129 Ill. 180 | Ill. | 1889
delivered the opinion of the Court:
Two questions are presented by this record: First, had the county court, under the Voluntary Assignment act, jurisdiction to determine the interest of the assignee in the property in controversy, and to authorize and require him to receive payment for such interest, and execute an acquittance of the claim of the assignor upon receipt of the same; and second, do the facts here shown authorize the entry of that order by the county court, if it had such jurisdiction.
By the sheriff’s deed of June 5, 1883, Eben J. Marsh, one of the assignors, became clothed with the legal title to real estate of the value of at least $350,000; and although this property was not scheduled, either as the individual property of Marsh, or as assets of the firm of Sherman & Marsh, assignors in the deed of assignment subsequently made, yet the interest of Marsh and of the firm, if any, would and did, as being comprehended within the general terms of the assignment, vest in the assignee for the benefit of creditors. The assignee, however, took no greater interest or better title than his assignors possessed. In his hands the title was affected with every infirmity and subject to all the equities that existed in respect thereof in the hands of the grantor in the deed of assignment. It becomes necessary, therefore, to determine what interest Marsh took by virtue of the sheriff’s deed, and, logically, that determination would precede the discussion of the question of jurisdiction.
It is conceded that in making the sale and deed the sheriff proceeded in substantial compliance with the forms of law, and if there were no equitable considerations affecting the same, the title of the defendants in execution thereby became vested in Marsh. It is apparent, however, that there are strong equitable reasons why the sale, and deed thereunder, should not be allowed to stand. Beal estate of the value of $350,000 and over was levied upon and sold to satisfy a judgment of one cent and costs, which, with interest, and costs on execution, amounted, at the time of the sale, to the sum of $17.25—less than one twenty-thousandth part of the value of the property sold. In Comstock v. Purple, 49 Ill. 158, we said: “Admitting the lands sold for an inadequate price, the doctrine of this court is, that, of itself, is not sufficient,” (to avoid the sale,) .“unless it should he so grossly inadequate as to establish fraud.” It would seem that if a case could arise where gross inadequacy would establish fraud, this one would do so. Public policy, however, requires that judicial sales should be upheld, when fairly and regularly made. The better rule, and the one sustained by the weight of authority, is, that generally, in sales made under judicial process, gross inadequacy of price, unaccompanied by circumstances of irregularity, or that indicate unfairness in the conduct of the officer making the same, or the purchaser thereat, will not create the inference of fraud. Where the sale is fairly and openly made, after due notice, with a fair opportunity for real competition, and without any circumstance impeaching its fairness, inadequacy of price, however gross, is not, per se, sufficient evidence of fraud to avoid the sale. Hamilton v. Quimby, 46 Ill. 90.
Many eases are to be found in the books, which seem to apply the principles to sales upon process that are applicable to sales of private property. Kerr on Fraud and Mistake, (4th Am. ed.) 186. But an examination of the cases, it is believed, will show, that in nearly if not quite all, the application to vacate the sale was by motion in the court from which the process issued, or where there were irregularities affecting the process, or affecting the conduct of the officer in making the sale, or of the purchaser, or of the party to the record, which were regarded as sufficient to render it unconscionable that the purchaser should retain the undue advantage obtained by his purchase. See Henderson v. Sublett, 21 Ala. 630; Webber v. Weitling, 18 N. J. Eq. 441; Hodgson v. Farrell, 15 id. 88; Taul v. Wright, 45 Texas, 288; 2 Pomeroy’s Eq. 927. However this may be, the authorities are uniform that where property has been sold, upon execution or at judicial sale, at a grossly inadequate price, even slight circumstances indicating unfairness or fraud, either upon the part of the officer, the purchaser, or the party to the record benefited by the sale, will furnish sufficient ground for equitable interposition. The conscience of the chancellor, quickened by proof of circumstances indicating that an unfair advantage was sought or taken, will seize upon the gross inadequacy as additional and strong evidence of fraud, and, by decree, prevent the purchaser from reaping an unconscionable advantage. Thus, in Hamilton v. Quirnby, supra, it was said, that if the execution had been properly issued, and the officer had performed his duty by giving the defendant notice of the writ, and a sale had been made of a large amount of property for a very small sum of money, “the sale ought not to have been set aside for mere inadequacy of price; but even then, where there is such gross inadequacy, the court will seize upon anything indicating unfairness in the plaintiff, to afford relief.” See, also, Comstock v. Purple, supra; Kinney v. Knoebel, 51 Ill. 112; Berry v. Lovi, 107 id. 612; Howell v. Baker, 4 Johns. Ch. 122; Klœpping v. Stellmacher, 21 N. J. Eq. 328; American Wine Co. v. Scholer, 85 Mo. 496; Johnson v. Craul, 55 Texas, 571; Seaman v. Riggins, 1 Green’s Ch. 214; Bixby v. Mead, 18 Wend. 611; Roberts v. Roberts, 13 Gratt. 639; Bod v. Ellis, 11 Iowa, 97, and cases supra.
It will not be necessary to extend this opinion by quotation from the cases’. Upon examination it will be found that various incidents have been seized upon by the courts to grant relief where there has been a gross inadequacy of price; and the additional circumstances need not be sufficient, in themselves, to authorize the sale to be set aside, if they tend to show that an unfair advantage was taken, or that the sale was conducted in a manner prejudicial to the rights or interest of the parties interested, for while gross inadequacy of price will not, of itself, be sufficient, yet, when coupled with other circumstances tending to prove fraud, it becomes controlling and conclusive evidence, and justifies the interference by a court of equity to prevent the consummation of an inequitable result.
Tested by this rule, it is at once apparent that this sale and deed, upon proper bill filed for that purpose, would have been set aside. The dock company was bailee of the goods and chattels replevied, and it is evident that in their refusal to deliver the goods upon the request of Sherman & Marsh, without the return of the delivery receipts issued by them, they only sought to shield themselves from responsibility against a wrongful delivery of the goods. It is true they were served with process in the replevin suit, but, having no further interest in the goods replevied, paid no attention whatever to the result of that suit. It is shown that they had no actual notice of the rendition of the judgment or issue of execution thereon. The first execution, while it is apparent that the dock company had ample property in the county subject to levy, was returned by the sheriff not satisfied. No demand was made of the defendant for property upon which to levy, or notice given of the execution, although the defendant vras in the county, and its office within a few minutes’ walk from the sheriff’s office. An alias execution was issued on the 27th day of January, 1882, and came to the sheriff’s hands the same day, who was instructed by the attorneys for the plaintiffs therein to levy upon all the dock company’s interest in block 74, school section addition to the city of Chicago, together with all the buildings and improvements situated thereon, and to advertise and sell as early as possible. The sheriff levied accordingly the same day, and at ten o’clock A. M. of the 27th of February, 1882, sold the property en masse to the attorney of the plaintiffs for $17.25. It is true that a eertifi- ■ cate of purchase was recorded March 1, 1882, that the same was subsequently assigned to Marsh by said attorney, and upon the expiration of redemption a deed for the property was made to Marsh. It was the duty of the sheriff to notify the defendant in execution before making the levy, and apply to it for payment of his execution. (Pitts v. Magie, 24 Ill. 610; Rock v. Haas, 110 id. 529.) A defendant in execution has a right to pay and satisfy the same, and it is unfair and unjust to him that a levy should be made without an opportunity to make such payment, and thereby save incurring additional costs. It was said in the Pitts case: “It is the first duty of an officer having an execution against a party, to apply to him personally for payment, wherever that is practicable, and the officer should be held responsible to the party aggrieved, for a neglect of this duty, wherever special damages result from it.” It is averred and shown in this case, that the defendant in execution had ample property, and was able to, and would, upon demand or notice, have satisfied the execution. It is not necessary to hold, nor do we determine, that the failure of the officer to make the demand would be sufficient, of itself, in a case where the levy was upon real estáte, to avoid the sale. But in this case it is not shown or pretended that there was any necessity for levy upon this large amount of property, or that the-sale should be made in the shortest time possible, nor is any excuse given for not pursuing the ordinary course and making the demand before making the levy. While the officer failed to perform his duty in the respect indicated, under either execution, it appears that in making the levy and sale he acted under the direction of plaintiffs’ attorney. The attorney was careful to direct the levy upon the whole block, and upon all the buildings and improvements thereon, and to sell the same as early as possible. It is manifest that any division of the block would have satisfied the execution. Nor is there any reason why this vast amount of property should be advertised and sold for this insignificant sum, within thirty days from the date of the execution, without any actual notice to the defendant thereof, or demand for its payment. It seems clear that it was not the payment of the execution, alone, that was sought hy the plaintiffs’ attorney. Whether the animosity shown in the record to have existed on the part of the plaintiffs in execution against the president of the dock company, may furnish the clew to this proceeding, or whether it was to gain some unconscionable advantage by placing a cloud upon the title of the dock company, can make no difference. By the course pursued, if the sale was discovered, plaintiffs in execution would get their money, with costs. If, however, it remained undiscovered, a cloud would be created to the injury of the dock company, and possibly to the advantage of Marsh. It can not be doubted, that upon the state of facts here shown a court of equity would at once have declared the sale and deed void, and removed the same as a cloud on appellee’s title. At most it would have been found and declared that Sherman & Marsh, or Marsh, would have had no other interest, and acquired no other right, under said sale and deed, than to be reimbursed the amount of money bid at the sale.
The question remains to be considered, had the county court jurisdiction to determine whether the real estate in question passed to the assignee, under the assignment, and became assets in his hands, to be applied in satisfaction of the claims of creditors.
By the first section of the Voluntary Assignment act the effect of a voluntary assignment for the benefit of creditors is to vest in the assignee title to all the property of the debtors, whether scheduled or not, comprehended within the general terms of the assignment. By the 11th section of the act the assignee is empowered to dispose of the assigned estate, real and personal, to sue for and recover everything belonging or appertaining to said estate, “and, generally, to act and do whatever the said debtor or debtors (assignors) might have done in the premises.”' The duty of the assignee under this authority is, to collect and convert the estate assigned, into money, and to distribute the same pro rata among the creditors proving their claims in conformity with the statute. This is to be done under the supervision and direction of the county •court. The 7th section of the act provides, “that the assignee or assignees, in the execution of assignments, shall, at all times, be subject to the order and supervision of the county ■court, when in session, or judge of said court, when not in •session;” and the assignee may, by the court, be required “to proceed in the faithful execution of the duties required by this act, and to obey the order of such court or judge in relation to the complete and final settlement, distribution and paying •over of the proceeds derived from said trust, or any part thereof, until final settlement and distribution is made.”
It would seem clear that the assignee, having due and proper regard to the administration of the estate and to the rights of creditors, may do whatever the debtor or debtors might have done in respect of the assigned property, if no assignment had been made. It is, we think, also clear, that the assignee must act under the supervision, direction and control of the county court, and may do, under such direction, what is necessary for the most advantageous, and the final and complete, settlement and distribution of the trust estate. By the 14th section of the act, full authority and jurisdiction is “conferred upon the county courts, and the judges thereof, to execute and carry out the provisions of this act, ” and it is provided "that the court shall, at all times, be open for the transaction of business relating to assignments. The power to direct and control the assignee at every step in the progress of the settlement of the estate is thus clearly given to the county court, and the assignee is required at all times to act in accordance with its mandate and under its supervision. Freydendall v. Baldwin, 103 Ill. 325.
One of the duties imposed upon the assignee is to determine what property passed to him under the assignment, to reduce it to possession, and convert it into money, and it follows that in so doing he must, as in other matters, act under the control of the court and subject to its directions. If questions should arise whether particular property passed under the assignment, he must act under the direction of that court in respect thereof; and full power, as we have seen, is given by the statute to the court to execute and carry out the provisions of the act, and to compel the complete and final settlement of' the estate by the assignee. It necessarily follows that the-county court must, in the first instance, determine what property has passed to the assignee, and the nature and extent of the interest acquired by him therein under the assignment. So that if we are correct in our conclusion, it became the duty of the county court, in the exercise of its supervisory power and control over the assignee, to determine what interest, if any, the assignee took in the property in controversy, and we are of opinion it was authorized and required by the statute so to do. If the court had determined that the property was-assets belonging to the estate, it would have been its duty, by proper order, to have directed the sale of the property with or without reducing it to possession, as might have been found-best for the interest of the estate. It by no means follows from what is here said, or from the statute as we understand it, that the county court is given jurisdiction in causes of a. purely equitable nature, or that it may adjudicate in respect of property not in possession or control of the assignee. (Preston v. Spaulding, 120 Ill. 208.) If the county court had sought to compel the assignee to reduce the property to possession, its power would have ended with the enforcement of its order on the assignee to proceed in the forum having jurisdiction of the action necessary and requisite for that purpose, for while-the county court has jurisdiction to direct the assignee in all matters pertaining to the' administration and settlement of the estate, and to settle all controverted questions relating to property in possession of the assignee, and therefore under its administrative control, nevertheless, if the assignee seeks to recover property, either at law or in equity, he must resort to the courts having jurisdiction of the appropriate remedy, and competent to afford adequate relief.
It is manifest from the foregoing, that the county court, however it might be called into action, was clothed with authority to decide for the assignee the nature and extent of the interest in this property, if any, held by Marsh, and passing to him under the assignment; and it was competent for that court to adjudge, if the facts warranted, that the assignee had become seized of the entire estate; or of any less interest or estate, and direct that whatever that interest might be should be realized upon by the assignee. The court found, as it was justified in doing, that while the legal title had become vested in the assignor, in fact the only interest acquired, if any, was the right to be reimbursed the amount bid at the sale of the land on" execution, with legal interest thereon. Nor does this finding by the court involve the jurisdiction of a court of chancery,—as, upon bill filed by the dock company to set aside said sale and deed. The authority of the court arises from the express power given by the statute to that court to control the management and settlement of the estate, and direct the assignee in the execution of the trust. It is true that the court is required to look into the facts, and to find therefrom that the sale and deed of the sheriff were fraudulent, and that in a court of equity would be cancelled and set aside,—that is, to find that the assignor (Marsh) had no title in fact, and that none passed to the assignee, and that the only interest in the property that could be rightfully subjected to the payment of the debts of the estate was the judgment, interest and costs before mentioned. That this was all the interest Marsh had, was clearly and conclusively established. If the assignor had held a deed absolute to a tract of land, but which confessedly, by the contract of the parties, was intended to be a mortgage for the payment of money only, can it be doubted that the county court would have power, under this statute, to ascertain the amount actually due, and to anthorize the assignee to receive the same and execute a proper release ? The only distinction between that ease and this is, that in the one the equity arises out of the contract of the parties, while in the other it arises from the fraudulent act of the parties in procuring the deed. This power is essential to the proper administration of the estate. It was not contemplated that the county court must needs compel the assignee to proceed to expensive and fruitless litigation, and thereby exhaust the trust funds in his hands. The court having power so to do, and having determined that the real estate in question was not assets of the estate, properly dismissed the cross-petition of plaintiffs in error; and in the subsequent orders made, requiring the assignee to receive a sum of money far in excess of any claim the assignors had against the dock company, and to release and quitclaim his apparent interest acquired under the assignment, committed no error of which plaintiffs in error can complain.
From what has been said, it must be apparent that so far as the action of the county court was concerned, in determining the issues raised by the cross-petition, the direct question was, had the title to the block of land in controversy passed to the assignee. If it had become assets in his hands, the assignee should have been required to proceed in accordance with the prayer of the cross-petition. If it had not, he would be ordered by the court, — and properly so,— as he was, in effect, to desist from interfering therewith. When this was done the dismissal of the cross-petition properly followed.
We are of opinion that the order of the county court should be affirmed.
Order affirmed.