Howison v. Oakley

BRICKELL, C. J. This was an action by the heirs at laAV of William Oakley, deceased, to recover damages for the failure of appellant to comply with the terms of his purchase of certain lands belonging to the estate of said William Oakley, Avhich were ordered to be sold for division by decree of the probate court, and were offered for sale by the administrator of said estate, and — 237 — bid in by appellant. J The questions presented by the assignments of error relate solely to the rulings of the trial court on the many demurrers to the various counts of the complaint. There was a cross-appeal by the plaintiffs below, on which the sustaining of some of the grounds of demurrer to the original complaint is assigned as error, and the overruling of the demurrers to the amended complaint is assigned as error by the appellant in the original appeal. The statutes authorizing the sale of lands of a decedent by the executor or administrator of the estate, under decree of the probate court, require the sale to be reported to the court, and make it subject to confirmation or vacation by the court. Such sales are, therefore, strictly judicial sales, in which the court is the real vendor, and the executor or administrator is a mere agent of the court through whom the negotiations are conducted. Until the sale is confirmed it rests in negotiation only, and the bid of the purchaser is a mere proposition to purchase, which, though accepted by the agent because the highest and best bid, may be rejected by the court if the sale has not been fairly conducted in obedience to its decree, or if the amount bid is greatly less than the real value of the land, or if the required security for the payment of the. purchase money is not given. — Cruikshank v. Luttrell, 67 Ala. 321; Code of 1896, § § 173, 171. If for any of the above causes the sale is vacated, it is the duty of the court to order a resale, which must be advertised and conducted in all respects as the first sale, but need not necessarily be on the same terms. — Code of 1896, § 176. When the successful bidder at a judicial sale fails to complete the purchase by complying with the terms thereof, the land may be re-sold at his risk, and if a less price be brought at the second sale, he becomes liable to the persons injured by his default for the difference between the amount bid at the first sale and the price brought at the second, together with the expenses of the second sale. This right to re-sell at the first purchaser’s risk is, under the former decisions of this court, a condition of every judicial sale implied by law, and does not depend on any expression of the condition in the order of sale, or in the terms announced at the — 238 — time of the sale. — Lamkin v. Crawford, 8 Ala. 153; Hutton v. Williams, 35 Ala. 513; Griel v. Randolph, 108 Ala. 601. The condition, therefore, becomes a part of every bid and is incorporated in the contract of every successful bidder, although it may not have been expressly agreed to by him, and may not have been announced at the sale, or known to him. By reason of this implied condition he agrees that, in the event he fails to comply with the terms of the purchase, if accepted by the court, the land may be re-sold at his risk, and he will pay the deficiency arising on the second sale, together- with the expenses of the same. When such a condition is inserted in an agreement between private parties for the sale of property, it is treated as a stipulation for liquidated damages. — Adams v. McMillan, 7 Port. 73. And in case of judicial sales it is likewise held by the former decisions of this court that the difference between the amount bid at the first sale and the price brought at the second, together Avith the costs of the second sale, is in the nature of damages stipulated by the parties and recoverable as such. — Lamkin v. Crawford, supra; Hutton v. Williams, supra. \ Now, it is a universal rule that Avhen the parties to a contract, by a stipulation therein, agree upon the amount 'to be paid by the one to the other for the breach thereof, all inquiry as to the extent of the actual injury suffered is irrelevant, if the amount agreed upon is held, in law, to be stipulated damages, and not a penalty. The stipulation is in lieu of actual damages and fixes and controls the amount of the recovery; and, if for any cause not attributable to the defendant, this amount cannot be recovered, there can be no recovery at all, even of nominal damages. — 5 Am. & Eng. Encyc. of Law, (1st ed.), 24; 23 lb. 867; Kelso v. Reid, 145 Pa. St. 606. If, therefore, in the case of a judicial sale, the loss occasioned by the re-sale is in the nature of stipulated damages, this loss, and this alone, constitutes the measure of recovery, and if for any reason it be not recoverable in a particular case, the plaintiff, Avhen there has been in fact a re-sale, cannot waive the stipulation, and, falling back on the ordinary measure of damages for the breach of a contract for the purchase of real estate, recover the actual damages sustained; that is, — 239 — the difference between the amount agreed to be paid and the market value of the land at the time of the breach. By the stipulation for the liquidated damages he has waived all right to claim actual damages measured by the ordinary legal standard. But if there has been no re-sale of the property — if, for instance, the application for the sale ivas withdrawn, or, by request of the administrator, no re-sale was ordered — ¡the implied agreement to measure the damages caused by the purchaser’s default by the loss occasioned by the re-sale is no longer binding on the parties. The implied agreement is, not that there shall be a re-sale, but that there muy be one, and if there is a re-sale, the loss occasioned thereby shall constitute the measure of the first purchaser’s liability. In the event there is no re-sale, there may, therefore, be a recovery of the actual damages sustained by the purchaser’s default. The liquidated damages agreed to be paid, namely, the loss occasioned by the second sale, if a less price is brought than at the first, is composed of two items; first, the difference between the amount bid at the first sale and that brought at the second; and, second, the necessary expenses incurred by reason of the second sale; and each of these amounts the first purchaser impliedly agrees to pay. In an action for the breach of his contract, claiming both items as damages, although the circumstances con-, nected with the second sale, may preclude a recovery of the first item, yet. the expenses of the second sale may be recoverable; and a complaint is not, therefore, demurrable because it fails to show that plaintiff is entitled to recover the one item, if it contains sufficient to justify a recovery of the other. The implied condition of a judicial sale, that the purchaser shall be responsible for the loss occasioned bjr a re-sale, made necessary by his default, is itself subject to the condition that the second sale shall be upon the same terms as the first — or at least, upon terms equally beneficial to the first purchaser — and that it shall not be delayed for an unreasonable time, or, .if upon different terms or after an unreasonable delay, that injury be not caused thereby to the first purchaser. Such a condition precedent to his liability is manifestly within the contemplation of the parties, and both reason and — 240 — justice demand that if, without the consent of the first purchaser, the second sale shall be made upon different and less beneficial terms, or after unreasonable delay, and injury be thereby caused to the first purchaser by reason of the reduced price brought at the second sale, OAving to the change of terms or delay, he should be released from all liability for the deficiency arising on the second sale; for there are no means of ascertaining Avhat the land would have brought at the second sale, if it had been held on the same or equally beneficial terms as the first and Avithin a reasonable time thereafter, and therefore no means of determining the amount to be paid under the implied stipulation. — Hare v. Bedell, 98 Pa. St. 485; Shinn v. Roberts, 20 N. J. L. 435; Riggs v. Pursell, 74 N. Y. 370. Under these circumstances the liability of the first purchaser should be confined to the expenses of second sale, which his own default made necessary. The fact that the defaulting purchaser at the first sale Avas also the purchaser at the second sale, held under different terms and after unreasonable delay, should not make the above rule inapplicable. It cannot be said that his injury as the first purchaser, occasioned by the delay and the change in the terms, whereby a reduced price was brought at the second sale, is offset by his gain as the second purchaser in procuring the land at a reduced price, and that he Avas not, therefore, injured; for the second sale, if confirmed, must be presumed to have brought a sum not greatly disproportionate to the real value of the la,nd, considering the terms and time of the sale." s When the lands of a decedent are sold on credit by decree of the probate court, the manner in Avhich the payment of the purchase money must be secured is not left to the court, nor to the administrator, but is prescribed by statute, which provides that “the executor or administrator must secure the purchase money by taking the notes or bonds of the purchaser with at least íavo sufficient sureties.” — Code, 1896, § 171. The court has no power to authorize, and the executor or administrator has no power to demand, security of a different character. It is manifest, therefore, that if the administrator should demand of the purchaser any kind of security other than his notes or bonds, Avith at least two — 241 — sufficient sureties, the purchaser 'would not be in default for failure to give such security, but would be entitled to tender his. notes or bonds, with two sufficient sureties, and demand that the sale be confirmed.' Nor is the purchaser in default so as to become responsible for a loss occasioned by a re-sale, merely because, when the sale is reported to the court, the court finds from the evidence presented that the sureties on the' notes are insufficient. Section 1T5 provides that when it is made to appear to the court that the sureties on the notes or bonds of the purchaser are insufficient, the sale “must not be confirmed until he gives security for the purchase money to the satisfaction of the court; and if such security is not given, the sale must be vacated as to the purchaser thus failing.” The statute'thus clearly contemplates that, in the event the sureties on the notes first given are found by the court to be insufficient, the purchaser shall have notice of this finding and be given an opportunity to furnish sureties satisfactory to the court. It is, therefore, a condition precedent to the first purchaser’s liability for failure to complete the purchase, — at least, where he has furnished notes or bonds with two sureties, — that he have such notice and opportunity, and without a compliance with this condition, the court is not justified in vacating the first sale and ordering a re-sale at the risk of the first purchaser. A complaint for the recovery of the loss occasioned by the second sale, which fails to aver that the defendant was given notice that his sureties were found by the court to be insufficient, and had an opportunity to furnish satisfactory sureties, or which fails to aver facts from which the fact of such notice and opportunity follows as a necessary inference, is bad on demurrer, if it appears that the sale was on credit, and the averments are susceptible of the construction that the purchaser gave to the administrator his notes or bonds with two sureties, or fail to distinctly show that he failed or refused to give such notes. No default on the part of the purchaser is shown in the absence of such averments. By the application of the above principles the various grounds of demurrer may be disposed of. The third count of the complaint fails to aver that the bid of defendant was accepted or approved by the court, or that — 242 — there was any re-sale of the land, and there are no facts averred from which the fact of such acceptance or approval is a necessary inference. As we have already seen, the court was the real vendor, and the. administrator was its mere agent to conduct the negotiations, whose acts were subject to confirmation by t'he court. Until the bid was accepted by the court, the purchase was incomplete, the bid was a mere proposition to purchase, and did not, therefore, amount to a contract on which any liability could be incurred. For aught that appears in this count, the court may have found the amount of defendant’s bid to be greatly less than the real value of the land, and may on this account have refused to confirm the same. It is, therefore, essential to the sufficiency of each of the special counts that it be averred in some form that the bid of the defendant was accepted and approved by the court. — Stout v. Philippi Mfg. Co., 41 West Va. 339; Cruikshank v. Luttrell, 67 Ala. 321. In the fourth and each of the other special counts, except the third and twelfth, although there is no direct averment of the acceptance and approval of the bid, yet it is alleged that the administrator reported the sale to the court, and that the court ordered a re-sale “on account of his failure to give notes with approved security,” and the lands were again sold in obedience to said order. We are of the opinion these allegations are sufficient to show that the bid was accepted, and that the sale was vacated solely on the ground of the failure to furnish the required security. Griel v. Randolph, 108 Ala. 601. Although the third count was bad for the reason pointed out, yet the demurrer specifying this objection went to the third and fourth counts jointly, and since the fourth count was not demurrable on this ground, the demurrer was properly overruled. If there was no re-sale of the land, then, as stated above, the actual damages sustained were recoverable, and the true measure of such damages would be the difference between the amount bid for the land, if accepted by the court, and its market value at the time of the breach on the same terms. — Old Colony Co. v. Evans, 6 Gray (Mass.) 25; 5 Am. & Eng. Encyc. Law, 28. It was not, therefore, necessary to the statement of a cause of action that a re-sale be averred, and the — 243 — demurrer specifying this objection • should have been overruled. The fourth ground of demurrer to the third and fourth counts jointly was too general to be consid-. ered and should have been overruled. In each of the special counts, except the twelfth, it is alleged that the court ordered the first sale to be made “on a credit, one-'half due in one year, and the other half two years after the sale, and that said amounts be secured by notes with approved, security ” and the breach assigned is, that defendant “has always and does now refuse and fail to execute or give the notes with approved security;” and it is further averred that the court ordered a re-sale “on account of his failure to give notes with approved security.” It is not averred that the defendant failed or refused to give any notes or bonds, or that he failed or refused to give his notes or bonds with two sureties, and that on account of such failure a re-sale was ordered, nor is it averred that defendant, previously to the order for the re-sale, had any notice that the sureties offered by him were found to be insufficient by the court, or any opportunity to furnish satisfactory security, which notice and opportunity, we have seen, the statute contemplates. The character of the security required of defendant by the administrator may have been different from that required by the statute, and if it was, defendant was justified in refusing to give it, and incurred no liability by reason of such refusal. The counts aver, it is true, that “defendant had notice of all such orders, decrees and notices,” but the only orders and notices previously mentioned in the counts are the order for the re-sale and notices of such re-sale, whereas the notice to which defendant was entitled was a notice, previously to the order for the re-sale, that 'his sureties were found to be insufficient. Applying the principles above stated to these averments, the counts were defective for the reasons pointed out, and the demurrer to the amended counts presenting these objections should have been sustained. The special counts fail to show that the second sale was upon the same,' or equally beneficial, terms as the first, and show affirmatively that nearly three years elapsed between the first and second sales. As stated — 244 — abovej if the terms of the'second sale were' substantially different from those of the first, or if there was' unreasonable and unexplained delay in making the' second sale, and injury to the'first purchaser”was cailsed thereby, he is released from all liability for the deficiency arising on the second sale, although fie may still be liable for the expenses of the second sale. But injury caused by the change of terms or unreasonable delay is. a matter of defense,' and, unless it affirmatively appears •from the complaint, should be set up by special plea. It was not necessary to' aver that the terms of the second sale were the same as those' of the first, and it does not affirmatively appear that' defendant was injured by the long delay in making the second sale. The reduced price brought at the second sale may have been caused by the change in the terms, if any, or by the general depreciation in the value off lands located where these were.' Each of these counts avérs,.in explanation of the delay, that “said lands were not re-sold after the first sale, namely, the sale made oh the 31st day of January, 1887, until the 4th day of November, 1889,'by and with the consent of the defendant.” This averment, we think, sufficiently shows that defendant consented to the delay, and thereby estopped himself from setting up the delay as a defense. The demurrers presenting1 these objections should have been overruled. Moreover, the objections go only to one element of the damages claimed, namely', the difference between the amount bid at the first sale and the price brought at the second, while, as we have seen, the expensés of the second sale may be recoverable, although the difference between the two sales may not be. "When the complaint shows that one of two or more elements of damages claimed is not. recoverable, or fails to aver facts sufficient to show that such element is recoverable, the defect should be taken advantage of by a motion to strike, or by objection to the evidence by which it is sought to prove such damages, or by a request for appropriate instructions to the jury, and not by demurrer. It -was not necessary to allege in the complaint that the first sale was fairly conducted. If there was any fraud, collusion or unfairness of any kind in the conduct of the sale, this was a matter of defense. Nor was. — 245 — it necessary to aver tliat the order for tlie re-sale provided tliat sucli re-sale should he at the risk of the defendant. This, as Ave have stated, is a condition of eA-ery judicial sale arising by implication of laAV, and is not dependent upon any expression thereof in the order for the 'first sale or. that for the re-sale, or any announcement1 thereof’ at 'the sale. ' '■■■■■• ■? ■ The trial court erred in sustaining the demurrer for misjoinder of counts. The counts on the promissory notes, the common counts, and the special counts declaring on the contract and claiming damages for the breach thereof, were alb in assumpsit, and Avere, therefore, properly joined. The action was properly brought in the name of the heirs of William Oakley, deceased, although it might also have been brought in the name of the administrators. The legal title to the lands Avas in the heirs; they Avere entitled to the proceeds of tlie sale thereof, the sale having been for division, and they Avill be entitled to anything that may be recoArered for the breach of the contract, Avhether in their names or in the name of the administrator. They Avere, therefore, the persons injured by the defendant’s default and are entitled to sue for the injury. — Hutton v. Williams, 35 Ala. 512; Griel v. Randolph, 108 Ala. 601. The averment that plaintiffs are “the heirs at laAV of William Oakley, deceased,” is sufficient, on demurrer, to sIioav that they are the only heirs of said decedent. The demurrers to the 12th count, AAdiich declares on a contract made directly with plaintiffs for the purchase of lands, Avere properly overruled. It results from what has been said that on the cross-appeal all the assignments of error are Avell taken, except that relating to the sustaining of the fourteenth ground of demurrer to the fourth count of tlie original complaint, AAdiich specified the failure of the count to aver that defendant had any opportunity, previously to the order for the re-sale, to furnish security, satisfactory to tlie court. Of the assignments of error on' the original appeal those only are Avell taken AAdiicli relate to the overruling of the lltli, 12th, 13th, 14th and 15th grounds of demurrer to the 8th, 9th, 10th and 11th counts of the amended complaint.