Johnson v. Dorsey

7 Gill 269 | Md. | 1848

Martin, J.,

delivered the opinion of this court.

This case comes before the court, upon an appeal from an order of an associate judge, of the third judicial district, sitting for the chancellor, vacating a sale made to the appellant, on the 21st of April 1847, under a decree of the chancery court.

It appears from the record, that objections to the ratification of this sale, were interposed by the appellee, prior to its confirmation. But they were not sustained by the affidavit of the exceptant, or verified by that of any other person, and in this predicament, they were disregarded by the judge, to whom the application was preferred, and the sale ratified on the 24th of June 1847.

This order was, however, subsequently rescinded, and in considering therefore, the questions presented on this appeal, they ¡are to be treated as uninfluenced by a final order of ratification.

The objections to the validity of this sale, as filed below, ,and relied upon in the argument of the cause, before this court, are in substance, as follows:

1. Because notice of the sale was not given, as required by the terms of the decree.

2. That in consequence of some mistake or misunderstanding, prevailing in the community, that the sale would not take place, various persons, who were desirous of purchasing the •estate in question, were prevented from bidding for the same, and that in this way it was sacrificed.

3. That in consequence of this mistake, or misunderstanding, there was in fact, no competition at the sale.

4. That the price at which the property sold, was grossly inadequate.

There is no force in the first objection. By the terms of the decree, the trustees were required to give, “at least three week’s previous notice, inserted in some newspaper or papers, .and such other notice as they might think proper, of the time, place, manner and terms of sale,” and the appellee has, in is petition admitted, that the trustees advertised this sale onceh a week for three weeks, and once on the day of sale, in two daily newspapers in the city of Baltimore This certainly was legal notice of the sale. It is a misconception of the character of the decree, to suppose, that it imposed upon the trustees the obligation to advertise the property daily, for three weeks previous to the sale. The language of the decree does not warrant such a conclusion. And we should be indisposed to countenance a construction, which would operate most severely and injuriously upon the interests of a debtor, already embarrassed, by subjecting him to an onerous and useless expense.

The second objection is equally untenable. The appellant is a stranger to the controversy in which this proceeding originated. His position is that of a party, who having purchased in good faith, an estate, at public sale, regularly conducted and fairly made, under the authority and supervision of the court of chancery, now claims to have his contract ratified, as obligatory on both parties. And in a case thus situated, it is perfectly clear, that the sale cannot be disturbed upon the ground of mistake,. unless the mistake has been generated by the conduct of the purchaser, or can be traced to the creditor, at whose instance, and for whose use, the property was sold, or to the trustee to whom the control and management of the sale was confided.

The American cases are full and conclusive on this point; and the proposition is sustained by the most eminent of the English Chancellors, whose opinions are to be received as illustrative of the law upon this subject, when expressed with respect to applications for opening sales, after their absolute confirmation.

It will be found by consulting the authorities, that this principle is firmly established, not only as a rule of public policy and convenience, but one in which the debtor himself is directly and deeply concerned, as a means of rendering these sales productive, by imparting to them the character of permanence and security.

The principle is thus correctly and clearly stated by the vice chancellor,- in the case of Woodhull vs. Osborne, 2 Edward's Rep., 616.

“ Where a stranger or third person becomes the purchaser in good faith, something more than a mere offer of a higher price must appear, to induce a re-sale: Such as fraud or misconduct of the master, or other person, having the control of the sale, or surprise upon the party interested, or his having been misled as to the time and place of sale. Where circumstances of the latter description are relied upon, the party must show they proceeded from or were caused by the purchaser, or some person connected with or having the management of the sale. If he be of full age and under no disability, he cannot be permitted to allege his own negligence or inattention, as the cause of his surprise or mistake.”

In Collier vs. Whipple, 13 Wend., 226, Mr. Justice Nelson, after citing, with approbation, the cases of Morrice vs. Bishop of Durham, 11 Ves., 57, and White vs. Wilson, 14 Ves., 151, says:

“These cases, without going further, sufficiently shew that fraud or misconduct in the purchaser, or fraudulent negligence in any other person connected with the sale, as the agent of the mortgagor, or of persons interested as judgment creditors, and also surprise created by the conduct of the purchaser, will induce the court to open the biddings.” And at page 228 of the opinion, he distinctly expands the rule so as to embrace the master; — correctly maintaining, “that surprise created by him on his conduct, is as injurious and as available in an application of this kind, as if caused by a purchaser; which all the cases concede is sufficient.”

In Gardiner vs. Schermerhorn, 1 Clarke's Rep., 103, the language held by the vice chancellor, is equally strong.

And in the case of Williamson vs. Dale, 3 John. Ch. Rep., 292, the chancellor, in setting aside a sale, on the ground that the defendants were misled, though unintentionally, by the language of the plaintiff and his solicitor, said: “'That he was not influenced by the alleged inadequacy of the auction price, and that in disturbing the sale, he pushed the doctrine to the utmost verge of an admissible interference.”

In Morrice vs. the Bishop of Durham, 11 Ves., 57, Lord Eldon, after animadverting upon the decision of Lord Commissioner Ashhurst, in Watson vs. Birch, 2 Ves., Jr., 51, said:

“That the only case in which the biddings can be opened, after confirmation of the report, is, where there is some fraud or misconduct in the purchaser, or fraudulent negligence in another person, as the agent, of which it is against conscience that the purchaser should take advantage.” White vs. Wilson, 14 Ves., 151.

It cannot be pretended in this case, that the mistake, of which the appellee complains, is to be attributed to the conduct of the creditor, the trustees, the vendee, or their agents, and upon the doctrine enunciated in the cases to which we have referred, the purchaser is not to be treated as accountable for the consequences of the alleged mistake, however injuriously it may have operated upon ¡he sale.

But what is the nature and origin of this alleged mistake? Mr. Stewart in his answer to the petition of the appellee, states:

“That he believes sufficient notice was given of the sale, which was by public advertisement, but he believes also, that there was a general impression among persons who might otherwise have been disposed to attend the sale, that some arrangement would be made, and that the sale would not proceed. How this impression originated he cannot say, but it seemed to be a prevailing and accredited impression.”

How the impression to which the trustee refers, arose, or by whom it was propagated, is not distinctly disclosed by the testimony in the cause. But when it is recollected, that the ex-ceptant, at the time he solicited the intercession of Mr. Swann with the creditor, for the purpose of arresting the progress of the sale, stated, “that until within half an hour of the sale, he had confidently expected to procure the money,” the inference is legitimate, that the impression, mentioned by the trustee, “that some arrangement would be made, and that tho sale would not proceed,” was generated by the debtor himself,under the hope, sincerely and honestly entertained, that he would be able before the sale to raise a sum,- sufficient for the payment of the mortgaged debt, and that in this way the sale would be arrested.

At all events it is difficult to believe under the circumstances of the case, that this impression in the community to which Mr. Stewart refers, was not known to the exceptant. If so, it was his plain and imperative duty to have communicated its existence to the trustees, that they might have guarded the sale against its influence, and an act of such remissness and negligence on the part of the debtor, would be regarded, irrespective of other considerations, as presenting an insuperable obstacle, to the interposition of a court of equity.

It was indeed contended by the counsel for the appellee, that the knowledge of this impression was in the possession ofoñe of the trustees, prior to the day of sale, and that he was obnoxious to the charge of a gross dereliction of official duty, by not adopting in connection with his co-trustee, such means as might be necessary to disabuse the public mind of this error, before the property was exhibited at public auction. But there is no foundation for this imputation. It is perfectly apparent on a fair construction of the answer of Mr. Stewart, that the information referred to, was not acquired by him until after the sale.

The third objection is in the following words: “Because there was no attendance of bidders at the said sale, and no competition, in consequence of which the said property was sold far below its valué.” This exception literally interpreted is of course in conflict with- the. undisputed facts in the cause, but the point of the objectioli is, that in consequence of the impression before referred to, with respect to the arrangement of this debt,- and the anesfation of the sale, the sale was depressed, and competition prevented.

We have already seen, that the appellant is not to be considered as responsible for any injurious consequences, which may have resulted from the prevalence of this mistake.

But is it true, as maintained by the counsel for the appellee, that competition was hindered, and that persons disposed to become the purchasers of this property, were discouraged from bidding by a mistaken impression, that the sale would not proceed ?

We think not. Mr. Boyd, certainly,, was not detained from the sale, from any misapprehension of this kind. Notwithstanding he was informed by notice in the newspapers, that the sale was appointed for the 21 st of April, he declined to attend, upon information derived entirely from those who lived in the vicinity of the appellee, that the sale would be postponed-for one month. And upon this intelligence he acted, without seeking to be correctly informed upon the subject, by reference either to the debtor, or to the trustees. It is scarcely necessary to say, that to disturb a fair sale upon a ground like this> would be without precedent, and of the most mischievous tendency. The absence of this gentleman from the sale, was obviously the result of his own remissness.

It appears from the testimony in the cause, that among the persons assembled at this sale, there was at least one of those gentlemen designated by the exceptant as disposed to become the purchaser of the property, at a larger price than that which was obtained for it.

Why, then, were there not more bidders?

The auctioneer after consulting with the trustee, announced his determination not to sell the property, unless forty dollars an acre was offered for it. This communication was calculated to stimulate competition. It was an annunciation that the sale was not formal, — that it would™g^^^^Sji.miprised those interested in the purchase, tlndwt oo soíd ft forty dollars an acre, unless more was it. TJm^^^&neer states, that he paused upon the bid ££lofl|er than he ought to have done, under the jp-ffie of ag^gg¡)^n*idvanee.” And yet there was no proposition o^^S^ancoi^n that bid.

Under such circumstances, itN^.d ifiieu]t.-ffifresist the inference, either that the property was not considered as intrinsically worth more than the sum offered for it by the agent of the appellant, or that there was an invincible repugnance to purchase this estate, in opposition to the wishes of the debtor. The testimony of one of the witnesses on this point, is exceedingly significant. He says, “that he does not know the property, but if there had been no contention, and he could have obtained peaceable possession, he would have given for it fifty dollars per acre.”

The last objection raises the question with respect to the alleged inadequacy of the auction price, at which this property was sold.

The testimony on the question of value, in this case, is chiefly composed of the opinions of witnesses, familiar with the property. But nothing can be more precarious and uncertain as a standard of value, than that created by these diversified and speculative opinions. Each opinion is constituted of different elements, depending upon the taste, habits, pursuits, and feelings of the witness.

The English practice of opening the biddings as a matter of course, before the ratification of the master’s, report has not been adopted in Maryland. We have said in a former case, that it is not expedient to introduce it here. But if the bid-dings are to be opened, there is wisdom in the English rale, acted upon in the chancery courts of New York, which provides, that a resale shall not be ordered, unless there is an actual advance upon the original bid.

The true test of value in these applications is to be found in the inquiry., with respect to the sum which the property would produce in the market upon a resale, and on this subject we have no reliable information, as there has been no proposition of an advance on the sum bid for this estate by Mr. Gittings.

It is however not necessary to pursue this inquiry. We are perfectly satisfied, that according to the doctrine now settled by an unbroken series of adjudged cases, that assuming this property to be worth the sum of twenty thousand dollars, the estimate placed on it by the exceptant, but to which we do not accede, the court would not be authorised to vacate the sale, upon the single ground that the consideration was inadequate.

In the case of Duncan against Dodd, 2 Paige, 99, the property sold at a master’s sale for half its value. A resale was ordered on the condition that the petitioner gave sufficient surety to the master, that the premises should produce an advance of fifty per cent. And in this strong case the chancellor placed his decree upon the ground, that the property was the only dependance of two infant children, and that it was sacrificed through the misapprehension, or negligence, of their mother, or step-father.

After stating, that in such sales, it is essential to the interests of those whose property is sold, that purchasers should continue to retain full confidence in the safety of such purchases, and that they will not, as matter of course, be disturbed merely because a good bargain has not been obtained: — The chancellor said:

“If the defendants were adults, and the property had been sacrificed by their own negligence or inattention, I should not disturb the sale.”

In the case of the American Insurance Company vs. Oakley, 9 Paige, 259, the property, consisting of two lots, was sold together, for the sum of $21,000, when, as the affidavits in support of the application stated, “the premises were worth, and would have brought, $10,000 more, if the same had been sold in parcels.”

On this ground the sale was rescinded. But the chancellor said:

“If the premises had been put up and sold in parcels, I think it is not a case in which the court ought to have interfered with the sale, although the property was only sold for about two-thirds of its supposed value. ® ® If the property is duly advertised and fairly sold by the master, in the usual manner, to a stranger to the suit,, mere inadequacy of price is not a sufficient ground for depriving the vendee of the benefit of his purchase, unless the inadequacy is so great as to be evidence of fraud or unfairness in the sale.”

In Williamson vs. Dale, 3 John. Ch. Rep., 290, the mortgaged premises were bid off at $2700, subject to a prior mortgage for the same amount; and the petitioners for a resale, stated the value of the property to be more than $12,000.

This sale was vacated on the ground of surprise. And Chancellor Kent, in pronouncing his decree, said :

“I wish to be distinctly understood, that I interfere on the ground of surprise, and that I do not lay any stress upon the alleged inadequacy of the auction price. Such a ground, unattended with other circumstances, is insufficient.”

In the case of Cohen against Wagner, (6 Gill., 97,) decided by the Court of Appeals, at the December term 184.7, the property was purchased for $13,000; and the exceptant, in his application for a resale, averred, that the property was worth $20,000. The application was rejected by the court, and on the question of the alleged inadequacy of the auction price, they said :

“Under the third exception a third ground is relied on, for withholding the ratification of the sale, for $13,000, of property alleged to be well worth fifteen or twenty thousand dollars, or more. From the views entertained of the effect which would result from the asserted inadequacy of price, if it, in truth, .existed, it is deemed unnecessary to inquire, whether the assertion be sustained by proof? The practice of opening the bid-dings in chancery sales, upon the mere offering of an advance upon the purchaser’s bid, has not been adopted in Maryland; and its non-adoption is founded on cogent reasons of justice and policy. The doctrine, that mere inadequacy of price in a chancery sale, where the sale has been made conformably to the powers and directions specified in the decree, is not of itself sufficient ground for vacating the sale, has been so frequently announced by the judicial tribunals of this State, that a special reference to authorities, to sustain it, is deemed unnecessary. A sale thus made will not be set aside, or its ratification refused, unless the court believe that such inadequacy was the result of fraud, surprise, mistake or unfairness in the sale.” And in the concluding paragraph of the opinion, the court announce the principle, that to set aside a sale, upon the ground of mere inadequacy of price:

“It must be so gross and inordinate, as to furnish evidence of misconduct or fraud in the trustee.”

This, unquestionably, is the sound and correct doctrine upon this subject. It is certainly true, that inadequacy of price is to be regarded as a strong auxiliary argument, in combination with circumstances calculated to cast doubt or suspicion upon the correctness of a sale. But standing alone, as it does in this case, it is insufficient to authorise an interference with the sale, unless, in the language of the court, in Cohen against Wagner, it is so inordinate, as to indicate some mistake or unfairness in the sale, for which the purchaser is responsible, or misconduct or fraud in the trustee, to whom the management of the sale has-been committed.

In the answer of Mr. Mayer, one of the trustees, to the petition of the exceptant, he states: “That the sale was appointed positively to take place, after at least one postponement, and considerable delay on the creditor’s part, and that he found on the day of the sale, that the creditor was peremptorily resolved on having a sale made, and he felt himself under a peculiarly strict obligation to effect a sale, even at a price materially beneath his estimate of the worth of the property. With this persuasion of his duty, and under the pressure of such a requirement, however painful the position, or the act, he allowed the estate to be struck off at the price of forty dollars per acre, as the highest bid, although, if left to his own discretion, and to conform to what he deemed the reasonable valuation of the property, he would not, he believes, have allowed it to be sold for a less price than sixty dollars per acre, that even being less than he deemed it actually worth.”

And this paper has been relied on by the counsel for the appellee as evidence, that in prescribing the terms upon which this sale was to be made, the trustee permitted his own judgment and discretion to be controlled by the creditor. It, was exhibited in strong language to the court, as a written confession of indiscretion and misconduct in the trustee, which, if not mitigated by the consideration, that he acted under a gross misconception of his duty, would be regarded as amounting almost to official turpitude.

But we do not think that the conduct of the trustee is susceptible of this construction.

It appears that this debt was of long standing. That the property had been before twice advertised for sale, the last time on the 15th of October 1846. It is in proof, that on the last occasion the sale was postponed by the creditor, at the solicitation of the appellee, and upon his promise that the debt should be paid in six months, and under an assurance from Mr. Donaldson, that if the matter was not then settled, the property Would Be sold. And we are informed by one of the trustees, that it was within his particular knowledge, that the postponement of the sale advertised to take place, of Thursday, the 15th of October 1846, was assented to by the creditor, upon1 the undertaking of the petitioner, that no further delay should be asked.

The right of the creditor, under such circumstances, to demand that the property should be offered for sale at public auction, cannot be questioned. A refusal on the part of the trustee to comply with so reasonable a request, would have subjected him to detrusion from his office by the court who appointed him.

But in yielding to the requirements of the creditor, he reserved to himself the privilege, which he undoubtedly possessed,- of guarding this property from sacrifice, by fixing a limit below which it was not to be sold. And it is a mistake to suppose,- that the trustee, in limiting his minimum price at forty dollars an acre, submitted himself to the'rule and will of the creditor. His answer does not justify such a conclusion, and in this act we can perceive no manifestation of either misconduct or unfairness. It would be an extraordinary proposition to maintain,-that on a sale like this, it was the duty of the trustee to have designated a sum equal to the maximum value of the property, as the lowest price at which it should be sold. In Cohen vs. Wagner, where the sale was upheld, the minimum price fixed by the trustee was $12,500, in relation to property asserted to be worth $20,000:

It follows from the views thus expressed, that we think the judge below erred in setting aside this sale, and his order is therefore reversed.

order reversed.

Case Details

Case Name: Johnson v. Dorsey

Court Name: Court of Appeals of Maryland

Date Published: Dec 15, 1848

Citation: 7 Gill 269

Court Abbreviation: Md.