McCelvey v. Thomson

7 S.C. 185 | S.C. | 1876

The opinion of the Court was delivered by

Wright, A. J.

The three cases above stated, from their reference together for a hearing and determination of the issues they involve, would appear to embrace the same subject matter upon which, by appeal, the judgment of this Court is asked to correct the errors alleged in the conclusions of the Judge below confirming the report of the Referee.

We shall not attempt to encumber our opinion with a recital of the facts which may be necessary to a proper understanding of the grounds upon which the petitioner seeks relief. They are fully set forth in the report in the proper order as to dates, and their statement will be accepted as accurate, though we may not agree with the conclusions which the Referee draws from them. The cause first stated in the caption seems to have been disposed of at the reference, and is not open to consideration here by any exception in regard to it. Indeed the points to be reviewed on the motion of the appellant are in no wise affected by the determination of any question which arose under it.

The cases secondly and thirdly stated may be considered together. The first of these assails the purchase at the sale of the Commissioner, under the order of the Court, in the cases of both Hugh McCelvey vs. William McCelvey, and Mars, assignee, vs. Conner, Corley et al., and claims judgment against Thomson and Parker for $2,700, with interest from 7th October, 1867, and costs of suit. The petition, Ex parte McCelvey, in re Mars, assignee, vs. Conner et al., (the third in the heading,) recites the facts stated in the other case, already referred to, alleges that petitioner was a necessary party thereto, questions the propriety of the sale of the land assigned by him to Mars for the benefit of his creditors, prays that the entry of “ended” on the docket as to the case of Mars, assignee, vs. Conner et al., may be erased, that a rehearing of the canses may be had, the sale set aside, the deed surrendered and canceled, and, if necessary, the lands resold and proceeds disposed of under the assignment according to law. Without noticing the inconsistency of the relief sought through the bill against Thomson and Parker, and the petition In re Mars, assignee, vs. Conner et al., the one claiming a compensation in money for any wrong committed by Parker and Thomson in the sale and purchase of the lands, and the other that the case may be restored to the docket, a rehearing had, the sale set aside, and the deeds ordered to be canceled, it is enough to say that the petitioner was duly made a party to the bill of Mars vs. Conner et al. The order therefor was by one of the Associate Justices, under the authority of the Act of 1859, (12 Statutes at Large, 757,) and the judgmentyu’o eonfesso properly entered.

Neither is he entitled to a rehearing of so much of the merits of the case as terminated in the order made on. June 12, 1867, for a sale of the lands. He was a ‘party to the proceeding; the order constituted a final judgment acting directly on the property the subject of the suit; and though the appellant was allowed by the statute of 1784, (7 Statutes at Large, 210,) if absent from the State and within the United States, two years to appear in Court, and petition to be heard in “ relation to the matter of such decree, and such proceedings shall be had, &c., as if no former decree had been made in the said cause,” he failed to avail himself of a privilege, by the exercise of which he would have had the opportunity of contesting the propriety of the sale of his property.

While we do not regard the cause as “ended,” when the entry to that effect was made by the Chancellor, for objection to the confirmation of the sale may have been made by any one interested on the coming in of the report upon it, yet the petitioner cannot have the decree for the sale set aside, because, a party to the bill when it was ordered, he did not move to contest it within the time permitted by the statute. It by no means, however, follows because a party affected by a judicial sale may be precluded from coming in and contesting either its necessity and propriety, that he is prohibited from seeking relief against it on the ground either of fraud in equitable combination or undue influence. While, therefore, the appellant may not be permitted to aver against the title by which the land is held by its present owners, he may be allowed, on the equitable principles which regulate the action of those standing in a fiduciary relation, to know that a profit to which he is entitled has enured to the benefit of others who, by the position in which they stood to him, could be considered only as agents or trustees and in the particular transaction could not acquire a benefit to his prejudice. It is proper and necessary to consider the position which Mr. Thomson occupied at the time of the sale, which was ordered under the case of Hugh McCelvey vs. William McCelvey, as well as that of W. R. Mars, assignee, vs. A. P. Conner et al. In the first he was the solicitor of the plaintiff, in the language of his own answer to the complaint, here “employed to file the bill of said Hugh McCelvey for the purpose of selling this Clay land.” In the bill of Mars, assignee, vs. Callet and Conner et al, he was the solicitor of record for the plaintiffs to enjoin a sale of the assignee’s property under execution, and to marshal the assets of Wm. McCelvey, to whom, by the terms of the assignment, was reserved the interest in any overplus after the purposes proposed by the instrument had been accomplished. In the statement of facts furnished by the brief, it appears that on November 7, 1866, Associate Justice Wardlaw made an order for the sale of the lands, which resulted in their being knocked off to Mr. Thomson for $2,800, but in December, 1866, (the precise day is not mentioned,) the sale was set aside on the action of one Welch. On June 12,1867, the order for the sale under both eases was again made, terms cash, and on October 7, 1867, the sale took place, Mr. Thomson being the highest bidder for the Clay tract, $920, the Wells tract, $900. The bid for the last named piece was paid, but, in the language of the Referee, “ the proceeds of the sale of the Clay tract having to, await the further order of the Court, the Commissioner (Mr. Parker,) though he charged himself with the amount of the sale, did not collect from Mr. Thomson until a future time.” No report of the sale was ever made to the Court. ' The bid for the Clay tract ($920) was not paid until the 19th of November, 1868, when the title was executed to Mr. Thomson, and he, on the same day, transferred by deed a one-half interest in both places to Mr. Parker, and the two on the same day, in consideration of $3,060, sold and conveyed the whole to Brown and Reid on certain trusts. Thomson, it will be remembered, purchased on October 7, 1867. When he agreed to sell the one-half interest to Parker does not appear, but it is in the proof that they jointly rented it to one Carter for the year 1868. It is proper not to omit a statement by the Referee in his report, to wit: “ The profit made by these defendants in their joint sale is accounted for by the fact that they conveyed to Reid and Brown, with warranty against the contingent right of dower in the wife of the plaintiff, and also the claims of title in the lands set up by Welch, which after the purchase by Thomson has been satisfied or arranged.” To what extent this claim was asserted, or how arranged, did not appear. It is a matter of satisfaction to the Court that there is nothing in the evidence which can subject these defendants to the charge of actual or positive fraud, with which they have been assailed in the transaction out of which this contest has arisen. There is no testimony to show a combination to obtain a profit or advantage at the sacrifice of the obligation which they relatively owed to the plaintiff, McCelvey, by any direct agreement to that end. They must, nevertheless, be held amenable to the principle of equity, which, while it recognizes the absence of all moral delinquency, yet regards the transaction liable to imputation, because, in the language of Mr. Story, “ contrary to some general public policy, or to some fixed artificial policy of the law, or growing out of some special confidential or fiduciary relation between all the parties, or between some of them, which is watched with special jealousy and solicitude, because it affords the power and means of taking undue advantage, or of exercising undue influence over others.”

Mr. Parker was the Commissioner in Equity who made the sale. By the Act of 1791, (7th General Statutes, 263,) he was prohibited from being concerned or interested, directly or indirectly, in the purchase or acquisition of any property sold by him. If his acts here do not bring him within the letter of the prohibition, they certainly include him within its spirit. The terms of the sale were cash, the bid was $1,820, of which $900 was paid at the time, October 7th, 1867, and the balance not until 19th November, 1868, the very day on which the purchaser conveyed a half interest to him. Although the sale was not perfected by the payment of the whole purchase money and the execution of a deed for some time, yet very soon after the lands had been knocked off to Mr. Thomson, and so entered on the sale book, Mr. Parker seems to have acquired an interest in them, for he with Mr. Thomson rented them to Carter for the year 1868. The payment of the remaining portion of the bid was made to Mr. Parker on the 19th of November, 1868, and he thus acquired a credit on his own purchase of over a year through the very credit which he had extended to Mr. Thomson. If it had been announced at the sale that a credit of one-half of the purchase money (and that too without interest) would be given for a year, who can say there may not have been a bid overreaching that made by the party who was entered as the purchaser? It is urged that, although Mr. Thomson represents the assignee of the appellant in the case of Mars vs. Conner et al., the sale was made not only under that case, but conjointly with the case of Hugh McCelvey vs. William McCelvey, in which Mr. Thomson represented the plaintiff, the bill in the last named cause praying specific performance of a contract in relation to one of the very tracts sold. It may be assumed as certain that his position as solicitor in the two suits did not detract from the influence which he might have exercised at the sale had he been but the solicitor in one of them. The ground assumed in his behalf as representing only the assignee, and not William McCelvy, the assignor, cannot be maintained. While it is true that the assignee held the property subject to the provisions of the assignment, they were to be enforced under the terms which the assignor had directed and prescribed for the government of his assignee. The relation which the assignee occupied was one of trust, not only as regards the creditor, but also in relation to the assignor, who, besides his general interest in the proper administration of the trust conferred, had a direct interest in so much of the property conveyed as might remain after its appropriation to the purposes directed by the assignment. When Mr. Thomson therefore represented the assignee, he at the same time was bound to protect the interest of the assignor to any rights to which he may have been entitled under the instrument. His reception of a fee out of the assigned effects is indicative of the connection in which he stood to William McCelvy in the case. A fiduciary relation existed between Thomson and Parker on one hand and MeCelvey on the other. The one was the solicitor, the other the officer making the sale, and they must both be regarded as his agents in the course of its conduct. While we see no actual fraud in the circumstance attending the sale and resale, yet the transaction cannot be sustained when subject to and tested by the principles of equity, which are so concisely and tersely stated by Judge Story in the language to which we have already referred. They are recognized in the cases in our own Courts, where questions arising out of the rights and obligations of trustees and cestuis que trust have been discussed and determined, and they are so well and plainly expressed by Chancellor Walworth, in Terry vs. Bank of Orleans, (9 Paige, 662,) as to render unnecessary a citation of other authorities. He says: “It is a settled principle of equity that no person who is placed in a situation of trust or confidence in reference to the subject of sale can be a purchaser of the property on his own account; and in the recent case (Treenlaw vs. Kind) decided in the Court of Chancery in England, in January, 1841, (5 Law Journal, 18,) Lord Cottenham held that the principle was not confined to a particular class of persons, such as guardians, trustees or solicitors, but was a rule of universal application to all persons coming within its principle, which is that no party can be permitted to purchase an interest where he has a duty to perform that is inconsistent with the character of purchaser.”

Another point remains to be considered. Although the appellant did not apply within two years from the date of this order for sale for leave to come in and contest its necessity or propriety with the purpose of setting it aside, he is within the proper time for asking that the entry of “ ended” in the case of Mars vs. Conner et al., should be struck out, and he be permitted to come in and claim whatever rights he may be entitled to under his assignment. The entry was made June 30,1870, and the petition for leave to appear was filed January 29, 1872. The two years fixed by the statute had not expired.

The sale to Reed and Brown must stand. In addition to the reasons already given, they were bona fide purchasers for valuable consideration, and not affected with notice of any equity on the part of McCelvey sufficient to overreach legal title. Parker and Thomson must be held liable to account to William McCelvey for $1,240, that difference between the amount at which they purchased the land and the price at which they sold it, with interest from the 19th of November, 1868. The costs under the petition must be paid by William McCelvey, and the costs in William McCelvey vs. Thomson and Parker by the respective parties on whose several behalf they were incurred.

The ease is remanded to the Circuit Court for Abbeville County, with leave to the parties to move for such orders as may be necessary and proper to give effect to the views and principles herein announced.

Moses, C. J., and Willard, A. J., concurred.