Koontz v. Northern Bank/Opinion of the Court

by Stephen Johnson Field

United States Supreme Court

83 U.S. 196

Koontz  v.  Northern Bank

There is only one question in this case which we deem it important to consider, and that is, whether the deed of the receiver, in the suit of Bacon and others v. Robertson, passed to Calhoun a good title to the property mortgaged by him; and upon this question we have no doubt.

The suit of Bacon and others v. Robertson related to the effects of the Commercial Bank of Natchez in the hands of the defendant, who had been appointed trustee under a proceeding for the forfeiture of the charter of the bank, and presented a case in which it was eminently proper that a receiver should be appointed of the effects. No question was made as to the legality or propriety of the appointment. The premises in question, consisting of a house and lot in Natchez, constituted a portion of these effects. The order of the court, entered at its November Term in 1857, empowered the receiver to sell the lands, or any part of them, belonging to the bank, upon such terms as he might deem best for the interest of all parties, provided he should not sell any of the lands on a longer credit than one, two, or three years; and in all cases should retain a lien or take a deed of trust on the lands. Under the authority thus conferred, the receiver sold the property in controversy in March, 1860, to Calhoun, for the sum of nine thousand and nine hundred dollars, and executed and delivered to him a deed of the premises, reciting that it was made by the grantor, as receiver, and in consideration of the sum specified, the receipt of which it acknowledged. Soon afterwards the deed was placed on the records of the county.

In May, following, the receiver reported to the court that he had sold the premises for the consideration stated, and prayed that the sale might be confirmed. The court referred the report to a master to examine into its sufficiency and correctness. The master reported that it was correct, and recommended its confirmation. The court thereupon ordered that the master's report be in all things confirmed. This confirmation carried with it the confirmation of the sale into which the master was required to examine.

Soon afterwards Calhoun went into possession of the premises purchased under the deed from the receiver, and remained in possession in person, or by his tenants, up to the period when the mortgage in suit was executed, in January, 1867, and until his surrender to Koontz, the present receiver.

There was undoubtedly an irregularity committed by the receiver in executing his conveyance before the sale was confirmed by the court, and until then the contract of purchase was not binding upon that officer. But his conveyance was not on that account void; it was only voidable. If the deed had been executed after the confirmation, it would have taken effect by relation as of the day of the sale. If the confirmation had been denied, the deed, resting upon the sale, would have become inoperative. But the confirmation having been made, all objection to the time at which the deed was executed is removed.

The authority conferred by the court upon the receiver to sell, carried with it authority to give to the purchaser evidence of a transfer of title. And that the court intended he should exercise this implied authority, by executing deeds where land was sold, is evident from the requirement that he should, in case of sale on credit, retain a lien or take a deed of trust on the lands from the purchaser.

The report of the receiver does not state in terms that the sale to Calhoun was made in cash; it only discloses the fact that a sale was made, and specifies the amount of the purchase-money. But the only inference which the court could reasonably draw from the language, in absence of any statement that the sale was on credit, was undoubtedly that it was a cash sale. It is clear that the court so understood the transaction. The receiver so treated it by the immediate execution and delivery of a deed reciting the payment of the stipulated consideration, and omitting to take in return any trust-deed from the purchaser.

If the fact were other wise, and the court was deceived by the report of the receiver or master, and the purchaser participated in creating the deception, it could, undoubtedly, at any time before the rights of innocent purchasers had intervened, have set the whole proceedings, including the deed, aside. But after the rights of such third parties had intervened, its authority in that respect could only be exercised consistently with protection to those rights.

A purchaser under a deed from a receiver is not bound to examine all the proceedings in the case in which the receiver is appointed. It is sufficient for him to see that there is a suit in equity, or was one, in which the court appointed a receiver of property; that such receiver was authorized by the court to sell the property; that a sale was made under such authority; that the sale was confirmed by the court, and that the deed accurately recites the property or interest thus sold. If the title of the property was vested in the receiver by order of the court, it would in that case pass to the purchaser. He is not bound to inquire whether any errors intervened in the action of the court, or irregularities were committed by the receiver in the sale, any more than a purchaser under execution upon a judgment is bound to look into the errors and irregularities of a court on the trial of the case, or of the officer in enforcing its process.

If the receiver in the one case, or the sheriff in the other, omit to perform his whole duty, by which the parties are injured, or commit any fraud upon the court, and the rights of third parties have so far intervened as to prevent the court from setting the proceedings aside, the injured parties must seek their remedy personally against those officers, or on their official bonds. The interest of parties in the controversy will generally induce such attention to the proceedings as to prevent great irregularities from occurring, without being brought to the notice of the court.

AFFIRMED.

Notes