Opinion
06-17-1873
HUDGINS v. LANIER, BRO. & CO.
Steger, for the appellant. John Howard, for the appellees.
Judgments are recovered against H. and docketed. He afterwards makes a deed in which his wife joins, conveying certain real estate to T, in trust to sell, upon the demand of a majority of his creditors, and pay his debts ratably; but if any have obtained liens, they to be first paid. He, at the same time, conveys to T, other real estate, in trust for the separate use of his wife, stated upon the express consideration of executing the first deed. The deed does not name any creditor or enumerate the debts. L, one of the judgment creditors, files a bill to enforce the payment of his debt. He says he does not mean to give up any right he has, but is willing to proceed first against the land conveyed in the deed. He makes H, T, and the judgment creditors defendants; and the bill is taken for confessed as to all the defendants. A commissioner states the debts of the judgment creditors, and there is no exception to the report; and there is a decree appointing commissioners to sell the land conveyed in the deed, at auction; but with the consent of H there may be a private sale. H negotiates with R for a sale of a part of the property at $4,500, which he proposes to the commissioners, and they are disposed to accept the offer; but before it is closed, M offers $5,000; and then H protests against the sale to M, and insists it shall be sold at auction; but R declining to give more, the commissioners accept the offer of M, and H excepts to the report. H then files his answer, insisting that T shall elect whether he will proceed under his judgment lien or under the deed; and insists that under the deed, only a majority of the creditors could direct a sale. And he files a petition saying that R had offered $5,100 for the property; and proposing to give bond and security, that if accepted, the offer will be complied with in five days after the rising of the court. HELD:
1. The deed not naming the creditors, the only mode of proceeding open to them, was by bill in equity, where the necessary parties might be convened, their rights and liabilities ascertained and adjusted, and the trust enforced under the supervision of the court.
2. There having been no objection for want of proper parties, the want of such parties is no objection to the proceedings.
3. If there were other creditors beside those named in the bill, they could have asserted their claims before the commissioner.
4. The creditors before the court made no objection to a sale under the deed; and as the bill was taken for confessed as to them, it is to be presumed they desired the sale. If they did not constitute a majority of the creditors, it was for H to show it. He alone knew their names or numbers.
5. As the deed of trust makes no mention of the deed in favour of the wife, and the decree in this case does not touch the property conveyed for her benefit, the validity of the deed for her benefit is not a question in this case.
6. T purchased one part of the land sold, at a commissioner's sale under a decree of court, and had paid all the purchase money, and was entitled to a deed; but it had not been made. This is not a cloud upon the title which will avoid the sale.
7. H having consented to a private sale by the commissioners to R, at a certain price, and the commissioners having sold to M at a higher price, he could not withdraw his consent to a private sale, so as to set aside the sale as made, as not made in pursuance of the decree.
8. It is no just cause for vacating a judicial sale, that only a few bidders were present. The only enquiry for the court, is, whether the terms of the decree have been pursued, and the property sold at an adequate price.
9. The advance of $100 upon the price paid for the property, is no such substantial and material advance upon the price obtained by the commissioners, as would justify the court in annulling the sale, and ordering a new sale.
This case was argued in Richmond, and decided at the June term 1873, at Wytheville.
This was a suit in equity in the Circuit court of Matthews county, brought in August 1869, by Lanier, Brothers & Co., against Wm. H. Hudgins and others, to enforce satisfaction of the judgments which they had recovered against Hudgins, and which were docketed in May and June 1867. The bill set out the recovery and docketing of the judgments, and stated, that after the judgments were docketed Hudgins made a deed by which he conveyed to Thomas U. Hunley, certain real estate in said county, for the benefit of his creditors. That by the provisions of the deed the trustee was required to make sale of the property after the 1st of April 1869, when called on by a majority of the creditors of said Hudgins, and apply the proceeds to the payment of his debts; and if said proceeds were not sufficient to pay all, then they were to be applied ratably. But it was provided that if any prior liens had been acquired on the real estate of Hudgins, they were to be first paid. That the wife of Hudgins united in this deed; and at the same time Hudgins executed another deed, by which he conveyed to Hunley other real estate, in trust, for the separate use of his wife.
They say further, that Hudgins is insolvent: that they have liens on his real estate by virtue of their judgments; that they do not intend to waive their said liens; but they are willing to have their debts paid out of the property conveyed for the benefit of the creditors of Hudgins, and have no disposition, unless it becomes necessary to prevent them from suffering loss, to interfere with the said deeds of trust. They are informed that there are other parties who have acquired liens on the real estate of Hudgins, of even or prior date to theirs. They state who these parties are. And making Hudgins, Hunley, and the lien creditors, parties defendants, they pray that the property conveyed by Hudgins, for the benefit of his creditors, may be sold, and the proceeds applied to the payment of the debts secured thereby, first paying the liens on the real estate of Hudgins. That the liens may be ascertained; and all other proper accounts taken; and for general relief.
In October 1869, the bill having been taken for confessed as to all the defendants, the court made a decree directing one of the commissioners of the court to take an account of all liens upon the real estate of Hudgins, which had been acquired before the execution of the deed, in the bill mentioned, to Hunley, and the amount of such liens, and the persons entitled thereto, and their priorities.
The commissioner proceeded to state the accounts upon notice to Hudgins, Hunley, and the lien creditors, no creditor being named in the deed of trust; and from his report it appears that the debts of the creditors by judgment docketed before the execution of the deeds to Hunley, with interest to October 1st 1870, amounted to $4,211 44, and that the plaintiff's debt amounted to $3,072 46. To this report there was no exception.
After this report had been returned Hudgins answered the bill. After stating the execution of the deeds, and that the deed for the benefit of Mrs. Hudgins was made in pursuance of an express agreement that it was to be done in consideration of her joining in the other deed, he denies that the plaintiffs have a right to sue him; because by the terms of the deed he was to retain possession until a majority of his creditors should direct a sale: and this had not been done. He insists plaintiffs shall be put to their election, whether they will claim under said deed or under the lien of their judgments. That if they proceed under their judgments every cloud upon the title to the property should be removed before a sale is directed. And he proceeds to set out the difficulties as to each parcel of land. The only parcel, however, which is involved in this case, is one of six and one-half acres, which had been sold under the decree of the county court of Matthews, and of which he had become the purchaser, and had paid the purchase money, but had not received a conveyance for it; and the commissioner had since died.
The cause came on to heard on the 11th of October 1870, when the court, not then deciding on the liability of the property conveyed for the benefit of Mrs. Hudgins, to satisfy the plaintiff's debt, decreed that unless Wm. H. Hudgins, or some one for him, should, within four months from the rising of the court, pay to the plaintiffs the sum of $3,072.46, with interest on $2,016, 64 cents, part thereof, from the 1st day of October 1870, then John P. Donovan and M. B. Seawell, who were appointed commissioners for the purpose, should proceed to sell the land conveyed in the deed for the benefit of creditors, at public auction, to the highest bidder. The terms of the sale were, cash for the expenses, and a credit for the balance of one, two and three years, with interest from the day of sale; taking bonds and security, and retaining the title.
And, with the consent of the defendant, Wm. H. Hudgins, the commissioners were authorized to sell the said land in lots to suit purchasers. And with like consent the commissioners were authorized to sell any of said parcels of land at private sale, and on the credit before directed to be given.
The commissioners proceeded to sell a part of the property embraced in the deed. This was the tract called Crickett Hill, where Hudgins had carried on business as a merchant, and the small tract of six and one-half acres lying on the opposite side of the road. This was sold as a whole, and was purchased by James W. Marchant, Wm. N. Trader and Josephus Trader; and the price to be paid for it was $5,000.
Hudgins excepted to the report, on the ground, first: that by the decree the land was to be sold at public auction, unless, by consent of the defendant Hudgins, a private sale should be made. That Hudgins consented to a private sale to Wm. A. Richardson, who offered a price for the two lots sold, sufficient to pay the expenses of sale, and all the debts reported; and Hudgins insisted upon this offer being accepted:
2d. Because it is not reported by the commissioners that they sold the land at public auction, as directed by the decree, nor at private sale, by and with the consent of the defendant Wm. H. Hudgins. The fact is, it was sold at private sale, without his consent and against his protest.
3d. Because the commissioners have not reported whether said lands sold for three-fourths of their assessed price at the last assessment thereof, for the purposes of taxation.
It appears from the statements of the commissioners and the affidavits filed, that previous to the day of sale Hudgins had negotiated with Wm. A. Richardson, for the sale to him of the parcel of ground called Cricket Hill, on which was a storehouse, and a lot of six and one-half acres, lying across the road from the former, the same sold by the commissioners, at the price of $4,500; and on the day of sale the proposition of Richardson was stated to the commissioners, and they expressed themselves disposed to accept it, or so much as would pay the debts, costs and expenses. But whilst one of the commissioners was making a calculation to ascertain whether this sum would pay all the debts reported and the expenses of sale, another party proposed to give for the two lots $4,600, and wished the property put up together. Hudgins insisted they should sell to Richardson, at the price he had offered; but the commissioners explained that they could not sell for $4,500, when $4,600 was offered, and they were about to have the property put up at auction. Before this was done, however, upon the suggestion of Mr. Donovan, one of the commissioners, to Richardson, that he would accept any thing over $4,600, Richardson offered $4,650. Mr. Donovan went to Mr. Seawell, the other commissioner, and proposed to close with this offer, at once; but he declined doing so, until Marchant, who had made the other offer, was consulted, as he might be inclined to give more. They both then went to Marchant, who, when the matter was explained to him, offered $5,000. This they communicated to Richardson, and asked him if he would give more; when he shook his head and said, " I am out of the ring." The commissioners then informed Marchant & Trader that they could have the property at their offer; and whilst the bonds to be executed by the purchasers were in preparation by Mr. Donovan, Hudgins objected to the sale, and required and demanded that the property should be put up at public auction in separate lots; the Cricket Hill lot first, and then the other. He was told by Mr. Seawell that the property was sold. After Seawell had left the ground, some dissatisfaction was expressed by the company present to Mr. Donovan, at what had been done; when, he being unable to satisfy them, announced that if any one was willing to give more than $5,000 for the properties, he would not confirm the sale; when Richardson offered $5,100; and Marchant declined to give more. Donovan thereupon, declined to sign a receipt for the cash payment by Marchant.
Some days after the sale, Mr. Donovan saw Richardson, and told him that if he wished to contend for the property, he had better make a tender of the cash payment and the bonds; that he would not involve himself further in the controversy between the contending parties; and should therefore refuse to accept the tender, but would report the facts to the court; but no such tender was made. And Mr. Donovan says he saw him a second and third time, and told him in his last interview, that unless he, by a certain day named, made a tender of the bonds and cash, he, Donovan, should close the matter, so far as he was concerned, by uniting with Mr. Seawell in his receipt to Marchant and Trader; and he was understood as declining to make the tender, and saying he would have nothing more to do with it. Donovan then told him he would go and sign the receipt to Marchant; to which Richardson made no objection; and, in a few minutes afterwards, Donovan signed the receipt.
Wm. H. Hudgins presented a petition to the judge, in which, after stating that Richardson had offered $5,100 for the property, and that the petitioner had protested against the sale to Marchant & Trader, he insists that the said sale should not be confirmed, for the reasons stated in his exceptions. And he offers and binds himself, and will execute bond, with satisfactory security, that the said offer of $5,100, made for said land, will be complied with in five days after the rising of the court.
The cause came on to be heard on the 26th of October 1871, when the court overruled the exceptions of the defendant, Hudgins, to the report, and confirmed it. And it being suggested that Hudgins was in possession of the property sold by the commissioners, it was ordered that he, within ten days from the service upon him of a copy of this decree, should surrender and deliver possession thereof to the purchasers, Marchant & Trader.
And it was further decreed, that the sheriff of Matthews should proceed to sell the other property conveyed in the deed of Hudgins to Hunley, for the benefit of his creditors; and that a commissioner of the court should take an account of the debts due by Hudgins and secured by said deed, showing the amount and character thereof, and to whom such debts were due. And the death of Hunley was suggested.
From this decree Hudgins obtained an appeal to this court.
Steger, for the appellant.
John Howard, for the appellees.
OPINION
STAPLES, J.
The first ground of error assigned by the appellant is, that before a decree was rendered for the sale of the lands in controversy, the appellees should have been required to elect whether they would claim under or against the deed of trust executed by the appellant for the benefit of his creditors. The appellees acquired a lien by judgment, upon all the real estate of the appellant, before the execution of that deed. No attempt was made to defeat or interfere with this lien. On the contrary, the deed recognized the rights of the judgment creditors, and provided for enforcing them. It mattered but little, therefore, to the appellant, whether the property was sold under the judgment or the deed of trust.
It is true, the deed provides for a sale by the trustee only upon request made by a majority of the creditors. But how were they to be ascertained? The deed does not name them; nor does it enumerate the debts. As they were only known to the appellant, it would have been always difficult for the trustee to determine whether a majority had already united in demanding a sale. Inasmuch as the trustee could not sell without the concurrence of a majority, the only recourse of the creditors was a suit in equity, where the necessary parties might be convened, their rights and liabilities ascertained and adjusted, and the trust enforced under the supervision of court. That course was pursued in this case. It is true the creditors having judgments are only named in the bill, but the appellant has made no objection for the want of proper parties. He did not claim, in his answer or otherwise, in the court below, there were other creditors necessary to be brought before the court. If, indeed, there were others besides those named in the bill, they could have asserted their claims before the commissioner to whom the accounts were referred. The appellant was notified of the time and place of taking these accounts; but he failed to attend or to file any exception to the report before or after its confirmation. The creditors, before the court, made no objection to a sale under the deed. As they permitted the bill to be taken for confessed, it is to be presumed they desired the sale. If they did not constitute a majority of the creditors, it was for the appellant to show it. He alone, was in possession of information as to their name and number, and as he did not choose to furnish it, the court might well conclude a majority of them were represented.
The appellant claims, however, that his wife joined in the trust deed, upon condition of the creditors consent to the settlement in her favor. And he further insists, that they shall be required to ratify the settlement, or abandon all claims under the deed. In the first place, the trust deed imposes no such terms. It is an absolute conveyance on its face, with an unconditional relinquishment of dower. In the second place, the decree does not interfere with the property embraced by the settlement. It directs only a sale of what is conveyed by the trust deed. Whether the creditors, including the appellee, have in fact claimed under that deed, and if so, whether such claim will preclude them from contesting the validity of the settlement, are questions not arising in this case, and in respect to which we express no opinion.
Another error assigned is, in decreeing a sale before the difficulties in respect to the title were removed. It is not pretended there is any cloud upon the title to the lots actually sold by the commissioners. No objection is made by the purchaser; and the price agreed to be paid for the lots abundantly shows, that not the slightest apprehension was felt by any one, in regard to the title. With respect to the other small tract, not yet sold, according to the appellants own showing, there is no real difficulty. The appellant became the purchaser under a decree of the County court of Matthews; has paid all the purchase money, but has received no deed. This tract contains only about six and a half acres, and probably is of but little value. The legal title can at any time be obtained, and there is no reason to suppose that any sacrifice will result from a sale of the property without it. The whole subject is under the control of the Circuit court, which will take care not to confirm a sale at a grossly inadequate price.
The next and principal ground of complaint is the error in confirming the sale made by the commissioners, because the sale did not conform to the terms of the decree under which the commissioners were acting; was not only without the consent of the appellant, but directly against his most earnest remonstrance and protest; was a surprise upon the crowd in attendance, who were allowed no opportunity to bid; was conducted secretly and confined to two bidders, one of whom was not advised that if he did not increase his bid the offer of the other would be accepted; was thus a surprise to him, and prevented his giving more, and resulted in a sacrifice of the property. These are the objections; not one of them is well founded. It is not necessary to consider in detail the evidence bearing upon this point. It is sufficient to refer to a few of the more prominent facts.
The decree provided that the commissioners, with the consent of the appellant, might sell the lots at private sale. The appellant expressly gave such consent. He wished the property to be sold for four thousand and five hundred dollars to his friend William A. Richardson, who was willing to purchase the lots at that price at private sale. The commissioners believing this was their fair value, were willing to make the sale on those terms. It was ascertained, however, very soon, that other parties were willing to give more, and the commissioners did not feel authorized to close the contract with Richardson, upon the terms proposed by him. After some negotiations, Marchant and Trader became the purchasers at the sum of five thousand dollars. It was not until after it was clearly ascertained that they were willing to purchase the property upon more liberal terms than those offered by Richardson, that the appellant insisted upon a public sale. Having given his consent that the property might be sold privately, he had no right to retract that consent, because his individual preferences were not consulted.
As to the charge that there were only two bidders present, and that the crowd assembled was denied an opportunity of bidding for the property, it is notorious that Richardson, Marchant and Trader, were the only persons present desiring to become purchasers. The complaint comes, however, with an ill-grace from the appellant, who insisted that the sale should be made to Richardson upon the very first terms proposed by him. It is no just cause for vacating a judicial sale, that only a few bidders were present. The competition may be as active and spirited among two or three as a dozen. The only enquiry for the court, is, whether the terms of the decree have been pursued, and the property sold at an adequate price. In this case the price agreed to be paid by Marchant and Trader, is five hundred dollars in excess of the appellant's own estimate.
It is said, however, that Richardson was willing to give more than five thousand dollars; but was refused an opportunity of doing so. His affidavit was taken and filed in the record. According to his version, he was willing to give forty-six hundred and fifty dollars; he was informed that other parties had offered five thousand dollars. He then remarked you can count me out of the ring; " but put the place up to the highest bidder." This was certainly a very distinct intimation that Mr. Richardson was unwilling to pay the price offered by Marchant and Trader. It was a little presumptuous in him, to say the least, under such circumstances, to demand a public sale. He declares, however, that he afterwards expressed his willingness to pay fifty-one hundred dollars. Why then did he not make the offer? He was offered ample opportunity of doing so. A few days after the sale and before the contract with Marchant and Trader was fully consummated, he was told by one of the commissioners, that if he wished to contend for the property, he had better make a tender of the cash payment and the bonds; but he declined to make any such tender. On another occasion, he was informed by the same commissioner, that time enough had elapsed to have the matter put into a definite form, and he must say whether he then contended for the property at five thousand and one hundred dollars. But the commissioner was unable to get a definite or satisfactory answer from him. It is apparent that this witness did not entertain any serious thought of buying the property upon the terms mentioned by the commissioner; and that he has been actuated throughout simply by a desire to gratify the wishes of the appellant. He does not now, in his affidavit, express a wish to buy the property upon any terms. The record does not show that any one else is anxious to become a purchaser. It is true that the appellant, in his petition to the Circuit court, proposed to execute bond with satisfactory security, that the offer of fifty-one hundred dollars, made on the day of sale, would be complied with " within five days after the rising of the court." But it is obvious that this is no such substantial and material advance upon the price obtained by the commissioner as would justify the court in annulling the sale already made, and exposing the creditors to all the delays and hazards attending a resale. There is no doubt the property was sold at a very advantageous price; the sale was fairly conducted, and the terms of the decree fully complied with. The commissioners were the counsel of the parties; and their high character, personally and professionally, is an ample guaranty that no injustice was done, no fraud perpetrated or attempted. It would be a bad precedent, leading to most pernicious consequences, to vacate a sale made under such circumstances, because the owner may be able to find some one willing to advance a small sum in excess of the commissioner's sale. Such has not been the practice in Virginia.
For these reasons, I think the decree of the Circuit court should be affirmed.
DECREE AFFIRMED.