Case ID: ohio-st_4/html/0198-01.html
Source: Caselaw Access Project
Author: {"author": "Ranney, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Hollister v. Dillon et al.
    J. D. being indebted to T. for tbe purchase money of certain real estate, gave bim several notes and a mortgage upon tbe property to secure them. Soon after the execution of the mortgage, J. D. conveyed the land, subject thereto, to other persons. After some of the notes had fallen due, T. recovered a judgment at law upon them against J. D.; and, in ignorance of the conveyance, levied upon, bid off, and took a deed of the mortgaged premises, in satisfaction of the judgment. Upon a bill filed upon the mortgage, by the assignee of T. against J. D. and his grantees:
    
      Meld, That the sale of the property upon the judgment at law was no defense of this suit, and did not operate as a payment of any part of the debt secured by, the mortgage.
    That whether a court of equity has, or has not, the power to vacate the satisfaction of a judgment, and open it for further process, because the purchaser, under a mistake, bid off property to which the debtor had no title, it will not permit such a sale to prejudice a party, in a case over which it has unquestioned jurisdiction..
    That the mortgage gave such jurisdiction in this case, and nothing short of an actual satisfaction would operate to deprive the mortgagee of his estate in the property, or bar a suit to recover the money secured by the mortgage.
    The cases of Vattier v. Lytle, 6 Ohio, 477, and Freeman v. Caldwell, 10 Watts* 9, commented upon and distinguished.
    In Chancery ; reserved in Licking county.
    The case is as follows:
    On the 4th of February, 1839, Abraham Wright was the owner of one undivided third of a tract of 1,300 acres of land, the remaining undivided two-thirds being owned by Joseph Taggart, in his own right and as trustee of Edward Gray and Robert Taylor; and Joseph Taggart was also, as above, the owner of the ^undivided two-thirds of two other tracts, one of one hundred and thirty-two, and the other of one hundred and thirty-seven acres. On that day Wright filed his petition for partition as to the 1,300 acres, against Taggart, Gray, and Taylor, and 411 acres were set off for him.
    On the 11th of March, 1839, Taggart conveyed the undivided two-thirds of all the above-named tracts to John Dillon, Dillon giving back a mortgage to secure three notes dated October 23,1838, for $1,520.17 each, payable in one, two, and three years, with interest.
    May 30,1839, Wright’s partition was confirmed.
    October 22,1839, Wright, in consideration of $1, and that Dillon had covenanted that neither he nor Taggart, nor Gray, nor Taylor, nor any one claiming under them, should seek to disturb the par tition, conveyed to Dillon about 146 acres, out of the part which had been assigned in severalty to Wright in the partition.
    October 25, 1839, John Dillon conveyed all his interest in the three tracts to George B. Reeve and Moses Dillon, jr., who thus ■became owners (subject to Taggart’s mortgage) of an undivided two-thirds of the 132 and the 127-acre tracts, and (subject to the .same mortgage) of, first, all the 1,300-acre tract not assigned to Wright, and the 146-acre tract conveyed by Wright to Dillon as .aforesaid. It is claimed that Reeve and Moses Dillon made sundry payments to Taggart.
    July 5, 1841, Taggart recovered a judgment in the circuit court of the United States for the Ohio district, against John Dillon, in a ■suit on the two notes first due, for $3,526.78, and costs.
    March 15,1842, the deed from John Dillon to Reeve and Moses Dillon was recorded.
    June 19,1843, Reeve mortgaged his half to William Hamilton.
    January 11,1845, Taggart had execution issued on his judgment, which was levied soon after, on all that part of the 1,300 *aere tract which was not set off to Wright in severalty; 2. On the un•divided two-thirds of the two smaller tracts. The land was not sold for want of bidders.
    September 8, 1845, a vendí, was issued, and the land was sold to Taggart.
    March 12, 1848, the marshal conveyed to Taggart, recognizing Wright’s title to one-third in severalty “ set-off.” This deed was ■acknowledged May 1, 1848, and never recorded.
    January 4, 1849, Taggart conveyed to Hollister by warranty deed (except as to tax claims), according to the description in the marshal’s deed.
    July 26,1849, the mortgage from Reeve to Hamilton, given June 19,1843, was assigned to the complainant Hollister.
    October 24,1849, Hollister filed his bill, praying for an account .of the amount due him by reason of the promissory notes and mortgages aforesaid, and for a decree that the defendants pay complain.ant the sums of money to be found to be due as aforesaid, and in default, that the equity of redemption be foreclosed, or the land be sold, and for general relief.
    An amended bill charges the conveyance by John Dillon to Reeve and Moses Dillon to have been fraudulent, having been made without any valuable consideration, when the grantor was embarrassed and insolvent, for the purpose of hindering and delaying creditors, etc., and avers that when complainant purchased of Taggart he had no notice “that said John Dillon had conveyed said lands to said Moses Dillon and George B. Reeve for any good or valuable consideration whatsoever, and, on the contrary,” he “ supposed and believed that he was purchasing and receiving a full and perfect legal title to said land, unincumbered and in fee simple.” The amended bill further represents, “ that, at the time of the purchase by said Taggart at marshal’s salo as aforesaid, the said Taggart had no knowledge or notice that the said John Dillon had conveyed said lands to said Moses and George for any good or valuable consideration whatsoever, *nor had the said Taggart any actual knowledge or notice, that said John had parted with his title, until long after the execution of a deed from the said marshal to him, the said Taggart, for the lands aforesaid; but, on the contrary thereof, said bid was made and said deed received by said Taggart in good faith, under the full belief that said John still held the title-to said land, and that no deed had ever been executed by him to transfer the same to the said Moses and George, or any other person ; and if the said Taggart had known or believed that any valid conveyance had been executed by said John, conveying said land to any other person, the said purchase would not have been made ; and if it shall appear that any such valid conveyance was made by the said John before said purchase,” complainant “ avers that said bid was made under a mistake of fact,” etc. The bill further represents that it was not till sometime after complainant purchased the land and received a conveyance therefor, that he learned that said Moses and George claimed title to said land; and for the purpose of securing himself as well as possible in the title thereto, complainant obtained an assignment of the mortgages aforesaid and the notes thereby secured, etc.
    The answer of Moses Dillon denies that the deed to Reeve and Dillon was without consideration, payments having been made to Taggart at different times of $1,520.17, and $200 for John Dillon, and the balance of the consideration, which was in all $4,680, was in sundries, got of respondent and Reeve at various times. In this-respect, the answer denies the allegation of the bill as to the purof the to and Reeve. “ further answering says that the said Joseph Taggart well knew, at least as early as October, 1841, when he paid him on account of John Dillon the aforesaid $2,000, that he, respondent, was the owner of said land — that he and the said Reeve had purchased it of the said John Dillon, and that said $2,000 was part of the consideration paid John Dillon therefor. Respondent further states that the said complainant, William *Hollister, at the time of his purchase of said land from said Joseph Taggart, know well that this respondent and the said George B. Reeve were the bona fide owners thereof; that their deed was duly recorded long before that time, and that he often applied to this respondent to purchase.” The answer insists generally, that the mortgage to Taggart has been fully paid.
    A replication was filed by complainant, and the case stands in this court on the original and amended bill, the answer of Dillon, the replication, and the following exhibits among them:
    1. A letter from Taggart to Dillon, acknowledging the receipt of two drafts for $1,000 each. 2. A certificate, signed by Creighton & Green, as attorneys of Taggart, that defendant is entitled to an abatement from the judgment of $563.61 as of the date of. its rendition. The amount of the purchase at the marshal’s sale is insisted upon as a satisfaction of so much of the amount due on the mortgage.
    
      Smythe & Sprague, for complainants, made the following points, among others:
    I. The allegation of mistake in purchasing at the marshal’s sale being in the amended bill, and that bill not calling for answer under oath, the allegation in the answer, that Taggart knew of the sale to Moses Dillon and George B. Reeve before that purchase, will pass for nothing. The complainant relies upon the undisputed fact, that Taggart took nothing by the purchase, and the irresistible inference therefrom, that he would not have thrown away $2,435 in that way for nothing.
    II. It is not necessary to prove a mistake any more than any other facts in judicial proceedings by absolute, direct proof; but the same may be inferred in any case from.other facts, which reasonably lead the mind to that conclusion. 1 Story’s Eq. Jur. 176 ; Hyde v. Tanner, 1 Barb. S. C. 75.
    III. There was no satisfaction worked by the purchase at, the marshal’s sale. Under the circumstances of this case, in which the *j adgment creditor is the purchaser, and no title passes or the title fails, there is no more difficulty in going behind this suj)posed satisfaction than in going behind a receipt where nothing had in fact been paid. (The case of Vattier v. Lytle, relied on by the other side, so far from being authority in this case, only shows the necessity for the interference of a chancellor — that case being in a court of law.) Upon this point, the following cases are referred to : 11 Paige, 505; Bank of Utica v. Munson, 3 Barb. Ch. 586; Price v. Boyd, 1 Dana, 436 ; Jones v. Henry, 3 Littel, 427; 8 Dana, 183; Muir v. Craig, 3 Blackf. 293; Warren et al. v. Helen et al., 1 Gilman, 220; 2 N. H. 85.
    
      O. B. Goddard, for defendant.
    1. Hollister ought not to have a decree vacating the pro tanto satisfaction of the judgment caused by Taggart’s purchase. If Taggart brought a bad title, he has no relief in this court or elsewhere.
    1. The following cases are relied on: Vattier v. Lytle, 6 Ohio 477; Freeman v. Caldwell, 10 Watts, 9; England v. Clark, 4 Scam. 486; 4 Kent Com. 466, note (4), 7 ed. 1851, citing 2 Bailey S. C. 48.
    2. The “ act for the protection of purchasers at judicial and other sales,” passed March 2, 1846 (2 Curw. 1288, Swan 715), has settled the question, if any existed in this state. It recognizes the existing rule of caveat emptor, and gives such a remedy to the purchaser in such cases as the legislature thoiight worthy of it when the title is invalid by reason of defect in the proceedings — not when invalid by reason of other causes.
    3. If the plaintiff were entitled to this relief, he should seek it in the forum where the judgment remains. Barbell v. Griggs, 3 Paige, 207.
    4. A scire facias being in the nature of a bill in equity, the casé of Vattier v. Lytle is authority as claimed.
    5. The remark of the chancellor in Starr v. Ellis, 6 Johns. Ch. 395, is not here applicable. *We have nothing to do with the doctrine of merger. Chancellor Kent, in many cases, recognizes the doctrine that there is no remedy to the purchaser of a bad title, unless he have a covenant of warranty. Why should he have relief when purchasing at a public sale, in the face of the admitted law that he can have none when purchasing at a private sale. '
    
      6. The New York and New Hampshire oases cited for complainant are based upon the statute, 22 Hen. VIII, ch. 5, and colonial statutes of a like character. See 3 Barb. 586; 2 N. H. 84. The ■cases in Kentucky are cases of chattel sales, in which there is always, between vendor and vendee, an implied warranty of title. The Illinois case is directly in conflict with that cited on this side from 4 Seammon. Arnold v. Fuller, 1 Ohio, 458, is not applicable. The sale there was void by the defective process.
    7. If the court can interfere to relieve a purchaser when the title wholly fails, it must do so where the title partially fails. If the ■court will relieve against mistakes as to title, it must relieve against mistakes as to value.
    
    In addition to the briefs from which the foregoing points are taken, an oral argument was made by Mr. Stanbery for complainant, and Mr. Goddard for defendant; but no notes of that argument were furnished to the reporter.
   Ranney, J.

Our opinion is confined to a single question. Upon the other questions arising in the case, further testimony is required; and it is agreed by the parties that the cause shall be remanded to the district court to enable them to take it.

Shall the amount for which the land was sold to Taggart, upon the judgment rendered by the circuit court, be allowed as a pro .tanto satisfaction of the mortgage? The facts bearing upon this question are indisputable. The judgment was recovered upon two of the notes secured by the mortgage. The mortgage was given ^to secure the purchase money, and covered the lands levied ■upon and sold. Before the judgment was recovered against John Dillon, the mortgagor, he had sold and conveyed the land, subject to the moi’tgage, to Moses Dillon and George B. Reeve. It is perfectly evident that the land was levied upon, bid off, and a deed taken by Taggart, in ignorance of the conveyance; and most .abundantly clear that he got no title to the land by the sale, and •obtained no real satisfaction of any part of his debt.

But it is insisted by the defendants’ counsel that it is alto.gether immaterial whether he did or not; that his notes were merged in the judgment, and the judgment in part satisfied by the sale; and that he can not now be heard to insist upon a vacation of that satisfaction, because the sale by the marshal excluded all warranty — the purchaser taking all risks, and subject to the full operation of the maxim, caveat emptor. The cases chiefly relied upon to support this position are Vattier v. Lytle’s Ex’rs, 6 Ohio, 477, and Freeman v. Caldwell, 10 Watts, 9. These cases certainly go to the .full length of holding that a court of law will not vacate the satisfaction of a judgment, and order a new execution, because it turns out that the property which produced the satisfaction did not belong to the judgment debtor. Nor do they contain any intimation that a court of chancery possesses more enlarged powers, or could, in such cases, afford any relief. This doctrine is far from being universally acquiesced in. The eases cited in argument very conclusively show that relief is given in several of the states of the Union; but there is very little agreement as to the mode of obtaining it, or the principles upon which it is afforded; while several of the cases referred to, seem to rest upon statutory provisions. The subject has been most fully considered by the New York court of chancery, in the cases of Wambaugh v. Gates, 11 Paige, 505, and Bank of Utica v. Mercereau, 3 Barb. Ch. 586. In these cases, while the opinion of the chancellor evidently was that the relief might be given upon general equity principles, still, much reliance is *placed upon the analogy furnished by the statute, 22 Henry YIII, chap. 5, giving a new extent when the creditor was evicted, by title paramount, from the lands included in the first, and which had been adopted into the colonial legislation of that state.

It is clear, that neither class of cases can be made to depend upon any mere technical rule. The difference manifestly results from the greater or less weight given to considerations of public policy. Abstractly, there can be very little justice in permitting the debtor to pay his debt with the property of another, or in compelling the creditor to discharge it, before he has received an actual satisfaction. Where the debtor has lost nothing, and the creditor has received nothing, it seems most inequitable to permit a mere mistake to discharge the debt. But the fact, that exact justice can not be done in every case, is in no way decisive against the soundness of a general principle. If it is productive of general Convenience and simplicity, and in most cases adapts itself to the business and intercourse of men in society, it needs very little experience to see, that it is, upon the whole, salutary, and ought not to be impaired by ingrafting numerous exceptions upon it. The difficulty, in many cases, of determining what is abstractly right, and what remedy ought to be afforded, undoubtedly lies at tbe foundation of tbe refusal to interfere in any way, where the sale has been fairly made.

When the sale is made to a stranger, and the money has been paid over to the creditor, it is clear that the officer, who has done-no more than his duty, ought not to be required to refund; and by no means certain, that the creditor, who has got no more than he-was entitled to, and was under no obligation to investigate the debtor’s title to the property, may not conscientiously retain the-money of the purchaser — who must be presumed to have investigated, and to have been fully aware that he bought at his own risk. It is perfectly certain, that no contract to warrant the title can be-inferred, on the part of the debtor. As against him, the whole proceeding is im inviturrt; while attaining the same end, in *substance, by a new execution on the judgment for the benefit of the purchaser, involves the danger of collision between the purchaser1 and adverse claimant, and deprives the debtor of all ability to defend his title to the property. It would never do to place the creditor, when he became the purchaser, in a better position than a stranger;, as it would enable him to purchase without risk, and would furnish a strong inducement to him to throw doubts over the title, resulting, inevitably, in a sacrifice of the property, to the prejudice of the-debtor.

If these considerations can not be deemed conclusive of the correctness of the rule adopted in the Pennsylvania and Ohio cases,, they must be considered as going far to sustain them; and they derive a strong support from the analogy furnished in private sales, of real estate without warranty.

I have alluded to these considerations, with no view of approving- or disapproving of the decision made in Vattier v. Lytle; but for the mere purpose of showing that the case now before us is neither within the terms or policy of that decision.

In cases like that, whether the appeal is made to a court of chancery, or to the equitable powers of the court that rendered the judgment, by a summary application, the party must stand upon the mistake he was under when he made the purchase; and the relief he demands, is a new execution to levy upon the property. The mistake furnishes the only ground of equitable interference, and the-future use of the judgment the only object to be attained. Now, let. it be granted, that considerations of public policy intervene to prevent the correction of such mistakes, and still this case is not. .affected. The present complainant has all the rights of Taggart, the original mortgagee; and ho comes into court with the mortgage, and demands an appropriation of the property pledged for the payment of the debt. That the debt existed, and was secured by the mortgage, is admitted; and the only question is, has it been paid, in whole or in part? The defendants, who have purchased the property for a nominal ^consideration, subject to this very mortgage, say that it has; but how ? They answer, by an abortive .attempt to appropriate the property to the payment of the judgment. That this proceeding did not appropriate it, is certain; and ■ equally so, that the defendants were in no way prejudiced by it. At the time it was pursued, Taggart was the undisputed owner of the legal title in fee, of this property.

The debt was due and unpaid, and nothing but the equity of redemption remained with the defendants. He had two undoubted .remedies, which he might have pursued conveniently; but he could have but one satisfaction. He could have brought an action at law for the debt, and levied his execution upon any property then belonging to John Dillon; or he could have filed a bill in chancery for the foreclosure or sale of the equity of redemption, whoever .might have been the owner of it. He pursued the first, and levied upon his interest, supposing John Dillon to have been still the -owner, when in fact he was not, and obtained nothing by the sale.

His assignee is now pursuing the other. To deny him relief, we must not only say that Taggart, by his mistake, lost all further .•remedy upon his judgment at law, but, also, that he forfeited his legal estate in the property, as well as the debt secured by it, and .all right to pursue this independent remedy. But the complainant .asks for no further remedy upon the judgment, and claims no right under it. If he did, aside from the main question, a very conclusive answer would be, that we have no power over the records •or process of the circuit court.

He asks us to correct no mistakes; but having an undoubted •■standing in this court, under an acknowledged head of equity juris■diction, he simply asks us to say, whether what has been done in the circuit court amounts to such a payment and satisfaction of the mortgage as to bar this remedy upon it. We have no hesitation in raying that it does not.

When the jurisdiction of a court of equity is established, and *its duty to hear and determine is unquestioned, it looks only to the substance of transactions, and is never embarrassed by the forms or complications in which they may be involved. After forfeiture, all the rights that Dillon or his grantees had were in equity;, and the only way in which they could redeem the land, or take the-legal title from Taggart, was by paying the debt — not in form only,, but in reality. To call the mistaken proceeding in the circuit court, by which nothing was accomplished and nothing obtained, in reality a payment of the debt, is in the face of common sense; and to permit it to operate as such, not for the benefit of the debtor even, but for those who have purchased his interest subject to the payment of the debt, and without paying, would hold the property without, consideration, and shock the moral sense. If they were here with a bill to redeem upon no more equitable grounds, no one would-suppose them entitled to any relief. And still, the case is not substantially different. The complainant is here with the mortgage- and evidences of indebtedness, apparently unsatisfied, and asking a sale of the equity of redemption. The burden of showing a satisfaction is upon the defendants, and is in no way changed from the fact, that the bill anticipates such a defense and seeks to avoid it. They stand upon the mere creature of a court of equity, and before they can ask its protection, they must do equity. They can not expect equity to suffer to be done in its name what it would not itself do, nor suffer them to obtain indirectly what it would not do for them-, directly. The case of Vattier v. Lytle was decided upon the-authority of the early cases in Pennsylvania. Yery recent decisions-of the Supreme Court of that state, make it unmistakably clear that no such injustice as extending the principles of that case to one like-the present, would be there permitted. In a case reported in 14 State R. 883, it is said that the mistake of the mortgagee in bidding-for the land, under a misapprehension of his right to apply the proceeds to the payment of the mortgage debt, would furnish a sufficient-reason for setting aside *the sale. And in Cummings’ appeal, decided in 1854, the same ruling was made, in a case in every way more doubtful than the one before us. The purchaser had two-claims, both due for the purchase money of the property, and both were in judgment, the largest of which was secured by mortgage, aDd the other not. He levied an execution, issued upon the smaller-judgment, upon the property, and bid it off, under the erroneous-belief that the sale would divest all liens and entitle him to apply the surplus to the payment of the mortgage debt. The court decidod, that if the sale was permitted to stand the surplus would belong to the mortgagors; but they held it to be the duty of the court below, either before or after confirmation, to give the purchaser relief, by setting the sale aside and discharging him from his bid. In these cases, it will be observed the mistake was one of law purely, and the relief given opened the judgment for a new execution.

Upon the whole, without expressing any opinion as to the power ■of a court of equity to vacate the satisfaction of a judgment, on account of the mistake of a purchaser, and the want of title in the debtor to the property sold, .we are clear that such a sale of mortgaged property to the mortgagee can not operate to deprive him of rights existing anterior to, and independent of, the judgment. That if such a mistake does not, on the one hand, lay a foundation for equitable relief, it does not, on the other, give any advantage to the debtor, when set up as a defense in a suit brought upon the mortgage, over which a court of equity has unquestioned jurisdiction.

We.are therefore of opinion that the amount for which the property was sold, upon the execution issued from the circuit court, should not be allowed to diminish the amount to be recovered in this suit.

Decree accordingly.