Smith v. Warner

C. Allen, J. If construed literally, the Gen. Sts. c. 118, § 27, do not allow proof of- this claim. A creditor having security may make application for an order of sale, and the sale is to be made in such manner as the judge orders, and after such sale, and an application of the proceeds towards the payment of his debt, he shall be admitted as a creditor for the residue. The creditor contends that a broader construction may be given to the statute, and that he may be allowed to prove for the residue, after applying the proceeds of a sale made without an order of court, but with the concurrence of the assignee. But we do not think so. The statute provides a plain method of procedure, and we think it better to hold this prescribed method to be the exclusive one. The action of the assignee in joining in the sale 73 no doubt had the effect to give a good title to the purchaser, but is ineffectual in enabling the creditor to prove his claim. His agreement to allow the proof of a claim is of no significance, if the law does not allow such proof to be made. The statute might have provided that the value of the security should be determined in some other way than by a sale made under order of the court, as, for instance, by an agreement between the creditor and the assignee; but it has not done so. In other cases, it is provided by § 46 that the court may make an order concerning the time, place and manner of selling the property of the insolvent debtor; in this case, the statute provides that the sale shall be made in such manner as the judge orders, and that, if the property is not so sold, or released and delivered up to the assignee, the creditor shall not be allowed to prove any part of his debt. This implies that the judge is to fix, if he sees fit to do so, the time and place of the sale, the terms, whether on credit or for cash, the manner, whether by public auction or private sale, and the notice to be given. It has also been decided that the validity of the security held by the creditor must be determined before ordering a sale. Day v. Lamb, 6 Gray, 523. This court has also a general supervisory jurisdiction, to relieve a party aggrieved by a decision upon a petition for a sale. Eastman v. Foster, 8 Met. 19. Barnard v. Eaton, 2 Cush. 294. While there is no reason to doubt that the sale in the present case was conducted in good faith, and it is not found as a fact that the price realized was unreasonably small, we nevertheless find, in the meagreness of the notice which was given, an illustration of the reasons which might well lead the Legislature to require a judicial supervision of the sale. No mention was made, in the notice, of the amount of the first or second mortgage, the terms of the sale, or the situation of the property, or what buildings were upon it; and there was little to invite the attendance of any purchasers who were not already well acquainted with these particulars. Judgment affirmed.