156 Mo. 270 | Mo. | 1900
The Laclede National Bank.of St. Louis presented to the probate court of the city of St. Louis, for allowance against the estate of J. H. Simpson, deceased, its claim based upon two promissory notes made by the deceased in its favor, dated respectively February 6th, and February 15th, 1893, payable to the order of the bank, and due ninety days after date, each for the sum of $20,000. These notes are in the form of what is known as “collateral notes,” containing provisions whereby certain personal property is pledged as security for their payment, with power to sell such security in event of non-payment of the notes, and contain the following power of sale: “In default of payment of this note at maturity I hereby authorize said Laclede National Bank, or any of its officers, to sell said collateral at public or private sale, or otherwise, at its option, without notice, and to apply the proceeds to the payment of this note, with all damages, interest, charges and costs. Said Laclede National Bank of St. Louis shall also have the right at any such sale to bid for or purchase said pledged property, or any part thereof, in its own name, and for its own use and benefit.” The property mentioned in these notes, as pledged for their payment respectively, was numerous promissory notes secured by several deeds of trust on real estate. Some of these deeds of trust, so pledged, were first liens on the real estate therein described, while others were second, and
It is conceded that under the power contained in the Simpson notes the bank had authority to sell the securities held by it either at public or private sale. The only question, therefore, presented by this record for adjudication is the validity of the public sale of the sundry notes and deeds of trust held by the bank as security for the loan in question. The referee declared the sale invalid because the printed notice of the sale did not state upon what authority or by virtue of what power the sale was to be made, no reference whatever having been made to the pledge orpower under which Mott was acting in making the sale,- nor was any mention made of the ownership of the collaterals, nor was it stated upon what terms the sale would be made, whether for cash or on time; besides there was nothing in the published notice
That the bank held these securities in trust is undoubted. It, therefore, became the imperative duty of the bank, in exercising the rights conferred by the power of sale contained in the collateral notes, to use the utmost good faith.
In Dana v. Buckeye C. & C. Co., 38 Ill. App. 371, in discussing the power of sale contained in a collateral note similar to those here under consideration, the court said: “It is an authority to sell at public or private sale, but creditors, in whom such authority is vested, can not exercise it otherwise than under a trust for other creditors’ benefit as well as their own.... That a person holding property or securities in pledge, occupies the relation of trustee for the owner, and as such, in the absence of special power to do otherwise, is bound to proceed as a prudent owner would do with his own.” Oolebrooke, in the second edition of his most excellent work on Collateral Securities, section 118, thus states the rule: “Such a power given by contract, however, so far as it enables the pledgee to extinguish the right of the pledgor to redeem, will, as other contracts affecting equities of redemption, be construed favorably for the interests of the pledgor, so far as is consistent with the rights of the pledgee, .... and a sale must not be forced for barely enough money to secure the payment of the debt.” In 2 Perry on Trusts (1 Ed.), see. 602o, it is said: “Trustees and mortgagees, in the execution of their powers, must use the utmost good faith toward all parties in interest. This proposition can not be too strongly stated and enforced. They must act impartially for every person who has any rights in the estate.....They
The power of sale contained in the Simpson notes expressly authorizes the bank or its officers to sell in case of default. There is no question in our mind that in making such sale the bank had the right to act either through its officers or any agent it might designate. A corporation, as is well known, from its very nature is incapable of acting-only through the instrumentality of its agents. [Waterman on Corps., sec. 101; N. Y. & N. H. Railroad v. Schuyler, 34 N. Y. 30.] Having decided to sell these securities at public sale it was incumbent on the bank in the printed advertisement to show by virtue of what authority the sale was to be made.
Here was one of the strongest financial institutions in the State seeking to realize on sundry notes and deeds of trust having an aggregate face value of over $40,000. Can it be said that as trustee the power of sale contained in the collateral notes was properly exercised without giving the weight of its name to the transaction, and in making the sale in its own name? In-other words, can the sale be said to have been made on behalf or in the name of the bank? The record shows that Mr. Mott advertised and made the sale in his own name, and neither in the notice, nor in conducting the sale was his principal disclosed. The printed notice under which the sale was made was in his own name, signed “E. W. Mott, agent,” and says: “Notice is hereby given that the undersigned will, at the east front door of the court
In discusing the duty of the trustee to adjourn the sale where there were only a few bidders and the sum offered inadequate to the value of the property, Perry on Trusts (4 Ed), section 602u, says: “If an adjournment of the sale is not prohibited by the power, the donee of the power may adjorn the sale to another time and to another place. Such power is implied. Of course it is a discretionary power, and must be exercised in good faith; it may be the clear duty of the trustee to adjourn the sale, and an evidence of bad faith not to adjourn; as, if there are few or no purchasers present and the bids are very low and inadequate to the value of the property.” Having power, under the exercise of a sound discretion, it was the clear duty of the bank to adjourn the sale in order to prevent a sacrifice of the securities and obtain a fair price therefor. [2 Jones on Mortgages (5 Ed.), sec. 1873.] The trust relation occupied by the bank toward the pledgor made it incumbent upon the former to obtain the best possible price and to use every reasonable means to obtain the full value of the pledged property. The condition of the weather and the absence of any considerable number of bidders rendered an adjournment necessary in order to prevent a sacrifice of the securities.
In view of the character of the securities sold, consisting of numerous notes secured by sundry 'deeds of trust on different lots of land, we do not think the bank exercised a proper discretion in selling on four days’ notice. The notice given was wholly inadequate to enable prospective purchasers to investigate into the value of the securities offered.
Counsel for appellant argues that respondent, by bis attorney, was present at tbe sale and made no objection thereto, and consequently can not be beard to complain. This point was not made in tbe court below but is raised for tbe first time here. Tbe practice in this State has long been settled that a point not presented and passed upon by tbe trial court will not be considered by tbe appellate court. If, however, this question was properly before tbe court for adjudication tbe point would have to be ruled against tbe appellant, as tbe testimony shows that counsel for respondent in tbe presence of those in attendance at tbe sale openly protested against tbe sale being made, by announcing that be would present bis objection thereafter to tbe court, thereby distinctly negativing any acquiescence in the sale then about to take place, and it must have been distinctly understood by tbe officers of tbe bank that tbe respondent, as be bad a right to do, questioned appellant’s right to make tbe sale under tbe circumstances. Having indicated to those concerned bis opposition to tbe sale, be can not be said to have acquiesced in tbe subsequent proceedings, nor was be required to state bis specific objections thereto, especially where be was not asked so to do. Moreover, it is not claimed that tbe bank was misled by any acts or conduct of tbe respondent or bis attorney.
Eor tbe reason indicated tbe judgment of tbe circuit court will be affirmed.