CHAPTER XXII

JUDICIAL AND OTHER PUBLIC SALES ·

§ 443. Nature of Contract Created by Bid or Purchase at Public

Sale.

444. Jurisdiction of Equity.

445. Application of Rule of Caveat Emptor.

446.

Fraud and False Representations.

447. Announcements or Representations by Persons Conducting

454.

Remedies Before and After Confirmation of Sale. 455. Laches and Estoppel.

§ 443. Nature of Contract Created by Bid or Purchase at Public Sale.-The transfer of property by means of a judicial sale constitutes a contract, the court which orders the sale being the vendor and contracting party on the one side and the purchaser at the sale the other, while the officer who conducts the sale is the agent or representative of the court. And in the absence of fiduciary relations or extraordinary circumstances, courts and their officers are as firmly bound by their executed judicial sales, both in morals and in law, as private citizens, and they ordinarily have no right or privilege to rescind them upon any ground which is not equally available to a private party. Considering the position of the purchaser, on the other hand, it is a rule that a bid made at a public sale by auction is merely an offer to purchase at the price named, and no contractual relation comes into existence until it is accepted. Until that is done, the bidder may withdraw his offer at discretion and

1 Castleman's Adm'r v. Castleman, 67 W. Va. 407, 68 S. E. 34, 28 L. R. A. (N. S.) 393; Blickensderfer v. Hanna, 231 Mo. 93, 132 S. W. 678. But see Brennan v. Paxson, 227 Pa. 444, 76 Atl. 199, as to the rescission of a sheriff's sale of land by mutual agreement between the sheriff and the purchaser.

2 Files v. Brown, 124 Fed. 133, 59 C. C. A. 403.

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no liability can be imposed upon him. But after the acceptance of a bid, a contract is formed, and the situation is the same as if it were a contract between private parties voluntarily made, so that the bidder cannot retract his bid except under such circumstances and for such reasons as would justify the rescission of any other contract. It will be observed that the owner of the property sold is not a party to the contract when the sale is made under judicial process or an order of court. If an owner voluntarily puts up his property for sale at public auction, he may be considered as entering into a contract with the purchaser, and may have right to rescind it for cause or to join in a mutual agreement for rescission. But if the sale is under judicial process, it is not he that is the vendor, but the court, as above stated. And this rule applies to some other kinds of public sales. Thus, a tax deed will not be canceled at the suit of the owner of the property because the purchase money due on the sale has not been paid; for if a tax sale is to be regarded as in any way constituting a contract, it is not a contract between the owner of the land and the purchaser at the tax sale, but between the latter and the state or municipality. It has been said, however, that it is the policy of the law to support a judicial sale, if it can be done without injury to the rights of any person and without the violation of any principle of law, and that a sale of land at auction is not governed by the strict rules applicable to formal contracts made with deliberation after ample opportunity to investigate and inquire."

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§ 444. Jurisdiction of Equity.—If objection is made to the validity of a public sale on the ground of error, irregu

3 Manser v. Back, 6 Hare, 443; Anderson v. Wisconsin Cent. Ry. Co., 107 Minn. 296, 120 N. W. 39, 20 L. R. A. (N. S.) 1133, 131 Am. St. Rep. 462, 16 Ann. Cas. 379; Beavers v. Nelson, 152 Ky. 319, 153 S. W. 428; Grotenkemper v. Achtenmeyer, 11 Bush (Ky.) 222.

Nebraska Loan & Trust Co. v. Hamer, 40 Neb. 281, 58 N. W. 695; Files v. Brown, 124 Fed. 133, 59 C. C. A. 403: Hayward v. Wemple, 152 App. Div. 195, 136 N. Y. Supp. 625; Cropper v. Brown, 76 N. J. Eq. 406, 74 Atl. 987, 139 Am. St. Rep. 770.

5 Woody v. Dean, 24 S. C. 499.

927.

Connor v. McCoy, 83 S. C. 165, 65 S. E. 257.

Sohns v. Beavis, 200 N. Y. 268, 93 N. E. 935, 34 L. R. A. (N. S.)

larity, or formal defects, relief must be sought in the court which ordered the sale or issued the process for it. But if the sale was invalid on account of fraud, mistake, or any other circumstance which would give a court of equity jurisdiction in ordinary cases, and if it has been consummated by the delivery to the purchaser of a deed which, if allowed to stand, will constitute a cloud on the owner's title, then equity will have power and authority, in a proper proceeding, to order the cancellation of the deed. As stated by the court in Alabama: "If the sale were impeached because of mere error in the process, or because of mere error or irregularity in its execution, the jurisdiction of the circuit court would be exclusive, for the correction of errors or irregularities in the judgments of courts of law, or in legal process, or its abuse, is not within the province of a court of equity. But if fraud or illegality attends the sale, or if it has been followed by the execution of a conveyance casting a cloud upon the title, and which may be at any time employed to disturb the possession, the jurisdiction of a court of equity is concurrent with that of the court of law. * * The conveyance by the sheriff not disclosing the invalidity of the sale, at law, in an action for the recovery of the lands, it would prevail as valid and operative. It is within the peculiar jurisdiction of a court of equity to intervene for the cancellation of conveyances of lands, at the instance of a party having rightful possession, the invalidity of which can be made apparent only by a resort to extrinsic evidence." And not only is the jurisdiction of equity in such cases well founded, but its exercise may in some circumstances become imperative. Thus, to grant relief where property of an infant has been sacrificed at a judicial sale, by collusion to prevent bidding, is not a mere matter of discretion, but an infant is entitled to the protection of the court upon a summary application to set aside such a sale, as well as in a formal action.10 But here, as in other cases,

8 Schroeder v. Young, 161 U. S. 334, 16 Sup. Ct. 512, 40 L. Ed. 721; New England Mortgage Security Co. v. Robson, 79 Ga. 757, 4 S. E. 251; Polk v. Rose, 25 Md. 153, 89 Am. Dec. 773; Shelton v. Franklin, 224 Mo. 342, 123 S. W. 1084, 135 Am. St. Rep. 537.

9 Cowan v. Sapp, 74 Ala. 44.

10 Howell v. Mills, 53 N. Y. 322.

equity will not interfere if there is an adequate remedy at law, as, for instance, if a sheriff's deed is absolutely void and the fact may be shown in an action of ejectment.11 So, where a person is not only the purchaser of goods wrongfully sold at a sheriff's sale, but has also incited and instigated the sale, and indemnified the sheriff against liability therefor, the owner of the goods may proceed against such purchaser in an action of trespass.12

The same general rules apply to tax sales of lands. Unless its jurisdiction in such matters is limited by statute a court of equity has power to vacate a tax sale or cancel the tax deed on account of any illegality or fraud in the proceedings at the sale or leading up to it, or on account of any mistake, omission, or irregularity (not attributable to the owner's own fault or neglect, and not appearing on the face of the deed) of such a substantial nature as to render the proceedings voidable.13 Thus, where the assessment of the tax was entirely void, for the reason that the lands in question were exempt from taxation but yet the defect does not appear on the face of the proceedings, but would only be disclosed by extrinsic evidence, the tax deed will constitute a cloud on the owner's title, and equity has jurisdiction to annul and cancel it. But, on the ground that an owner of property against which taxes are assessed must be vigilant in the protection of his own interests and avail himself of such special remedies as the law provides, it is held that he cannot invoke the aid of a court of equity to cancel a tax deed, when the error or defect in the assessment of which

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11 Benton County v. Morgan, 163 Mo. 661, 64 S. W. 119. Steere v. Steere, 5 Johns. Ch. (N. Y.) 1, 9 Am. Dec. 256. 12 Morrison v. Nipple, 39 Pa. Super. Ct. 184.

And see

13 Ritchie v. Sayers (C. C.) 100 Fed. 520; Ulman v. Iaeger (C. C.) 67 Fed. 980; Crocker v. Dougherty, 139 Cal. 521, 73 Pac. 429; Springer v. Bartle, 46 Iowa, 688; Gray v. Coan, 23 Iowa, 344; Morrill v. Lovett, 95 Me. 165, 49 Atl. 666, 56 L. R. A. 634; Perkins v. Nugent, 45 Mich. 156, 7 N. W. 757; Blanchard v. Powers, 42 Mich. 619, 4 N. W. 542; Loomis v. Semper, 38 Misc. Rep. 567, 78 N. Y. Supp. 74; Yancey v. Hopkins, 1 Munf. (Va.) 419; Carroll v. Brown, 20 Grat. (Va.) 791; Vestal v. Morris, 11 Wash. 451, 39 Pac. 960; Van Ostrand v. Cole, 131 Wis. 446, 110 N. W. 891; Pulford v. Whicher, 76 Wis. 555, 45 N. W. 418. But see Read v. Dingess, 60 Fed. 21, 8 C. C. A. 389.

14 Newell v. Wheeler, 48 N. Y. 486.

he complains is such as might have been remedied by the taxing officers, or by such a special tribunal as a board of equalization, if he had made timely application.15 And it should be observed that in some states the statute law has so far limited the jurisdiction of equity to interfere with tax sales that an action for the cancellation of a tax deed can be maintained only on the ground that the land in question was not subject to taxation, or that, if taxable, the assessed taxes had actually been paid before the sale.1o

§ 445. Application of Rule of Caveat Emptor.-The rule of caveat emptor is strictly applicable to all judicial and quasi judicial sales. In such sales there is no warranty or implied representation. The purchaser must take notice that the subject of the sale is simply the right, title, or interest in the property of the person against whom the process runs, and must inform himself as to its nature and validity, and he makes the purchase at his own risk and peril. The reason generally given for this rule is that, in such a sale, there is no one against whom recourse can be

15 Duggan v. McCullough, 27 Colo. 43, 59 Pac. 743.

16 See Berkey v. Burchard, 119 Mich. 101, 77 N. W. 635, 79 N. W. 908; Burns v. Ford, 124 Mich. 274, 82 N. W. 885; Detroit F. & M. Ins. Co. v. Wood, 118 Mich. 31, 76 N. W. 136; Virginia Coal Co. v. Thomas, 97 Va. 527, 34 S. E. 486; Gerke Brewing Co. v. St. Clair, 46 W. Va. 93, 33 S. E. 122.

17 Alleman v. United States, 43 Ct. Cl. 144; Ezzell v. Brown, 121 Ala. 150, 25 South. 832; Fore v. McKenzie, 58 Ala. 115; Lang's Heirs v. Waring, 25 Ala. 625, 60 Am. Dec. 533; F. A. Ames Co. v. Slocomb Mercantile Co., 166 Ala. 99, 51 South. 994; Winter v. Montgomery Cooperage Co., 169 Ala. 628, 53 South. 905; Danley v. Rector, 10 Ark. 211, 50 Am. Dec. 242; Guynn v. McCauley, 32 Ark. 97; Bartholomew v. Warren, 32 Conn. 102, 85 Am. Dec. 251; Tilley v. Bridges, 105 Ill. 336; Wing v. Dodge, SO Ill. 564; Weaver v. Guyer, 59 Ind. 195; Williams v. Glenn's Adm'r, 87 Ky. 87, 7 S. W. 610, 12 Am. St. Rep. 461; Slothower v. Gordon, 23 Md. 1; Columbia Paper Bag Co. v. Carr, 116 Md. 541, 82 Atl. 442; Clarke v. Cooper, 148 Mo. App. 230, 128 S. W. 47; Tonopah Banking Corp. v. McKane Mining Co., 31 Nev. 295, 103 Pac. 230; Brady v. Carteret Realty Co., 67 N. J. Eq. 641, 60 Atl. 938, 110 Am. St. Rep. 502, 3 Ann. Cas. 421; Asheville Supply & Foundry Co. v. Machin, 150 N. C. 738, 64 S. E. 887; Velsian v. Lewis, 15 Or. 539, 16 Pac. 631, 3 Am. St. Kep. 184; Hously v. Lindsay, 10 Heisk. (Tenn.) 651; Kimball v. Salisbury, 19 Utah, 161, 56 Pac. 973; Smith v. Wortham's Heirs, 82 Va. 937, 1 S. E. 331; Flanary v. Kane, 102 Va. 547, 46 S. E. 312, 681; Redd v. Dyer, 83 Va. 331, 2 S. E. 283, 5 Am. St. Rep. 272; Capehart's Ex'r v. Dowery, 10