Citizens Bank & Trust Co. v. Raines

125 Ark. 17 | Ark. | 1916

Wood, J.,

(after stating the facts). 1. When the State Bank Commissioner takes charge of an insolvent bank for liquidation under Act 113, supra, “upon the orders of the chancery court in the county in which it (the bank), is doing business, he may sell all its real and personal property on such terms as the court shall direct.” Section 53. The act is special statutory proceedings for the disposition of the assets of insolvent banks under the directions of the chancery court. Section 6236 of Kirby’s Digest, providing the manner of foreclosure of mortgages and other liens, and the sale of property under such foreclosure, has no application to sales of the assets of an insolvent bank that are in process of liquidation under the above act.

It is not shown that the real estate in controversy was sold under any mortgage or other lien. The purpose. of Act 113, supra, was to enable the chancery court to make such disposition of the insolvent bank’s assets as would best subserve the interests of all concerned, and the court is unfettered by any limitations as to the terms upon which it may order the disposition of such assets.

(2) Section 6236 of Kirby’s Digest, and section 63 of Act 113, supra, relate to different subjects and there is no conflict between them. The sale of an insolvent bank’s assets not under mortgage or other hen, when in process of liquidation under Act 113, must be governed alone by that act. It appears that the deputy commissioner, instead of acting under the orders of’ the court to make a private sale, proceeded to advertise the land and sold the same at public sale. The court, however, found that the sale, as made by the deputy commissioner was fairly and legally conducted and confirmed and approved the sale, thus treating the sale as having been made in compliance with the orders of.the court. This finding of the chancellor was clearly against the undisputed testimony.

The undisputed testimony of the deputy commissiqner who conducted the sale, was to the effect that he * understood that he had the authority to offer the lands in the manner which he did, and if the bids made upon the lands were not satisfactory, that he would so report to the court, and that the court would not approve the sale; that he so advised members of the stock holder’s committee with reference to the sale. The testimony of the president of the bank was to the effect that the deputy commissioner consulted with him about the sale, and that he was opposed to it, but withdrew his objections when given to understand by the deputy commissioner that any bids would be turned down if the same were unsatisfactory, and upon his representation that the property would be re-offered; that he attended the sale under this impression and permitted the bids of the parties who bought these lands to pass; believing that the lands would be re-offered for sale, as the bids were not satisfactory. The parties who purchased the lands, a few days before, had offered the sum of $1 per acre at private sale for the bank’s equity, whereas, at the sale their bids were 40 cents per acre less.

The testimony showed that the bid of appellee was $3.10 per acre, or about the assessed value of the land, which was reasonably worth $6 or $7 per acre.

The court should have adopted the recommendation of the deputy commissioner in his report and disapproved the bid of Raines. The court’s order directing the sale did not specify any terms further than that the commissioner should sell the real property at private sale. In the order the court provided that “all such sales shall be submitted to the court for its approval before the sale is consummated.” Under the law and under the order of the court the sale was not consummated until the chancery court approved the same. The plain purpose of the law was to enable the chancery court to conserve the best interests of all concerned in the assets of the insolvent bank, and to make the most advantageous disposition of same possible. While the court is thus given large discretion in the manner in which it may dispose of these assets, yet it is not an unlimited judicial discretion, but * one that can be controlled when abused.

It clearly appears that it was not to the best interest of those who were directly concerned in the manner of the disposition of the bank’s assets to approve this sale. On the contrary, instead of husbanding the resources of the bank, so as to preserve and protect the interests of those who are directly concerned, the order of the court approving this sale would have precisely the opposite effect. The court therefore abused its discretion in. confirming the report of the commissioner and treating the acts of the commissioner with reference to the sale of the lands as a completed sale to the appellee. ‘

Appellee invokes the rule stated in previous decisions of this court that mere inadequacy of price in the absence of fraud does not afford grounds for withholding confirmation of a public judicial sale. Colonial & United States Mortgage Co. v. Sweet, 65 Ark. 152; George v. Norwood, 77 Ark. 216. That rule does not, however, apply in the present case for the reason that the court ordered a private sale (of which fact the pruchaser was fully advised), and in considering the question of confirmation, it should have been treated as a private sale.

The reason for the rule has been stated by this court in the following language: “Courts have adopted, as a wise public policy, the rule that confidence in the stability of judicial sales should be maintained, so that competitive bidding may be encouraged by the assurance that, in the absence of fraud or misconduct, the highest bidder will be accepted as the purchaser of the property offered for sale.” George v. Norwood, supra. The reasons thus given do not apply to a private sale, for there is no such thing as competitive bidding in conducting that kind of sale which constitutes mere negotiations ending in the final approval or disapproval by the court.

It does not follow, however, that the court should have accepted the increased bid of Kress and others, and treated their bid as a final offer anid a consummation of the sale. The undisputed testimony clearly shows that there was no intention upon the part of the commissioner by what he did to complete a sale to any one. The deputy commissioner recommended that the property which he had sold to Raines be resold. The court should have found that the commissioner had not proceeded to make the sale in the manner directed by its order, and should have adopted the recommendation of the deputy commissioner and ordered the land resold.

The decree of the court is therefore reversed and the cause is remanded for further proceedings according to law, and not inconsistent with this opinion.