Chemical Co. v. McLucas

OPINION. December 9, 1910. The opinion of the Court was delivered by after stating the facts. The first question that will be considered is, whether W.J. Montgomery was liable for interest on his bid.

The principle is well settled in this State, that a purchaser of land, under a decree rendered by the Court, in the exercise of its chancery jurisdiction, is entitled to a reasonable time, after bidding off the property, to ascertain whether the title is defective.

The rule is thus stated in Bank v. Bramlett, 58 S.C. 477,36 S.E. 912:

"In Mitchell v. Pinckney, 13 S.C. 212, it was stated: `Reasonable time is always given for the examination of titles and, if necessary, a reference will be ordered.' We take it that this expresses the policy of this State, and it is a fair and just one to all concerned, and it is well calculated to inspire confidence, and promote competition at equity sales. Such being the rule, we do not well see how purchasers at equity sales, should be denied relief for defect of title, on the mere ground that they are bound, by constructive notice of such defect, unless it be that relief is never to be afforded for defect of title, which a full examination of records would disclose, which would, for most practical purposes, be a denial of relief for defective title. If one has actual notice of the defect in the title, or has before his bid discovered such defect by an examination of the records, there would be good grounds for denying him any relief; but if he has no actual notice, and bids in reliance on the rule allowing him a reasonable time to examine into his title, he ought not to be denied relief, merely because he had constructive notice of the records, at the time of his bid."

In other words the rule is based upon the just and equitable principle, that a purchaser should not be compelled to comply with his bid, if the title is defective; and, if it is a case in which it would be inequitable, to require him to pay the principal of his bid, it necessarily follows, that the interest thereon, could not be collected from him.

But he would be compelled to pay interest on his bid, if investigation showed that the title was not defective.

In the case under consideration, it appears from the testimony: (1) That shortly after W.J. Montgomery purchased the property, he ascertained certain facts in regard to the title, of which he did not have any actual knowledge, at the time of his bid, which showed that the title was defective, and that he could not have been compelled, to comply with the terms of sale; (2) That he promptly notified the attorneys representing the plaintiffs in the forclosure suit, of such fact, and for the foregoing reason, declined to comply with his bid, and offered to assign it; (3) That W.J. Montgomery and the attorneys for the Virginia-Carolina Chemical Company, agreed to settle the question by litigation in the most expeditious method possible; (4) That with the knowledge and consent of the attorneys for the Virginia-Carolina Chemical Company, W.J. Montgomery assigned his bid, and the usual form, to James H. Manning; (5) That from the time he assigned his bid on the 30th of January, 1909, until the master made his supplemental report in October thereafter, W.J. Montgomery did not have notice of any further proceedings, in regard to the transaction, on the part of the attorneys for Virginia-Carolina Chemical Company, and (6) That if he had been notified, at the time the question of interest arose, between the attorneys for the Virginia-Carolina Chemical Company, James H. Manning and the master, he could in all probability have protected himself from loss, but that he would now be without remedy.

Under these circumstances he was not chargeable with interest.

Having reached this conclusion, it necessarily follows, that neither James H. Manning nor J.D. McLucas, master, are liable for interest.

Judgment affirmed.