In looking over all the facts in the case,
it seemed to them and to eminent counsel, that the sales
made by Lownsdale before he acquired his legal title were
wholly illegal and invalid and without binding force in law,
and could extend only to simple temporary possession and use
which the purchasers had already enjoyed; and they
deter-mined to enter suit to recover all property which was
included under the specifications of the patent issued to D.
H. Lownsdale by the United States. This would of course,
dispossess a large number of Port-land's property holders
who supposed that they had titles to their land, and in this
faith had built upon and improved their property, and were
confidently expecting to reap their millions of profit when
the great growth of the future should come. The legal
possibilities of the case were so great as to attract
universal attention and to elicit a multitude of opinions
from lawyers and others acquainted with law and judgments.
Sympathies of all kinds, this way and that, were excited,
and the prospect was that many innocent purchasers would be
thrown out of their valuable holdings; for the difficulties
in the way of establishing a legal right to the persons then
holding lots were confessedly very great.
It was evident from the start that the courts must proceed in one of two ways-either to stick to the letter of the law and follow a strict and narrow construction, and recognize no title except that conferred by the United States Patent; or else to take a general view of the circumstances and necessities of the case and decide upon the general equities and common understanding of all parties, and to let possession count for all that it was worth.
So far as the heirs of Lownsdale were concerned, it could be very properly claimed for them that they were entitled to all the property and wealth that had been accumulated by him, and that those who had been enjoying the use of his property for so many years without rent or other burden, and for a considerable part of which they had paid but nominal prices, should now be willing to relinquish it to the rightful owners. On the other hand, on the part of the people of Portland, it could be claimed that they had bought these lots with the expectation of permanent possession; that they had cleared them of timber, reduced them to order, built upon them commodious houses, had made for themselves and families permanent homes, and had by their toil and self-denial at least assisted Lownsdale in creating a metropolis, and by their very living and working here had multiplied the value of Lownsdale's remaining property so that what was left to his heirs was now many times as valuable as it would have been if they had not incurred all this effort and expense.
As attorney for the lot-owners Colonel Chapman was retained. His legal abilities and acumen were well recognized and he was specially prepared to conduct such a case as this, all the details of which he had known most thoroughly and kept account of most diligently. Dr. Davenport was selected as the one against whom the complainants, or heirs at law, should move, and by whose claims the equities in the case should be determined. District Judge M. P. Deady, of our city, most readily agreed to the suggestion that Judge Sawyer of the United States Circuit Court should be present from San Francisco, and the case on both sides was conducted with the utmost good spirit and with conspicuous ability, and the final decision of the Court was so careful, cogent and just, as to pass finally without exceptions through the Supreme Court of the United States.
Without following the argument of the lawyers, which was very voluminous, it is possible to give here a brief abstract of the decision itself. It may be premised in a general way that the Court followed a liberal construction, not exactly of the law, as but little law was involved, but rather of the necessities and circumstances of the case. It recognized the validity of the agreements entered into by the proprietors before any United States patents were issued. After giving due attention to the facts in the case, Sawyer's opinion proceeds as follows (First Sawyer, 619) "The decision of this action, I am satisfied, must turn upon the validity, construction, and effect of the said various contracts and conveyances * * * and these must be construed in the light of the condition of things existing at the time and with reference to which they were executed.
"It is a matter of public history, of which the Court can take notice, that Oregon was settled while the sovereignty of the country was still in dispute between the United States and Great Britain; that subsequently, a provisional government was organized and put in operation by the people, without any authority of the sovereign powers; that laws were passed temporarily regulating and protecting claims made upon public lands; and that afterwards, the territorial government was established under the authority of Congress and put in operation long before there was any law or means by which the real title to any portion of land in Oregon could be obtained. The title to the lands in Oregon were vested in the United States from the moment that the right of sovereignty was acquired, and the first law that was passed, by which the title . in fee could in any way be acquired from the government was the said Act of September 10th, 1850, called the Donation Act. Long before that time, however, an organized community had existed; lands had been taken up and improved; towns laid out, established and built up, having a considerable population and a growing commerce. It was necessary, in the nature of things, that some right of property should be recognized in lands, in the dealings of the people among themselves, and laws were adopted by the provisional government regulating the subject. Tracts of land were taken up and claimed by the settlers within the limits, as to quantity allowed; towns laid off, 'and lands and town lots sold and conveyed from one to another, in all respects as though the parties owned the fee, except that every party dealing with the lands, necessarily knew that he did .not, and could not, under the existing laws obtain the fee from the real proprietor. * * *
"But between man and man possession is evidence of title in fee, as against everybody but the true owner. The law protects in his possession the party who has once possessed himself of and appropriated to his use a piece of unoccupied land until he has lost his possession and right of possession by abandonment, as against everybody but the true owner. Such possession and right of possession are recognized as property by the common law, and the right is protected and enforced by the Courts. * * * * * * Prior appropriation is the origin of all titles. Prior discovery and an actual or constructive appropriation is the origin of title even in governments themselves. For communities situated like that in the early settlement of Oregon, no rule could be adopted which would better subserve the public interest than to treat prior occupancy as giving a provisional title to lands in reasonable quantities and under proper restrictions, and thereafter, until the real title can be obtained from the Government, deal with it as between individuals in all . respects as if the prior occupancy originated and vested a title in fee. This is the natural order of things, and affords a rule of conduct consonant with the ordinary course of dealings, and the common experience of mankind in organized communities."
Proceeding upon this broad basis, the Judge cited the circumstances of the case in hand; the Portland Land Claim was taken up, lots sold, improved and lived upon. The party thus occupying acquired possession as against all but the true owner-the United States. This right could be transferred by sale like any other.
Lownsdale was, on March 30th, 1849, in possession of the six hundred and forty acres, except certain lots already sold. On that day two instruments were executed, each evidently a part of one and the same transaction, between Lownsdale and Coffin, forming a partnership, by which the legal title was to be vested in Coffin, but to be held in trust for the joint benefit of the two. All profits of sale to be were divided, every exertion made to acquire title, each paying half of expenses, and upon dissolution Coffin is to convey one-half to Lownsdale of whatever he may have under title. In this agreement Lownsdale and Coffin were to own each a half interest in all the six hundred and forty acres, except certain lots already sold to various parties as town property; but every exertion was to be made to gain a title to the whole six hundred and forty acres, not excepting those lots-showing that they claim no further interest in those lots, but were to get title to them for the benefit of those to whom the lots had been sold.
"When, in 1849, Chapman was admitted, the three partners were to have an equal interest in the property, excepting town lots already sold previous to this date as town property; and, in 1852, when the section had to be divided up in severalty, so that the proprietors might obtain a title on their own individual account, as provided by the Donation Act, they make an agreement in which they set forth the fact that they have already obligated themselves to make to their grantees a general warranty deed whenever they, as grantors, shall obtain title from the United States, and bind themselves again to make such deeds to the original grantees, their heirs, assigns, etc., whenever they should get the patents for which they were then taking steps to obtain.
"Whenever a new partner was admitted it was expressly provided that the lots already sold should be excluded from the use of the partners, but that the title must be got for all. Whence it follows that acquisition of title was for the benefit of the purchasers, and not of the vendors-partners-only."
It was also further held by Judge Sawyer that although Lownsdale only promised to give the deed when he got a title, and was under no compulsion by that promise to get a title, yet nevertheless that when he did proceed to obtain a patent, although voluntarily, he was not thereby relieved of the trust which rested in his promise or covenant, but that the trust, having passed from the covenant, now rested in the title, which he procured, and the title thus acquired was in pursuance of the covenant, and therefore for the benefit of the parties designated in the covenant. Moreover, it could not be allowed that Lownsdale was receiving any new valuable consideration frcm the vendees when he agreed to acquire for them a deed for lots previously purchased and paid for, since the only possible value derivable to him from such deed, or promise of it, would be to prevent purchasers going forward to make a claim to their lots in their own name, under the Donation Act, and thus allow him an opportunity to file on the whole claim and get legal title to the whole of it, to the exclusion of the owners or purchasers, of the lots. But that would be a presumption of bad faith and fraud, which should not be admitted. The fact that Lownsdale proceeded voluntarily to get title, and not under compulsion of his covenant, or that he received no valuable consideration for procuring this title, would not, therefore, make any difference with the binding nature of his covenant, which was legally fulfilled by the very fact of his obtaining title.
Still further, it was held that the clause requiring an affidavit of those entering lands under the Donation Act, that such land was for their own use and they had made no contract to sell it, should be decided, or interpreted, in the same liberal spirit. It was held that the law was enacted with a view to the existing state of things, contemplating the fact that many settlers had been living long on their claims, had already sold and bought; and that to confirm sales already made, in the course of business in the past, was no "future contract" such as was contemplated and prohibited by the law. At all events, the. clause must be construed so as to work both ways: if it were held to prevent those who had bought land from Lownsdale from holding their lots, it must also be held to prevent Lownsdale from perfecting his title; since it was no more an infraction of the law for them to buy than for Lownsdale to sell. But Lownsdale had been permitted to obtain title, in spite of his former promise to grant titles to purchasers, and upon the validity of his patent must the whole validity of the claim of the plaintiffs be made to rest. But, if his title was valid, in face of his covenant, that covenant was not invalidated by the clause in the Donation Act prohibiting future contracts.
The above is but a brief abstract of this most valuable document which brought peace to a large number of Portland lot holders. To sum it up, Judge Sawyer held that in the conditions of the case, and of society, and since a town could have been built in no other way at that stage in the development of Oregon, the promises, agreements and covenants of the proprietors before they got a legal title were still valid after they got that title, and that there was nothing in the Donation Act, or any United States law, to prevent their execution. The cross bill of Dr. Davenport was, therefore, allowed and possession of the property given him; while the bill of the Lownsdale heirs, praying for relief, was denied.
Judge Deady concurred, in the following language: " I concur in the conclusion reached by the Circuit Judge. After careful consideration, and not without some doubt and hesitation, I have become satisfied that by force of the agreement of March 10, 1852, and the subsequent action of Lownsdale, Coffin and Chapman, under and in pursuance of it, each of them took and obtained from the United States a separate portion of the Land Claim in trust for the purchasers or vendees of any lots situated therein, and before that time, sold by any or all of these parties.
"From the passage of the Donation Act-September 27, 1850-and prior thereto, Lownsdale, Coffin and Chapman had held this land claim in common, and made sale of lots throughout the extent of it; but on March 10, 1852, by means of this agreement, and with intent to conform to the provisions of said act and obtain the benefit thereof, they partitioned the claim between themselves so that each was thereafter enabled to proceed for himself, and notify upon and obtain a donation of a separate portion of the whole tract.
"The Donation Act was a grant in praesenti. Each of these settlers-Lownsdale, Coffin and Chapman-was upon the land at the date of its passage, and from that time is deemed to have an estate in fee simple in his donation, subject only to be defeated by a failure on his part to perform the subsequent conditions of residence, cultivation and a proof thereof. This being so, it follows that at the date of this agreement either of these parties could impress a trust upon his donation in favor of any one. And, even if it be considered that the settlers acquired no interest in the land until the partition and notification before the Surveyor General, still each one having acquired a separate portion of the common claim in pursuance and partly by means of this agreement, so soon as he did so acquire it, the trust provided for in it became as executed at once, and might be enforced by the beneficiary thereof; although a mere volunteer, from whom no meritorious consideration moved."
He doubted, however, whether the purchaser of lots could be shown to have contributed in any way to the acquisition of the land from the United States, thinking the taking of portions in less quantities than the smallest legal sub-division, forty acres, was unknown, if not illegal; and that lot holders at Portland would not, in those days of change, think of serving four years to secure simple lots, the value of which was then very problematical. Nor was it likely that any one of the citizens was living upon and cultivating such lots in accordance with the Donation Act. The lot-owner had no right, except to bare possession, and must look to the settler for perfect title, relying upon the written obligation which, in most instances, was given.
He summed up the case thus: "I think the agreement of March 10th, 1852 a valid instrument, and not within the prohibition entered in section four of the Donation Act, against `All future contracts' 'for the sale of land', granted by the act. By its terms it appears to be a contract concerning the making of title to the parcels or lots of land already sold, and, for aught that appears before the passage of the Donation Act. But if this were doubtful good policy, it seems to me it requires that the instrument, as between the parties to it, and in favor of those intended to be benefitted by it, should b so construed and upheld."