Dotterer v. Pike

Jackson, Judge. This was a case in equity, tried under the act of 1816, on which trial the jury found a special verdict in response to certain questions propounded. On this verdict the court granted a decree, and the only matter complained of is that decree. The substance of the verdict is, that Rowley loaned Newby, the husband of Mary A. Newby, $1,500.00, to secure which N ewby and wife executed to him a mortgage of the wife’s land; that no money was paid for the land as purchase money; the deed to the land of Mrs. Newby was to pay the individual debt of Newby; part of Rowley’s debt on Newby was $15 or $25 taxes, and $166 premium on New-by’s life for the benefit of Mrs. Newby; Mrs. Newby’s purpose was to contract as security for her husband, and Rowley knew it; the land was worth $2,500.00, and the rent $250.00 per annum; Rowley knew that Newby acted as agent of his wife; Mrs. Newby acquiesced in the transaction, and permitted the purchaser at sheriff’s sale of the land to go into possession, but she did so in ignorance of her rights under the law; Rowley represented to Mrs. Pike that the title was good, and this representation induced the purchase; Mrs. Pike paid Rowley $2,300 for the land. The facts disclosed by the record, as admitted in the pleadings, and found by the verdict of the jury, seem, with sufficient certainty, to be substantially these : That Mrs. Pike was an innocent purchaser without notice; that the sale of the trustee was for the purpose of paying or securing a debt for the husband of Mrs. Newby; and that the sale to Rowley was by the trustee, and authorized by the deed, if Mrs. Newby consented thereto, which consent appeared on the face of the papers; that she bought from Rowley, paying him $2,300 for the land, taking his bid off his hands for value, he having paid but $1,500 for it; that the sheriff made her the deed, and she went into possession and inqn-oved the land, with the knowledge of — 39 — Mrs. Newby, who knew of the sheriff’s sale also; that Rowley knew all about the purpose and object of the sale, having himself been the purchaser to pay his own debt owing by Newby, the husband, to him; that the value of the land was twenty-five hundred dollars; and that, of the entire proceeds thereof, but one hudred and sixty-six dollars, insu. ranee premium, and twenty-five dollars, taxes, was used for the benefit of Mrs. Newby, the entire balance being applied to Newby’s debt to Rowley. The statute, Code, §1783, is in the following words: “The wife is a femme sole as to her separate estate, unless controlled by the settlement. Every restriction upon her power in it must be complied with; but, while the wife may contract, she cannot bind her separate estate by any contract of suretyship, nor by any assumption of the debts of her husband, and any sale of her separate estate, made to a creditor of her husband in extinguishment of his debts, shall be absolutely void.” Section 2329 of the Code is ‘as follows : “ The purchaser from a trustee, with notice actual or constructive of the trust, holds as trustee for the beneficiaries; if the purchase be bona fide, and without notice, the purchaser holds the property freed from the trust.” Section 2622 requires the purchaser to “ look for himself as to the title and soundness of all property sold under judicial process.” ' ' Section 2628 declares, in substance, that the purchaser at judicial sales is not responsible for the disposition of the funds, or the returns or irregularities of the sale, but is only bound to see “that the officer has competent authority to sell, e nd that he is apparently proceeding to sell under the prescribed forms.” Section 2640 is to the effect, that “ though a title obtained by fraud be voidable in the vendee, it will be protected in a bona fide purchaser without notice.” Section 3092 declares that “ a bona fide purchaser for — 40 — value, and without notice of an equity, will not be interfered with by a court of equity.” Section 2633 enacts that fraud voids a sale where consent is obtained by it; and section 2751 enacts that fraud voids all contracts. ¥e think that these sections of the Code all have a bearing upon the decree proper to be rendered in the case made by the admissions in the pleadings and the findings of the T7- The language of section 1783 is very strong. A sale of the wife’s separate estate made to a creditor of the husband to extinguish his debt, is declared to be absolutely void. As between Rowley, the creditor of the husband, and Mrs. Newby, the sale is clearly void; and if Rowley held the land, the deed to him would be set aside, and the land restored to Mrs. Newby, beyond all cavil or question. But it has passed out of his hands, and is in the possession of Mrs. Pike under a purchase for value from Rowley, without notice to her that the sale was to pay Newby’s debts; and the question arises as between Mrs. Newby and Mrs. Pike, will a court of equity interfere to relieve Mrs. Newby when Mrs. Pike is an innocent purchaser? Section 3092 would seem to forbid such interference, for Mrs. Newby’s title is an equitable one; the legal title was in the trustee; the trustee sold pursuant to the deed of trust by Mrs. New-by’s assent thereto ; and if the sale, though not made to her directly by. the trustee, came to her from Rowley, who bought from him, and she believed that it was all right, she certainly ought to be protected, and equity ought not to disturb her possession. "While the sheriff made the deed to Mrs. Pike, she cannot be said to be exactly a purchaser at a judicial sale; for, though she bought the bid of Rowley, she did not take it off his hands at the same price he gave, but paid very nearly the full value of the land — eight hundred dollars more than he gave for it. If she had been the actual purchaser at the sale, under section 2622, which requires such purchaser to look to the title of the property for himself, it is possible — 41 — that she would have acquired no title, as it was sold as Newby’s property, the deed being made to him by Rowley under the bond for titles; but even then, if innocent, under section 2828, she need not have looked to see how the money she paid was applied. The officer had authority to sell, the thing looked fair, the title apparently passed out of the trustee of Mrs. Newby into Rowley, and from him to Newby, and seemed all regular. If she had bought directly from the trustee, as Rowley did, but without any knowledge or notice that the money which she paid was to go to pay the husband’s debt, then she would have been protected by section 2329 of the Code, which enacts clearly that such a purchaser holds the property freed from the trust. While Rowley held it as trustee for Mrs. Newby, because he was not innocent, but was trying to pay a debt to himself of the husband, Mrs. Pike would have taken it free from the trust, for the reason that she was innocent, and had no notice of aught that was wrong. Now, it cannot change her rights in equity that, instead of buying from Garvin, the trustee, directly, she bought from the man to whom he had sold, all appealing right on the papers. It is true that it seems singular, if not absurd, that a void title in one vendee can transmit to another anything valid; but. the Code is explicit in sections 2633 and 2751, that fraud voids — which, I suppose, means makes absolutely void — all contracts, and yet a title so acquired by fraud, and void on that account, when transmitted to an innocent purchaser, without notice and for value, is made good by section 2640. It is true that the language there used is the word “ voidable,” which certainly makes a difference ; but then the other sections, 2633 and 2751, use the word “ voids,” which assuredly must mean “ makes void ;” and yet this fraudulently void title transmits a valid one to the Toona fide purchaser for value without notice. But, independently of all this, we think that as between — 42 — Mrs. Pike and Mrs. Newby, the principle of an equitable estoppel may be applied. Mrs. Newby gave her assent to the sale by her trustee of this property — she knew of the sheriff’s sale of it as the property of her husband, conveyed to him by Rowley, to whom her trustee, by her consent, conveyed it under the terms of the deed of trust. She saw Mrs. Pike put in possession and making improvements, and yet she gave no warning. Under these facts, will not equity estop her from setting up her title against Mrs. Pike ? It strikes us that it should. The Code, section 3753, gives a succinct, summary of estoppels, and concludes thus : “ and other admissions, upon which other parties have acted, either to their own injury or the benefit of the persons making the admissions, and similar cases where it would be more unjust and productive of more evil to hear the truth than to forbear investigation.” It seems to us that the acts of Mrs. Newby, and her omission to give notice of her title or equity, during all this time, constitute such a case, as applying the principle of the Oode to it, will prevent her from setting up her equitable estate against an innocent purchaser. It would be more unjust to let her tell the truth about her title, as respects an innocent purchaser, than to forbear the investigation and disturb that innocent purchaser. The facts make a case where Mrs. Pike’s equity is superior to that of Mrs. Newby. The doctrine of estoppel will apply to married women in such cases. Perry on Trusts, §170. Our own Code, in respect to the bona fide purchaser for value, but re-enacts the principles of equity. Perry on Trusts, §218, et seq.; where it is said that such a purchaser holds the property free from the trust; and “ that equity will not disarm a purchaser, but assist him • and precedents of this nature are very ancient and numerous, viz : where the court hath refused to give any assistance against a purchaser, either to an heir, or to a widow, or to the fatherless, or to creditors, or even to one purchaser against — 43 — another; ” but if he has the legal title, he may buy up any ncumbrance and defend himself at law, and equity will not harm him; and numerous eases are cited to sustain the main principle, that such a purchaser will not be disturbed by a court of equity. So in the same book, §680, it is said, speaking of the contracts of married women, “ it will be remembered that the contracts themselves were utterly void, but that equity gave them effect as quasi charges upon their separate property.’’ Here we have equity giving effect to something “ utterly void,” because the married woman ought not to be allowed to use the exemptions and privileges which the law gives her for her protection against fraud in others or the power of her husband over her, to defraud other people. So this court held, the other day, in the case of Glover vs. Moore, from Bartow, not yet reported, that her attorney could bind a married, woman by a confession of judgment on terms, because she had employed him, and that the judgment concluded her, because the other side had acted upon it by giving time and not litigating the case, as they might have done but for the settlement; and this on the same principle of estoppel. And her separate estate was-held subject to the judgment, though the allegation was that the debts were all her husband's. So the Code, §119, under the chapter of “ Accident and Mistake, enacts that “ Equity will grant relief as between the original parties, or their privies in law, in fact, or in estate, exceptbona fide purchasers for value without noticefi showing the favor that equity everywhere extends to an innocent man who honestly paid his money for property. We think, therefore, that the court was right in decreeing, upon the verdict, that Mrs. Pike was protected, and that equity would not interfere with her title and possession of the land. 2. But in respect to Rowley, it is clear that he stands in no such attitude, and so, too, the court held; but we think that the decree does not give effect in .full to the fact that — 44 — the whole trade is void as to him. For the decree allows him to retain $1,275.00 of the money which the land brought. We think that he is only entitled to a credit of $25.00, for taxes paid on this land, and $166.00, insurance for her benefit. Purchasing the land from her trustee, with full knowledge of her equities, and in utter violation of the law which prohibited the sale to him to pay the debt her husband owed him, lie got no title thereto, but became, and is, her trustee, and must account for the trust. Having purchased with full notice, he became her trustee. Perry on Trusts, §217; Code, §2329; and aiding in misapplying her funds, he is responsible to her. Code, §3151. We think, therefore, that the decree in favor of Mrs. Newby against him should be for the value of the land, as showed by the sale to Mrs. Pike, $2,300.00, with interest thereon from the 19th day of January, 1875, when Mrs. Newby was dispossessed thereof; and the decree will be modified accordingly. To give a credit to Rowley of $1,275.00, which Newby got, and with which he paid his debts, would be to do what the statute, we think, prohibits. The judgment is reversed upon the ground that the chancellor erred in decreeing too little to Mrs. Newby against Rowley, and affirmed in all other respects. Judgment reversed.