Black v. Childs

• Decision Date: 22 November 1880
• Docket Number: CASE No. 940.
• Citation: 14 S.C. 312
• Court: South Carolina Supreme Court
• Parties: BLACK v. CHILDS.

14 S.C. 312

BLACK

v.CHILDS.

CASE No. 940.

Supreme Court of South Carolina.

Nov. 22d, 1880.

1. To sustain a plea of purchase bona fide without notice, three things are necessary: (1) that he has paid in full the purchase money; (2) that he has the legal title, or the best right to it; (3) that he purchased bona fide without notice.

2. Section 8 of the act of 1791 (7 Stat, 263,) forbidding certain officers from being interested in the purchase of property sold by them officially, was superseded and repealed as to commissioners in equity by section 6 of the master's act of 1840. 11 Stat. 108, 120.

3. It seems to be the settled conclusion from the authorities, that where a trustee to sell purchases at his own sale, the sale is not void, but will be set aside upon the application of any one interested, whether the sale was fair, and a full price obtained, or not.

4. Denial of notice “directly or indirectly,” is denial of notice had by an agent.

5. The objection that a defence of purchaser for valuable consideration without notice is not sufficiently pleaded, should be taken by motion to make the answer more definite, or by demurrer.

6. Where circumstances are sufficient to put a party upon inquiry, he is chargeable with constructive notice of every fact which such inquiry, properly conducted, will certainly disclose.

7. Where P. a commissioner in equity, at his own sale procured his friend F. to purchase the property sold, and F. was announced as the bidder, took titles in his own name, and executed to the commissioner the required bond and mortgage, and P. took control of the property, a subsequent purchaser for value from F., under negotiations had with P., (who claimed to act for F., and who as commissioner, received payment in full of such bond and mortgage before maturity) is not chargeable with notice of P.'s interest, or of the private arrangement between P. and F., at the commissioner's sale.

Before THOMSON, J., Richland, April, 1879.

This was an action commenced in 1869. The facts are fully stated in the opinion of this court. The Circuit decree, after stating the facts, concluded as follows:

What title passed by such sale? The answer is given by the act of assembly, “That *** no master or commissioner in equity *** shall be concerned or interested, directly or indirectly, in the purchase or acquisition of any property sold by them respectively by virtue of or in obedience to any process, execution or order of court or law; and if any such officer shall presume to be concerned or interested in any such purchase or acquisition, ** the purchase made shall be utterly void and of no effect.”

Against J. H. Pearson it is clear the plaintiffs could demand and have resale of the premises.

Here it may be urged that, though the sale be wholly void as to Pearson, yet it may be valid as to his vendees or alienees, that is, to L. D. Childs and associates. In other words, is the sale so wholly void, the defect so total, that no title will vest in Pearson or Fair, although the purchaser can plead that he purchased without notice and for a valuable consideration?

An obligation or other instrument of writing declared void by statute is as if it never had existence. What is void cannot be confirmed. The statute against gaming declares all securities given for a gaming consideration void. Our courts have held such notes, though negotiable, void in the hands of an innocent holder. This construction was given upon the force of the words used in the statute. So our court has held a purchase at a sheriff's sale by a deputy sheriff, through or by a third party, would, under the act recited, fail to convey the estate of the heirs-at-law, who, it is said, were as much owners as before the sale.

L. D. Childs, however, alleges that J. H. Pearson was, as to himself and associates, unknown in the transaction. That their purchase was from S. Fair, who had complied with the terms of the sale. That they were ignorant of any understanding between J. H. Pearson and S. Fair. That their purchase rests upon papers which did not indicate ownership in Pearson or suggest inquiry; in short, that, in the fullest sense, they are purchasers for valuable consideration without notice.

Admitting this to be true as to Childs and associates, what shall be said of A. G. Baskin, the agent?

L. D. Childs states that he employed A. G. Baskin as his attorney to examine the title to the property; that he placed the whole matter in his hands. That he (Childs) had confidence in his judgment, and so expressed himself. Notice in such case to an agent is notice to the principal, and notice to a solicitor is actual notice to the client.

What notice, then, had A. G. Baskin of the transaction? As a matter of course, A. G. Baskin must have known the contents of the record, must have known the order of the court directing the sale and its terms, the credit given to the purchaser, and that the installments fell due successively on the first days of January, A. D. 1864, 1865 and 1866; that a bond and mortgage were given conforming to these terms of sale; the direction that the money was to be retained until the further order of the court; the possession of the lot by Pearson and his conduct like that of an owner, which, of itself, made inquiry necessary, and the transaction which anticipated the payment and surrendered the mortgage to perfect the title to Childs. These were circumstances and acts sufficient to give notice to a prudent man, suggesting inquiry and disclosing peril to a purchaser. In a sale for partition by order of court, in a certain sense the court is the vendor, but not without reference to the will of the heirs-at-law. The court collects this will and embodies it in an order. Thus declared, it expresses the will of the parties in interest, and which the court itself will not change or alter without their consent or notice to them.

No such power is vested in the commissioner. A vendee of a title resting upon a commissioner's sale, who knows that in obtaining it the order of sale has been destroyed, purchases without the consent of the heirs-at-law. He alters the terms of sale and does not purchase as the heirs-at-law proposed.

The following are the conclusions of law of the court:

1. That the sale by the commissioner, Pearson, of lot “C” and the purchase thereof by S. Fair, are void transactions under the statute, and that no interest passed to L. D. Childs and his associates, under the conveyance by S. Fair.

2. That notice was given to L. D. Childs through his agent, A. G. Baskin, of facts and circumstances affecting the title before the purchase was completed, and that L. D. Childs and his associates are not bona fide purchasers without notice.

It is therefore ordered, adjudged and decreed:

1. That the sale of lot “C” by J. H. Pearson is invalid, and the deed of conveyance thereof to S. Fair transfers no interest; and that the deed of S. Fair to L. D. Childs and others is invalid and conveys no interest, and it is ordered that the said deeds be delivered up to the master to be canceled.

2. That it be referred to the master to inquire and report the time L. D. Childs and associates have been in possession of lot “C,” and the value of the rents and profits or of the use and occupation, reserving to the defendants the question of liability therefor.

3. That the master call in by the usual practice the creditors of the estate of A. Brodie to present and prove their demands by a given day, and report the same to the court.

4. That it be referred to the master to report upon testimony who are the heirs-at-law and distributees of A. Brodie, deceased, who are entitled to an interest in his estate under the statute of distributions, and for this purpose may use testimony already taken in this case.

5. That parties have leave to apply for an order of sale of lot “C,” described in the pleadings.

Defendants L. D. Childs, William Johnston and W. H. Willard, the purchasers, appealed to this court.

Messrs. Pope & Haskell, for appellants.

Mr. J. P. Carroll, contra.

A trustee to sell is by law disabled from purchasing the trust property. Sugd. on V. & P. 161-2; Hill on Trustees 159. Under act of 1791, § 8, (7 Stat. 263,) a commissioner could not purchase at his own sales; such purchase was a nullity, and prohibited under penalty. This section was not repealed by act of 1840. 11 Stat. 132, § 31. The penalty attached makes the purchase absolutely void. Story on Agency, § 240; 1 Story's Eq. Jur., § 306; Potter's Dwarris 250-1. Defendants do not deny notice to their agent, Baskin. Le Neve v. Le Neve, 2 Lead. Cas. in Eq. 27; 2 Sugd. on V. & P. 1041. The facts led up to notice. Besides, Pearson was in possession. 19 Ves. 254; Adams' Eq. 158; 4 Rich. Eq. 114;Spears' Eq. 27. The facts show that Pearson was not acting as agent for Fair, but for himself. The money was not due, and the record of the case showed it; therefore the bond is still subsisting. 1 Sugd. on V. & P. 48; Story on Agency, § 98.

The opinion of the court was delivered by

MCGOWAN, A. J.,

Alexander Brodie died intestate in 1861, seized of real estate. Charles H. Black administered upon his estate. In 1862 proceedings were instituted in the then court of equity, in a case entitled Charles H. Black v. James Black and others to partition or sell the land of which the intestate died seized. The record in the case in some way got out of its proper place, and as we now have it is not complete. There is, however, an order of sale of Chancellor Inglis, bearing date June 21st, 1862, which directed the commissioner to sell the lands in January then next or some succeeding sales day, “upon the following terms to wit: so much cash as will pay the costs of these proceedings and the sale, and the balance upon a credit of one, two and three years, with interest from the day of sale, payable annually, secured by bond and personal security and a mortgage of the premises. After paying the costs that the...