82 Md. 168 | Md. | 1895
delivered the opinion of the Court. 0
The Court below was perfectly right, we think, in refusing to ratify the sale made by the Receiver in this case. Courts, for obvious reasons, always interfere reluctantly with sales of this kind or with judicial sales of any kind. And a sale made in strict conformity with the terms prescribed by the order or decree of the Court, will not as a general rule be set aside unless it plainly appears that the property was sold for an inadequate price, or unless there has been a mistake or surprise of some kind, or an omission of duty or misconduct on the part of the Receiver, or fraud on the part of the purchaser. The mistake or surprise, or omission of duty, or misconduct or fraud, such as will justify the interference of the Court in the rejection of the sale, will depend upon the facts and circumstances of each particular case. In dealing with all such questions, it must be borne in mind that sales of this kind are made by the Court through the Receiver as its agent, and made in behalf of the interests
With these general principles to guide us, we come to the facts and circumstances. under which this sale was made. Maurice Gandy, a subject of Great Britain, was the patentee of a process for manufacturing a machine belting made of cotton duck, for which he claimed merits superior to leather, rubber and other belting used for mechanical purposes. In 1883 he formed a partnership with John MacWatty and John H. Phillips for the purpose of manufacturing this belt
And then in his answer to the exception filed by MacWatty to the ratification of the sale on the ground of inadequacy of-price, because no information was - given to the public as to the right of the purchaser to use the patents, he says “ with regard to the patents, it would seem sufficient to say, that the Court in disposing of the partnership assets can only dispose of what is contained in those assets. But the facts and circumstances of the case made it wholly unnecessary to make any provisions as to the patent rights.” * * * “ The principles of equity applicable under such circumstances show, as the Receiver is advised that the order of sale not only went to the utmost extent of the jurisdiction of the Court, but provided for an advantageous disposition of the partnership property.” Whát were the facts and circumstances that made it wholly unnecessary to make any provision in the order of sale as to the right of the purchaser to use the patents ? He knew the good will and business of the Gandy Company was utterly valueless, unless the patents could be used in the manufacture of the belting, for he says they were purchased by the Mount Vernon Company to enable him as Receiver to continue the business, and that without their use the business might be closed at any moment. And it is equally clear from the answers filed by him as Receiver, that he was uncertain
The failure to have the rights of the purchaser thus definitely ascertained, affected most injuriously, as- the proof shows, the sale of the plant and good will of the business. As offered for sale by the Receiver, without any guarantee that the purchaser would have the right to use the patents, Mr. Phillips, who was himself a manufacturer of machine belting, says the plant and machinery was worth nothing more than so much old iron, and that he would not himself, nor would he have advised anyone else to have bid any
But this is not the only objection on which the exceptants rely against the confirmation of the sale. Here was a sale of the plant and good will of a business paying annually a net profit of over ten thousand dollars, the cost value of the plant amounting to $36,458.48, together with the stock of merchandise in the possession of the Receiver and in the hands of agents, of the value of over $50,000, and of bills receivable and debts due the company aggregating nearly $35,000. And the proof shows that besides paying commissions of over five thousand dollars annually to the Receiver, and twenty-five hundred dollars a year to a manager, and all other expenses, there had accumulated in the hands of the Receiver, during the eight years of his management, a cash surplus of $50,000. And yet neither in the advertisement nor otherwise, was any information given by the Receiver as to the character and value of the property to be sold, nor of the extent of the business, the good will of which was part of the assets of the company. If competition was to be invited and the property brought to the hammer under the most favorable terms, then such information was absolutely necessary to enable bidders to form some judgment as to the value of the entire property. And accordingly the Providence Belting Company, in its first letter, dated 29th August, 1894, requests the Receiver to furnish particulars as to the estimated value of the property, and debts on same, if any, and then asks the pertinent question, “ What does the property for sale consist of?” And in reply, instead of furnishing the information and answering directly the inquiry, the Receiver contents himself with
Then again, Mr. Walker, who came all the way from Chicago for the purpose of getting information as to the assets and property of the Gandy Company, writes on his return home, October ist, saying, “what we desire to know is the exact amount of the assets, including plant, machinery, outstanding accounts, and all other assets that will be sold at the Receiver’s sale, as ■ also the amount of net sales per annum for the last two'years, and the amount of profit from the business during that time.”
Now the proof shows that the Receiver had at his command all the information necessary to have answered these inquiries satisfactorily. While withholding the information from the Providence Belting Company and Mr. Walker, he furnishes by his letter of Sept. 13 this information to the Gandy Belting Company, Limited, of England. To this Company, he says, the profits for the past six years have averaged $10,000 per annum, “the books will show more profit;” with this knowledge on his part as to the annual profits, he declines to give this information in response to direct inquiry from the Providence Belting Company, and also fi;om Mr. Walker.
Now, what was the result of this failure on the part of the Receiver to furnish the information thus requested as to
But it is unnecessary to further consider the exceptions relied on against the ratification of this sale. The counsel for the exceptants has made out quite an elaborate statement for the purpose of showing that the property sold for an inadequate price. That it sold far below its market value, and that this depreciated price was caused by the failure on the part of the Receiver to put it fairly and advantageously on the market, there cannot be any question. We do not, however, rest our judgment on mere inadequacy of price, but on the ground that there has been a plain omission, misconception or neglect of duty, call it what you please, on the part of the Receiver, in the sale of this property, and in consequence of which it sold far below its fair value.
We deem it proper to add, that we cannot approve of so much of the order of the Court below as directed the Receiver to sell' at public auction the bills payable and all other debts due the company. This indebtedness amounted to over thirty-five thousand dollars, scattered all over the country, and no bidder could form even a probable estimate as to the value of these debts. And besides, the purchaser was to get only such debts as remained uncollected by the
Order affirmed with costs.