Opinion
May 6, 1969.
October 9, 1969.
Deeds — Mistake — Bona fide purchaser for value without notice — Action by holder of prior equitable claim — Cemetery lots — Restatement, Restitution.
1. A bona fide purchaser for value and without notice has a perfect defense in a suit brought by a holder of a prior equitable claim. [376]
2. Restatement, Restitution, § 13, cited. [377]
3. In this action in equity, in which it appeared that plaintiff's assignor received from defendant, M, president of E cemetery, a deed of burial lots in E cemetery, in exchange for deeds to other burial lots; that, as the result of a mistake by M, these new lots were located in and owned by neighboring K cemetery, and, since M lacked authority to convey K property, the deed of E cemetery was a nullity; that later E cemetery was adjudged bankrupt and R cemetery purchased from the trustee in bankruptcy E cemetery's lands, subject to the outstanding rights of burial and sepulchre; that plaintiff brought the instant action against R cemetery (which had refused to recognize plaintiff's right to the lots in question), the trustee in bankruptcy of E cemetery, K cemetery, and M, to locate the lots of which plaintiff was the owner or such other relief that the court might deem proper, including reformation of the deed or recovery of the burial lots which were surrendered for the nonexistent lots; and that the court below dismissed the complaint as to all defendants except M, against whom it was decreed that plaintiff could recover the market value of the original lots surrendered; it was Held that the existence of an innocent purchaser barred the requested relief against all the defendants other than M, and the decree of the court below was affirmed.
Mr. Justice ROBERTS concurred in the result.
Before BELL, C. J., JONES, COHEN, EAGEN, O'BRIEN, ROBERTS and POMEROY, JJ.
Appeal, No. 251, Jan. T., 1969, from decree of Court of Common Pleas of Bucks County, May T., 1961, No. 726, in case of Donald N. MacKubbin v. Rosedale Memorial Park, Inc. et al. Decree affirmed.
Equity. Before BECKERT, J.
Decree entered dismissing complaint as to all defendants except Morris. Plaintiff appealed.
F. C. Fiechter, Jr., for appellant.
Joseph J. Cohen, for appellee.
The facts found by the chancellor and affirmed by the court en banc are as follows: Appellant's assignor (Blanche Peters for herself and as administratrix for her sister, Elizabeth Peters) received from Thomas A. Morris (Morris), President of Evergreen Memorial Park (Evergreen), a deed representing 212 burial lots in Evergreen in exchange for deeds to other burial lots. These new lots, however, were located in and owned by neighboring King David Cemetery (King David). This error was the result of a mistake by Morris who selected the lots to be given to the Peters in exchange for the lots surrendered. Since Morris lacked authority to convey King David property, Evergreen's deed was a nullity.
In 1959, Evergreen was adjudged bankrupt and Rosedale Memorial Park, Inc. (Rosedale) purchased from the trustee in bankruptcy Evergreen's cemetery lands subject to the outstanding rights of burial and sepulchre.
Appellant brought this action in equity against Rosedale (which refused to recognize appellant's right in the 212 lots), the trustee in bankruptcy, King David, and Morris, to locate the lots of which appellant was the owner or such other relief, including reformation of the deed, that the court deemed proper. The decree of the chancellor dismissed the complaint as to all defendants except Morris, who has made the original "mistake" in selecting the lots conveyed to appellant, and against whom it was decreed that appellant could recover the market value of the original lots surrendered.
There can be no doubt that appellant's assignor was damaged. Properties of value were exchanged for a deed which conveyed nothing. But the chancellor found, and the court en banc agreed, that there was ample testimony that Rosedale was a bona fide purchaser, for value and without notice, of Evergreen's property. Despite appellant's allegation that Rosedale had knowledge or some kind of constructive notice of appellant's claim, the lower court found no evidence that Rosedale learned of any claim based on the deed given appellant, or for the burial lots exchanged therefor until August, 1961, one year after Rosedale's purchase of the property. Equity protects innocent purchasers by providing that a bona fide purchaser for value and without notice has a perfect defense in a suit brought by a holder of a prior equitable claim. Witherow v. Vlachos, 401 Pa. 576, 165 A.2d 373 (1960); Lenheim v. Smith, 54 Pa. Super. 147 1913); Annot., 79 A.L.R. 2d 1180; Pomeroy, Equity Jurisprudence, 5th ed. §§ 767, 776, 870; Restatement, Restitution § 13; Williston, Contracts, rev. ed. § 1548 at 4341.
This Court affirmed the lower court which said at 39 Wn. Co. Rep. 139 (1959): ". . . While the jurisdiction of equity to reform a deed, which by mutual mistake fails to express the intention of the parties, is unquestioned, it is a power to be exercised with great caution. And this affirmative relief of reformation must always be subject to the limitation that it should never be conferred where a bona fide purchaser will be prejudiced thereby. Intervening rights must be protected and preserved."
The black letter section reads: "A person who has entered into a transaction with another under such circumstances that, because of a mistake, he would be entitled to restitution from the other, (a) is not entitled to restitution from a third person who has received title to or a legal interest in the subject matter either from the other or from the transferor at the direction of the other, and has given value therefor without notice of the circumstances; (b) is entitled to restitution from a third person who had notice of the circumstances before giving value or before receiving title or a legal interest in the subject matter."
Appellant also contends that if reformation is unacceptable, he should recover the burial lots which were surrendered for the nonexistent lots. He is asking for rescission or a declaration that the transaction is void for lack of consideration. Again the existence of an innocent purchaser must bar the requested relief. Rosedale justifiably relied on the absence of any claim by the Peters against the lands purchased by Rosedale from the trustee. The failure of appellant or the Peters to register their claim with Evergreen or the trustee permitted an innocent party to make a bona fide purchase. Equity will not impose additional obligations on such a purchaser.
Decree affirmed at appellant's costs.
Mr. Justice ROBERTS concurs in the result.