Wise v. Miller

• Decision Date: 13 January 1927
• Docket Number: 6 Div. 759
• Citation: 111 So. 913,215 Ala. 660
• Parties: WISE v. MILLER et al.
• Court: Alabama Supreme Court

111 So. 913

215 Ala. 660

WISE v. MILLER et al.

6 Div. 759

Supreme Court of Alabama

January 13, 1927

Rehearing Denied April 14, 1927

Appeal from Circuit Court, Jefferson County; W.M. Walker, Judge.

Bill in the nature of a bill of review by Sallie M. Wise against N.L Miller and others. From the decree, complainant appeals. Reversed and remanded.

Ritter Wynn & Carmichael, W.T. White, and McClellan, Rice & Stone all of Birmingham, for appellant.

Needham A. Graham, Jr., and Douglass P. Wingo, both of Birmingham, for appellees.

SAYRE J.

Appellant, Sallie M. Wise, by her bill in this cause, an original bill in the nature of a bill of review, seeks to set aside a decree rendered in a cause entitled David J. Davis v. Sallie M. Wise and Others, whereby the interest of appellant in certain corporate stock was condemned to the payment of the debt of Charles H. Merritt on the ground that the same had been transferred to her by Merritt in fraud of his creditors. In the present bill it is averred with sufficient particularity and certainty that complainant, appellant, had no notice of the suit against her by service of summons or otherwise, that she took no part in the conduct of the cause, and that she had and has a meritorious defense. Merritt, Davis, N.L. Miller, and the Birmingham Trust & Savings Company are made parties defendant. The interests of Merritt and Davis have already appeared. The trust company is made a party defendant because, it is alleged, at the time of the litigation in the original cause, to which also it was a party defendant, it held the shares of stock in controversy under a trust agreement to be noticed hereafter. As for N.L. Miller, it is averred that he became the purchaser of the stock at a sale had under and in pursuance of the decree rendered in the original cause. The bill in the present cause avers that summons in the original cause was returned by the sheriff as executed upon the defendants therein named, but there is no averment imputing to Miller knowledge or notice at any time prior to his purchase of the equity now asserted by complainant, appellant. His demurrer, setting up in various forms the defense that he was a purchaser without notice, was sustained, and from the decree to that effect this appeal is taken.

We have been led through various channels to consult many authorities supposed to bear upon the question at issue, but have found few cases precisely in point. The complaint in Dunklin v. Wilson, 64 Ala. 162, made a case very like the case at bar, and is cited in the cyclopedias and text-books to the point here under consideration. In that case the court, after an examination of the evidence, concluded that the complainant had been served with process and denied relief. But, discussing the issues made by the bill of complaint, and by most strong implication, if not expressly, conceding the equity of complainant's case there shown, the court said:

"A party sought to be concluded by a judgment or decree, must be shown to have had notice or knowledge of the suit, actual, or, in some cases, constructive; and if this notice or knowledge be wanting, the record of recovery has no binding effect. This rests on the plain principle of right, that no man shall be deprived of his goods, until an opportunity has been afforded him of making defense."

As between the parties to a decree or judgment the foregoing statement of law and justice cannot be questioned. But we have here definitely presented the case of an innocent stranger to the decree, who purchased at the sale in pursuance thereof, and now contends that, since the record of the cause in which the decree was rendered was in all respects regular on its face, showing jurisdiction of the subject-matter and of the parties, he should be protected in his purchase. Marks v. Cowles, 61 Ala. 299, is also quoted as follows:

"All purchasers must at their peril inquire into and ascertain the jurisdiction of the court."

In that case the purchaser, a party, claimed title through an erroneous decree which was reversed on appeal after his purchase. The court gave its approval to the proposition that:

"A party to an erroneous judgment or decree, purchasing at a judicial sale made under it, acquires only a defeasible title, which falls with the subsequent reversal of the judgment or decree [citing authorities.]"

Strong language, condemning judgments without notice, is quoted from Hudson v. Wright, 164 Ala. 298, 51 So. 389, 137 Am.St.Rep. 55, where it had been, in turn, quoted from the Supreme Court of the United States; but the question there discussed was whether a subtenant of agricultural lands was bound by notice to his landlord. However, the language quoted from these several adjudications by this court was quite broad enough to cover the question mooted in the present case, and, in our opinion, should be applied under the facts here appearing, and appears to have been so intended in the first named case at least.

The principal reliance for appellee is found in Reeve v. Kennedy, 43 Cal. 643, quoted at some length in the fifth edition of Freeman on Judgments, edited by Tuttle. We repeat the quotation in its most relevant part:

"As between the parties to the action, a judgment fraudulently obtained will be set aside and held for naught when the fraud is made to appear. But there would be no security in titles acquired at judicial sales if the rights of a bona fide purchaser, without notice, could be overthrown by subsequent proof that the judgment was obtained by fraud, or that the record, which showed a due service on the defendant, was in fact false. *** No prudent person would purchase at a judicial sale, if he incurred the hazard of losing his money, in case it afterwards should be made to appear that the judgment was obtained by perjury or other fraudulent practices, or that the record on which he relied, as proving a service on the defendant, was in fact false."

These conclusions, it was said, were demanded by the repose of titles and indeed every consideration of public policy. Furthermore they were said to be too familiar to require the citation of authorities in their support--and none were cited. But in the text of the same edition it is said, "If the judgment is not void on its face, even though there may in fact have been no service of process, a bona fide purchaser under it is protected"--citing Smoot v. Judd, 184 Mo. 508, 83 S.W. 481, Pettis v. Johnson, 78 Okl. 277, 190 P. 681, and two cases from the court of Texas, and it may be conceded that the cited cases and some few cases decided in the federal courts sustain the text. The cases thus referred to all proceeded on the ground of public policy. The constitutional right of the owners of property were relegated.

The policy which would protect innocent purchasers at judicial sales must be observed in its proper applications, of course and our cases hold that it protects innocent purchasers under judgments within the jurisdiction of the courts against errors and irregularities in the exercise of that jurisdiction. Cowles v. Marks, 61 Ala. 299; Dunklin v. Wilson, 64 Ala. 162. And in the circumstances alleged in the bill in this cause this court has from the beginning and in many cases held that a party against whom the judgment or decree has been rendered...