Case ID: ky_76/html/0591-01.html
Source: Caselaw Access Project
Author: {"author": "JUDGE PRYOR", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Case ¿-PETITION EQUITY
    Feb. 9.
    Farmers Bank of Kentucky v. Peter, &c.
    APPEAL PROM HENDERSON COMMON PLEAS COURT.
    1. The doctrine of caveat emptor applies, after confirmation, to all sales of real estate made under judgments rendered by the chancellor.
    2. When the purchaser discovers a defect in the title, or assigns some other reason sufficient to set aside the sale, the chancellor will relieve him by refusing to confirm the act of his commissioner.
    
      But when the sale has been confirmed, and no fraud practiced by the creditor on the purchaser to induce the purchase or warranty of title, no relief will be granted.
    8. After confirmation no deduction will be made from the price agreed to be paid, nor will the purchaser be released from his obligation to pay for the reason alone that liens existed upon the property at the time of the sale unknown to the plaintiff and purchaser.
    No deduction is allowed in this case for taxes paid by the purchaser, although a lien on the property at the time the sale was made.
    4. The purchaser under a judgment enforcing a mortgage buys at his peril, and can not complain of a want of title unless he applies to the chancellor before the sale is completed by an order of confirmation, or during the term in whieh the chancellor has the power to disregard or modify such an order.
    At the December term, 1873, of the Henderson Circuit Court, a judgment was rendered in favor of appellant against M., foreclosing a mortgage and ordering a sale of real estate in the city of Henderson. In July, 1875, the property was sold under said judgment on a credit of six and twelve months. At the time of the sale the commonwealth of Kentucky and the city of Henderson each had a lien on the property for taxes for the year 1875, which amounted in the aggregate to $128.20, of which the purchaser had no notice.
    After the confirmation of the sale and the payment of the purchase-money, except a balance on the last bond, the purchaser, the appellee Peter, sued for.and obtained in this action an injunction, enjoining the collection of so much of that balance as was necessary to pay said taxes, and ordered the same to be credited on the bond. The judgment perpetuating the injunction and ordering the credit is reversed.
    A. DUVALL for appellant.
    1. The allegations of the petition — that he, the purchaser, had no notice of the tax liens, and that he understood and believed the lot was free from all liens and encumbrances — failing to allege any fraud upon the part of the appellant, did not entitle the purchaser, Peter, to any relief, legal or equitable, unless it can he shown that appellant was a warrantor by implication of the property sold.
    2. “It is a well-settled principle that in judicial sales there is no warranty,” etc. (Borer on Judicial Sales, sec. 458.)
    The rule caveat emptor applies in all its rigor to judicial sales of real property. (Borer or Judicial Sales, sec. 459.)
    The principle above stated is substantially settled in McGhee v. Ellis (4 Litt. 245), and has since been substantially recognized by Ettlinger v. Tansey (17 B. Mon. 366) and Hanna v. Guy (3 Bush, 92.)
    B. H. CUNNINGHAM for appellee Peter, &c.
    1. Injunctions are granted as relief against fraud, accident, or mistake. (2 Story’s Eq. Jurisprudence, secs. 874, 878, 879, 886, 887; 1 lb. sec. 110; Civil Code, sec. 299; Young v. Craig, 2 Bibb, 270.)
    2. A vendee may insist upon specific performance, and recover damages where his vendor is unable to perform the contract (Jones v. Shackleford, 2 Bibb, 410), and may enjoin a judgment for ..purchase-money. (Fishback v. Williams, 3 Bibb, 342; Moredoek v. Rawlings, 3 Mon..77; Kelly v. Kelly, 2 Duv. 364.)
    3. The mortgagor in this case was primarily bound to pay the taxes; but on his failure to do so and. his insolvency, it became the duty of the mortgagee to pay them. The innocent purchaser was in no sense the owner or possessor of the property at the time the taxes were assessed, nor until after the sale was confirmed to him. (Sec. 7, art. 1, chap. 92, Gen. Stat.)
    4. The property being liable for the taxes due at the time the sale was made, the purchaser was entitled to an abatement on his purchase-bonds. (Fall v. McMurdy, 3 Met. 365; Rogers v. Garnett, 4 Mon. 269; Underwood v. Brockman, 4 Dana, 309.) f
    
    5. Money paid without cause or consideration, and which in law, honor, or conscience was not due and payable, may be recovered back. (Underwood v. Brockman, 4 Dana, 309; Ray, &c. v. Bank of Kentucky, 3 B. Mon. 514; Louisville v. Zanone, 1 Met. 153; City of Covington v. Powell, 2 Met. 228.) But it is otherwise where the party paying knows all the facts. (Tyler v. Smith, 18 B. Mon. 798; Elliot v. Swartwort, 10 Pet. 155.)
    6. It is the policy of the law to sustain judicial sales. (Benningfield - v. Reed, 8 B. Mon. 105; Thornton v. McGrath, 1 Duv. 354.) But such sales may be set aside before confirmation. (Taylor v. Gilpin, 3 Met. 546.)
    But after the expiration of the term, the court has no power to set aside its formal orders. (Civil Code, sec. 579; Anderson v. Anderson, 18 B. Mon. 97; Barrett v. Churchill, lb. 390; McLean v. Nixon, lb. 769; Todd v. Dowd’s heirs, 1 Met. 281; Megowan v. Pennebaker, 3 Met. 502.)
    M. YEAMAN for appellee the city of Henderson.
    R. H. CUNNINGHAM in petition for rehearing.
    1. The doctrine of caveat emptor prevails or has hitherto prevailed only in the sale of chattels. (1 Story’s Eq. Jurisprudence, 212; 2 Kent’s Com. 478; 2 Blackstone’s Com. 451; Ohitty’s Com. 309, 310, 447-449.)
    2. Equity will not relieve against a bona fide purchaser for a valuable consideration. (1 Story’s Eq. secs. 108, 139, 165, 410, 411, 436; 5 Mon. 194; 3 J. J. Mar. 553; 10 B. Mon. 383; 1 L. Cas. Eq. 371; 2 Story’s Eq. sec. 1228; 2 L. Cas. Eq. 64; Long on Sales, 444; 3 Mar. 255; 5 Mon. 451; 6 B. Mon.. 348; 10 Bush, 68; 18 B. Mon. 237; 2 Bush, 201; 8 Bush, 298.)
    3. A purchaser at sheriff’s sale, in most of the states, takes the land discharged of every claim or title, whether arising under an unregistered deed or a mere equity, of which he had no notice at the time of the sale, and which, would he invalid as against an ordinary purchaser. (2 Leading Cas. .Eq. 110; 4 Cow. 599; 9 lb. 120; 15 Wend. 588; 8 lb. 620; 5 Mo. 38.7; 1 Green, 43; 9 Ohio, 184; 8 Ala. 866; 8 Blackf. 420; 2 Bin. ' 40; 1 Burr, 24; 5 Har. 467; Low v. Blinco, 10 Bush, 334; Helm v. Logan’s heirs, 4 Bibb, 78; Boyce v. Waller, 9 Dana, 478.)
    4. Tax liens, discovered after the sale, were ordered by Chancellor Kent to be paid out of the purchase-money in Lawrence v. Cornell (4 Johns. Ch. 542.)
   JUDGE PRYOR

delivered the opinion op the court.

The doctrine of caveat emptor applies to all sales of real estate made under judgments rendered by the chancellor. After confirmation, wherethe purchaser discovers a defect in the title, or assigns some other reason suificient to set aside the sale, the chancellor will relieve him by refusing to confirm the act of his commissioner; but where the sale has been confirmed, and no ‘ fraud practiced by the creditor on the purchaser, to induce the purchase or warranty of title, no relief will be granted; and we have been unable to find any case where the purchaser, after confirmation of the sale, has had a deduction made from the price agreed to be paid, or released from his obligation to pay, for the reason alone that liens existed upon the property at the time of the sale unknown to the plaintiff and the purchaser. There is no warranty of title by the chancellor or the creditor, and in a case like this, where there is a judgment to enforce the mortgage, and a sale under it, the purchaser buys at his peril, and can not complain of a want of title, unless he applies to the chancellor before the sale is completed by an order of confirmation, or during the term in which the chancellor has the power to disregard or modify such an order. In cases of sales under execution, a purchaser of the property sold to satisfy the plaintiff’s debt must pay his bonds, although he acquires no title, unless there is some warranty of title, or fraud practiced by the plaintiff in order to induce the purchase. The chancellor is more lenient than the common-law judge; and if before the sale is made complete it is discovered that his vendee acquires no title, or some equitable reason is presented for canceling the bonds of the purchaser, the relief will be granted. There was no representation as to title, or fraud. practiced in this case in regard to the sale. The Bank had on one or two occasions paid the taxes for the mortgagor; still the latter was primarily liable, and the appellee, voluntarily and without any inducement from the bank or its officers, agreed to take the mortgaged property, and pay the bank’s debt.

The liens upon the property, having priority to the mortgage paid by the appellee, were the debts of the mortgagor, and the appellee, having paid them, must look to him, and not to the bank for restitution. The cases referred to by counsel for the appellee, as between vendor and vendee, have no application to decretal sales or sales under execution, and while the appellee may have purchased under the belief that he was ob-’ taining a title free from all liens, his loss is the result of his own action in the premises. He ought to have known what he was purchasing, or by inquiry to have ascertained his rights as purchaser.

“It is a well-settled principle that in judicial sales there is no warranty. This principle, as a general rule, holds good as to all those sales of real property made in equitable proceedings under the direction and control of the courts, usually denominated mortgage sales, guardian’s, executor’s, and sales for enforcement of vendors and statutory liens. The purchaser takes what he gets. The rule of caveat ernptor applies in all its rigor to sales of real property.” (Borer on Judicial Sales, 168.)

The taxes, paid by the purchaser in this case, of the property sold under the judgment of foreclosure, although a lien a.t the time of the sale, can not be deducted from the purchase-money. The sale has long since been confirmed, and the title vested in the purchaser.

The judgment is reversed, and cause remanded for further proceedings consistent with this opinion.