Fairman v. Peck

Mr. Justice Sheldon delivered the opinion of the Court: There are three grounds upon which the trustee’s sale is claimed by appellant to be irregular and void: 1. Because the amount of the secured indebtedness was greatly overstated in the notice of sale. 2. Because Downs and Van Wyck having warranted the title, the trustee had no right or power to make a sale of the premises during the existence of the incumbrance created by the Rich trust deed. 3. Because the premises were advertised for sale, and sold as a whole, and not in separate lots or parcels. It requires - a very close criticism of language to discover that there was any over-statement of the indebtedness in the notice of sale. It did not profess to state the amount of the indebtedness then due, but to state that the contingency had happened upon which the power of sale might be exercised, viz: default in the payment of the notes. There had been default in the payment of the notes, as they had not been paid. The statement did not necessarily imply that no one, or no part, of the notes had been paid. Perry, in his work on Trusts, in speaking upon this particular question, observes: “ If such statement (of the amount of the claim or debt) in the notice is required by the power or by a statute, the amount of the debt must be stated with substantial accuracy; or, if not being required, a greatly exaggerated claim should.be fraudulently stated in the notice, the sale would not bar the equity of redemption. So, if the sale is proposed to be made for more than is due to the creditor, equity will restrain the sale; and if actually made, it will be set aside.” 2 Perry on Trusts, sec. 602 s. No one of such circumstances exists in the present case, to bring it within the range of that rule. No statement in the notice of the amount of the indebtedness was required by the power or by statute at that time. An act passed since, (Rev. Stat. 1874, p. 713,) declares that it shall be sufficient to insert in the notice “ the amount of indebtedness the instrument was given to secure, the amount claimed to be due,” etc. No greatly exaggerated claim was fraudulently stated in the notice, nor was the sale proposed to be made, or actually made, for more than was due. In the case of Shine v. Hill, 23 Iowa, 268, the objection to a trustee’s notice of sale was similar to the one made here. It was objected that the trustee’s sale was void, because the notice of sale stated “the whole amount mentioned in the trust deed, etc., was unpaid,” which was not true: it was held, that the objection was not available to set aside the sale of the property in the hands of the grantee of the purchaser. This court passed upon this question in Hamilton v. Lubukee, 51 Ill. 415, where, upon the subject of an over-statement, in the notice of sale, of the amount of the debt, it was said: “ The first point made by appellant is, that the advertisement, or notice, of the sale describes a different and other or larger indebtedness than that secured by the mortgage, to-wit: an indebtedness of $1000 over and above the amount really due by the mortgage. Admit the fact to be so, it is not shown that the property was injuriously affected by it, or bidders deterred thereby from attending the sale; nor is it shown that it was so published for a fraudulent purpose,—and if it was, there is no evidence the defendants, or any of them, participated in it, or had any knowledge of it.” All which may be affirmed respecting the case in hand; and to the like effect is Bush v. Sherman, 80 Ill. 175. There was no attempt on the part of appellant to prove that the property did not sell for its full value. The only proof upon that subject was made by the defendants, in the testimony of Van Wyck, who was at the sale and bought the property, and who says: “ The amount we bid for the property was its full value; it was then unimproved.” He states, further, that, about two years after the trustee’s sale, he succeeded in selling the property; that he saw Mrs. Fairman, and told her he would figure up how much they had made in the transaction, which he did, showing it to be only $300, which he paid over to her. As respects the second ground, the existence of the prior incumbrance of $400, created by the Rich trust deed, quite a number of authorities have been cited by appellant’s counsel, to the purport that, in a suit to foreclose a purchase money mortgage, the mortgagor and grantee in the conveyance can claim deductions for incumbrances covenanted against in the deed from the mortgagee. However this may be, or however it might have been on an application to enjoin the sale under the trust deed until this incumbrance was removed, we view it as a- different question, whether, when a sale has actually taken place where there is such an outstanding incumbrance existing, the sale should be set aside for such a reason, and especially where, as in this case, no injury is shown to have resulted. The only suggestion of harm in this regard is, that the incumbrance would necessarily prejudice the sale, as no one would bid as much, taking the premises subject to a prior trust deed, as if receiving a clear title; but the proof is, that the property did bring its full value. If so, if the amount of the full value of the property was actually bid and paid for it, how could there be injury in the respect named? When such a sale has once been made, it should not be set aside by a court of equity without some sufficient equitable reason being shown. Hone such appears here in this respect, as, for aught that is shown, there might have been an adequate remedy upon the covenants in the deed to Fairman. In Abbott v. Allen, 2 Johns. Ch. 519, Chancellor Kent, in considering the subject generally, and laying down the rule that a purchaser should resort to his covenants, remarked: “ Perhaps an outstanding incumbrance may form an exception in cases of covenants against incumbrance.” It does not appear that there was, here, any covenant against incumbrances. The deed from Downs and Van Wyck to Fairman was not. produced, and only an abstract of title was shown—the deeds and the records of Cook county having been destroyed by the great fire in Chicago, in 1871. The abstract merely shows the deed to be a warranty deed. Had the testimony of Van Wyck been received, it would have shown an assumption of this incumbrance by Fairman; but his evidence in this respect was excluded by the court below, and, we think, rightly, under the statute. There is no claim that Fairman did not have lull notice of this incumbrance when he purchased. In Campbell v. Benjamin, 69 Ill. 251, it was said upon this subject: “ It would be a novelty in the purchase of real estate incumbered by a heavy mortgage, unheard of, to pretend that no agreement was made between the vendor and vendee in regard to who should assume and pay the incumbrance.” The trust deed, here, having expressly authorized the sale to be made on the condition, alone, of default in the payment of the notes, and not providing anything in respect to this incumbrance, may it not be presumed that upon such default of payment the power of sale was rightly exercised as intended by the parties, and that it was agreeable with their understanding, whatever it may have been, with respect to such incumbrance, that, notwithstanding its existence, such sale might be had, or that Fairman relied upon his covenants in his deed from DoAvns and Van Wyck, and, at least, might, not innocent subsequent purchasers Avell so presume ? At any rate, the power of sale Avas given, and exercised as given, and the sale can not be held void. As to the sale of the lots as a whole, and not separately, they were thus sold according to the description in the trust deed, and in the deed to Fairman. Barker, the trustee, testifies that he knew the land AA’as subdivided into lots, and that he offered it in lots; that there being no bidders, he then offered it as a whole. There was no other testimony upon this point. In Van Valkenburg v. Trustees, etc. 66 Ill, 105, it was held, that where the premises were offered separately and no bidders, and then struck off en masse, the sale was properly confirmed; and to the like effect is Martins v. Hargardine, 46 Ill. 322. In Prather v. Mill, 36 Ill. 404, it was said: “ This court has held that it is only on the ground of fraud or that some one has been prejudiced by the sale of lands en masse, that the sale will be set aside in equity because the property was not sold in separate parcels,” citing Ross v. Mead, 5 Gilm. 173; Gillespie v. Smith, 29 Ill. 481. And to like effect see Fergus v. Woodworth, 44 Ill. 378; Hay v. Baugh, 77 id. 500. As before remarked, the proof here shows the property was sold for its full value; hence no injury resulted from the manner of the sale. There is the allegation of fraud in making the sale, but it is entirely unsupported by proof, there being nothing more claimed in that respect than the inference of fraud to be drawn from the circumstances stated, in the making of the sale. Were the case one against Downs and Van Wyck themselves, the purchasers at the sale, they having retained the title in their own hands, it is by no means clear that the grounds would be sufficient for setting aside the sale even as against them; but as against the appellees, remote and innocent purchasers, they must clearly be adjudged insufficient. The alleged irregularities would not make the sale void, but at the most only voidable. Such a sale, upon application in due time, may be avoided while the title remains with the purchaser at the sale, or his grantee, with notice; but after the property has passed into the hands of subsequent bona fide purchasers for value, without notice of the irregularity in the sale, as against them, the right of avoidance of the sale can not be exercised, but the sale must stand. Wilson v. Park Commissioners, 70 Ill. 46; Cassell v. Ross, 33 id. 244; Conover v. Musgrave, 68 id. 58; Gunnell v. Cockerill, 79 id. 79; Mixer v. Sibley, 53 id. 61; Shine v. Hill, supra. It is said there was notice here. None other is pretended than such as might be furnished by the public records. There would appear upon the record the prior trust deed made by Rich, and the warranty deed from Downs and Van Wyck to Fairman, and perhaps that should be considered notice of the continuance and existence of the incumbrance of such trust deed at the time of the trustee’s sale; but we can not regard knowledge of the existence of such deeds as any notice that the power of sale might not be properly exercised at the time it was, or as anything to put one upon inquiry in that regard. We think, rather, that from the fact of the poiver of sale having been given unqualifiedly, as respected the incumbrance, third persons would have the right to suppose that the power might unobjectionably be exercised as it had been given, and was exercised, notwithstanding such incumbrance and warranty deed. The record of the trustee’s deed, too, should probably be considered as furnishing notice that the property was sold as a whole, but it would not show whether or not it was so sold under justifiable circumstances, as, that it had 'first been offered separately, etc. No injury having resulted from the manner of the sale of the property, that should not, as we have seen, invalidate the sale. Further than as above, we do not regard the public records as furnishing anything more in the way of notice. So far as respects anything of material bearing, we are of opinion that appellees occupy the position of innocent purchasers, and that they are fully entitled to protection as such. The view taken renders it unnecessary to consider the question of lachés, which has been made. The decree must be affirmed. Deeree affirmed.