Court Opinion

ID: 6689229
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:36:05.916244+00
Date Added: 2024-06-11T16:01:03.632081
License: Public Domain

SMITH, J.
(dissenting.) I cannot concur in the conclusion of -my m-ajcritv associates in this case and deem it my duty to state, as briefly as I may, the grounds of my dissent.
Appellant's main contention, and the one on which the majority opinion bases the reversal of the judgment, is that defendant Potter was not a purchaser in good faith: First, because he purchased the land before the expiration of the statutory period within which an appeal could be taken from the judgment quieting Gowie’e title as against Harker; second, because prior to hii-s- purchase he had notice of circumstances sufficient to put him upon- inquiry and charge him- with notice of the fact that Harker was making at that time some -claim of title- to the land.
So far as the record discloses, the -only information received by Potter, except that contained in the abstract of title, and the opinion thereon by attorneys employed to examine it, consisted of statements by one Bergakker and another person present when Potter visited the land before purchasing, to the effect that Ber-gakker had rented the land from a m'an by the name of Harker, of Mitchell, but understood the land then belonged to parties at Armour. The -term of the lease was- not stated, nor was there any lease of record, and Bergakker did not. even intimate that he was in, or claimed, possession under any lease.
Inquiries suggested by this information -could only have disclosed that which appeared upon the public records, and of which Potter was already advised by the recitals of the abstract, *392viz. the character and source of Hanker’s former interest in the land, if a-ny, and that by the default judgment 'his claims had been adjudged and -decreed to be invalid. Was Potter required, as a test of good faith, to- ascertain what course Harker intended to pursue — whether he intended to appeal from the default judgment, or to make application to the trial court to vacate the judgment? Suppose Potter had pursued such inquiries, and had ascertained the facts as to Harker’s intentions, disclosed by what he did later, viz. that he did not intend to appeal but did .intend to make application to vacate the default. In such case, would Potter be required to go- further than to consider whether, and to what extent, the title he was about to purchase, would be affected by the proposed vacation of the default judgment? Would his purchase of the land necessarily amount to his taking an unconscionable advantage of another through the forms or technicalities of the law? Civ. Code, § 2448. “Good faith consists of an honest intention to abstain from taking an unconscionable advantage of another.” The statute makes good faith a matter of intention.
The trial court found that Potter purchased the land in good faith, and paid full value in cash. It is not perceived how such a purchase could gain him a wrongful or unconscionable advantage. Had 'he purchased the land at less than its full actual value, the trial court might 'have found as a matter of fact that Potter had sought or obtained an unconscionable advantage. P>ut if, in fact, 'he obtained no “unconscionable advantage,” it would be idle to say that he roust abstain from seeking such advantage. The only possible advantage Potter could gain was to obtain a good title to property for which he was paying full value to- an owner whose title had been adjudged to be good by a competent court, and was pronounced good and merchantable by competent .attorneys upon whose judgment he wais entitled to rely. Assuming the rule to be as held in Mach v. Blanchard, 15 S. D. 432, 90 N. W. 1042, 58 L. R. A. 811, 91 Am. St. Rep. 698, that Potter-, as a purchaser, was bound to- know the law — what was the law1? First, that the judgment in Cowie v. Harker was not final, because Harker still had the right of appeal; second, that Harker might abandon the appeal and apply for a vacation of the default judgment. He must know that the action was to quiet title, and *393that after default judgment Harker might ¡be relieved therefrom, if taken through iiiis mistake, inadvertence, surprise, or excusable neglect, and anight he permitted to defend the action. But was ■he bound to know, .as a matter of law, that any facts existed which would entitle Harker to have the judgment vacated ? Harker 'had not asserted any such facts, or made any attempt to vacate the judgment, although personally served with process nearly a year before. But Potter was also advised by the same statute that, if the default should be vacated, “the defense, if successful, shall be without prejudice to the rights of a purchaser in good faith of the premises from the said plaintiff after the entry of such judgment, and before the filing of the order permitting such defendant to defend.”
Did the mere existence of this statutory' right of Harker to be relieved from the default judgment, which' might or might not have been “taken through mistake, inadvertence, surprise, or excusable neglect,” make it impossible for Potter to become a purchaser in good faith ? T think not. The question cf Potter’s good faith was one of fact and' not of law, and the trial court found:
“That the defendant, John W. Potter, is a bona fide purchaser of said property, for value, without notice of any claimed right of Joseph Harker therein, and that he relied upon the judgment entered in the case of A. E- Cowie v. Joseph Harker at the time he purchased said real property; that he purchased the said real property in .good faith of Josephine Zolnowskv, the imme-iate grantee of the plaintiff, A. E. Gowiie, in the case of A. E. Cowie v. Joseph Harker, after entry of judgment in said action, and before the order permitting the defendant Harker to defend said action was executed.”
■Certainly this court cannot say that this finding is against the preponderance of 'the evidence. There can be no -doubt but. that the finding of the trial court that Potter relied and acted upon the opinion of his attorneys, advising him that Mrs. Zol-nowsky’s title was a good and marketable title, that he paid full cash value for the land, and hadi no notice that Harker was actually claiming or asserting any interest or title in the land at the time of his purchase, and that he purchased the property in good faith is sustained by and is not contrary to- the preponderance of the evidence.
*394Appellant 'relies largely upon the decision of this -court in Mach v. Blanchard, supra, in which we hold that one who accepted a mortgage upon -land the title to which was in litigation, which was held to he pending until the time for appeal had expired, acquired no rights superior to' those of his mortgagor. But in that case, the court, quoting section $343, Comp. Laws (now section 568, Code Civ. Proc.), said:
'“This is a general provision of the law of civil procedure. Its language iis plain. Had the Legislature intended that civil actions should be deemed to he pending during the period mentioned for certain purposes only, it would have so expressed itself.”
This action, if deemed pending, was pending for 'Certain purposes only, viz., for an appeal, or a motion to vacate the judgment and defend the action. Certainly I think section 9, c. 81, Laws 1905, which applies expressly to this action -to quiet title, recognizes the rule -contended for by respondent, that when a default judgment is vacated and ibhe defendant permitted to defend, not as a strict legal right, 'but as a matter of grace or favor, on account of mistake or excusable neglect, acts done in good faith and in reliance upon the judgment ought not to be invalidated by its subsequent vacation. Hunter v. Ruff, 47 S. C. 525, 58 Am. St. Rep. 907; Morris v. Gentry, 89 N. C. 248; Simpson v. Hornbeck, 3 Lans. (N. Y.) 53; Black on Judgments, §§ 355, 169. In the case of Mach v. Blanchard, supra, the court, following Lord v. Hawkins, 39 Minn. 73, 38 N. W. 689, -held that the rule which protects purchasers at sales made under executions of judgments had no application to persons who purchase from the plaintiff in actions to- quiet title. That decision was prior to -the enactment of chapter 81, Laws 1905. Section 9 of that adt provides:
“The court may, in its discretion, and upon such terms as may be juist, at any time within two- years after the entry of judgment, relieve a defendant in such action from the judgment if ■ taken against him through his mistake, inadvertence, surprise or excusable neglect, and allow such party to defend the action, but the defense, if successful, shall be without prejudice to the rights of a purchaser in good faith- of the premises from the *395said plaintiff after the entry of such judgment, and before the making of the order permitting such defendant to defend”
Under this act, the period within which an application may 'be made to vacate the default judgment is identical with that within -which an action is deemed pending. Under the general statute applied in the Mach case, the action must always be deemed pending within the two years allowed by this act for opening defaults. In that case it was held, that in an action to quiet title, one who became a purchaser or incumbrancer of the property 'in controversy during the pendency of the action must be held to be a purchaser in bad faith, and that such a conveyance or incum-brance did not change the rights of a purchaser pendente lite in good faith, from the plaintiff, after the entry of judgment and before the making of the order vacating the default and permitting the defendant to defend.
The majority opinion holds that Potter was informed bj Bergakker that -he had rented this land from Harker, and that hf was thus advised that Harker was exercising acts or claim of ownership over it in conflict with the Zolnowsky title and knowing from the abstract that Harker had a warranty deed to the land, such facts, were sufficient to put Potter upon inquiry and to charge him with knowledge of whatever such inquiry might 'have disclosed. Bergakker did not inform Potter that Harker was exercising any .control over or making any claim to the land, nor did he intimate to Potter that he himself was in possession of the land or was then making any claim as lessee of Harker. But assuming that such inquiries had been made, would they have disclosed any fact showing that Harker then had a subsisting claim or interest in the land? Certainly not, because every right or claim of Harker, and necessarily of any lessee claiming under him, had then 'been barred and invalidated by a valid, subsisting judgment and- decree rendered upon default after personal service upon Harker many months before.
The vital question is whether Potter purchased in good faith, and even if it be assumed that such record disclosed as a legal fact Harker’s right to apply for a vacation of the judgment, the fact that he was talcing no steps- to vacate it, but was apparently acquiescing therein, and the fact that Potter was advised by his attorneys upon whose opinion ¡he relied, in effect that such judg-*396meii't barred any claim Harker might have had, and that he (Potter) paid full value for the land, were sufficient to sustain the finding of fact that Potter purchased Zolnowsky’s title in good faith. Under section 9 of this act, the mere fact that one purchases property in litigation from a plaintiff after he has obtained a judgment by default, and before the making- of an order vacating such judgment and with knowledge which the statute gives such purchaser, that the defendant may thereafter apply for such- relief, is not conclusive of bad faith, though the burden may -rest upon the purchaser to show his good faith, and thus bring himself -within the -Class of persons intended to be protected by -the- statute.
I am firmly convinced that-the judgment should be affirmed.