Opinion
08-30-1907
MONTCLAIR BUILDING & LOAN ASS'N v. FARMER.
E. B. Goodell, for complainant William W. Crane, for defendant
Action by the Montclair Building & Loan Association against William Farmer to foreclose a mortgage. On motion for confirmation of a sale of the property. Denied.
E. B. Goodell, for complainant William W. Crane, for defendant
HOWELL, V. C. This suit is an ordinary foreclosure suit, in which there has been a final decree for the sale of the premises, a writ of execution to execute the decree, and a sale in pursuance thereof. The property described in the execution is in two parcels. They were sold separately and purchased separately by Henry J. Bloemecke. Counsel for the complainant now moves to confirm the sale against the objection that the second tract did not bring what it was fairly worth at the sale. The motion was heard on affidavits.
The property in question was owned by a Mrs. Farmer, who died intestate, leaving two infant children and her husband. These appear to be the only persons who are interested in the property. The surviving husband, in order to protect himself and his children, had arranged to have the property bid in for him at the sale, presumably for the purpose of making it bring all that it was worth. The first tract was sold for $600 and this price appears to be satisfactory to the complainant and to the defendant, because no objection is made to confirming the sale of that tract. In the sale of the second tract the defendant Farmer had employed one Flannigan to bid for him. There was a bid of $600. Flannigan claims that he bid $610. The person who was bidding for the purchaser likewise claims that he bid $610. The undersheriff appears not to have heard the bid of Flannigan, and, after holding the property for higher bids for a short time, struck the property off and announced that Bloemecke was the purchaser. Immediately Farmer and his friends Gallagher and Flannigan protested, and claimed that the bid was Flannigan's, and that Farmer was the real purchaser. This was denied by the purchaser and his brother who bid for him. The question was referred to the sheriff, who decided that the bid must stand as Bloemecke's bid. The fact that the claim was made on the spot on behalf of Farmer is testified to by Farmer, Gallagher, Flannigan, and the undersheriff. It is not denied by the purchaser or by his brother who did the bidding for him, nor is it mentioned in any of the other affidavits. I must take it as proved that Flannigan thought that the $610 bid was his bid, and that it was a clear mistake, and is clearly proved, that led him to decline to make any further bids. I think, therefore, that thesale should be set aside, on two grounds: (1) Because of misapprehension and mistake; and (2) because of inadequacy of price induced by the misapprehension and mistake. It is shown that the property is worth $1600, and that Mr. Farmer is willing to bid that amount at another sale. The discrepancy between $1600 and $610 is almost enough in itself to throw doubt upon the sale, but, taken in connection with the mistake made by Flannigan and the undersheriff, I think it is entirely sufficient.
On the argument, the purchaser's counsel stated that, if the sale was set aside, he desired it to be set aside in toto, because he did not desire to purchase the first tract described in the execution, unless he could have the second tract also. I think this is a reasonable request, and ought to be acceded to, but that, in setting aside the sale, the defendant Farmer must be put upon terms. His counsel suggested that he would be willing to submit to giving a bond to bid $1600 for the second tract at a resale, and such other reasonable terms as the court might impose. I think he should give a bond in the penalty of $4,400, conditioned to bid $600 for the first tract and $1600 for the second tract at the resale; that he should pay all the taxable costs and sheriff's fees pertaining to the first sale; that he should pay to the purchaser interest on the deposit to the date of the repayment. The order should be taken Immediately, and the bond provided for should be given within three days thereafter, on the filing of the bond, the sheriff to repay the deposit and the petitioner to pay the interest thereon. In case petitioner makes default in any of these requirements, the complainant or the purchaser may apply for a discharge of this order. This course is in accord with the ruling of the Prerogative Court in 1852 in the case of Conover v. Walling, 15 N. J. Eq. 167. There a mistake was made by the auctioneer and the unsuccessful bidder somewhat similar to the one that appears to have been made in this case. The property was sold to Conover. Immediately Ellis claimed the bid. The ordinary says: "It is customary in New Jersey at public sales, where a bid is claimed by two or more persons, and there is really good ground for dispute as to the claim to the bid, to put the property up again at the price and at the bid if such one of the competitors as the auctioneer may declare in his judgment entitled to it. This is the fair way of settling such disputes, and it is a right which the owner of the property claims which he will exercise, because it is to his advantage to do so." The Court of Appeals held in Raphael v. Zehner, 56 N. J. Eq. 836, 42 Atl. 1015, that in that case there was a gross inadequacy of prices, and that, by reason of mistake or misapprehension, the complainant did not attend the sale to protect her interests, and that the sacrifice was the result of this mistake or misapprehension. It was a common-law sale. but on bill filed to set it aside a decree was made for the complainant in the Court of Chancery which was confirmed in the Court of Errors and Appeals. A similar course was taken in Mutual Benefit Life Insurance Company v. Gould, 34 N. J. Eq. 417. The purchaser relied upon the case of Morrisse v. Inglis, 46 N. J. Eq. 306, 19 Atl. 16, in which the sale was confirmed; but the court in that case excepts from the rule laid down, cases of sales affected by accident or mistake, holding, where a mistake of fact has prevented a fair sale in the manner required by law, it may sometimes justify interference with the sale. This action is likewise in accordance with the provision of the statute which prohibits the court from confirming any sale unless it is satisfied by the evidence that the property had been sold at the highest and best price the same would then bring in cash; and, while it is common practice to refuse to set aside a sale for mere inadequacy of price (Porch v. Agnew Company, 66 N. J. Eq. 232, 57 Atl. 726), yet when the inadequacy is gross, as in this case, and is induced by mistake or misapprehension, and the rights of infants are at stake, the only justice of the case is to order a resale.