Anderson v. White

2 App. D.C. 408 | D.C. | 1894

Mr. Justice Shepard

delivered the opinion of the Court:

■ Courts of equity are charged with no power of relief against the hardships and misfortunes which sometimes attend upon the prompt and rigid enforcement of debts and obligations which have matured in accordance with contracts whose validity is conceded. Deeds of trust to secure debts, with powers of sale upon short notice, which have been deliberately and fairly made, may, by being pushed to speedy sale immediately upon default, in times of unexpected depression, or even in ordinary times, cause properly to sell for less than could reasonably have been expected at their dates, and be otherwise attended with results disastrous to the plans and hopes of their makers. Notwithstanding, they, have grown into almost universal use under the permission and encouragement of the law, as a ready means of effecting loans; and while in some jurisdictions they have been limited in their scope and operation, they have rarely, if ever, been abolished, because, doubtless, their general conveniences and advantages have been considered as more than counterbalancing the exceptional hardships which may result from their swift and sometimes merciless enforcement against an unfortunate debtor; these hardships being no greater, however, than those which have often attended a rigid or heartless enforcement of liens and debts by the ordinary legal process. As long as these contracts are entered into by permission of law, they must be respected and not interfered with, unless upon some well recognized principle of equity applicable alike to all contracts of the same general nature.

Wherever the terms of the trust have been followed, and no violation of duty on the part of the trustees can be shown, the hardship of the condition of the mortgagor will not excuse the interposition of courts of equity.

That “ times are hard,” or “ money scarce,” or the “ time of year ” unpropitious, or that the property would likely sell for a great deal more at a later period, aiford no ground for equitable relief. Interference for such causes would be to impair the obligation of contracts and to extend the guardianship of the courts to those laboring under no disability to contract for themselves. Moreover, by interference upon slight foundation to prevent hardship to the debtor, one equally as great might be brought upon the creditor, who might alsoo be the debtor of a third person, and thereby suffer even a greater disaster by failure to collect the money due him.

This case itself presents an example of this; for complainants say in their bill that Mrs. Anderson “was unable to obtain possession of a large sum of money, to wit, $4,000 more or less, which was due and payable to her shortly prior to November i, 1892, and upon which she had relied to meet this note,” for $3,185, maturing November 1. If she had been able to collect this money promptly it would more than have discharged her first note then maturing, and it would not have gone to protest, and no sale would have occurred. It may possibly be that the holders of these notes sustained some special injury or incurred some additional liability by her default. There are sometimes two sides to these equities, just as there are two parties to the contract sought to be enforced.

With respect, too, to the facts of this case, it may be said that courts of equity will more readily interfere with sales under trust deeds before they are made and purchasers thereunder have acquired equitable rights, than when parties, with knowledge of all the circumstances which ought to render the sale invalid, take the chances thereof, and only apply to the courts after it has taken place with results undesired and to some extent unexpected. Parties who with knowledge of sufficient facts in time before sale to apply to the courts to prevent it, will not, as contended by appellees, be estopped to impeach the sale after it is made (unless, indeed, they may have stood by and permitted an innocent purchaser to pay out his money in the belief of its validity); but they will be required to allege and prove substantial violations of the trust or other plain misconduct of the trustees. Where there has been misconduct on the part of the trustees affecting the fairness of the sale, or where, they have violated the terms of the trust in any material particular, or where the sale has been upon such inadequate consideration as to shock the. conscience and of itself suggest fraud or misconduct, equity will interpose and set aside the sale upon the application of the mortgagor and sometimes of the mortgagee.

It must be borne in mind that we are here discussing sales made under the ordinary trusts to secure loans, and enforceable upon stipulated terms and notices at the demand of the creditor or holder of the secured debt. Another and different rule applies to cases of sales under trusts of a different character, such as trusts to sell for partition or distribution and the like, and it is this rule which the authorities cited on behalf of appellant, in the main, support, without trenching upon the operation of the other. The discretion imposed in the trustees in the one case is widely different from that in the other. In the one they are charged with the duty to so arrange for the sale without unnecessary delay as to secure the highest possible price for the property; this being the object of the trust and the interests of the beneficiaries being identical. But this discretion is entirely wanting in the other. Their duty is to sell after default, upon the demand of the security holder in the manner and upon the notice prescribed in the trust. They cannot sell upon holidays, or at unusual or unreasonable hours; but they hav.e no right, on the other hand, to refuse to sell until some time in the future that may be more satisfactory or advantageous to the mortgagor. Appeals for delay to a more favorable or convenient season must be made to the creditor. The terms of .the instrument measure the powers and prescribe the duties of the trustees. It reinains to consider the principles which have been discussed in application to the facts alleged in the bill.

There was no misconduct on the part of the trustees. The note was protested November 4, 1892. The first sale was advertised to take place December 15. When Young failed to make good his bid, they readvertised in the required manner for sale on December 29. They did not mislead the complainant in any particular. The only definite or well pleaded charges of misconduct are that one of them denounced the bid of Young as a trick, and asked Mrs. Anderson’s representative if he knew whether she caused it to be done. As she was the only person directly interested in the delay of the sale the suspicion was not so unnatural as to show malice; and we do not see how its expression under the circumstances could affect the subsequent -sale. Again, the trustees are charged with telling the attorney of the loan company of the existence of the mechanics’ liens of about $4,000, with the intent to prevent Mrs. Anderson from perfecting a loan which it had under consideration. As the statement was true, according to the allegations of her own bill, and one which she would have been bound in honor to have communicated herself, we cannot perceive how it could affect the case or afford a certain inference of malice on the part of the trustees, or a desire to destroy her credit. If the knowledge of these liens, as is probable, did prevent the loan being made, how can the fault be charged to the trustees?

The charge that two bidders only were present does not mean that only two persons were present; its meaning can only be that only two persons actually made bids at the sale. This is doubtless very often the case at similar sales. That “the excessive cold prevented the attendance of bidders” is not sufficient, because it appears from the allegations that there were “bidders,” and no specific fact is alleged from which the court could determine whether or not possible bidders were reasonably prevented from attending the sale. In some sections of the country, if this be a sufficient allegation, a valid sale could hardly be expected to be made in the winter; while in others excessive heat might be alleged as a preventive of attendance at other seasons.

Surely there is no precedent for saying that a sale cannot properly be made during Christmas week. That the auctioneer stated the value of improvements on the lot made since Mrs. Anderson’s purchase to be $3,000 instead of $8,000,. is a matter of no consequence. It is not made to appear that this was not an honest mistake on his part. It does not appear that any one of complainants’ representatives corrected, or attempted to correct, this statement, as might easily have been done at the time. It is not probable either that prospective purchasers of property of such value were, of could have been, influenced by statements of the auctioneer.

There is no great inadequacy of price in the sale — certainly not such as to shock the conscience or raise a suspicion of unfairness. Complainant alleges the value in general terms to have been $35,000, and states that it had been appraised in November and December by three persons, two of whom estimated it at $35,000, and the third at $30,000.

From what has been said, the conclusion follows that the facts alleged in the bill are not sufficient to authorize the setting aside of the sale, and the court did not err in sustaining the demurrer.

The decree appealed from must be affirmed, with costs to the appellees; and it is so ordered.