Case ID: tex_9/html/0143-01.html
Source: Caselaw Access Project
Author: {"author": "Wheelee, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

John Crayton and Others v. N. H. Munger, Adm'r.
    There is no principle which can sanction and give legal effect to fraud by which an innocent person has been deceived to his prejudice, by whomsoever and in whatsoever capacity committed. There is no person nor class of persons, capable of contracting at all, at liberty to perpetrate frauds upon others to their injury with impunity. Not even infants and married women, who, for most purposes, are incapable of contracting so as to bind themselves, aro exempt from the obligation to observe, in their dealings with others, the dictates of natural justice and common'honesty. (Note 48.)
    An estate can neither bo charged nor can it charge others by means of the illegal or fraudulent acts of its legal representative.
    Where a party excepts specially to the pleadings of his adversary, the latter has a right to regard all other objections than those indicated, unless to matter of substance, as waived.
    
      Quere? As to the extent of a prayer of a deiendant who is resisting the collection of a note given for the purchase-money ot land, that both parties be placed in statu quo. The doctrino of caveat emptor, in its application to judicial sales, does not extend to a discharge of those who make the sales from the obligation which obtains in all sales, to act fairly and not fraudulently. •
    Appeal from Caldwell. This suit was instituted in the court below by the appellee against the appellants to recover the amount of a note executed by them for the purchase-money of a half league of land, bought by Crayton at a sale made by the appellee as administrator of Pettus, and to foreclose the mortgage executed by Crayton to secure the payment of the same.
    To the original answer of the appellants the appellee excepted, and his exception was sustained by the court, giving the appellants (the defendants below) leave to answer over.
    The parties, Thompson and McGehee, filed an answer setting forth that they were the sureties of Crayton and ought not to have been sued.
    The party Crayton filed his amended answer, pleading substantially as follows :
    1st. Payment.
    2d. That the note sued on was executed by him and his codefendants, who were his sureties, for the half league of land mentioned in plaintiffs petition, sold by plaintiff to defendant Crayton at administrator’s sale; that neither at the date of the sale or conveyance of said land by plaintiff to defendant (to wit, on tiie 5th August, 1851, and on the 28th August, 1851) was there any good and legal title to said half league of land in the plaintiff; that at the time of said sale and conveyance to defendant the plaintiff’s title as administrator was wholly worthless and defective; that the laud was not assets in the hands of the said plaintiff as administrator of Pettus; and that the plaintiff well knew the facts as stated when ho made the sale to defendant; that the said plaintiff at and before the dates of said sale and conveyance falsely and fraudulently represented to the defendant that his (plaintiff’s) title,to said land was good and perfect; that plaintiff well knew at the time that his title was not good; that said plaintiff used false and fraudulent representations to induce the. defendant to purchase; and that he, defendant, relying upon these false and fraudulent representations, was induced to purchase the land; that the plaintiff’s intestate, “William Pettns, in his lifetime, to wit, on the lltli day of July, 1839, sold aud conveyed by bond for title to one George Adams one league of land, covering the half league sold by plaintiff' as administrator, to defendant, of all whicli the said plaintiff had knowledge when lie. sold to defendant, and thus knowingly aud wilfully committed á gross fraud upon him, defendant; that suit has been instituted and is now pending in the United States District Court sitting at Galveston, by parties claiming under said title bond to Adams against the plaintiff ns administrator of Pettus,'to compel him to make title, &c. Defendant prayed that the facts alleged in his answer might be heard and considered, aud that the contract between himself and said plaintiff might be canceled; that defendant be allowed to give up to plaintiff the deed executed to him by plaintiff' for said half league of land and reconveying to him whatever interest he acquired by said deed; that the note sued be surrendered to defendant and the parties placed in statu, quo; or that, if not entitled to this relief, the plaintiff be restrained from proceeding to final judgment until the determination of the aforementioned suit against the said plaintiff in the federal court ad Galveston.
    To the amended answer of Crayton, as stated, and the separate, answer of Thompson and McGelien, the appellee excepted specially, and the court sustained the exceptions and rendered judgment against the appellants. It was not stated as a cause of exception that the answer was not sworn to, nor that the defendant did not offer to restore the possession.
    
      A. J. Hamilton, for appellant.
    The error assigned is the-judgment of the court below sustaining the plaintiff’s exception to the amended answer of the defendant.
    It will he contended here, as it was in argument in the court below, that the doctrine of caveat emptor, in this and all other sales made by administrators, applies as well as in all other judicial sales. It is conceded that, as a general rule, the doctrine applies in all judicial sales, and that the purchaser takes without warranty, express or implied; but it is not a rule without exception, and the exception exists wherever tlie sale has not been conducted with fairness, certainly where it has beeu tainted with fraud.
    There is no exception to the rule that'“fraud vitiates every contract.”
    In tlie application of tiffs rule there is no principle of law or equity which creates an exception in favor of an administrator. If injury result to the estate from the fraudulent act of the administrator he will be responsible to the estate. Tlie party against whom the fraud is perpetrated is not to be injured by it. (Swenson v. Walker’s Administrator, 3 Tex. B., 93.)
    The whole extent of the doctrine of caveat emptor, as applied to sales by administrators, or others selling under judicial orders or decrees is, that the sale is without warranty, and the case of Lynch et al. v. Baxter and Wife, 4 Tex. B., 431, goes no further. But a sheriff, or either of the parties, plaintiff or defendant to an execution, may he guilty of such fraud as will vitiate the sale.
    The rule of caveat emptor applies not to judicial sales merely, hut to all other public sales. (1 Story Eq. Jur., sec. 200, and notes.)
    Thus, then, the rule being the same, anything which would avoid, in favor of the purchaser, a sale at auction, would also be good in a judicial sale.
    The misrepresentation and fraud complained of was greatly to tlie prejudice aud injury of the appellant, and would he actionable even in a court of law. (1 Story Eq. Jur., sees. 203 and 207.) And the same author, still continuing to treat of misrepresentations and concealments, proceeds to say: “But by far “ the most uumerons class of cases of undue concealment arises from “some peculiar relation or fiduciary.character between the parties;” among which are enumerated “executors aud administrators and creditors, legatees, “or distributees,” &e. (Sec. 218 ; 13 Ves. B., 51; 5 Ves. B., 485.)
    
      Aiiy concealment or misrepresentation by tlie vendor in relation to tlie title oí land by which tlie defendant is deceived is fraudulent. (See Bacon Abr,, 4 vol., page. 388, aud numerous authorities cited; 3 Maine B., 332.)
    It would be a reproach to equity jurisprudence to say that no relief can be had upon the fads presented in the appellant’s amended answer, aud which are admitted by the appellee’s exception. Nor will tlie principles of equity be satisfied by the personal responsibility of the administrator. The administrator is but. ili(> legal agent, of the estate, aud the principals cannot prolit by liis fraud. (Arar. í>ig'., 2 vol., 240; Hughes’ B., 71.)
    
      M. II. Manger, for appellee.
    Tlie demurrer was properly sustained to the second separate amended answer of Crayton—
    1st. Ben use there is no affidavit as required by article 2505, Hart. Dig.
    2d. An administration sale is a judicial sale; aud a defect in the title and knowledge of that defect by the administrator would be no defense in a suit on the note.’’ (Lynch et al. v. Baxter and Wife, Adm’rs, 4 Tex. B., 437.)
    3d. The allegation that “the plaintiff falsely aud fraudulently represented “to tlit> defendant that the title to said half league of land was a good and per-“feet title,” adds no force and gives no effect to the plea, that averment being a conclusion from facts or allegations of plaintiff, and not a statement of his representations. The allegation “that tlie plaintiff used false aud fraudulent “represent at ions to induce defendant to purchase, and that lie trusted to them,” are liable to the same objections. Wliat proof could have been admitted under such averments? Surely no facts or statements of plaintiff. (Mimms v. Mitchell, 1 Tex. B., 443.)
    4th. An administrator as administrator cannot commit a fraud or tell a lie. As ail individual he may do both, and be responsible in damages therefor. If an administrator, as such, can commit a fraud, then the purchaser can plead in reeonvention the injury which he has sustained, and recover damages against the estate. The latter is a sequence of the former.
    5th. Tlie. plea does not aver that he is disturbed in his possession of the land. (4 Tex. B., 437.)
    6th. lie does not tender a reconveyance of the land, and he cannot be permitted to hold oil to it and resist tlie payment of the purchase-money.
    7th. The plea states only conclusions of law and fact, and not facts.
    8th. Merc knowledge of an outstanding claim for the land by the administrator, he having made no representations, and there being no averment that the purchaser was ignorant of such claim, would not, of itself, make the act of the administrator in thus selling fraudulent. A faithless trustee trying to injure the estate, or by himself or liis friends endeavoring to purchase tlie property at greatly less than its value, might proclaim defects of title or depreciate the value of the thing sold. It is not the duty of an administrator to do so. AYonld an honest one do it? Would the law allow it? Would it not open the door for fraud upon the estate? It is enough that he makes no false or fraudulent representations. Had the purchaser used the diligence before the sale he .lias since, lie could then have known all he now knows. His vigilance is now prompted by a desire to avoid the paymeut of the money. Honesty, fair dealing, the interest of the estate and its creditors, should .have urged him to an earlier investigation, and show the propriety of applying the doctrine of caveat emptor to purchasers at administration sales. (4 Tex. B., p. 437, and authorities cited; art) 1176, Hart. Dig.)
    9th. The fact that a suit is instituted against the administrator for the land affords no defense to the defendant in this suit, he getting only tlie title the intestate had. (Art. 1170.)
    10th. Again, if the defendant could tender a reconveyance of the land, place things in statu quo ante helium, and be released from the payment of the money, he has not made such a tender of a reconveyance as is permitted or authorized by law. He must actually bring into court and tender the recon-veyance with his plea. But the doctrine of caveat emptor applying, he is not permitted to reconvey and avoid payment.
   Wheelee, J.

The material question to he determined is upon the legal sufficiency of the answer.

It is only necessary to notice so much of the answer as respects the sufficiency of the averments contained in it to entitle the defendant to a rescission of the contract it discloses. Its averments arc, in substance, that i he consideration of the note sued on was a half league of land sold the defendant by the plaintiff as administrator of William Pettus, deceased; that the plaintiff had no title to the land, either at the date of the sale, on the 5th day of August, 1S51, or of the conveyance, on the 2Sth of the same month, for that the plaintiff’s intestate, in his lifetime, on the 11th day of July, 1839, had sold the land to one George Adams, and made to him his bond to make title; that the plaintiff, well knowing' this, falsely represented to the defendant, before and at the time of the sakg that he had a good and perfect title; and that he made such representation knowing it to be untrue and with the intent to deceive and defraud the defendantthat the defendant, trusting to these false and fraudulent representations of the plaintiff, was thereby induced to make the purchase; and that the plaintiff’s conveyance gave him no legal and valid title to the laud. And he prayed a rescission of the contract; and to that end, that the defendant might be allowed to return to the plaintiff his deed, and to re-convey to him the premises; that the note sued on be canceled, and the parties placed in tlieir original condition as before the making of the contract. Taken as true, as for the purpose of considering its, sufficiency on the exceptions, the answer must be taken, we cannot doubt that it presents a proper case for the rescission of the contract. It makes out a case of positive fraud, which vitiates and avoids all contracts, when sought to be relieved against by the party defrauded. There is no principle which can sanction and give legai effect to a fraud by which an innocent person has been deceived to his prejudice, by whomsoever and in whatever capacity committed. There is no person, nor class of persons capable of contracting'at all, who are at liberty to perpetrate frauds upon others, to their injury, with impunity. Hot even infants and married women, who, for most purposes, are incapable of contracting so as to bind them, are exempt from the obligation to observe in their dealings with others the dictates of natural justice and common honesty.

An administrator, it is true, cannot create a charge upon the estate he rep-presents by his illegal or fraudulent acts; and it is equally true that the estate cannot derive benefit, or obtain a legal advantage as against innocent third persons, by means of such acts. The estate can neither be charged nor can it charge others by means of the illegal or fraudulent acts of its legal representatives. That an administrator in his representative capacity cannot derive benefits from frauds committed by him in that or any other capacity is a proposition too plain to require illustration. It is (says Judge Story in his Commentaries on Equity Jurisprudence) manifestly a result of natural justice that a party ought not to be permitted to avail himself of any agreement, deed, or other instrument, procured by his own fraud, or by his own violation of legal duty, or public policy, to the j>rejudice of an innocent party. (2 Story, Eq., sec. 695.) It would, indeed, bo a monstrous doctrine to hold that estates may speculate upon the fraudulent acts of their legal representatives.

It is objected to the legal sufficiency of the answer that it is not properly verified. To this and other objections, now first urged to its sufficiency in point of form, it will suffice to say, that when the plaintiff undertook to except specially to the answer, lie ought to have indicated all the grounds of exception on which ho intended to rely. ’ Where a party excepts specially to the pleading of his adversary, the latter has a right to regard all other objections than those indicated, unless to matters of substance, as waived. Beyond the grounds of exception specially set forth, the court will only look to the substance of the pleading.

Note 48. — O’Brien v. Hilburn, post, 297. Fraudulent representations made by an administrator at the sale of the property of the estate respecting the character and soundness of the property, by which the purchaser is misled, entitle the latter to a rescission of the contract or an abatement of the price to be paid. (Able v. Chandler, 12 T„ 88.) A mere defect of title, in the absence of fraudulent representations, does not have such an effect. (Williams v. McDonald, 13 T., 322; Edmondson v. Hart, post 554.) Where the representation of the administrator is but an honest expression of his opinion upon facts equally well known to the purchaser the rule of caveat emptor applies. (Walton v. Reagor, 20 T., 103; Hawpe v. Smith, 15 T. Supp., 448.) Where there is a failure of title to a part of the land conveyed it is the right of the purchaser to take what the vendor could convey and have an abatement of the price to .the extent of the failure of title. (Copeland v. Gorman, 10 T., 253.) Where an administrator sold land to which there was no other title than the location of a rejected and fraudulent certificate the principle of caveat emptor has no application. (Roel v. Pleasants, 31T., 45.) An allegation that the vendor fraudulently represented that he had a good title, when, in truth, he had no't the' title, is a sufficiently specific allegation of fraud. (Hays v. Bonner, 14 T., 629.)

It is objected that the answer does not aver that the defendant is disturbed in his possession. There is no averment, nor does it appear by the record that the defendant was in possession of the land. This, perhaps, would be the legal inference from his having' purchased and received a conveyance, and if the fact was otherwise, and it was .essential to his right, it was for him to show it. The prayer, however, that the defendant might'be permitted to deliver up his deed for cancelation, that the contract might be rescinded, and the parties placed in the condition they respectively occupied before the sale, cannot be otherwise considered than as a virtual offer on the part of the defendant to deliver up to the plaintiff not only the deed but the possession also, if, indeed, he had received it; and this was sufficient as to the matter of the possession. Had tlie exceptions raised this objection to the answer it might have beeu cured by amendment, or a more direct averment containing either an express offer to restore the possession, or showing a legal excuse for not doing so might have been required. But, as the question is presented, we think the pleading sufficient in substance, and 'that to require greater speciality where the attention of the pleader was not called to the alleged defect, and especially where it was diverted from this by exceptions specially taken to other parts of the answer, would be unjust to tbe defendant, and might have the effect to defeat the ends of substantial justice by requiring too great strictness in matters of form.

We are of opinion that the answer presented a valid defense to the action, set forth by averments in. substance sufficient, and that the court erred in sustaining the exceptions. The judgment is therefore reversed, and the cause remanded for further proceedings.

Beversed and remanded.