Opinion
(December Term, 1833.)
1. Persons may be permitted to unite in an association by which one shall bid at a public sale for the benefit of all concerned, when the motive for such association is not dishonest, nor the object nor the effect of it to produce an improper result.
2. A wrong done by a person seeking equitable relief, to one not a party to the proceedings, furnishes no objection to such relief on the part of those against whom it is sought.
3. When an objection to equitable relief is based upon an allegation of fraud, it will not be sustained by proof of mere error.
4. No one can in equity be permitted to set up a benefit derived through the fraud of another, although he may not have had a personal agency in the imposition.
THE case, upon the bill, answer, and proofs, was that one William Hunt filed his bill against John D. Hawkins, Richard Boyd, Francis A. Thornton, and Henry Fitts, wherein he charged that a fi. fa. which had issued from the Superior Court of Granville, directed to the sheriff of Warren, against Alexander Boyd, had been levied on a certain tract of land as the land of the said Alexander; that previously to the teste of that execution the said Alexander had conveyed this land to the defendant Fitts in fee simple, upon certain trusts for the indemnity of the defendants Richard Boyd and Thornton; that doubts having arisen whether in law this conveyance had priority to the lien of the (394) execution, and it being a matter of importance not only to the creditors in the execution and to the said Alexander, but also to the defendant Richard Boyd, who was surety of the said Alexander for the debt on which the aforesaid judgment had been rendered, that all such doubts might be removed, in order that the sale might be for a full price, it was explicitly agreed and declared, on the part of the defendants Boyd, Thornton, and Fitts, that all claim under the said deed should be waived and relinquished; that upon the faith of this declaration Hunt became the purchaser of the land upon the execution sale, and paid the full price thereof; that subsequently the defendant Fitts, by the direction of the defendants Boyd and Thornton, had assigned and transferred his legal interest in the said land, under the aforesaid deed of trust, to the other defendant, Hawkins; that the said Hawkins, combining with the other defendants, was about to evict the plaintiff Hunt from the said land by virtue of the title derived under the deed of trust, notwithstanding it was perfectly known to all of them that the plaintiff had purchased at the execution sale in consequence of the explicit abandonment by the other defendants of any title under the said deed, and of their full consent that the land should be applied to the satisfaction of the judgment which was discharged by the purchase.
Devereux for plaintiff. (396)
Badger and W. H. Haywood contra.
The plaintiff prayed for an injunction, a conveyance from the defendant Hawkins of all his estate under the said deed, and for general relief.
The material facts thus charged were admitted in the answers; but at the same time the defendants averred that the present plaintiff, John C. Goode, was the beneficial owner of the judgment against Alexander Boyd, and was jointly interested with Hunt in the purchase made at the execution sale; that the said Goode had, since the rendition of the said judgment, at sundry times oppressively and usuriously extorted from the said Alexander sums of money exceeding lawful interest, as a consideration for forbearance and indulgence thereon; and that the agreement of the defendants Richard Boyd, Thornton, and Fitts to permit the land (395) to be sold under the execution, and to waive the title to it under the deed of trust, was obtained by gross and fraudulent misrepresentations of the said Goode, whereby they were made to believe that an original execution had issued, of a date anterior to that of the deed of trust, the lien whereof attached to this land, and that this lien had been preservedly unbroken by a series of alias executions, duly and regularly sued out thereafter.
Hunt's bill was afterwards permitted to be amended. In the amended bill he distinctly charged that the purchase made at the execution sale was made for and on account of himself and Goode jointly, on an agreement to divide the land equally between them. To this amended bill he made Goode a party defendant; and he modified his prayer for relief by asking for a conveyance from the defendant Hawkins of an undivided moiety only. The original defendants, except Hawkins, relied on the matters set forth in their former answers. Hawkins submitted to make Hunt a conveyance as to his moiety. Goode answered the amended bill, and admitted all the allegations of the plaintiff. Goode then also filed his bill in the nature of a cross-bill, in which he utterly denied all usurious and oppressive dealings towards Alexander Boyd on the judgments against him; insisted that the agreement for the waiver of title under the deed of trust as against the execution had been made upon a fair exposition of all the facts as to his judgment, and the execution thereon from time to time issued, and without any fraud, misrepresentation, or deceit on his part, and prayed that a conveyance might be made to him of the other undivided moiety of the land. To prevent delay, and save prolixity of pleadings, the parties all agreed that the answers of the defendants Boyd, Thornton, Fitts, and Hawkins to the bill of Hunt should be considered as their answers respectively to the bill of Goode, and Hunt's amended bill as his answer to Goode's cross-bill. All irregularities in the forms of proceedings were waived by general consent of all the parties. A decree had been before rendered for Hunt, so that the controversy was now between Goode and the other parties.
Three objections have been urged on the hearing against the plaintiff Goode. In the first place, it is objected that the agreement between him and Hunt, whereby they were to be equally interested in the purchase made by the latter, was one in fraud of public policy, as calculated to prevent competition at the sale and to deceive those present at the sale and ignorant of that agreement. Secondly, it is insisted that his oppressive and usurious exactions from Alexander Boyd for indulgence on the judgment for the satisfaction of which the land was sold, deprive him of all claim to the aid of a court of equity for making good his purchase at such sale. And, thirdly, it is contended that the waiver of title under the deed of trust was procured by fraud, and that he who was guilty of that fraud shall not be permitted to take the advantage of such waiver.
Not having been present at the argument of Hunt's bill, I do not know whether the objections now urged were then made, or if they were then made, what were the reasons which induced the court to overrule them. It is probable, however, from the submissions in Hawkins' answer to Hunt's amended bill, that there was no opposition to this decree. But it would seem that the objections, if valid against one of the plaintiff's were valid against both. Whatever may be the forms of the transaction, Hunt and Goode purchased jointly by one and the same act, had one and the same title to relief; instead of being arrayed on different sides of the controversy, ought to have been joined as plaintiffs in the same bill, and are liable to have their claim repelled by one and the same defense. If the purchase were designed to stifle, or necessarily tended to stifle, fair competition; if one of the parties in the association cannot be admitted to join in insisting on the purchase; if the waiver of the outstanding title to the land were procured by the fraud of a partner in the transaction, the purchase could not stand, and ought not to be aided in a court of equity. No one can there be permitted to set (397) up a benefit derived through the fraud of another, although he may not have had a personal agency in the imposition. Huguenin v. Basely, 14 Ves., 238. Still less can one of two joint contractors ask to sever the contract, and let them have the benefit of half of the bargain, in order to escape the pollution with which the fraud of his companion has tainted the entire transaction.
As it is probable, however, that the objections now urged were not pressed on the hearing of Hunt's case, we have examined and considered of these objections as wholly unaffected by the adjudication then made. The first relies on the fact that Goode was concerned in the purchase made by Hunt, and that this interest was not proclaimed at the time of the bidding. We are unaware of any judicial decision by which such a connection in a purchase at execution or other public sale is denounced as a fraud, nor do we find ourselves warranted by fair inference from any established principles in pronouncing so sweeping a denunciation. Smith v. Greenlee, 13 N.C. 126, referred to in this part of the argument, certainly contains no adjudication to that extent. So far from it, this Court reversed the judgment below, and ordered a new trial from an apprehension that the language of the judge's instruction might have induced the jury to think that all agreements to buy on joint concern at execution sales were unfair. Whether any question might be entertained of the correctness of the doctrine asserted in that case as applied to the trial of an ejectment in a court of law, we have none of its soundness as applicable to the controversy here, and for that purpose adopt altogether the principles which it sanctions. If an agreement for one to bid on behalf of himself and others be made to stifle, paralyze, or discourage competition, those concerned in such an association shall not be permitted to derive benefit from a sale the fairness of which has been thus violated. But persons may legitimately unite in an association by which one shall bid for the benefit of all concerned, when the motive for (398) such association is not dishonest, nor the object nor the effect of it to produce an improper result. The act does not necessarily imply a dishonest motive, an improper end, or an injurious consequence. If by reason of these the act should be repugnant to fair dealing, then he who objects to it because of such repugnancy must allege and prove the matters which render it liable to be thus impeached. It appears to us that this has not been done on the part of the defendants in the present case.
We deem it unnecessary to inquire whether the second objection has or has not been sustained by proof. If clearly established, we do not perceive how a wrong done by the plaintiff to Alexander Boyd can furnish a justification to the defendants in now setting up against the plaintiff a title to the land which at the time of the purchase they explicitly waived. Goode is asserting no equity, and asks no relief against Alexander Boyd. The latter is no party to the present proceedings. What is the true state of the moneyed transactions between Goode and Alexander Boyd, or between the former and the sureties of the latter, as such, is not here in contestation, cannot here be settled, and is in no way material to the decision of the equity which Goode sets up to have a legal title removed out of the way of his purchase at the execution sale. He claims relief against those who set up this legal title, and upon the ground of their agreement. They may rightfully insist on any opposing equity which they have against him, but they cannot insist that he shall redress the wrongs of Alexander Boyd before he shall be heard to complain of the wrongs which they have inflicted or threaten to inflict on him.
The principal objection in the case remains to be considered. As far as we can ascertain the facts upon which this objection rests, they appear to be these: At May Term, 1822, of Granville County Court, the judgment of the executors of William Smith to the use of Goode was rendered against Alexander Boyd and Spotswood Burrell for about the sum of $9,000 on a bond in which the said Alexander was principal, and Burrell, the defendant Richard Boyd, and others were sureties. (399) The first execution on this judgment was a fi. fa. directed to the sheriff of Granville, tested of the first Monday of November, 1822. On this, $1,851 was paid by the defendants, and the execution stayed for the balance. Writs of fi. fa. directed to the sheriff of the same county were regularly made out, issued, and delivered to the said sheriff, and by him returned "Indulged," which were tested the first Mondays of February, August, and November, 1823, and of February, 1824. There was also a writ of the intermediate term, May, 1823, and tested of the first Monday of May, made out but not delivered to the said sheriff. An execution tested the first Monday of May, 1824, was then directed to the sheriff of Warren, and by him levied on certain slaves and this tract of land. After the rendition of this judgment, and after the teste of the second execution, viz., on 18 February, 1823, the deed of trust to Fitts for the security of Richard Boyd and Thornton was made. This deed was proved in April, 1823, and was afterwards registered, but the time of such registration does not appear. I presume, however, that it was registered shortly after its probate. A legal question arose, whether the land conveyed by this deed of trust was subject to be sold under the execution, and at the Warren County Court in May, 1824, Goode, Alexander Boyd, Richard Boyd, Thornton, the sheriff of Warren, and many others being present, the opinion of Robert H. Jones, Esq., a respectable lawyer of that county, was asked. Goode stated that his judgment was prior to the deed of trust; that his first execution was prior to it, and that this had been kept alive by executions regularly issued every term thereafter. This statement was not contradicted by any person, and was expressly confirmed by Alexander and Richard Boyd. Mr. Jones, thereupon, without any further inquiry, decided that the execution then in the sheriff's hands bound the land, notwithstanding the deed. Good, Richard Boyd, and Thornton then agreed, to which agreement Fitts assented, that all claim to the land under the deed would be waived as against the execution, (400) upon Goode's consenting that the sale should be made for Virginia notes at par and North Carolina notes at 6 per cent discount. Upon this agreement the sales were made.
These facts do not, in the opinion of the Court, establish the allegation of fraud and misrepresentation against the plaintiff, nor justify the defendants in now setting up title under the deed of trust to defeat his purchase at those sales. The charge of fraud rests on the falsehood of Goode's assertion that the lien of his first execution had been duly and regularly continued by those subsequently issued. This assertion, say the defendants, was false, for all the executions prior to the last having been directed to the sheriff of Granville, the execution directed to the sheriff of Warren did not relate to any of the former, so as to bind the property of Boyd in Warren County; and it was also false in this, that one of the Granville executions, that of May, 1823, was never delivered to the sheriff, but remained either in the clerk's office or in the hands of Goode. It is not pretended that the plaintiff's opinion upon any legal question was either desired or required, or relied upon by the parties. For the determination of questions of that character, Mr. Jones was appealed to. If there was any error in his decision, this error is attributable to the plaintiff so far only as he may have occasioned it by a misrepresentation or suppression of material facts. Mr. Jones did not require to be informed whether the executions preceding that then in the hands of the sheriff had been directed to the sheriff of Warren, or to the sheriff of Granville, nor whether these preceding executions had been actually placed in the hands of the sheriff to whom they were directed. It is no imputation on Mr. Jones's professional reputation that he did not make these inquires, for unquestionably until long afterwards, till the decision of Hardy v. Jasper, 14 N.C. 158, many of the first men of the profession held that an alias fi. fa., to whatever sheriff directed, bound all the property of the debtor against his alienations, from the test of the first fi. fa., and it is not yet settled, (401) nor are we prepared now to decide, that as against the defendant in the execution and his alienees the lien of the original fi. fa. is lost, because an alias properly directed was not put into the sheriff's hands. Palmer v. Clark, 13 N.C. 354, expressly confines the adjudication to disputes for priority between conflicting execution creditors. Had Mr. Jones deemed these inquiries material, he would have made them. Neither he nor any other witness testifies that the plaintiff stated any specific fact untruly. The defendants in their answers, charging the plaintiff with fraud and misrepresentation in the strongest terms, specify no fact which was falsely alleged by him. Richard Boyd avers that the plaintiff exhibited a statement from the clerk of Granville County Court showing what executions had been sued out, and there is no evidence to prove that such statement varied in effect from the transcript which has been exhibited to us. Alexander Boyd and Richard Boyd, says Mr. Jones, confirmed Goode's statement. Can there be a question that both these, and especially the former, who had repeatedly obtained indulgence from the sheriff of Granville by arrangements with Goode, well knew that the former executions had been directed to that sheriff? Clanton, the sheriff of Warren, was one of the persons present, and privy to the inquiry, and he knew that the execution then in his hands was the first that had come to him. The executions had all issued from the court of the adjoining county; the clerk's office was within a day or a half day's ride; the facts were accessible to all interested in the subject, and we have no proof to induce us to believe that these parties were under the slightest mistake with respect to any of these facts. That they were in error with respect to the legal result of these facts is sufficiently shown. It is unnecessary, however, to inquire whether in any case an agreement may be set aside because founded in such error. The defense is rested on the ground of fraud, and will not be upheld by proof or error. But if it could, we deem it obvious that the agreement to waive the title under the deed of trust was not produced solely by the conviction that such title was bad as against (402) the execution. Richard Boyd was solicitous to make the arrangement, because Goode would otherwise insist on selling the negroes for specie, and being liable on Alexander Boyd's bond as one of his sureties, he was anxious that the negroes should bring full prices. It appears that Thornton was reluctant to enter into it, but he yielded, according to his onw [own] statement, because of the double motive, that he relied on Goode's representation that the execution had a prior lien, and that as Richard Boyd had consented, he would not be obstinate. The very arrangement to waive the claim is evidence that its invalidity was not certain. The stipulation with the plaintiff in regard to the terms on which the property should be sold, if the title were waived, constituted a consideration for that waiver, assuredly of some and possibly of great weight. Richard Boyd probably, judging from the evidence, would gladly have acceded to the arrangement had Mr. Jones expressed no opinion upon the question of the title, and it has not been shown that Mr. Thornton suffered by yielding his objections to the arrangement, after learning that it was acceptable to Richard Boyd.
PER CURIAM. Decree in favor of the plaintiff, with costs against the defendants Boyd and Thornton, who must also pay the costs of the defendants Hawkins and Fitts.
Cited: Black v. Bayless, 86 N.C. 535; Davis v. Keen, 142 N.C. 504.
(403)