Southern Cotton Mills v. Ragan

Atkinson, J. A sale by a receiver appointed by a court is a typical judicial sale, and the maxim caveat emptor applies to such a sale. The purchaser must look for himself as to the title and soundness of the property sold. Civil Code, § 6054; Campbell v. Parker, 59 N. J. Eq. 342 (45 Atl. 116). Such sales are by the court, and there is no' one to go back on if the buyer takes nothing. Fraud will vitiate such a sale.; and where it is made to appear, it will authorize the court to set it aside. Folsom v. Howell, 94 Ga. 112 (21 S. E. 136). But in the petition under consideration no fraud or misrepresentation on the part of the receivers in relation to the sale by them was alleged. It is true that the petition alleges that an electric-lighting plant was connected with the Hawkinsville Cotton Mill, “and in connection therewith was a franchise of what was purported and represented to be a franchise granted by the City of Hawkinsville, and under a contract with said City of Hawkinsville the said Hawkinsville Cotton Mill was to furnish said city and its inhabitants with electric lights for a term of 10 years;” but it does not appear from the petition how; this was purported and who represented it to be true. The petition further alleges that the petitioner, through Cooper, negotiated with the receivers for the purchase of the property of the Hawkinsville Cotton Mill, “including the franchise and the contract of the City of Hawkinsville for the lighting of the same,” and that the proposition made by the petitioner to purchase all of such property was accepted by the receivers under the authorization of the judge, and that the sale made in pursuance thereof was subsequently confirmed. There is nothing, however, in such allegations which shows that the receivers did not in good faith believe that the Hawkinsville Cotton Mill had a franchise for the operation of the lighting plant, and a contract with the City of Hawkinsville for the lighting of its streets. While a court of equity would doubtless relieve a purchaser at a receiver’s sale, where it was made to appear, before the completion of the sale and purchase, that he had acted in good faith and in the exer [508] cise of ordinary diligence, and the relief granted to him would not prejudicially affect the rights of any one, yet a strong case must be presented before such a purchaser would be granted relief, where a sale has been made and confirmed, the conveyance of the property executed and delivered, and the purchaser put in possession. The petition here presented no such case. The sale was made and confirmed, the conveyance was executed and delivered, and the purchaser was placed in possession of the manufacturing plant of the Hawkinsville Cotton Mill and the electric-lighting plant connected therewith, and operated both the manufacturing and the electric plant until November, 1909, being a term of several months duration. So far as appears from the petition, the purchaser exercised no diligence in ascertaining whether the City of Hawkinsville had granted a franchise to the Hawkinsville Cotton Mill for operating the electric-lighting plant, or whether the city had entered into a contract with the Hawkinsville Mill for the lighting of its streets for a given term. An inquiry of the clerk of the city council or an examination of its minutes, either of which could have readily been made, would certainly have developed whether such franchise and contract existed. Furthermore, no reason is alleged for the long delay after the consummation of the sale before the purchaser-ascertained that there was no such franchise and contract. Absolutely no excuse is alleged why the purchaser failed to ascertain why the - conveyance executed by the receivers did not cover the electric plant, the franchise for operating the same, and the contract with the City of Hawkinsville. A mere reading of that instrument would have disclosed the property conveyed therein, and that it did not eonvejr the electric plant, the franchise for conducting it, and the contract with the city. In this connection see Wylly v. Gazan, 69 Ga. 506 (5), and citations. There is not even an offer on the part of the purchaser to return the property purchased to the receivers, but the appointment of other receivers is prayed, which this court, when the case was formerly here, decided that the purchaser was not entitled to. And even if such a prayer could be considered as tantamount to an offer to return the property to the court or the receivers it had already appointed, there is nothing in the petition to show that the property was in the same condition or of equal value at the time of the filing of the petition as it was when the [509] sale was consummated and the petitioner put in possession thereof. The petition, on the other hand, discloses the fact that the manufacturing plant had been closed and was not in operation at the time of the filing of the petition; for what cause it is not suggested. While an accounting is prayed between the receivers and the petitioner, the latter merely offers “to account for the earnings of the mill and the electric plant during the operation of the same from the time that [the petitioner] took charge of said plant until it was closed.” Certainly the mere earnings made by the purchaser from the property during that time were not what it was bound to account for, even if an accounting such as prayed for could be had. The earnings may have been little or nothing and solely because of the fault of the purchaser in operating the property. Furthermore, it is not made to appear from the petition that the rights of the bondholders of the Hawkinsville Cotton Mill and its other creditors would not be injuriously affected upon the cancellation of the conveyance made by the receivers. The petition shows that some of the purchase-money paid to the receivers has been paid out by them. How much is not alleged. From what we have said we find no difficulty in coming to the conclusion that the court did not err in dismissing the petition on demurrer. Judgment affirmed. All the Justices concur.