Green v. Crye

• Decision Date: 08 December 1928
• Citation: 11 S.W.2d 869
• Parties: GREEN et al. v. CRYE et al.
• Court: Tennessee Supreme Court

11 S.W.2d 869

GREEN et al. v. CRYE et al.

Supreme Court of Tennessee.

December 8, 1928.

Appeal from Chancery Court, Monroe County; T. L. Stewart, Chancellor.

Bill by Jane Green and another against Joe M. Crye and others. Decree of dismissal, and complainants appeal. Reversed and remanded.

Paul R. Stewart, of Athens, and Tom J. Taylor, of Etowah, for appellants.

John D. Penland, of Madisonville, for appellees.

SWIGGART, J.

The original bill having been dismissed by the chancellor on demurrer, complainants have appealed to this court.

The cause of action stated in the bill is one for fraud and deceit. It is averred that the defendants, Joe M. Crye, Jim Axley, and John Kimbrough, employed by the defendants, William Lambert and wife, Elizabeth Lambert, as auctioneers, sold at auction a number of parcels of real estate, including a tract purchased by the complainants at the price of $3,078, and that the said auctioneers, both at the time of the auction and subsequently, when the trade was consummated, represented to complainants that the title to the property purchased by them was unincumbered in the said Lamberts, a representation false in fact, and known to be false by the defendants. After complainants had entered into possession of the land, they were informed that it was incumbered by a registered mortgage in the sum of $2,250, which mortgage was foreclosed, resulting in the eviction of the complainants prior to the institution of the suit.

The bill discloses that the Lamberts had removed from Tennessee, and were nonresidents, and they were not before the court at the time of the decree from which the appeal is being prosecuted.

The averments of the bill with reference to the alleged wrong of the three defendants, described as auctioneers, are more particularly that they announced at the sale that the title was clear, and that there were in fact no incumbrances against the property. Complainants, being without business experience, relied upon the warranties, statements, and representations so made, both at the time the memorandum of the sale was executed, and later when the cash payment and notes for the purchase price were paid and delivered and the deed accepted; the deed having been prepared by Joe M. Crye, and the acknowledgments of the vendors taken by him as a notary public. After learning of the outstanding incumbrance, complainants interviewed the auctioneers, and were told by them that they knew of the existence of the mortgage at the time of the sale, but supposed the Lamberts would pay it off out of the proceeds, During the interval between the execution of the deed by the Lamberts and the eviction of the complainants, defendants knew that the mortgage had not been paid, and knew that complainants were paying the deferred payments of the purchase price, and that these payments were not being applied to the satisfaction of the mortgage; a part of the original cash payment was paid by complainants to the defendant Joe M. Crye, and "practically all of the payments of purchase money notes were made to defendant Crye," as agent of the vendors. One-third of the total consideration was paid in cash, and for the deferred payments complainants executed three notes in the sum of $684 each, all of which, except $100, complainants have paid.

The bill avers that if complainants had known of the outstanding mortgage, they would not have paid for the property, nor accepted a deed, and that the action of the three defendants, auctioneers, in withholding the true information and in representing the title as free from incumbrances, constitutes a fraud upon complainants.

The demurrer interposed by the three defendants, auctioneers, contains two grounds:

First, that the bill discloses that demurrants were employed only as auctioneers and as agents of Lambert and wife, and that the covenants made were those of the vendors and not of the demurrants, as agents.

Second, that the bill discloses that the outstanding mortgage against the property purchased by complainants was duly of record at the time of the purchase by complainants, and that complainants were therefore charged with knowledge of the facts.

The second ground of the demurrer is manifestly without merit. The complainants are not now asserting any title to or interest in the property described in the registered mortgage, and the rights of the grantee named in such instrument are not here involved. Frizzell v. Rundle & Co., 88 Tenn. 396, 12 S. W. 918, 17 Am. St. Rep. 908; Embry v. Galbreath, 110 Tenn. 297, 301, 75 S. W. 1016.

In Frizzell v. Rundle & Co., this court said:

"The constructive notice consequent upon registration attaches only to persons who subsequently assert any title, charge, or lien, or interest in the property described in the registered instrument, and only in favor of the grantees in such instrument. It is, for instance, well settled that a subsequent purchaser from the grantor will not, as between himself and such grantor, be charged with notice of the state of his vendor's title as shown by the registered title. He may, as between himself and his grantor, rely upon the representations of the latter as to his title, and will not be bound by the registered title of which he has not actual notice, Napier v. Elam, 6 Yerg. 108; Ingram v. Morgan, 4 Humph. 66 ; Topp v. White, 12 Heisk. 165."

It has long been the rule in this state that an action on the case will lie for a fraudulent representation as to title, in the sale of land. Gwinther v. Gerding, 40 Tenn. (3 Head) 197; McLean v. Houston, 49 Tenn. (2 Heisk.) 37; Merriman v. Norman, 56 Tenn. (9 Heisk.) 271.

The cause of action stated in the bill against the three defendants, who acted as auctioneers, is not confined alone to the false representation as to the title, made at the time of the auction, and upon the faith of which the complainants made their bid, but includes the subsequent conduct of these defendants in withholding their information as to the existence of the incumbrance, while assisting the vendors in the preparation and execution of their deed, and in acting as the agents of the vendors in the collection of a portion of the cash payment and of the deferred payments.

A person employed as an auctioneer at the sale of property, real or personal, is primarily the agent of the owner or vendor. In making a sale, to evidence which a writing signed by the person to be charged is necessary, the auctioneer is also treated as the agent of the purchaser, for the purpose of making the written evidence at the time of the sale; but his authority to represent the purchaser is thus limited. Meacham on Agency (2d Ed.) § 2320.

It has been frequently ruled that when the purchaser at an auction sale deposits with the auctioneer a sum of money, to be applied on the purchase price, and the auctioneer has knowledge or information of a defect in the title of the seller which will prevent him from completing the sale, the auctioneer is liable to the purchaser for the return of the...