Summary
In Hamilton v. Federal Land Bank, 184 Miss. 878, 882, 186 So. 832, 833 (1939), preliminary to foreclosure, the secured creditor appointed one of its own employees as substituted trustee.
Summary of this case from Wansley v. First Nat. Bank of VicksburgOpinion
No. 33524.
March 6, 1939.
1. MORTGAGES.
As respects sale in parcels, provision in trust deed that in case of default trustee should sell "property or a sufficiency thereof" to satisfy indebtedness then unpaid was for benefit of mortgagors and could be waived by them.
2. MORTGAGES.
Waiver of provision in trust deed for sale of mortgaged land in parcels instead of a unit need not be in writing, but the rule is, that any person who is present and fails to object to manner in which the sale is made cannot subsequently have sale set aside on ground that it should have been conducted in a different manner.
3. MORTGAGES.
Mortgagors who were present at sale under trust deed and made no objection to sale of land as a unit without first offering it in parcels waived right to have land offered for sale in parcels, particularly in absence of proof of prejudice.
4. MORTGAGES.
No sale of mortgaged land is either void or voidable on account of a departure from a condition or stipulation which has been waived.
APPEAL from the chancery court of Clarke county; HON. A.B. AMIS, SR., Chancellor.
W.F. Latham and John Sharp Butler, both of Quitman, for appellants.
The record shows that under the terms of the contract in the deed of trust "the above named trustee, or any successor appointed in his place, shall sell said property or sufficiency thereof to satisfy the indebtedness of the aforesaid, then unpaid;" and that under the terms of the contract that it was the duty of J.E. Shirley to offer said property at the foreclosure sale in subdivisions or different parcels, all of which the said trustee wholly failed to do, which breach of said contract was sufficient within itself to void said sale.
Rawlings v. Anderson, 149 Miss. 632, 115 So. 714; Land Cattle Co. v. Federal Land Bank, 167 Miss. 808.
The positive evidence of appellants shows conclusively that the sale of the property was improperly conducted in that there was no competitive bidding by any person, that the sale was made only in the presence of the substituted trustee and appellants, that no bid was made on the property in the manner and form as required by law.
If there was ever a sale conducted by a trustee who was an employee of the mortgagee and where the heart of that trustee beat in unison and in harmony with the sole and only interest of the mortgagee, and where as he stated that if he did not perform for them he would lose his job, and where there was absolutely no act or thing done for the benefit of the debtor; this sale was that kind of sale. This sale was void.
19 R.C.L. 607; 92 Am. St. Rep. 585; Rawlings v. Anderson, 115 So. 714, 149 Miss. 632.
H.F. Case, of Quitman, and T.H. Hedgepeth and W.L. Pack, both of New Orleans, La., for appellee.
Obviously, the parties did not mean by the mere use of the words "sufficiency thereof" to require absolutely that the land first be offered in parcels, because there is nothing in the deed of trust to indicate what parcels they could have had in mind; that is, whether the land should be offered in 40-acre tracts or 20-acre tracts or 5-acre tracts or 1-acre tracts. The only reasonable construction of the language is that the matter of offering the land was left to the sound discretion of the trustee, the only limitation being that if he elected to offer the land in parcels and if one or more of the parcels should bring enough to satisfy the debt, there would be no sale of the remaining portion. Any construction other than this leads to uncertainty and utter confusion.
This construction comports with the universal rule that, in the absence of the statutory or contractual requirements to the contrary, a trustee selling land under a deed of trust is vested with a reasonable discretion and that he may offer the land either as an entirety or in parcels. This rule was expressly recognized by this court in its opinion in Rawlings v. Anderson, 115 So. 714, 149 Miss. 632. 19 R.C.L., page 607, and 41 C.J., pages 972-93, are to the same effect.
Rutherford v. Eastman Gardiner Co., 133 Miss. 289, 97 So. 670.
But even if appellants' view were correct and if the use of this language in the deed of trust was an express direction to the trustee to first offer the land in parcels, the fact that he did not so offer it cannot in this case invalidate the sale, because here there is an utter absence of any proof that any injury or damage accrued to the mortgagors by reason of the trustee's failure to first offer the land in parcels. There is no proof whatsoever to show, or from which any inference could be drawn, that the result of the sale would have been any different if the land had first been offered in parcels before being offered in its entirety. On the contrary, it appears from the record beyond question that there would have been no bids at all on the property if it had been offered in parcels and that in the end exactly the same result would have obtained; that is, that the property would have been bought in by the bank in its entirety and for the same consideration.
Certainly, it would have been a vain and foolish thing for the trustee to have gone through the formality of offering the land in parcels when there was only one bidder present at the sale, and this bidder (Federal Land Bank) had made known its intention to bid on the land only as a whole.
So far as we have been able to ascertain, all of the authorities are in accord on the proposition that even where it is the duty of a trustee conducting a foreclosure sale to first offer the property in parcels, his failure to so offer it does not render the sale void, but only voidable, and the sale will not be set aside except on a showing that some actual harm resulted from the incorrect method.
41 C.J. 974, sec. 1422; Phelps v. Western Realty Co., 89 Minn. 319, 94 N.W. 1085; Willard v. Finnegan, 42 Minn. 476, 44 N.W. 985, 8 L.R.A. 50; Kerfoot v. Billings, 160 Ill. 563, 43 N.E. 804; Mahone v. Williams, 39 Ala. 202.
The mere fact that property which is susceptible of division has been sold in mass will not render a trustee's sale void. It is only where substantial injury has been inflicted by a failure to subdivide and sell in parcels, that a court of equity will interfere and set the sale aside.
German Bank v. Stumpf, 73 Mo. 311; Givens v. McCray, 196 Mo. 306, 93 S.W. 374, 113 A.S.R. 736.
In the case at bar, not only is there an utter failure to prove or even charge that the land would have brought more if it had been offered in parcels, but there is no proof whatsoever nor any allegation that the land was susceptible of division. Most assuredly, the appellants must prove these things before they can be permitted to challenge the validity of the sale on this ground.
And the principles applies with even greater force in this case, because the appellants were present at the sale and they offered no objection whatsoever to the mode of sale adopted by the trustee. They did not request or even suggest that the land be offered in parcels.
Mutual Fire Ins. Co. v. Barker, 17 App. D.C. ___.
On January 15, 1925, appellants Hamilton and wife, borrowed $1600 from appellee Bank, and as security gave a deed of trust on the following described land in Clarke County: E 1/2 of W 1/2 of SW 1/4, and W 1/2 of NW 1/4, Sec. 5, Tp. 1, R. 15 E. and 2 acres on south side of SW 1/4 of SW 1/4, Sec. 32, Tp. 2, R. 15 E. The mortgagors became considerably in arrears in their annual payments, and the Bank decided to declare due the entire debt, principal and interest; to appoint a substituted trustee, and to foreclose by a sale in pais. The substituted trustee gave the required public notice and sold the land at public outcry on August 30, 1930, within legal hours, at the county courthouse. The Bank became the purchaser, being the only bidder at the sale, and the trustee executed his trustee's deed to the Bank.
The purchaser made expensive but ineffective efforts, through actions of unlawful entry and detainer, to dispossess appellants; and finally on April 9, 1937, the Bank filed its bill in chancery to have its title declared absolute as against appellants, and for a writ of possession. Appellants resisted the suit on several grounds of attack against the validity of the trustee's sale: (1) That the substitution of the trustee had not been lawful; (2) that the substituted trustee was disqualified to act because he was an employe of the Bank; (3) that the public notice given by the truste contained an error as respects the page of the record of his substitution; and (4) that the notice posted at the courthouse did not remain posted. None of these objections were maintained, in point of law, under the proof, and we proceed to the only ground of attack which seems to require discussion; and that is, the contention that the sale was void because the land was not offered at the sale by the trustee in parcels or subdivisions.
It will be observed from the description that the mortgaged land consists of 122 acres, the lower forty acres being one-half mile north and south by one-eighth mile east and west, and the upper eighty acres one-half mile north and south by one-quarter mile east and west, and next adjacent on the north, a narrow strip of two acres, running one-quarter of a mile from east to west. The record discloses that the land was and is used as a single farm, and that about one-half of it is or has been in cultivation, and that there is a farm residence and outhouses somewhere on the land. The location of the cultivated ground or whether in one or more enclosures is not disclosed, nor is the location of the residence and outhouses shown. The record is silent as to whether there is any merchantable timber or any minerals, and, if so, on what part of the land. Some part of the land is said to have greatly suffered by erosion, there being many gullies, but as to where these are nothing is shown. The general location is several miles from any city or town.
Nothing is shown in the record or in the argument as to how this land of a single small farm could, as a practicable matter, have been divided into parcels for an available sale of portions less than the whole; but the contention is upon the naked legal proposition that because the trustee did not offer the land in some sort of parcels or subdivisions the sale was of no valid legal effect.
The deed of trust provided that the trustee or any successor appointed in his place "shall sell said property, or a sufficiency thereof, to satisfy the indebtedness aforesaid then unpaid." It is admitted that the trustee sold the land as a unit without first offering it in parcels. It is also shown that the mortgagors were both present at the sale and made no objections to the offer as a whole; made no request that the land be offered in parcels, and made no representations to the trustee at the sale, or at any time theretofore, that the land could be more advantageously sold if offered in parcels or as to what those parcels could or should be. And looking to the above-stated situation and use of the property, it is difficult to see what reasonable or practically available suggestions or requests could have been made in that regard; but whether so or not, the facts are that no objections or requests or suggestions as to the manner of sale were made. And there is not a word in the record that any person was present, or would have been present, who would have bid on any parcel or on what parcel, and there is no showing that if offered in parcels any one of them, or the aggregate of them, would have brought the amount of the debt. Although advertised for four weeks nobody, who manifested any sort of interest in it, was present at the sale other than the two mortgagors, the substituted trustee, and a person whom the trustee had requested to appear and bid for the mortgagee.
The quoted provision in the deed of trust was solely for the benefit of the mortgagors, and being for their benefit could be waived by them. It was held by this court in Brown v. Mortgage Co., 86 Miss. 388, 400, 38 So. 312, that even the statutory requirement, Sec. 2167, Code 1930, that land sold under deeds of trust shall be offered in subdivisions of not exceeding 160 acres, may be waived by the parties.
Such a waiver is not required to be in writing; but, as succinctly said in 41 C.J., p. 975, Sec. 1423, the general rule is that any person who is present and fails to object to the manner in which the sale is made cannot subsequently have the sale set aside on the ground that it should have been conducted in a different manner. Or, as expressed in 2 Perry on Trusts (7 Ed.), p. 1051: "The provisions in the power limiting and regulating the sale are for the benefit of the debtor. They are for his protection, and they may be waived by him, or his conduct may estop him from taking advantage of any irregularities, as if being present at the sale and knowing of the irregularity he should make no objection, but permit the sale to proceed." To the same effect is 3 Jones on Mortgages (8 Ed.), p. 929, sec. 2406.
Under the stated facts appellants fall within the principles above set forth; under the facts, they have waived the objections to the manner of the sale which at this late day they seek to interpose; and no more than the statement is required of the legal proposition that no sale is either void or voidable on account of a departure, if there has been any such departure, from a condition or stipulation which has been waived. We decide no other question in regard to the manner of the sale, it being unnecessary to go further.
Affirmed.