County of Polk ex rel. School Fund v. Sypher

DilloN, J. Practice : motion; surplus, There is no objection to the practice of determining contests in relation to the surplus arising from sales on execution on motion, instead of by peti- . . - . ‘ni tion m equity or other action, especially where the facts are undisputed, or are susceptible of being clearly and easily ascertained, and no new parties are necessary. This practice is well established. Williams v. Rogers, 5 Johns., 163; Ball v. Ryers, 3 Caine’s R., 84; Every v. Edgerton, 7 Wend., 259, 263. See, also, Ritter v. Henshaw, 7 2_New parties, Iowa, 97. But when it appeared in this case that the sheriff had actually paid over the sur-plusage moneys to the other execution creditors of the common debtor, these should have been before the court. If the sheriff was liable immediately and personally to the appellee, he could then have an order on those to whom he had paid the money to refund it to him, or for other relief, on showing himself thereto entitled. If it should appear that the sheriff was not liable, but that those to whom he had paid tbe money were liable to the appellee, they could be ordered to refund. But the parties receiving the surplus money in dispute, not being before the court, we proceed to determine tbe only question before us, viz.: whether the order of the District Court, based on the motion before it, making the sheriff liable personally in respect of the overplus, was correct ? 3. Judicial sale: decree and execution. In support of the decision below, the appellee makes this point. The sheriff sold five lots (as subdivided), when four them produced more than sufficient to Pay the debt. Having done so, it is argued that pe h0pjs the surplus in trust for the party enti362 tied to the first lien on the land, and that be paid it over at bis peril. This is the point in this case that has given us the chief difficulty. The sheriff subdivided the mortgaged estate into five parcels; and four’of'them sold for enough to pay the decree under which they were sold. A doubt mig£t possibly be suggested whether the sheriff in selling all exceeded the command of the writ which is his guide. The writ did not follow the decree, which, was to sell the mortgaged estate, or so much thereof as should he necessary. In foreclosure proceedings the court, because of the indivisibility of the premises, or because the parties consent, or for other causes, often orders the sale of the whole estate. The execution, beyond which the sheriff need not go commanded him “ to expose to sale the following described property.” In selling all, he obeyed the writ literally; although the law and the decree were both violated, so far as the sale of the fifth parcel was concerned. We need express no opinion whether, under the writ, the act of the sheriff in making sale of the last parcel was wrongful, because in this case the rights of the parties do not .turn upon the decision of this question. See Trieber v. Shafer, infra; Waldo v. Williams, 2 Scam., 470. This is not an application to set aside the sale: to disaffirm and repudiate the act of the sheriff in selling too much. There is no evidence that Sypher, whose property was thus sold, malceg any objection to the sale. It may admit of serious question, if Sypher ratifies and is satisfied with the sale, because it is an advantageous one or for other reasons, whether it can be impeached and set aside by a judgment creditor. But, waiving this question also, it is clear that when such a creditor-comes into court and files a motion, making no complaint about the sale, but simply asking for the surplus, he, by that very proceeding, necessarily affirms and ratifies the act by which, .and by which alone, the [363] surplus was brought into existence. Bacon v. Leonard, 4 Pick., 277, 280. On this motion, which is the only proceeding before us, the question is just the same as if the surplus had arisen under a sale of the.most unquestioned regularity. If Sherman wishes to try the question whether the act of the sheriff in selling the fifth parcel was, as to him, unauthorized and wrongful, or if he wishes to set aside the sale thereof and to test his right to do so, the law affords him appropriate remedies. The present motion was not framed with that view, and claims the money in question on other grounds. It assumes that the money is rightfully in the sheriff’s hands, and asks it for-the appellee, because he is the next lien-holder in order after the decree. 4. Foreclosure: surplus. If the surplus money was still in the hands of the officer, or if it was in court, it would clearly belong to the appellee, who was the first lien creditor. By the,statute, Rev.,'§ 3666, “if there are no other liens upon the property, the overplus shall be paid to the-mortgagor.’’ If there are other liens, “they shall be paid off in their order” (Id., § 3667.) And the doctrine is well established that, when lands are sold on execution, the liens are transferred to, and follow, the surplus, at least in equity, and the surplus will be distributed in the order of the liens (whether by judgment or mortgage) on the land out of which it arose. Averitt v. Loucks, 6 Barb. S. C. R., 470; Eddy v. Smith, 13 Wend., 488; Bodine v. Moore, 18 N. Y., 347; Bartlett v. Gale et al., 4 Paige, 503; De La Vergne v. Evertson et al., 1 Id., 181, 558, 635; Doniphan v. Paxton, 19 Mo., 288; 23 Id., 429; 16 Id., 341; Am. Law Reg., vol. 2 (N. S.), 733, 734, and authorities cited; Every v. Edgerton, 7 Wend., 259. This principle is recognized in Chase v. Parker, 14 Iowa, 207; Cook & Sargent v. Dillon, 9 Id., 407. It is not in the power of the debtor to assign this surplus so as to defeat liens on the land existing at the time of the [364] assignment. Doniphan v. Paxton, 19 Mo., 288; Van Nest v. Yeomans, 1 Wend., 87; Palmer v. Yarborough, 1 Ired. (Eq.), 310. If the surplus is levied upon and appropriated by a junior lien-holder, this is an assignment from the debtor by operation of law ; and this cannot be done to the destruction or prejudice of prior liens, anymore than if the assignment had been direct from the debtor by contract or deed. Eddy v. Smith, 13 Wend., 488, 490, and cases supra. While the court would, as above observed, have awarded the surplus to the appellee, if the sheriff had returned the money into court, or if it were still in his hands, it does not follow that the sheriff is liable, under the circumstances, for having applied it on the other writs. The execution under which he acted, did not require him to bring the surplus into court. It did not advise or notify him that the appellee or that’ any other person had liens upon the property or was interested in the surplus. Nor had he actual knowledge of such liens. He was therefore justified in presuming that the surplus was the property of Sypher. (Rev., § 3315.) Under these circumstances he might have paid this surplus to Sypher without incurring liability, had no other executions been placed in his hand. When these came into his hands, it was his duty (having no notice of other liens) to levy them upon the overplus as Sypher’s property, and having done so in good faith, and actually paid over the money, it seems to us manifestly unjust to subject him to liability to a party who had failed in the foreclosure proceeding to set up his rights, and respecting which the sheriff was faultlessly ignorant. It was stated, arguendo, in Cook v. Dillon, 9 Iowa, 407, that a trustee making sale of land under a deed of trust, is not bound to take notice of or search for subsequent judgments or liens, and that if such lien-holders do not notify him of their rights, he will be without fault and without liability [365] if be pays the surplus over to the party whose land was sold. This is reasonable, and the principle is equally applicable to sales by a sheriff. His writ is his charter and his guide. He is not bound to examine the records of the county or those of the court to ascertain the rights of subsequent grantees or incumbrancers. Bacon v. Leonard, 4 Pick., 281. “ Whilst the avails of a sale remain in the hands of a sheriff, they are subject to the control of the court” (per Woodworth, J., in Van Nest v. Yeomans, 1 Wend., 87; and see also The People ex rel. v. Ulster Common Pleas, 18 Wend., 628, 630; Bartlett v. Gage, 4 Paige, 503); but the sheriff will be protected where he acts in good faith, and without, actual knowledge of the rights of others, when he is under no obligation to ascertain those rights. Bacon v. Leonard, 4 Pick., 277, 281, which fully supports the views above expressed; a,nd see also Williams v. Rogers, 5 Johns., 163, 167; Turner v. Fendall, 1 Cranch, 117. As to the right of the appellee to have the sale of the fifth parcel set aside, or to hold the sheriff in damages, we give no opinion. Whatever rights the appellee has as respects the surplus, he must assert against those who received the money. The order appealed from is therefore Eeversed.