Rice v. Burnet

McAdoo, J. —This case presents a vigorous and spirited contest over the application to it of two well-established rules of law and equity, and which appear to be totally irreconcilable in the case. The appellant urges the rule of caveat emptor against the appellee, who purchased at an administrator’s sale; while the.appellee urges the rule against the appellant that “fraud vitiates everything it touches,” even including sales by administrators. Both of these rules are so well established that a reference to authorities is scarcely necessary. But how must the case stand when these two rules so present themselves in the case that one or the other must yield % Equity must furnish the answer. He who purchases a bad title at an administrator’s sale is, at the worst, only guilty of negligence. He has only purchased without due investigation of title. There is no moral turpitude in his conduct. He only purchases with his eyes open, and the rule of caveat emptor applies, because he took the chances without proper investigation. He is only to be regarded as a mere speculator, to win if [180] he buy a good title, or to lose if the title be worthless. The rule applies even perhaps if fraud were apparent on the face of the proceedings, when he had a fair chance, with proper diligence, to detect the fraud or vice in the title he buys at administrator’s sale. But, on the contrary, the rule that fraud taints and destroys every act done—that no man shall be permitted, in a court of justice, to enforce an iniquitous and fraudulent contract, or to profit by acts of fraud, is based on a higher equity. The element of moral turpitude enters into it; it is repugnant alike to the common moral sense of all men, and to the sense of common justice of all courts. It finds no tolerance whatever in a court of equity. Weighed in the balance against mere negligence, the turning of the beam is not doubtful. This case turned in the court below, evidently, on the equitable rule last mentioned. And it is urged by the appellant’s counsel, that there is nothing in the facts of this case to vary the rule as to purchasers at judicial sales; and we are cited to the case of Hamilton v. Pleasants, 31 Texas, 638, in which it is said: “In all sales made by an executor or an administrator, he acts under the decretal order of the probate court; and the purchaser, at his own peril, is required to ascertain the grounds and authority of the fiduciary, not from his declarations at the time of the sale, but from the orders of the court and the statutes of the State in regard to his special duties in the premises. The administrator could make no terms with the purchasers at such sales, which the orders of the court or the laws of the land did not warrant. Of the nature of such orders, and of the provisions of the law, the purchaser had the same means of knowing and understanding as the administrator.” The sale in the case above quoted from was made for Confederate money. The reasoning in that case is clear. [181] The purchaser did have all the means of knowing and understanding that the administrator had. In other words, it is a case brought clearly within the rule of caveat em/ptor. There was no fraud practiced, and none intended. The purchaser speculated on his chances, with all the facts fully before him on which his rights rested. It was a venture ; he knew it to be a venture; he made it and lost. He was entitled to no equitable relief. But does that case stand on the same footing as this ? Can any reasonable mind reach the conclusion that the land in controversy was in fact the property of the estate of Joseph Rice, the appellant’s intestate? Did not the appellant know the land did not, in fact, belong to the estate he was administering ? His whole conduct shows that he knew the facts. He did not inventory the land until he had well nigh administered the whole estate ; arid yet the deed from Trabue to Joseph Rice was on record. , The testimony of Cundiff, one of the chief actors in; the transaction, bears testimony in the fullest measure to the frauds. A fraud was in the first instance committed in order to give jurisdiction to the Federal court. The arrangement was made in advance by Joseph Rice, Clinton A. Rice and Cundiff, that the suit should go by default; that the deed was to be made to Joseph Rice without his paying any consideration therefor, and all for the express purpose of defrauding the wife of C. A. Rice of her community rights in a suit then pending for a divorce. This was the purpose, and those were the acts intended to effect the end. These fraudulent intentions and acts stand out in bold relief in the testimony in this cause. These fraudulent intentions and acts were unknown to the appellee, and he had no means of knowing them. He did not stand in a position to know them equally with the appellant. These [182] transactions were secret and private, and he was not in privity with- the actors in them. ■ The ■ appellee has, at a cost of one hundred and fifty dollars, endeavored to acquire lawful possession of the land, and to no purpose. ■ We can find no better words in which to close this opinion than those which close the brief of the counsel of the appellees: ‘£A more righteous judgment never emanated from a judicial tribunal than this one. The cases cited (Walton v. Reager, 20 Texas, 103; Crayton v. Menger, 9 Texas, 291) fully sustain it in a legal sense, though the principles maintained in those cases are far more applicable, and should be regarded as far more imperative, in this case than in them or any other reported case. Good faith and common honesty uphold the judgment, and to apply the rule of caveat emptor in such a case would be to pervert equitable principles to iniquitous ends.” ■ The judgment of the District Court is affirmed. Affirmed.