Untitled Texas Attorney General Opinion ( 1974 )

T~XAA'ITORNEYGENERAL
OF TEXAS
Aus-cmr. T-e 78711
JCBBN L. EllLL
*TroRN~ GENEmAL
July 30. 1974
The Honorable Tom Hanna Opinion No. H- 358
Criminal District Attorney
Jefferson County Re: Rights of purchaser at
P. 0. Box 252 3 an execution sale based on
Beaumont, Texas 77704 a void judgment.
Dear Mr.. Hanna:
You have requested our opinion as to the rights of one who purcha.ses
real property at a sheriff’s sale based on a void judgment. In connection
with your request we have received from an interested party a memorandum
with attachments which indicates that the facts you have presented to us
are subject to dispute and may ultimately have to be resolved in litigation.
It is not the function of this office to resolve factual questions. This
opinion is based on the facts that you have presented to us, but it does not
represent any determination on our part as to the accuracy of these facts.
You state that in a criminal bond forfeiture proceeding the county
obtained a judgment against a defendant and his sureties in the amount
of thirty five thousand dollars. This judgment was void as to the sureties
because process was never served on them. Nevertheless, on the basis
of the judgment, execution was levied on some real property belonging to
one of the sureties. An execution sale was conducted by the sheriff, and
the property was purchased for five hundred dollars which amount was
paid over to the county in partial satisfaction of the judgment.
Subsequent to the execution sale the judgment was reversed by the Court
of Criminal Appeals on the ground that the State had failed to tender the required
judgment nisi into evidence. Purkey.v. State, 494 S.W.2d 541, No. 45,
862 (Tex. Crim. App., May 16, 1973). The case was later retried and a
judgment was again entered against the sureties. This judgment has since
ps 1685
The Honorable Tom Hanna page 2 (H-358)
been satisfied in full by the sureties. You ask us to assume that the
original judgment was void and then ask what are the rights of a purchaser
with respect to the property purchased at a sheriff’s sale on a.void judg-
ment.
The general rule is that an execution sale based upon a judgment
which is not void but merely erroneous will be sustained if the purchaser
is a stranger to the judgment. Thus, when the purchaser at an execution
sale is someone other that the judgment creditor and is acting in good
faith, his title to the property in question will not be disturbed’ or affected
by a subsequent reversal of the judgment. Stroud v. Casey, 25 Tex. 740
(1860); Texas Co. v. Dunlap, 41 S.W.2d 42 (Tex. Comm. App., 1931);
Glaze v. Johnson, 65 S.W. 662 (Tex. Civ. App.1901, writ ref.); and Cordray
v. Neuhaus, 61 S.W. 415 (Tex. Civ. App. 1901, writ ref.).
A different rule is applicable, however, when the judgment upon
which an execution sale is based is void. In this situation a purchaser
at the sale, even though bona fide and not the judgment creditor, obtains
no title in the property purportedly sold and furthermore has no cause
of action against the judgment debtor for the purchase price paid. This
principle was first established in Texas in Stegall v. Huff, 54 Tex. 193
(1881). Stegall had purchased real property belonging to Huff at a sheriff’s
sale based on a void judgment. The judgment was void because the record
indicated that process was never properly served upon Huff. Stegall was
a stranger to the judgment and a bona fide purchaser. Nevertheless the
Supreme Court held that, because the judgment was void, the sale under
it did natdivest Huff of title to -his land. In addition the Court held that
Huff was under no obligation to reimburse the innocent purchaser because
otherwise Huff might indirectly be forced to pay an indebtedness which
he did not owe. Stegall, supra at 197. See also Flanary v. Wade, 113
S.W. 8 (Tex. 1908), Houston Ice and Brewing Co. v. Stratton, 89 S.W.
1111 (Tex. Civ. App., 1905, no writ), and Texas Co. .v. Dunlap, 21 S.W.
2d 707 (Tex. Civ. App., Waco, 1929), affirmed 41 S.W.2d 42 (Tex. Comm.
App. 1931).
p. 1686
The Honorable ,Tom Hanna page 3 (H-358)
.:
The principle established in Stegall plainly controls the fact situa-
tion you have presented to us. The surety whose property was sold at an
execution sale based on a void judgment’has not been divested of his title
to that property. The purchaser at the sale, though entirely innocent, has
no cause of action against the surety for the purchase price he paid to the
sheriff because otherwise the surety might be forced to pay a debt he did
not owe. In short the purchaser must look elsewhere for relief from his
predicament.
Ordinarily, in resolving the claim of an execution sale purchaser
against a judgment creditor for reimbursement of purchase money, Texas
courts apply the doctrine of caveat emptor, holding that neither the judg-
ment creditor nor the sheriff may be held responsible for a failure of title
to property purchased at a sheriff.‘8 sale. Even though the purchaser
obtains nothing for his money, he is not entitled to recover the purchase.
price from them. Russell v. Sarkeys, 286 F.2d 736 (5th Cir. 1961);
The purchaser, however, is permitted to assume the posture of the judg-
ment creditor and pursue whatever claims the creditor has remaining
against the judgment debtor. Rosenthal and Desberger v. Mounts, 130
S.W. 192 (Tex. Civ. App., 1910, no writ). Subrogation would be of no
avail to the purchaser in the fact situation you have described. The
original judgment was void and the second judgment has been fully
satisfied. The county no longer has any claims against the defendant
and the sureties which could be pursued by the purchaser in an effort
/ to get back his money;
However, where equitable considerations dictate otherwise, the
caveat emptor doctrine is not applied inflexibly. For instance, in Stock v.
Hartgraves, 236 S.W.2d 257, 258 (Tex. Civ. App. *San Antonio, 1951,
writ ref.), the court rejected a strict application of the caveat emptor
doctrine and stated that in circumstances where the judgment creditor had
already been satisfied in full “nothing would be more unjust than for the
purchaser at a void execution sale to receive nothing for the money he
pays but the holder of the jtdgment be permitted to retain that money in
satisfaction of his judgment. ” See also Estes v. Doty, 90 S.W.2d 754,
756 (Term. 1936); Danner v. Murnan, 178 N.W. 987 (S. D. 1920); and
p. 1687
The Honorable Tom Hanna page 4 (H-358)
Schwinger v. Hickok, 53 N.Y. 280 (1873).
In the fact situation you have posited, the judgment creditor, i. e.,
the county, in effect has been paid twice. The county’s judgment against
the defendant and his sureties has been satisfied in full, and in addition it
has received the money paid by the purchaser at the execution sale based
upon a void judgment. The purchaser on the other hand has received nothing
for his money. In these circumstances it is our opinion that, in accordance
with the equitable principles we have outlined, the courts would find the
caveat emptor doctrine inapplicable and would require the county to repay
the purchase money to the purchaser.
SUMMARY
When the judgment upon which an execution sale
is based is void, a purchaser at the sale obtains no
title,in the property and has no cause of action against
the judgment debtor for the purchase price paid.
Ordinarily the doctrine of caveat emptor would pre-
clude the purchaser who finds himself inthis situa-
tion from recovering his purchase money from the
judgment creditor. But where the judgment creditor
has in effect been paid twice,~,courts would as a matter
of equity require him to repay the purchase money to
the.purchaser.
ery truly yours,
Attorney General of, Texas
APPRb&D:
v-- -‘-
DAVID M. KENDALL, Chairman
Opinion Committee
p. 1688