Graves v. Long

87 Ky. 441 | Ky. Ct. App. | 1888

JUDGE HOLT

delivered tee opinion of the court.

August 15, 1885, Thomas B. Graves and J. B. Wells made an assignment of their property to a trustee for the payment of their debts. Among the assets was a valuable farm. Graves had previously conveyed his undivided half of it to his wife; but in October, 1885, she conveyed all her interest in it to the assignee of Graves and Wells for the purposes named in their deed of trust. In February, 1886, this action was instituted by the assignee for the purpose of obtaining a sale of the land to pay the indebtedness. Graves and Wells were, together with their creditors, made defendants in the petition.

March 23, 1886, a judgment of sale was rendered. It provided that the commissioner making it should immediately thereafter put the purchaser in possession of the land, save the house, garden, yard and outbuildings, thereby in effect denying any right of redemption, regardless of what the property might bring.

Orders were also made enjoining the creditors from bringing separate actions, and referring the cause to a commissioner for proof of claims.

Up to this time the defendant Wells, and a lien creditor, one Bergen, had” not been brought before the court by service of summons. Section 438 of the Civil Code provides, however, that in an action to sell property held in trust for the payment of debts, it shall not be necessary, as it is in a suit to settle a decedent’s estate, to make all the lien creditors parties.

The title to the land was not in Wells. He was not only a proper but a necessary party to the suit, because of his interest in it, but not for the purpose of passing the title to a purchaser. He had already parted with it for a specific purpose. It had vested in his assignee. Moreover, it appears from the testimony, but not by any entry of record, that his two attorneys, in open court, consented for him to the rendition of a decree of sale at the time it was entered. Their right to do so is now denied. It is urged that they were also the attorneys of the assignee in this suit. It is undoubtedly a safe rule, supported by both reason and sound morality, that whenever an agent or attorney accepts another employment in conflict with the interests of his first principal or client, it ends his first engagement. He cannot act for him and at the same time be against him. When such antagonism arises, the law steps in and says to him that his further action is likely to tempt him to mischief and dishonesty, and lead to the injury of his principal.

Such a case is not here presented, however. There is not necessarily any antagonism of interest between the debtors and their assignee. It is his duty to apply the property in payment of their debts. They convey it to him for this purpose; and it is their moral and legal duty to throw no obstacle in his way. It is true a case might arise where it would be improper for the same attorney to represent both; but this record does not present it.

The land having been sold, the appellants, Graves and Wells, gave notice and moved to set aside the judgment. They also filed exceptions to the report of sale, but their objections, as well as their motion to set aside the judgment, were overruled, and they have appealed. But one of the exceptions was well grounded.

Prior to the act of April 9, 1878 (General Statutes, p. 972), the debtor’s right for twelve months after a sale to redeem Ms property, if sold for less than two-thirds of its appraised value, was confined to sales under execution. If sold under decree, there was no such right. His property was, therefore, often sacrificed. In view of this fact the Legislature passed the act named, which has the general title: “An act providing for the redemption of real estate sold under an order or judgment of a court,” and provides: “ Before any real estate shall be hereafter sold, in pursuance of any order or judgment of a court, the commissioner or officer, whose duty it may be to sell the same, shall cause it to be valued. * * * The valuation so made shall be in writing, signed by the persons making it, and returned by such commissioner or officer to the court which made the order or rendered the judgment for the sale of the property.” * * * *

“If the real estate which may be sold in pursuance of such judgment or order does not bring two-thirds of such valuation, the defendant and his representatives shall have the right to redeem the same within a year from the day of sale, by paying the purchaser or his representatives the original purchase money, and ten per centum per annum interest thereon. * * *

“If the judgment in pursuance of which such sale is made be not satisfied by such sale, the right of redemption herein provided for may be sold in satisfaction of the residue of such judgment; and the said right of redemption shall also be liable to sale under execution. The land shall, in such case, be still liable to redemption from both purchasers until the end of a year from the first sale.”

If the wisdom or expediency of tMs act were open to question, it is not our province to determine it. That is a matter which, subject alone to constitutional restraint, must be left to legislative judgment.

Viewed by past and then existing circumstances and the object within the legislative eye, it is evident that the law-maker intended to give to the debtor an opportunity to redeem his property in all cases where it might be coercively sold for debt, and fail to bring two-thirds of its appraised value. It was the purpose to put all coercive sales of real property for debt upon the same footing.

It is urged that, in this instance, the judgment was not directly against the debtor; that the assignee, who asks the sale, represents him as well as the creditor, and that, therefore, the act does not apply. Undoubtedly it does not, as was held in the case of Wooldridge v. Jacob’s Guardian, 79 Ky., 250, where the sale is for the benefit of the owner alone, as where the property of an infant is sold upon the petition of his guardian under article 8, chapter 63, of the General Statutes. It relates to sales for debt only. It substantially says so. The case now in hand, however, was a coercive sale for the debts of the appellants. The property was as much liable to sacrifice as if it had been sold under execution, or a judgment rendered in an action by the creditor directly against his debtor. If so, and the legislative purpose was to prevent such loss, then the act should be construed to that end, if its terms fairly admit of it. We are not disposed to cramp its operation by a strict construction. It is for the benefit of both the debtor and his creditor. It will often serve to prevent one creditor from obtaining all the property of the debtor, or the benefit of it, at a ruinous price, to the exclusion and injury of his other .creditors. The spirit of it, as well as the plain import of its language, show that it was intended to embrace all coercive sales for debt; and it therefore provides that before any real estate shall be sold for this purpose it shall be valued. Where an administrator sues to subject the real estate of the decedent to the payment of the debts, he acts both for the creditor and the estate. He asks that the sale be made; and yet this court, in the case of Cantrill v. Perry’s Adm’r, 7 Ky. Law Rep., 446, held that the act in question applied to such a case, and that the sale could not be sustained, because the property had not previously been valued.

Our conclusion is, that the statute embraces a case like the one now before us. Its language gives to “the defendant (meaning the debtor) and his representatives” the right to redeem. He has an interest in the property, although he has placed it in trust for the payment of his debts, and passed the title to his assignee for this purpose. If he were to pay all his debts, he would be entitled to a re-conveyance.

We fail to see that such a construction will be likely to work an injury to the insolvent estate or the creditors. It is likely to do so but 'seldom at most; ■ and will more often, it is probable, redound to their advantage by preventing a sacrifice of it.

It is true, the act provides that if the property does not bring two-thirds of the appraised value, the debtor may remain in possession until the expiration of the year within which it may be redeemed; but this is equally so in cases of sales under execution or under judgments rendered in actions brought directly by the creditor against his debtor.

Here there was no appraisement before the sale. It was not essential to the validity of the judgment that it should in express terms direct it, because the law required the officer to have it done; but it by implication directed the contrary, because it improperly provided that the commissioner should, without regard to what the property might bring, at once put the purchaser in possession. The employment of attorneys did not confer the power upon them to waive their client’s right to redeem their property, or any steps necessary thereto, even conceding that they at tempted to do so. Evidence that it in fact sold for a fair value, or more than the two-thirds of any appraised value which could fairly have been placed upon it, can not avail. If so, it could equally be urged that a judicial sale, made without advertisement or otherwise in violation of law, should be upheld, because the property in fact brought a fair price. The law is imperative that the valuation shall be made before the sale. It is not merely directory. It goes to the right of the debtor, and reaches to the interest of the creditors. It is the statutory test of the right of the one to redeem, and of the other to still look to the property for the payment of their debts. No coercive sale for debt can be lawfully made in the absence of this valuation. The statute forbids it; and it was not intended that its place should be supplied by testimony given after the sale and heard upon the question of its confirmation.

The judgment is reversed, and cause remanded for further proceedings consistent with this opinion.