Mountain Home Lumber Co., Ltd. v. Swartwout

• Citation: 166 P. 271,30 Idaho 559
• Parties: THE MOUNTAIN HOME LUMBER COMPANY, LTD., a Corporation, Appellant, v. D. R. SWARTWOUT, Appellant, and ALMA LORENE MESEROLE, Formerly ALMA LORENE SMITH, E. D. MESEROLE and CLARA LUDELL SMITH, Respondents
• Decision Date: 29 June 1917
• Court: United States State Supreme Court of Idaho

166 P. 271

30 Idaho 559

THE MOUNTAIN HOME LUMBER COMPANY, LTD., a Corporation, Appellant, v. D. R. SWARTWOUT, Appellant, and ALMA LORENE MESEROLE, Formerly ALMA LORENE SMITH, E. D. MESEROLE and CLARA LUDELL SMITH, Respondents

Supreme Court of Idaho

June 29, 1917

AGENCY-EXECUTION SALE-NOTICE OF EXISTING EQUITIES-BONA FIDE PURCHASER-LACK OF CONSIDERATION-AFTER-ACQUIRED TITLE-ESTOPPEL.

1. A purchaser at an execution sale of realty, who takes the property with actual notice that the judgment debtor had given both a bond for a deed and a deed for the property to a third party before the lien of the judgment attached, is not a bona fide purchaser.

2. A purchaser at an execution sale of realty who takes the property with constructive notice that a judgment prior to the one under which he purchases had impressed such property with a prior lien, is not a bona fide purchaser.

3. Where a judgment creditor bids in property of the judgment debtor, at an execution sale, and credits upon the judgment the amount bid, no valuable consideration passes for such purchase, since it amounts to nothing more than a cancellation, pro tanto, of a pre-existing indebtedness, and such purchase conveys only the legal title to the judgment creditor, subject to existing equities.

4. One who parts with a consideration neither valuable nor irrevocable is not a bona fide purchaser.

5. Where one acting as secretary, general manager and agent of a corporation dealing in land, with full authority to make conveyances on behalf of such corporation, induces a prospective purchaser to buy a tract of land which he represents as belonging to the corporation, when in fact it does not so belong, and on behalf of the corporation gives the purchaser a deed for the land, and thereafter acquires title to the land himself, both he and his successors in interest are estopped from asserting title to the land as against such purchaser.

6. G as agent of a corporation, conveyed to S. land which he represented as belonging to the corporation, but which in fact did not so belong. Afterward G. acquired title for himself without the knowledge of S. Held, that such title as G. acquired became impressed with a trust for the benefit of S., and when G.'s supposed interest was subsequently purchased on execution sale by a judgment creditor of G such purchaser took only such title and interest as G. had and must also be deemed to have taken the legal title in trust for S., subject to every element of estoppel that could be urged against G.

[As to defenses available to defendant in execution when sued in ejectment by purchaser thereunder, see note in 84 Am.Dec 570]

APPEAL from the District Court of the Fourth Judicial District, for Elmore County. Hon. Chas. O. Stockslager, Judge.

Action to quiet title. Judgment for defendants and cross-plaintiffs Meserole and Smith. Reversed.

Reversed.

J. R. Smead, Elliott & Healy, for Appellant Swartwout.

"A person who acquires a legal title or an equitable title or interest in a given subject matter, even for a valuable consideration, but with notice that the subject matter is already affected by an equity or equitable claim in favor of another, takes it subject to that equity. (1 Pomeroy's Eq. Jur., 3d ed., sec. 591, p. 964.)

Although one claimant holds the legal title, yet if at the time of his purchase he was charged with notice of an existing equitable right in the land, such notice gives the earlier equitable right priority over the legal title. (2 Pomeroy's Jur., sec. 681.)

Nor is it important whether the notice to one about to purchase the legal title to land is actual or constructive. (2 Pomeroy's Eq. Jur., sec. 690.)

Two equities are equal when both parties are equally entitled to the consideration and protection of a court of equity. In such a case the earlier equity prevails over the later. (2 Pomeroy's Eq. Jur., sec. 683, p. 1189.) An agent making false representations as to his principal's title to real estate is estopped thereafter to assert any title inconsistent with his representations. (2 Pomeroy's Eq. Jur., sec. 807; Crosby v. Meeks, 108 Ga. 126, 33 S.E. 913; Eastwood v. Standard Mines & Mill Co., 11 Idaho 195, 81 P. 382.)

Where a person induces another to purchase property, representing to him that it is free from encumbrance, such person will be estopped afterward to claim under a mortgage or judgment lien existing at the time of his false representations, and subsequently purchased by him. (16 Cyc. 784; Briggs v. Langford, 59 Hun, 615, 12 N.Y.S. 657; Bitting's Appeal, 17 Pa. 211; 15 Am. & Eng. Ency. Law, 2d ed., 1184; Central Coal & Iron Co. v. Walker's Excx, 24 Ky. Law Rep. 2191, 73 S.W. 778.)

One who, in a representative capacity, assumes to sell and convey to another the entire estate in land, is estopped, as against the purchaser, from asserting an estate in his own right in the same land; although the first sale and deed were void. (Wells v. Steckelberg, 52 Neb. 597, 66 Am. St. 529, 32 N.W. 865; Carothers v. Alexander, 74 Tex. 309, 328, 12 S.W. 4.)

The estoppel runs against the guilty party and against those in privity with him, if such privies have either form of notice, or knowledge. (16 Cyc. 798; 11 Am. & Eng. Ency. 415 (3); Tefft v. Munson, 57 N.Y. 97, 99.)

By crediting the amount of its bid upon its own judgment, plaintiff merely canceled to that extent a pre-existing indebtedness, and one which could be revived if title to the land should prove defective. Such a transaction does not furnish a valuable consideration. (Land v. Hea, 20 Idaho 250, 118 P. 506; Holden v. Garrett, 23 Kan. 98; Ayres v. Duprey, 27 Tex. 593, 86 Am. Dec. 657; Dickerson v. Tillinghast, 4 Paige Ch. (N. Y.) 215, 25 Am. Dec. 528; Wright v. Douglass, 10 Barb. (N. Y.) 27; Williams v. Hollingsworth, 1 Strob. Eq. (S. C.) 103, 47 Am. Dec. 527.)

Defendant Smith purchased with both notice and knowledge of the estoppel against Garrett. This also estops her to deny Swartwout's claim. (Tiffany, Real Property, sec. 457; Froman v. Madden, 13 Idaho 138, 88 P. 894.) The actual notice and knowledge had by both plaintiff company and defendant Smith is sufficient to defeat their claims. (21 Am. & Eng. Ency., 584-590; Wood v. Rayburn, 18 Ore. 3, 17, 22 P. 521; Mull v. Orme, 67 Ind. 95.)

W. L. Harvey and W. C. Howie, for Appellant Mt. Home Lbr. Co.

The courts universally hold that where title or interest of the party sought to be estopped is a matter of record there could be no estoppel. (Campbell v. Jacobson, 145 Ill. 389, 34 N.E. 39; Gardner v. Pierce, 22 Nev. 146, 36 P. 782; Blue Ridge Marble Co. v. Duffy, 128 Ind. 79, 27 N.E. 430; Porter v. Wheeler, 105 Ala. 451, 17 So. 221; Griswold v. Boley, 1 Mont. 545; Cornish v. Woolverton, 32 Mont. 456, 108 Am. St. 598, 81 P. 4; Murphy v. Jackson, 69 Miss. 403, 13 So. 728; Waits v. Moore, 89 Ark. 19, 115 S.W. 931; Geisendorff v. Cobbs, 47 Ind.App. 573, 94 N.E. 236; Oberheim v. Reeside, 116 Md. 265, 81 A. 590; Brant v. Va. Coal and Iron Co., 93 U.S. 326, 23 L.Ed. 927.)

"To enable a man to set up a title by estoppel, he must have been ignorant of the true state of the title at the time he took it, or been without means of ascertaining it by a reference to records." (16 Cyc. 738-741; 3 Washburn, Real Property, 81.)

As a rule the doctrine of title by estoppel does not apply in the absence of personal covenants to a title subsequently acquired in a different right. (16 Cyc. 712; Smith v. Penny, 44 Cal. 161; Davis v. Davis, 26 Cal. 23, 85 Am. Dec. 157.)

One making a conveyance in a representative capacity where there is nothing in the conveyance to indicate a purpose to bind himself individually, is not estopped from setting up an adverse title held by him at the time of conveyance. (Wm. D. Cleveland & Sons v. Smith (Tex. Civ. App.), 113 S.W. 547; Dean v. Parker, 88 Cal. 283, 26 P. 91; Gjerstadengen v. Van Duzen, 7 N.D. 612, 66 Am. St. 679, 76 N.W. 233; Gjerstadengen v. Hartzell, 9 N.D. 268, 81 Am. St. 575, 83 N.W. 230; Spears v. Weddington, 146 Ky. 434, 142 S.W. 679.)

Nor is he estopped from setting up an adverse after-acquired title. (Flemming v. Ray, 86 Ga. 533, 12 S.E. 944; Consolidated Rep. Min. Co. v. Lebanon Min. Co., 9 Colo. 343, 12 P. 212; Jackson v. Hoffman, 9 Cow. (N. Y.) 271; Irish v. Stevens, 154 Iowa 286, 134 N.W. 634.)

Anyone purchasing at an execution sale, including the debtor, who may credit the payment on his judgment is a bona fide purchaser. (Pugh v. Highley, 152 Ind. 252, 71 Am. St. 327, 53 N.E. 171, 44 L. R. A. 392; Sternberger v. Ragland, 57 Ohio St. 148, 48 N.E. 811; Conley v. Redwine, 109 Ga. 640, 77 Am. St. 398, 35 S.E. 92; Hart v. Gardner, 81 Miss. 650, 33 So. 442, 497; Sharp v. Shea, 32 N.J. Eq. 65; Newman v. Davis, 24 F. 609; Low v. Blinco, 10 Bush (73 Ky.), 331; Smith v. Farmers & Merchants' Nat. Bank, 57 Ore. 82, 110 P. 410; Feinberg v. Stearns, 56 Fla. 279, 131 Am. St. 119, 47 So. 797; Hendryx v. Evans, 120 Iowa 310, 94 N.W. 853; Wood v. Morehouse, 45 N.Y. 368; Motley v. Jones, 98 Ala. 443, 13 So. 782; McMurtie v. Riddell, 9 Colo. 497, 13 P. 181.)

The record of their deed and contract cannot be actual notice nor constructive notice to plaintiff for the reason that they are both from a party who is absolutely a stranger to the chain of title. (Harris v. Reed, 21 Idaho 364, 121 P. 780; 2 Pomeroy's Eq. Jur., sec. 658.)

E. M. Wolfe, for Respondents Smith.

Respondents Smith have the right to assume that the Great Western Beet Sugar Co. is a stranger to the title. That though it executed a deed to the property it had no title to convey and that deed conveyed no title. For this reason of course, Swartwout obtained no title. They had no right to believe that the company intended to convey to Swartwout the property described in the instrument, since no person is...