Opinion
04-06-1891
HOPPOCK v. CRAY et al.
Chas. A. Skillman, for complainant. James Buchanan, for Cray & Sergeant. W. D. Holt, pro se. John Lilly and A. D. Anderson, for Lear, Holcomb, and Niece.
(Syllabus by the Court.)
On bill and supplemental bill to set aside sheriffs sale.
Chas. A. Skillman, for complainant.
James Buchanan, for Cray & Sergeant.
W. D. Holt, pro se.
John Lilly and A. D. Anderson, for Lear, Holcomb, and Niece.
BIRD, V. C. The defendant Cray was the owner of several parcels of real estate. He had given a mortgage to Hoppock on a portion thereof. Hoppock foreclosed his mortgage, and after selling the lands embraced therein Cray was still indebted to him in a large sum. On the 22d day of July, 1882, Cray executed and delivered to Mr. Sergeant, one of these defendants, a deed of conveyance for all his lands and real estate which are involved in this controversy. This deed contains a clause of which the following is a copy "Intrust, nevertheless, for the use and benefit of the said Abraham Cray, party of the first part; the said party of the second part to control, convey, and dispose of all the hereinbefore mentioned tracts, subject to all legal incumbrances, or freed from incumbrances, as may be for the best interests of said party of the first part, and to collect Interest, and reinvest all moneys therefrom arising as trustee and attorney in fact of said party of the first part, according to the covenants and conditions of a certain power of attorney bearing even date with this indenture, and given by the said Abraham Cray to the herein-named Lambert H. Sergeant, subject, however, to all lawful charges and expenses incurred in the management, control, sale, conveyance, and investment of funds arising thereout." On the same day said Cray executed a power of attorney in the said deed referred to. This instrument is in the ordinary form, first authorizing him to receive all debts due, to collect rents, to control a certain farm, to pay the taxes thereon, to pay all claims of any person who shall labor for said Cray on said farm, and was given the control of all the personal property of said Cray, and the control and oversight of all real estate, and to pay the expenses of necessary repairs, "and generally to do and perform all matters and things which may be requisite or proper to carry on my business, with the same powers to all intents and purposes as I could if personally present." At or about the time of the sale made under the decree obtained by Hoppock upon his mortgage Cray executed to Mr Holt a bond conditioned for the payment of $2,000, and at the same time a mortgage upon all his real estate to secure the payment thereof. This bond and mortgage Mr. Holt assigned to Mr. Sergeant, the trustee, who claims that the amount secured thereby is due to him for services rendered as such trustee. Prior to this, said Cray and Sergeant, as trustee, hadconfessed a judgment to Holt for $910, the amount actually claimed to be due being $455. Hoppock filed his bill of complaint in this cause, attacking both the mortgage and judgment so given to Holt, declaring that they were contrived in fraud, and for the purpose of preventing him from recovering the amount of the deficiency due to him upon his bond. While the controversy was pending, the solicitors and counsel of the respective parties made and signed a stipulation, which contained, among other things, the following: "It is hereby stipulated and agreed by and between the parties to this suit and the parties in a certain other cause in this court wherein Lear, Holcomb, and Niece are complainants, and Abraham Cray and Lambert H. Sergeant, trustee of Abraham Cray, are defendants, by their respective solicitors, as follows: (1) That all the land and premises set forth and described in Exhibits number 5 and 6, annexed to complainants' bill in the cause first above stated, shall be sold by John T. Cox, sheriff of the county of Hunterdon, on Monday, the 25th day of August instant, at Flemington, between the hours of twelve and five o'clock in the afternoon of said day, under and by virtue of the execution now in his hands issued out of the supreme court at the suit of Woodbury D. Holt against Abraham Cray and Lambert H. Sergeant, trustee of Abraham Cray. (2) That said sheriff shall sell all the property and premises aforesaid, free and clear of any lien or incumbrance of a certain judgment obtained against Cray and Sergeant, trustee, by John L. Wilson, and now owned by George Hoppock; and free and clear of all liens and incumbrances of a certain judgment obtained against said Cray by Lear, Holcomb, and Niece, Joseph R. Wert and Son, which latter judgment is now owned by Woodbury D. Holt; and free and clear of all liens and incumbrances of a certain indenture of mortgage dated May 5, A. D. 1890, made by said Cray and Sergeant, trustee, to said Holt, and by him assigned to said Sergeant individually and personally, which said judgment and mortgage are named and referred to in the complainant's bill first above named. (8) That the said John T. Cox, sheriff, after deducting costs, fees, commissions, and expenses of said sale, shall bring the balance of the proceeds arising from such sale into this court, where it shall be subject to the rights and equities of the parties to the suits herein named, to be determined by said court."
In addition to the ordinary advertisements employed by the sheriff to give notice of the sale of the property, it was agreed that large hand-bills should be printed, and extensively circulated, in order to insure a full attendance of bidders at the sale; and that they might feel free to bid, this clause was inserted in the advertisement: "These properties are very valuable, and will now be sold free from complication to the buyer, and should command the attention of persons desiring to invest;" to which were annexed the names of the solicitors of the respective parties. In compliance with such intention, such hand-bills were extensively circulated. Just before and at the time of the signing of said stipulation the solicitor who represented one of the judgment creditors suggested that the judgment confessed to Holt by Cray and by Sergeant, as trustee, was not valid, and was ineffectual to pass a perfect title to the lands proposed to be sold. But Mr. Holt himself, and the solicitor of Sergeant, gave such assurances on this point that the sale was consented to by all parties according to the stipulation. The sheriff accordingly advertised the premises for sale under the Holt judgment. But prior to the day of sale the question as to the validity of said judgment and the legal effect of a sale thereunder in transferring the title was again mooted. There is no doubt but that there was more or less discussion between counsel upon this point before the bidders assembled at the place fixed by the sheriff for offering the property, and also after they had assembled, and in the presence and in the hearing of such bidders. It was asserted upon the one hand that a good title could not be conveyed, and upon the other that it could. Two of the solicitors in this cause, and one of them the attorney for Wilson, who held one of the judgments, in the presence of the bidders so assembled declared that they withdrew from the stipulation which they had entered into. One of them declared publicly, in effect, that no good title could be given. Mr. Holt insisted upon a sale, and urged the sheriff to proceed. The several properties were all sold, and all of them but one purchased by Mr. Holt, without any other person bidding. According to the testimony, I think it may reasonably be concluded that one of the properties, a large store-house, was worth, over and above all incumbrances, from $2,000 to $3,000. The incumbrances are less than $7,000. One witness said he attended the sale with the view of giving $9,000 for this property, but that he was deterred from bidding because of what was said respecting the imperfection of the title. His estimate of the value of the property was sustained by the testimony of other unimpeached witnesses. This parcel was struck off to Mr. Holt for $100. The differences between the fair values in cash of the other properties and the price at which they were struck off to Mr. Holt are, perhaps, not so great in every instance, but so great, it seems to me, as to come within the rule which declares that when the price paid at judicial sales is so inadequate as to shock the conscience, such sales will he set aside. Kloepping v. Stellmacher, 21 N. J. Eq. 328; Cummins v. Little, 16 N. J. Eq. 48; Gifford v. Thorn, 9 N. J. Eq. 702; Ryerson v. Boorman, 7 N. J. Eq. 167; Executors of Wintermute v. Executors of Snyder, 3 N. J. Eq. 490; Fletcher v. McGill, (Ind.) 10 N. E. Rep. 651; Cole Co. v. Madden, (Mo.) 4 S. W. Rep. 397.
It is proper to state briefly the circumstances or condition existing at the time of the sale, in addition to what appears above, which contributed largely to the embarrassment or misapprehension which induced the counsel objecting to the saleto take the course they did. The allegation of the complainant and of the creditors interested with him in securing the highest price for these lands is that an effort was made by the defendants, or some of them, by means of the confessed judgment and the blanket mortgage, to put such obstructions or hindrances in the way of a sale, if not serious clouds upon the title, as to prevent fair and just competition at the sale in case one should be made by Hoppock to recover the amount of his deficiency. Especially was it urged that this was the object of the blanket mortgage for $2,000; for, that resting upon all the properties, no bidder would feel line bidding for either, unless he could buy all, since he could not for see but that he might lose his purchase in making satisfaction for the said $2,000 mortgage. It was this very manifest embarrassment that led to the stipulation above given. That cannot be read without concluding that there were some very just or reasonable grounds for it. The unquestionable spirit and intent of that paper show the parties meant to have a fair and untrammeled sale. It cannot be said that such a result followed.
But what should be the relief adjudged? Immediately after the sale the complainant in this suit made application to the court, and obtained leave, and filed a supplemental bill, in which he set up the facts and circumstances connected with and attending said sale. He asked that the sheriff might be restrained from delivering a deed to Mr. Holt. Such restraint was refused, but a lis pendens was filed. The title was conveyed to Mr. Holt by the sheriff by virtue of the execution in his hands issued on the judgment in favor of Mr. Holt. The complainant insists that the sale was in effect fraudulent and void, even though the judgment under which it was made be valid, and asks that Mr. Holt may be decreed to hold the lands in trust for the other parties to this suit as well as for himself. Now, it will be seen that if the question respecting the title to this property which was originally discussed between the parties should be determined in favor of the complainant's insistment, which is that the judgment confessed by Cray and Sergeant, as trustee, be illegal and inefficacious in the attempt to transfer the title thereby, it goes to the root of the whole matter, and the decree of this court that Mr. Holt holds the title as trustee for the creditors of Cray, would be equally inefficacious. If the judgment under which he sold be void, the deed which the sheriff executed to him must be void. If he took no title, there is nothing in his hands for the court to declare that he holds in trust. The deed under which the title to the land in question was conveyed to Sergeant is a deed of full covenants of warranty and seisin. Sergeant holds title, therefore, absolutely, qualified only by the paragraph in the deed which is above quoted. The paragraph provides in the first sentence that he holds it in trust for the use and benefit of the said Abraham Cray. The next sentence expressly empowers Sergeant to control, convey, and dispose of all of the said lands and premises. This is not a mere passive, naked, or barren trust, so that a court of equity might say that after all every title and interest is really in the cestui que trust. See Melick v. Pidcock, 44 N.J. Eq. 525, 15 Atl. Rep.3, and Wood v. Trust Co., 44 N. J. Eq. 460, 14 Atl. Rep. 885. It is active and executory, for Sergeant is empowered to control, convey, and dispose of; and for that purpose the deed declares that he shall have and hold the same to himself, his heirs and assigns forever. I think it was admitted upon the argument that, after giving the deed of conveyance and the power of attorney the most latitudinarian construction, not the slightest foundation could be found in either, giving Sergeant the right to confess judgment. Huntt v. Townshend, 31 Md. 336; Mallory v. Clark, 20 How. Pr. 418; Freem. Judgm. § 545. Therefore I must conclude that no change was effected in the legal title by virtue of this sale. However honest and sincere Mr. Sergeant might have been, I can regard this confession of judgment as nothing more or less than an effort upon his part to effect a sale and transfer the title of these lands by another, rather than by himself as trustee; and that the object was to do this under the forms of law. It plainly must be considered an effort to delegate the authority which he held in trust to a public officer to do that which had been committed to him alone. This he could not do. Cases need not be cited to show that a trustee cannot delegate his power. In this case the power to convey was expressly given to Mr. Sergeant, and he had ample power to make such conveyances for the payment of the debts of the cestui que trust. Could he not sell this valuable real estate at public or private sale? Why should he confess a judgment for $455 when he had an abundance of real estate at his command on which he could raise money to discharge such debt either by mortgage or by sale? And as a prudent and careful trustee, could he not sell to a far better advantage than a sheriff under an execution at law? Forms of law never prevent the conduct of parties being inquired into when other innocent parties suffer. "Where from the manner in which bids were prearranged so as to use a comparatively small judgment in order to cover the whole of the appellee's property, consisting of a number of separate parcels, it must be inferred that the bidder must have suspected that the owner of the property had no knowledge of the sale, the use of the mere form of law to acquire the property of another is itself a legal fraud." Fletcher v. McGill, supra. But it was argued that if he alone could not confess a judgment, he and Cray together could. Suppose this to be so, then the serious question in the case confronts us: Can such a judgment be enforced in the common-law courts against lands in which Cray has no legal, but only an equitable, interest? I can think of no rule of law which will permit me to answer this in the affirmative. Whatever relief a court of equity might be able to give to a creditor of Cray, he cannot reach property so circumstanced at law. The court of chancery is the appropriate tribunal to render aid in such cases. Haggerty v. Nixon, 26N. J. Eq. 42; Bolles v. Trust Co., 27 N. J. Eq. 308; Halsted v. Davison, 10 N. J. Eq. 290; Woodruff v. Johnson. 8 N. J. Eq. 730; Vancleve v. Groves, 4 N. J.Eq.330; Ketchum v. Johnson's Ex'r, 4 N.J. Eq. 370; Disborough v. Outcalt, 1 N. J. Eq. 298; Rice v. Burnett, 1 Speer, Eq. 579; Mallory v. Clark, supra. This defect being inherent and fundamental, I must conclude on this score also that Mr. Holt has no title.
I ought to observe that it was pressed upon the argument that Sergeant could convey by way of mortgage, and that he had done so to the commissioners of the sinking fund. This does not at all militate against my conclusion, for he is expressly given the power to convey and dispose of. For such a conclusion there is good authority. Loebenthal v. Raleigh, 36 N. J. Eq. 169. I am aware that there are several well-considered cases which at first view may be thought to be in conflict with the case just cited; but I think, when carefully considered, there will not any real disagreement appear. The case cited rests upon the power to raise money to pay debts. Mr. Sergeant was authorized to control, convey, and dispose of, and undoubtedly, among other things, for the purpose of the payment of debts. I therefore think that the power to mortgage was included, but that this power in no sense included the power to confess judgment. But suppose that I am wrong in concluding that Mr. Sergeant had no power to confess a judgment, and that the judgment confessed by him and Cray was valid and effectual in law, and that by virtue of the execution issued thereon the sheriff could convey an absolute title in fee, still the question remains whether, under the circumstances of the case, the sale should be allowed to stand. In other words, considering the uncertainty which prevailed as to the ability of the sheriff to pass a good title, and the inadequacy of price paid by Mr. Holt, ought this court to interfere? I think in every case where a party interested is controlled by a serious misapprehension of facts honestly entertained by him, which results to his prejudice, courts always interfere to grant relief when the application therefor is promptly and properly made. In addition to what appears in many of the cases above cited, see, also, Hodgson v. Farrell, 15 N.J. Eq. 88; Cole Co. v. Madden, supra; Seaman v. Riggins, 2 N. J. Eq. 214; Commissioners v. Peter, 32 N.J. Eq. 115; Woodward v. Bullock, 27 N.J. Eq. 507; Conover v. Walling, 15 N. J. Eq. 173; Insurance Co. v. Gould, 34 N. J. Eq. 417,—in which the mistake was that of the counsel. Kloepping v. Stellmacher, 21 N.J.Eq. 328. I ought, perhaps, to speak of another phase of the case strenuously urged upon the argument. Counsel for the defendant insisted that the counsel for the complainant and for one of the defendants created the difficulty by their declarations, which caused persons who had attended the sale with the view of buying to desist from bidding. They insisted that they were guilty of slandering the title, which was their only reliance for the recovery of the money which they claimed to be due. Having done this, they assert that the complainant and the defendant who Joined with him ought not to be heard in a court of equity. In view of what I have said above, I can discover no just ground for laying any charge to the complainant in this respect. The counsel not only did their plain duty to their clients, but every principle of morality and fair dealing required them to say and do what they did. Had they refrained from speaking when they did they would have been estopped from speaking afterwards. How dare they refrain, after what they had said in the hand-bills, which were extensively circulated, if they honestly believed a good title could not be conveyed?
It was urged upon the argument that these proceedings are fatally defective be cause the questions involved have been raised by supplemental bill when they should have been by petition. There can be no doubt, in many cases, where irregularity in the proceedings in a cause is brought to the attention of the court, that it may be done by petition. Such has been the practice in several instances in this state; but my understanding of the rule is that when new matter is introduced which has had its origin since the filing of the original bill, and with which third parties have been connected, who should, or properly may, be made parties to the further proceeding, then a supplemental bill is not only proper, but justified by the best authorities. In addition to this, it is sufficient for me to say that the pleadings in this case to the extent referred to have the sanction of the chancellor. I will advise an order setting aside the sale. While the specific prayer above named, that Mr. Holt may be declared to hold the title for those interested, does not meet the case, I think the prayer for general relief is sufficiently broad for the purpose indicated.
The only question remaining is, who shall bear the burden of the costs? I think it very plain that the defendants should alone meet this responsibility. They were warned before the sale of the serious question involved. They were urged to consent to a postponement in order that the matter might be fully inquired into. They had joined in the declaration that the sale should be made free from all embarrassments. Before the property was offered for sale by the sheriff the complainant's counsel and the counsel for one of the defendants both declared that a good title could not be made, and that they withdrew from the stipulation. From that time to the close of the argument every possible resistance has been made by Mr. Sergeant, Mr. Cray, and Mr. Holt. Under these circumstances there would seem to be no excuse whatsoever for not charging them with the costs of this litigation. I will so advise.