Act No. 229, Pub. Acts 1933 (amending 3 Comp. Laws 1929, § 14366), does not justify the minimum bid fixed by the circuit judge. That act contemplates exercise of reasonable judgment; not arbitrary action. The act gave the court of equity no new power. The court of equity has inherent power to control its process and has ever exercised such power in foreclosure upon reports of judicial sales. Bids upon foreclosure sales have been rejected as inadequate and resales ordered. True the power has been sparingly exercised preceding sales. The statute does not call for freehand exercise, nor does it permit elevating the value of the subject of sale beyond its fair value. Having adjudged the sum due on foreclosure that subject was closed and could not be considered in fixing the upset bid for the security. The upset bid for the security must bear a reasonable relation to the value *Page 654 of the security at the time of sale. In the case at bar the court fixed the upset bid at the sum decreed due on the contract and $15,516 above the unquestioned fair value of the security. Such action was arbitrary and not in accord with principles of equity and cannot be permitted to stand and work the delay incident to its fruitless endeavor and consequent wrong to plaintiffs. Plaintiffs ought not to be required to await demonstration of a futility.
It was well said by the Chancellor in United Building LoanAss'n of City of Newark v. Neuman, 113 N.J. Eq. 244 (166 A. 537):
"The fixing of an upset price must inevitably discourage possible competitive bidding at judicial sales and thus defeat their very purpose. Morrisse v. Inglis, 46 N. J. Eq. 306 (19 A. 16); Ryan v. Wilson, 64 N.J. Eq. 797 (52 A. 993,53 A. 1039). The rights of a mortgagee demand the protection of this court no less than those of the mortgagor; and it is of the highest interest to the public welfare that no judicial action be taken which would render real estate mortgages less desirable as an investment, a result which quite possibly might follow from indiscriminate restraints in proceedings of this kind; and no impediment should be interposed by this court to the orderly pursuit by the holder of a mortgage of his lawful remedy for the collection of the debt thereby secured, except where necessary for the protection of a countervailing equity."
The court in that case recognized the power to grant relief but stated it should be sparingly exercised.
The case is remanded to the circuit court with direction to fix the minimum bid at a sum no higher than the fair market value of the security.
Plaintiffs will recover costs.
POTTER, NORTH, and FEAD, JJ., concurred with WIEST, J. *Page 655
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