Case Name: Ez. Massey vs. Andrew M'Ilwain, Nancy M'Cardell and James King
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1836-07
Citations: 2 Hill Eq. 421
Docket Number: 
Parties: Ez. Massey vs. Andrew M’Ilwain, Nancy M’Cardell and James King.
Judges: Justices Gantt, Eichardson, O’Neall, Evans and Butler, concurred.
Reporter: South Carolina Equity Reports
Volume: 11
Pages: 322–327

Head Matter:
Ez. Massey vs. Andrew M’Ilwain, Nancy M’Cardell and James King.
Purchaser at sheriff’s sale not allowed the protection of an execution under which the land was not sold. [*425]
One who has paid the purchase-money, taken possession and made improvements under a parol contract for the purchase of land, entitled to specific performance. [*426]
One purchasing land, to which another has an equitable title, with notice of the equity, takes subject to the equity, and is bound to convey in like manner as the person from whom he purchased. [*426]
Where land was sold under execution as the property of one who had the legal title, but under a parol contract which had been performed was bound to convey to the plaintiff, the purchaser is invested with all the rights of the judgment creditors at whose instance the land was sold, and want of notice to them of the plaintiff’s equity may protect him; but it seems that the possession of the land by the plaintiff would be sufficient notice to creditors. [*427]
The rule in equity is, that an agreement in writing to convey will bind the estate and prevail against subsequent liens; so, too, a parol contract to convey which has been performed and set up by the Court, has equal validity with a written covenant; and the party entitled to specific performance may hold the land against subsequent judgment creditors of the vendor. [*428]
Heard before Chancellor Johnston, Lancaster, July, 1835.
In 1826, the plaintiff, and the defendant King, contracted with Nathan and Abel Funderburk, to purchase of them a tract of land, containing two hundred and ninety-six acres, for six hundred dollars. With the consent of the plaintiff, they executed a conveyance to King alone, who gave them his note for the money, with the plaintiff as security, but the conveyance has never been recorded. It was, however, at the time expressly agreed between plaintiff and King, that plaintiff was to have one half the land, and he (King) should convey the same to plaintiff, when he paid him his portion of the price; but this agreement1 was merely verbal, and was never reduced to writing. Immediately after the purchase, both King and *the plaintiff settled on the land, and went p* on with building and improving; and not long after procured a L surveyor to run a dividing line between them; and from that time to the present, they have both lived on, improved and cultivated their respective portions as designated by this line. In 1830, or thereabouts, the plaintiff, having previously made other payments, paid the balance in full to King, his proportion of the price of the land, but never obtained a conveyance from him. Previous to this time, King had become much involved in debt, and judgments were obtained against him for a considerable amount, at the instance of sundry persons, and entered up at different times from 1828 to 1830, some of them for debts contracted before, and some of them after plaintiff had paid King his portion of the purchase-money, and amongst others, one at the suit of the Funderburks, against both himself and the plaintiff, for $52, being a balance due of their notes given as the price of the land. The entire tract of land, including that in the possession of plaintiff as well as King, in October, 1830, was however levied on and sold, in February, 1831, as the property of King, under an execution at the suit of one H. Hoey. At this sale the defendants, Andrew M’llwain and Nancy M’Cardell, were the purchasers. M’llwain, who was the active agent in the purchase, had explicit notice of the possession and nature and extent of the plaintiff’s claim at the time he purchased. Defendants, M’llwain and M’Cardell, have commenced an action at law against the plaintiff, to try the title and recover possession of the land ; and the object of this bill is to set aside the sale to them, and to restrain their proceedings in the action at law.
The Chancellor. In the view which I take of this case, it is unnecessary to examine most of the questions made. Whether M’llwain and Mrs. M’Cardell had or had not notice of the transactions between King and Massey, before they purchased from the sheriff, is immaterial, so long as they can stand in the shoes of the creditors'of King, to whom, with the exception of the Funderburks, it is not pretended notice was extended by the arrangement of King and Massey themselves. The title was taken to King, which procured him credit on the faith of the land. Massey cannot therefore complain that King’s creditors should satisfy themselves out of property of which he consented that King should become the ostensible owner; and if the creditors had the *sale of the >-*¿90 land in their power, a sale by them to a person infected with L notice, was as good as if made to one who had no notice at all. To say otherwise, would put it in the power of one, first, to obtain credit, and then, by giving general notice, to defeat that creditor of his remedy, by cutting off all purchasers under the creditors’ execution. The well-known principle, that one infected with notice may safely purchase from and protect himself under another destitute of notice, is of easy application to this case. This is sufficient to decide the case, as between the plaintiff and the defendants, M’llwain and M’Cardell. As to King, the plaintiff is entitled to a decree against him for reimbursement;. although at present his insolvency may seem to render that nugatory.
It is decreed that the bill against the defendants, M’llwain and Mc-Cardell, be dismissed ; and that, as between the plaintiff and the defendant, King, an account be taken to indemnify the plaintiff for such payments as the plaintiff has made said King, on the score of the land mentioned in the pleadings — the plaintiff to be liable to M’llwain and Mc-Cardell for their costs, and King to be liable over to the plaintiff for theirs, and all other costs of the case.
The plaintiff appealed, and now moved to reverse the Chancellor’s decree, on the ground that the case made entitled him to relief.
Clinton and Peareson, for the appellant,
contended that it was an established principle of equity, that one purchasing a trust estate, or an estate subject to equitable rights, with notice, took subject to all the liabilities of the vendor. That it was not denied that as between the plaintiff and King, the performance of the parol contract for the land, by the payment of the purchase-money, and taking possession and making improvements, made such a case as entitled the plaintiff to a specific performance. The proof was clear that M’llwain, the agent in the purchase, had explicit notice of the plaintiff’s equity at the time he made the purchase, and even before. And if it be insisted that he is invested with the rights of the creditors’ executions, it is contended that they too had legal notice. The possession of the plaintiff from 1826, his improvements and general acts of ownership, the creditors living in the neighborhood, constituted such evidence of title in him as should have put the creditors on the inquiry ; and amounted to notice of his claim. Besides, these debts *1911 were n°f contraete(l on the faith *of this land. King had no ae4 -* tual possession; he had the deed, it is true, but it was npt recorded; and if creditors came.to a knowledge of the purchase, they would at the same time know the manner of the purchase, and the plaintiff’s claim. The defendants cannot be protected under Funderburk’s execution, for this creditor was privy to the agreement between King and the plaintiff, and knew of its performance. At the time the agreement was performed, there were no liens on the land, and King had the right to convey. The plaintiff’s equity is therefore paramount to that of creditors. Cited Daniels v. Davidson, 16 Yes. 250; 1 John. Oh. Hep. 267; 2 Fonb. 151; 5 John. Ch. 29.
W F. Be Scntssure, contra,
argued that the defendants, M’llwain and M’Cardell, as purchasers for a valuable consideration, were entitled to the protection of the Court. They had not only the rights of purchasers, but were invested with all the rights of the execution creditors, among whom Funderburk had his execution for the balance due on the original purchase.
By the Court. — Was Funderburk’s execution levied ?
It was not — but the balance due on it was paid from the sales. The debts were contracted subsequent to the purchase of the land, and on the faith of it. The equity of the creditors is at least equal to that of the plaintiff; and where equities are equal, the law must prevail.
As to notice — He insisted that notice to the purchasers was not sufficient : there must be notice to the creditors, whose rights they are clothed with; and there was no proof of notice to them. Possession is only evidence of title to personal property, not to real. A purchaser with notice of an equity, may protect himself by want of notice to the person from whom he purchased. And here, these defendants will be protected by want of notice to the creditors. Cited Amb.' 164 ; 1 John. Oh. Rep, 214; Ca. Temp. Talb. 181; Brandlyn v. Ord, 1 Atk. 511; Sweet v. Southcote, 2 Bro. Ch. 66 ; Bumpus v. Plainer, 1 John. Ch. 219.

Opinion:
Chancellor Johnson
delivered the opinion of the Court.
It seems that at the time of the sale of the land by the sheriff, and the purchase by defendants, there was still a small balance of the principal, and the costs, remaining due on the judgment at the suit of Funderburk against the defendant, King and *the plaintiff, for the price of the r^,. 9F. land ; and before I enter upon what are supposed to be questions L J of more importance, I will dispose of the argument of the counsel opposed to the motion, by which it is insisted, that the debt itself was an equitable lien on the lands, and overreached the claims of the plaintiff as well' as all others. However this may be in point of principle, (and I will not stop to examine it,) the land was not sold under that judgment, nor are the plaintiffs in that cause parties to this suit, or claimiug the benefit of their lien (if in law they have any,) nor can the defendants shelter themselves under it, for there is no privity between them.
The legal estate in the land was confessedly in the defendant, King, at the time the judgments referred to were obtained against him, and the sale made by the sheriff; and the question is, whether the equity of the plaintiff, arising out of the agreement between him and King, that King should convey one half of the land to him on his paying half the price agreed to be paid for the whole, his subsequent possession of the land, and the actual payment of the money, should prevail against the legal rights of the defendants, M'llwain and M'Cardell, who purchased with notice of the nature and extent of the plaintiff's claim.
If King was under no legal obligation to convey to the plaintiff, or if the legal title acquired by defendants under their purchase, or the equity of the creditors of King at whose suit the land was sold, is entitled to be preferred, then of course the plaintiff is not entitled to the relief which he prays; but if, on the other hand, the rights of plaintiff are to be preferred, he ought not to be disturbed in the possession. In the consideration of the case, it will therefore be necessary to ascertain—
1. What are the rights of the plaintiff, as between King and himself.
2. What are his rights as between the defendants, M'llwain and Mc-Cardell, purchasers with notice — and
3. What are his rights with reference to those who were creditor's of King at the time he fulfilled his agreement with him, by paying his portion of the price of the land.
1. Notwithstanding the statute of frauds, the Courts of Chancery have, for a long period of years, and through along series of judicial decisions, enforced the specific performance of parol contracts for the sale of lands, where they have been partly performed; and *the ground upon which they have proceeded, is not that they are not within the L original provisions of the statute, but because the suffering of the party who had accepted the performance, to shelter himself under the provisions of the statute, would enable him to practice a fraud at least as odious as that which the statute was intended to prevent, and thus render the statute an instrument of fraud. It is, however, a doctrine which the Courts have carried out with reluctance, and over which they have watched with a jealous circumspection. Hence the rigid proof which is required of the terms of the contract, and the fact of partial performance, for which I refer to Thomson v. Scott, et al. — 1 M'C. Ch. Rep. 33.
The proof here is perhaps as perfect as could be expected to be derived from matters depending on memory, not only of the terms of the agreement between King and the plaintiff, but of the partial execution of it by King, in delivering the possession of the land, and running out and marking a dividing line between them, and of the entire performance by the plaintiff of his part of the agreement, by paying the price stipulated ; and it will suffice to remark of these circumstances, that they constitute the proof required by the most rigid rule. — 1 Mad. Ch. 380.— The plaintiff is therefore entitled, as between himself and King, to a specific performance. This has not been questioned.
2. Regarding the rights of the other defendants, as derived from King, the rule in equity is, that one coming into the possession of trust property with notice of the trust, shall be considered as the trustee, and bound to the execution of the trust with regard to that particular property. As in Taylor v. Stibbert. 2 Ves. jun. 437, where tenant for life granted leases for lives under a power, and bound himself upon the dropping in of a life, to grant new leases with the same provisions for the renewal on the death of any person named in any future lease, and afterwards joined in a sale, though the power was exceeded ; and it was held that a purchaser having notice would be bound to a specific performance, by granting a new lease, with the same provision, if a life dropped in, in the lifetime of his lessor. Now, although the legal estate in the land was in King, yet, by accepting performance of the agreement on the part of the plaintiff, he held subject to his equity, and, as trustee, was bound to convey according to the terms of the contract; and the defendants, having had notice at the time they purchased, are bound by the same trusts.
*3. Defendants, MTlwain and M'Cardell, are not only invested under their purchase with all the rights of King, but they are also clothed with the rights of his creditor, at whose instance the land was sold. The creditor has the right to have his debt satisfied out of the property of his debtor, .and if it is sold under execution for that purpose, the purchaser is invested, not only with the rights of the debtor, but those of .the -creditor also — which is in some degree peculiar. If, for example, the debtor convey lands after judgment signed against him, or even before, when he conspires with the purchaser to defraud his creditors, a purchaser at sheriff's sale,.at the instance of the creditor, is entitled to prevail against the voluntary alienee of the debtor, notwithstanding the legal estate of the debtor had been before divested by his voluntary alienation; and in that case, the rights of the purchaser are derived from the creditor, and hence the necessity of the third inquiry proposed.
Some of the debts for which judgments were subsequently obtained against King, were contracted before the plaintiff had performed his part of the agreement to purchase the land, and when the legal title was confessedly in King, and assuming that he obtained credit on the faith that it belonged to him, it is insisted, that in Equity the claims of the creditors ought to be preferred; at any rate that the Court will not aid the plaintiff in doing wrong to the creditors, but leave them to their rights at law. But it will be recollected that at the time plaintiff paid his money, the creditors-had no lien on the land, and that the payment of the money alone, if it gave him no legal right, made him as meritorious a creditor of King, as if he had lent him money or sold him goods, and placed him on at least an equal footing with the other creditors. He was also in possession of the land ; and that, according to some of the English cases, was not only notice to creditors, but sufficient to repel the claims of a subsequent purchaser. In Daniels v. Davidson, 16 Ves. 254, the Lord Chancellor Eldon, observes, that there was- considerable authority for the opinion which he held, that where there was a tenant in possession under a lease or agreement, a person purchasing the estate was bound to inquire on what terms he was in possession, and was bound by the terms of the lease or agreement; and refers to the case of Douglas v. Whitrong, in which Lord Kenyon held, that possession was sufficient notice; and to the case of Taylor v. Stibbert, 2 Ves. jun. *440, in which it was expressly ruled; and if possession alone be notice to a purchaser, L it is necessarily so as to creditors. But the claims of the plaintiff rest, I think, on higher grounds and more satisfactory authority.
The rule in Equity is, that an agreement in writing to convey land in consideration of an adequate price paid, will in Equity bind the, estate, and prevail against any subsequent judgment creditor; and is so laid down by Lord Chancellor Cowper, in Finch v. Winchelsea, 1 P. W. 282. The reason for the rule is well expressed in 1 Eq. Ca. Abr. 320, Tit. Mortgage, where it is said, " that if a man mortgages by a defective conveyance, and there are subsequent creditors whose debts did not originally affect the land, Equity will supply such defective conveyance against such subsequent incumbrancers who acquired a legal title afterwards ; for since the subsequent creditors did not take the lands for their security, nor have in view an intention to affect them; when afterwards the lands are affected, and they come in under the very person that is in conscience obliged to make the defective security good, they stand in his place and shall be postponed to such defective conveyance." The same question was so ruled in Taylor v. Wheeler, 2 Vern 564, where a defective mortgage was set up in opposition to the claims of the assignees of the mortgagor who had become bankrupt. In all these cases, it is true, the contracts were in writing, and in that alone they differ from the present case ; but I apprehend the principle equally applies. If the contract is binding on the parties, the legal effect is the same whether it is in writing or by parol. A parol agreement to convey lands set up by the Court, has equal validity with a deed containing a covenant to convey.
The judgment of the Circuit Court is therefore reversed; and it is ordered and decreed that the conveyance of the sheriff to the defendants, MTlwain and M'Cardell, for the lands described in the pleadings, be delivered up to be cancelled; that the said defendants, MTlwain and M'Cardell, be perpetually enjoined and restrained from proceeding- in their action at law against the plaintiff to recover the said land; and that they pay the costs of this suit.
Justices Gantt, Eichardson, O'Neall, Evans and Butler, concurred.