Opinion
(December Term, 1839.)
1. A purchaser at a sheriff's sale, even when the defendant in the execution has the legal title, and much more when he has but an equity, succeeds only to the defendant in the execution, and is affected by all the equities against him.
2. It is only the honest purchaser of a legal title whom equity will not disturb. If the purchase be of the legal title, but with notice of an equity in another, or if it be only an assignment of an equity, with or without notice of a prior equity in another person, in either case the estate must, in the hands of the purchaser, answer all the claims to which it would have been subject in the hands of the vendor. Therefore, the sureties of a purchaser of land at a sale made by the clerk and master under a decree of the court of equity, where the title is retained until the purchase money shall be paid, have a right, upon the insolvency of their principal before the payment of the debt, as against one purchasing from him bona fide and without notice of the nonpayment of the purchase money, to have the land sold for their reimbursement, if they have paid the debt, or for their exoneration if they have not yet paid it.
3. The assignor is not a necessary party to a bill against an assignee, where it appears from both the bill and answer that all the interest of the assignor has been transferred.
DANIEL GALLANT died intestate and seized in fee of certain lands situate in Mecklenburg County, and in 1829, upon the bill of Daniel's heirs (of whom John Gallant was one), the court of equity for that county decreed that, for the purpose of partition, the lands should be sold by the clerk and master, on a credit, in the decree specified. At the sale John Gallant became the purchaser of one parcel at the price of $420, and gave his bond therefore, with the present plaintiff, Polk, as his surety, payable to the clerk and master; and that officer was to execute conveyances to the purchasers respectively upon the payment of the purchase money. In February, 1832, John Gallant assigned his interest in the land to his son, Stephen M. Gallant, without having paid any part of the purchase money, he being then insolvent, and residing, as well as the son, in South Carolina. In 1833 the surety, Polk, filed this bill against John Gallant and Stephen M. Gallant, and besides the circumstances above stated, therein further charged that the assignment from the father to the son was voluntary and without any valuable (396) consideration, and with knowledge on the part of the latter that the former had not paid his bid, or any part of it, nor obtained a conveyance; and, also, that John Gallant had directed the application to other purposes of his own share of the moneys arising from the sales of all the lands, and that it had been so applied; by means of all which the bill alleged that the plaintiff was in danger of being compelled to pay the said bond, and that the only fund from which he could expect exoneration or indemnity was the land itself. The bill then prayed that an account might be taken of the sum due on the bond, and the same raised out of the land and applied to the debt in discharge of the plaintiff.
After the bill had been taken pro confesso and set down for hearing ex parte, as to John Gallant, the cause abated as to him by his death.
Stephen M. Gallant answered that he agreed to give his father $421 for the land, the same being the full value thereof, and that he paid that sum without any knowledge that the original purchase money had not been paid by his father; that he soon discovered that at the time of his own purchase there was a judgment and execution against his father, on which he was advised the land was liable to be sold; and that it was sold by the sheriff, and this defendant again became the purchaser, at the price of $161, which had been a clear loss to him. At the sheriff's sale the answer stated no doubt to have existed of the title being good.
To the answer the plaintiff replied, but no proofs were taken by either party.
D. F. Caldwell for plaintiff.
Alexander and Hoke for defendant.
The cause is brought to hearing without evidence, upon the bill, answer, and replication; and from the pleadings the case is as follows: [His Honor here stated the case as above, and then proceeded.] Upon the argument, counsel for defendants placed not much stress on the defenses brought forward in the answer; and we think very properly, as they are clearly insufficient. In the first place, the sheriff's sale is not bar, even if a legal title had been the subject of it, as the purchaser only succeeds to the defendant in the execution, (397) and is affected by all the equities against him. Freeman v. Hill, 21 N.C. 389. Much more must this be so when the defendant in the execution has himself but an equity. If it be of that kind which is liable to be sold, the purchaser can only claim to stand in the shoes of the debtor, and get a title only by doing those acts on the performance of which the debtor himself would have been authorized to ask for a conveyance.
Precisely on the same footing stands the purchase of the son from the father himself, which was of an equity only. It is only the honest purchaser of a legal title whom equity will not disturb. If the purchase be of a legal title, but with notice of an equity in another, or if it be only an assignment of an equity, with or without notice of a prior equity in another person, in either case the estate must, in the hands of a purchaser, answer all the claims to which it would have been subject in the hands of the vendor. Between mere equities, the elder is the better.
Against the present defendant, then, the plaintiff is entitled to all the relief which this Court would have given him against the original purchaser, for whom he was surety. We have, during the present term, in Green v. Crockett, ante, 390, applied the equity between principal and surety to a state of facts substantially the same with the present, and decreed for the sureties; and in so doing we have laid down no new principle nor made a novel application of an old one. Neither the purchaser nor his assignee could get the title, without paying the purchase money; and if the surety paid it, the vendor ought not then to convey, but hold the title for the indemnity of the surety, who has a right to it by substitution. But when the principal is insolvent, the surety, although he may not have paid the money, has an immediate equity to subject the land, because that has then become in fact the only fund to which he can have access, as between it and the surety, as it were, the principal debtor, and not simply a collateral security. We are not speaking of the rights and duties of the creditor and surety as between themselves, but those which arise between the surety and his principal, or the (398) principal's assignee. As to these last, there is a plain and strong equity, when it is admitted or ascertained that the original debtor is personally disabled from furnishing any means for the exoneration of the thing pledged, that such pledge should forthwith be applied to the purposes for which it was created, in discharge or diminution of the surety's responsibility.
It was, however, insisted for the defendant that his father was a necessary party, and that the plaintiff cannot have decree without reviving the suit against his heirs. There are two answers to this objection. The one, that the defendant is stated by both the bill and the answer to be the assignee of all the interest his father had; and, therefore, the latter is not a necessary party, as there could be no relief decreed against him; and the only effect of having him before the court would be to conclude him. Thorpe v. Ricks, 21 N.C. 613. The second answer is that what is required in the argument exists in fact; for the present defendant is admitted in the answer to be the son of John Gallant; and the latter is dead without, as far as appears, leaving any other child, or having made a will; and so the defendant is his only child and heir. It cannot be requisite to bring him in as heir by bill of revivor, because the plaintiff does not seek to charge him as heir to any purpose whatever.
We think, therefore, that it must be referred to the master to inquire what is due for principal and interest of the debt, for which the plaintiff is liable, as stated in the pleadings; and that it must be declared that the land, also, mentioned in the pleadings, is liable for the sum that may thereupon be found due, and for the costs of the plaintiff in prosecuting this suit; and if the defendant shall not pay such principal, interest and costs, within some reasonable time, it must be ordered that the clerk and master of Mecklenburg sell the land, and out of the proceeds pay, in the first place, the principal money and interest due on said debt; and in the next place, the said costs if sufficient therefor.
PER CURIAM. Decree accordingly.
Cited: Winborn v. Gorrell, 38 N.C. 122; Barnes v. Morris, 39 N.C. 26; Smith v. Smith, 40 N.C. 41; Egerton v. Alley, 41 N.C. 189; Vannoy v. Martin, 41 N.C. 172; Freeman v. Mebane, 55 N.C. 47; Mullins v. McCandless, 57 N.C. 428; Smith v. Bank, 57 N.C. 306; Shoffner v. Fogleman, 60 N.C. 570; Miller v. Miller, 62 N.C. 89; Carr v. Fearington, 63 N.C. 563; Walke v. Moody, 65 N.C. 602; Hicks v. Skinner, 71 N.C. 540; Ross v. Henderson, 77 N.C. 173; Todd v. Outlaw, 79 N.C. 237; Durant v. Crowell, 97 N.C. 373; Moore v. Moore, 151 N.C. 558; Williams v. Lewis, 158 N.C. 575; Brown v. Harding, 170 N.C. 268.
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