Federal Land Bank of St. Louis v. Ballentine

Smith, J. Appellant filed a complaint in the Grant Chancery Court on September 26, 1931, to foreclose a deed of trust executed to it by Virgil Ballentine and wife on May 1, 1922, to secure the payment of a $600 loan. The deed of trust described three forty-acre tracts of land. A decree foreclosing the deed of trust was rendered for the want of an answer on October 26,1931, and on January 16, 1932, exceptions to the commissioner’s report of sale under this decree were heard by the court. The court found that notice of the sale had been given for the time and in the manner required by law, and that the sale had been conducted in accordance with the notice and the decree of foreclosure. The commissioner testified that only one bid was received, this being a bid for $300 for the three tracts of land, which bid was made bj> appellant. The debt, as adjudged in the decree of foreclosure, was $676.93. J. R. Matthews, a real estate dealer, testified that he was familiar with the market value of the mortgaged lands and other lands in that vicinity, and that Mr. Bal-lentine had asked him to sell the entire 120-acre tract of land for $700, but he had been unable to get an offer for it, and that three to four hundred dollars was the fair value of the land, inasmuch as the only house on it — a four-room Louse — had tumbled down and the cleared land presented the appearance of not having* been worked for several years and had g*rown up in brush. No other testimony was offered, and the court made the finding that the bid was “wholly inadequate,” inasmuch as a $600 loan had been made on the property and the .judgment was for $676.93. This appeal is from the decree refusing to confirm the commissioner’s report of sale for the reason stated. It is said in the briefs in explanation of the decree appealed from that the court did not confirm the report of sale for the reason that appellant’s bid did not equal the amount of the loan secured. This, we think, was error. There is no intimation of fraud or other inequitable conduct on appellant’s part relating to the sale, except only that appellant did not bid the amount of the debt secured by the deed of trust. The rule has long been established in this State that mere inadequacy of consideration, however gross, unaccompanied by fraud, unfairness or other inequitable conduct in connection with the sale, is, of itself, insufficient to justify the court in setting the sale aside and refusing confirmation. Of the numerous cases to this effect one of the latest is that of Free v. Harris, 181 Ark. 646, 27 S. W. (2d) 510, where we said: “In Martin v. Jirkovsky, supra, [174 Ark. 417, 295 S. W. 365], this court quoted from George v. Norwood, 77 Ark. 216, 91 S. W. 557, 113 Am. St. Rep. 143, 7 Ann. Cas. 171, the following: ‘When a sale is made in all respects according to the terms of the decree, and neither fraud, mistake nor misrepresentation can be alleged against it, the faith of the court is pledged to ratify and perfect it. * * * There is a uniform current of decisions settling that official sales will not be opened on mere representations that more may be obtained for the property. This well-known practice is in accord with the policy of our law respecting such sales, which are required to be made after advertisement sufficient to give publicity, by public outcry, to the highest bidder. It is of the greatest importance to encourage bidding by giving to every bidder tbe benefit of bids made in good faith, and without collusion or misconduct, and at least when the price offered is not unconscionably below the market value of the property. Nothing could more evidently tend to discourage and prevent bidding than a 'judicial determination that such a bidder may be deprived of the advantage of his accepted bid whenever any person is willing to give a larger price. The interest of owners in particular cases must give way to the maintenance of a practice which, in general, is in the highest degree beneficial.’ ” No brief has been filed on behalf of appellee, but the suggestion has been advanced in our consultation that the chancellor knew — as we and all others know — that the present is a period of great depression and for that reason the chancellor had the discretion to refuse to confirm the sale and to order a resale, and the case of Winfree v. Jones, 183 Ark. 679, 38 S. W. (2d) 28, is cited to support that view. That ease, however, was not one in which the parties thereto were seeking to enforce contractual rights. It was a suit for partition of lands among the heirs who had inherited it, which land could not be partitioned in kind because of the large number of heirs, and a sale of the property had been ordered to effect the division. It appeared from the recitals of the decree ordering the sale that the chancellor had been induced to make this order by the statement of one of the heirs made in open court that he would see that the lands brought their fair market value. This the heir failed to do, and the lands were sold for a grossly inadequate price, the sale having been made on a day when twenty banks in the State had closed their doors. The instant case is not one for partition, as was the case of Winfree v. Jones, supra, but is one to enforce the contractual right of having the mortgaged land sold in satisfaction of the mortgage debt. This relief had been awarded by the court and a sale ordered, and a sale was bad pursuant to the direction of this decree, and the question presented by this appeal is that of the right to have the report of the sale confirmed. We think that right exists and should be enforced. McGown v. Sandford, 9 Paige (N. Y.) 290; Pewabic Mining Co. v. Mason, 145 U. S. 349, 12 S. Ct. 887; Henderson’s Chancery Practice p. 862. Federal Land Bank v. Blackshare, 183 Ark. 648, 38 S. W. (2d) 30. Now, the law is equally as well settled that, while approval of sales will not be withheld because of inadequacy of consideration, yet, when the consideration is gTossly inadequate, the court will seize upon slight circumstances of fraud or unfairness to afford relief. Union & Planters’ Bank & Trust Co. v. Pope, 176 Ark. 1027, 5 S. W. (2d) 330. But that doctrine has no application to the facts of the instant case. There are no circumstances indicating fraud or oppression, nor is there a showing that the sale was for a price grossly less than the market value at the time of thevsale. The undisputed testimony is to the contrary. The only evidence in the record on the subject is to the effect that the land sold for about its present market value. It is true, of course, that the sum bid by appellant was just half the original loan, but, so far as the record before us discloses to the contrary, the loan may have been made for a higher per cent, of the market value than is customary. However, it is undisputed that the only house on the land was in a “tumbled down” condition, and the cleared land did not appear to have been worked for the past several years, and had been allowed to grow up in brush, and for these reasons the market value was placed at from three to four hundred dollars by the only witness who testified on the subject of value. The report of sale should, therefore, have been approved, and the decree denying that right will be reversed, and the cause will be remanded with directions to that effect.