Opinion
Decided February 4, 1929.
Judicial sales — Purchaser not in contempt for refusal to pay purchase money — Section 11687, General Code — Serious defect affecting marketability of title — Purchaser may rely upon compliance with court rule — That abstract filed in foreclosure case and interested parties joined.
1. Where party having dower interest in land was not made party to foreclosure suit, so that there was serious defect affecting marketability of title, purchaser at judicial sale could not be adjudged guilty of contempt under Section 11687, General Code, for declining to take property.
2. Rule of court requiring an abstract of title to be filed in every foreclosure case, and requiring court before entering decree to pass on question as to whether all parties having interest in property were made parties, amounted to representation that decree was entered in full compliance with rule and that it was safe to bid at judicial sales in foreclosure cases, and purchaser had right to rely on such representation.
ERROR: Court of Appeals for Cuyahoga county.
Messrs. Gottfried Silber, for plaintiff in error.
Mr. Ray T. Miller and Mr. E.J. Hopple, for defendant in error.
This matter comes into this court on error proceedings prosecuted from the judgment of the common pleas court, wherein the plaintiff in error was adjudged guilty of contempt for failing to complete the purchase of a parcel of land sold by the sheriff at judicial sale, whereat plaintiff in error was the highest bidder.
It appears that in March, 1927, the treasurer of Cuyahoga county instituted suit in foreclosure against certain premises located in Cleveland, the purpose of the suit being to enable the county to collect delinquent taxes on said land, due to it for the five years prior to the filing of the suit. At the time the suit was instituted, title to part of the land stood in the name of Michael McNamara, and title to the balance stood in the name of Minnie Nicholson. The record discloses that Minnie Nicholson was dead at the time of the filing of the suit, she having died in 1913, leaving surviving her a husband, Burton Nicholson, and a daughter, Edna M. Snow.
Michael McNamara, owner of part of the land, was served personally. Upon the return of the sheriff showing no service on the other defendants, service by publication was perfected in accordance with the statute. There is no dispute in the record that Burton Nicholson, husband of the deceased, Minnie Nicholson, had an interest in the land, to wit, statutory dower, that he was at the time of the filing of the suit a resident of Cuyahoga county and that no personal service was had upon him.
Under a decree of the court the premises were ordered sold at sheriff's sale, and accordingly, in January, 1928, the property was sold by the sheriff to the highest bidder, the plaintiff in error, the Gale Realty Company, a corporation.
In accordance with the rule of the court, the purchaser, the Gale Realty Company, paid the sheriff $300 as a deposit. The purchase price of the land was $2,375. On February 14, 1928, the purchaser notified the sheriff that it would refuse to go through with the purchase of the land. The reason given was that there was a serious defect in the title in that Burton Nicholson, surviving husband of Minnie Nicholson, who has a dower interest in the land, was not served in accordance with the law. A citation was issued for the purchaser, the Gale Realty Company, to show cause why it would not be punished for contempt. After a hearing, it was adjudged guilty of contempt and a fine imposed.
It is contended on the part of defendant in error that the rule caveat emptor applies to a purchaser at judicial sales, and that therefore a bidder at a sheriff's sale does so at his own risk, and, once the property is sold to him as the highest bidder, he is bound to go through with the purchase, and that the sheriff is only required by law to convey whatever he has and no more.
It appears that the common pleas court adopted a rule that in every foreclosure case an abstract of title must be presented to the court, and that before a decree is entered by the court the court must pass on the question whether all parties having an interest in the property were made parties. There may be some question as to the power of the court to adopt such a rule, but the purpose of the rule is quite clear, namely, to protect bidders at judicial sales, and to permit no judicial or sheriff's sales unless the sheriff can give a marketable title.
The proceedings for contempt in this case were had under the provisions of Section 11687, General Code, which is as follows:
"The court from which an execution or order of sale issues, upon notice, and motion of the officer who makes the sale, or of an interested party, shall punish as for contempt any purchaser of real property who fails to pay the purchase money therefor."
It seems to us that in the exercise of sound discretion on the part of the court a purchaser at judicial sales should not be punished for contempt for declining to take property where there is an apparent serious defect in the title making the same unmarketable. Otherwise the court would become a party to perpetrating a fraud upon a bidder in good faith at a judicial sale. There is this additional element in the case, namely, that the rule of the common pleas court which requires an abstract of title to be filed in every foreclosure case, and also requires the court, before entering a decree, to pass upon the question as to whether all parties having an interest in the property were made parties, amounts to a representation to all bidders at sheriff's sales that the decree was entered in full compliance with said rule, and that it is safe to bid at judicial sales in foreclosure cases. Plaintiff in error had a right to rely upon this representation.
Since it is the admitted fact that Burton Nicholson, who has an undisputed dower interest in the land, was not made a party in accordance with the law, and that there is therefore a serious defect affecting the marketability of the title, the plaintiff in error could not be adjudged guilty of contempt under the circumstances.
Holding as we do, the judgment of the common pleas court is reversed, and judgment is entered in favor of plaintiff in error.
Judgment for plaintiff in error.
SULLIVAN, P.J., and VICKERY, J., concur.