Opinion
12687
June 27, 1929.
Before CHARLES CARROLL SIMS, SPECIAL JUDGE, Allendale, April, 1928. Affirmed.
Action by J.J. Walker against Mary Oswald in her own right and as administratrix of the estate of J.H. Oswald, deceased, and others. From an adverse judgment, the plaintiff and defendant T.B. Warren appeal.
The decree of the Circuit Judge directed to be reported is as follows:
"The plaintiff, J.J. Walker, being the owner of two muniments of title to the timber rights involved in this proceeding, that is to say, the one arising from the lease or timber contract executed directly to him on the timber and the other acquired by purchase of a mortgage from the estate of Drew, sought the foreclosure of his mortgage on the land, which likewise included the emblements and muniments of timber, etc. The suit was amended and substitution of new parties defendant was made upon the death of the original mortgagor, J.H. Oswald, who died pendente lite, and all of the parties interested, both Walker and the heirs of J.H. Oswald, entered into a consent decree, the particularity of which is unusual.
"Under the consent decree the land covered by the Drew mortgage, together with all the rights, members, hereditaments, and appurtenances, was duly ordered to be sold by his Honor, Judge T.J. Mauldin, on sales day in November, 1926, upon the following terms, that is to say, to the highest bidder for cash.
"About three days before the sale was had there appeared on the records of Allendale County what purported to be a conveyance by J.J. Walker of his timber rights in this tract to his brother-in-law, T.B. Warren, and notice of this alleged conveyance pendente lite was given at the sale. There was no application to the Court for any amendment to the complaint or to the consent decree in this case, but the effect of this notice would be to amend the same if it was legal and was done by the plaintiff, J.J. Walker, in a circumambulatory manner, and without any consent of any of the other parties to the original decree. Notwithstanding the notice, the lands were sold under the decree by the Master and purchased by one J.L. Oswald for $8,000, the amount of this bid being deposited by the purchaser Oswald with the Court, and the deed being retained by the Master because of Oswald's refusal to accept it pending the hearing on a petition which he filed before Judge Mauldin asking the following relief:
"That he be made a party to the cause and be not required to accept the Master's deed pending the further order of the Court; that the Master be restrained from disbursing the funds pending the further order of the Court; and that the Court issue its order requiring T.B. Warren to show cause why he should not be made a party to the cause and required to assert his alleged rights in the property by appropriate pleadings.
"Upon return to a rule issued by Judge Mauldin based upon the above quoted petition, Judge Mauldin, on November 16, 1926, issued an order overruling demurrers filed by Warren and Walker to the petition and ordering that both T.B. Warren and J.L. Oswald be made parties defendant to the cause and requiring all the parties seeking relief to serve upon their antagonists appropriate pleadings setting up their claims for the same and continuing the injunction against the Master prohibiting him from disbursing the funds.
"A notice of appeal from this order of Judge Mauldin was served by counsel for Walker and Warren, but was subsequently abandoned on the record, and the pleadings required by Judge Mauldin's order were duly served by all the parties, and under these pleadings the issues now before me were joined. The cause was marked "heard" by me when I was presiding as Special Judge of the Court of Common Pleas at Allendale at the Fall Term of 1927, and by agreement of counsel was later argued before me at Barnwell. The relief sought by the heirs and distributees of the estate of J.H. Oswald and by J.L. Oswald is that the Court grant an order:
"1. Setting aside and canceling the attempted timber deed and the attempted release executed by J.J. Walker in favor to T.B. Warren;
"2. Canceling the timber lease executed by J.H. Oswald in favor of J.J. Walker; and
"3. Construing the Master's deed in favor of the defendant J.L. Oswald, and declaring the same to pass title to the lands and timber to J.L. Oswald free of any rights, claims, and interests on the part of any of the parties to the action.
"The matter thus presented was argued before me by counsel; Messrs. R.P. Searson and James M. Patterson, representing the estate of Oswald and J.L. Oswald, while Messrs. C. Birnie Johnson and Randolph Murdaugh represented the plaintiff, J.J. Walker, and the said T.B. Warren. At the conclusion of this reference time was asked to further present the matter to the Court, which being granted a new angle presented itself in the substitution of Messrs. Henderson and Salley of Aiken for Messrs. C. Birnie Johnson and Randolph Murdaugh.
"Mr. Henderson asked that the matter be recommitted, which the Court in the interest of a speedy trial declined. He then offered an affidavit of J.J. Walker in testimony, and asked that the Court consider this as the testimony that Walker would give if the case had been recommitted, together with an affidavit of J.J. Bush and also an affidavit of T.B. Warren. The Court has considered these affidavits for what they are worth, and has given full credence to the said affidavits where they do not conflict with the testimony and facts in the case as presented, and in this connection I will state that the affidavit of Mr. Bush, as to the intention of the estate of Drew as to merger, is not pertinent, for the Court imagines that the estate of Drew had no interest one way or another in what became of the mortgage when it was assigned to Walker. The affidavit of J.J. Walker has been considered with reference to his testimony, and necessarily has been rejected where it conflicts with his previous testimony given before the Court on the reference. The Court holds that the affiant Walker may be correct in his statement of what his intention might have been, but the circumstances surrounding this transaction would indicate that when he became the purchaser of the mortgage and became the owner of both of the titles to the timber, and became the master of the situation, that then he sought the relief which he felt would give him the most permanent benefit, and immediately undertook the foreclosure of the Drew mortgage, and it would seem to have been his true reason that he would thereby avoid all danger of expiration of the time limit, etc.; that he would have the whole matter foreclosed in one mortgage and his title perfected. He never dreamed of the consequences that would emanate in the light of his subsequent action. It it too late now for him to blow hot and cold. He had both titles. He could have cut the timber and then foreclosed his mortgage on the land. He had within himself the protection which the law gave him the right to assert; where he is in possession of two rights and deliberately undertakes to exercise the paramount right, while it sequesters the servient right, his effort to maintain the servient title by the circumambulatory method that he has pursued, and his affidavit of intention, could not avail him in the face of the facts surrounding the entire case.
"It seems clear to the Court from all the circumstances surrounding the transaction that Walker with great deliberation arranged the scene and when he determined that he was not going to be the purchaser, and then sought to preserve the timber and lease by the method he undertook to pursue, he was pursuing a course not warranted in equity and good faith.
"It appears to the Court that the transaction between J. J. Walker and his brother-in-law, T.B. Warren, is so unusual, to say the least of it, and shows such an indifference to the decree of the Court that the transaction with reference to the sale of the timber by the grantor Walker to the grantee T.B. Warren, and being made at such a time as this, conveys nothing, and I so hold. It is a transaction entirely pendente lite, and if Walker desired to make a sale to his brother-in-law Warren he should have done so before he did so. I hold Judge Mauldin's decree to be binding on me and all parties to the cause.
"It is therefore, ordered, adjudged, and decreed that the sale alleged to have been made by the said J.J. Walker to the said T.B. Warren is hereby set aside.
"Further ordered that the Master's deed is sufficient to pass title to the petitioner Oswald to land and timber, and it is so ordered.
"It is further ordered, inasmuch as intimation has been made of the possibility of an appeal being taken from this decree, and it is desired that a bond should be made on appeal, that the defendant J.L. Oswald do enter into a bond approved by the Clerk of Court of Allendale County, in the sum of $3,000, in the event of an appeal, conditioned to hold the said defendant, T.B. Warren, harmless if such appeal should result adversely to the said J.L. Oswald."
Messrs. C. Birnie Johnson, and Henderson Salley, for appellants, cite: As to merger: 26 S.C. 401; 90 S.C. 153; 30 S.C. 302; 131 S.C. 32; 90 S.C. 176; 28 S.C. 495; 16 S.C. 330; 27 S.C. 562; 24 S.C. 18; 26 S.C. 424; 17 S.C. 499; 20 S.C. 555; 87 S.C. 50; 120 S.C. 448. As to intention: 74 S.C. 50; 120 S.C. 408. Effect of foreclosure: 21 C.J., 1035. Effect of Master's notice at foreclosure sale: 145 S.C. 364; Ann. Cas., 1912-B, 395; 8 A.S.R., 696; 16 R.C.L., 59.
Messrs. R.P. Searson, and James M. Patterson, for respondents, cite: Judgment binding on all parties to suit: 15 R.C.L., 1010; 7 S.C. 209. As to merger: 131 S.C. 32; 15 R.C.L., 789. Estoppel: 16 Cyc., 473. Lis pendens: Sec. 388, Code. Waiver: 99 S.C. 115; 145 S.C. 364. As to timber rights here: 8 S.C. 282; 84 S.C. 510; 100 S.C. 326; 126 S.C. 399; 50 S.C. 105; 81 S.C. 516; 15 R.C. L., 994, 963; 84 S.C. 505. Suppression of facts: 92 S.C. 393; 111 S.C. 41.
June 27, 1929. The opinion of the Court was delivered by
This was an action to foreclose a mortgage held by the plaintiff, J.J. Walker, covering certain property, which is the subject of this litigation. A brief statement of the facts is necessary to understand the issues involved. J.H. Oswald owned 512 acres in Allendale County. He sold the timber on 360 acres of the 512 acres to one Silverthorn in 1918, which timber lease or contract expired in 1923 with the timber uncut. On March 21, 1920, J.H. Oswald mortgaged the whole tract to the executors of P.J. Drew for the sum of $8,000, and this mortgage was duly recorded on March 21, 1920. J. H. Oswald, on November 24, 1920, executed a timber deed in favor of J.J. Walker, the plaintiff herein, conveying the timber on 360 acres of the 512-acre tract subject to a limitation of 10 years. A portion of the timber, to wit, the poplar, has been cut by J.J. Walker. On October 28, 1925, the executors of Drew, for valuable consideration, transferred the mortgage to Walker, the plaintiff herein; the assignment, however, was not recorded until November 12, 1925. This is the date on which, admittedly, Walker began his foreclosure of the mortgage covering the property. In the meantime, J.H. Oswald had died and his heirs were substituted as parties defendant along with his administratrix. The lis pendens was duly filed, and the action proceeded to judgment; the order of sale being granted on September 22, 1926.
This order of sale was the usual decree in foreclosure carrying with it all of the property covered by the mortgage which admittedly included the 360 acres on which the timber in question was situate.
Three days before the sale date, Walker executed to his brother-in-law, Warren, for an alleged consideration of $2,000, a timber deed covering the timber rights on the 360 acres of land, being the same rights secured by Walker from J.H. Oswald. This timber deed of Walker to Warren was duly recorded, and a notation of the fact that it had been made was entered upon the entry of judgment in this action, and a paper purporting to be a formal release of the timber from said judgment was executed and recorded. No supplemental order or decree was taken, and the action proceeded to the sale, which was had during the legal hours on salesday in November, 1925, by the Master for Allendale County. At the sale Warren requested the Master to read a notice to prospective purchasers, which notice set forth the fact that Warren was claiming the timber on 360 acres of the land under and by virtue of the terms of the deed from Walker to Warren. This notice was signed by Warren and was dated November 1, 1926. At the sale by the Master, J.L. Oswald, a relative of the deceased, J.H. Oswald, but not an heir at law, purchased the 512 acres at and for a price of $8,000. There were many conflicting statements about the value of the land and the timber. When Walker desired to have a Receiver appointed, he swore under oath that the property did not exceed in value $2,500. When J.L. Oswald and the heirs of J.H. Oswald, in a cross-bill, sued Walker for alleged chilling of the bid, Walker swore that the entire property was worth $8,000, the amount bid by J.L. Oswald, and now at the conclusion of the matter Walker contends that the property is worth around $15,000. We do not think, however, that the question of the value of the land is material to the issues here involved. After the purchase of the land by J.L. Oswald he, by petition, brought in the defendant Warren as a party in order to determine the rights of the various parties in the transaction, and prayed that the timber deed between Walker and Warren be declared null and void, and that he be declared to have a good fee-simple title to the land in question upon payment of the bid made at the legal sale. The heirs of J.H. Oswald join in the cross-bill of J.L. Oswald, and, further, ask that judgment be given against Walker and Warren in favor of the heirs of J.H. Oswald on the theory that the action of Warren and Walker was in effect a conspiracy to chill the bid, to their injury and damage, on the property in question. The real issues involved in this matter grow out of the original suit as well as the cross-bills and the answer to the cross-bill in the supplemental proceedings. Special Judge Carroll C. Simms heard the matter and rendered a decree holding that the Master's deed passed the title to J.L. Oswald, and, further, setting aside the timber deed between Walker and Warren. He seems to have ignored the issue as to the alleged chilling of the bid, and, therefore, this question is not before this Court.
The appellants have excepted to the entire decree of Judge Simms on many grounds, but the questions involved are not so numerous.
The appellant complains of error on the part of the Circuit Judge in holding, according to appellant's contention, that there had been a merger of the two estates, to wit, the mortgage and the timber deed. The appellant Walker expressly affirmed his intention of merging these two estates by his denial of the cross-bill of Oswald, but the question of merger is not involved in the case under the view taken by this Court. There is no doubt that, where two estates meet, one superior and the other inferior, that the inferior estate merges into the superior estate, provided the party does not express an intention to the contrary. This doctrine, however, has no application to the case at bar for the reason that, if the appellant, Walker, desired to set up his rights under the timber deed in the action of foreclosure, he had a perfect right to do so, but for some unaccountable reason he did not do so. He could have preserved his rights to the timber by setting up the facts in connection with the timber contract in his complaint or by filing an answer in the cause setting forth his rights therein. He could have had a decree of sale made selling the property without the timber, and, if the amount brought by such sale was sufficient to pay the mortgage debt, then the timber could have been reserved to him. If the amount was insufficient to pay the mortgage debt, the timber could have been sold, the mortgage debt paid, and the remainder applied to retire the claim of Walker. Walker did not elect to do this, but desired to sell the property on sales day, secure the legal title in himself, and get control of the entire property. When it dawned upon him that others might bid, he then attempted, a short time before the sale, to sell the timber rights which he claimed were worth $8,000 to his brother-in-law for an alleged consideration of $2,000. Even at this time he could have protected himself by timely application to a Circuit Judge for an order to stop the sale and allow an amendment to the decree.
The appellant contends that, even regardless of this, an equity should arise in favor of Walker under the circumstances to still force the exhaustion of the land estate before the timber be included in the sale to satisfy the mortgage. It cannot be denied that, if this position had been taken and properly presented before the decree of foreclosure, the decree could have been so prepared, but there was nothing in the decree, the pleadings, or the proof which warranted the Judge in making such finding. There is no necessity to discuss in detail the numerous exceptions by appellant which charge error in practically every finding of the Circuit Judge. The findings of the Circuit Judge were well sustained in fact and will not be set aside unless against the weight of the testimony, or unless there is a manifest error of law.
The crux of this whole case is that Walker brought a foreclosure in usual form of a mortgage on a piece of land over which he held another interest, to wit, the timber contract. He did not set up the timber interest for the reason that he, according to his testimony, thought he would get the land without it. Later on he found out that this plan would not mature in all probability. He then attempted to deed the timber rights which were included in the decree of foreclosure in a suit to which he was a party and had full knowledge of all the proceedings therein. At the sale of the property Warren attempted to give notice of his interest in the property. If this Court would permit persons to give such notice at a judicial sale, no property would ever be fairly sold in South Carolina under a decree of Court. At every sale some one would claim a fence, a house, the timber, or some other part of the land which would chill the bids and upset judicial sales entirely. When a man buys a piece of property at a judicial sale, he secures every interest in the property which is covered by the proceedings in the action. If the Court has jurisdiction and the parties in interest are properly served and made parties to the suit, the title carried at the sale by the decree of Court is a good and sufficient title to such interests as are determined in the suit. Of course, when the Master himself, under an order of the Court, makes an announcement at the sale, such announcement is binding upon the parties, but when an outsider makes an announcement, the successful bidder at the judicial sale buys whatever is legally sold under the proceedings. Ex Parte Boyce, 41 S.C. 201, 19 S.E., 495; Stewart v. Groce, 42 S.C. 500, 20 S.E., 411; Beall Co. v. Weston, 83 S.C. 491, 65 S.E., 823.
Walker claims that by the doctrine of equity he should have relief. He has lost nothing according to his own statement. He bought the timber for $2,000 and cut the poplar timber off of it which was worth about $2,000. He bought the Drew mortgage to protect the cutting of the timber, as the cutting impaired the security of the mortgage. He foreclosed the Drew mortgage and at that time swore that the property was worth $2,500. When he feared he was going to be mulcted in damages for chilling the bid he swore the property was worth $8,000, timber and all, and then later when he wanted to save the timber rights he attempted to show that the property was worth $15,000. He deeded a piece of timber to his brother-in-law for a consideration of $2,000, which he says was worth $8,000, three days before the sale of the same under foreclosure. He intended to get possession of the entire property if possible. His action in the entire transaction shows no reason for this Court to grant him equitable relief, for "he who seeks equity must come into Court with clean hands and must himself do equity." If Walker's position is sustained, J.L. Oswald will lose a part of the purchase price which he paid at the Master's sale, for, according to testimony, the land is worth only about $5,500 without the timber.
The opinion of the Circuit Judge reaches a correct conclusion and gives a discussion of the facts and circumstances surrounding this transaction which is enlightening.
The above disposes of all the exceptions of the appellant, and the same are hereby overruled, and the judgment of the lower Court is affirmed.
MESSRS. JUSTICES COTHRAN, BLEASE, STABLER and CARTER concur.
MR. CHIEF JUSTICE WATTS did not participate.