Montague v. Dawes

Wells, J. Upon the agreed statement of facts, Henry Dawes may be regarded as the real assignee of the mortgage by whom the power of sale was executed, and also the purchaser at the sale under the power, as well as the real defendant in this suit. He alone has paid any money for the title; he caused both sales to be made; he was the sole bidder at the auctions; his will and his interests controlled every disposition made of the property. The form of receiving payment from his wife, by way of a credit on account of her moneys which had been paid over to him twenty years before, can be treated in this court only as a mere form. We cannot regard the conveyance, so taken to her, as entitled to the protection which is accorded to a party purchasing and paying value in good faith for a title apparently perfect, and with no notice express or implied of any objection to the proceedings by which the sale was effected. Equity will not consent to be blind to the real nature of the transactions which underlies the formal proceedings. But, as the terms of the power permitted him to be purchaser, as well as seller, at the auction sale, the title thus conveyed will not fail for that reason, if the proceedings are otherwise unobjectionable. One who undertakes to execute a power of sale is bound to the observance of good faith and a suitable regard for the interests of his principal. He cannot shelter himself under a bare literal compliance with the conditions imposed by the terms of the power. He must use a reasonable degree of effort and diligence to secure and protect the interests of the party who intrusts him with the power. A stranger to his proceedings, finding them all correct in form, and purchasing in good faith, may not be affected by his unfaithfulness. But whenever his proceedings can be set aside without injustice to innocent third parties, it will be done upon proof that they have been conducted in disregard of the rights of the donor of the power. When a party who is intrusted with a power to sell attempts also to become the purchaser, he will be held to the strictest good faith and the utmost diligence for the protection of the rights of his principal. If he fail in either, he ought not to be permitted "hereby to acquire any irrevocable rights which he can set up against the party whose interests he has sacrificed. 374 If we apply these principles to the facts of the present case, the iesult so obviously must be against the validity of the sale that it becomes unnecessary to determine precisely at what point of indefiniteness a notice will be deemed to be insufficient, so as to defeat a sale properly effected in other respects. Here the notice proved ineffectual to attract purchasers, as might reasonably have been anticipated from the meagre information it contained, its irresponsible character, and the place of sale selected, remote from the premises to be sold. With such a notice, and under such circumstances, a mortgagee, who is authorized to sell only at auction, finding himself to be the only bidder at the sale, cannot in good faith proceed with the sale and purchase the property for himself at his own price, and insist upon such a purchase as precluding the mortgagor from all right to redeem the property. The permission that he may be a purchaser at the sale will not justify such an abuse of the confidence reposed in him. The mortgagor is therefore entitled to redeem, as if no sale had been made.