State, Ex Rel. v. Dear

46 So. 2d 100, 209 Miss. 268, 1950 Miss. LEXIS 387

• Court: Mississippi Supreme Court
• Decided: June 12, 1950
• Docket: 37492
• Status: Published

Opinions

McGehee, O. J.

This suit was originally brought by the former Attorney General, upon the recommendation of a legislative investigating committee, to recover against the appellees, Gus Dear and his wife, Mrs. Gus Dear, as purchasers, in January, 1944, of certain Sixteenth Section timber on that part of Section 16, Township 4 North, Range 1 East, lying west of Pearl River in Hinds County, for the grossly inadequate consideration of $500, upon the theory that the sale virtually amounted to a donation of the said timber, in violation of. Section 95 of the Mississippi Constitution of 1890, and also against Greif Brothers Cooperage Corporation, which later purchased this timber from the Dears for the sum of $4,000 with actual notice of the consideration paid to the Board of Supervisors of the County for said timber as disclosed from its examination of the order of the Board of Supervisors and the timber deed executed in favor of the Dears, and which was then duly recorded, a decree of the chancery court for the difference between the $500 paid by the Dears to the Board of Supervisors for said timber and the fair market valne thereof at the time of the sale to them, the recovery being sought both against the Dears and the said Cooperage Corporation, and also against the members of the Board of Supervisors and the sureties on their official bonds, who are likewise made defendants to the bill of complaint.

The case was tried on an agreed stipulation of the facts, and on certain oral testimony offered by the complainant, but it is conceded that the latter added nothing to the case presented by such agreed statement of facts. At the conclusion of all the evidence offered by the complainant, including the agreed statement of facts, the trial court sustained motions on behalf of all the defendants to exclude the evidence and to render a decree in their favor. Hence this appeal was taken by the Attorney General who sued for the benefit of the educable children of the township, in which the Sixteenth Section is located, on the ground that the Board of Supervisors was without power under Section 95 of the Constitution, while acting as agent for the State which holds the Sixteenth Section school lands and timber as trustee for the benefit of the educable children of the township, to sell said timber for a grossly inadequate consideration, virtually amounting to a donation thereof.

•The agreed stipulation of facts discloses that the dedefendant Cooperage Corporation cut and removed from the land, under its purchase from the Dears, an amount of timber aggregating 875,394 feet, for which it paid the said sum of $4,000 to the Dears after having found from the records that they had purchased the same from the Board of Supervisors at the said grossly inadequate sum of $500.

The agreed stipulation of facts further discloses that “the entire area occupied by such timber is subject to overflow during the fall, spring and winter months”. But it would necessarily follow that while this fact was true at the time the Dears purchased the timber, the same consideration entered into its subsequent purchase by the defendant Cooperage Corporation, which was experienced in determining the value of timber; and the said Corporation is of course presumed to have taken this fact into consideration, and the inaccessibility of the timber, when it determined that it could afford to pay therefor the sum of $4,000.

It was further stipulated and agreed that “the Board of Supervisors, after investigation of the property, believed then and believes now that it obtained a fair and reasonable value of the timber and the highest and best price available at the time and under the circumstances.” While it is not reasonable that the Board of Supervisors still believes that it obtained the fair and reasonable value of the timber in the light of the knowledge acquired subsequent to the sale that an experienced timber operator had paid $4,000 therefor, such is nevertheless the agreed stipulation that was submitted to the trial court on that issue. At any rate, the members of the Board of Supervisors, and the sureties on their official bonds, are'not liable for the losses occasioned by their failure to exercise proper care in ascertaining the reasonable value of the timber sold to the Dears, since they were exercising a judicial function in determining the price at which the same should be sold, and especially in view of the stipulation that they believed they were obtaining a fair and reasonable value therefor. Section 6598, Code of 1942, Section 6599, Code of 1942; Paxton v. Baum, 59 Miss. 531; Bell v. McKinney, 63 Miss. 187; State use of Lincoln Co. v. Green, 111 Miss. 32, 71 So. 171; Pegram v. State, 121 Miss. 564, 83 So. 741; National Surety Co. v. Miller, 155 Miss. 115, 124 So. 251; Gully v. McClellan, 170 Miss. 405, 153 So. 524; Gully v. Bew, 170 Miss. 427, 154 So. 284; Gully v. Thomas, 171 Miss. 749, 158 So. 465; State ex rel. Bank of Commerce v. Forbes, 179 Miss. 1, 174 So. 67; DeWitt v. Thompson, 192 Miss. 615, 7 So. (2d) 529; Causey v. Gilbert, 193 Miss. 756, 10 So. (2d) 451.

Manifestly, the Dears are not in a position to claim that they were innocent purchasers for value of the timber where it is undisputed that they owned land adjacent thereto, and necessarily knew at the time of their purchase that the sum of $500 was a grossly inadequate price therefor. However, it is argued on behalf of the Greif Brothers Cooperage Corporation that there are no facts whatsoever in this record to support or justify the conclusion or even the inference that this timber was sold by the Board of Supervisors for an inadequate consideration. This contention is made notwithstanding the fact that when it purchased the timber it had already determined that it could afford to pay at least the sum of $4,000 therefor, and had already ascertained that its vendors had paid for this trust property only the sum of $500 as the purchase price.

The defendant Cooperage Corporation is presumed under the law to have known that the Board of Supervisors was selling this timber as agent of the State which held it as trustee for the educable children of the township, and was in duty bound not to sell the same for a grossly inadequate consideration, virtually amounting to a donation, in violation of Section 95 of the State Constitution. The stipulation contained in the agreed statement of facts that the Cooperage Corporation purchased the timber from Mr. and Mrs. Dear without any notice or knowledge of any infirmity in the title to them ‘ ‘ other than any knowledge shown by the records in the office of the Chancery Clerk”, and the further stipulation that they went into possession of the property and commenced cutting and hauling the timber from the Sixteenth Section land without any knowledge or notice “except as imparted hy the records in the Chancery Clerk’s Office” at Jackson, Mississippi, do not protect it as an innocent purchaser for value, since the knowledge shown hy the records in the said office fully disclosed gross inadequacy of the consideration paid by its vendors.

This Court held in the case of Rice et al. v. McMullen, 43 So. (2d) 195, 202, not yet reported in State Reports, as follows: “It is well established that the rights of a beneficiary of a trust estate who finds the trust property has been wrongfully transferred to a third party with notice of the trust are clearly defined in law, and are without dispute so far as we know. Such a beneficiary has the right to follow the trust property and to recover the res if he can identify it in the hands of the third party, or he can have judgment against the third party for the value of the trust property. Scott on Trusts, Sections 291.2, 291.7; [4] Bogert on Trusts, and Trustees, Section 867.”

Continuing the discussion as to the liability of the defendant Cooperage Corporation for the difference in the price paid by its vendors to the Board of Supervisors and the fair market value of the timber in question, and in answer to its claim of being an innocent purchaser for value of the timber, we call attention to the holding of this Court in the case of Dead River Fishing & Hunting Club v. Stovall et al., 147 Miss. 385, 113 So. 336, 337, as follows: “A purchaser of land is charged with notice not only of every statement of fact made in the various conveyances constituting his chain of title, hut he is also bound to take notice of and to fully explore and investigate all facts to which his attention may be directed hy recitals in said conveyance contained. The duty is also imposed on him to examine all deeds and conveyances previously executed and placed of record by his grantor — either immediately or remote — if such deeds or conveyances in any way affect his title. And if in any such deed or conveyance there is contained any recital sufficient to put a reasonably prudent man on inquiry as to the sufficiency of the title, then he is charged with notice of all those facts which could and would be disclosed by a diligent and careful investigation. Parker v. Foy, 43 Miss. 260, 5 Am. Rep. 484; Deason v. Taylor, 53 Miss. 697; Alliance Trust Co. v. Nettleton Hardwood Co., 74 Miss. 584, 21 So. 396, 36 L. R. A. 155, 60 Am. St. Rep. 531; Baldwin v. Anderson, 103 Miss. 462, 60 So. 578; Crago v. Vitter, 120 Miss. 103, 81 So. 646.”

Moreover, in the case of State ex rel. McCullen, Land Commissioner, et al. v. Adams et al., 185 Miss. 606, 188 So. 551, 553, this Court held that the subsequent vendee, John Jordan, who purchased from Adams, the patentee of the State, certain land owned by the State in fee simple, was not an innocent purchaser for value thereof “since John Jordan was sufficiently familiar with the value of the land as to be willing to pay a cash consideration of $1,600 therefor” and was put on notice of the grossly inadequate price of $160 paid for the land by Adams as recited in the patent, then of record, and delivered to him at the time of his purchase. In the instant case the defendant Cooperage Corporation likewise gained notice of the grossly inadequate consideration paid for this trust property when it examined the recordation of the deed to his vendors, and at a time when the said defendant had determined that the timber was worth at least $4,000. And on this question as to what should put a purchaser upon inquiry, see the cases of Baldwin v. Anderson, 103 Miss. 462, 60 So. 578; Beauchamp v. McLauchlin, 200 Miss. 83, 25 So. (2d) 771.

In the recent case of Koonce v. Board of Supervisors of Grenada County, 202 Miss. 473, 32 So. (2d) 264, 265, it was expressly held by the unanimous decision of this court that: * * the Board of Supervisors had no right to sell this trust property, which it was administering as an agency of the State on behalf of the educable school children of the township in the capacity of a trustee, at such a grossly inadequate price in violation of Section 95 of the State Constitution, which prevents ‘lands belonging to, or under the control of the state (from being) donated directly or indirectly, to private corporations or individuals, ’ etc. This is even true where such lands belong to the State in fee simple, and here the property in question was being held by the State as trustee, and was being controlled through the Board of Supervisors as a trust estate. * * *

“Private individuals who negligently fail to ascertain the value of their own property may, in the absence of fraud, bind themselves by conveyances thereof for a grossly inadequate price, but this is not true of public officials dealing with property held by the State, either in fee simple or as trustee, and especially as trustee, where the price is so grossly inadequate as to virtually amount to a donation, in violation of our State Constitution.”

The foregoing announcement of the Court is contrary to the contention made in the brief of the defendant Cooperage Corporation, wherein the Dears have joined, to the effect that the fixing of a price on Sixteenth Section timber by the Board of Supervisors is conclusive and. cannot be inquired into in the absence of fraud. It is beyond the power of the Board to make a sale of Sixteenth Section timber under the authority conferred upon the Boards by Section 6599, Code of 1942, for such a grossly inadequate price as to virtually amount to a donation thereof since Section 95 of our Constitution expressly prohibits this from being done. The Constitution is paramount to any authority conferred by a statute when the action taken under the statute is in conflict with the Constitution.

Under the decision in the case of State ex rel. McCullen v. Tate, 188 Miss. 865, 196 So. 755, the lands of the State owned in fee simple by it cannot be sold for a grossly inadequate consideration such as to virtually amount to a donation in contravention of Section 95 of our Constitution, and this would be true whether those in whom there is vested authority to sell the lands shall act negligently or fraudulently. There is greater reason for holding that the Board of Supervisors, while acting as agent for the State which holds property as trustee, cannot bind the State by a sale in violation of the Constitution, whether the action of the Board is due to its negligence, as in the instant case, or due to fraud or collusion. We are unable to agree that the State is precluded from inquiring into the act of its agent so as to protect the beneficiaries of tlie trust property in the instant case.

The absence of fraud or bad faith is controlling in the instant case only as to the liability of the members of the Board of Supervisors and their bondsmen.

It is true that the case of Dantzler Lumber Co. v. State, 97 Miss. 355, 53 So. 1, 4, and some of the other earlier cases cited by the Cooperage Corporation and the Dears tend to support their contention that the sale of Sixteenth Section timber has been committed by statute to the Board of Supervisors, and that in the absence of fraud or collusion the Courts cannot interfere with their discretion in the matter, but it is to be noted that in the Dantzler case the main question involved was whether or not such statute was in violation of Section 211 of the Constitution, and no mention is made either in the main opinion, concurring opinion, or dissenting opinion in that case of Section 95 of the Constitution. Then, too, the agreed statement of facts therein expressly stated that: “The price paid by defendant foi said timber and wood were as much as could be obtained on the market at that time for the same, in view of the facts that it was growing on sixteenth section lands, the right to cut and remove it was involved in some uncertainty, and the defendant was the owner of the leases. ’ ’ The Court lield that it was agreed that the timber was worth $20,000, or rather said sum could have been obtained for it “if the board of supervisors had possessed the authority to make a fee-simple title to the entire property, including the soil on which the timber and wood was growing.” At any rate, it is now well settled by the principles announced in the more recent cases that a Board of Supervisors has no right to sell Sixteenth Section timber for a grossly inadequate price, and this is true even though its action in so doing is due to negligence rather than fraud or bad faith. The Board is just without power to so dispose of this trust property, because Section 95 of the Constitution expressly forbids.

But it is urged by the purchasers and their vendee in the instant case that there is no proof in the agreed statement of facts or in the oral testimony to show that this timber was sold for a grossly inadequate price, or what was its actual value at the time it was sold. However, value does not have to be proved with certainty as to the amount in order to show that the consideration is grossly inadequate. The admitted fact that only $500 was received for the timber and that at a subsequent sale, not too remote, and where no substantial change in the conditions or circumstances in the meantime is shown to have intervened, the property brought the sum of $4,000 in a resale to a purchaser of experience in valuing the quantity and quality of timber, is prima facie proof of its value, and especially where the agreed statement of facts states the exact number of feet of timber cut and removed from the land.

In 31 C. J. S., Evidence, Section 181, page 882, it is stated that “value or market price may be shown by either direct or circumstantial evidence”, and that “generally, the law assumes that the value of a thing is what it will fetch in the open market, the price which the owner, if willing, but not compelled, to sell could obtain from a buyer, willing, but not compelled, to buy. ’ ’

Again in Section 182, page 885, of this text, it is stated: “A sale of real property made under ordinary circumstances is evidence of its value at the time of the sale, and may be shown to prove value at a different time provided the time interval is short and conditions remain substantially the same * * *”.

To the same effect is the statement in 20 Am. Jur., Section 373, page 340, where it is said that: “Evidence of the price at which property, the value of which is an issue, brought bona fide at a voluntary sale at some time near the time as of which value is to be determined is competent evidence of its value and is one of the best and most satisfactory standards of estimating actual value, although it is not in any case conclusive of value.”

"We are therefore of the opinion that the complainant made out a prima facie case and showed that the timber was worth at least $4,000, and that it was incumbent upon the purchasers and their vendee to introduce proof that 875,394 feet of timber which was sold for $500 was not sold for a grossly inadequate price as disclosed by the proof on behalf of the complainant. This Court upheld a judgment for $10,800 in the case of Brown v. Ohman, 42 So. (2d) 209, not yet reported in State Reports, for 1,200,000 feet of timber which was alleged to have been situated on overflowed land.

The cause will therefore be reversed and remanded for a new trial as to. the purchasers from the Board and their subsequent vendee, because of the error in excluding the evidence offered by complainant, and affirmed as to the members of the Board of Supervisors and their bondsmen.

Affirmed in part, reversed in part, and remanded.

On Suggestion of Error.

June 12,1950 (47 So. (2d) 150)

Alexander, J.

The cases cited to support the suggestion of error while eventuating in different results are in point chiefly as indicating that the question of disparity in value as constituting pro tanto a donation remains an open question.

We have not taken into account any of the factors which may or may not ultimately support the answer of the appellee. There is no occasion for us to evaluate these factors. We went no further than to hold that the State had made at least a prima facie case and that the matter should be heard on its merits.

Suggestion of error overruled.