Chance v. Mcwhorter

• Decision Date: 31 August 1858
• Citation: 26 Ga. 315
• Parties: Henry S. Chance, plaintiff in error. vs. Abbott M. McWhorter et al., defendants in error.
• Court: Georgia Supreme Court

26 Ga. 315

Henry S. Chance, plaintiff in error. vs. Abbott M. McWhorter et al., defendants in error.

Supreme Court of the State of Georgia

AUGUST TERM, 1858.

In Chancery, from Carroll Superior Court. April Term, 1858. Honorable George L. Rice, presiding.

See the statement set out in the opinion of the Court.

Merrell, for plaintiff in error.

Chisholm & Waddell, contra.

By the Court.—Lumpkin, J., delivering the opinion.

This was a bill filed by the complainant against the defendants, and containing, amongst other things, the following charges and allegations in substance, to wit: That complainant on the 14th clay of February, in the year 1854, sold to the defendant, Abbott M. McWhorter, lot of land, No. 147, in the second district of Carroll county, and executed to him, an absolute deed of conveyance for the same; and took said defendant McWhorter\'s notes for $1,050 for the purchase money, and that said McWhorter entered into and took possession of said lot of land in pursuance of the said purchase. That afterwards, to wit, on the 27th day of May, in the year 1854, the said defendant McWhorter executed a mortgage deed, conveying said lot of land to the firm of J. S. Farrer & Brothers, to secure the payment of a debt of $481 58-100, which was owing by the defendants, Abbott M. McWhorter, Larkin H. Davis and Alfred B. Davis, merchants and partners, using the name and style of Davis, McWhorter & Co.; said firm debts having been contracted, long before the sale of said land by the complainant to the said McWhorter. That said defendants fraudulently executed said mortgage, for the purpose of depriving complainant of his equitable lien on said land for the balance of his purchase money, namely, $708 24-100, besides interest, which was yet due and unpaid; and for which he held no security, but the notes of the said McWhorter. That J. S. Farrer and Brothers proceeded to foreclose said mortgage, and had the execution issuing thereon, levied on the said lot of land, and the same was sold on the 1st Tuesday in July, 1857, at which time complainant by public proclamation before any bid was made, gave notice that he should seek to enforce his lien on said land for the purchase money still due thereon. That defendant Davis was present and near enough at the time to have heard the same, before he bought; and the complainant believes and so charges, that the defendant Davis did hear all that was then and there said by complainant, in relation to said land, and the sale thereof; and that complainant would seek by virtue of his vendor\'s lien, to subject said land to the payment of the purchase money still owing thereon; and that the said Davis, then and there became the purchaser of the said lot of land No. 147, in the second district of Carroll county, with full, complete and perfect notice and knowledge of complainant\'s equitable rightin and lien upon the same; and that he the said Larkin H. Davis now holds a deed from the Sheriff, conveying to him, all the interest, title and claim, to the said lot of land, that the said Abbott M. McWhorter had therein before the sale. That said L. H. Davis bid off said lot of land, at and for the sum of $696, when the same was worth $1,200; and but for complainant\'s lien aforesaid, would have brought that sum; that the money arising from the said sale, paid off the debt, due by the defendants to J. S. Farrer and Brothers; and left a surplus of $100, which was applied to the discharge of a debt, owing by the defendants to Gilland & Howell, or some other person; that the Sheriff has executed titles to Davis to the land; and that he is about to transfer the same to an innocent purchaser for value, without notice.

The bill contains a prayer that Davis be enjoined from conveying the land; that the same be resold and the proceeds applied to the extinguishment of complainant's lien, and a decree against the defendant McWhorter for the amount of the notes.

To this bill, a general demurrer was filed for want of equity; and upon argument had thereon, the presiding Judge sustained the demurrer, and ordered the bill to be dismissed.

Was there equity in the bill? In other words, can the complainant in such a case as this, assert a lien on the land sold to McWhorter for so much of the purchase money as remains unpaid?

As between vendor and vendee, the settled rule is, to sustain the implied lien for the purchase money, where the mere personal security of the purchaser has been taken, and on the other hand to consider the implied lien as waived, whenever the security of a third person is given. See Blount's Ambler, 723, (n. 1,) where all the English authorities are collected and arranged; and also 4 Kent's Com. 146, and cases there cited.

In this case, it is not pretended, that there was any collateral security of a third person taken; or any agreement or understanding, that the vendor should or would relinquish his right to look to the property for the payment of the purchase money. The lien then clearly existed as against McWhorter. Has it become subordinate to the mortgage given by McWhorter to J. S. Farrer and Brothers, and the judicial sale under it? That is the question, and it is an important one; and one that has never been decided by this Court.

There is, to say the least of it, an apparent conflict of authority upon this point and a bright array of names on both sides. The Supreme Court of the United States, is supposed to have adjudged this question, for the defendants in the Court below, and the defendants in error in this Court in Bailey vs. Greenleaf and others, (7 Wheaton, 46;) and the Supreme Court of Maryland, in Roberts vs. Salisbury, (3 Gill and Johns. 425;) and of Tennessee, in Gann vs. Chester, (5 Yerger, 205) are cited in support of the same doctrine. In Shirley vs. The Congress Sugar Refinery, and another, (2 Edward's V. C. Rep. 511;) the N. Y. Court dissents from the opinion of the Supreme Court of the United States. And in Truloe vs. Williams, (3 Wharton, 493) it is decidedly condemned by Chief Justice Gibson, who pronounces it, "unsatisfactory upon principle and precedent." And to the memory of the late lamented Gibson, I beg leave to record this passing tribute, that while at the time of his death, he had been longer in office than any cotemporary Judge in the world; that none other on earth, united the same originality, vigor, clearness, precision of thought with the same elegance and felicity of expression. He is unquestionably, for force and beauty of style, the ablest judicial writer that this or any other country has produced. His decisions and Lord Stowell's, are amongst the few, that all lawyers love to read.

Chief Justice Marshall in delivering the opinion of the Supreme Court, in Bailey vs. Greenleaf, considers that thevendor\'s lien can not be asserted against creditors, holding under a bona fide conveyance from the vendee; and doubts whether it is settled in England, that the lien remains against the assignees of a bankrupt or creditor coming in under the purchaser, by act or operation of law.

Vice-Chancellor Edwards, in commenting upon this decision, Shirley vs. The Sugar Refinery, remarks: "Had the learned Chief Justice gone a little further and looked into some later cases, particularly, Grant vs. Mills, (2 V. and Beam. 306;) and ex parte Peake, (1 M. C. Rep. 346,) (which do not appear to have fallen under his observation,) it is probable his doubts upon this point, would have been removed. In the first of these cases, Sir Wm. Grant treats it as a settled rule, not to be disputed, that whatever equity, the vendor would have against the purchaser, he is entitled to, against his assignee; and in the last case, where the question was between the vendor and the assignee, and creditors of a bankrupt vendee, Sir Thomas Plumer, V. C, lays it down as clear, that the vendor's lien exists against the assignee, where the vendee becomes bankrupt, they being in no better condition than the bankrupt himself."

And, I beg leave to add, why should they be? Why should the assignees be in any better condition than the assignors? They pay no purchase money on the transfer, and take only what the debtor had; and as he held it, subject to all countervailing equities. The doctrine in England in bankrupt cases, is not disputed. (2 Sudg. on Vendors, 81; 12 Ves. jun., 349; Milford vs. Milford, 9 Ves. jun., 99; 2 V. and Beam. 309; Powell on Mortgages, 542; Taylor vs. Wheeler, 2 Vernon, 564; Finch vs. Winchelsea, 1 P. Wms. 280; Cowper, 565; Dougl. 636.) The American cases, with but few exceptions, accord with the English decisions, and establish the principle, that it is only the purchaser, who has paid a valuable consideration, on the transfer, without notice, in the ordinary course of business, that is protected, and put in any better situation than the assignor. (1 Dall. 430; 4 Brow. 368; 3 Raule, 99, 203; 4 Raule, 345, 354; Wolf vs. Erchelberger, 2 Penn. Rep. 346; 1 Wharton, 433; 10 Johns. Rep. 540; 13 Wend. 570; 16 Wend. 574; 15 Mass. Rep. 156.)

Mr. Sugden, now Lord St. Leonards, the distinguished author of the treatise on the law of vendors, (now in its 9th edition,) after laying down the rule, that persons coming in under the purchaser by act of law, as assignee of a bankrupt, are bound by an equitable lien, although they had no notice of its existence; because the assignment by operation of law, passes the right of a bankrupt, precisely in the same plight and condition, as he possessed them, observes: "And the creditors claiming under a conveyance from the purchaser, are bound in like manner as assignees, because they stand in the same situation as creditors under a commission." (2 Volume 74, 75.)

And in Farrell vs. Heelis, (Ambler, 723) Earl Bathurst acknowledges the rule to be, that the equitable lien for the purchase money, where the seller has not waived it by taking other security, is good, not only against the purchaser, but against his creditors, whether under a...