Case ID: scl_43/html/0515-01.html
Source: Caselaw Access Project
Author: {"author": "O’Neall, J. Wardlaw, J., Withers and Munro, JJ.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Commissioner in Equity vs. William Smith.
    To a bond given to the Commissioner in Equity for the purchase-money of a negro sold for partition under the decree of tbe Court, unsoundness at the time of the sale is a good defence.
    Such defence proceeds, not on the ground of cross-action for breach of warranty, but on the ground of failure of consideration.
    BEFORE O’NEALL, J., AT YORK, FALL TERM, 1854.
    The report of his Honor, the presiding Judge, is as follows :.
    “ This was an action on the bond of the defendant, given for the purchase-money of a negro woman and her son, sold for partition, under the decree of the Court of Equity.
    
      “ The defence was the unsoundness of the woman. I was aware of the case decided at the last Term in Columbia, in which it was held that there was no warranty at a Commissioner’s sale of lands, and I confess that there can be little reason that the same rules should not apply to personalty. Yet it has been held in so many cases of sales by authority of law, as administrator’s and executor’s, that the defence of unsoundness may be set up to suits brought upon bonds or notes given for property so sold, (and it seemed to me there was no difference between such cases and that before the Court,) that I thought it was best to hold that the defence was admissible. Accordingly I allowed it, and the jury under a very favorable charge from me in favor of the plaintiff, found the unsoundness and allowed a discount of two hundred and fifty dollars.”
    The plaintiff appealed, and moved for a new trial on the grounds:
    1. Because the bond sued on, was given for the purchase-money of negroes, sold by order of the Court of Equity, by plaintiff, Commissioner of said Court, for distribution amongst certain persons, and it is submitted at such sale the rule of caveat emptor applies, and the law implies no warranty of soundness.
    2. Because his Honor erred, it is submitted, in holding that if the negroes for which the bond sued on was given, were unsound, the defendant was entitled to a discount to the extent of such unsoundness, on the ground of failure of consideration.
    3. Because the verdict of the jury was against and without evidence to sustain it.
    After argument in the Law Court of Appeals, the case was referred to this Court, where it was now heard. ,
    
      Williams, for appellant,
    cited Commissioner vs. Thompson, 4 McC. 434; Fuller vs. Fowler, 1 Bail. 76 ; Fvans vs. Bendy, 2 Sp. 9; Rogers vs. Horn, 6 Rich. 361; Barldey vs. BarTcley, Harp. 441; Tunno vs. Flud, 121; Herlemont vs. Sharp, 2 McC. 264; 2 Brev. 105; Prescott vs. Holmes, 7 Rich. Eq. 9.
    
      Witherspoon, contra,
    cited Rupert vs. Bunn, 1 Rich. 101; Chit, on Con. 352; 2 Brev. 268; Eastland vs. Lang shorn, 1 N. & McC. 194.
   The opinion of the Court was delivered by

O’Neall, J.

The case of Rogers vs. Horn, 6 Rich. 369, does not conclude this case, for that case proceeded upon the ground, that in the sale of land made by a Commissioner in Equity, for partition, there was no warranty, and that to the bond given for the purchase-money, an outstanding incumbrance, such as dower, which had been set up and recovered against the purchaser, could not be set off as a discount, or. allowed as a failure of consideration. For there is á material distinction between real and personal estate as to the warranty. In real estate, the warranty rests in deed: in personal estate it may be by parol, or by implication. This distinction is enough for my present purpose, but I may be permitted, I trust, to say, that I regret the decision in Rogers vs. Horn. For unquestionably from Gray vs. Handkinson, 1 Bay, 278, such defences have been allowed. In the early cases, it was allowed even upon the mistaken notion, that the doctrine, “ a sound price warrants a sound commodity,” applied to land, and afterwards, as a failure or want of consideration. The very distinction undertaken to be maintained in Rogers vs. Horn, to wit., that misrepresentation was necessary to be shown, in order to let in the defence, would have been sufficient for that case. For in all the cases, where misrepresentation is alluded to, it is not pretended that a wilful misrepresentation was necessary. It was enough, if the land sold did not turn out to be what it appeared to be in quantity, title or purpose. As in Richardson vs. Pearson, the land was sold for partition, between Delilah Perry, a lunatic, and the executors of Aaron Cates : it was purchased at the Commissioner’s sale by Eobert E. Pearson. The defect in the title of the lunatic was not known at the time of the sale or for years after: the defendant was in possession, had paid a large part of the purchase-money, and yet the defect in the title being made apparent, the Court held it was allowable as failure of consideration, and thereby the whole contract was rescinded.

Having referred thus to Rogers vs. Horn, more for the purpose of expressing now, (what I would have done if I had been present at its decision,) my dissent from its reasoning and conclusion, I proceed to consider the case before us. >

The jury have found that the woman sold by the Commissioner for partition was unsound: and have allowed the defendant a discount, or rather have deducted from the ■purchase-money secured by the bond in suit, two hundred and fifty dollars, on account of such unsoundness.

The question is, whether the judge'below was right in telling the jury, that if the unsoundness at the sale was established, they might abate the price according to it ?

For more than forty years, that I have been concerned in the administration of justice, as a lawyer and judge, I have never doubted, that such was the law of South Carolina. Beyond all doubt, it is true, that in compulsory sales made by operation of law, the rule caveat emptor applies. But if a sheriff sells, as the agent of another, I do not perceive why his public character should protect his principal. I am, however, anticipating, what will more properly arise in another part of this opinion.

The question which I propose first to discuss, is, how is a defence of thiá! kind against the payment of the purchase-money regarded ? is it regarded as a cross-action predicated of, or necessarily resting on a cause of action, or is it, as a failure of consideration ?

All of our cases, when properly examined, consider it in this last point of view, suggested by the question.

Gray vs. Handkinson, 1 Bay, 278, was an action to recover the purchase-money of a tract of land. The defence was, that there was a mill seat on the land purchased, which was covered by an elder grant, and therefore the purchaser’s title so far failed. The Court held, that whether the vendor knew or not of the defect, the defence was admissible as an equitable one; that if the defect operated to defeat the purpose for which the land was bought it would rescind the whole contract; and if it did not, then the party retaining the land was to be compensated for his loss by deducting from the purchase-money, as much as it (the loss) was worth. It will be observed, that that case adopted, and carried into the defence of a law case, a well known and a constantly practised principle of equity, that on an application for specific performance, the contract would be altogether rescinded, or compensation be made-according to the nature of the defect relied on, as a defence. This was recognized by Judge Johnson, when, in Brickell vs. Means, 2 Hill, 657, he referred to Caldwell vs. Briggs, decided in the Court of Equity, to show that a mistaken representation (not wilful) of the quantity of woodland on a tract sold was a ground for compensation, and that the same would be a good defence at law.

The State vs. Gaillard, 2 Bay, 11, it seems to me put the defence on the same ground, although it is true, in that case, Judge Burke spoke of the rule, that a sound price warranted a sound commodity, as also applying to it.

The case there, it will be remembered, was on a bond given to the Commissioners of confiscated estates for a tract of land sold by them. A plat presented at the sale represented a fine stream of water running through the land with a mill-seat on it. The mill-seat was the great object of the purchase; it turned out that there was no such stream, but it was not pretended that the Commissioners knew anything about it, or were guilty of any wilful misrepresentation. There was no warranty in their deed. Yet the defence was allowed. How ? It is plain it was not on the ground of fraudj for there is no fraud where the vendor no more than the vendee, knows nothing about the thing sold. It was on the ground that the thing sold, the land, was not in' point of fact such as it appeared to be at the sale. This it is manifest was mere failure or want of consideration, and no more. For the State was not liable to an action on any warranty, express or implied, and it could not therefore be set up as a discount, if considered as a cross-action.

Without reasoning further from the case, I appeal to the words of the Judge who pronounced the judgment. Judge Bay tells us that Burke, J., who delivered the judgment, said, that a sound price warranted a sound commodity — and whenever there is a failure of consideration, a misrepresentation, or concealment of material circumstances, it vitiates the contract in toto, or entitles the party to such a reasonable abatement, in the price of the thing sold, or demanded, as would make him full reparation for any injury sustained by reason of such unsoundness, failure, misrepresentation or concealment, according to the nature and circumstances of such case.”

In that case, we are further told by the venerable reporter, that Judge Burke adopted the civil law, that “ when the defects of a thing sold were unknown to the seller he shall be bound not only to take it back- but to indemnify the purchaser or buyer as to all the charges the sale has put him to.”

In Eastland vs. Longshore, (reported as Longshorn,) 1 N. & McC. 194, Judge Johnson, as far back as 1818, in speaking of the rule which let in a defence of unsoundness against a bond or note given for the purchase of property under a sale made by authority of law, as in sales by sheriffs, executors or administrators, said that, “ the rule is predicated on a failure or want of consideration rather than fraud or deceit.” He put persons thus selling on the footing of a private agent, who “if he is guilty of no fraud, or deceit, and has paid the proceeds of a contract, the consideration of which has failed, over to his principal without notice, he is clearly not responsible.” These principles have been ever since recognised, and innumerable cases of sales made by executors and administrators have been decided, in conformity thereto. The sales made by sheriffs, of which he here spoke, were sales, where the sheriff sold for partition, or in some other way, as the agent of parties, and took therefor bonds or notes to be paid at a future day.

Barkley vs. Barkley, Harp. 441-2, is an illustration of the principle in the case of a sale made by a sheriff. There the sheriff sold.a tract of land, as containing four hundred acres, for partition. The sale was by the acre: and a bond was given for the purchase money. Fifty-five acres of the land were cut off by' older grants. This was relied upon, as a defence. The plaintiff resisted it upon the ground, that there was no warranty, at a sheriff’s sale. The defence was allowed, and on appeal, the Constitutional Court held, that the decision below was right. Judge Eichardson, who. delivered the unanimous opinion of the Court, said, “ The sheriff sold, as the mere agent of the parties concerned in the distribution of the estate, and the purchaser stood upon the footing of other purchasers in general, and not in the situation of a purchaser at sheriff’s sale. In this instance, the sheriff sold the land for the distributees without' knowledge of the premises, as an auctioneer, or other agent would have done: and the purchaser has the same rights as he would have had in purchasing directly from the heirs at law.” In that case it is perfectly plain, that there was neither warranty nor intentional misrepresentation. Indeed there was no misrepresentation, for the tract did contain four hundred acres, and it was only by outstanding, unknown, paramount title that a less quantity was produced. There was no other ground of defence than failure or want of consideration, in that the purchaser did not get what he expected to get. In other words he would in equity have been entitled to compensation for his loss, and- that, at law he obtained under the defence of failure or want of consideration.

In the Commissioners of Roads vs. Macon & Foot, 2 Brev. 105, the action was by sum. pro. on a note for the price of a mare sold as an estray ; the defence was unsoundness ; this was proved and allowed on the circuit, and on appeal, that- great Judge, Wilds, (whose early death was so much lamented in this State,) said, in overruling the appeal, that the “ plaintiffs, acting as public officers, were not bound to warrant property sold by them, or be answerable for any defects, or deficiencies, in the subject of sale ; and although the defendants might be without relief, in case the note had passed into the hands of an innocent indorsee for valuable consideration, yet circumstanced as this case is, the defendants are entitled on principles of law and equity to claim relief from payment of the money to the persons who sold the unsound property, and who claim the money as trustees for the public. There can le no good reason why he should he compelled to pay it, if the consideration for which he promised to pay it has failed.”

Those cases conclusively show, that a defect in the land or personal property sold, may be given in evidence as a defence to the action brought for the recovery of the purchase money, on the ground of a want or failure of consideration. This being so, there is no difficulty in the proposition, which I next propose to discuss, to wit: that such defence' is admissible in all cases, where the sale is made by operation of law, (except under compulsory process, or sales under executions,) and where the purchase money is secured by bond or note. For there is no necessity in making such a defence to cast about, and inquire, was there any warranty ? The single inquiry is, was the property sold such as it appeared to be, or such as the seller permitted buyers to believe it was by his silence, or by failing to put them on their guard, as by refusing to warrant. This makes the whole body of law harmonious. The vendor is not personally liable, and the case of Evans vs. Deny, 2 Speers, 9, was properly decided. So, too, was the case of Prescott vs. Holmes, 7 Rich. Eq. 9. Indeed, in that case my brother Dunkin, with his usual caution, took care to reserve expressly the class of cases to which this decision applies.

Independent of the conclusion drawn from decided cases, it seems to me the same result ought to follow from right reason, which is nothing else than justice. Parties go into the Court of Equity and tell that Court they have a common piece of property which they cannot divide and ask the aid of that Court to divide it for them: it is found that it cannot be actually divided but must be sold. It is ordered to be sold by the officer of the Court. For what purpose ? To put the proceeds in the pockets of the. distributees. If it turns out that that piece of property is not what it appears to be from want of title, or unsoundness, is it right to permit the parties to pocket the proceeds of a sale made under the belief that the title was good or the property sound ? What difference is there between such a sale and one made by themselves ? None whatever. The Commissioner is their agent. He sells their title, legally supposed to be good, and their property for what it appears to be, sound. Are they to shelter themselves under the cover of a public officer when he sues for them, and at their instance, to collect their money ? I think not.

The motion is dismissed.

Johnston, Dunkin, Dar&an and Wardlaw, CC., and Whitner, J., concurred.

Wardlaw, J.,

dissenting. I am one of the majority of the Law Court of Appeals whose views in this case have been overruled by the Court of Errors, and with much deference I venture hastily to set forth those views.

It appears to me that however we may turn the matter, the question of the case at last comes to this: — Has a commissioner, who sells a slave under 'proceedings for partition, by which simply the power to sell is given to him, the right to make a warranty of soundness, which will be binding upon the parties for whose benefit he sells ? He cannot, without special authority, make an express warranty, which will bind any person besides himself. This, I believe, is admitted. ■ I think it follows that no warranty will be'implied by the law, in his contract of sale: for that only is implied which circumstances indicate where the parties are silent, and which the parties are competent to express.

Distinctions have, however, been taken between failure of consideration and breach of implied warranty, and between an implied agreement and a condition annexed by the law.

There is plainly a difference between a set-off and a failure of consideration, (Evans & Yongue, 8 Rich. 113,) or as it maybe otherwise expressed, between an independent cross demand and a defence growing out of the contract sued on; between damages arising from the plaintiff’s breach of another contract, and a diminution in the value of an article sold, which comes from a vendor’s — plaintiff’s violation of some condition on his part which was contained in the contract of sale. But when, in reference to defences for unsoundness where there is no express -warranty, we say that th^re is a distinction between the breach of implied warranty and the failure of consideration, we distinguish only between two modes of expressing the same thing. To ascertain a failure of consideration, we must first fix what the consideration was. If it was an article sold under the rule caveat emptor, then from a latent defect, without fraud or affirmation, no failure ensues. If it was an article sold under the rule ordinarily applicable in this State to the sales of chattels, then the failure caused by such a defect consists in the breach of the implied warranty, the breach of the condition annexed by law to the contract, on the non-performance of the contract on the part of the vendor, as by one or another of these phrases we may choose to express a violation of the rule. The question always involved is, what was the contract ? and the defence grounded on plaintiff’s breach of the contract remains the samé, however its name may be varied.

By the common law, when a manufacturer supplies his manufactured goods for a particular purpose there is an implied warranty that the goods shall be fit for the purpose; when any person, perhaps, sells a commodity for a particular purpose, he is understood to warrant it to be reasonably fit for the purpose: goods sold by sample are impliedly warranted to be equal in quality to the sample: where the purchaser had no opportunity for inspection, goods sold are by implication warranted to be merchantable; all provisions sold are impliedly warranted to be wholesome ; affirmations by the seller, on the faith of which the purchaser ’buys, are regarded as warranties ; great latitude of construction is indulged in establishing express warranties ; and for all deceit there is accountability. (Chitty on Contracts, 357, and note 1, 4th Amer. Ed.) Subject to these qualifications and exceptions, the rule caveat emptor applies to the sales of chattels. It is specially applicable to sales of the products of nature, contradistinguished from manufactured goods, because as to the former latent defects unknown to both parties are more likely to exist. A learned civilian says, that the rule was borrowed from the civil law, by which it was applied only to the sales of slaves, horses and cattle. (Duponceau on Jurisdic. 118.)

The other rule, which prevails in this State, and for which also reference is made to the civil law, is usually expressed in this form, “a sound price requires a sound commodity.” It is most frequently brought under the notice of our courts, in its application to the sales of slaves and horses. Some have thought that it is better expressed In this form, “ the article sold must conform to its appearance ;” but by whatever words we may attempt to condense its general purpose, the rule has been, by the decisions of our courts, explained, qualified, extended, restricted, assailed and defended, so that it is familiarly known. The usual name given to the result of its application to a contract is, the implied warranty of soundness ; but if we should call the same result, an equitable condition of the sale, we would not alter its nature nor enlarge its meaning in effect. Where it applies, it is a condition or tacit understanding, which the law makes part of the contract. If there has been without fraud, a refusal of the seller to warrant, the condition does not attach or, as we usually phrase it, the implication of warranty does not arise. (1 Speer, 319.) The implied warranty, or equitable condition, is then like the many other agreements which the law implies where the parties are silent, and circumstances are taken to denote their understanding of that which justice or policy requires and which they do not contradict or exclude.

According to the plain expressions used in a sale, which a Commissioner in Equity makes for partition,'he sells the interest of the person whose property is to be partitioned, in the article which he exhibits; he sells as a public officer under a power contained in a special order of Court, and he makes neither express warranty nor affirmation concerning the article. No high equity requires the application of a rule which may guard against fraudulent concealments on his par.t, for he knows of the article no more than the purchaser does, he has no better opportunity of inspecting it, and feels much less interest concerning the price. The want of power on his part forbids that any agreement should be imputed to him beyond his expressions, which shall affect himself personally. But it is supposed that he is the agent of the parties in the Equity cause, and that the same rule should apply to a sale made through his intervention that,would apply to one made by themselves directly. That-Courts and the machinery of justice maybe made the instruments of fraud, and, that fraud thus perpetrated should be the more abhorred for the very sanctity of the means that it abuses, may be admitted, but the case we are considering is not one of fraud, but of unsoundnass unknown to all parties. If, in reference to cases like this, the Commissioner can in his sale be properly called the agent of the parties in Equity, at all, he is in such sale acting under a power delegated by the Court, — a power without interest, and often affecting the rights of persons who are not mi juris, — he is responsible only to the Court, and receives directions from no other quarter. If the parties all being competent, should positively direct him to, refuse to warrant, would any directions from them, not contained in the proceedings had in their cause, alter the contract as it is written in those proceedings ? If it would, and the Commissioner should in their absence neglect their directions, would he become personally liable to them for permitting a liability to fall upon them which they had not intended to assume ? In the absence of all directions, written or unwritten, about warranty, the mode of salé adopted by the parties, the terms expressed and the circumstances attending it, may well be considered equivalent to a refusal to warrant, and the modification of the general rule which such refusal ordinarily produces, should here prevail.

If we look to policy, symmetry, and other intrinsic considerations, for an exposition of the contract made by the Commissioner in Equity in his sale of a chattel, the propriety of excluding the implication of warranty will be further established.

A purchaser who has paid his money could not, for a defect subsequently discovered, recover back from the Commissioner. If, without allegation of fraud or affirmation, he should be held entitled to recover back from the parties who had received the money, serious mischiefs in the disturbance of settled accounts, and serious difficulties in the pursuit of scattered distributees, including femes covert, and infants, might be expected to ensue. But, if there is no recovery back, (which I understand to be the better opinion,) then the rule for Commissioners’ sales such as the one in question, is what we have called the equitable, condition, so modified that it may avail for defence, but not for the support of an action. In the same sale made partly for cash, and partly on credit, the condition may be applicable to one part and not to the other. Land and negroes sold under the same order, to the same purchaser, and paid for by the same bond, will fall under rules so widely different, that the purchaser must pay for the land, although he should be evicted from it by a paramount title, but shall have an abatement for the' unsoundness of a negro, if he shall have discovered it soon enough.

In sales made by a sheriff under execution, it is acknowledged that the rule is caveat emptor. Policy and convenience require this, but a sufficient technical answer to any attempt that might be made to extend to these sales the equitable condition above-mentioned, is that the sheriff, under the power which he exercises in such sales, can make no warranty, express or implied, binding on other persons. Sometimes a Commissioner sells under proceedings for payment of debts and distribution of the residue. The same reasons which give law to sheriffs’ sales would apply to the Commissioners’, so far as debts are concerned ; and under the decision now made, it may hereafter become necessary in such cases to inquire whether a portion of chattels sold under the same order, is subject to one rule and a portion to another; and possibly, if the equitable condition should he held to apply only to the extent of the residue, an adjustment of accounts in Equity may be required before it can be decided at law whether a defence upon a bond taken from a purchaser can be' sustained, — that 'is, whether parties, ignorant at the time of their contract of what might be the result of an accounting, did or did not impliedly adopt a condition, whose applicability depended upon such result.

It is supposed that Commissioners’ sales would be chilled, if it was understood that the purchaser should take care of himself. This might be so, to such extent as the application of the equitable condition, modified so as to suit only for defence, serves to enhance prices. But, if all doubt and mischief could not be removed by the order of the Court which directs the sale, any loss to parties, that would thus ensue, would be more than compensated by the security which they would have acquired against the injustice which, upon the falling of prices or ill-luck attending an article sold, is often administered in Courts under the fqrm of applying a rule of abstract equity or a high morality.

On the other hand, it has been urged that when a successfuldefence has been made by a purchaser, a distributee to whom that purchaser’s bond may have been assigned, may for his share receive only a fruitless right of resort to distant or irresponsible co-distributees.

It seems to me that the greater simplicity and certainty of the rule which excludes the implication of warranty at Commissioners’ sales, much outweighs any advantages, which the superior equity of any other rule may be supposed to afford; and I think that the cases hitherto decided in this.State, if they do not require us to adopt the former rule, at least leave us at liberty to do so.

In general, no warranty or implication extends to sales made by public officers. Commissioner vs. Thompson, 4 McC. 434.

In an action by a sheriff upon a bond which was given for land sold under proceedings for partition had in the Court of Common Pleas, a defence for deficiency of quantity was allowed; but there the sale was made by the acre according to a plat which the parties exhibited in their proceedings, and the Sheriff exhibited at the sale. Barkley vs. Barkley, Harp. 441. The case stands on the ground of representation made under a special power delegated by the parties.

To sales by executors and administrators, the implied war-' ranty of soundness extends, because executors and administrators are legal owners of the chattels sold by them. Eastland vs. Longshore, 1 N. & McC. 194.

In the sum. pro. case, concerning a note given for a horse that had been sold as an estray, (Commissioners of Roads vs. Macon, et al., 2 Brev. 105,) the report contains loose expressions about deceit, but there the magistrate who sold was, under the estray Act, the agent for the owner or for the Commissioners of Roads, as the event might be, and the sale was therefore in effect the same as a sale by the owner.

The opinions in Evans vs. Dendy, 2 Speer, 9, and Rogers vs. Horn, 6 Rich. 361, seem to me to have been designed to establish principles, from which I fear this case will be a departure more likely to increase litigation than to promote justice. Those cases it is true related to land, and in them the contracts were expressed in deeds; but I do not see the propriety of perplexing our law by unnecessary distinctions,— adding to the distinctions, which already exist between real and personal estate, a further distinction concerning the admissibility of these equitable defences against bonds given to Commissioners in Equity. The hardship to the purchaser may be as great, the chilling of the biddings is likely to be- greater, in reference to land than to slaves, inasmuch as a tract of land is usually more valuable than a slave, and a defect in a land title may be more inscrutable than a defect in a negro’s health.

Having thus set forth, very inadequately, the reasons why I would have preferred a contrary decision, my duty is now to conform, as I cheerfully will, to the decision which has been made.

Grover, J., concurred.

Withers and Munro, JJ.

We concur generally in the reasoning employed in this dissenting opinion. We are quite content, however, that a rule is established — and only fear that its practical operation may disclose more inconveniences than the rule of eaveat emptor, applied to Commissioners’ sales.

Motion refused.