Acton v. Lamberson

BEAN, J.

Counsel for defendants upon this appeal submit, and support by a wealth of authorities that,—

“If the County Court, in the guardianship matter, secured jurisdiction of the subject matter, the sale by the guardian to Fred Cammann was valid, and if there were any defects, either in the service of the notices or the failure to serve notices, they were cured by the order confirming the sale, and cannot be collaterally attacked. ’ ’

With this general principle counsel for plaintiff agrees, but claims that the real property of a testator descends to the heirs subject to the testator’s debts, and that the grantee of the heirs of Frank Cammann, deceased, stands in no better position than the heirs themselves; that the sale under order of the County Court by the administrator to pay the debts of the testator may completely divest the heir or grantee of the title to such real property: Citing Section 10125, Or. L.; Worley v. Taylor, 21 Or. 589 ( 28 Pac. 903 ); Re Estate of Houck & Meyer, 23 Or. 13 ( 17 Pac. 461 ); Stadleman v. Minor, 83 Or. 348 ( 155 Pac. 708 , 163 Pac. 585 , 983).

1, 2. It appears from the record that the adverse possession of the real property involved, held by the defendants, lacks four days of the statutory period of ten years required to obtain title to land by prescription. Before April 1, 1908, or for the four days mentioned, and for some time prior thereto the land *481 was in possession of Fred W. Cammann who was owner of one-third thereof. His brother Cleve Cammann owned one third and the minor heirs of Frank Cammann, deceased, owned one third of the 225 acres of land which was formerly owned by Philip Cammann, the grandfather of the minor heirs. Therefore the possession of the land was in Fred W. Cammann as a cotenant, who held the same for the other co-tenants : 2 C. J., p. 75, § 56. Although the heirs of Frank Cammann, deceased, held possession of the land belonging to the father’s estate, such possession was not adverse to a purchaser at an administrator’s sale for the payment of debts, for the reason that such heirs take subject to the payment of the ancestor’s debts. The law is tersely stated in 1 Cyc. 1055:

“Possession of heirs is not adverse to a purchaser at an administrator’s sale for the payment of debts, because they take subject to the payment of the ancestor’s debts.

“Heirs cannot acquire title to the land descended, as against the debts of the ancestor, by a- claim of adverse possession as against the title descended.”

It is further contended by the plaintiff that the administrator’s sale of the land in question, having been made by authority of the County Court which had complete jurisdiction, and the sale confirmed, such proceedings cannot be assailed in this suit for the reason that it is a collateral attack. This claim is in conformity to the holding of the trial court, and we think is the first question for consideration.

Turning to authorities cited in plaintiff’s brief, the case of Morrill v. Morrill, 20 Or. 96, 101 ( 25 Pac. 362 , 23 Am. St. Rep. 95 , 11 L. R. A. 155), contains a discussion of what constitutes a direct or collateral *482 attack upon a decree of court. Mr. Justice K». S. Bean there said:

“A collateral attack on a judgment is any proceeding which is not instituted for the express purpose of annulling, correcting or modifying such decree. (12 Am. & Eng. Ency. of Law, 177.) The fact that the parties are the same, and that the plaintiff seeks to attack the decree by the allegation of the reply cannot change the rule or make the attack any the less a collateral one.”

In the case of Yeaton v. Barnhart, 78 Or. 257 ( 150 Pac. 745 ), one of the latest decisions of this court upon the subject, among other things this court said:

“The County Court, having ordered a sale of the premises, necessarily decided that jurisdiction of the subject matter over which its authority extends had been secured in a proceeding based upon a proper allegation of the facts requiring an exercise of its power; and, it being thus competent to determine whether or not the facts set forth in the petition to sell the real property to pay the debts incurred by the deceased were adequate, the determination is conclusive against all the world, unless reversed on appeal or avoided for fraud in a direct proceeding: Woerner, Am. Law Admr. (2 ed.), § 145. # * ”

As to whether an attack upon a judgment or decree is direct or collateral, the rule is stated thus, in 1 Bailey on Jurisdiction, 140:

“In fact the writer is of the opinion (though not conceded by many courts) that any attack which has for its object the setting aside and vacating of a judgment is a direct attack, whether in the same or an independent proceeding. Any attack the object and purpose of which is to avoid the judgment, • leaving it to stand as the judgment of the court which pronounced it, is a collateral attack. Thus an action in equity to vacate and set aside a judgment is a direct attack; it directly attacks the judgment. *483 An action to restrain proceedings under the judgment, or to prevent the enforcement thereof is a collateral attack.”

This rule was approved by this court in Christensen v. Lane Co., 90 Or. 401 ( 175 Pac. 845 ), where it was held that a complaint seeking to remove a cloud upon the title, and to set aside an order of the County Court opening a road across plaintiff’s land, is not a collateral attack, but a direct attack upon the order of the County Court. In Lieblin v. Breyman Leather Co., 82 Or. 22 ( 160 Pac. 1167 ), this court held that a suit to cancel a judgment and to enjoin the enforcement thereof by execution against land of which plaintiff claims to be the owner, is a direct and not a collateral attack upon the original judgment.

3. The essential allegations in a suit in equity for the purpose of annulling or setting aside a judgment or decree are usually contained in the complaint, instead of in an answer as in the case at bar. Section 390, Or. L., authorizing a defendant, in an action at law where the defendant is entitled to relief arising out of facts requiring the interposition of a court of equity, and material to his defense, to set such matter up by answer, plainly declares that equitable relief respecting such matter of suit may thus be obtained by answer, and equitable defenses to new matter contained in the answer may be asserted by reply. The statute also declares that “the parties shall have the same rights in such case as if an original bill embodying the defense or seeking the relief prayed for in such answer or reply had been filed.” The statute therefore in such a case, where matters are set up entitling a defendant to equitable relief gives such defendant the same right as though he were plaintiff in the suit, and also gives the plaintiff the same right as though *484 he were defendant in such suit. The question does not depend upon which of the parties first reaches the court house and files his pleading. An important change in the practice in this respect was incorporated into Section 390 by an amendment in 1917.

4. 'The answer referred to above unquestionably attacks the proceedings of the probate court and the acts of Arley Acton as administrator in obtaining and allowance of his claim and selling the real estate to satisfy the same. "VVe do not understand that this is questioned by the counsel for plaintiff; but it is contended upon behalf of plaintiff that the attack upon the probate proceedings made by defendants in their answer is a collateral one. Tested by the authorities above referred to, the answer which is in the nature of a complaint in equity is a direct attack upon the probate proceedings in question.

5. The next question is, should the sale of the real property by Arley Acton as administrator be allowed to stand?

It appears that Philip Cammann, the former owner of the land, died leaving three sons, Frank Cammann the deceased, Fred A. Cammann and Cleve Cammann. His estate was administered, and John Zimmerman was appointed guardian of the minor sons. While Frank Cammann, deceased, was a minor he entered into a partnership business with Arley Acton. They had a few horses, perhaps a few more than sufficient for saddle-horses, and as stated were riding the range ‘ ‘ slickearing. ” Fred A. Cammann, a brother of deceased, and a witness in this proceeding, not being desirous of using harsh language in regard to his deceased brother, states in effect that they were taking property that did not belong to them. We find no contradiction of this testimony. They secured *485 possession of several horses branded with eight different brands. About the time the authorities were investigating the matter Arley Acton sold whatever interest he claimed in the horses to Frank Cammann then a minor, and took the note mentioned for $394 on January 5, 1903. On account of the transactions Frank Cammann was indicted and left the state, going to Seattle, Washington, but was induced by his brother, Fred Cammann, to return to Malheur County where he was killed about August 11, 1905. On February 29, 1908, J. D. Fairman was appointed as administrator of his estate and duly qualified. The claim of Arley Acton for the amount of the note appears to be dated on April 8, 1908, but was never allowed by J. D. Fairman as administrator. It appears to have been filed with the clerk July 29, 1908. Fairman resigned in September, 1908, and Arley Acton, husband of plaintiff, was appointed administrator of the estate. All of the real property belonging to the estate had then been sold to defendant J. Gr. Lamberson, on March 11, 1908, for the sum of $1,000, which was expended for the care of the minors. Arley Acton resided in the vicinity where the land was located, and presumably knew of these proceedings. On July 22, 1909, Acton as administrator allowed his claim for the note. The matter was then permitted to slumber until April 8, 1914, when the administrator petitioned to sell the real estate, which was sold on June 1, 1914, by order of the County Court after issuance and service of citations and the publication of notice. Meanwhile J. Gf. Lamberson was improving the land, which when he purchased it embraced but twenty acres in cultivation. At the present time about fifty acres have been reclaimed from wild sagebrush land and planted to *486 alfalfa. The annual crops amount to about 200 or 250 tons of hay. It is not clear, however, whether in giving the amount of such crops the witness refers tot the whole of the farm or the one-third interest involved. The sale of the land was made by the administrator to plaintiff Delia Acton, the wife of the administrator. It appears from the testimony of Arley Acton that she had a few cattle when they were married. Acton’s and his wife’s cattle were kept together. Acton states, ££We just run them together.” Her name was not on the assessment-roll for tax purposes. It is claimed that the cattle were sold and that Mrs. Acton’s share of the proceeds paid a part of the purchase price.

Mrs. Acton was not a witness upon the trial. It seems she was in the town where the testimony was taken, but her husband, Arley Acton, testified in her behalf on cross-examination in regard to the sale as follows:

“Q. As I understand, she and you had some stock together in the spring of 1914 and you sold them to Billy Miller, and Billy Miller paid her and you for the cattle, or the stock?

“A. Yes, sir.

<£Q. You put that, I presume, in your bank now?

££A. I don’t know that we had a bank account. It was in the business there; I don’t know just how we did do that.

££Q. You are not clear on that. You had the money in the business and you were in charge of the business, that is right, isn’t it?

“A. Yes, sir.

££Q. Then, when you thought about selling this place to somebody you advanced this $250 out of the business, part of it was hers and part of it was . yours, that is right, isn’t it?

“A. Yes, sir.

*487 “Q. And yon gave it to her in cash, did yon?

“A. Well, it was there, yes; we had the money there at the honse.

“Q. Yes, I understand you had the money there at the house.

“A. Yes, sir.

“Q. And you took it and gave her the $250, did you, and started off down to Yale together?

“A. Yes, sir.

“Q. To buy the place; now then when you got to Yale along about the 1st of June, just tell the Court now what you did towards selling this place.

“A. I sold this place.

“Q. How did you sell it?

“A. I sold it at the courthouse.

“Q. Private sale or public auction?

“A. A public auction.

“Q. Yes, public auction sale, you got up and struck it off. How many people bid at that sale?

“A. There was just one bid.

“Q. Your wife made a bid?

“A. Yes, sir.

“Q. And she made the bid and took this same $250 and paid it over to you?

“A. Yes, sir.”

Acton also testified thus:

“Q. You took the mortgage on the place for the $750? Then when she paid this mortgage off, Mr. Acton, did she pay you or did you just give her credit and consider that to be in the business?

“A. She paid me.

“Q. How?

“A. She paid me the money.

“Q. A check or currency or how?

“A. It was currency.

“Q. Now where did she get this currency from? Was that about the same procedure as before?

“A. Well, she had sold some steers and some cows.

“Q. Some of that partnership property that she and you had together?

*488 “A. Yes. * *

“Q. How did she pay you? You say she gave you currency then for the $750 and the interest?

“A. Yes, sir. * *

“Q. Did you make any attempt to get the rent, issues and profits from that land' from 1908 up until 1914?

“A. No, sir. * #

“Q. And these cattle that you sold, you had an interest in them, the cattle you sold to Chet Stallard?

“A. Yes, sir, it wasn’t any — ”

Cattle owned in the same way were sold to pay the balance of the purchase price of the land secured by mortgage. A construction of the testimony as favorable to plaintiff as can be made is, that the joint property of the husband and wife was used to pay for the real estate in question.

Section 1276, Or. L., provides among other things that,—

“The order of confirmation of sale in this chapter mentioned is conclusive as to the regularity of the sale, and no further. All purchases of the property of the estate by an executor or administrator, however made, whether directly or indirectly, are prohibited, and if made are void.”

We think the testimony shows that the sale of the real property in question was made for the benefit of the administrator and comes within the prohibition of Section 1276.

The sale of the real estate in question made by Arley Acton as administrator of the estate of Frank Cammann, deceased, to Delia Acton, his wife, was made indirectly to Arley Acton himself, and was void. Therefore the plaintiff has no title upon which to maintain this action: Lombard v. Carter, 36 Or. 266 ( 59 Pac. 473 ); Marquam v. Ross, 47 Or. 374, 404 ( 78 Pac. 698 , 83 Pac. 852 , 86 Pac. 1); Haymond v. *489 Hyer, 80 W. Va. 594 ( 92 S. E. 854 , L. R. A. 1918B, 1); Lagger v. Mutual Union Loan & Bldg. Assn., 146 Ill. 283 ( 33 N. E. 946 ).

In Marquam v. Ross, 47 Or. 404 ( 83 Pac. 859 ), this court speaking by Mr. Justice E. S. Bean, used this language:

“The fiduciary character of the purchaser, when the circumstances are such, that to allow him to purchase for himself would tempt him to act for the protection of his own interest and the consequent injury of those whom, as trustee, he is bound to protect and serve, will be sufficient. It is enough that there is a conflict between duty and self-interest. The law will not allow the matter of self-gain to stand as a temptation to misconduct in the discharge of the duty growing out of the fiduciary relation. A trustee will not be permitted to subject himself to the temptation which arises out of the conflict between the interest of the purchaser and his duty as a trustee”: Citing authorities.

In a note to Haymond v. Hyer, [ 80 W. Va. 594 ( 92 S. E. 854 )], L. R. A. 1916B, 1, at page 7, we find the following:

“The rule is almost unanimous, both in the United States and the British Empire, that an administrator or executor may not purchase at his own sale of the property belonging to the decedent’s estate. In some of the States this rule of the common law has been embodied in statute (Section 1276, Or. L.). The rule is an application of the general rule against the purchase by trustees of property belonging to the trust estate. It is founded upon the unfairness that is likely to follow upon a sale in which the same person is both vendor and purchaser. ‘Lead us not into temptation’ has been said to be the underlying principle. Accordingly the presence of actual fraud in the transaction is not necessary to render the sale improper. ’ ’

*490

6. Among all of the trusts that of a person occupying the position of an executor or administrator of the estate of a deceased person, should be held to a strict compliance with the statute prohibiting a purchase of the property of the estate, either directly or indirectly, by such executor or administrator, and a court of equity should hold such a sale, if made, void as the statute declares it. An order of confirmation of a sale made in contravention of the statute is conclusive only as to the regularity of the proceeding of sale. A court of chancery, when the matter is properly brought before it, should not permit the property of minor heirs to be wrongfully taken from them in violation of the law.

7. The trial court, in ruling upon this point, recognized the effect of the statute, expressing the opinion that when the wife having purchased the property continued to hold the same in her own name and not transfer it to the administrator, the presumption was she had purchased for herself. However this presumption may be, the testimony clearly shows that the purchase was made for the benefit of the administrator. While the fact that a reconveyance to the administrator would perhaps be conclusive evidence that the sale was made for his benefit,r;we do not think that is the only manner of showing that a sale is made by an administrator indirectly for his own benefit. Otherwise all that would be necessary in such case, in order to circumvent the statute, would be for the wife to make the purchase of the real estate sold by her husband as administrator and hold the same until the statute of limitations has run. The sale in question was clearly in violation of our statute.

*491

8.. It is contended upon behalf of plaintiff that the defendant should have offered to compensate plaintiff for the amount paid for the real estate, or that plaintiff should be subrogated to the rights of the creditor of the estate if the sale is set aside. The authorities do not appear to be agreed as to a tona fide purchaser having such a right, many authorities holding that the right of subrogation on a void sale does not exist. The authorities are practically unanimous in support of the doctrine that this right does not exist where fraud has entered into the transaction. It is stated in 11 E. C. L., page 377, Section 450, that,—

“It should be recognized that the right of subrogation in the jurisdictions in which it is recognized' is an equitable right, subject to being forfeited by any fraud or wrongful conduct of the purchaser.”

In Huse v. Den, 85 Cal. 390 ( 24 Pac. 790 , 20 Am. St. Rep. 232 ), the syllabus reads:

“Purchasers of land at void sales by executors can claim no rights of subrogation where they know that the land was subject to a trust, and that the executors had no authority to sell. * * ”

We read in 11 E. C. L., page 376, Section 449:

“It may be noted in this connection that in order to assert an equity of subrogation in property that has been sold at an administrator’s sale, the facts must be pleaded, and that when the purchase money derived from the sale has not been paid out of the hands of the personal representative in liquidation of debts, but remains in his hands, the purchaser, instead of being entitled to subrogation against the heirs, will be entitled to a decree against the executor or administrator for the amount so held.”

“It has also been held that a decree for the sale of land to pay debts is not res judicata as to the validity of the debts and the insufficiency of personal *492 property to pay them as against the heir or his successor in interest, who may contest a motion to revive such order of sale on the ground that the debts are barred by the statute of limitations.” 11 R. C. L., p. 380, § 454.

As we read the record, from the inception of the transaction when Arley Acton unloaded his portion of the ill-gotten gain in the horse business upon Prank Cammann, the whole matter is steeped in fraud. The court of equity should not vary the rule in order to recompense Arley Acton in the matter. That would be the effect of subrogating plaintiff to his right as a creditor of the estate.

The plaintiff should look to Arley Acton, her husband, for reimbursement if she has expended any of her money in the purchase. It is doubtful if a dollar changed hands in the transaction. The land is attempted to be applied in satisfaction of the administrator’s note which should have been acted upon while Mr. Pairman was administrator of the estate, and probably would have been if it had been a valid claim.

The briefs of counsel upon both sides are thorough and complete, and furnish all assistance that could be expected. We have examined the record with care.

The decree of the Circuit Court will be reversed, and one entered setting aside the sale and deed of the administrator of the one-third interest in the land and quieting the title of defendants to the real property described in the answer herein.

Reversed and Decree Entered.