Pettit v. Johnson

Mr. Justice WalKEk delivered tbe opinion of tbe Court. The material facts, upon which tbe equity of this case rests, are, that Thomas Ware, who owned several tracts of land and lots in tbe county of Chicot, in which be then resided, was indebted to a number of persons. Amongst others, be owed Abner Johnson $1,344 36, who, on the 10th of December, 1841, obtained judgment thereon; and to Silas Craig a debt of $2,677, in State bonds; to secure the payment of which, be executed to Craig a deed of mortgage on several of tlie tracts of land so owned, .duly acknowledged and recorded on the 24-th of March, 1843. And to William II. Sutton, and divers other persons, he was largely indebted; to secure the payment whereof, he, on the 4th of May, 1843, executed to the complainants a deed of trust on said lands and lots of land, including the tracts conveyed to Craig. He was also indebted to Benjamin Bailey, who, on the 9th of November, 1843, obtained judgment for $1,340 00. These several judgments and deeds, by force of the statute, became liens on said real estate, having priority according to their respective dates of record. After several writs of fi.fa. and vend, ex., issued upon Johnson’s judgment, had been returned unsatisfied, on the 20th of March, 1844, a writ of vend. ex. was issued with a,fi.fa. clause, which was levied on the lands conveyed to the complainants by deed of trust, but no sale was made until May, 1845, at which time they were exposed to sale by virtue of a writ of vend. ex. issued 12th of March, 1845, and bought by the defendant, Joshua M. Craig, for the_ price of $3,031, which he paid, and took from the sheriff a regular deed of conveyance for the same. Upon this state of case, the complainants filed their bill; the prayer of which was, that the sheriff’s sale and deed, if any might be cancelled, and the lien of the deed of trust to them confirmed and enforced; and the land sold, first,.to pay Silas Craig’s mortgage debt, and the residue to complainants. Johnson, Bailey, Ware, and the Craigs, are made defendants. Johnson, in. his answer, insists, first, upon his lien and the validity of the sale under it; and, second, that if there were irregularities, such as might have been fatal to his prior lien rights, if asserted, that the complainants declined taking advantage of them, and by their presence and conduct acquiesced in the sale of the land. Joshua M. Craig relies upon the same defence, and claims, as a bona fide purchaser, who was encouraged to bid and pay his money by tbe acts and declarations of tbe complainants. He subsequently filed a cross bill, but from tbe view wbicb we take of tbe case, it will be unnecessary to notice it; because, unless tbe sale under Johnson’s judgment lien can be upheld, tbe rights of tbe purchaser must necessarily fall; It has been repeatedly decided, by this Court, and may now be considered as definitely settled, that until a subsisting levy, whether upon lands or personal property, is discharged, it is erroneous to make a second or further levy; and that, upon application for that purpose, such process andlevy may be set aside; but it has also been decided that if no objection is made to such irregularity, and a sale is made under such erroneous process, that a bona fide purchaser, who pays for the property and gets his deed, will not be divested of his title thus acquired, on account of such erroneous pi-oceeding. But the main ground of objection to the validity of the sale under Johnson’s judgment lien is, that notwithstanding his was the prior lien, and that the levy was made before his lien expired by limitation, he lost the benefit of such lien, because the sale was postponed until after the three years had elapsed, the period fixed by law for its termination. This precise point came up for consideration in the case of Trapnall vs. Richardson, Waterman & Co., 13 Ark. 543, and it was there held, that a levy upon lands within three years from the date of the judgment, will not continue the lien of the judgment beyond the three years. Adhering to this opinion, it follows, that the purchaser acquired no right whatever under the judgment lien, but took only such interest or estate as .existed in the defendant at the time of the sale. "We will, therefore, proceed to enquire what that estate was. We have seen that the judgment lien had expired by limitation, before the sale, and that although the levy was made before the expiration of the three years, its effect was not to continue the judgment lien, but to create a new lien from the date of the levy, and we have also seen that before the levy was made, and consequently .before the lien attached, the land so levied upon had been conveyed by deed to the complainants; the effect of which was, to vest in them the legal estate in the lands, charged, it is true, with a specific trust, — the payment of Ware’s creditors,'— and it is also true that if, upon the sale of the property, there should be found to be more than sufficient money for that purpose, the residue of the property remaining undisposed of should be recon-veyed to Ware; or if, upon the sale of the whole estate, there should be found a balance in cash, after the payment of the entire trust, such sum should be paid to Ware. Upon this contingency, and to this extent, he may be said to have an equitable interest in the lands conveyed, and although in some respects this interest is much like that of a mortgager’s equity of redemption, it certainly' differs in this, that the equity of redemption, as well as the legal estate, is conveyed by deed, or if reserved, is dependant upon a contingency, which never happens until after the trust sale. And it is for this reason, that a sale by a trustee vests in the purchaser an absolute estate in the lands purchased, free from all equity of redemption. The legal title and the equity must be conveyed, or he could .never convey such title to the purchaser, because no one can convey a more perfect title than he possesses. This view of the legal effect of a deed of trust, is fully sustained by a former decision of this Com-t. (Crittenden vs. Johnson, 11 Ark. Rep.) And in Morris vs. Way, 16 Ohio Rep. 469, the precise question before us was presented, and it was held that a deed of trust passes the legal title, and though given to secure a debt, and so drawn as for most purposes to be treated as a mortgage, yet, as between the grantor and the grantee, the estate passes, so that nothing remains in the grantor, which can be levied upon and sold upon execution at law. An equitable interest in an estate was not, at common law, subject to sale under common law process; and our statute which subjects equitable estates to sale, although general in its terms, when properly considered, could never have been intended to embrace such equities as those in this case reserved in the grantor. No one acquainted with, the condition of the land titles in this State, at tbe time tbe act passed subjecting equitable estates to sale, doubts but that tbe main object in view was to subject to sale such equitable interests or estates as were acquired by entry and purchase from tbe United States. For, it is a matter of public history, common to all newly settled countries, in tbe United States, that a large amount, perhaps half tbe lands in tbe State then purchased, were held by such equitable titles, and although paid for and unencumbered, remained unpatented, for a greater or less time dependent upon tbe press of business in tbe land office department. Tbe effect of this was to greatly embarrass and delay tbe collection of debts; to remedy which, was tbe leading object of tbe passage of tbe act, and so we find tbe expressions, “ all real estate, whether patented or not, whereof tbe defendant was seized in law or equity, shall be liable to be levied upon and sold,” &c., showing that tbe Legislature bad directly in view unpatented lands. Without therefore restricting tbe act to such equitable estates as are held by certificate of purchase' from tbe United States before tbe patent issues, or drawing a line-of distinction between such equitable interests as are or are not within tbe sphit and meaning of tbe act, it will suffice for the-present to consider whether equities of this and like kind are,, under the statute, subject tobe levied upon and sold under execution. And that they are not, is evident, as well from tbe fair construction of tbe act, under tbe circumstances under which it was passed, as from tbe consequences bkely to result from such sales, because a sale of aninterestso uncertain, as well to the nature- and extent of the interest, as tbe time when tbe purchaser could take tbe benefit of bis purebare, would, in most instances, be attended with great lost to tbe debtor, and of very little benefit to tbe creditor, which are tbe prominent considerations to be considered and guarded against in judicial sales. We must presume that tbe Legislature did not lose sight of this. They must have known that no one would be inclined to bid tbe value of interests so doubtful, _and to enjoy -which tbe purchaser would have to resort to a court of equity to ascertain his true interest and affirm his title. In all such cases, where the debtor is possessed of an equitable estate, in which there are conflicting interests, upon the determination of which the debtor’s real interest must depend, and the creditor seeks to subject it to the payment of his debt, his best and in most cases his only remedy is in chancery, where all the parties interested can be heard, and the real interest of the debtor ascertained, and where a sale may be had under process so guarded as to protect the interest of the debtor and give assurance to the purchaser of an unencumbered title. The second ground of defence is, that the complainants, by their acts and declarations, encouraged the purchaser to bid for the property, and are for that reason estopped from questioning the validity of his title. There can be no doubt, from the evidence, but that the complainants, as well as the purchaser and ■others juesent, believed that Johnson, by virtue of his judgment lien, had a prior right to satisfaction, and acted under this belief; but there is not a qoarticle of evidence to prove that the complainants either misrepresented or suppressed any fact connected with their own title, or that of Johnson. On the contrary, they made their title known, as well by the records of the country, as fey declarations at the time, and insisted upon their rights under it; not as a title superior to Johnson’s, for under a misapprehension of their legal rights, they supposed Johnson’s superior to theirs, but as a title which they would assert fully. There is, therefore, not the slightest ground for charging fraud upon the complainants. The defendant, Craig, has no cause of complaint against the complainants. He was not deceived with regal’d to the facts, for they were well known to him, and as to his mistake in the legal rights of the parties, he must abide the consequences. So far as regards the title set up under Johnson, as holding a vendor’s lien, for the purchase money, it may suffice to say that, waiving all consideration of the merits of the defence in other respects, it cannot prevail for want of notice to tbe complainants before tbe sale to them. Tbe determination of these several grounds of defence, in effect, disposes of tbe whole case, because if Ware bad no such estate in tbe lands, legal or equitable, as was subject to sale under execution, Craig, tbe purchaser, acquired no title whatever to the property sold; and tbe same remains now subject to be sold in satisfaction of tbe trust debts, as folly as if no such sale bad been made. Part of tbe money paid by Craig to tbe sheriff, has passed into tbe bands of Johnson, and beyond tbe control of tbe Court in this case, as there is no issue between Johnson and Craig in regard to tbe sum so paid. Tbe residue of tbe money is in tbe bands of tbe receiver, and as Craig has lost tbe benefit of bis purchase, it is but just that this sum should be restored to him. The defendant Bailey has not contested tbe complainant’s title to tbe property, and was most probably only made a party, because bis execution against "Ware was also levied upon tbe lands in controversy. TJnder these circumstances no decree, should be taken against him. Tbe cross-bill of Joshua 3£ Craig depended for its support upon tbe validity of the sheriff’s sale to him; that question, having been settled, the bill must be dismissed at complainant’s costs. Having thus disposed of tbe several questions presented for our consideration, it only remains for us to direct that tbe decree of tbe Chicot Circuit Court be reversed, and that tbe appellee, Joshua M. Craig, pay the costs in this Court, and that the cause be remanded to said Circuit Court, that a decree may be there entered, declaring the sale, made by the sheriff to Joshua M. Craig, void, and that tbe same be set aside, and tbe deed to Craig-canceled. That tbe cross-bill be dismissed, at tbe complainant Craig’s cost; that tbe title of tbe trustees to tbe property in controversy be affirmed, and tbe lands sold at such time, and upon such terms as may appear to tbe chancellor equitable ; and that the proceeds of the sale be applied, first, to the payment of all costs not otherwise directed to be paid; second, to tbe payment of tbe mortgage debt, due to Silas Craig; third, to tbe debts set forth in the deed of trust, in the order therein directed; and, lastly, the residue, if any, to the defendant "Ware. lion. Chief Justice "Watkins not sitting.