Hess v. Deppen , 125 Ky. 424 ( 1907 )

Opinion op the Court by

Judge Hobson

Reversing.

Appellants held certain bonds áiid mortgages which had been assigned to them by the German American Title Company. Appellees brought this action to have the mortgages and bonds canceled for fraud in their procurement; Appellants answered deuying that the bonds and mortgages were procured by fraud and praying their enforcement. The circuit Court adjudged appellants the relief sought, and appellees appealed to this court, where the judgment was reversed; See Deppen v. German American Title Company, 70 S. W. 868, 72 S. W. 768, 24 Ky. Law Rep. 1110, 1876. Before the case was determined in this court, the judgment of sale Was executed. At the sale part of the property was bought by the Louisville Banking Company, and part by a third person. After the reversal of the judgment, appellees filed an •amended petition seeking to hold the appellants liable for damages On the sale of their property. The case was heard on this amended petition, and, judgment having been entered against the appellants for the value of the land at the time of the sale, the appellants appeal.

The case of Hays v. Griffith, 85 Ky. 375, 3 S. W. 431, 11 S. W. 306, 9 Ky. Law Rep. 65, which the circuit court appears to have followed, was overruled in Bridges v. McAllister, 106 Ky. 791, 19 Ky. Law Rep. 107, 51 S. W. 603, 4 L. R. A. 800, 90 Am. St. Rep. 267. In that case the court, among other things, said: ‘ ‘ The judgment was the act of the law. Neither party could control the court, and neither was responsible for his actions. The law constituted a tribunal to determine the rights of the parties. That determination, proceeding from a power above them, was in no sense their act. A litigant in this court does not procure the judgment entered in any such sense as to render him responsible for the consequence of the judgment, on its reversal by the United States Supreme Court. We have been referred to no case, and can find none, where an action for damages has been sustained upon the reversal of a judgment for acts done pursuant to it, as for a tort. The fact that there are no precedents for such recovery seems at this day conclusive that, it has not been recognized as admissible by either the bench or the bar. When a judgment is reversed, restitution must be made of all that has been received under it; but no further liability should in any case be imposed.” This case was followed in Schnabel v. Waggener, 118 Ky. 362, 80 S. W. 1125, 26 Ky. Law Rep. 258. It is also supported by the following authorities: Mark v. Hyatt, 135 N. Y. 306, 31 N. E. 1099; Thompson v. Reasoner, 122 Ind. 454, 24 N. E. 223, 7 L. R. A. 495; Simpson v. Hornbeck, 3 Lans. (N. Y.) 53; Bryan v. Congdon, 86 Fed. 221, 29 C. C. A. 670; Fisher v. Langbein, 62 How. Prac. (N. Y.) 238; Chapman v. Dyett, 11 Wend. (N. Y.) 31, 25 Am. Dec. 598; Hayden v. Shed, 11 Mass. 500; Peck v. McLean, 30 N. W. 759, 36 Minn. 228, 1 Am. St. Rep. 665; 3 Cyc. 470; 18 Ency. Pl. & Pr., 884, and cases cited.

The rule is elementary that in a' judicial sale the court is the vendor, and that in selling it acts as the agent of the defendant, compelling him to do what it determines he ought to have done. In making a judicial sale, the court does not act as the agent of the plaintiff. The court acts by authority of the law of the land, and the plaintiff is in no sense his principal. If the court makes a mistake, it is a mistake of the law, and not of the plaintiff. 'See Rorer on Judicial Sales, section 1, 2; Outten v. Palmeteer, 30 Ky. 241; Forman v. Hunt, 33 Ky. 621. The rule is also elementary that a judgment which is erroneous, hut not void, protects all persons for acts done in obedience to it while in force. The judgment of sale not being void and simply' erroneous and emanating from the authority of the law, the plaintiffs in the action are not responsible in damages for acts done under it. There can be no sound distinction between a sale of property under an execution and a sale of property at a judicial sale, where the judgment in either case is afterwards reversed. The rule is well settled that in execution sales the officer making the sale is the agent of the law, and in such case the plaintiff is not liable for anything more than the amount of money which he receives, although the judgment is afterwards reversed, where he simply leaves the law to take its course. Freeman on Executions, section 346; Rorer on Judicial sales, sections 590, 599.

The fact that no precedent can be found for a greater liability, in the entire history of the courts of England, is potent evidence that at common law a greater liability did' not exist. Were the "rule otherwise, there would be no need for the appellee ever to supersede a judgment to prevent the sacrifice of his property where the appellee is solvent; but in all cases he .might let the law take its course, assured that in any event he would suffer no loss, and if successful on the appeal might punish his adversary with great loss. Such a rule would have a tendency to prolong and produce ligitation, and it would make the enforcement of judgments which are not superseded so hazardous as to destroy that respect for them, which public policy requires. We therefore conclude that, appellants, except the Louisville Banking Company, are only responsible for the amount of money which they received from the sales, with interest. As to the Louisville Banking Company, the appellees may either elect to allow thé sale to stand as to the property purchased by it and take the purchase money, or they may have the sale set aside and take the property itself, as the law will not allow the plaintiff who obtained an erroneous judgment to make a profit out of it, but will require him to make restitution of all that he réceived under it. But, if the sale is set aside, the Louisville Banking Company should be adjudged; a lien upon the property for all valid taxes paid by it or other necessary charges or expenses incurred in keeping the property iri repair or improving it. The purchaser should be charged with waste or rents, and credited by necessary outlays or enhancement by improvements, as in other cases where a contract of sale is rescinded between vendor and vendee on account of a mutual mistake.

Judgment reversed, and cause remanded for further proceedings consistent herewith.

Petitions for rehearing and extension of opinion overruled.'