Henderson v. Herrod

Mr. Justice Yerger delivered the opinion of the court. In 1842, Barnabas Herrod, by Wesley Drane, his solicitor, — 451 — filed a bill in the circuit court of Madison county, against George W. Henderson, Lemuel D. Livingston, and Albert G. Forney, for the purpose of foreclosing a mortgage executed by Livingston, on a tract of land to secure three promissory notes payable to Albert G. Forney. The bill, among other things, alleged that Herrod was the assignee of Forney of the note first due, and that Henderson was the holder of the two others. Such proceedings were had in the caus.e, that at the May term 1843, of the court, a decree was made foreclosing said mortgage, and in default of payment of the amount due by Livingston, ordering a sale of the land upon six months’ credit, the purchaser giving bond, &c.; the proceeds of the sale to be applied to the payment of the amount due to Herrod, and if any balance remained the same was to be paid over to George W. Henderson. William Montgomery was appointed a commissioner to sell the land. On 17th day of July, 1843, Montgomery sold the land under the decree, and Wesley Drane became the purchaser for $912, who gave the bond required by the decree, and a deed was executed to him by the commissioner. At the November term, 1843, the commissioner made a report of the sale, &c.. to Drane, and the sale was confirmed by the court. On the 12th of January, 1844, Henderson took out a writ of error to the high court, and a super-sedeas was on that day issued. At the January term, 1847, of the high court the cause was decided, and it was held by that court, that “ There was error in the decree'of the circuit court allowing Herrod priority of payment out of the proceeds for which the mortgaged premises might sell, and that the notes held by Henderson for the balance due on them, should share with the one held by Henderson, and should be paid rateably with it out of the proceeds of the mortgaged premises; whereupon, for the error aforesaid, the decree below is reversed and the cause remanded to the court below, and a decree ordered to be entered conformably to this order.” A certificate of this order was issued from the high court, and on the 25th of February, 1848, George W. Henderson, the appellant in this court, filed a petition in the circuit court of Madison county, to set aside the sale of the land made to Drane by virtue of the de — 452 — cree, alleging as a reason therefor, that the price paid by Drane was not the value of the land ; that Drane purchased in fact for Herrod, and being a solicitor in the cause was a purchaser with notice; that he never in fact paid any money on account of his bid, but that at the direction of Herrod the commissioner entered satisfaction of the bid, and surrendered the note ; that this entry of satisfaction was made after Herrod and Drane had notice of the writ of error and supersedeas ; that Drane, on the 19th of January, 1844, and after notice of the writ of error, conveyed the land to Mason E. Sanders, a creditor of Livingston, and who claimed the right as such to redeem by virtue of the provisions of the redemption law; that on the 8th of October, 1845, Sanders conveyed to Daniel J. Sample, who died in November, 1847, in possession of the land, leaving a widow and no children, but brothers and sisters, his heirs at law. The petition further stated, that the land was worth about $4000 at the sale, but owing to the decree then in force, which gave to Herrod the whole proceeds of the sale till his debt was extinguished, petitioner did not occupy such a position as would ' have justified him in bidding, especially against those who would not be required to pay money. An offer- is made to advance $3000 on Drane’s bid, and a prayer is appended that the sale to Drane be set aside, and a re-sale ordered. Drane, Herrod, Sanders, and the heirs of Sample are made defendants, and subpoenas, &c., regularly issued, &c. The circuit court dismissed the petition; from which order Henderson has appealed. The counsel for both parties have filed able and elaborate briefs, and as the case presents some questions of importance in relation to the practice of the chancery court, and the jurisdiction of the circuit court in matters of equity, we have endeavored to give it that examination which the arguments of counsel and the importance of the case seem to demand. Upon the facts contained in the record, three questions arise, which we deem it necessary to notice. I. Can a court of equity in this state, after confirmation of a sale made by a commissioner, set that sale aside at a subsequent term ? If so, for what causes, and in what way — 453 — shotild the application be made, whether by petition or original bill? II. If a court having general equity jurisdiction possesses this power, can a circuit court exercise it in cases where the property exceeds the value of five hundred dollars ? If it can exercise such a power at all, can it be dpne where other parties than those to the original suit or the purchaser at the sale are interested in the premises ? III. If such a power exists in the circuit court, do the facts presented by this record make a case proper for its exercise ? 1. Sales by a commissioner under decrees of the chancery court, should be regulated very much by the same rules which apply to execution sales at law by a sheriff. The object in each instance is the same, namely, the execution of the judgment or decree of the court, and the interests of suitors as well as public policy demand that the sales should be in each instance alike certain and obligatory, and that the title which a purchaser obtains in either mode, should possess a similar degree of validity and force. It is true this court has held, that until a commissioner’s sale has been confirmed, it is not valid; yet it has also decided, that the parties to the sale may act in such a manner as to give to the sale the effect and validity of an order of confirmation by the court. 3 S. & M. 493 ; 4 lb. 210. The chancellor, in refusing to confirm a sale, should exercise not an arbitrary, but a sound legal discretion. What would be sufficient grounds for a refusal to confirm, must depend in a great degree upon the circumstances of each case. Among causes which have been enumerated as sufficient for that purpose, are fraud, accident, mistake, or surprise in relation to the sale or the time of sale, or the title of the property sold, or the failure on the part of a purchaser to comply with the conditions of the sale, in relation to the security or otherwise. But, of course, we do not pretend to specify all the causes which would justify the chancellor in withholding confirmation. In England, it was the practice of the court of chancery to withhold a confirmation for inadequacy of price, or because a better price was offered afterwards than the. bid at the sale. This — 454 — doctrine.has never, however, prevailed in this country; and in this state particularly such a practice has never been adopted. After an order of confirmation, we think the court would have the power for proper cause to set aside that order during the' same term, and to set aside the sale for similar causes that would have justified a refusal to confirm in the first instance j-but after the term has passed at which the order of confirmation has been made, we think the power of the court over the subject-matter has ceased, unless indeed the purchaser at the sale was a party to the suit, in which the decree for the sale was originally made, and that suit is still pending undetermined in the court. In such a case, the court would still have the parties before it; we do not say that an order of confirmation might not be set aside by petition at a subsequent time. The order of the court confirming the sale, is a judgment of the court, by which the rights of the purchaser to the property has been fixed and determined by the appropriate tribunal; and equity and sound policy alike dictate, that this judgment should be eqpally valid, and possess the same force and effect of other decrees or judgments by which the rights of parties are determined. Prior to the confirmation, the whole subject-matter is in fieri, and under the control of the court, subject to the exercise of a sound discretion' in regard to it. Each party has the right to move for or resist a confirmation. When the motion to confirm has been made, a day is assigned, within which a party objecting to a confirmation could attend and show cause against it; if he does not do so, and he sustains any injury therefrom, it is an injury which his own laches has produced, and against which sound policy requires that a court should not relieve him. This is no new doctrine in this court; on the contrary, the principle will be found to pervade the whole body of the jurisprudence of this state, that where a party has an opportunity of presenting his case properly before the appropriate tribunal for relief, it is too late, after the question has been adjudicated against him, to ask that the judgment against him be set aside for any causes which existed at the time, and which were known to him, or which by reasonable diligence he might have ascertained. — 455 — We therefore are of opinion, that when a commissioner’s sale has been confirmed by the chancery court, it is too late to apply at a subsequent term to set it aside, for any causes which existed at the time of its confirmation, and which were known to the party, or which by reasonable' diligence he might have ascertained, unless indeed he was prevented by fraud or inevitable accident of some kind from presenting them to the consideration of the court. But cases may arise, where a party did not know at the time of the confirmation, or was prevented by accidental or other good cause, from exhibiting, if he did know, the causes for which a confirmation of the sale should have been refused, and the sale set aside. In such a case, he should not be, and is not deprived of relief. The same principles, which authorize a court of equity to relieve against iniquitious and unconscientious judgments, would apply as well in this case as to relief against a judgment at law, and the same causes which would justify relief in the latter case would entitle him to relief in the former. Whether this application should be made by petition or in a more formal way by bill, depends somewhat on the situation of the case, and the parties to it. Chancellor Kent, in the case of Codwise v. Gelston, 10 Johns. R. 507, says, that “ The precise line between cases in which a party may be relieved upon petition, and in which he must apply more formally by bill, is difficult to advise. Petitions are generally for things which are matters of course, or upon some collateral matter, which has reference to a suit in court. The mode of application depends very much upon the discretion of the court.” In Ex parte Bloomfield, 1 Ves. jr. 453, the chancellor said, that the case must be put in the shape of a bill, because of its magnitude and importance. In the case in 10 Johns. 507, before referred to, Gelston was a party in the suit, and filed a petition to enforce a lien on a fund in the court arising in that suit, and Chancellor Kent said, “ He was not a novus hospes. He had already been before the court, and his case was well known,” &c. Applying the principles which may be deduced from these cases, we believe the correct practice in cases of this kind to be: 1st. To apply by — 456 — petition, where the original suit is still pending, undecided in the court, and the purchaser at the sale is one of the parties to that suit, and continues to hold the property 2d. "Where the original suit is determined, or the party who purchased at the commissioner’s sale was not a party to the original suit, then the proper practice is to apply by bill. 3d. Although the original suit is undetermined, and one of the parties thereto was the first purchaser, yet if other persons not parties to that suit have acquired an interest in the property, the proceedings should be by bill. . 2. This brings us to the second proposition, that is, the jurisdiction of the circuit court in questions of this kind. The equity jurisdiction of that court is limited by the constitution to “ all cases where the value of the thing or amount in controversy does not exceed $500 ; also in all cases of divorce and for the foreclosure of mortgages.” This court heretofore held, in the case of Tooley v. Gridley, 3 S. & M. 493, that “ A circuit court having jurisdiction to decree the foreclosure of mortgages, must have power to watch over the execution of its decrees, and to regulate all proceedings under them until the case is finally disposed of.” This view of the law meets with our approbation, yet we think it is very far from establishing the rule, that it has the power añer a sale has been made and confirmed under a decree of foreclosure, at a subsequeut term, to set that sale aside. Of course, until a confirmation, it has full power to regulate the whole matter, to confirm or set it aside according to its discretion, and this as a consequence of the rule that no sale is valid till confirmation. But after confirmation and the expiration of the term, then, as before stated, the order of confirmation becomes a judgment or decree of the court in the subject-matter, and the rights of the parties have become fixed and settled by adjudication. To set aside an order so made is not necessary to the decision of the original suit for foreclosure, or to enable the court to execute its decree in that case, or proceed to a final disposition of that cause if undetermined. On the contrary, the act of sale and confirmation by the court constituted an execution of the decree. The order of confirmation being a judgment of the court, and the — 457 — term having passed at which it was made, it must stand until reversed, or unless vacated or set aside for fraud or some .other cause, which will authorize a court of equity to interfere to set aside or vacate any other judgment or decree of a competent court. The power to vacate or set aside a judgment or decree under such circumstances, is an original power pertaining to a court of equity, and a circuit court can only exercise it by virtue of possessing the powers of a court of equity. But we have seen that this jurisdiction is limited by the constitution to cases where the amount in controversy does not exceed $500, to the foreclosure of mortgages, and divorce cases. We are therefore of opinion, that a circuit court does not possess the power to set aside a commissioner’s sale, and an order of confirmation after, the term where the property in controversy exceeds the sum of $500. This opinion is sustained by the decisions of this court in the analogous cases of sales made by the probate court, in which it was’ held, that the probate court has power to set aside a sale for fraud which has been made under its direction, when application is made at the term to which the report of sale is returned. But that it has not the power to do so at a subsequent term, because the power to set aside the sale cannot be regarded as in the course of the administration of an estate. The power to vacate a judgment order or decree on account of fraud, has uniformly been holden to pertain to a court of chancery. Planters Bank v. Neeley, 7 How. 96, 201; Turnbull v. Endicott, 3 S. & M. 302. Of course, then, if the. equity jurisdiction of the circuit court is limited to cases where the amount in controversy is $500, it cannot exercise the jurisdiction of a court of equity to vacate an order, judgment, or decree, in relation to property of greater value. 3. The settlement of the foregoing positions makes it unnecessary for us to examine at great length the third ppint presented by the record. The appellant contends that the sale should be set aside, because this court reversed the decree of the circuit court in relation to the proceeds of the sale under the mortgage.' It is not pretended, that this sale was irregular; that appellant — 458 — did not know where it was to take place, so that any thing was done to prevent the property from selling for its full value. But it is alleged, that it was worth more than the purchaser bid at the sale, and that appellant would have bid more but for the decree awarding the whole proceeds to Her-rod, thus inducing the belief that he would have to pay the whole of Herrod’s claim in the first instance, and he was thereby prevented from bidding. We do not think this a sufficient cause to set aside the sale. If the circuit court erred in its decree on the subject, he should have appealed before the sale, and have had- his rights adjudicated by the appellate court. Had he done so, no sale would have taken place. But, as he chose to wait till after the sale, before appealing, it will not do to complain of a result, however prejudicial, caused by his own negligence. We do not think that the action of this court, reversing the decree of the circuit court in relation to the distribution of the proceeds of the sale, in any way affected the sale itself, or the rights of the purchasers at the sale. The case was not reversed for any error of the court in decreeing the foreclosure or the sale, but for an error in relation to the fund which the sale was expected to realize. Let the decree be affirmed.