28 N.Y.S. 192 | N.Y. Sup. Ct. | 1894
The motion to vacate or modify the judgment is founded upon the charge that it, as entered, did not afford to the holders of the receiver’s certificates and notes the benefit to which they were entitled. As has been observed, the orders pursuant to which they were issued gave them priority over the mortgage bonds previously issued, and that priority continued. This is not questioned. The certificates contained a provision that in case of a sale of the property and franchises of the railroad company, by judicial proceedings or otherwise, and it should not realize sufficient to pay the full amount of the certificates then outstanding, the purchaser should assume such certificates. In each of the receiver’s notes was a similar provision. Ho provision to that effect was in the judgment pursuant to which the sale in question was made. The decree directed that out of the proceeds of the sale the referee pay first the costs, fees, and expenses of the suit, and next the receiver’s certificates and notes, or so much of them as the residue of the proceeds would pay. The orders authorizing the issue of the certificates and notes, so far as appears, did not contain any such direction, and whatever force it had was given by the certificates and notes themselves. It probably was not contemplated, when they were made, that any judicial proceeding for the sale of the property would be founded upon them, but that it might be taken for that purpose upon the mortgages; and such provision may have been put into the certificates and notes to emphasize their priority, and to protect them from sacrifice in such a proceeding,—in other-words, that they should remain a charge upon the property against any purchaser at a judicial sale founded upon any junior lien. They were so recognized in the decrees in foreclosure upon which sales had been made, and, in the reorganization, provision was made for their payment. This action was brought by the plaintiff, not only for the benefit of himself, but of all other creditors of the receiver, to enforce the lien of the certificates and notes, and for the purpose of realizing for their payment such proceeds as the sale would produce. It is difficult to see that the provision for assumption of, them by the purchaser is applicable to an action and sale for such purpose. The object of the proceeding was to vest a title in the purchaser, free from the lien of those instruments. It would certainly be remarkable to suppose that it was within their contemplation that a purchaser at a judicial sale to foreclose the lien of the notes and the certificates would take the property subject to, or assume, them, in case there was a deficiency of proceeds to pay those obligations. Hor is it reasonably supposable that the foreclosure of such lien could effectually be had if the property failed to produce sufficient proceeds to pay them in full; and. it would not be practicable to bid in the property for all the holders of the certificates
In support of the motion to set aside the sale, and for a resale, the appellant alleges that it was made for a price grossly inadequate, and attended with circumstances of surprise. Mere inadequacy of price is not a ground for such relief, unless it be so great as to shock the conscience of the court, and raise the inference of unfairness or fraud, or unless there are circumstances of mistake or surprise. O’Donnell v. Lindsay, 39 N. Y. Super. Ct. 523; Kellogg v. Howell, 62 Barb. 280; Gould v. Gage, 18 Abb. Pr. 32; Tripp v. Cook, 36 Wend. 143; Insurance Co. v. Oakley, 9 Paige, 259. The amount for which the sale was made appears quite small, for a railroad, but it appears that, most of the time of its operation, it Md been run at a loss; and the affidavits in opposition to the motion tend to show that its value was in the old iron and steel, to be taken and sold as such. The only offer in the moving papers to pay a larger price on resale is made in the affidavit of Mr. Post, who says he will bid and give for the property, “if the same be sold by judicial sale, free and clear of all incumbrance, the sum of thirty thousand dollars.” This may therefore be deemed the up price for which it would sell on a resale. The general rule is such that a resale will not be ordered, upon an offer to increase the price, without the support of some special circumstances in aid of it. Lefevre v. Laraway, 22 Barb. 167-173. „ The sale was advertised for September 23, 1892, at 10 a. m. Shortly before that time an order made by Mr. Justice Beach was served upon the referee, in terms staying the sale until a future day, when the plaintiff was required to show cause why it should not be further stayed during the pendency of the appeal from the judgment. The sale was held open until 12:30 p. m. the next day. In the mean time the order was vacated by the justice who made it, for irregularity, in that it was obtained without the notice required by rule 67, and the sale was then made. The order seems to have been obtained upon application in behalf of the Central Trust Company of Hew York. The appellant, Clarke, was absent, on vacation; and it does not appear that he knew anything of the order at the time it was obtained or vacated, nor does it appear that any person was deterred from being present at the sale by reason of the order, although Mr. Clarke, in his petition, states his belief that persons neglected to attend the sale, to bid, by reason
