeds of sale to be made under said decree, or that said Kebler and Kebler & Roelker had no authority to make or give such consent for them. He denies that said complainants had no knowledge of the order of distribution of the proceeds of said sale made in said cause, or of the payment of said sum of $11,361.65 to said Kebler, or that said Kebler was not authorized to receive said sum, or that the order of court directing such payment was null and void. He denies that said Kebler was wholly insolvent at all times mentioned in said bill. He denies that, prior to or at the time of his purchase of said premises, he knew complainants were absent from the state of Ohio, or nonresidents of said state during the time of said proceedings. He denies that the proceedings and acts taken and done in said cause, purporting to be on behalf of said complainants, were without authority, notice, or knowledge, or that they were done solely by fraud of said Kebler, or that they were ignorant of said suit and the proceedings therein, and of the receipt of said money be said Kebler, until after his death. He denies that the said decree in said cause was null and void as to said complainants, or that the said [155 U.S. 13, 29] court of common pleas was without jurisdiction to order the said premises sold free from their claim and title, or that said sale and conveyance to him by said Tyler were null and void. He denies that no rent had been paid under said lease since February 5, 1886, or that there was due and unpaid rent since that date at the rate of $600 per annum, or that said complainants had any lien on said premises therefor.
Of the truth of the charge in said bill that the said Kebler embezzed and appropriated said sum of $11,361.65 to his own use, and that said complainants received no part of the same, or of the charge therein that said Loth was insolvent, this defendant avers that he had no knowledge, and did not admit the same.
Admitting that he had failed and refused to perform any of the covenants and conditions of said lease as charged in said bill, he avers that he was under no obligation to perform the same, but that, by virtue of said sale and conveyance to him of the premises so purchased by him, and the consideration of $9,100, which he paid therefor, he acquired a perfect title to said premises in fee simple, including all the right, title, and interest of both said lessors and said lessee, and free from the claims of all the parties to said suit.
Further answering, said Vos avers that at the time said deed was made by said Loth to said Robb and Strong, trustees, and said lease by them back to him, the transaction was understood and intended to be in fact a mortgage to secure an investment then made of $10,000 by said trustees for the purpose of furnishing an income to the said Ellen W. and Mary Robb; that, at the same time, it was understood and agreed between said trustees and said Kebler and said Kebler & Roelker that the said Kebler should have entire charge of said investment and collection of said rent or interest, and pay same directly to said Ellen W. and Mary Robb, with full authority to act for said trustees in carrying out said trust in all matters required for the protection and collection of said interest and principal; and, in pursuance thereof, that he did, with the knowledge and consent of said trustees, collect interest on said $10,000, paid as rent from February 5, 1885, down to [155 U.S. 13, 30] November 1, 1887, and paid the same over to said Ellen W. and Mary Robb, and that he had also paid over to the said Ellen W. Robb and Mary Robb a portion of said sum of $11,361.66, but how much, exactly, he could not state.
And, further answering, said Vos avers that any alleged want of authority on the part of said Kebler or Kebler & Roelker to do any and all of the acts by him or said firm done and in said bill mentioned was supplied and all such acts purporting to be done on behalf of said complainants were ratified by them as follows: Said complainants, on March 2, 1888, in the court of common pleas of Hamilton county, Ohio, in the case of William J. Coppock, Adm'r, v. John Kebler et al., No. 79,812, on the docket of said court, voluntarily entered their appearance and filed their answer and cross petition; and again, on April 10, 1888, in the same court, in the case of William J. Coppock, Adm'r, v. John Kebler et al., No. 79,902, on the docket of said court, said complainants having, on cross petition of Frederick G. Roelker, been made parties defendant in said cases, voluntarily entered their appearance, and filed their answer and cross petition in each of said cases, being in the same language, and in each case averring that said Charles A. Kebler, for his firm of Kebler & Roelker, had entered the appearance of said Robb and Strong, trustees, in said action in the bill mentioned, brought by said Gugenheim, and had filed an answer therein on their behalf; and that on May 11, 1887, said firm of Kebler & Roelker had been dissolved, and had been succeeded by the firm of Kebler, Roelker & Jelke, composed of said Kebler and Roelker and Ferdinand Jelke, Jr.; and that thereafter all steps taken in said cause on behalf of said Robb and Strong, trustees, were taken by said new firm; and that in the case aforesaid, brought by said Gugenheim, the premises in the said bill herein described had, pursuant to decree made therein, been sold by George Sidney Tyler, special master commissioner appointed by the court for that purpose, free from the claims of said Robb and Strong, trustees, and all [155 U.S. 13, 31] other persons whomsoever; averring, further, that the decree had been made in said cause on May 19, 1887, whereby it was ordered, adjudged, and decreed that said special master commissioner should pay to said Robb and Strong, trustees, or their counsel, Kebler, Roelker & Jelke, out of the proceeds of said sale, the sum of $11,361.65; and further averring that said sum had been by said special master commissioner, on June 16, 1887, duly paid by said firm, but no portion thereof had by said firm been paid or accounted for to said Robb and Strong, trustees; and further averring that on November 23, 1887, said Charles A. Kebler had deceased, and that said Roelker & Jelke were the surviving partners of said firm of Kebler, Roelker & Jelke; and praying that said Jelke might be made party defendant to said causes; and that it might be adjudged that said Robb and Strong, trustees, were creditors of said firm of Kebler, Roelker & Jelke; and that the property in the petition and cross petition of said Roelker sought to be sold might be sold; and that out of the proceeds thereof said sum of $ 11,361.65, with interest from June 16, 1887, might be paid to said Robb and Strong, trustees; and that said Robb and Strong, trustees, might recover judgment against said Roelker & Jelke, as surviving partners of said Kebler, Roelker & Jelke, for said sum and interest.
And, further answering, said Vos avers that said answers and cross petitions were sworn to by the said James Hampden Robb, and were signed and filed by the duly-authorized attorneys of the said Robb and Strong, trustees; that the same remained on file in said cases until May 16, 1888, when, said cases having in the meantime been consolidated (April 21, 1888; Record, p. 164), said Robb and Strong, trustees, filed a demurrer to said cross petition of Frederick G. Roelker, on the ground that they had been improperly joined as defendants thereto, and thereafter, until May 28, 1888, when said demurrer was sustained, and said Robb and Strong, trustees, were dismissed from said cases. A copy of said answers and cross petitions was filed with the answer of said defendant William Stix to said bill, to which copy the said Vos makes [155 U.S. 13, 32] reference, and incorporates said copy in this, his answer, as part thereof.
Said Vos further avers that, at the time of swearing to said answers and cross petitions and filing them, said Robb and Strong, trustees, had full knowledge of all things and acts done on their behalf by said Kebler and Kebler & Roelker and Kebler, Roelker & Jelke, and they deliberately adopted them as done on their behalf and ratified them, and supplied all lack of previous authority upon the part of said Kebler and Kebler & Roelker and Kebler, Roelker & Jelke, if any such there previously had been, which he, said Vos, denies; and thereupon said Vos prays to be hence dismissed.
On the same day, December 8, 1888, the said August Vos filed in said circuit court and in said cause No. 4,148 his cross bill against the said James Hampden Robb and Charles E. Strong, trustees, William Stix and Moritz Loth, stating fully the facts alleged in said bill of Robb and Strong, trustees, which were admitted in his answer to said bill; also the facts set forth in his said answer; also averring that on May 24, 1887, he entered into possession of the premises so purchased and conveyed to him, and has had possession thereof ever since, and has expended a large amount of money thereon in repairs and permanent improvements, which he is ready to show to the court; also referring to the petition, hereinbefore mentioned, filed in a cause brought by said Robb and Strong, trustees, May 12, 1888, in the superior court of Cincinnati, No. 43,368, removed to said circuit court, and then on the docket thereof (No. 4,182), in which they averred that the said transactions between them and said Loth-the deed and lease-were in truth and in fact a loan by them to said Loth of $10,000, for which sum and interest thereon they had a first and best lien upon said premises. Reference is made to the certified copy of said petition contained in the transcript of the record in said case 43,368, superior court of Cincinnati, on file in said circuit court in said case No. 4,182, and the same incorporated therein.
Vos prays that in the event it be found by the court that the said acts done by said Kebler or Kebler & Roelker or [155 U.S. 13, 33] Kebler, Roelker & Jelke were unauthorized by, and not ratified by, and not binding on, said Robb and Strong, trustees, and the said judgments, orders, and decrees of said court of common pleas void as to them, and that he acquired no title by his purchase and deed of the said real estate, it shall be decreed that the deed and lease aforesaid constituted only a mortgage to secure to said Robb and Strong, trustees, the payment of said $ 10,000 and interest, and that an account be taken to ascertain what proportion of said sum and interest ought justly to be borne by him as chargeable against the land covered by said mortgage purchased by him, taking into account count the payments which it may be found said Kebler or Kebler & Roelker or Kebler, Roelker & Jelke had made on account of said interest and principal, or out of said sum of $11,361.65, to said Ellen W. Robb and Mary Robb, which proportionate sum that may be so found he hereby offers and agrees to pay as said circuit court shall direct.
On December 21, 1888, said Robb and Strong, trustees, filed their general replication to the answer of said Vos in No. 4,148.
On February 16, 1889, said Robb and Strong, trustees, filed their answer to the said cross bill of August Vos, in which they deny that said Vos was an innocent purchaser for valuable consideration, without notice of the want of authority from the said Kebler or Kebler & Roelker, or of the want of consent of said Robb and Strong, as trustees, to the decree of sale in the said Gugenheim Case; and they deny that any of the acts of said Kebler or Kebler & Roelker or Kebler, Roelker & Jelke had been ratified by any act of said Robb and Strong, as trustees. As to whether the said transaction whereby the said Loth conveyed to them said property for $10,000, and they leased the same back to him, was a loan, and whether said conveyance should be regarded as a mortgage, and to be foreclosed as such, they left the same to the determination of the court upon the proof to be made by said August Vos of the allegations of his said cross bill.
They also deny any authority on the part of said Kebler or Kebler & Roelker to collect said rent, or to act for them [155 U.S. 13, 34] in the collection of said interest or principal; and they deny that said Kebler collected any of the interest of said $10,000, and paid the same to Ellen W. Robb and Mary Robb, and, if he did so, that he was authorized to collect the said principal.
On February 23, 1889, said Vos filed a general replication to said answer of Robb and Strong, trustees, to his cross bill.
The defendant William Stix did not file any demurrer or special plea to said bill, but otherwise filed pleadings substantially the same as those filed by August Vos.
On the final hearing, November 26, 1889, upon the pleadings and evidence, the court found the equity of the case with the defendants, and that the complainants had ratified said Kebler's want of authority, and therefore decreed the dismissal of the bill, and also that the title of Vos should be quieted against the complainants, as prayed for in his cross petition.
Edward Colston, Judson Harmon, and George Hoadly, Jr., for appellants.
A. B. Huston, for appellee Vos.
[155 U.S. 13, 38] Gustavus H. Waed, for appellee Stix.
Mr. Justice SHIRAS, after stating the facts in the foregoing language, delivered the opinion of the court.
As the proceedings in the Gugenheim Case were regular upon their face, and extrinsic evidence was required to show their invalidity, we think a court of equity was the proper tribunal to afford effectual relief. Slater v. Maxwell, 6 Wall. 268; Cocks v. Izard, 7 Wall. 559; Oelichs v. Spain, 15 Wall. 228; Freem. Judgm. 499, 500.
Nor do we think that the contention that for the circuit court of the United States to grant such relief would be to interfere with the jurisdiction of the state court is well founded. Pennoyer v. Neff, 95 U.S. 714 ; Johnson v. Waters, 111 U.S. 640 , 4 Sup. Ct. 619; Arrowsmith v. Gleason, 129 U.S. 86 , 9 Sup. Ct. 237. [155 U.S. 13, 39] Whether the presumption, in favor of innocent third parties, that Kebler had authority to enter an appearance for Robb and Strong, trustees, and to receive the proceeds of the sale, was sufficiently overcome by the evidence in this case, we need not consider, because we agree with the conclusion of the court below that the acts of Kebler, whether done with or without authority, were subsequently adopted and ratified by the complainants.
That the course of Robb and Strong in voluntarily appearing in the case of Coppock v. Kebler, and filing an answer and cross petition therein, whereby they sought to appropriate to themselves the benefit of the mortgage given by Kebler, in June, 1887, to F. G. Roelker, would have been an adoption and ratification of the acts of Kebler done in their behalf, and would have estopped them, as against innocent third parties whose proceedings were or may have been influenced by such course, is clear, upon reason and authority, if Robb and Strong were acting in their own behalf. This course was deliberately chosen, after the lapse of several months from the death of Kebler, and with a full knowledge of all the facts. It does not appear that they acted under any mistake, nor that, when they afterwards dismissed their cross petition and resorted to the present suit, they had acquired any additional information. The subsequent withdrawal of their answer and cross petition did not avail to put the parties in statu quo. Such withdrawal could not restore to the purchasers at the Gugenheim sale their lost opportunity to pursue Kebler's estate. Nor is it necessary that it should be made to appear, by evidence, that benefit would certainly have accrued to Vos and Stix from an attempt, if seasonably made, to secure indemnity from Kebler's estate. The right to seek such indemnity was a valuable one, and it is enough that it appears that Robb and Strong, by acquiescing in Kebler's acts, and resorting to legal proceedings against his administrator and partner, prevented Vos and Stix from promptly and perhaps successfully pursuing their remedies against the criminal's estate.
Similar reasoning was applied by this court in the case of Bank v. Morgan, 117 U.S. 96, 114 , 6 S. Sup. Ct. 657. [155 U.S. 13, 40] It was there held that a depositor, whose checks had been fraudulently raised by his clerk, lost his remedy against the bank by his delay and negligence in making known the facts to the bank, and thus giving it an opportunity to seek restitution from the wrongdoer, and the following language was used:
We do not deem it necessary to review the numerous cases, involving questions of election of remedy and ratification, cited on behalf of the respective parties, but shall content ourselves with referring to two or three which satisfactorily illustrate the principles upon which we proceed. upon which we proceed. Thompson v. Howard, 31 Mich. 309, was [155 U.S. 13, 41] a case where a father had brought an action of assumpsit for a minor son's wages, and, after the jury disagreed, had discontinued the suit, and brought an action for the unlawful enticing away and harboring the son. The supreme court said:
In Conrow v. Little, 115 N. Y. 387, 22 N. E. 346, at pages 393 and 394, 115 N. Y., and page 347, 22 N. E., the court said:
In Butler v. Hildreth, 5 Metc. (Mass.) 49, it was held that 'an assignee of an insolvent debtor,' under the insolvent law of 1838, 'may affirm a sale of goods made by such debtor for the purpose of delaying or defrauding his creditors, and receive the price of the goods from the vendee; and if such assignee, knowing all the facts of the case, brings an action against the vendee on a note given by him for the price of the goods, and secures the demand by an attachment of his property he thereby so far affirms the sale, and waives his right to disaffirm it, that he cannot, by discontinuing such action and demanding the goods, entitle himself to maintain an action of trover against the vendee on his refusal to return them.'
At page 51 the court said: 'It would, we think, be going too far to say that merely demand of the price would be deemed a waiver of his right to avoid the sale and claim the [155 U.S. 13, 43] goods, because, in many cases, if the price could be obtained, it would be equally beneficial to the creditors, and he would have no further occasion to pursue the harsher remedy of impeaching the sale. But we think that if the assignee commences an action against the purchaser for the price, and causes his property to be attached to secure it, this is a significant act,- an unequivocal assertion that he does not impeach the sale, but by necessary implication affirms it. It is an act, too, deeply affecting the rights of the purchaser, whilst it is an assertion of his own; and, if done with a knowledge of all the facts which ought to influence him in his election, it is conclusive.'
In Connihan v. Thompson, 111 Mass. 270, at page 272, the court said: 'The defense of waiver by election arises where the remedies are inconsistent, as where one action is founded on an affirmance and the other upon the disaffirmance of a voidable contract or sale of property. In such cases, any decisive act of affirmance or disaffirmance, if done with knowledge of the facts, determines the legal rights of the parties, once for all. The institution of a suit is such a decisive act; and if its maintenance necessarily involves an election to affirm or disaffirm a voidable contract or sale, or to rescind one, it is generally held to be a conclusive waiver of inconsistent rights, and thus to defeat any action subsequently brought thereon.'
The rule established by these cases is that any decisive act by a party, with knowledge of his rights and of the facts, determines his election in the case of inconsistent remedies, and that one of the most unequivocal methods of showing ratification of an agent's act is the bringing of an action based upon such an act.
We cannot accept the contention that Robb and Strong never had any legal standing in the Coppock Case, and that the filing of their answer and cross petition was merely a fortuitous circumstance, which did no injury to Vos and Stix. It is true that when the answer and cross petition were, by leave of court, withdrawn, the record did not of itself disclose any good reason for making them parties, and their [155 U.S. 13, 44] demurrer was properly sustained; but if they had stood upon their case, as set up in their answer and cross petition, it would seem that they would have been entitled to relief.
These views justify the decree of the court below, unless the fact that Robb and Strong were trustees calls for a different conclusion.
It is claimed that the interest held by Robb and Strong in the lands embraced in the deed and lease between them and Loth was in the nature of an estate in realty, and that, as trustees, they could not themselves, nor by authority given to Kebler, have consented to the sale of such lands in the Gugenheim Case. If the nature of their tenure was, indeed, such that it could not be affected by the sale in the Gugenheim Case without their consent, and if, as trustees, they were disabled from consenting, it would seem to follow that the sale in that case was inefficacious, and that the remedy at law would be the sufficient and only one.
But our examination of the deed and lease, read in the light of the testimony of the parties, satisfies us that, as between Robb and Strong and Loth, the transaction was that of a loan of money secured by the covenants of the lease.
Moritz Loth testified in the present case that he regarded the transaction as a loan; and Robb and Strong, in the petition filed by them against Vos and Stix, alleged that 'the said transactions between them and the said Moritz Loth were in truth and in fact a loan by them to the said Moritz Loth of the sum of $10,000, in consideration whereof the said Moritz Loth conveyed to them the premises hereinbefore described, and they executed to the said Loth the lease hereinbefore described, containing the privilege of purchase for the said sum of $10,000;' and they accordingly prayed that 'their claim shall be declared to be a first and best lien on the premises, and that unless the defendants should pay them the said $10, 000, with interest, the said land might be sold for the satisfaction of their claim.'
It also appears that in the Gugenheim Case the petition averred that Robb and Strong, trustees, held the land only as security. [155 U.S. 13, 45] Accordingly, it would seem plain that the rights of Robb and Strong, trustees, were correctly asserted by Kebler in the answer and cross petition filed by him in the Gugenheim Case, and that, assuming that he was authorized to appear, the decree in that case, directing the lands to be sold, and awarding to Robb and Strong, trustees, the said sum of $10, 000 and interest out of the proceeds, was fully warranted. It follows that by the payment into court of the amount of the principal and interest of the money found to be due to Robb and Strong, trustees, and by the conveyance to them by the master of the lands in question, in pursuance of the decree, the purchasers became vested with a feesimple title to said lands.
The decree of the court below is accordingly affirmed.
Justices JACKSON and WHITE, not having heard the argument, took no part in the decision.