Penn's ad. v. Tolleson

Mr. Justice Compton delivered the opinion of the Court. On bill filed and proceedings had in the Crittenden Chancery Court, to enforce a lien on certain lands lying in that county, for the payment of divers sums of money, the court ordered the lands to be sold by the master in chancery, for cash; and decreed that the proceeds of the sale, with those arising from the rents and profits, to be ascertained by the master — “ will, after payment of the costs of this suit, be applied to pay Nancy E. Tolleson $8,603 66, with legal interest from this day until paid. Next, to pay the Planters Bank of Tennessee $2,811 65, with like interest from this day until paid: and the residue, if any, be delivered to the administrator of the estate of James L. Penn, deceased. And the master shall report what he shall do,” etc. On the coming in of the master’s i'eport, the Bank, Penn’s administrator’, and his infant heir at law, moved the court to set aside the sale, and order a re-sale, which was refused, the sale was confirmed, and they appealed. The circumstances attending the sale, necessary to be stated, are briefly, the following: The master published his advertise- ments in the Memphis and Helena papers, giving notice of the sale in the usual form, and among other things, that the terms would be for cash. The sale took place at Marion, the county seat of Crittenden county, distant twelve miles from the city of Memphis, and seems to have been numerously attended. At the sale, the appellee, who was the complainant in the proceedings in which the order of sale was made, directed and required of the master, that the terms of the sale, as to so much of the proceeds as would be necessary to discharge the amount decreed in her favor, should be payment down in gold and silver at the dose of the sale, which was announced by the master, at the commencement of the offering. The bidders present manifested surprise, and expressed their inability to comply with the terms, which they declared to be new and unexpected, and against which they all remonstrated. Subsequently, the master, after having a conversation, apart from them, with the appellee, announced that time would be given for the payment of the specie, until 5 minutes before three o’clock, when, if not paid, a re-sale would be made. He refused to vary the time so as to make the bids payable in specie at Memphis that evening, or at Marion as soon as it could be brought there, or at the residence of the master, on the next day; or to receive, at the close of the sale, a check on the Planters Bank of Tennessee, at Memphis, payable in specie, which was offered to be marked “ good” by the Cashier of the bank, who was present at the sale. Among the the persons present, with the expectation of bidding, was a Mr. Dunlap, of Tennessee, who had come one hundred and fifty miles for that purpose, and would have bid at least $10,000 for the lands. He was prepared to bid, but did not have the specie there to pay down. His ability and integrity were vouched for by persons with whom the master was well acquainted. He proposed, that if he should become, the purchaser, to pay the money that evening in Memphis, or tp have it the next day at Marion, or at the residence of the master. He also proposed to give for the amount of his bid, -his check; on the Planters Bank of Memphis, payable at sight, 'in gold and silver, marked “ good” by the Cashier, who said he would endorse it, and who was an officer of one of the leading Banks of Memphis, and personally well known to the master. The master, however, adhered to the terms announced, and seems to have acted in strict obedience to the requirements of the appellee. It-was now eleven o’clock when the bidders held a consultation, with a view of determining whether the purchaser, after the sale, could go to Memphis, a distance of twelve miles, and return by the time fixed for counting down the specie to the master; to accomplish which, a distance of twenty miles had to be traveled, the Mississippi river crossed twice, the money counted at Memphis, and again at Marion. This they concluded the purchaser could not do, and so declined to bid at all. The lands were then knocked off at $7,000 to the appellee, who was the sole bidder, and who had caused to be eai'ried to the place of sale, an amount in gold, which, together with the amount due her out of the proceeds of the sale, was sufficient to enable her to bid as high as’ $10,000 for the lands. She had also made an arrangement with a friend to let her have more gold on the spot, in the event she should need it. According to the weight of testimony in the cause, the lands were worth from $12,000 to $14,000. It is impossible to regard the appellee as a purchaser in good faith — she was a party to the proceedings — was one of the creditors, for the payment of whose claims the lands were sold. Hers was the largest and first to be paid. At the sale she was a bidder, prepared to comply with the terms, which at her instance, the master announced and refused to vary, and which operated as a surprise upon the bidders present, stifled all competition, and enabled her to buy the lands at about half their value. Although a creditor is entitled stricti juris, to payment in specie, still, in ordinary business transactions, it is not usually required; and in this case, no previous notice having been given of such requirement, itwasnotatallimprobablethatthebidders would be found at Marion without the gold and silver, especially so, when it is borne in mind that the sale was made in the vicinity of the city of Memphis, where, if the bidders had provided themselves with the specie, it would most likely have been left, as a place of safe deposit. But a reasonable time was not even allowed them to get it there from Memphis; and the master, whose affidavit was read on the hearing, does not pretend that he believed, or had reason to believe, that Dunlap’s check, or that of any other person who might become the purchaser, would not be paid in specie, on presentation, or that the specie would not be paid that evening in Memphis, or at Marion as soon as it could be brought there, or at his residence the next day. In view of all the evidence adduced, he seems, in this respect, to have been controlled by the directions of the appellee, regardless of the interest of the other parties concerned; and his conduct, if not attributable to collusion between him and the appellee, was, to say the least of it, the result of an unjustifiable interference on her part, with his discretion, which, as an officer of the court, he should have been left to exercise, free from the dictation or control of any of the parties interested. .According to the terms and legal effect of the decree under which the master was acting, the appellee had no right to require that the purchase money should be paid down on the day of sale, within the time fixed at her instance, and even if it had been so paid, the master was not authorized to pay over any part of it to her until the further order of the court. The court itself was the vendor, and he the agent through whom it acted. The whole proceeding, from the begining to the final confirmation of the reported sale, and the passing of title to the vendee, and the money to the persons entitled to it, was under the supervision and control of the court. The sale resulted in an injury to the appellants, and the conduct of the appellee superinducing this result, must be regarded, under all the circumstances, as a successful attempt to stifle competition, and purchase the lands at a sacrifice. Such conduct the law characterizes as fraudulent, and a court of equity will not hold such a sale valid. Goldsmith vs. Osborne, 1 Edw. Ch. Rep. 560; Baring vs. Moore, 5 Paige Ch. Rep. 48; Neilson vs. McDonald, 6 John. Ch. R. 201. It is conceded in argument, that if the appellee was not a bona fide purchaser, it was not necessary, in order to set aside the sale, on the application of the parties injured, that an advance on her bid, or any sum whatever should have been offered and deposited in court; and so we understand the law to be. In England it is the practice to open the biddings at any time before the sale is confirmed, almost as a matter of course— where it is made to appear that a larger sum can be obtained for; the land, and where the applicant • offers and deposits in court, an advance of ten per cent, on the former sale, besides expenses. In such cases, the deposite is regarded as an indemnity to those interested, against loss, and as a guaranty for an advanced price; and in that view, is equitable. But the practice of setting aside sales, merely for the sake of an advance upon the price, which, by a series of adjudications, has grown into a system in England, has not been adopted in this country. 2 Dan. Ch. Pr. 1465, 1467, and authorities there cited in English and American notes. Nor does the reason of the rule requiring a deposit in court, under the English practice, as above indicated, apply to the case before us. The appellee, as has been seen, was a purchaser in bad faith, and could not, therefore, ask for indemnity against any loss she might sustain, in consequence of a re-sale; and the other parties interested desired no deposit, but insisted that the sale should be set aside, because they were injured by it. Forman & Dane vs. Hunt et al., 3 Dana 614; Williamson vs. Dale et al., 3 Johns. Ch. Rep. 292. The decree of the Court below must be reversed, and the cause remanded with instructions to set aside the sale, and order a re-sale. Absent, Mr. Justice Rector.