132 Mo. 442 | Mo. | 1896
Lead Opinion
This case was transferred to the court in banc, after an opinion reversing the judgment had been rendered. 32 S. W. Rep. 1. We adopt the statement of facts therein made, as well, also, as the first paragraph of the opinion of our. learned brother, Barclay, J. They are as follows:
“The questions to be determined on this appeal arose upon a motion in the circuit court to set aside a
“Plaintiffs obtained a judgment against the owners of the Baldwin theater or opera house property for a small amount, and a lien against the- property under the mechanic’s lien law. A special execution issued on that judgment, and the property was sold by the sheriff. Mr. McAfee became the purchaser, as trustee, on behalf of plaintiffs and other holders of liens against the building for work and materials furnished toward its construction. Before the sale, but after the judgment of lien, Judge Philips, at chambers, as judge of the United States circuit court for the western district of Missouri, appointed a receiver of the theater property, in the suit of Lubbock et al., plaintiffs, v. Marion Davis, Ellen Davis, and .A. B. Crawford, defendants, to foreclose a mortgage upon the same property. The order of appointment was of wide reach, and is said to be a barrier to the execution of the mechanic’s lien judgment, pending the receivership. The plaintiffs in this case are not named as parties to the proceeding in the federal court. After the. sale under the execution on the mechanic’s lien judgment, the Járvis-Conklin Mortgage Trust Company and Samuel M. Jarvis'filed
“Passing now to some of the necessary particulars of the case, it will be convenient to keep the following dates in view:
“September 9, 1891, date of mortgage sought to be foreclosed in the Lubbock case in the federal court.
“December 5, 1891, beginning of plaintiffs’ lien account.
“March 5, 1892, close of lien account.
“May 1, 1892, notice of lien.
“May 31, 1892, lien filed in circuit clerk’s office.
“August 17, 1892, plaintiffs mechanics lien suit begun.
“September 20,1892, judgment in mechanics lien suit for $37.36, and of lien.
“March 13, 1893, transcript of the judgment filed in circuit clerk’s office. '
“March 16, 1894, petition for receiver in federal court.
“March 17, 1894, receiver appointed by Judge Philips.
“March 19, 1894, receiver took possession of the property.
“October, 1894, special execution issued from circuit court on mechanics lien judgment, returnable to January term, 1895.
“November 23, 1894, sale on special execution. Property bought by Mr. McAfee.
“December 15, 1894, sheriff’s deed recorded.
“January 14, 1895, motion filed to set aside sale.
“January 23, 1895, motion sustained; sale set aside.
“The proceeding to enforce plaintiffs’ mechanics lien was begun before a local justice of the peace, after the filing of the lien in the circuit clerk’s office, according to law. R. S. 1889, sec. 6161. The defendants in that original cause were the parties named as such at the outset of this opinion. The moving parties in the present motion are the trust company and the trustee, Mr. Jarvis, both defendants in that case. Five of the defendants were personally served; the others (including the trust company and Mr. Jarvis) were ultimately brought in by posting advertisements, as prescribed in such eases. R. S. 1889, sec. 6163.
“The justice’s judgment refers to the mortgage or deed of trust in which Mr. Jarvis was trustee for the Jarvis-Conklin Mortgage Trust Company, and finds plaintiffs’ demand (for- the amount of judgment rendered against the owners) to be paramount to the mortgage, and adjudges that it is a lien on the property described, including the. estate and interest of these defendants. A transcript of that judgment was duly filed in the circuit clerk’s office, and the execution sale now in question took place upon process issued from the circuit court upon that judgment. No appeal from the latter was ever taken, and the judgment became final in due time.
“Other facts will be stated in the course of the opinion, in connection with some subordinate points on which they bear.
“1. The chief issue concerns the relation of the original lien case to the receivership in the federal court. It will be seen that, by the terms of the order appointing the receiver, ‘all persons,’ whether claiming through the defendant Crawford ‘or otherwise,’ were enjoined from ‘attaching, seizing, levying upon, or otherwise taking or interfering with any of the prop
"The question is whether or not the mechanics lien proceedings subjected the theater property to the judicial power of the state courts until that jurisdiction was exhausted, so that no other court might meanwhile remove the property from the control necessary to make the use of that jurisdiction effective. The comity which should govern the actions of courts of concurrent jurisdiction in such circumstances has passed into a rule of law, now generally recognized in the United States, and which has been thus stated by the highest federal tribunal:
" 'When the object of the action requires the control and dominion of the property involved in the litigation, that court which first acquires possession, or that dominion which is equivalent, draws to itself the exclusive right to dispose of it, for the purposes of its jurisdiction.’ Heidritter v. Oilcloth Co. (1884) 112 U. S. 305, 5 Sup. Ct. Rep. 135.
"The proper application of this rule to the facts in judgment depends somewhat on the nature of the mechanics lien suit. Such suits in this stateare regulated by positive law, which clearly indicates their nature. An action to enforce such a lien deals with certain described property, against which the lien is claimed, and, upon establishment of the claim, judgment goes first against the principal debtor on the
“The jurisdiction of the state courts (having attached to the property a long time before the suit in the federal court began) was not exhausted by the rendition of the judgment of lien. The ultimate process (in this instance, of special execution) needed to make the judgment fruitful is, under our law, an essential part of the mea,ns provided for the exercise of power comprehended in the term ‘jurisdiction.’ A grant of power is considered to include the use of all incidental powers necessary to make the principal grant effective. Broom, Leg. Max. [8 Am. Ed.], *pp. 479, 486; State v. Ryno (1887) 49 N. J. Law, 603, 10 Atl. 189. In a leading federal case it was said that, ‘process subsequent to judgment is as essential to jurisdiction as process antecedent to judgment, else the judicial power would be incomplete and entirely inadequate to the purposes for which it was conferred.’ Riggs v. Johnson Co. (1867) 6 Wall. 187.
“The subject of the mechanic’s lien suit (namely, the opera house property) was thus plainly within the
“In Gates v. Bucki (1893) 12 U. S. App. 69, 4 C. C. A. 116, 53 Fed. 961, the federal court of appeals of this circuit, by Judge Shikas, declared that, ‘this property, being thus in the custody of. the state court in proceedings intended to affect the title and control the disposition of the same, the property was for the time being withdrawn from the jurisdiction of the federal court, and when the foreclosure suit was filed in that court it could not and did not bind or reach the property, because the same was not then within the plane of federal jurisdiction.’
“The above ruling was made in a case wherein the jurisdiction of the federal court was challenged by appropriate moves in that court. But if the principle announced in it is sound, as we believe it to be, it is not essential for the lien claimants to go into the federal court to secure recognition of that principle. It is one of those rules of ‘general jurisprudence’ binding alike on federal and state tribunals. It follows that the ruling of the trial court on the motion to set aside
2. The next question is as to the correctness of the ruling of the court in setting aside the sheriff’s sale.
That the court had control of its own process, and the power to set aside the sale, if there was gross inadequacy of price, and the interest of the movers was injuriously affected by the sale, if they were by mistake or misapprehension prevented from attending it or preventing it, we think is well settled law. It is equally well settled that inadequacy' of price alone will not justify the setting aside of a judicial sale, and the court so declared; but when the inadequacy of price is very great, as in the case at bar, slight circumstances tending to show that interested parties, such as mortgagees, were misled, or by accident or mistake prevented from attending the sale, or preventing it, will justify its being set aside. While the court declared as a matter of law “that inadequacy of consideration, however gross, is not sufficient ground of itself to set aside the sale,” it did set it aside, and it may reasonably be inferred therefrom that in its opinion there were other facts in evidence which justified it in so doing.
The execution under which the sale was made was a transcript execution issued by the clerk of the circuit court of Greene county on the transcript of a judgment rendered before a justice of the peace of said county enforcing a mechanic’s lien against the property in question in favor of Rogers and Baldwin Hardware Company v. The Cleveland Building Company, A. B. Crawford, J. D. Porter, Seth Tuttle, Marion Davis, and W. H. Keyser, owners. The Jarvis Mortgage Trust Company, mortgagees, Samuel M. Jarvis, trustee, W. W. Baldwin, mortgagee, B. U. Massey, trustee, were also made parties to that suit, but no judgment was
The judgment after describing the tract of land by metes and bounds proceeds as follows, “together with the four story brick building known and designated as the Baldwin opera house, situated thereon, and that said land and building be charged with the payment of said debt. ” In the notice of sale by the sheriff no mention was made of the opera house, other than as the “buildings and improvements” on the land, although the property was generally known as the “Opera House” block.
The sheriff testified that at the time of the sale he did not know that he was selling the opera house property.
The property had been previously advertised for sale by the sheriff under nine executions issued on transcripts of mechanics’ lien judgments in favor of different parties, amounting in the aggregate to about $5,000. The judgment creditors in those cases, as well as in'this, were represented by Capt. McAfee as their attorney, the purchaser of the property at the sale in question. Those judgments were all compromised or paid off by T. J. Elannelly, who represented the Jarvis-Conklin Trust Company.
J. T. White, one of the attorneys for said company, testified that about the time the judgments were paid, Elannelly asked Capt. McAfee if he wouldn’t assign those which he had paid off to him, or to his clients, and Capt. McAfee said he couldn’t for the reason that he had other suits pending, but that if he would pay off the claims he had pending that, “I will sell them to you, but it wouldn’t be fair to assign to you all those I have in judgment and leave out those that are still pending.” Witness further stated that
The property was worth from $40,000 to $50,000, and was sold by the sheriff for $250. The purchaser represented a number of lien claimants whose demands not then in judgment amounted to about $11,000, and by an arrangement between himself and them, they were to share the property in proportion to the amount of their respective claims.
While the notice of sale was a technical compliance with the law, it should have given a more particular description of the property, and in failing to do so was to some extent misleading. So much so, in fact, that the sheriff did not know what property he was selling.
Herman, in his work on Executions, page 415, in speaking of sheriff’s sales for inadequate price, says: “A sale of twelve thousand dollars’ worth of property for four hundred dollars, is strong ground for relief, especially where the advertisement contains an imperfect description of the property. The fact that the advertisement was so framed as to mislead, so that no one, not acquainted with the premises, could have conjectured from the advertisement what the property was, that was intended to be sold, in connection with the fact that there were no bidders at the sale but the purchaser, and the property was sold at a very inadequate
The imperfect description of the property in the notice of sale should be taken into consideration in connection with other facts in evidence in passing upon the validity of the sale.
The weight of the evidence clearly showed that Elannelly as the agent and attorney of the mortgage company was misled by the supposed statement of Capt. McAfee with respect to the payment by that company of all lien judgments which he represented against the property, for it is fair to presume that he would not have paid all others, and left remaining unpaid the judgment under which the property was sold, amounting to so small a sum as $37.60. His object seems to have been to pay all liens then in judgment, and it is unaccountable why he did not pay that, unless he was misled by what he understood the statements of Capt. McAfee to be with respect thereto. We do not undertake to say that Capt. McAfee was guilty of any intentional wrongdoing, fraud, or unfairness in buying the property, and only speak of matters connected with the sale from a legal standpoint. These facts taken in connection with the evidence of White that the custom of the sheriff was to notify him with respect to intended sales of this property, and his failure to do so on this occasion, the inadequate price that the property sold for, fully justified the court in setting the sale aside. Seaman v. Riggins, 1 Green’s Chy. 214. The purchaser was attorney for plaintiff and was not an innocent purchaser. Harness v. Cravens, 126 Mo. 233.
All the plaintiff company is entitled to is its debts, and that end is not defeated by opening a bid, but will certainly be attained if that be done. The plaintiff suffers no loss if the sale be set aside, while the mortgage company loses a large amount of money. The object of the sale is not to transfer the property of the execution debtor to the execution creditor “but to pay the debt; he can not, therefore, be injured by any proceeding which has that for its object, and does not cause any unnecessary delays or expense.” Littell v. Zuntz, 2 Ala. 256. Justice can be but subserved by a resale of the property, for it can not result in any injury to the purchaser, the purchase money being refunded.
The sale if invalid as against the movers could not in any way be legalized by reason of any private arrangement between the purchaser and his clients as to how the property was to be shared by him with them, to which the company was not a party. The judgment
Dissenting Opinion
(dissenting). — Upon the leading proposition in the case a majority of the court in banc have adopted the unanimous opinion delivered in the first division. But they discard some of the minor rulings announced in that opinion, and conclude to affirm the circuit judgment. This change in the result does not seem to me entirely satisfactory.
1. My view still is that the cause should go back for a rehearing. The reasons for that view were given in the divisional opinion, and others will he added.
The opinion of the first division was as follows (omitting the passage approved in the learned opinion of Judge Burgess) :
“2. The defendants next insist that, as the trial court had control over its process, it might set aside the execution sale on equitable grounds satisfactory to that court.
“It is true, as pointed out in Ray v. Stobbs (1859) 28 Mo. 35 and recently repeated in Bryant v. Russell (1895) 127 Mo. 422 (30 S. W. Rep. 107), that a court on motion has jurisdiction to regulate and control the use of its own writs, so as to see that no injustice is done hy them.
“But the exercise of its judgment upon such motions is not beyond all review.
“The reasons assigned in such motions must he considered in determining the conclusiveness of action thereon hy the trial court.
“The lien judgment in the case at bar was rendered hy a justice of the peace. But when the transcript
“That control includes the power, on proper occasion, to set aside sales on execution to satisfy such judgments.
“The grounds of the motion in the pending cause were four. Two of them related to the proceedings in the federal court. The comments .already made dispose of them, so far as we are concerned.
“The first of the two remaining grounds was that the sale was for ah inadequate sum; that the defendants, bringing the motion, had no actual notice or knowledge of the judgment, execution, levy, or sale, until long after the sale; and that the sheriff had a custom (which he failed in this instance to observe) to notify interested parties or their attorneys of the demand of such an execution, and to thus give opportunity to pay the same.
“The circuit judge, upon an instruction, given at the close of the evidence on the motion, declared that mere inadequacy of consideration in the sale was not sufficient ground to set it aside. So it is probable that his order sustaining the motion was not based on that objection.
“The circuit judge also excluded questions of defendants directed to the point as to the sheriff’s custom to notify defendants in execution.
“As defendants are not in position to complain of that ruling, we need not go into it on plaintiffs’ appeal.
“Want of actual knowledge by, or notice to, defendants of the proceedings to. enforce the lien would not alone form a just or substantial ground to vacate the process on a judgment for its enforcement, where the proceedings were valid against collateral attack,
“3. The remaining ground of the motion is that the ‘sale was inequitable, unjust, and contrary to good conscience,’ for the reason that defendants, long after the judgment was rendered, and ‘before the issuance of said execution, were led to believe and did believe by statements made by said C. B. McAfee to the attorneys of said defendants,that there were no other lien judgments at said time against said property on behalf of any clients of his, and that the sum of five thousand dollars, which was then paid to said C. B. McAfee, on settlement of a large number of lien judgments held by his clients, then and there settled all his lien claims and those of his clients, which at said time were reduced to judgment; that these defendants and their said attorneys were thrown off their guard by said statements of said C. B. McAfee, and by reason of the same, did not investigate as to whether there were any such other judgments, and did not watch for said sale, and said property was sold without their knowledge for the grossly inadequate sum of two hundred and fifty dollars.’
“We have examined the evidence carefully on this point, and find that it does not establish the facts above alleged. We are unable to discover any proof of any statements by Mr. McAfee which should reasonably have been interpreted by adverse counsel as charged in. the passage from their motion above quoted.
“4. Some minor objections to the execution sale are made, as, for instance, that there were certain supposed irregularities in the lien judgment, or proceedings. But on examination we find none of those objections tenable or requiring special comment.
“5. On the case as it was submitted to the learned trial judge, we hold that he was in error in set
“In view of these rulings, to which these defendants had no need to except (because of the final ruling in their favor), we are unwilling to substitute a conclusive ruling to the contrary, on the record as it now stands.
“While the court’s declaration (as to inadequacy of price) is correct 'as a general proposition when applied to sheriff’s sales which have become final, it is not more than a half-truth as applied to the review of such a sale upon motion made before the sale has become a finality under the process on which it took place.
“It has been expressly held in this state that it may sometimes be the duty of an officer, in charge of process, to postpone such a sale, on his own motion, in case a gross and unnecessary sacrifice of property is threatened. Conway v. Nolte (1847) 11 Mo. 74; State ex rel. v. Moore (1880) 72 Mo. 285.
“And in cases where the officer would- be warranted in postponing the sale, the court itself, if the sale occurred, might set it aside upon prompt and timely application to that end, if the property has been-in fact sacrificed by a grossly inadequate sale, in circumstances which call for such relief against the abuse of the court’s process.
“In the present case the property sold for $250. It was certainly not worth more than forty or fifty thousand dollars. It was admitted that it cost about
“There are special facts, however, which indicate that the purchaser at the execution sale represented a large body of lien claimants whose demands reached the amount of about $11,000 and-the sale (under section 6727, R. S., 1889, as well as by their own mutual agreement) would inure to the benefit of all of them in proportion to their demands. So that, in effect, in view of the insolvency of the Building Company, the principal debtor, the price may be considered as substantially equivalent to the last named sum, which we do not think sufficiently out of proportion to the value of the property to warrant a court in vacating the sale, on the sole ground of inadequacy in the price.
“But here the evidence which the court excluded, as to the custom of the sheriff to notify defendants in execution, might have laid a basis for the court’s remedial discretionary action, when coupled with great inadequacy in the proposed price.
“Where inadequacy of price (such as would not alone warrant interference with such a sale) is accompanied with any circumstance of surprise, mistake, or even excusable neglect, the court, whose process is involved, may, in the exercise of a sound discretion, relieve against a sacrifice of the property, where such course appears to be dictated by the demands of justice in the particular case. Cole Co. v. Madden (1887) 91 Mo. 585. This may be done on timely motion, without resort to an independent suit in equity.
“We hence reverse the decision upon the motion to set aside the judgment, and remand the cause with directions to rehear that motion in conformity to the principles announced in this opinion. Beace, C. J., and Maceaelane and Robinson, JJ., concur.”
It is plain from the record in this court that the circuit judge did not intend lo exercise his discretion upon the facts, because he was convinced (as his rulings show) that the pendency of the receivership prevented a valid sale. All the court here differ with him on that point, yet a majority favor affirming the order to set aside the execution sale, nevertheless.
The proposition is undoubtedly true that a circuit ruling should always be sustained where it is right, though wrong reasons may have prompted it. But where a reviewing-authority undertakes to say that a decision in the trial court is correct on discretionary grounds, when that decision was evidently based on other, and untenable, grounds, the reviewing court should at least be very sure that ample foundation for a favorable exercise of the discretionary power (which was never exerted) exists in the facts, and it should also be very sure that the conclusion announced accords with the demands of the situation which confronted the trial judge in the particular case.
The application of discretionary authority, to set aside execution sales, by the court out of which the process has issued is governed by equitable considerations, though the form of relief may be legal. On motions directed to that end the court (though the form of action is not changed) applies rules of common fairness and justice according to the very right of the case, and on such terms as may be just.
Here, the parties moving to set aside the sale are
It appears that the moving defendants concede that the plaintiffs’ mechanics’ lien judgment “is a prior lien” (to use the language of their admission in the record), and that the lien judgment has become final as to all concerned. The gravamen of defendants’ complaint now is that they were misled by Mr. McAfee when they were trying to pay off all claims reduced to judgments.
Should any court, on such a showing; set aside an execution sale, in the exercise of discretion, without putting some sort of terms upon the parties moving for such relief? Ought not the latter, in such circumstances, to be required to do that equity which their admissions concede? Ought they not to pay, tender, or, at least, secure, the plaintiffs’ judgment which the moving parties have no ground to contest (and do not contest), before an order for resale is made?
The trial judge merely set aside the sale, without more. Even the costs of the first sale were not required to be paid by the moving parties. Plaintiffs are thus put to the hazard of paying costs of the resale, and of the possibility of losing their present full security for payment. At all events plaintiffs must lose considerable time now in obtaining payment of their demand, though the latter is practically undisputed.
It seems to me that a court, proceeding to deal with the situation described by this record, should at least require security for plaintiffs’ judgment before setting aside the former sale in the circumstances here
But no terms were imposed of any sort, for the manifest reason that the learned trial judge thought the sale should be vacated as an interference with the federal receivership. Had he reached, or considered, the general equities of the motion, he would, no doubt, have fully recognized the soundness of these suggestions as to the propriety of imposing reasonable terms on the moving defendants as a condition to setting aside the sale. The imposition of fair terms in such circumstances is approved as well by precedents as by the obvious demands of justice. Sawin v. Bank (1853) 2 R. I. 382; Winterson v. Hitchings (1895) 34 N. Y. Sup. 183.
At the hearing of this motion, Mr. McAfee, who purchased the land on behalf of the lien claimants, was a witness. In the course of his examination he said: “If these gentlemen will pay my clients to-day, I will deed them this property. * * * I had the sale made because I wanted to bring these men up to the mark in some way. * * * If these gentlemen will just pay off these claims, they will own the opera house.”
But these gentlemen were then contesting his purchase chiefly on the legal ground that the receivership was an obstacle to its consummation; and so they gave no heed to this polite invitation to pay. off the mechanics liens.
7. The pendency of the receivership and the well known power of the federal authority account in a great measure for the small price the property brought. But those factors in that result were not chargeable to the mechanics and material men, or their attorneys, who seem only to have sought payment for the labor and improvements upon the property.
The condition of the property and of its title had quite as much to do with the small price realized as any of the facts that have been mentioned as warranting interference of the court on discretionary grounds.
8. It has been intimated that the advertisement was misleading because the sheriff says he did not know he was selling the opera house. The description as used by him in his published notice of sale closely resembled the one adopted in the learned district judge’s order appointing the receiver. No one acquainted with the property could have been misled. The federal receiver was manager of the advertising department of the paper in which appeared the advertisement of sale. It is not likely in such circumstances that any fraud or secret sale was contemplated or perpetrated by the parties seeking to have the sale brought on, or by the sheriff.
9. The court, on a direct ruling, excluded evidence of the sheriff’s custom to notify parties defendant in executions of his demand, before proceeding to a sale. Later on, one of the witnesses testified to- such a custom. That fact was volunteered by the witness as part of an answer to this question:
. “Have you looked in the office of the attorneys for the judgment creditors, since that, for it” (namely, the lost execution)?
Though the evidence of the custom thus came in, and was not stricken out, it is clear from the court’s definite ruling on the point, at an earlier stage of the hearing, that the learned judge regarded the fact as irrelevant, and gave no weight to it.
10. All things considered, it seems to me that the order setting aside the sale, without any sort of terms imposed on the moving parties, should not be affirmed; but that the cause should be remanded to the end that the motion may be reheard on its merits on the circuit, and such conclusion be then reached as the facts disclosed may appear to warrant, in view of the ruling of the’' supreme court that the federal receivership is of itself no impediment to the sale.
