Court Opinion

ID: 9810869
Source: CourtListenerOpinion
Date Created: 2023-08-31 22:02:01.502153+00
Date Added: 2024-06-11T13:40:17.199265
License: Public Domain

Glare, C. J.,
dissenting: The defendant Pate bought certain personal property at execution sale against one Gaitley on which Pate held chattel mortgages. The defendant Lewis, the sheriff, delivered the property to Pate, in whose possession it was destroyed by fire. This is a *301proceeding to compel Pate to pay the price bid at the sale, and he seeks to defend upon the ground that personal property could not be sold at execution sale because there was a mortgage upon it.
The sale by the sheriff of the personal property of the execution debtor was valid under Revisal 629, sec. 1, which provides that: “The goods, chattels, houses, lands, tenements, and other hereditaments and real estate” and “effects of the judgment debtor, not exempt from sale under Constitution and laws of this State, may be levied on and sold under execution.” The personal property exemption of the judgment debtor had been laid off before the sale.
TJnder the broad words used in the statute there should be no question that this property was subject to sale, and that the title passed to the purchaser. The judgment debtor was the owner of this property subject only to the encumbrance of the chattel mortgages held by the purchaser himself to secure his indebtedness. It is true that under the long abolished system which made a distinction between equity and law there had grown up a series of rulings that in a mortgage the legal title passed to the mortgagee and that the mortgagor held only an equitable interest. The reason and the sole foundation for this was abolished by the Constitution of 1868, which destroyed at one blow the distinction by providing Constitution, Art. IY, sec. 1, that the “Distinctions between actions at law and suits in equity, and the forms of all such actions and suits, shall be abolished.” There was left, therefore, no reason why the interest of the true owner, the mortgagor, should not be subject to sale under execution at law, for there was thenceforward no other kind of judgment or execution, since there could be no other form of action.
The. statute makes no exceptions .as to the sale of any interest of the judgment debtor in any property, “except such exemptions as are allowed under the Constitution and laws of this State.” The continuation of the ruling made prior to the Constitution of 1868 in regard to equitable interests, or equity of redemption, being exempt from sale has no authority under our Constitution or statutes now to support it. There is no reason to perpetuate such abolished distinctions.
The "provision in Revisal 629 (3), for the sale of “the equity of redemption and legal right of redemption in lands, tenements, rents, or other hereditaments” is not a prohibition of the sale of personal property on which there is a mortgage. It is true that when that statute was passed in 1812 the .courts, adhering to the distinction then existing, held that it did not extend to the sale of personal property. But if such distinction should have been drawn even then, notwithstanding the evident intent of'the statute, there is no reason for the continuance *302of such ruling, since the Constitution of 1868, which was intended to simplify procedure by destroying all technical distinctions based on the former divorce between law and equity.
This subsection 3 of Revisal 629, is brought forward from the act of 1812, but it should now be construed in the light of the constitutional provision of 1868 and not in the light of the distinction between law and equity which existed prior thereto. Besides, it must be noted that there is in it no prohibition of the sale of the equity of redemption in personal property. The judicial gloss put upon the statute at the time when the distinction between law and equity existed was merely negative, and it did not extend the power of sale to an equity of redemption in personal property. The broad words of Revisal, 629, subjects to execution sale the “property, estate, and effects of the judgment debtor not exempted from sale” and specifically enumerates “goods and chattels, estates, equity of redemption,” and every other kind of property •that could be thought of. There is no reason, in the nature of things, why real estate on which there is a mortgage shall be subject to execution, but that personal property under • mortgage shall not be, and that there must be “a proceeding in equity” to subject the latter to payment of debts, because that was necessary prior to 1868, when such proceeding has now been utterly abolished for forty-nine years.
But even taking the restricted technical view set up by the defendant Pate, still this sale was valid under Revisal 629 (4), which provides that sale under execution may be had of any “goods and chattels of which any person may be seized and possessed in trust for the debtor.” The chattel mortgages executed by Guitley to Pate and his assignor subjected the property to the payment of the indebtedness named in the chattel mortgages. These liens created the relation of trustee and cestui que trust between Pate and the judgment debtor, Gaitley. McLeod v. Bullard, 86 N. C., 210; Whitehead v. Hellen, 76 N. C., 99. Pate, as mortgagee held an interest in the property which made him a trustee for the benefit of the mortgagor Gaitley and the interest of the latter, under the said section 4, could be sold for the benefit of the judgment debtor.
There has been no decision in this Court, till now, contrary to the above view. Revisal, 629, was enacted in lieu of chapter 45, Revised Statutes. There were several cases under the old statute which held that property conveyed to a tustee upon a mixed trust could not be sold under execution, but that property in which the trustee had only a bare naked trust could be sold under the language of the former statute, which is now subsection 4 of Revisal 629. Thompson v. Ford, 29 N. C., 418; Battle v. Petway, 27 N. C., 576.
*303Pate as mortgage© was trustee for tbe benefit of Gaitley. Tbe form of tbe mortgage does not change tbe fact tbat tbe mortgagee beld tbe property, after payment of bis debt, under a naked trust for tbe benefit of tbe mortgagor whose interest was sold at tbe execution sale.
Besides the above reasons, Pate is estopped to attack tbe validity of tbe sheriff’s sale both by tbe notice given at tbe sale tbat tbe property was sold subject to tbe chattel mortgages and by bis purchase at such sale. Tbe sheriff stated in Pate’s presence tbat this property was “sold subject to all liens, only tb© interest of G-aitley being offered for sale.” Other persons bid on tbe property, but tbe defendant Pate outbid them all. His bid was accepted and tbe property was delivered to Pate and removed by him. While tbe property was in bis possession tbe most valuable part of it was destroyed by fire. If other bidders bad bought and taken possession there would have been in all probability no such loss. By reason of tbe conduct of Pate and tbe subsequent fire, tbe parties cannot be not put in statu quo, and tbe judgment creditor should not bear tbe loss.
There are many eases which bold tbat tbe purchaser at tbe sheriff’s sale is estopped by bis conduct to deny tbe validity of tbe sale. In Lentz v. Chambers, 27 N. C., 587, a slave, tb© property of tbe plaintiff, was sold under execution on a judgment against tbe former owner of tbe slave. Tbe Court beld tbat tbe sheriff bad no right to sell tbe slave under execution^ as it was tbe property of another, but tbat tbe plaintiff was estopped to deny tbe validity of tbe sale because be was present at tbe sale, made no objection thereto, and endeavored to borrow money to purchase tbe slave himself.
In Mason v. Williams, 66 N. C., 564, certain property bad been conveyed to plaintiff in a deed of trust. One Pescud, who owned an interest in tbe property as trustee, advertised tbe property, and plaintiff was present at tbe sale and bid upon it. Tbe Court beld tbat be was es-topped to assert bis claim to tbe title.
In Biggs v. Brickell, 68 N. C., 239, tbe Court beld tbat one who is present at an execution sale and makes no objection cannot attack tbe validity of tbe sale. To same purport, Flemming v. Barden, 126 N. C., 450; Governor v. Freeman, 15 N. C., 472.
In Bird v. Benton, 13 N. C., 179, tbe Court beld tbat where a sale or pledge of property by one who bad no title thereto was mad© in tbe presence of the owner, without objection on bis part, tbe latter is estopped to assert bis better title.
In 16 Cyc., 764, tbe rule as deduced from tbe authorities is thus stated: “When a person having title to or an interest in property knowingly stands by and suffers it to be sold under a judgment or de*304cree, without asserting bis title, or right, or making it known to tbe bidders, be cannot afterwards set up bis claim. So, too, if be bas knowledge of any irregularity in tbe proceedings, but permits tbe sale to be made without objection, he is estopped to contest its validity afterwards. . . . -Where one who owns or has an.interest in personal property with full knowledge of bis rights suffers another to deal with it as bis own by selling or pledging it, or otherwise disposing of it, he will be estopped to assert bis title or right as against a third person who has acted on the faith of, and been misled by, his acquiescence.”
A case exactly in point is Rice v. Bunce (Mo.), 8 Am. Rep., 129, where the defendant, who had an equitable interest in one-half of a lot of land, was present when the property was sold at auction, but gave no notice of his claim, and bid on the property. The Court held that he was “estopped from afterwards asserting his title against the purchaser.” In 16 Cyc., 765, the same rule is thus stated: “If the owner of property, with knowledge of the fact, bids on it at a judicial sale without giving notice of his title, he will be estopped thereafter to assert his title or contest the validity of the sale, to the prejudice of one who has acted in reliance on his conduct and in ignorance of the facts.”
The defendant Pate, purchaser at the sale, does not claim that he is an innocent purchaser, knowing nothing of the liens recorded against the property, but had full notice, for he was himself owner of all the outstanding liens. ITe should not be relieved of his bid for the property interest of the judgment debtor, which he took possession of and removed, merely because it has since been destroyed by fire.
UkowN, J., concurs in dissent.