USA > California > Land in California, the story of mission land, ranches, squatters, mining claims, railroad grants, land scrip, homesteads > Part 15
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In the same year that San Francisco began to develop title insurance, Los Angeles saw the organization of the Abstract and Title Insurance Company. Out of this com- pany's later merger with the Los Angeles Abstract Company came the birth in December of 1893, of Title Insurance and Trust Company, destined to become the largest insurer of titles in California and in the nation. For many years, however, it continued largely to issue certificates, though policies were available. This com- pany is credited with developing the use of the "escrow," today an important business device in the buying and selling of land throughout California.
Although "escrow agents" have probably been func- tioning ever since man began exchanging or selling prop- erty-and we have seen traces of them in Mexican California-the flowering of "escrow service" in Cali- fornia as distinct from title service, seems to date from the 1890's. The late L. J. Beynon, a former official of Title In- surance and Trust Company, tells of the beginnings of
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escrow service there in these words: "One day in 1895 a man came into the office of the company and left an order for a certificate of title. He said he was obliged to leave town for a few days and asked if the order clerk would take his executed deed, deliver it to the buyer, together with the certificate of title, and collect from him the sum of $1000.00. This simple transaction was our first escrow." Soon afterward an escrow department was installed. Pres- ently the employment of a title company to hold funds and documents and to see that proper payments and deliveries were made when the condition of the title met requirements, became common practice.
Going into escrow simply meant depositing purchase money and transfer papers in the hands of a responsible and impartial representative of buyer and seller to be held safe until all the instructions of both parties-and of a lender, if there was one-could be fully complied with. Not only title companies, but banks, began to offer escrow service. With the development of branch banking in Los Angeles County, a large part of this county's escrow busi- ness was taken over by the branch banks. Real estate brokers got in the habit of taking the parties to a real estate transaction to the bank nearest the property. Since loans, especially construction loans, were a common fea- ture of such "deals," not only banks, but savings and loan associations, mortgage companies, and lenders in general in southern California, established escrow departments- using the mails or messenger service to get their title reports and their final policies from title insurance companies. A still later development was the entry into the escrow field of independent companies organized solely to handle escrows. Of course law firms and real estate companies also act as escrow agents. In central and
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northern California the escrow business is largely in title company hands.
Competition to the recording system and to the title services offered by private agencies, was offered in 1914 when optional title registration was provided for in the Land Title (Torrens) Act adopted in California in that year. Its purpose was to simplify real estate transactions. There had been an earlier law, adopted in 1897, following the report on the Torrens Land Transfer Act of Australia made by a commission appointed by the governor in 1893, but it had been too indefinite for general use. Registration of land titles, in various forms, existed in Europe for several centuries. It had been used in parts of the British Empire, and in Australia it had been made compulsory in 1858, owing to its promotion by Sir Robert Torrens, who gave his name to the system. As we have seen, too, Mexican California had a limited registration system in line with Spanish-American practice. Illinois in 1896 was the first state in the United States to adopt a registration law. Ultimately nineteen states were to pass land registra- tion laws; Utah was the last, in 1917.
Under California's Land Title Act, a title may be regis- tered when the ownership of the property is established by a judicial proceeding similar to a quiet title action. All persons known to have an interest in the property, together with adjoining owners, are made parties to this proceeding. Registration follows the obtaining of a de- cree, with a registrar's certificate of title issued. This cer- tificate names the owner and any incumbrances shown by the decree. If this owner wishes to transfer his title he files or registers his deed with the registrar, along with the certificate. A new certificate is then issued to the new owner. Mortgages, deeds of trust, and other types of in-
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cumbrances must be registered, these being entered as "memorials" on the certificate. The law contemplated that registered property could not be taken from an owner because of a title defect, but that any person deprived of a valid interest because of registration would be reim- bursed out of the public fund created under its provisions from filing fees.
The use of the registration system in California has been confined almost entirely to southern counties and of these Los Angeles County has been the largest user. The report of the State Land Commission on January 2, 1945, shows that in eighteen counties the registrar-who is also the county recorder-had issued certificates of title since the Torrens law had been in effect. Certificates in San Francisco totaled twelve, in Los Angeles County 133,993. Orange County was the nearest competitor to Los Angeles, with 10,111. The complete lack of interest in registration in San Francisco was due in part to the ex- istence and use there of the McEnerney Act, adopted to meet the emergency created in April, 1906, by the burn- ing of the public records following the earthquake. This act provided, like the Torrens, for a judicial procedure to establish ownership in a particular parcel, but, unlike the Torrens Act, thereafter the recording system was to be used. For a few years after 1914 there was an active cam- paign in Los Angeles County to bring property under the Torrens Act. Owners were recruited and urged to com- bine forces to reduce initial costs. Begining in 1923, how- ever, new registrations began to decline, and since 1935 the act has been a dead letter so far as the initial register- ing of land is concerned. Land once registered may not be withdrawn. Accordingly, an extensive land registration department is maintained in the office of the recorder of
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Los Angeles County to take care of land already regis- tered.
The Land Title Act was adopted to simplify the buying and selling of land. Presently it was discovered that a Torrens-registered title was at least as complicated as an unregistered title and that auxiliary private agencies- brokers, attorneys, escrow agents, title companies-were being called upon, as with the recording system, to care for the needs of buyers and sellers. At that point interest in registration began to decline. Many other factors played their part, among them the complete liquidation of the assurance fund to satisfy one judgment for $48,000, obtained in Imperial County against the fund; the limited coverage and protection of Torrens certificates of title as compared with policies of title insurance; the rigidity of the Torrens system; the fact that the operating costs of the system are borne largely by the general public instead of by persons using it; and certain apparently fundamental conflicts with the American recording system, with the separation (in the United States) of the legislative and the judicial functions, and with the constitutional provision that no person can be deprived of property without due process of law. Today it is general practice in California for buyers, sellers, and lenders to rely on private agencies for title information and title insurance whether the land in question happens to be registered or unregistered.
The 1948 directory of the California Land Title As- sociation, the trade organization of the title companies of the state, lists seventy-six separate companies having one hundred offices throughout California. It makes the statement that California "is, practically speaking, on a solid title insurance basis." The tendency of recent years has been for small companies to become merged with the
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larger or to secure from the latter the underwriting or the issuance of their policies of title insurance. Thus insur- ance of title is available to real estate buyers, sellers, and lenders in almost any part of the state. Mass demand for, and mass production of, policies of title insurance have kept costs down as compared with title costs in other states. The broadening of coverage, brought about largely through insistence of out-of-state life insurance companies engaged in making nation-wide loans on real estate, has been another important development.
Most of the title insurance companies in California today are the outgrowth of earlier companies, firms, and individuals who began selling title service almost as soon as California was admitted into the Union. The letter- head of one San Francisco Company-Title Insurance and Guarantee Company-says: "Established 1848." This cor- poration, though not incorporated until 1902, succeeded to the pioneer "plants" of C. V. Gillespie, and of F. A. Rouleau (father of the late O. A. Rouleau). Early-day title "plants" of these companies have been vastly enlarged, so that today some title insurance companies can boast of having "complete title plants"-these being, in effect, classified histories of the land transfers that have taken place in a county since 1850. Such are made possible through the day-by-day segregation and posting of essen- tial information concerning property or people to be found in the recorded or filed papers, or in the proceed- ings, of all the many offices of the public records system of the county. The use by experienced searchers or ex- aminers of this storehouse of local history enables the corporation employing them to offer insurance of title to anyone buying or selling real property in California.
CHAPTER XVII
Title Story of Two Cities
THE STORY of the rise of California's two metropolitan giants-San Francisco and Los Angeles-is one of dramatic contrasts. From their beginnings as pueblos, in the days when California was not a part of the United States, the physical aspects of the two cities have presented striking differences. Since these first days, too, their development has presented patterns that are equally varied.
Something of the story of the beginnings of presidios and pueblos has been told already, and of how presidios became pueblos and of the four square leagues of land to which, under Spanish law, they were each entitled. As a part of it, there was the founding in 1776 of a military out- post near a high and perpendicular cliff that overlooked San Francisco Bay. Also included was the starting in 1781 of a farming community in the fertile valley of the Porciuncula River to help supply the garrisons of Cali- fornia. So began San Francisco and Los Angeles. As the story continues, we find the population of the presidio
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shifting, in 1835, to a sheltered cove near by and becoming Yerba Buena, which in 1847 was to retake the name of San Francisco and to stride forward as a seaport. Los An- geles meanwhile kept to its location and its name and was already the center of the cattle country, with great ranchos round about. As the two cities developed, San Francisco, under the impetus of the Gold Rush leaped to maturity. Los Angeles remained a pastoral pueblo until the railroad came to it. Ultimately the northern metropolis was to find almost full development within its original four square leagues for which it had to fight bitterly. The southern metropolis, winning its pueblo title to land with ease, spread over all the surrounding ranchos and mountains and valleys until its original four-square-league area was merely the hub.
The setting up by Congress in 1851 of the Board of Land Commissioners authorized to segregate private land claims from public domain was the signal for the pueblos of the north and the south to bestir themselves. Pueblo authorities were in the same position as were the owners of ranchos. All had to prove claims to land that originated in the Spanish or Mexican periods.
Early in 1852 the Land Commission began hearings in San Francisco. There was a rush to file claims. San Fran- cisco, as successor to the pueblo of Yerba Buena, put in its claim on July 2. The Los Angeles claim was filed Octo- ber 26 when the board was in session in the southern city.
San Francisco, asserting ownership of four square leagues of land, received a rebuff on December 21, 1854. Confirmation came from the government but only for the region north of the "Vallejo line," which ran approxi- mately from Rincon Point on the bay to Point Lobos on the ocean. The balance of the claim was rejected, the
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decision being influenced by the government's acceptance of the "Zamorano document"-afterward proved spuri- ous-in which General Vallejo in 1834 had purportedly suggested that line to Governor Figueroa as a boundary for the planned establishment of the pueblo of Yerba Buena.
Both the city and the United States appealed to the District Court. On September 5, 1864, the case was trans- ferred to the United State Circuit Court where it was argued before Stephen J. Field, Justice of the United States Supreme Court, who some years before had partici- pated in another celebrated case (Hart v. Burnett, 15 Cal. 530) where the city's title was also involved. His decision, presenting the views he had expressed in the earlier case, found the claims to four square leagues to be valid. "The confirmation is in trust," Judge Field found, in the decree entered May 18, 1865, "for the benefit of the lot-holders under grants from the pueblo, town or city of San Fran- cisco, or other competent authority, and as to any residue, in trust for the use and benefit of the inhabitants of the city." While appeals from this decree to the United States Supreme Court were pending, Congress, on March 8, 1866, relinquished and granted to the city and its succes- sors the land confirmed, and upon the trusts that had been set forth. The appeals were then dismissed.
The title of San Francisco to four square leagues of land rests, therefore, upon this decree of the Circuit Court, entered in 1865, and upon the confirmatory act of Congress in 1866. Confirmation was for an area bounded on three sides by the ordinary high-water mark as it was in 1846, excepting military reservations and a few private claims. A survey was made in 1867-1868. Disputes arose about the location of the easterly line of the pueblo at
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the mouth of Mission Creek and other estuaries. It was not until June 20, 1884 that the United States issued its patent for 17,754.36 acres, in accordance with court decree and Congressional act, with an additional patent, on March 6, 1887, covering 238.95 acres.
This bare recital of board rulings, appeals, court de- crees, Congressional acts, surveys and patents entirely skips what was actually happening to the population of San Francisco, not only during the years between 1852 and 1866, when the principal contests over titles were taking place, and between 1866 and 1887, when minor is- sues were under dispute, but also during the earlier years beginning in 1849 when the city was feeling the full im- pact of the Gold Rush.
It is to the court contests, however, that we are indebted for our knowledge of the early title story of San Fran- cisco. These court disputes had drawn the attention of the best students of Spanish and Mexican law, for the existence of the municipality itself, the approval of its past acts, and the well-being of its future were at stake. The story, as revealed in courtrooms, tells of the patri- mony of four square leagues of land to which each Spanish American pueblo was entitled under the Laws of the In- dies, it tells of the establishment of the presidial pueblo of San Francisco in 1776, and the organization there for the San Francisco area of an ayuntamiento in 1834. It con- tinues with the settlement in the following year of Yerba Buena (within the limits of the pueblo of San Francisco) and the gradual shifting of population to that more sheltered area. It goes on with the suspension of the ayuntamiento in 1838, because the population require- ments had been raised, but shows that alcaldes and justices of the peace continued to grant lands down into 1846. It
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points out that on July 7, 1846, the date of the conquest of California by the Americans, the pueblo was in exist- ence, that it was recognized as such, and that its ayuntami- ento was restored in 1847 and continued to function until April 15, 1850, when San Francisco was organized as a municipal corporation by act of the legislature of the new State of California, whereupon old officials gave way to mayor and aldermen.
It was John W. Dwinelle, city attorney of San Francisco, who presented the case for his city against the United States in the district and circuit courts, and it was he who made available much of the exhaustive material that was drawn upon in proving the pueblo's claim. His brief, which he published in four editions from 1863 to 1867 as The Colonial History of San Francisco, is a history of San Francisco's Spanish and Mexican periods, supported with documents of the greatest importance in the history of California land titles.
In this action against the United States, material used in the earlier case of Hart v. Burnett was drawn upon. Here the establishment of title under a sheriff's deed to several pueblo lots was involved originally, but this was submerged in the larger issue when the matter was ap- pealed to the California Supreme Court. It was the big opportunity for the city and for property owners to come in and defend their titles and prove San Francisco's claim to four square leagues. So vast was the research, so great the compilation of laws and documents, so skillful the presentation, and so much was at stake, that the action of Hart v. Burnett has been called the cause célèbre in the annals of California land titles. The California court's decision was that San Francisco was a fully organized pueblo and as such entitled to four square leagues of land.
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The reasoning that led to this decision led also to the later one in the case against the United States.
Mention has been made of the sale of land in Yerba Buena. This took place both before and after the first official survey made in 1839 by John (Jean Jacques) Vio- get. This survey covered the portion of present-day San Francisco between Pacific and Sacramento streets and between the bay and Grant Avenue, to which was added certain "one hundred vara" lots adjacent to this area. Deeds came from alcaldes, prefects, and justices of the peace. It was Alcalde Washington A. Bartlett who em- ployed Jasper O'Farrell to revise and extend the Vioget Survey; the new map was finished in 1847 and termed the Bartlett Map. Bartlett was also responsible for the change in the name on January 30, 1847, of Yerba Buena to San Francisco.
When the city lots were about gone, and San Francisco needed money, it did what every other city with land on its hands does. It called in another surveyor. This time it was William M. Eddy, who was appointed city surveyor in 1849. He assembled earlier surveys, dipped further into the surrounding lands, and prepared what is known as the second official map of San Francisco. It is referred to as the Eddy Map of 1851, for it was adopted by the legislature in 1851, and sometimes as the Red Line Map. The same legislature made certain grants of tideland rights within the red lines of the Eddy map to San Fran- cisco. Later, in 1868, the state legislature was to provide for a board of tideland commissioners to have charge and disposition of salt marsh and tidelands of the state in San Francisco, pursuant to which blocks covering a con- siderable area of tidelands, conforming to the city blocks, were laid out and the lands sold to individual purchasers.
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The Gold Rush had brought not only population but squatters to San Francisco and by 1852, when the city first asserted its claim before the Land Commission, they were an active horde whose tools often were the blanket and the gun. Beyond the lands surveyed by William M. Eddy lay a great unsurveyed area. It lay west of Larkin Street and southwest of Ninth Street but was within the charter boundaries of the city as defined in 1851. Professional landseekers concentrated on this region, on the wise as- sumption that it must belong either to San Francisco or to the United States. Prior possession, they thought, would be a forerunner of later confirmation by one or the other. Some bolstered their claims with guns and en- trenchments. Some supported their claims to parcels of 40, 80, or 160 acres, by making entries under federal pre- emption laws or state laws governing "school land" selec- tions. "Between 1850 and 1854 this section of the city," comments O. A. Rouleau, "was covered with several hun- dred of these notices and copies of surveys." Procedure for getting title simply did not exist, since the city's owner- ship had not been finally upheld.
The result was a compromise between "squatters" and city officials. It was effected by what is called the Van Ness Ordinance, passed during the administration of Mayor Van Ness. There were really three ordinances, adopted in 1855 and 1856, but they are considered as one. By it the title of persons who could prove possession of land in this "Western Addition" between January 1, and June 20, 1855, was upheld and confirmed, so far as the city was concerned. Early alcalde grants also were confirmed. Pro- vision was made for the protection of city rights in the laying out and reservation of streets, parks, and grounds for various public purposes. State confirmation of the
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ordinance came in 1858, and the Congressional act of July 1, 1864 was an endorsement of its purposes. Later state legislation provided for the issuance of city deeds to those who could qualify.
Westerly and southerly of the lines established by the Van Ness Ordinance lay still other lands that were a part of the city's four square leagues. To this acreage, also a place favored by squatters, was given the term "Outside Lands," for it was originally outside the city's jurisdiction. Its western boundary was the ocean, and the four-square- league line was the southern boundary. Because squatters needed counsel and loans, many possessory rights in this area came into the hands of prominent lawyers and finan- ciers. To "quiet title" here and do away with shotgun rule was the purpose of the Outside Lands Ordinance which was drafted shortly after the circuit court and Congress had upheld the city's pueblo title. Proof of pos- session on March 8, 1866, and of payment of taxes for five years preceding July 1, 1866, was required of the posses- sory claimants. The city was to have a park to contain not less than a thousand acres and land for other public purposes. Confirmation came from the legislature. The Committee on Outside Lands, under power given it, is- sued deeds to several hundred persons, among whom were names well known to this day.
In this manner San Francisco's patrimony in land passed into private hands. "Beneficent" and "wise" were the terms historian Theodore H. Hittell applied to the legislation making it possible. Critics have called it "unconditional surrender" to squatters and a "billion dollar steal." They point to Golden Gate Park as a silent reminder of all that is left of a wonderful heritage. It seems apparent, however, that San Francisco officials took
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a realistic view of a title situation that had become in- tolerable through no fault of their own. By their action they ended the era of squatter violence and made possible the orderly settlement and building up of the modern city.
Part of the title story of San Francisco also concerns the numerous adverse claims to its lands that were filed before the Board of Land Commissioners. These claims were either rejected or found to be fraudulent on appeal to the federal courts. They, too, helped to keep things un- settled and to interfere with the buying and selling of land. The fabulous claims of José Y. Limantour included most of the city, islands adjoining, and other property. When the Land Commission, finding the documents and testimony apparently in order, approved these claims in 1856, San Francisco was in an uproar. Some citizens rushed to get quitclaims from Limantour. Fears were quieted, however, when the district court found the pur- ported grant from Governor Micheltorena covering the San Francisco area to be a forged document and that fraud and false testimony had been used extensively. So flagrant were the various Limantour claims that, in rejecting them, Judge Ogden Hoffman described the cases as being "without parallel in the judicial history of the country."
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