Kentucky River Coal Corporation v. Culton

Opinion of the Court by Judge Fulton Reversing. Appellee, J. M. Culton, filed this action against appellants, Kentucky River Coal Corporation et al., alleging that lie was the owner of a tract of land in Leslie County, in which, he sought an injunction against the defendant for cutting timber on the land and prayed that he be adjudged the owner of it. Appellants answered, claiming to be the owner thereof and on final hearing the court adjudged the appellee to be the owner of the land and this appeal follows. *419 On June 16, 1932, A. J. Asker conveyed tke tract of land to appellee, but tkis- deed was not recorded until October 27, 1933. Prior to November 14, 1932, tkere was issued from tke skeriff’s office of tke Bell circuit court an execution on a replevin bond in favor of Morris Euster and Rosa Euster against A. J. Asker and anotker, directed to tke skeriff of Leslie county, and tkis execution was levied on lands of A. J. Asker, including tke land in controversy, and under tkis execution and levy tke land was sold by tke skeriff on November 14, 1932, at whick sale tke Eusters became tke purckasers for tkeir debt, interest and costs. This execution was levied on tke land on September 29, 1932, and at tkis time tke Eusters recorded in tke Leslie county clerk’s office a lis pendens notice of tke execution. On August 21, 1933, Asker’s equity of redemption in tke land was sold under execution by the United States Marshal, at which sale tke appellant became tke purchaser of tke equity of redemption. On October 28, 1933, tke day following the recording of appellee’s deed to the land, tke Eusters sold and assigned tkeir judgment, execution, replevin bond and purchase to tke appellant, and on November 15, 1933 tke skeriff of Leslie county, pursuant to tkis assignment, executed deed for the land to tke appellant. It will thus be seen that at tke time of tke purchase of Asher’s equity of redemption in tke land by appellant, as well as at tke time of tke Eusters’ purchase of tke land under tke execution sale, appellee’s deed from Asker was not of record. Neither tke appellants nor either of tke Eusters had any knowledge of appellee’s unrecorded deed at tke times of tkeir respective purchases. Tkis was alleged in tke third paragraph of appellants’ answer and not denied. Tke ruling of tke lower court in adjudging appellee to be the owner of the land is based on tke opinion of tkis court in the case of Hopkins v. Slusher, 266 Ky. 300, 98 S. W. (2d) 932, 108 A. L. R. 662, which holds that tke validity of an execution issued as foundation for a sheriff’s sale must be established by proof of tke judgment. In tke present case tke judgment was not introduced in evidence, but appellants did introduce in evidence as a foundation for the execution, under which tke sale was made, a replevin bond signed by Asher. Appellants con *420 tend that the rule enunciated in the case of Hopkins v. Slusher, supra, does not apply where the judgment has been replevied. The principle has been definitely established in this state that in the ordinary case, in order to sustain the title of one claiming under an execution sale, there must be introduced in evidence a valid judgment on which the execution was issued. The case of Hopkins v. Slush-er, supra, reviews many of the older cases holding this and reaffirms it in no uncertain terms. However, no case has been cited, and we are unable to find any, which holds that the judgment must be proven where the judgment has been replevied. On the contrary, the early case of Floyd v. McKinney, 10 B. Mon. 89, holds that it is sufficient to introduce in evidence the replevin bond, where the judgment has been replevied, the court saying: “It seems to us that the replevin bond upholds the sale. The statute provides, that after a replevin bond .shall fall due, the proper officer shall at the request of the plaintiff, or his attorney, ‘issue execution thereon as on a judgment, and such bond shall have the force of a judgment, and be taken and treated as such:’ (1 Stat. Laws of Kentucky, 643.) If this bond has the force of a judgment, then as the defendant voluntarily entered into it, he cannot, in this action, require the plaintiff to go behind the bond, and produce a valid judgment to sustain the bond. A sale, by virtue of an execution on the bond, is as valid as if it had issued on a valid judgment. If the replevin bond was defective, or was taken by the Sheriff without lawful authority, or if it was based upon an execution improperly issued on an invalid judgment, his remedy was to have it quashed, on motion, or, by other proceedings, annulled. He cannot be permitted to assail it in the action of ejectment against him.” "We have been unable to find any case in which this rule has been departed from in Kentucky and the decisions of this court have uniformly held that a judgment is extinguished by the execution of a replevin bond. Section 1676 of the Statutes provides that a replevin bond has “the force and effect of a judgment,” and the case of Shaw et al. v. McKnight-Keaton Grocery Co., 231 Ky. 223, 21 S. W. (2d) 269, in speaking of replevin *421 bonds, says [page 271], “Whilst styled bonds, they are in truth equivalent to judgments. * * * A judgment is extinguished by the execution of a replevin bond, and proceeding's thereafter must be upon the bond in which the judgment is merged. ’ * The earlier cases laying down this rule are collated in this later case of Shaw et al. v. McKnight-Keaton Grocery Co., supra, and it is not necessary to do so again here. As the statute, itself, provides that the replevin bond has the force and effect of a judgment, and as the rule is definitely established in this state that the execution of a replevin bond extinguishes a judgment and it is merged in the bond, it seems obvious there is no reason in requiring the judgment to be proven. All proceedings thereafter must be on the replevin bond and it is prima facie evidence of the validity of the judgment re-plevied by it. If the judgment was void, the only way the judgment defendant and surety on the replevin bond could avoid the bond would be to make a motion to quash the bond and proceedings thereunder. The purpose of proving the judgment is to show a foundation for the execution. When a replevin bond is executed the judgment is extinguished and merged in the bond. The bond thereby becomes the foundation supporting the execution. We are of the opinion therefore that the court was in error in holding that it was necessary to prove the judgment in this case. Appellants put in evidence the replevin bond on which the execution was issued and in our opinion this was sufficient. Appellee insists that even though the court might be of the opinion that it was sufficient to put in evidence the replevin bond as a foundation for the execution under which the land was sold, yet the appellant is not a bona fide purchaser within the meaning of Section 496, Kentucky Statutes, because it took the assignment of the Eusters’ purchase at the execution sale and paid to them the amount of the purchase money after appel-lee’s deed was recorded. However, it will be remembered that appellant became the purchaser of Asher’s equity of redemption before appellee’s deed was recorded and as to this equity of redemption it was unquestionably a bona fide purchaser. The Eusters also were undoubtedly bona fide *422 purchasers of the land at the execution sale and they had duly recorded a lis pendens notice of the execution in the county clerk’s office before appellee’s deed was recorded and had actually become purchasers before such recording. As appellant was the owner of the equity of redemption, it had the right to redeem the land at any time before the expiration of one year from the date of the execution sale and when it paid the amount due under the execution to the Eusters and took an assign-' ment of their purchase this transaction amounted, in effect, to no more than a redemption of the land by appellant. When it took the assignment of the Eusters’ purchase it simply stepped into the place of the Eusters and, the Eusters being bona fide purchasers and entitled to a deed at the proper time which would take precedence over appellee’s deed even after it was recorded, the appellant standing in their place was also entitled to a deed which would take precedence over appellee’s deed. The sheriff’s deed to appellant, executed pursuant to the assignment, relates back to the time of the levy by the Eusters and the title to the land vested in appellant as of the date of the levy under which the Eusters purchased. The correct rule along this line is stated iii the case of Greer v. Wintersmith, 85 Ky. 516, 4 S. W. 232, 9 Ky. Law Rep. 96, 7 Am. St. Rep. 613, as follows [page 234]: “* * * the sheriff’s deed must be ‘given such an effect as will preserve and make effectual the lien under which the execution sale was made;’ and, in order that the deed may have such an effect, ‘it takes precedence over subsequent liens and transfers; and a sale and convyance, based upon such lien, transfer to the purchaser all the title which the defendant held when such original lien attached. To this extent, the deed, when executed, takes effect by relation, and must be treated as though made on the day when the lien was created.’’ See Freem. Ex’ns, sec. 333; Million v. Riley, 1 Dana [359] 360 [25 Am. Dec. 149].” See, also, Rouse et al. v. Craig Realty Co., 203 Ky. 697, 262 S. W. 1083. The situation here is somewhat analogous to the case where a negotiable instrument is held by a party *423 who has notice of its infirmity, but who took title from, and claims through, a bona fide holder. In such case notice of infirmity by the holder is not a good defense where he pleads and proves that his title is derived from and through a bona fide holder without notice of infirmity. In this case the Eusters were bona fide purchasers, entitled to a deed taking precedence over appellee’s deed and appellant acquires this same right by virtue of its assignment from the Eusters all the more is this so, since it was a bona fide purchaser without notice of the equity of redemption. Appellee further insists that the sheriff’s levy describing “all right, title and interest of A. J. Asher,” did not include the land conveyed to Culton and conferred no right upon the purchaser at the execution sale because Asher had already divested himself of title by the unrecorded deed to Culton. We are unable to extend much consideration to this line of argument for to do so would be completely to emasculate Section 496, Kentucky Statutes. By this section, an unrecorded deed is void as to purchasers and this unrecorded deed from Asher to Culton was, as to appellant’s purchase and the Eusters’ levy, void and of no effect and no title passed to Culton by it as against them. Asher was therefore, as far as appellant and the Eusters were concerned, the owner of the land, or whatever interest he owned therein, at the time of the purchase by appellant of the equity of redemption and at the time of the levy by the Eusters and their purchase at the execution sale. The purchase of the equity of redemption and sheriff’s deed pursuant to execution sale operated to vest appellant with all title of Asher to the land just as if the deed from Asher to Culton had never been executed. Wherefore, the judgment is reversed with directions to enter a judgment in conformity with this opinion.