Sherwood v. Reade

8 Paige Ch. 633 | New York Court of Chancery | 1841

The Chancellor.

The question presented for the consideration of the court in this case, arises under the 33d section of the act of April, 1837, authorizing a loan of certain monies belonging to the United States, deposited with the state of New-York for safe keeping. (Laws of 1827, p. 130.) The statute directs the commissioners to advertise the mortgaged premises for sale, in case the interest is not paid, and to sell the same at public vendue on the first Tuesday of February, to the highest bidder ; and the purchaser on such sale is to hold the land discharged of all equity of redemption. The 33d section then, provides that when the mortgaged premises are thus exposed for sale, and no person shall bid at such sale a sum equal to the amount due on the mortgage for principal and interterest and the expenses of the advertisements and the sale, “ or if any person to whom any such lands shall at any such sale be struck off, shall not pay for the same then, an.l in every such case the commissioners shall enter and take possession of the lands and premises, and let the same upon the best terms they can obtain, for the benefit of the state,until the third Tuesday of September then next; when the commissioners are again to expose the same upon a six weeks’ notice. And if upon such sale no person shall bid or offer to give for the said lands and premises a sum equal to the amount due on the mortgage for principal and interest, including all costs and expenses, "or if any person to whom any such lands and premises shall at any such sale be struck off, shall not pay for the same,” then the commissioners are to bid therefore in behalf of the state, to the amount of the sum at which the premises shall have been appraised j if necessary to prevent a sale to some other person for a less sum. The section then provides for a redemption of the premises at any time previous to such sale in September, where there has not been an actual sale thereof in February, as contemplated in the previous section.

The construction which the counsel for the complainant puts upon this 33d section of the act is, that if any person bids to the amount of the mortgage, at the sale in February, although he immediately refuses to complete his purchase, the commissioners are precluded from putting up the premises again and selling them to a real bidder who is willing to complete his purchase. And the vice chancellor probably must have taken the same view of the provisions of the act, or he could not have sustained this injunction. If such was the intention of the legislature, I think the purchaser did not go far enough to prevent a re-sale ; as he ought at least to have signed the terms of sale so as to render himself liable for the deficiency, in case the premises should be sold for a less price upon the subsequent sale in September.

Upon a careful examination of the provisions of the statute, however, I am satisfied the legislature were not guilty of the absurdity of directing a mere formal sale of the premises in February, which any irresponsible person could defeat, by bidding higher than any one else and then refusing to pay his bid. The obvious intention of the legislature was to prohibit a sale of the property in February, unless some purchaser could be found who would purchase the mortgaged premises and pay for them at a sum or price which would he sufficient to cover the. amount due upon the mortgage with interest and costs. And if no such bidder could be found, that then the commissioners should take possession of the premises, and offer them for sale again in September ; unless the owner of the equity of redemption should in the meantime pay up the amount of the interest and costs. There is nothing therefore in that part of the section which, either in terms or by necessary implication, prevents the commissioners from making it a condition of the sale that if the bidder does not immediately pay the amount of the bid, or so much thereof as they may have deemed necessary to ensure the completion of his purchase, that it shall be considered as no bid, and that the premises shall be put up and re-sold to some one who wishes to become a real purchaser ; subject, however, to the restriction imposed by law upon the original bidding, that there shall be no sale of the premises until September unless some person can be found at the sale in February who will bid to the amount required by law, and pay such bid. By adverting to the latter part of the same section, it will be seen that similar language is used in relation to the sale in September. At that sale the commissioners are required to bid for the state to the amount of the appraised value of the premises, not exceeding however the amount due upon the mortgage and costs. And this they are to do, in the language of the previous clause of the section, “ if any person to whom any such lands and premises shall at any such sale be struck off, shall not pay for the same.” Here there can be no doubt that the legislature intended that the premises should not be struck off to any one, other than the state, unless upon a bid to the amount of the appraised value, if that amount was necessary to satisfy the debt and costs ; and incase any one bid to that amount, or more, and the premises should be knocked down to him accordingly, that they should be immediately put up and re-sold if he did not comply with the terms of the sale by paying the purchase money. For if the premises cannot be immediately put up and re-sold where they have been struck off to one who bids more than the appraised value, but neglects to pay his bid, the premises never can be sold, under the statute, so as to deprive the owner of the equity of redemption of the power to redeem upon paying the amount of the mortgage with interest and costs. This being the obvious construction of the language used by the legislature in the latter part of this section, there is no reason why the same construction should not be put upon similar language used in the previous part of that section, relative to the sale in February. I have no doubt therefore that the commissioners had the right to make it a condition of the sale that if the terms upon which the premises were sold should not be complied with by the purchaser, the land should be put up and re-sold. And the first sale being a nullity, in consequence of the refusal of the purchaser to comply with the terms, 'the subsequent sale by the commissioners on the day specified in the statute was a valid sale ; and was a perfect bar to the equity of redemption of the complainant in the premises.

Neither has he any right to complain of any hardship in the case ; for he says the premises were originally bid off by W. B. Sherwood, without his knowledge or privity. He therefore had suffered the mortgaged premises to be advertised and sold, in consequence of his neglecting to pay a trifling sum of interest due on the mortgage to the loan commissioners, and did not even attend the sale or send any one there to bid for him ; thus compelling his mortgagee, who lived at a distance, to employ an agent to attend the sale and bid in the property for his own indemnity. And there is nothing in this case to show that the complainant has ever applied to Hooker or Reade to permit him to redeem the premises on equitable terms, or upon any terms whatever; or offered to pay them the amount which they had been compelled to pay in consequence of his gross neglect. The application of W. B. Sherwood, who was not the agent of the complainant, and who bid off the premises without his knowledge or privity, was an application on his own account to get the benefit of his bid which' had been relinquished previous to the putting up of the premises the second time. The complainant therefore cannot claim any equity from this offer of a third person who had no right whatever to the premises ; even if such an offer if coming from himself should have been accepted. The mortgage to Hooker had in fact been satisfieri, by tbe sale for a sufficient amount to pay the same beyond the amount due on the mortgage to the loan commissioners. Any new arrangement made between Hooker and a third person, therefore, in relation to the premises, without getting payment of what was due him on his mortgage, would have left the complainant discharged of any personal liability on his bond ; and Hooker would have been obliged to run the risk of the property being worth sufficient, at a future day, to satisfy the whole amount of both mortgages, with interest and costs of foreclosure.

The only claim of the complainant to equitable relief, therefore, depends upon the question whether the commissioners were bound to strike off the premises absolutely to an irresponsible purchaser, who refused to pay his bid or to sign an agreement by which he would be rendered liable for the payment of the deficiency upon a re-sale in September. And I have arrived at the conclusion that the complainant was clearly wrong on that question. The order appealed from must be reversed, with costs. And the injunction must be dissolved ; so that the commissioners may proceed and complete the sale by receiving the balance of the purchase money, except that part thereof which belongs to Hooker as the assignee of the second mortgage, and giving a deed of the premises to the purchaser according to the directions of the statute.