Cain v. Sheets

SOMERYILLE, J. The suit is in ejectment, the plaintiffs claiming as the sole heirs of James W. Cain, who died in the year 1866. The legal title of the lands is shown to have been in Cain, who, as it appears, however, sold them during his lifetime to one Webster, executing to him a bond for title, and taking his notes for the unpaid purchase-money. Webster, having thus acquired the equitable title, went into possession of the premises, and in the year 1869 was adjudicated a bankrupt, under the provisions of the Bankrupt Act of 1867, then in force. The defendants claim title through a sale made by [495] order of the Bankrupt Court, on application of the assignee of the bankrupt. The plaintiffs are clearly entitled to recover, unless their legal title to the lands was divested by reason of the sale made by the assignee; for it is clearly settled, that the latter, as trustee of the bankrupt, took his property subject to all the legal and equitable claims of others, whatever they may have been.— Cook v. Tullis, 18 Wall. 332. The assignee, in other words, can take nothiug more than the bankrupt himself had, except in cases where the latter has made a fraudulent conveyance of his property. — Bump on Bankruptcy, 10th ed., 490; Bolling v. Munchus, 59 Ala. 482 ; Gayle v. Randall, 71 Ala. 469. It is admitted that the Bankrupt Court had full power to sell the property free of the lien existing for the purchase-money, which, in view of the vendor’s retention of the legal title, is closely analogous to the lien of a mortgage. But it is insisted, that the title of the heirs was unaffected by these bankrupt proceedings, because they were not made parties, and had no legal notice of therm The contention, on the other hand, is, that notice to the personal representative of the decedent, Cain, was all that wTas requisite, as he was the holder of the lien ; and the fact of such notice is undisputed» Where the owner of the legal title is also the holder of the lien, it is clear that, oh a proper petition filed by the assignee, notice to the creditor thus secured would be sufficient to confer jurisdiction on the Bankrupt Court to sell so as to discharge the lien. This was said in Ray v. Norseworthy, 23 Wall. 128, where the incumbrance on the property was a mortgage, and notice to the mortgagee, if sufficient, was admitted to confer such jurisdiction. But we do not understand the rule to be, where property is sold in any manner, or for any purpose, by a Bankrupt Court, that the rights of persons who are not parties to the proceedings, and have such notice, can be affected to any extent by such sale. This principle was settled in the Tenn. & Coosa Railroad Co. v. East Ala. Railway Co., 75 Ala. 516, and is otherwise well sustained by authority upon fundamental principles. In Ray. v. Norse-worthy, supra, it was said by J ustice Clifford, that there was no well considered case “which gives any support to the proposition, that the judgment, order, sentence, or decree of a court, disposing of property subject to conflicting claims, will affect the rights of any one not a party to the proceeding, and who was never in any way notified of the pendency of the proceedings.” — Bump on Bankruptcy, 10th ed, pp. 619, 620. The judgments of Courts of Bankruptcy constitute no exception to the general rule, that persons w’ho have never had their day in [496] court can not'be precluded of their property rights by such proceedings. This would not be “ due process of law.” This principle is, in our opinion, conclusive of the case. Under the state of undisputed recitals in the bill of exceptions, the court erred in refusing to give the charge requested by the plaintiffs, which was, that the jury should find for them, if they believed the evidence. Be versed and remanded.