217 F. 16 | 2d Cir. | 1914
(after stating the facts as above). The question in this case is whether the action of the District Court vacating a sale of the property herein involved to the petitioner, Porter, and directing a new sale, shall stand. The sale made to Porter had been confirmed, only to be subsequently vacated. The purpose of a sale is that it shall be final, and the presumption is that a court, before confirming a sale made under its authority and in accordance with its directions, has observed due precaution to see that no wrong has been accomplished in and by the manner in which it was conducted. But it may sometimes happen that a court is imposed upon, or for some reason fails to perform'its full duty in respect to such a sale, and when that happens a necessity may arise to vacate the sale, although it has been confirmed. We proceed to inquire whether the facts in this case justified the court below in its action, and whether Porter, the purchaser at the first sale, is or is not entitled to the benefit of his purchase.
“It is a general rule of the law that all the judgments, decrees, or other orders of the courts, however conclusive in their character, are under the control of the court which pronounces them during the term at which they are rendered or entered of record, and they may then be set aside, vacated, modified, or annulled by that court. But it is a rule equally well established that after the term has ended all final judgments and decrees of the court pass beyond its control, unless steps be taken during that term, by motion- or otherwise, to set aside, modify, or correct them; and if errors exist they can only be corrected by such proceeding by writ of error or appeal as may be allowed in a court Which, by law, can review the decision.”
It is, of course, true that as a general rule the power of, the court to modify its orders expires with the term. But there are no terms in bankruptcy, and the principle which the learned counsel invokes that a court has no power to vacate its order other than at the term in which it was granted is inapplicable to the facts of this case. In Sandusky v. National Bank, 23 Wall. 289, 23 L. Ed. 155 (1874), Chief Justice Waite, speaking for the court, said:
“A proceeding in bankruptcy from the time of its commencement, by the filing of a petition to obtain the benefit of the act, until the final settlement of the estate of the bankrupt, is but one suit. The District Court, for all the purposes of its bankruptcy jurisdiction, is always open. It has no separate terms.*19 Its proceedings in any pending suit are, therefore, at all tirr.es open for re examination upon application therefor in an appropriate form. Any order made in the progress of the cause may be subsequently set aside and vacated upon proper showing made, provided rights have not become vested under it which will be disturbed by its vacation.”
“Tbe order of confirmation gives to the sale the judicial sanction of the court, and when made it relates back to tbe time of the sale, and cures all defects and irregularities, except those founded on want of jurisdiction or fraud. As the contract is then complete, the sale will not be set a.side, except jior the same reasons for which equity would set aside a sale between individuals; but relief will be given when such reasons do exist, as, for example, where there has been fraud or mutual mistake.” 24 Oye. 30, 37.
We discover in the facts herein involved no grounds upon which a sale between individuals could be set aside. The reasons given for setting the sale aside were: That the original order of sale was not correct in form; that the proof of notice of sale was indefinite, and, while it made a prima facie compliance with the law, yet the notices did not seem to have been received; that as the parties had appeared they should have been served personally or by attorney rather than by mail; that the order of confirmation was not on notice to the parties whose rights were cut off. The District Judge declared he was unwilling “to find an estoppel where there are so many conflicting equities and where the purchaser was told at the sale that his bid would not be accepted.”
The reasons assigned are wholly insufficient to justify the court in the action taken.
Before confirmation, if the inadequacy of the price be great, slight circumstances of unfairness on the part of the party benefited will be sufficient to prevent confirmation, and will justify the opening of the sale for further bids. In Ballentyne v. Smith, 205 U. S. 285, 27 Sup. Ct. 527, 51 L. Ed. 803 (1905), this course was allowed, the property being worth at least seven times more than the sum bid. But the case is different after the sale has been confirmed, and the court below seems to have lost sight of this distinction. After a sale has been confirmed, the court and the successful bidder are regarded as occupying the relation of vendor and purchaser in an executed sale, and nothing, is sufficient to avoid it which would not set aside a sale of like character between private parties. In Morrison v. Burnette, 154 Fed. 617, 624, 83 C. C. A. 391, 398 (1907) the Circuit Court of Appeals in the Eighth Circuit declared that:
“The rulo is settled, and it seems to be universally approved, that after confirmation of a judicial sale neither inadequacy of price, nor offers of better prices, nor anything but fraud, accident, mistake, or some other cause for which equity would avoid a like sale between private parties, will warrant a court in avoiding the confirmation of the sale, or in opening the latter and receiving subsequent bids.”
The court considered the rule so firmly established as to be no longer debatable, and in that view of the matter we concur. The cases are there collected, and need not be repeated here. And in view of the established principles there can be no doubt that the court below has committed a serious error in vacating the order confirming the sale made to the petitioner.
The order which set aside and avoided the sale to the petitioner, and all proceedings based thereon, and which directed a new sale of the property, and the order confirming the resale, are hereby reversed.
It is so ordered.