Scott v. Newell , 146 S.C. 385 ( 1928 )

I think that the special referee has reached the justice of this case, and therefore respectfully dissent from the opposite conclusion announced in the opinion of Mr. Acting Associate Justice Thurmond, for the reasons which follow. The case is quite complicated, and at the risk of repeating what is said in the leading opinion and in the report of the special referee, I shall give my very decided impressions of it.

It appears that one E.A. Simmons, in October, 1921, owned two tracts of land in Williamsburg County, which for convenient reference I shall designate as tract No. 1 and tract No. 2. The two tracts are adjacent, being separated by the Seaboard Air Line Railway; tract No. 1, containing 39 1/2 acres, lies on the eastern side of the railroad, and tract No. 2, containing 30 acres, on the western side. On October 31, 1921, Simmons executed a mortgage to the Federal Land Bank upon both tracts No. 1, 39 1/2 acres, and No. 2, 30 acres, to secure a certain obligation for borrowed money in the sum of $4,500. This mortgage was duly recorded.

Prior to October, 1921, in the fall of 1919, Scott had purchased from Simmons and Oliver certain other property near Hemingway, S.C. and paid $6,000 cash for it. Later Scott ascertained that there was a prior mortgage of about $4,500 upon the property, not the Federal Land Bank mortgage just referred to.

Upon Scott's complaint and demand for a return of his money or security therefor, on November 12, 1921, Simmons and one Oliver (who I assume had acquired an interest in the land from Simmons) executed to Scott four notes of $1,280 each, aggregating $5,120, secured by a mortgage upon tract No. 2, 30 acres, to protect him from the undisclosed prior mortgage above referred to (not the land bank mortgage). Later, it appears that Scott assigned one of the $1,280 notes to the Marion National Bank. In April, 1923, the bank foreclosed the mortgage, and at the sale Scott became the purchaser of tract No. 2, 30 acres, complied with his bid, and received the deed of the clerk of Court who made the sale therefor, dated May 21, 1923, recorded May 23d.

To the bank's foreclosure proceeding the Federal Land Bank, which, as stated, held a prior mortgage upon tract No. 2, 30 acres, as well as upon tract No. 1, 39 1/2 acres, was not made a party. Scott's title to tract No. 2, 30 acres, was therefore subject to the prior mortgage of the Federal Land Bank.

On October 22, 1923, Scott, who held the title to tract No. 2, 30 acres, entered into a contract with the defendant, J.P. Newell, for the sale to him of that tract for $3,000, and executed to him a bond for titles, obligating Scott, after having received a cash payment of $500, to execute a deed to J.P. Newell of the tract, three years after Scott should have relieved the tract of the Federal Land Bank mortgage, which was recognized as a prior lien upon the tract, at least to the extent of such deficiency as might result after applying the proceeds of the sale of the other tract, No. 1, 39 1/2 acres, which the land bank mortgage also covered. J.P. Newell made the cash payment of $500 and went into possession of tract No. 2.

In April, 1924, the Federal Land Bank commenced an action to foreclose its mortgage upon both tracts, No. 1 and No. 2, given, as stated, by Simmons in October, 1921. All interested parties were made defendants to that action, the trustee in bankruptcy of Simmons, Scott, J.P. Newell and J.L. Newell. A decree of foreclosure and sale was entered in this action of the land bank, directing that the land be sold in two parcels, tract No. 1 first and No. 2 second.

The sale was had at Kingstree on October 6, 1924; both tracts were knocked down and charged to N.N. Newell, attorney, at initial bids of $5,300, for tract No. 1, and $500 for tract No. 2. The decree of foreclosure required the successful bidder to deposit immediately with the Clerk of Court, the officer who was making the sale, $500, which should be forfeited upon the bidder's failure to comply with his bid. The decree does not provide the time within whichsuch compliance should be made.

After the sale N.N. Newell, who had bid the property off "as attorney," deposited with the Clerk of Court a check for $500, drawn by J.P. Newell upon his bank. There is a controversy between the parties as to whether this deposit was made for J.P. Newell or for Scott. This depends upon the legitimate inferences to be drawn from the circumstances under which it was deposited, and will be discussed later in connection with the paramount issue in the case, whether N.N. Newell in bidding off the property was acting for J.P. Newell or for Scott.

It is stated in the leading opinion: "The balance of the bid was to paid by the 10th of October" (the Friday after the sale on Monday the 6th). I do not find anything in the decree of foreclosure, in the advertisement, in the announcement at the sale or in any statement emanating after the sale from the clerk, which tends to give even color to this statement.

It is idle to suggest that there was a contract between N. N. Newell and Scott, by which Scott's interest in the bid was to expire if not complied with by October 10th. N.N. Newell does not contend that he fixed that as the limit; as a matter of fact he was in no position to fix anything, certainly not to bind his principal Scott. I have never heard before of an agent binding his principal to a renunciation of the latter's interest in a contract entered into by the agent for him and a transfer of those rights to the agent. Mr. Johnson put it very aptly in his question to Mr. Shuler:

"Q. Didn't I then say to Mr. Lee: Mr. Lee, a lawyer cannot represent a man at a sale and then undertake to impose conditions on his client afterwards?"

The truth of the matter is that naturally Messrs. Lee Shuler, representing the land bank, were insistent upon the transaction being closed immediately; and they were the ones who set October 10th as the settling day. That was more than even they were authorized to do, for every purchaser at a judicial sale is entitled to a reasonable time within which to examine the title to the property. They recognized the fact that they could not fix a definite time for compliance; for they later extended it to October 13th, and even later than that on October 15th, accepted settlement.

What right did N.N. Newell have either to assign his bid or to impose conditions upon such assignment? He was certainly acting as agent for one or the other, J.P. Newell or Scott; if for J.P. Newell, he was without authority to barter away his principal's rights without consulting him; if for Scott, his agency obviated the necessity of an assignment to Scott; certainly as agent, he had no right to impose conditions of any kind upon his principal.

Immediately after the sale, N.N. Newell gave to Scott a slip of paper purporting to show the amount of money Scott would have to raise in order to comply with the bid. The memorandum, in the handwriting of N.N. Newell, read as follows:

"Send Cashier's check                                 $4,800.00
"Receipt for                                             500.00
"Settlement must be made by Friday noon, Oct. 10th.'

This was clearly an erroneous statement, in that it omitted the $500, the bid on tract No. 2. The statement should have called for a cashier's check for $5,300, and a receipt to be delivered to J.P. Newell for the $500 cash payment at the sale. It was so construed by Mr. Johnson in providing the check for $5,300. Evidently the "receipt for $500.00" referred to the $500 check which J.P. Newell had turned over to N.N. Newell for the purpose of complying with the cash terms of the sale, and contemplated manifestly that if Scott raised the $5,300 (which was the amount of the bids, $5,800 less the $500 check of J.P. Newell), and gave J.P. Newell a receipt for the $500 to be credited upon his obligation to Scott, title deed would be executed by the Clerk of Court and delivered to Scott.

On Wednesday, October 8th, Scott sent a telegram to J. P. Newell requesting him to wire his attorney, J.W. Johnson, Esq., at Marion, S.C. the amount of money that he could raise to apply upon J.P. Newell's obligation to him To this telegram there was no reply. On Monday, October 13th, J.W. Johnson, Esq., sent a telegram to N.N. Newell to the effect that Scott would be ready to comply by Thursday, October 16th.

On the same day, October 13th, Monday, J.W. Johnson Esq., sent a telegram to Messrs. Lee Shuler, who were the attorneys for the foreclosing mortgagee, Federal Land Bank, and who were taking steps to re-advertise the sale, stating that he had sent Scott to them in pursuance of their offer to look after his client's interest at the sale; that he was relying on them to protect Scott's interest, and that he did not think there was any doubt that Scott would comply before Thursday.

On Tuesday, October 14th, J.W. Johnson, Esq., wrote a letter to N.N. Newell, that he would be in Kingstree on the following Thursday morning, the 16th, to close up the matter, and requesting him, if not convenient to meet him there, to mail to him, care of the Clerk of Court at Kingstree, a transfer of his bid. N.N. Newell declares in his testimony that he was absent from his office and did not personally receive either the telegram of the 13th or the letter of the 14th, until after October 15th, although he admits that he had a stenographer in his office during this period, and was at his home the nights of the 13th and 14th.

N.N. Newell is badly mixed as to his movements on Monday and Tuesday, the 13th and 14th. He testified that he spent Monday, the 13th, in Charleston, and was in Kingstree all day Tuesday, the 14th. In his letter to Messrs. Kelly Hinds dated January 3, 1925, he says:

"Relative to telegram by Mr. Johnson to me, I am informed that same was delivered to my office about eleven o'clock on Tuesday. I was in Charleston on that day and did not get back until after night, and left at 5 o'clock the next morning to go to Lake City to see if I could raise the money to comply with the bids. Therefore I actually knew nothing about the telegram until Mr. Johnson accused me of having received it, and then getting in an awful hurry."

On Wednesday, the 15th, N.N. Newell went from his home at Moncks Corner to Kingstree, apparently unaccompanied, and about noon of that day transferred the bid which stood in his name as attorney, on tract No. 1, 39 1/2 acres, to Mrs. E.A. Simmons, wife of E.A. Simmons and aunt of N.N. Newell, for $3,500 cash, and note of E.A. Simmons for $500, and his bid on tract No. 2, 30 acres, to the defendants A.B. Newell and H.F. Newell, sons of J.P. Newell, for $1,800 cash which put in his hands $5,300 cash. That amount was paid by him to the Clerk of Court, in compliance with the terms of sale, and deeds by the Clerk of Court to Mrs. E.A. Simmons for tract No. 1, 39 1/2 acres, and A.B. Newell and H.F. Newell, for tract No. 2, 30 acres, were duly executed and delivered, respectively, to them.

Later on the same day, Wednesday, October 15th, about 4 p. m., Mr. Johnson and Mr. Scott appeared at Kingstree, a day before they expected to appear, prepared with a cashier's check for $5,300, to close the transaction by the payment of that amount to the clerk and the execution of a deed by him conveying both tracts to Scott. They soon ascertained what N.N. Newell had done earlier in the day, and were at their "row's end," except to seek relief as they have done in this action.

In effort to "knit up" this tangled "slieve," which I regard in its essence, as a controversy between Scott and J.P. Newell, the relative situations of these two parties are of great moment. A consideration of their respective interests is the key to the truth of the matter in dispute.

Actually, Scott was under a bond for titles to J.P. Newell which obligated him to convey tract No. 2, 30 acres, free of the incumbrance of the land bank mortgage, to J.P. Newell, upon the payment by him of $2,500; practically, Scott held a second mortgage upon the tract by J.P. Newell, subject to the prior land bank mortgage. The land bank mortgage covered tract No. 1, 39 1/2 acres, as well as tract No. 2. Scott, under the two-fund doctrine, had the right to require the land bank to exhaust tract No. 1 before resorting to tract No. 2, which was liable only for the deficiency after applying the proceeds of the sale of tract No. 1 to the mortgage debt. This right was distinctly recognized in the foreclosure decree, which ordered tract No. 1 to be first sold. It was therefore to Scott's interest to make tract No. 1 bring enough to satisfy the land bank mortgage, which would relieve tract No. 2 therefrom, and make his mortgage upon tract No. 2 perfectly good. This he expressed himselfas willing and determined to do. Naturally, in making preparations to carry out this purpose, if he could supplement with what J.P. Newell owed him on tract No. 2, 30 acres, he could more readily raise the necessary amount, $5,300. Accordingly, as soon as he received notice of the pending sale, he applied to J.P. Newell to know how much money he could raise upon his $2,500 obligation by that time. He received a reply from J.P. Newell, dated September 23rd, two weeks before the contemplated sale on October 6th, that he could raise $500 out of his own resources, and had the promise of a loan of $1,000 additional. (This letter is a pregnant fact bearing upon the question, which will be discussed later, as to who furnished the $500 cash payment at the time of the sale and from whom.)

J.P. Newell did not have the slightest idea of purchasing tract No. 1, 39 1/2 acres; his activities were limited to raising as much as he could to pay Scott upon his $2,500 obligation, with the concerted purpose of relieving tract No. 2, 30 acres, from the land bank mortgage, thus enabling Scott to make him a clear title to tract No. 2.

Now, approaching the question of prime importance in the case: Whom was N.N. Newell acting "as attorney" for, inbidding upon the property at the sale?

It is necessary to turn the hands of the dial backward for a space.

By letter dated September 22d, Messrs. Lee Shuler, attorneys for the foreclosing mortgagee, the land bank, advised J.W. Johnson, Esq., attorney for Scott in the foreclosure proceeding, that the sale would be had on October 6th, and added: "If we may be of any service to you in looking after your client's interest at the sale, we shall be glad for you to let us know." As a matter of course, Mr. Johnson did not expect these gentlemen to forget the interests of their clients in the matter, but in matters not conflicting with those interests, he was justified in acting upon the offer. Accordingly Mr. Johnson did not go to Kingstree on the day of the sale, but instead sent Scott, directing him to go to Messrs. Lee Shuler (who had previously represented Scott in another matter), and to request them to protect his interests at the sale. Scott did so, and entering the office of Messrs. Lee Shuler, on the morning of the sale and before the sale, about 10:30 a. m., found Mr. Shuler, J.P. Newell and N.N. Newell in conversation. He then, as he had been directed by Mr. Johnson, his attorney, to do, requested Mr. Shuler to give him a statement of the total amount, including costs, due under the decree and asked him to bid the property in for him. Mr. Shuler, upon the ground that he represented an adverse interest, declined to do this, after stating to Scott the amount due.

In the language of Mr. Shuler, this is what followed:

"I then told them that, under my view of the matter, his interest and the interest of Mr. J.L. Newell were identical, and I suggested that they should get together as to how they should bid on the property. I then left them in the front room of our office and closed the middle door, and I don't know what their understanding was. They discussed the matter some few minutes, and later Mr. Newell and I had a further brief conference about how the bidding should be handled — this was out near the Court house just before the sale. The agreement was that Mr. Newell should bid fifty-three hundred dollars, or as high as fifty-three hundred dollars if necessary, for the 39 1/2-acre tract lying east of the railroad, and that he would bid five hundred dollars for the thirty-acre tract lying west of the railroad. This total bid of fifty-eight hundred dollars would be sufficient to take care of all of the costs, expenses of the proceeding, any taxes due on the property, and the full amount due the Federal Land Bank of Columbia."

In the referee's report the following account of what happened is given:

"About this time, Mr. N.N. Newell came in, and at the suggestion of Mr. Shuler, Scott requested Mr. Newell to bid in the property for him. Scott's version is that Mr. Shuler informed him that the total amount, including costs, due under the decree was fifty-three hundred ($5,300.00) dollars, and that he instructed N.N. Newell to bid in the larger tract for him at that figure, thus clearing the title to the smaller tract, which could be bid in at a nominal figure, and he thus be allowed to make a clear title to J.P. Newell, as he had contracted to do, and that N.N. Newell assented to the proposition. N.N. Newell denies that he ever made any such agreement and on the contrary asserts that he refused to do so, and informed Scott that he was representing his uncle, J.P. Newell, and would bid for him fifty-three hundred ($5,300.00) dollars on the larger tract, and that he actually bid in the two tracts for his uncle at these figures."

The referee says in his report:

"I find as a matter of fact that the version of the transaction as given by Scott is correct. Standing alone, the statement of Scott would not necessarily compel such a conclusion, but corroborated as it is by other facts and circumstances of the case, I can draw no other inference."

I do not see how he could have arrived at a different conclusion, from these facts. The Newells and Scott were advised by Mr. Shuler that their interests were identical, and that they should agree upon a program of bidding; he left them in his front office in conference, which continued a few minutes; they separated, and in a short while N.N. Newell and Mr. Shuler had a brief conversation, in which N.N. Newell outlined the plan which evidently had been agreed upon, and which was carried out to the letter, Scott though having come for the purpose of running the first tract up to $5,300, leaving the bidding to him who, it had evidently been agreed upon, should conduct it. At the sale, as stated, N.N. Newell made but a single bid upon each of the tracts, $5,300 for tract No. 1, and $500 for tract No. 2; both tracts were knocked down to him and charged to him "as attorney."

Upon the issue, for whom was N.N. Newell acting, it is a pertinent inquiry, that if J.P. Newell had had $5,800 in his pocket at the time, what possible motive could have induced him to pay $5,300 for tract No. 1 and $500 for tract No. 2? If he had paid $5,300 for tract No. 1, the Land Bank mortgage debt would have been practically satisfied (excepting a balance of about $225) and tract No. 2 having been relieved of that incumbrance, Scott would have been in a position to make him titles to that tract, upon his paying to him $2,500; his bidding would, therefore, have been greatly to the interest of Scott and not particularly in his own interest; for if he had bid tract No. 1 off at $2,500 less than $5,300, he could have paid the $2,500 which he owed to Scott on the Land Bank's mortgage, and saved the difference between $5,300 and the amount of his bid on his purchase of tract No. 1.

As a matter of fact, is there a particle of evidence that J.P. Newell authorized N.N. Newell to bid the two tracts off at the figures named, or at any other figures, or at all? J.P. Newell did not take the stand and we have nothing from him as to such authorization. N.N. Newell did take the stand; he testified that through the foreclosure proceedings instituted by the Land Bank, he represented his uncle, J.P. Newell, and J.L. Newell, his son, and the record shows that his efforts were not to protect what he considered an equity of one or the other, of $500 in tract No. 2, resulting from the cash payment of that amount to Scott at the time the bond for titles were executed. The nearest he came to testimony of such authorization was that he had told Lawrimore that he could transfer his bid to him as "I knew it would be agreeable to Uncle Joe (J. P. Newell), as he had left the whole matter entirely in my hands." The only "matter" which he shows was left in his hands by "Uncle Joe" was the protection of his supposed equity of $500 and the right to have tract No. 1 sold first. J.P. Newell was present at the sale, and present for the purpose of helping Scott out to the extent of a $500 payment upon his $2,500 obligation; yet there is not a word from him or from J.L. Newell, or from N.N. Newell, suggesting even that J.P. Newell intended to bid or to authorize N.N. Newell to bid upon either tract. At the solicitation of Scott, J.P. Newell had tried to raise as much as he could, and had succeeded to the extent only of $500. To imagine that J.P. Newell with only that amount in his pocket, and no possible chance to raise any more, expected to purchase, at a cash sale, property which in all probability, practically a certainty, would bring nearly $6,000, is incredible to a degree. With the exception of turning over the $500 which he had, to be credited on his $2,500 obligation to Scott, and which was paid by N.N. Newell to the Clerk of Court in compliance with the terms of sale, J.P. Newell faded from the case. According to the testimony of N.N. Newell, J.P. Newell had become the purchaser of both tracts, as he, N.N. Newell, was acting as his attorney in bidding off the property; yet there is not a suggestion of an effort on J.P. Newell's part to comply with the obligation to pay the remainder of the purchase price, or to exercise any right connected with the bidding off by N.N. Newell. If N.N. Newell was acting as attorney for J.P. Newell in the bidding, J.P. Newell acquired the right to control the bid. We find, however, that N.N. Newell was assuming to act with reference to the bid as if he was the beneficiary and not J.P. Newell. One would expect under these circumstances, if any transfers of bids were to be made, the principal and not the agent would complete the transaction. That the $500 was paid by J.P. Newell to assist Scott to comply with the bid, and to be credited upon the $2,500 debt, I have not the slightest doubt, which makes it clear that the bid of N.N. Newell was the bid of Scott.

This is further demonstrated by the fact that immediately after the sale N.N. Newell gave to Scott a pencil memorandum of the amount that Scott was to raise, $5,300, which was the sale price of both tracts, $5,800 less $500 paid by the check of J.P. Newell, for which a receipt was to be returned by Scott to J.P. Newell.

I think that Mr. Shuler has very correctly sized up the situation in his testimony:

"I would like to explain just what I meant by writing the letter of September 22d. I am afraid that that is the letter that has caused the confusion here. I offered in that letter to be of any service I could, having in mind this, that Mr. Scott, already owner of the 30 acres of land, would probably give us a figure up to which to bid in the event that he couldn't come in person, or that Mr. Johnson could not come. I had in mind helping Mr. Scott in any way that I could, and being of any service that I could to Mr. Johnson, in bidding in any of the tracts, after our client was protected. I did it in order to render any service that I could. * * * Our prime purpose was to get enough money to take care of the Land Bank, and after that we didn't mind bidding to any other figure or amount requested by anybody."

Yet when Scott asked him to bid upon the land for him, and it was understood that it would be run up to $5,800, Mr. Shuler declined to do so and turned Scott over to N. N. Newell as the proper person, as their interests were identical, to bid for Scott. If Mr. Shuler had done what he practically offered to do, and now says he was willing to have done, the conflict between Scott and N.N. Newell would not now be pestering the Court. It is very clear to me that after what passed between Scott and Mr. Shuler, and Scott was referred to N.N. Newell, the latter agreed to do what Scott had asked Mr. Shuler to do.

The testimony of N.N. Newell and of Scott, as to whether N.N. Newell so agreed, is diametrically opposed. They are at stand-off. Scott's version is sustained by the natural inference to be drawn from the circumstances detailed; he is corroborated by Lawrimore, who testified that he heard N.N. Newell say that he had bid off the property for Scott; the circumstances occurring after the sale lend support to Scott's version; Scott testified that as soon as the sale was over, N.N. Newell approached him to discuss what had been done; he told Scott that he had to raise $500 and gave him a memorandum of the balance that had to be raised.

The sale was on October 6th; the transfer by N.N. Newell was on October 15th; the suit was commenced on October 16th; the answer of N.N. Newell was filed within 20 days, by November 5th. In that answer N.N. Newell alleges that in the bidding he was acting as attorney forJ.L. Newell, the penniless man with a broken leg; in his testimony N.N. Newell swears not less than three times, that in the bidding he was acting as attorney for J.P.Newell, "Uncle Joe." The date of the reference does not appear in the transcript. It is passing strange that he did not know within three weeks after the sale, when his answer was filed, for whom he was acting.

The witness, Lawrimore, testified that after the sale he went to see J.P. Newell and that J.P. Newell said: "I don't know whether he (N.N. Newell) can sell that place or not. Him and Mr. Scott are mixed up on that place. I don't know whether he can sell the place or not." That he told N.N. Newell "if that is Mr. Scott's bid, I don't believe you can sell." N.N. Newell did not then, as naturally he would have done, deny that it was Scott's bid, but; "He says that the bid was in his name, and I can go to Kingstree and have the bid transferred to you and the Clerk of Court will give you a title." Exactly the power he as agent for some one certainly, claimed to and did exercise on October 15th.

Scott's conduct at the sale is very significant of his understanding that N.N. Newell was bidding for him. Tract No. 1 was bid off first, at $5,300; tract No. 2 was then offered; N.N. Newell bid $500 on it. Assuming that N.N. Newell's statement is true, that he was bidding for J.P. Newell, can it be imagined that Scott, who had $2,500 in tract No. 2, after the incumbrance of the Land Bank mortgage had thus been practically removed, would have stood by and allowed J.P. Newell to take it practically for nothing, and lose his entire debt? If Scott had had any idea that N.N. Newell was not bidding for him, he could have run tract No. 2 to any amount, and all that he would have had to pay would have been the small balance of about $225 on the Land Bank debt and costs.

Again, if N.N. Newell had been explicitly authorized by J.P. Newell to bid upon both tracts (of which I do not think there is even a suggestion in the evidence), N.N. Newell was the agent of J.P. Newell and all that he ascertained during the course of that agency is chargeable to J.P. Newell. From the whole situation, the anxiety of both Scott and the Newells to make tract No. 1 bring enough to satisfy the Land Bank's mortgage debt, the request of Scott to Mr. Shuler to bid the property in for him, the declination of Mr. Shuler and his reference of Scott to N.N. Newell as the proper one to do the bidding as the interests of Scott and the Newells were identical, the conference in the office of Lee Shuler, the knowledge of N.N. Newell that Scott had come to protect his interest in tract No. 2, and the utter improbability of J.P. Newell having the remotest idea of bidding upon the property, all indicate a tacit if not express understanding of co-operation, and convinces me that if N.N. Newell did not assent to Scott's request to bid for him, he is obligated to have known that that was Scott's understanding, and that it was his duty to remove that misunderstanding, if such existed.Suppressio veri is as culpable as expressio falsi, and is equally effective in working an estoppel.

In 39 Cyc., 180, it is said:

"Where one having an interest in land, confiding in the verbal promise of another (or, I interpolate, being led by the conduct of such other to believe) that he will purchase it at a judicial sale for the benefit of the former, takes no steps to protect his interest, but allows the promisee to acquire the land at such sale, a subsequent denial of the promise and refusal to carry it into execution is such a fraud as will convert the purchaser into a trustee ex maleficio."

I fully indorse the sentiments expressed by Chancellor Mathews in the case of Denton v. McKenzie, 1 Desaus., 289; 1 Am. Dec., 664:

"From a full view and deep consideration of the whole case, we are of opinion that the attempt now made by the defendant to reserve to himself the absolute property in the land in question, deserves no other epithet than that of a gross fraud and imposition on a too credulous man"; and that it is "such a degree of hardiness, and such an attempt to pervert the true scope and beneficial effects of that law, as must ever receive the frowns of this Court."

I can see no difference between an express oral promise to bid for another and inducing another to refrain from bidding by silence with knowledge of his misapprehension. The first proposition is sustained by many of our cases:Denton v. McKenzie, 1 Desaus., 289; 1 Am. Dec., 664.Keith v. Purvis, 4 Desaus., 114. McDonald v. May, 1 Rich. Eq., 91. Schmidt v. Gatewood, 2 Rich. Eq., 162.Kinard v. Heiers, 3 Rich. Eq., 423; 55 Am. Dec., 643. Coxv. Cox, 5 Rich. Eq., 365. Johnson v. La Motte, 6 Rich. Eq., 347. Lamar v. Wright, 31 S.C. 60; 9 S.E., 736.Jarrot v. Kuker, 78 S.C. 510; 59 S.E., 533.

Even if Scott had not been under the apprehension that N.N. Newell had assented to his request that he bid upon the property for him, and that N.N. Newell bid as attorney for J.P. Newell (which I do not believe), the circumstances, the mutual, co-operating purpose of the parties to clear tract No. 2 of the Land Bank mortgage, the refraining of Scott from bidding, necessarily known to N.N. Newell, present an opening for the Court of Equity to declare J.P. Newell a trustee.

"The general principle is well established that equity prohibits a purchase by parties placed in a situation of trust or confidence with respect to the subject of the purchase; that no party can be permitted to purchase, for his own benefit, an interest, where he has a duty to perform which is inconsistent with the character of purchaser. Dickinsonv. Codwise, 1 Sandf. Ch. (N.Y.), 226." Brittin v.Handy, 20 Ark. 381; 73 Am. Dec., 497.

But what to my mind is absolutely conclusive of the whole case is the position of the Special Referee, a most accomplished lawyer, ably presented, that conceding that N. N. Newell acted for J.P. Newell in bidding off the land, at the time of the sale J.P. Newell was a vendee in possession under a contract which bound his vendor, Scott, to clear the title of the Land Bank mortgage, and bound him to pay to Scott $2,500 when this should be done. As such vendee he had actual notice of the encumbrance on the property under which it was being sold, for it was mentioned in the contract. This contract between Scott and J.P. Newell established a fiduciary relation between them, which rendered it impossible for either to commit an act detrimental to the rights of the other. "This being true, if J.P. Newell bid in the property at the sale, he did not thereby acquire any independent title to the thirty-acre tract that he could assert against his vendor, and thus dispense with his duty to pay to his vendor the balance he owed him; but all that equity and good conscience permitted him to do was to charge to his vendor the amount paid by him for the outstanding title and have it credited on the balance due on the purchase price. * * * In all cases involving confidential relations, there exists the mutual obligations of each of the parties to obtain no advantage at the expense of the other. To permit a vendee in possession to buy in an outstanding encumbrance, whether at a judicial sale or otherwise, and use it to defeat his duty to pay the vendor for the land, would violate this principle, and will not be countenanced by a Court of Equity."

In Lawrence v. Kennedy, 90 W. Va., 209;111 S.E., 142, the Court said:

"It is very well established that a purchaser of real estate, or an interest in real estate, who is put in possession thereof by his vendor, cannot acquire an adverse interest so long as he holds the same, and if he does acquire such interest it will inure to the benefit of his vendor, if he desires to have the advantage thereof, upon payment of the purchase price thereof."

"Purchaser in possession under sales contract cannot assert title acquired by him adverse to vendor while he remains in possession under the contract." Slocum v. Peterson,131 Wn., 61; 229 P., 20; 40 A.L.R., 1071.

"Thus * * * where a contract is made for the sale of land, the vendor is in equity immediately deemed a trustee for the vendee of the real estate, and the vendee is deemed a trustee for the vendor of the purchase money." 3 Story, Eq., 251.

In 27 R.C.L., 547, it is stated:

"If a purchaser who has been let into possession by his vendor, buys in a paramount outstanding title, he cannot set it up against the vendor, unless he first makes a bonafide surrender of the possession. It is also held, as a general rule, that the vendor has the right to demand that a paramount title to purchaser, shall enure to his benefit, on his paying the amount expended by the purchaser in making the purchase; and this is held true where one enters into possession under a contract giving him the option to purchase."

In Bigelow on Estoppel (2d Ed.), 259, is is said:

"It is a well established rule of equity that if a vendee buys in a better title than that of his vendor, the latter being guilty of no fraud, he (the vendor) can be compelled to refund to the vendee only the sum paid for the better title."

And at page 382, it is said:

"The relation which the purchaser of land not fully paid for bears to the vendor, is held to be the same in equity as that between landlord and tenant, so far as the doctrine of estoppel is concerned. The purchaser cannot set up an outstanding title against the vendor in bar of a proceeding by the latter to compel payment of the purchase money."

Commenting on the case of Bush v. Marshall, 6 How., 284; 12 L.Ed., 440, the author says:

"The doctrine of this case is that until the grantee is paid for the land, he holds, in respect to the payment, a relation of duty to the grantee similar to that of a tenant to his landlord * * * the grantee could not by this means, escape wholly the payment of the price agreed upon."

In Smith v. Boyer, 72 W. Va., 632; 78 S.E., 787; 46 L.R.A. (N.S.), 209, quoting syllabus by the Court, it is held:

"A vendee in possession cannot thereafter acquire a tax title to the land and claim thereunder adversely to his vendor." Citing Callihan v. Russell, 66 W. Va., 524;66 S.E., 695; 26 L.R.A. (N.S.), 1176. Lamborn v. Commissioners,97 U.S. 181; 24 L.Ed., 926. Bush v. Marshall, 6 How., 284; 12 L.Ed., 440. Bigelow on Estoppel, (5th Ed.), 545.

In Galloway v. Finley, 12 Pet., 295; 9 L.Ed., 1079, the Court said:

"In reforming the contract, equity treats the purchaser as a trustee for the vendor, because he holds under the latter, and acts done to perfect the title by the former, when in possession of the land, inure to the benefit of him under whom the possession was obtained, and through whom the knowledge that a defect in the title existed was derived. The vendor and vendee stand in the relation of landlord and tenant; the vendee cannot disavow the vendor's title." Willison v. Watkins, 3 Pet., 48;7 L.Ed., 596. Conn's Heirs v. Manifee, 2 A.K. Marsh. (Ky.), 242. Wilson v. Smith, 5 Yerg. (Tenn.), 398. Watkinsv. Holman, 16 Pet., 25; 10 L.Ed., 873.

In the last-mentioned case it is said:

"In the present case the vendee has bought in for $20.00 a legal title to a property worth more than $2,000.00, the possession of which he received from his vendor. * * * He has got a good title to the property, and he ought, in justice and equity, to pay for it the full consideration which he has covenanted to pay."

In the case of Roller v. Effinger, 88 Va., 641;14 S.E., 337, from which the foregoing quotations have been extracted, the Court, continuing, said:

"In this case Roller paid no more than he agreed to pay. In getting in the outstanding interests he used his vendor's money to make the payment, and yet claims that he was standing at arm's length, a position he did not assert until he had secured the complete title. A vendee of lands, entering before the conveyance is perfected, is affected with an equity in favor of his vendor; and, if he purchases an adverse title, he cannot set it up against his vendor, but the vendor is entitled to have it upon reimbursing the purchaser." Citing Morgan's Heirs v. Boone's Heirs, 4 T.B. Mon. (Ky.), 291; 16 Am. Dec., 153. Harper v. Reno, Freem. Ch. (Mich.), 323. Wood v. Perry, 1 Barb. (N. Y.), 115. Keech v. Sanford, 2 Eq. Cas., Abr., 741.

In Mizamore v. Berglin, 197 Ala., 111; 72 So., 347, L.R.A., 1916-F, 1024, it is held, quoting syllabus:

"A vendee in possession under an option contract holds an outstanding title acquired by him in trust for his vendor, and is estopped to set it up against the vendor."

In the opinion it is stated:

"The relationship of vendor and vendee has, so far as the question here involved is concerned, been likened unto that of landlord and tenant."

Citing many authorities, and continuing:

"The following quotation finds frequent reference in our cases: `Wherever one person is placed in such relation to another, by the act of consent of that other, or the act of a third person, or of the law, that he becomes interested for him, or interested with him, in any subject of property or business, he is prohibited from acquiring rights in that subject antagonistic to the person with whose interests he has become associated.'" Citing many cases.

In the case of Petroski v. Minzgohr, 144 Mich., 356;108 N.W., 77; 115 Am. St. Rep., 451, it is said:

"The vendor and vendee [of lands] stand in the relation of landlord and tenant; the vendee cannot disavow the vendor's title."

In Kirkpatrick v. Miller, 50 Miss., 521, the Court said:

"After doing homage to his vendor's title by purchase and entry under it, the vendee will not be tolerated to repudiate his allegiance to it, and transfer it to another title acquired whilst thus in possession. If such after-acquired title should be paramount, the vendee shall be esteemed as holding it in trust for his vendor, as having provided it to support and maintain his possession and his right under his original vendor. Whilst a Court of Equity holds the vendee to entire good faith to his vendor, and will not allow him to get in an outstanding title or incumbrance, and set it up in opposition to his vendor, yet it will lend its aid to reimburse all reasonable advances expended to fortify the title. At the same time it will rebuke every attempt by the purchaser to betray or invalidate the title."

It seems to me impossible to present the principles of law in a clearer manner.

In the case of Frink v. Thomas, 20 Or., 265; 25 P., 717; 12 L.R.A., 239, the Court said:

"But defendant having entered into the possession of this land under a contract of purchase, will not be permitted to obtain an outstanding title and assert it against the plaintiff. It was expressly understood at the time the contract for sale of this land was made that the title was unsettled, and that plaintiff would take such steps as might be necessary, in order to perfect the same, so as to comply with his agreement with defendant. With this understanding, defendant was allowed to go into possession of the land, and having done so, neither equity nor good conscience will permit him, by taking advantage of such possession, to obtain the title from the general government in his own name for his own use and benefit."

It seems that this statement was made to fit the very circumstances of the case at bar. The Court continuing said:

"It is an established rule of equity `that if a vendee buys up a better title than that of the vendor, and the vendor was guilty of no fraud, he can only be compelled to refund to the vendee the amount of money paid for the better title. Equity treats the purchaser as a trustee for his vendor, because he holds under him, and acts done to perfect the title of the former when in possession of the land inure to the benefit of him under whom the possession was obtained, and through whom a knowledge of a defect of title was obtained. The vendor and vendee stand in the relation of landlord and tenant. The vendee cannot disavow the vendor's title.'"

In Lake v. Hancock, 38 Fla., 53; 20 So., 811; 56 Am. St. Rep., 159, the Court said:

"A party having the right to enter into possession of land, and agreeing to so enter in a contract of purchase based upon an acknowledgment of title in another, and obtaining possession so far as this party is concerned under such agreement, is estopped from referring his possession to rights acquired under a conveyance by a third party to him. A party thus entitled to possession, or thus in possession, acquiring an outstanding title, holds it in trust, and not for his own benefit."

In Morgan v. Boone, 4 T.B. Mon. (Ky.), 73; 16 Am. Dec., 153, the Court said:

"It is a general principle that if a trustee, mortgagee, tenant for life or purchaser, gets an advantage by being in possession, or behind the back of the party interested, and purchases in an outstanding title or incumbrance, he shall not use it for his own benefit, and the annoyance of him under whose title he entered, but shall be considered as holding it in trust. It is sufficient for this doctrine to refer to the case of Holridge v. Gillespie, 2 Johns. Ch., 33, 34, in which Chancellor Kent has given references to many cases, old and new."

In Champlin v. Dotson, 13 Smedes M. (Miss.), 553; 53 Am. Dec., 102, the Court said:

"It is a principle of equity jurisprudence, then, that a vendee cannot buy the land under an outstanding incumbrance, and set up an adverse title; he can only claim to be refunded the amount paid by him. If he should claim more than this, a Court of equity would interpose to prevent a recovery."

In Meadows v. Hopkins, Meigs (Tenn.), 181; 33 Am. Dec., 140, the Court said referring to relation of vendor and vendee:

"This relation is somewhat similar to that which exists between a landlord and his tenant. Having recognized the title in the one instance by the acceptance of a lease, and in the other by a purchase, you shall do nothing to the prejudice thereof, so long as the relation continues."

In Greeno v. Munson, 9 Vt., 37; 31 Am. Dec., 605, it is held, quoting syllabus:

"One who goes into possession under another, or acknowledging the title of another, cannot be heard to dispute the title of that other, during the continuance of the relation. This principle extends to one who acquires possession under a contract of sale."

In Thredgill v. Pintard, 12 How. (53 U.S.), 24;13 L.Ed., 877, it is held:

"A purchaser of land cannot avail himself of the benefit of the contract for its sale and resist performance of it on this part, and an attempt to avoid payment of the price by procuring the title in his own name is fraudulent."

In Munford v. Pearce, 70 Ala., 452, it was held:

"A purchaser of land who, after taking possession under his contract for the purpose of perfecting his title, buys the land for a nominal price at an administrator's sale, by agreement with all parties, cannot set up the title thus acquired against his vendor."

In Hill v. Samuel, 31 Miss., 307, the Court held:

"Where the vendee, in a contract for the sale of lands, bought in an outstanding incumbrance, he could not set up such paramount title for the purpose of avoiding his contract, nor as a defense against the vendor's claim for purchase money, except to the extent of the sum actually paid by him in extinguishing the incumbrance."

In Thompson v. Adams, 55 Pa., 479, the Court held:

"A vendee purchasing a vendor's title at a Sheriff's sale, cannot withhold the unpaid purchase money, except so much as he has expended in buying in the title."

In Ins. Co. v. Bulte, 45 Mich., 113; 7 N.W., 707, the Court held:

"A purchaser in possession under an executory contract cannot cut off his vendor's rights by taking a tax title."

In Curran v. Banks, 123 Mich., 594; 82 N.W., 247, the Court held:

"Where a defendant, in possession of land under a contract of purchase made in 1895, purchased a tax title to the land based on taxes of 1893, such title inured to the benefit of the grantor, since the doctrine that a tenant cannot dispute his landlord's title extends to one in possession under a contract of purchase."

In Simmons v. Rood, 129 Mich., 345; 88 N.W., 879, the Court held:

"One who purchases land, agreeing to pay an existing mortgage, and a certain amount to the vendor, who retains the title till payment is made, occupies the position of mortgagor to the vendor and existing mortgagee, and cannot, as against them, acquire a tax title under a sale for an existing tax."

In Crumb v. Wright, 97 Mo., 13; 10 S.W. 74, the Court held:

"The rule that until the grantee had paid the purchase money he holds, in respect to the payment, a relation of duty to the grantor similar to that of a tenant to his landlord, and is precluded to that extent, and by a similar estoppel, from invoking to his aid an outstanding title, prevails both at law and in equity."

In Burke v. Scharf, 19 N.D., 227; 124 N.W., 79, the Court held:

"While a vendee remains in possession under a contract of sale, he is estopped to buy an outstanding title and assert same against his vendor."

In Finch v. Noble, 49 Wn., 578; 96 P., 3; 126 Am. St. Rep., 880, the Court held:

"A purchaser in possession under a contract of sale is estopped to deny the title of his vendor, and will not be permitted to acquire a title adverse to him."

In McCreary v. McGregor, 183 Iowa, 732;167 N.W., 633, the Court held:

"Purchaser of land in possession under contract by redeeming from mortgage foreclosure, though obtaining Sheriff's deed, cannot assert legal title against vendor's lien."

In Herron v. Harbour, 75 Okla. 127; 182 P., 243; 29 A.L.R., 905, the Court held:

"Where a purchaser acquires an adverse title which inures to the benefit of his vendor, the most that the purchaser can demand is to be reimbursed for his outlay; including his payment in acquiring outstanding and superior title and in perfecting vendor's title, with interest and expenses necessarily incurred, not to exceed value of land."

In Bank v. Rogers, 87 Fla., 147; 99 So., 546, the Court held:

"The purchase at an execution sale against his vendor by a vendee while he remains in possession of the land which he is under an executory contract to purchase, entitles him to defend only to the extent of the amount paid by him."

In the South Carolina case of Bradley v. Calhoun, 125 S.C. 70;117 S.E., 811, the Court said:

"The principle is just and well established that, where one's possession was begun in privity with or in subservience to the title of another, a quasi fiduciary relation is established, and before a foundation can be laid for the operations of the Statute of Limitations or the defense of adverse possession by the acquisition of an outstanding title, a clear, positive, and continued disclaimer of the title under which he entered and the assertion of an adverse claim must be brought home to the other party."

In the case of Smith v. Smith, Harp. Eq., 160, it was held that a lease from a party whose title was claimed to have been superior to that of the landlord which the lessee procured, inured to the use of the landlord. See, also,Maples v. Spencer, 97 S.C. 331; 81 S.E., 483.

The following cases bear somewhat indirectly upon the question: Garvin v. Cohen, 13 Rich., 153. Pyles v.Reeve, 4 Rich., 555. Van Lew v. Parr, 2 Rich. Eq., 321.

The actual result of sustaining the conduct of N.N. Newell in this case is the best argument that could be made in support of the proposition that J.P. Newell could not, so long as he was in possession under a contract of sale from Scott, acquire a title adverse to that under which he went into possession. J.P. Newell, or his pretended assignees, would acquire title to tract No. 2, worth $3,000, for $500; J.P. Newell's obligation to Scott would be annulled, and Scott would be in the vocative to the extent of $2,500; a result which I do not think a Court of equity would countenance for a moment.

It does not appear that the title of Mrs. Simmons to tract No. 1 is involved in this litigation, she not having been made a party thereto.

I think that the judgment of the Circuit Court should be affirmed and that the case should be remanded to that Court for such further and amendatory administrative order as has been made necessary by the delay incident to this appeal.