Hill v. Federal Land Bank

• Decision Date: 04 June 1938
• Docket Number: 6513
• Citation: 59 Idaho 136,80 P.2d 789
• Parties: HOOD HILL, Appellant, v. FEDERAL LAND BANK, a Corporation, Respondent
• Court: Idaho Supreme Court

80 P.2d 789

59 Idaho 136

HOOD HILL, Appellant, v. FEDERAL LAND BANK, a Corporation, Respondent

No. 6513

Supreme Court of Idaho

June 4, 1938

GUARDIAN AND WARD-SALE OF GUARDIANSHIP REALTY-RIGHTS AND LIABILITIES OF PURCHASER-BOND OF GUARDIAN.

1. A guardian's sale of realty is a "judicial sale" and the rule of caveat emptor applies.

2. The rule that caveat emptor applies to a guardian's sale of realty does not require a mortgagee of lands formerly purchased by mortgagor at guardian's sale to go beyond the record and investigate extrinsic facts covering the sale which the record or actual knowledge does not require a prudent man to investigate in ordinary business transactions.

3. Whatever is notice enough to excite the attention of a man of ordinary prudence and prompt him to further inquiry amounts to notice of all such facts as a reasonable investigation would disclose.

4. A purchaser at guardian's sale, and likewise a subsequent purchaser from him, is not bound to follow the purchase money and see that it is properly applied, or, in case of a subsequent purchaser, that the original purchaser actually paid the purchase price, since the guardian's bond is given for such purposes. (I. C. A., sec. 15-1808.)

5. The probate court is a constitutional court vested with exclusive original jurisdiction to deal with and to pass upon all matters of guardianship. (Const., art. 5, sec. 21.)

6. Although the statute that every guardian authorized to sell realty must give bond to the ward is in mandatory language it nevertheless confers a discretion on the court to approve the bond and necessarily, in so doing, to determine the amount of the bond and the sufficiency of the surety. (I. C A., sec. 15-1833.)

7. A guardian's general bond covers and secures all moneys received from any source including a sale of any of the real and personal property of the ward. (I. C. A., sec. 15-1808.)

8. The purpose of the statute requiring every guardian authorized to sell realty to give bond to the ward was to make sure that the guardian would be under sufficient bonds at all times to secure all moneys that might come into his hands, and primarily to secure the estate of the minor against loss. (I C. A., sec. 15-1833.)

9. Where guardian, who was brother of minor ward, gave bond for $5,000, sold minor's interest in realty to another brother for $2,000 on order of probate court, purchaser assuming incumbrances, and purchaser gave guardian a note which was never paid, court's approval of sale without requiring guardian to give special bond for the sale was not such an irregularity as to render sale void. (I. C. A., secs 15-1808, 15-1833.)

ON PETITION FOR REHEARING.

10. Where guardian, who was brother of minor ward, sold minor's interest in realty to another brother for $2,000, and received only an unsecured promissory note, guardian's representation that he had received the $2,000 was a fraud upon the court and upon the ward, but did not render the sale void.

APPEAL from the District Court of the Fifth Judicial District, for Bear Lake County. Hon. Jay L. Downing, Judge.

Action to set aside sheriff's sale on foreclosure of mortgage, to vacate decree of foreclosure and to remove cloud from title. Judgment for defendants. Plaintiff appeals. Affirmed.

Judgment affirmed with costs to respondent.

John L. Black and Roy L. Black, for Appellant.

Every guardian authorized to sell or mortgage real estate must, before the sale or mortgage is confirmed give a special bond to the ward with sufficient surety to be approved by the court with condition to account for the proceeds of the sale of mortgage. (Sec. 15-1833, I. C. A. 1932.)

This section of the Idaho Code is mandatory. Failure to comply with this provision makes the sale void and does not deprive the ward of his interest in the property, and the general guardian's bond cannot take the place of this special sales bond. The requirements of a special sales bond is jurisdictional, and when not given the sale is void. ( Richelson v. Mariette, 34 S.D. 573, 149 N.W. 553, Ann. Cas. 1917A, 883; Bachelor v. Korb, 58 Neb. 122, 78 N.W. 485, 76 Am. St. 70; Weld v. Johnson Mfg. Co., 84 Wis. 537, 54 N.W. 335, 998; Williams v. Morton, 38 Me. 47, 61 Am. Dec. 229; McKeever v. Ball, 71 Ind. 398; Henderson v. Coover, 4 Nev. 429.)

The purchaser of real property taking title through a guardian's sale is chargeable with knowledge of all those things appearing of record in the chain of title and is bound to examine the record of the probate court and of the recorder's office, and where such an inquiry discloses any unusual circumstances creating grounds for suspicion, he is chargeable with knowledge of all of the facts that a diligent inquiry would have disclosed. The rule of caveat emptor applies to all guardians' sales of real property. (Glover v. Brown, 32 Idaho 426, 184 P. 649; Blake v. Blake, 260 Ill. 70, 102 N.E. 1007; Dormitzer v. German Sav. & Loan Soc., 23 Wash. 132, 62 P. 862, affirmed 192 U.S. 125, 24 S.Ct. 221, 48 L.Ed. 373.)

B. W. Davis, for Respondent.

The giving of sale bond referred to in section 15-1833, I. C. A. 1932 is not jurisdictional; a sale without such bond is not void and is not subject to a collateral attack. (Sec. 15-1808, I. C. A. 1932; Carolina v. Montgomery, 74 Okla. 121, 177 P. 612; Watts v. Cook, 24 Kan. 278; Howbert v. Heyle, 47 Kan. 58, 27 P. 116.)

Under the facts and circumstances, the defendant, Federal Land Bank is a mortgagee for value in good faith and without notice and no facts appearing from the probate record sufficient to give them constructive notice of any fraud of any kind or any misapplication of funds. (Plant v. Shrock, 102 Okla. 97, 227 P. 439; Martin v. Replogle, 112 Okla. 27, 239 P. 465; F. B. Collins Inv. Co. v. Waide, 70 Okla. 191, 173 P. 835, Vose v. Penny, 78 Okla. 238, 190 P. 97; Jones v. Snyder, (Okla.) 233 P. 744.)

The doctrine of caveat emptor is not applicable to the present case and cannot be used to perpetrate a fraud or an injury. ( Hammert v. McKnight, 132 Okla. 14, 269 P. 289, 68 A. L. R. 649; Moroney v. Tannehill, 90 Okla. 224, 215 P. 938; Scott v. Abraham, 60 Okla. 10, 159 P. 270.)

A mortgagee or purchaser in good faith is not bound to trace or see to the application of the purchase price for sale of real estate by the guardian. (Simmons v. A. C. Carter & Co., 125 Ark. 547, 189 S.W. 176; Cole v. Richmond, 156 La. 262, 100 So. 419; Federal Land Bank of Omaha v. Tuma, 116 Neb. 99, 216 N.W. 186, 56 A. L. R. 186; note, 56 A. L. R., p. 195.)

In determining validity of a judgment, it is conclusively presumed that all facts not appearing of record concerning jurisdiction were found by court rendering judgment in favor of its jurisdiction. (McLeod v. Carroll, (Tex. Civ. App.) 109 S.W.2d 316; 34 C. J., p. 537; Karlson v. National Park Lbr. Co., 46 Idaho 595, 269 P. 591; Walker Bank & Trust Co. v. Steely, 54 Idaho 591, 34 P.2d 56; Harkness v. Utah Power & Light Co., 49 Idaho 756, 291 P. 1051.)

AILSHIE, J. Budge and Givens, JJ., concur, MORGAN, J. concur in the conclusion. Holden, C. J., did not participate in the decision in this case.

OPINION

AILSHIE, J.

This action was commenced by appellant, Hood Hill, whom we will hereafter refer to as plaintiff, against respondent, Federal Land Bank, to which we will hereafter refer as defendant, and also against Guy Hill, Delilah Hill, his wife, Stanley Hill and Gladys Hill, his wife, and the Hill Sheep Company, a corporation. None of the defendants was served except the Federal Land Bank and no one appeared or answered excepting the bank. The action is prosecuted against the Land Bank seeking a decree canceling and setting aside a decree of foreclosure and sale of certain real property, on the ground that fraud was perpetrated on the probate court in procuring a confirmation sale made by plaintiff's guardian, and on account of irregularities occurring in the probate proceedings, of which it is alleged the defendant had knowledge. Judgment was entered for the defendant and the plaintiff has appealed.

Plaintiff's mother died May 14, 1927, while he was yet a minor, and left surviving her three sons and two daughters. She left a will which was subsequently probated, and by the terms thereof, and the subsequent decree of distribution in conformity therewith, plaintiff was left an undivided one-fourth interest in a part of the real estate and an undivided one-eighth interest in another part of the property, and also an undivided interest in the livestock business in which the mother and Guy and Stanley Hill were then engaged.

In April, 1929, the business was in a bad financial way with indebtedness of mortgages and liens against the real estate to the extent of about $ 12,000, and like obligations against the personal property amounting to about $ 23,000; and it became imperative that they take care of some of these obligations; and plaintiff, who was then past sixteen years of age, filed petition in the probate court of Bear Lake county, praying that his brother, Guy G. Hill, be appointed as guardian of his estate. The appointment was made and thereupon the guardian gave a guardian's bond in the sum of $ 5,000. Thereafter and in August of the same year the guardian petitioned the probate court for leave to sell at private sale all of plaintiff's interest in the real estate and likewise in the personal property. The order was granted and he thereafter received a bid from Stanley A. Hill, brother of plaintiff and the guardian, offering the sum of $ 2,000 for all of plaintiff's interest in the property, and he, Stanley, would assume the indebtedness against the property. In other words, that $ 2,000 was to be net to the estate over and above the indebtedness existing against the minor's share in...