Barnard v. Duncan

1. Vendors and Purchasers — Trustees—Covenants,—A trustee undertakes only to convey the title vested in him by the deed giving him the power, and cannot be required to enter into any personal covenants against encumbrances in general. The only covenants which can be required of a trustee executing a mere naked power, is the usual trustee eovenant'against acts and encumbrances done or suffered by himself. 2. Vendors and Purchasers — Mortgages.—The purchaser, at a sale made by a mortgagee or trustee selling under a power to sell for the payment of debts, must take notice of the title and its defects as it appears of record. 3. Mortgages — Deeds of Trust — Sale—Damages.—Where the trustee, in a deed of trust with a power of sale at public auction upon giving notice for a certain number of days, advertises the property and puts it up for sale, and the property is struck off to a bidder, the trustee cannot upon the same day resell the property because the purchaser refuses to complete his contract; there must be a new publication of notice. The difference in price between the two sales in such a case is not the proper measure of damages. 4. Vendors and Purchasers — Notice of defects of Tille — Trustees—Fraud.—At a sale by a trustee under a power where the facts or means of information concerning the condition and value of the thing sold are equally accessible to both parties, and nothing is said or done which tends to impose on the other or to mislead him, there is no fraud of which the law can take notice; but where material facts are accessible to the vendor only, and he knows them not to be within the diligent attention, observation and judgment of the other party, he is bound to disclose those facts and make them known to the purchaser. The vendor must disclose all material facts of which he knows the vendee to be ignorant. There may be fraud in the suppressing and concealing of material facts, as well as in direct misrepresentation, if the other party is knowingly suffered to deal under a delusion.

jError to St. Louis Circuit Cowrt. The plaintiff sued to recover the amount bid by defendant, at a sale made by plaintiff as trustee, of lands conveyed to him as trustee. The petition set out the deed, by which W. D. W. Barnard conveyed the land to him, dated June 27, 1860, in trust to pay certain debts described; the exposing the land to sale at auction; the auctioneer’s memoi'andum of defendant as purchaser for $2,250 ; the tender of a deed to defendant, and his refusal to accept; a re-sale on the same day for $25; and prayed judgment for the difference. The answer admitted the conveyance to the plaintiff, the sale, and defendant’s bid; denied tender of a deed, but admitted his refusal to pay his bid; ignored all the proceedings at the second sale, and denied all fraudulent conduct at the sale. The answer then alleged that, by his deed to the plaintiff, W. D. W. Barnard covenanted that he had an indefeasible estate in fee simple in said lands; that said lands were free of encumbrances suffered or done by him, and for further assurance ; and then alleged that the grantors were not so seized, and that they had by previous deeds sold and conveyed said lands so that they had no title to convey. It then alleged that the grantors had, by deed of trust duly recorded, dated June 25,1860, encumbered said lands to an amount exceeding $30,000, twice the value of the lands. It then set out prior encumbrances made by W. D. W. Barnard upon the promises, in 1857 and 1859, to the amount of over $8,000. It then claimed that plaintiff was by the sale bound to convey a good title free of encumbrances; and that as plaintiff could not make title, he could not recover. At the trial, plaintiff read the deed under which he made the sale, dated June 27, 1860, recorded June 28,1860; this deed contained the statutory covenants created by the words “ grant, bargain, and sell.” Burnes, the agent of plaintiff, and his attorney, proved a tender of a deed to defendant on the day of sale, a demand for the amount bid and a refusal, and the re-sale; and that he wrote the deed of June 27, 1860, and the prior deed of June 25,1860 — recorded June 27, 1860 — to the same trustees, to secure specified debts for over $80,000 ; and that no time was allowed for examining the title. E. G. Obear, the auctioneer, proved the memorandum made by him; that no public statements were made by him about the title or the encumbrances, but that defendant applying to him, he told him that he had heard that the encumbrances were from $9,000 to $12,000, and that defendant declined complying with his bid because the property was encumbered to a much larger amount than had been stated to him ; that the property, if clear, might bring $20,000. Dr. Marshall testified that himself and defendant were the only bidders; that Duncan bid $1,000, and he then bid $2,000, when the plaintiff -came over to where he was standing and asked if he knew what he was bidding on ; Dr. M. replied, he thought he did — when the plaintiff told him that the encumbrance was larger than he had any idea of; that he thought he was bidding $12,000 for the property ; and, taking this as an act of kindness on plaintiff’s part, he stopped bidding, and at the next bid it was knocked down to the defendant at $2,250; that he thought the property worth $15,000. Defendant then proved the encumbrances on the property to amount to over $80,000. Plaintiff, in rebuttal, introduced evidence showing that part of the prior encumbrances had been paid off, and that of the assets conveyed by deed of June 25,1860, in the course of four or five years some $4,000 might be realized in relief of the encumbrance, and that at the sale the amount due upon the encumbrances was only $14,691.50. This would have made the cost of the property to the defendant $17,000. The court then gave the two following instructions asked by the defendant: 1. If the deed to plaintiff purported to convey a valid title, with good warranty, and if the plaintiff, as trustee,' offered for sale the lands described in the petition, and neither in the advertisement nor at the sale gave notice to the bidders that the land was encumbered, or that the title was defeasi-ble by virtue of prior deeds of trust executed by his grantors and not named in said deed to plaintiff, then he was bound to offer to defendant, as the highest bidder at the sale, a deed conveying a good title in fee simple, free and clear of any encumbrances which could defeat the title conveyed. 2. If the defendant, at the sale, or immediately prior thereto, applied to E. G-. Obear, the auctioneer, to know the amount of the' encumbrances, and by said auctioneer, acting for the plaintiff, was informed that the encumbrances amounted to between $9,000 and $12,000, and made his bid upon such information, believing the same to be true, and plaintiff, being present, did not correct such statement, and if, in fact, the encumbrances amounted to nearly $14,691.65, then the defendant is not liable in this suit for refusing to accept a deed and to pay the sum bid by him. The plaintiff asked the following instructions, which were refused by the court: 1. At a sale of real estate at public auction by a trustee, under a deed of trust duly recorded to secure the payment of debts, the trustee does not by such sale undertake to convey «any other or greater estate than was conveyed to him by the deed o”f trust under which he proposes to sell, unless by special agreement he undertakes otherwise, or renders himself otherwise liable by his representations, or those of some one else for him. 2. At a sale of real estate at public auction by a trustee, under a deed of trust duly recorded to secure the payment of debts, the rule caveat emptor applies, as against a bidder at such sale. 8. At a sale of real estate at public auction by a trustee, under a deed of trust duly recorded to secure the payment of debts, a bidder at such sale will not be released from his bid by reason of the fact merely that said real estate is subject to a prior deed of trust, which is also duly on record showing its priority. The bidder is chargeable with notice of such record’, and is presumed to bid with such notice. 4. If a purchaser at a sale of real estate at public auction by a trustee, under a deed of trust to secure the payment of debts, knows that at such sale he can only buy the equity of redemption to such real estate, subject to a prior deed of trust to secure prior debts, also duly recorded showing its priority, then he bids at such sale at his peril, the rule caveat emptor applying thereto. 5. The rule which protects bona fide purchasers does not apply to purchasers of a mere equity of redemption, who purchase with knowledge that it is only an equity of redemption which is being sold. 6. The auctioneer, in stating the amount of prior encumbrances, had a right to . deduct therefrom the value of the effects which were pledged for the payment of such prior encumbrances; and his estimate, thus honestly made, gives full notice to any bidder to whom it is communicated. 7. The defendant in this cause cannot avail himself of any supposed defects in the deed tendered to him by the plaintiff because he refused to comply with his bid and accept a perfect deed. On giving the instructions asked by the defendant, and* refusing those asked by the plaintiff, the plaintiff took a non-suit, with leave to move to set the same aside. The court erred in giving the instructions asked by the respondent, and in refusing the instructions asked by the appellant — Gardner v. Armstrong, 31 Mo. 536. I. The deed to plaintiff does not “purport to convey a valid -title with good warranty.” The only ground upon which it «eould have been so construed was because the words “grant, bargain and sell” were not in the granting clause. The deed ¡to the plaintiff is not such a conveyance as is required by the ¡•statute of Missouri, in order to raise the covenants provided by the statute by using the words “grant, bargain and sell.” The statute is, “ the words ‘ grant, bargain and sell,’ in all conveyances in which any estate of inheritance in fee simple is 'limited, shall * * be construed to be the following express covenants,” &c. — R.. 0.1855, p. 357, § 14. Blackstone, in defining “an estate of inheritance in fee simple,” says: “ A fee therefore, in general, signifies an estate of inheritance, 'being the highest and most extensive interest that a man can have in feud ; and when the term is used simply without any other adjunct, or has the adjunct of simple annexed to it (as a fee or fee simple), it is used in contradistinction to a fee conditional at common law, or a fee-tail by the statute, importing an absolute inheritance clear of any condition,” &c. — 2 Blacks. 106. II. In the case of Gale y. Mensing, 20 Mo. 461, property was conveyed to trustees, including real estate, to pay debts. The trustee had the power to sell at public or private sale, as in the deed to plaintiff, and some of the land was subject to a prior mortgage. The estate conveyed was exactly the same as by the deed to plaintiff. Judge Leonard gave the opinion of the court, and, in speaking of the estate conveyed, says, “ the deed was not a mortgage, but a conveyance of the whole title * * * a transfer of the legal ownership, upon the trusts declared in it, subject to Caldwell’s mortgage.” Caldwell’s mortgage does not appear to have been mentioned in the conveyance to the trustees. III. Even if the deed to plaintiff •conveyed an “ estate of inheritance in fee simple,” still the express language that there are three prior unsatisfied deeds of trust on the laud, and that the trustees take subject to those encumbrances, releasing them or not, as they deem proper, with trust moneys arising under the deed, — this express language of the deed prevents the raising of the statutory covenants from the use of the words “grant, bargain and sell” — Sheldon v. Pease, 10 Mo. 473. IV. This instruction is further erroneous in requiring the plaintiff, as trustee, to offer to the defendant “ a deed conveying a good title in' fee simple, free and clear of any encumbrances which would defeat the title conveyed.” What kind of a deed is required by this instruction? Would it require the words “ grant, bargain and sell” ? Would it require a covenant against encumbrances f As to the usual form of a trustee’s deed, see Whittelsey’s Missouri Form Book, p. 323, form 226. “ A person,” says Hill on Trustees, “ who conveys merely as trustee, can be required to enter into no covenants for title beyond the usual covenant that he has done no act to encumber” — Hill Trust. 481. In Cruise Dig., we have the law stated to be, “where all the money to arise from the sale of an estate is to be applied in payment of debts, a purchaser can only require a covenant from the trustees, or devisees, that they have done no act to encumber. And it is the same where the purchase is made from the assignee of a bankrupt — Sto. Eq. § 1038.” (4 Crui. Dig., Tit. 32, ch. 26, § 87; Ennis v. Leach, 1 Ired. Eq. 416.) I. Every agreement to sell land is an agreement to convey the land with a good title thereto, or for a sale in fee simple. In Kent v. Allen, 24 Mo. 98, 106, it was said by this court, “ that, if the owner send land into market for sale, he gives assurance to the world, by implication at least, that lie has a valid title to that land both in law and equity.” A title is implied, unless by the terms of the offer or contract it is excluded — 1 Sug. Tend. 455; Sto. Sales, § 462; Chit. Cont. 245-7 ; Hughes v. Parker, 8 Mee. & W. 244; 3 Nev. & Man. 40; Spritt & Jeffrey, 10 B. & C. 249; Shepherd v. Keatly, 1 Oro. M. & R. 117 ; Hall v. Beatley, 4 Man. & G. 410; Ogilvie v. Eoljambe, 3 Meriv. 53 ; Sowter v. Drake, 5 B. & Ad. 992; Coster v. Clark, 3 Ed. Ch. 428.— See also Washington v. Ogden, 1 Black, U. S. 450, which was a suit at law. Where a party cannot enforce a specific performance for want of title, he cannot recover damages at law — Chit. Cont. 246 ; notes to Seeton v. Slade, 2 Wh. & Tud. L. C., Pt. 2, 3; Beckwith v. Koons, 6 B. Mon. 222. In Dickson’s v. Desire’s Adm’r, 23 Mo. 151-9, Leonard, J., says: “ The sale of a thing imports, from its very nature, an obligation on the part of the seller to secure to the purchaser the possession and enjoyment of the thing bought— the right to possess and enjoy being really that which is purchased. So, if a man contract to convey with warranty, his contract is not satisfied by simply making and tendering a deed with covenants, &c.; he must have a good and perfect title to the land he agrees to sell — Luckett v. Williamson, 81 Mo. 54 ; "Everson v. Kirtland, 4 Paige Ch. 269; Major v. Edwards, 12 Mo. 13T; S. C. 10 Mo. 671; Smith v. Busby, 15 Mo. 387. The plaintiff evidently sues upon the idea that a trustee, like a sheriff, sells only the interest of the debtor in the property, and that a bidder bids at his own risk; in other words, that the rule caveat emjptor applies. This rule applies only to sales by the sheriff under execution — forced sales by virtue of the writ of execution ; but this is not a universal rule in the different States, and even in this State relief is sometimes granted where the title fails, as in the case of Maguire v. Marks, 28 Mo. 193. So.also incases of partition sales, the sale may be set aside for defect of title — Nieman v. Early, 28 Mo. 477 ; Jackson v. Edwards, 22 Wend. 498-509; Smith v. Brittain, 3 Ired. Eq. 347; 1 Hopk. Ch. 436 ; 2 Paige, 586. No man should be enriched at another’s expense without compensation — Vallé v. Fleming, 29 Mo. 152. We submit that trustees’ and partition sales do not stand on the same footing as sheriffs’ sales. The case of Gardner v. Armstrong, 31 Mo. 535, relied upon by plaintiff, does not here apply, for in that case the title sold was good, and no defect was shown. In the case of Coons v. North, 27 Mo. 73, a trustee’s sale, contract executed, was set aside upon the ground of mistake of parties as to the quantity of land conveyed. But a trustee is, in effect, the agent of the debtor, appointed by him, and a failure of title is a good defence to an action by the trustee even in case of an executed contract— Long v. Gilliam, 28 Mo. 560. In Jones v. Stanton, 11 Mo. 33, relief was given to a purchaser of land who had given his notes, upon the ground of defect of title in the vendor, and his insolvency. The deed of W. D. W. Barnard to plaintiff was a convey-anee with covenants of indefeasible seizin, and against his own encumbrances, by using the words “ grant, bargain and sell.” This deed did not recite nor refer to previous encumbrances — Mosely v. Hunter, 15 Mo. 322; Alexander v. Schneiber, 10 Mo. 460 ; Shelton v. Pease, 10 Mo. 473 ; Pe-care v. Chouteau, 18 Mo. 527 ; Dickson v. Desire, 23 Mo. 151; Chambers’ Adm’r v. Smith’s Adm’r, 28 Mo. 174. Under this deed the plaintiff really had no title, for it had been previously conveyed to trustees by other deeds: he, therefore, could not convey a title in fee, or free of encumbrances. The trustee advertised to sell the land by virtue of a deed of trust, which contained covenants that the grantor had a title which could not be defeated by anything — that is, a covenant for an absolute title in fee; and also, that it was free of encumbrances done or suffered by the grantor. The purchaser who looked to this deed was authorized to expect a good title from the trustee, and not a deed with a defeasible title, nor a title encumbered to twice the value of the property. II. The sale was not fairly made. The plaintiff, by his conduct in trying to save a friend from a bad bargain, thereby prevented a person from bidding who might have outbid the defendant, and thereby have relieved him from his contract. At auction sales, the utmost fairness must be observed, so that parties be not entrapped ; nor may bidders combine to depreciate the property — 2 Kent Com. 537; 1 Sto. Eq., § 293 ; Chit. Contr. 237-9 ; Worton v. Hinkle, 20 Mo. 290 ; Neal v. Stone, 20 Mo. 294; 22 Mo. 349. The defendant met the equity of the plaintiff’s case. He admitted that the auctioneer informed him that the property was encumbered to the amount of ten thousand dollars, and both he and Marshall, the other bidder, supposed they were bidding about $12,000 for the property. For the plaintiff to put one person rrpon his guard, by telling him that the property was encumbered to a larger amount than he had supposed, was entrapping strangers. III. It would be inequitable to compel the defendant to stand by his bid made under a mistake of fact as to the amount of the encumbrances. He was informed that they amounted to between $9,000 and $10,000, and he was willing, under that information, to give $12,000 for the property. The auctioneer was an agent for the plaintiff. No notice was given at the sale that the property was sold subject to prior encumbrances; but the defendant, bidding upon the information he had received of the auctioneer, might in equity be bound to take the property encumbered to that amount, $10,000, but for nothing more. He was under a mistake — Coons v. North, 27 Mo. 73. As a general rule, where a court of equity would not enforce the specific performance of a contract for the purchase of lands, the vendor cannot recover damages for a breach of the contract. In some cases, courts of equity will go farther than courts of law. At law, the vendor must have the title when he tenders the deéd; in equity, it is sometimes sufficient if he can make the title at the trial. In this case, the plaintiff sues for damages for refusing to complete the contract, when the plaintiff had not the title to convey, and the property was encumbered to the amount of twice its value, or more. At the best, the encumbrances upon the property were at least $30,000. In sales under decrees of a court of chancery, the purchaser has the opportunity of declining the purchase if the title be defective — 2 Dan. Ch. Pr., Am. ed. 1846, N. L. L. & Eq., 801, 902 et seq. & 911, 913, 919 — ed. 1865, pp. 1273-5, n. 5, & 1281; Seaman v. Hicks, 8 Pai. Ch. 656 ; Post v. Leet, 8 Pai. Ch. 337. A purchaser at master’s sale, who is notified of risk in the title, will not be compelled to take unless he can get the legal and equitable estate — Coster v. Clarke, 3 Ed. Ch. 428. So he may be relieved on account of mistake — bidding an unreasonable price — Dan. Ch. Pr., ed. 1865, p. 1283-4. So in partition sale, if title not made good — Jackson v. Edwards, 22 Wend. 498-509. Purchaser not bound to accept a doubtful or merely equitable title — 1 Hopk. 436 ; 2 Pai. 586. A partition sale is not a sale in invitum, but a mode of sale by the parties themselves — Smith v. Brittain, 3 Ired. Eq. 347 ; hence a purchaser may have the money paid back before conveyance executed.