VALIDITY OF SALES UNDER A SATISFIED JUDGMENT.

I. General View of Subject and Previous Monographic Notes, 1091. II. Under a Judgment Satisfied of Record.

a. When Completely Satisfied, 1092.

b. When Costs, Properly Taxable as a Part of the Judgment, have not Been Paid, 1093.

III. Under a Judgment Satisfied, but not Satisfied of Record. a. By Payment of the Judgment.

1. To the Judgment Creditor, 1094.

2. To the Judgment Creditor's Attorney, 1095.

3. To the Sheriff, 1096.

4. To Other Officials, 1096.

b. By Operation of Law.

1. Through Bankruptcy, 1096.

2. Through the Payment of the Other Judgment, Where There are Two on the Same Cause of Action, 1097.

3. Through an Appeal Which Voids the Judgment Under Which the Sale is Made, 1098.

c. By Payment of a Note Given for the Judgment, 1098.

IV. Where the Sale More Than Satisfies the Judgment, 1098.

V. Under a Satisfied Judgment, for Interest on the Judgment, 1099. VI. Under a Satisfied Judgment, for Sheriff's Fees on the Execution, 1099.

I. General View of Subject and Previous Monographic Notes. The validity of sales under satisfied judgments has long furnished a theme for discussion among lawyers on and off the bench. We have already said in another place (Freeman on Judgments, 4th ed., sec. 480) that while the courts have generally protected all third persons, acting bona fide and without notice on their confidence in judicial records, from all "secret vices and infirmities” in the proceedings of the courts or their officers, this protection has not been extended so as to shield purchasers from the perils of secret satisfactions of judgments. The laws usually, if not universally, provide that the entry of satisfaction may be made on the docket, and that the execution, with a memorandum of the proceedings under it, shall be returned to the court, and thus lead purchasers to expect that if, from an examination of the dockets and papers on file in the case, no release or satisfaction of the judgment is disclosed, that none in fact exists. Principles of public policy are said to require that bidders at judicial sales shall have confidence in the titles there to be acquired; and that in order to create such confidence, they should not be prejudiced by any defect not known to them, nor discoverable by examining the record. Therefore it seems that good faith toward purchasers, as well as the principles of public policy, recognized and enforced for the benefit of the whole community, demands that purchasers and other third persons, acting in good faith, should not be injured through secret releases, in order to preserve the interests of those persons whose negligence in not making those releases apparent on the record produced the mistake of fact under which the purchaser acted. This law of good faith underlies the whole proceeding, and Mr. Freeman goes on to say: "Nevertheless, we have the authority of many cases showing that a sale or other proceeding under a satisfied judgment is void under all circumstances": Wood v. Colvin, 2 Hill, 566, 38 Am. Dec. 598; Frost v. Yonkers Sav. Bank, 70 N. Y. 553, 26 Am. Rep. 627; Murrell v. Roberts, 33 N. C. 424, 53 Am. Dec. 419.

In Craft v. Merrill, 14 N. Y. 456, the reasoning on which these and other like cases was based was thus stated: "The judgment was the sole foundation of the sheriff's power to sell and convey the premises, and if the judgment was paid when he undertook to sell and convey, his power was at an end, and all his acts were without authority and void. The purchaser under a power is chargeable with notice, if the power does not exist, and purchases at his peril." Mr. Freeman points out that there are "a few authorities tending to establish the proposition that a sale under a judgment satisfied in fact, but not of record, is valid if made to a stranger to the execution having no notice, actual or constructive, of its satisfaction." Satisfied judgments have been dealt with in this series in the note to Trapnall v. Richardson, 58 Am. Dec. 350, satisfaction of judgments and executions by levy on real or personal property, and in the notes to Jones v. Burr, 53 Am. Dec. 701, vacating satisfaction of judgments when title of purchaser at execution fails, and Sturdivant v. Ward, 134 Am. St. Rep. 35, on the same subject, and much information parallel to that which is contained herein will be found, that in the last note mentioned bringing the cases up to nearly the present date.

The early decisions on the validity of a sale under a satisfied judgment were based, not on the power of the vendor, but on the notice or lack of notice of the purchaser. Where the judgment was satisfied of record, the purchaser had at least constructive notice of the satisfaction and took no title, but where the satisfaction did not appear of record it was generally held that the purchaser took a good title unless he had actual notice that the judgment under which the sale was held had been satisfied: Boren v. McGehee, 6 Port. 432, 31 Am. Dec. 695; Reynolds v. Ingersoll, 11 Smedes & M. 249, 49 Am. Dec. 57; Reed v. Austin's Heirs, 9 Mo. 722, 45 Am. Dec. 336; Nichols v. Dissler, 31 N. J. L. 461, 86 Am. Dec. 219; Van Campen v. Snyder, 3 How. (Miss.) 66, 32 Am. Dec. 311; Hoffman v. Strohecker, 7 Watts, 86, 32 Am. Dec. 740.

This manner of adjudging the validity of a sale from the viewpoint of the purchaser was inherently fallacious and no longer prevails. We now look to the existence of the debt as the sole basis on which the power to sell depends. The doctrine of caveat emptor is applied to the purchaser in all its rigor, for he who buys from one acting under a power does so at his peril, and takes nothing if the power does not exist: Schobee v. Dedman, 2 Litt. 116; Hammatt v. Wyman, 9 Mass. 138; King v. Goodwin, 16 Mass. 63; Laval v. Rowley, 17 Ind. 36; State v. Salyers, 19 Ind. 432; McClure v. Logan, 59 Mo. 234; Carpenter v. Stillwell, 11 N. Y. 61; Craft v. Merrill, 14 N. Y. 456; Neilson v. Neilson, 5 Barb. 565; Swan v. Saddlemire, 8 Wend. 676; Wood v. Calvin, 2 Hill, 566, 38 Am. Dec. 598; Jackson v. Morse, 18 Johns. 441, 9 Am. Dec. 225; Finley v. Gaut, 8 Baxt. 148.

Defects in this power are not cured by confirmation of the sale, as the court, in confirming a sale, adjudicates only the proceedings of the sheriff or other officer in conducting such sale: Capital Bank v. Huntoon, 35 Kan. 577, 11 Pac. 369; Short v. Short, 2 Penne. (Del.) 62, 45 Atl. 541; McLiesh v. Ball, 58 Wash. 690, ante, p. 1087, 109 Pac. 209.

II. Under a Judgment Satisfied of Record.

a. When Completely Satisfied.—When a judgment has been actually and completely satisfied by payment of the original debt to

gether with the costs which are incidental to and a part of the judg ment, and such satisfaction has been duly recorded, all has been done that is called for by the judgment. Its power is thus wholly destroyed, and a subsequent sale thereunder is obviously and unquestionably void.

In Boos v. Morgan, 130 Ind. 305, 30 Am. St. Rep. 237, 30 N. E. 141, one Lucas had been the owner of several parcels of land, all of which were subject to the lien of a judgment held by one Hendricks. Lucas sold one parcel of the land to Morgan, and later Morgan took an assignment of the judgment from Hendricks. Morgan then levied upon his own property, sold it by execution, bought it in himself, and satisfied the judgment of record, all by virtue of his assignment from Hendricks. After the satisfaction of the judgment Lucas sold another parcel of the land to Boos. Morgan considered himself as having become subrogated to Hendricks' rights by the assignment of the judg ment, disregarding the extinction of those rights by the satisfaction of the judgment under the former execution sale. Accordingly he secured the issuance of another execution under the same judgment, and by means of it sold the land which Boos had acquired from Lucas. In passing upon the validity of this sale, the court said: "In our judgment, Morgan had no right to disregard the first sale at his own pleasure, and make a second one after having the judgment entered satisfied. If a stranger had bought the property, we think it quite clear that Morgan could not, by his own act, have treated the sale as a nullity. The sale was complete, the receipt of Morgan to the sheriff for the price of the property was as effective as payment in actual money would have been, for it is settled that where a judgment creditor buys at his own sale, his entry of satisfaction of the judgment is equivalent to payment in money, inasmuch as there is no reason for going through the empty form and idle ceremony of handing the money over to the sheriff and then receiving it back from him. It is also well settled that a sale upon a satisfied judgment is void."

b. When Costs, Properly Taxable as a Part of the Judgment, have not Been Paid.-While the clerk's fees, accruing through the trial of a case, are properly chargeable as a part of the judgment, still the clerk cannot enforce them by execution, or defeat the satisfaction of a judgment in order to secure them. He must look for his fees solely to the plaintiff or his attorney. And although his fees have not been paid when a judgment is satisfied of record, a subsequent sale under the judgment for the purpose of collecting the fees is void.

This doctrine is plainly laid down in Snipes v. Beezley, 5 Or. 420, where, after satisfaction of the judgment had been put on record, the respondent filed an additional cost bill in the same cause, and the clerk, without any authority of law, undertook to enter a judgment in the lien docket against the appellant for the amount of the additional bill and to issue an execution thereon. The court held that, the costs being only an incident of the judgment, when the judgment itself was paid and satisfied, there was no authority for the issuance of a subsequent execution thereon. And, while the clerk still had recourse for his fees against the respondent, the satisfaction of the judgment operated to estop the respondent from making further demands based on the same cause of action. In Wills v. Chandler, 1 McCrary, 276, 2 Fed. 273, the validity of the sheriff's sale was attacked on the

ground that the judgment was satisfied by the plaintiff, and therefore the sale was void. The facts were very similar to the case last above mentioned. After the judgment was rendered, he under whom the plaintiff claimed became the owner of the land and paid to the attor ney for the judgment plaintiff the amount thereof except the clerk's costs, and a receipt in full was given. When the clerk failed to get his fees, he caused an execution to issue and sold the land to defendant, and the court, in the action to quiet title, held that the judgment was satisfied by the judgment plaintiff's receipt through his attorney for the money and the sale was consequently void.

III. Under a Judgment Satisfied, but not Satisfied of Record.

a. By Payment of the Judgment.

1. To the Judgment Creditor.-This is the most direct and obvious way of discharging the obligation and thereby satisfying the judg ment. That the payment has not been made a matter of public record through a formal satisfaction entered upon the judgment-roll is immaterial. The decision of the court of appeals of New York in Frost v. Yonkers Sav. Bank, 70 N. Y. 553, 26 Am. Rep. 627, states the law clearly and emphatically. In this case it had been agreed between the judgment creditor and a subsequent mortgagee that the mortgage should take precedence over the judgment as a lien upon the property by which both were secured. The agreement, though in writing, was not made a matter of public record in any way. Some time afterward an execution was issued on the judgment, and the land was sold to a purchaser who had no notice of the agreement giving priority to the mortgage. It was held, nevertheless, that the property was still subject to the lien of the mortgage by virtue of the agreement between the mortgagee and the judgment creditor. In so deciding the court said: "The docket of a judgment is not for the protection of purchasers under the judgment. It is for the benefit of the judgment creditor and the protection of purchasers from the judgment debtor. The sole purpose of an execution is to enforce a judgment for just what is due, and no more. An execution and the sheriff are instrumentalities provided by law, by which a judgment creditor enforces his judgment, and the sheriff can give no better title or greater right by a sale on an execution than the judgment creditor could give, if he were allowed to seize property and sell by virtue of his judgment without an execution. If the judgment is void or has been paid, the purchaser takes nothing. The rule of caveat emptor applies to every purchaser at a sheriff's sale, of either real or personal property, by virtue of an execution. He buys at his peril, and if by any valid agreement the judgment has lost its apparent position as a lien upon real estate, his lien under his purchase is just that which the judgment creditor had. It is true that thus purchasers at sheriffs' sales may sometimes be misled, but the courts have ample power usually in such cases to relieve them." This doctrine has been recognized as the foundation for the application of the principle: Knight v. Morrison, 79 Ga. 55, 11 Am. St. Rep. 405, 3 S. E. 689; Soukup v. Union Inv. Co., 84 Iowa, 448, 35 Am. St. Rep. 317, 51 N. W. 167; Shaffer v. McCrackin, 90 Iowa, 578, 48 Am. St. Rep. 465, 58 N. W. 910; Drefahl v. Tuttle, 42 Iowa, 177; Shelly v. Lash, 14 Minn. 498; Durette v. Briggs, 47 Mo. 356; Durfee v. Moran, 57 Mo. 374; McClure v. Logan,

59 Mo. 234; Pope v. Benster, 42 Neb. 304, 47 Am. St. Rep. 703, 60 N. W. 561; Swan v. Saddlemire, 8 Wend. 676; Lewis v. Palmer, 6 Wend. 367; Wood v. Colvin, 2 Hill, 566, 38 Am. Dec. 598; Carnes v. Platt, 59 N. Y. 405; Murrell v. Roberts, 33 N. C. 424, 53 Am. Dec. 419; Hunter v. Stevenson, 1 Hill (S. C.), 415; Terry v. O'Neal, 71 Tex. 592, 9 S. W. 673; Hardin v. Clark, 1 Tex. Civ. App. 565, 21 S. W. 977; O'Brien v. Allen, 42 Wash. 393, 85 Pac. 8.

And it is held that when a sale under an execution has been regularly held, and thereafter and prior to the confirmation of the sale the judgment debt is paid, the court will order the sale set aside: Fiedeldey v. Diserens, 26 Ohio St. 312.

The action of the court in this regard is analogous to the holding where an appeal has been perfected after sale and before confirmation, and, indeed, harks back to the basic theory that the purpose of an execution and a sale thereunder is to collect the debt, and not to dispose of the property. In Reed v. Radigan, 42 Ohio St. 292, where, after sale on execution under a judgment but before confirmation, the judgment debtor paid the debt in full, the court said: "If the order of confirmation is a part of the proceedings to enforce a judgment, and a proceeding which suspends the operation of a judgment (viz., an appeal, as per cases there cited) will defeat the confirmation of a sale made under it, it is difficult to see why payment and satisfaction in full, which actually extinguishes the judgment, should be less operative to defeat a confirmation of the sale made under it."

2. To the Judgment Creditor's Attorney. Since payment to the judgment creditor will void a subsequent sale under execution on the judgment, it follows naturally that payment to any duly authorized agent of the judgment creditor, as to his attorney, will have a similar effect. Such is the holding of the court in McLiesh v. Ball, 58 Wash. 690, ante, p. 1087, 109 Pac. 209. As the supreme court of Kentucky said, in a recent case: "The lawyer represented his client. What he did was the act of his client. When he accepted the deposit in the bank, and agreed to stop the sale, the judgment was satisfied. In Freeman on Executions, section 442, the rule is thus stated: 'As writs of execution exist only for the purpose of enforcing judgments, it is evident that, whenever a judgment is by any means satisfied, the writ which is issued for its enforcement must also be treated as satisfied. . . . . The first question in regard to payment made by or for the defendant is this: To whom may the payment be made? The answer is that it may be to the plaintiff, or to one of several plaintiffs, or to the officer holding the writ, or to the plaintiff's attorney, except where the defendant knows that the attorney has no authority to receive it, or to a prochein ami, or to the attorney of such prochein ami'": Davis v. Gott, 130 Ky. 486, 113 S. W. 826. Payment to the judgment creditor's attorney has been similarly sustained in Haden v. Walker, 5 Ala. 86; Miller v. Scott, 21 Ark. 396; Brackett v. Norton, 4 Conn. 517, 10 Am. Dec. 179; Mourain v. Beauvais, 10 La. 477; Rogers v. McKenzie, 81 N. C. 164; Wilkinson v. Holloway (Va.), 7 Leigh, 277; Yoakum v. Tilden, 3 W. Va. 167, 100 Am. Dec. 738; Harper v. Harvey, 4 W. Va. 539.

It should be noted in this connection that the law is different in England, for there an attorney's authority, and consequently his agency, terminate with the entry of judgment, and so a subsequent