Opinion
No. 73-064
Decided May 7, 1974. Rehearing denied May 29, 1974. Certiorari denied September 9, 1974.
Action to quiet title. Defendant asserted that he was in possession under 50-year lease. Interpreting prior decisions concerning ownership of the land in question, trial court entered judgment for plaintiff, and defendant appealed.
Reversed
1. JUDICIAL SALES — Defined — Caveat Emptor — Applies. A judicial sale is one made under the process of a court having competent authority to order it, and in such a sale, the court is the vendor, the officer conducting the sale is the mere agent of the court, and the maxim of caveat emptor applies strictly to such sales.
2. BANKRUPTCY — Sale by Receiver — Plaintiff — Full Knowledge — No Better Title — Than Receiver. In sale of property by receiver, plaintiff in quiet title action purchased the property with full knowledge of the state of the title to the property and of the claim of defendant, and plaintiff acquired no better title than the receiver possessed.
3. QUIETING TITLE — Defendant in Possession — Recorded Assignment — Lease of Record — No One — Challenge — Should Have Granted — Defendant — Summary Judgment. Where, in quiet title action defendant had been in possession of the property in question since 1942 under a recorded assignment of a lease which lease was also of record, where, in decision concluding previous litigation concerning the property, the Supreme Court stated that there was no longer anyone involved in the litigation who challenges or could challenge defendant's asserted rights, and where that situation still prevails, the trial court should have granted defendant's motion for summary judgment quieting title in him to his leasehold estate.
Appeal from the District Court of Garfield County, Honorable Don Lorenz, Judge.
Petre Zimmerman, P.C., George Petre, for plaintiff-appellee.
Nelson, Hoskin, Groves Prinster, P.C., John W. Groves, William H. Nelson, for defendant-appellant.
Claiming to be the owner of certain land in Garfield County, plaintiff sought to quiet title in itself as against defendant. Defendant answered, asserting that he was in possession under the terms of a 50-year lease executed in the spring of 1938. He asserted the affirmative defenses of estoppel, laches, and adverse possession under said lease, and filed a cross-complaint seeking to quiet title in himself to his leasehold estate.
After both parties had completed discovery, including requests for admission, they filed motions for summary judgment. The court, after hearing on the motions, granted summary judgment in favor of plaintiff and entered its decree declaring that plaintiff was the owner of the property and entitled to possession. Defendant appeals, contending that the court erred in its conclusion that the lease was invalid, and in failing to grant his motion for summary judgment. We reverse.
The facts in this case are set forth in detail in Whatley v. Wood, 148 Colo. 349, 366 P.2d 570; Whatley v. Wood, 157 Colo. 552, 404 P.2d 537; Whatley v. Cuddy, 148 Colo. 362, 366 P.2d 671; and Cuddy v. Whatley, 157 Colo. 562, 404 P.2d 533.
The instant action is not a continuation of any of the above cases, but rather is a new case premised on the same factual situation dealt with therein. After this case had come to issue, defendant filed requests for admissions, which plaintiff declined or neglected to answer and which therefore, in accordance with C.R.C.P. 36, stand admitted. Plaintiff by its failure to respond admitted that Dorothy Stevens Wood, Truman Stevens Wood, Ben Brown Wood, Marie G. Murphy and Wallace E. McGowan, as executor of the estate of Irene McGowan, deceased, were all defendants in the prior litigation and comprised a majority of the stockholders and creditors of the defunct Colorado Carbon Co. which originally owned legal title to the property in dispute. It further admitted that the receiver who sold the interest of Colorado Carbon Co. in the property to plaintiff made the sale for the benefit of the stockholders and creditors of said defunct corporation. Plaintiff also admitted that since June 20, 1938, defendant and his predecessors in interest have claimed a right to possession to the property in question under a 50-year leasehold interest in the property described in the complaint for the term period from May 1, 1938, to May 1, 1988, and that defendant is now in sole and exclusive possession of the property, except for the mineral estate which was excluded from the lease, and defendant made entry into the property in good faith without any knowledge as to defects in title of the lease.
In Whatley v. Wood, 148 Colo. 349, 366 P.2d 570, Cuddy, as a lessee of the property in question, was a defendant with the above named parties who claimed to be the owners of the property. In that case, the creditors and stockholders of the defunct corporation admitted the validity of the Cuddy lease and Cuddy was dismissed as a party defendant. Plaintiff Whatley appealed this ruling and in Whatley v. Cuddy, 148 Colo. 362, 366 P.2d 671, the court held that it had been error to dismiss defendant Cuddy, reversed the judgment, and remanded the cause with directions "to permit defendant Cuddy to present such proof relating to the validity of the lease in question as he may be advised." In the subsequent trial, the trial court held that the lease to Cuddy was invalid. However, on appeal in Cuddy v. Whatley, 157 Colo. 562, 404 P.2d 533, the court held that Whatley had no interest in the lands in dispute and thus could not question the validity of the Cuddy lease, and stated:
"We note that in the original action, No. 19609 ( 148 Colo. 349, 366 P.2d 570), the defendants in No. 20588 admitted the validity of the lease in question, therefore, in the instant proceeding, since Whatley can have no interest therein, there is now no one involved in these actions who challenges or can challenge Cuddy's asserted rights. For this reason the judgment is reversed with directions to dismiss the action as to Cuddy." (emphasis added)
In the first Whatley v. Wood, case, supra, the Supreme Court, in reversing the trial court, remanded the case for retrial; however, the remand contained the provision that in the event Whatleys' deed could not be sustained (which it was not in the second Whatley v. Wood, case, supra), the trial court should appoint a receiver and proceed to a sale of the property. In the second case, the remand directed that a receiver be appointed and that the property be sold. This was done and plaintiff acquired its title from the sale by the receiver.
[1,2] In Union Trading Co. v. Drach, 58 Colo. 550, 146 P. 767, the court defined judicial sale as follows:
"'A judicial sale is one made under the process of a court having competent authority to order it, by an officer legally appointed and commissioned to sell; one made by a court of competent jurisdiction, in a pending cause through its authorized agent. A sale under an order or decree of court is a judicial act. The court is the vendor, and the officer conducting the sale is the mere agent of the court. The sale is a transaction between the court and the purchaser.' . . .
"In the sale under consideration, there is no suggestion of fraud nor mutual mistake, and the maxim caveat emptor applies strictly to judicial sales."
The sale of the property which was the subject of the instant case by the receiver to plaintiff was a judicial sale. Plaintiff purchased the property with full knowledge of the state of title to the property and of the claim of Cuddy. Plaintiff acquired no better title than the receiver possessed. In Korlann v. E-Z Pay Plan, Inc., 247 Ore. 170, 428 P.2d 172, it is stated:
"It is a well-established principle that a liquidator or receiver occupies no better position than his insolvent occupied at the time of insolvency. Bohlinger v. Zanger, 306 N.Y. 228, 117 N.E.2d 338 (1954). He takes the property and rights of the one for whom he acts, subject to the same equities and defenses in others that existed before insolvency."
[3] At the conclusion of Cuddy v. Whatley, supra, the court remarked that parties who are now plaintiff's predecessors in title comprised more than half of the stockholders and creditors of the Colorado Carbon Co. and that they had acknowledged the validity of the Cuddy lease. The court then stated that there was no longer anyone involved in these actions who challenges or can challenge Cuddy's asserted rights. That situation still prevails. Plaintiff acquired no greater right to the property than Colorado Carbon Co. had prior to the sale by the receiver to plaintiff. The majority of the stockholders and creditors of the corporation had acknowledged the validity of the Cuddy lease. Cuddy at all times has acknowledged the title of the owners. He has been in possession of the property in question since 1942 under a recorded assignment of the lease which was also of record, and no one with authority to do so questioned his lease until the instigation of this suit filed January 28, 1970. The trial court should have granted Cuddy's motion for summary judgment and denied plaintiff's motion for summary judgment.
Judgment reversed and cause remanded with directions to enter judgment in accordance with this opinion.
CHIEF JUDGE SILVERSTEIN and JUDGE SMITH concur.