When a sale of property is decreed by a court of equity as the
result of a litigation, it is the policy of the law that it shall
not be set aside for trifling causes or matters which the
complaining party might have attended to.
When such a sale is attacked, the court will scrutinize all
previous action of the parties during the litigation which may
throw light upon or explain their action at the sale.
It cannot be tolerated that either party should designedly wait
until the property has been struck off to the other and then open
the bidding and defer the sale by an increased offer.
When a corporation owning real estate is wound up by reason of
the expiration of the term for which it was incorporated, and its
real estate is sold by decree of court under directions of a
master, stockholders may purchase it, and there is no fraud on
other stockholders if a part of the stockholders combine to
purchase it for the benefit of an adjoining property owned by
them.
Litigants prolonging litigation to the extent of their ability
in a suit in equity seeking the sale of real estate, and prolonging
their resistance by having the sale postponed after the decree,
cannot complain if it takes place finally in a time of financial
depression.
The court decreed in this case that the assets of the mining
company should be sold at public vendue, that the debts of the
company should be ascertained by a master as a basis for the bid,
and that the sale should take place on the confirmation of his
report.
Held that it was not intended that the sale should
be delayed till every claim arising since the commencement of the
suit should have passed to final judgment, but that a mere
statement of the amount should be presented as a basis for fixing
an upset price.
No leave of court is necessary to enable a litigating
stockholder to bid at such sale of the assets of the corporation
under a decree in the suit in which he is a litigant.
The provisions in Equity Rule 83 respecting exceptions to a
master's report do not apply to a report of a mere ministerial
matter like a sale, but only to a report upon matters heard and
determined by him.
The master's sale under the decree was advertised to take place
in Michigan
Page 145 U. S. 350
on Saturday, January 24. Late in the evening of Friday, January
23, the master received from M. a telegram from Boston, in
Massachusetts, stating that he was a holder of nearly 3,000 shares
of stock, that he had just heard of the sale, that it was to take
place on the Jewish Sabbath, that his Jewish friends wished to buy
but would not attend on the Sabbath, and asking for a postponement.
The sale took place on the 24th as announced, whereupon, on the
26th, M. again telegraphed protesting and making an offer in
advance of the purchaser's bid. The master reported this in his
report of the sale. The sale was confirmed. The day after the
confirmation, M. asked leave to intervene and have the sale set
aside. In the subsequent proceedings, no proof was offered that M.
was a shareholder, and it appeared affirmatively that he had no
financial responsibility.
Held that if it had been
planned, he could not have been more opportunely ignorant before
the sale, or more accurately informed after the confirmation, and
that his intervention was too late.
The Court stated the case as follows:
These cases spring out of the same litigation, and may be
considered together. The preliminary facts are these: on April 4,
1853, the Pewabic Mining Company was organized as a corporation or
mining copper, under the laws of the State of Michigan. The term of
the corporation was for thirty years, and expired April 4, 1883.
The capital stock at that time consisted of 40,000 shares of $25
each. Notwithstanding the termination of the life of the
corporation, the directors then in office continued its business
without change. On March 26, 1884, at a meeting of the
stockholders, by a vote of 27,919 against 6,754 shares, the
directors were authorized to dispose of the property at a sum not
less than $50,000, and a sale was directed to be made to a new
corporation, to be organized on the basis of 40,000 shares, the
shares in the old to be exchanged in full payment for shares in the
new, the stockholders in the old not electing to join the new to
receive their
pro rata interest in money. The present
appellees were stockholders in the old corporation, owning 2,650
shares, and protested against these resolutions. A new corporation
was organized, but before the transfer had been made, the appellees
filed their bill in the Circuit Court of the United States for the
Western District of Michigan, the purpose of which was to enjoin
the proposed transfer of the property of
Page 145 U. S. 351
the old to the new corporation, and to have it sold at public
auction, and the proceeds divided ratably among the stockholders.
This bill was filed March 31, 1884. On final hearing, a decree was
entered sustaining the prayer of the bill, and directing a sale of
the property at public vendue, for cash, to the highest bidder, and
referring the cause to Peter White as special master, with power to
ascertain the assets and debts of the mining company, and directing
that, after ascertaining and making report thereof to the court, he
should proceed to sell the property at public vendue. 25 F.
882.
From that decree an appeal was taken, and thereafter this Court
sustained the decree so far as it ordered a sale. In reference to
the accounting before the master, it, however, directed that it
should be widened so as to include the proceedings of the directors
since the dissolution of the corporation. The opinion of this Court
was announced January 13, 1890.
133 U. S. 133 U.S.
50. The mandate was issued February 6, and was filed in the circuit
court on March 14, 1890. In the execution of the decree, a sale was
made by the master on the 24th of January, 1891, more than a year
after its affirmance by this Court, the purchasers being Thomas
Henry Mason and William Hart Smith, two of the original plaintiffs,
and the price paid being $710,000. The sale was confirmed, and to
set aside the confirmation and to open the sale were the matters
sought to be accomplished by the three appeals taken in these two
cases.
The specification of errors in the Pewabic Mining Company case
was as follows:
"1. That the court below erred in overruling the first exception
taken by the appellant to the report of the sale of the special
master,
viz:"
"That the said sale mentioned in said report was made before the
debts and assets of said defendants, the Pewabic Mining Company,
were ascertained as provided for and required in the decree entered
in said cause."
"2. That the court below erred in overruling the fifth exception
taken by the appellant to the report of the sale of the special
master,
viz: 'Because said property was sold
Page 145 U. S. 352
for an inadequate price or sum, and for much less than it is
worth.'"
"3. That, under the mandate of this court, nothing less than
'all the assets and property of the said Pewabic Mining Company' '
in one body' could be sold by said master, but that, by the order
of the court confirming the sale, an exception was made therefrom
of the claims against the directors, so that in fact all of said
assets and property were not sold in one body."
"4. That in disregard of the rules governing the equity practice
of the circuit courts of the United States, said report was
confirmed within one month from the filing of the report in
court."
"5. That promptly and without laches, and before any
confirmation of said sale had been made as authorized by the rules
governing practice, and before any confirmation whatever had become
absolute, beyond the power of the said circuit court to set aside,
bona fide and well assured offers of a price largely
advanced beyond the highest bid at the reported sale were presented
to this court in support of an application from the party so
offering and of this appellant, for the setting aside of said
reported sale and the ordering of another sale."
"6. That Thomas H. Mason and William Hart Smith, complainants in
this case, bid at said auction, and that their bid, as the highest
bid, was accepted by the special master, and the property exposed
to sale was struck off to them as purchasers, when: (a) they had
not obtained leave from the court to bid at said auction; (b) they
had advised the court in the matter of the sale, and pressed
forward the sale as parties interested only as sellers to obtain
the highest price, and not at all as buyers interested to obtain
the property for the lowest sum, and that therefore they had no
right to bid; (c) before so bidding, they had concerted with the
Quincy Mining Company a scheme to take the property (if bought) off
their hands at a very large personal profit; and they did not
disclose this fact to the court in any of their representations to
the court in the matter of the sale, and they procured
Page 145 U. S. 353
affidavits from officers of the Quincy Company and presented
them to the court, in which this fact was not disclosed; (d)
neither did they disclose this fact of their having secured a sale
of this property to the Quincy Mining Company at a large profit, to
the master, their fellow stockholders, or the other bidders at said
sale, nor allow the same then and there to be disclosed, but
concealed the same; (e) on the other hand, while they had obtained
this contract and agreement with the Quincy Mining Company, in
accordance with which they were to buy this property for the
purpose of transferring it to that company, they advised the court
that said Quincy Mining Company would, at the auction ordered, bid
as an independent bidder, in fair and free competition, and pressed
forward the sale for this reason, that if deferred, the Quincy
Company might not bid, concealing from the court this contract and
agreement and all their relations with the Quincy Mining Company in
this matter; (f) as a matter of fact, the scheme was carried out.
The complainants were both buyers and sellers. They advised the
court, made the sale, purchased the property, and resold it at an
advance which they pocketed themselves for their own personal
benefit and in fraud of the other stockholders."
"7. That as against a bid accepted under all these
circumstances, the Pewabic Mining Company, having for a reasonable
time an undoubted right to elect whether to ratify and enforce the
sale and to demand and receive into its own assets the advance upon
the sum bid, which was to be paid to the accepted bidders, or to
have the accepted bid rejected and the bidding reopened, has
exercised that right entirely within such reasonable time, and is
not guilty of laches in the premises."
"8. That the advance price offered to be bid for the property
sold, in case a new sale should be ordered, was large enough to
induce and require the court to open the bidding and to order such
resale, and that such order was amply secured and guaranteed, and
was seasonably made for that purpose."
In Marcus' case, the following additional specifications were
filed:
Page 145 U. S. 354
"1. Because, as a large stockholder and as making a
bona
fide offer of a great advance over the amount bid at the sale,
he had a right to intervene."
"4. If the sale had not been confirmed prior to the filing of
Marcus' petition, the
bona fide offer of so large an
advance price was proper ground for opening the sale and ordering a
resale."
"5. Even if the sale had been confirmed prior to the filing of
Marcus' petition, the action of the court at the same term in
entertaining the petition and in directing order of notice to issue
thereon suspended the operation of the order of confirmation."
"6. But even if the sale had been regularly confirmed and the
decree of confirmation had become of full effect, under all the
circumstances of this case, the sale should have been opened and a
resale ordered."
"7. The petitioner, Marcus, has not been guilty of laches which
should defeat the granting of his petition. "
Page 145 U. S. 356
MR. JUSTICE BREWER, after stating the facts in the foregoing
language, delivered the opinion of the Court.
The question in this case is whether the master's sale shall
stand. It may be stated generally that there is a measure of
discretion in a court of equity both as to the manner and
conditions of such a sale as well as to ordering or refusing a
resale. The chancellor will always make such provisions for notice
and other conditions as will in his judgment best protect the
rights of all interested and make the sale most profitable to all,
and after a sale has once been made, he will, certainly before
confirmation, see that no wrong has been accomplished in and by the
manner in which it was conducted. Yet the purpose of the law is
that the sale shall be final, and to insure reliance upon such
sales and induce bidding, it is essential that no sale be set aside
for trifling reasons or on account of matters which ought to have
been attended to by the complaining party prior thereto. And in
this respect, regard may properly be had to all that has transpired
before, for the conduct of the parties, their acts and omissions,
may largely interpret their action at the time of the sale. In
order, therefore, to understand fully the merits of these present
appeals, we must notice the course of the litigation and the
conduct of the parties prior to the sale.
In 1883, the Pewabic Mining Company ceased to exist. Its
property then belonged to the different stockholders as tenants in
common. They could not agree among themselves. The minority
appealed to the courts, and there the litigation was carried on for
years, the minority insisting upon a sale, the majority upon the
transfer of the property to a new corporation. At the end of six
years, the controversy was finally determined by this Court, and in
January, 1890, a decree of the circuit court directing a sale was
affirmed. During these years, each party was fully aware of the
purpose and contention of the other, and therefore had ample time
to prepare for whatever might be the outcome of the litigation. In
January, 1890, as stated, the final decision was announced. At that
time, each party knew that a sale was to be had, and
Page 145 U. S. 357
that if it intended to buy, it must make all its arrangements
therefor, and in such arrangement must be included a determination
of the full amount it was willing to bid for the property. It
cannot be tolerated that it be in the contemplation of either to
wait until after the property has been struck off to the other and
then open the bidding and defer the sale by an increased offer.
Though the final decision in favor of the sale was announced on
January 13, 1890, the sale was not made until January 24, 1891,
more than a year thereafter. It was advertised to take place first
on October 30, 1890, but, on application of the defendant, was
postponed till December 20th, and again, on like application, to
January 24, 1891. It was fully advertised not only in the local,
but also in Detroit, New York, Boston, and Chicago papers. There
can be no pretense, therefore, of haste or a lack of notice,
personal and general.
It is insisted by defendant that the plaintiffs were acting in
the interest of the Quincy Mining Company, a corporation owning
adjoining and rival mining property; that solely in its interest,
and not for the benefit of the stockholders in the Pewabic Mining
Company, they carried on this litigation, secured the sale, bought
at it and, in final consummation of the wrong to their co-owners,
have since their purchase conveyed the property to the Quincy
Mining Company. There is a countercharge by the appellees that the
majority of the stockholders who sought to convey the property to
the new corporation, and who have been practically the adverse
party in this litigation, and who may hereafter be considered as
described by the term "defendant," were acting in the interest of
the Franklin Mining Company, another corporation, also owning
property adjacent to the Pewabic mine. We are inclined to think
there is truth in each allegation, and that it is not difficult to
read between the lines that the minority of the stockholders were
interested in the Quincy and the majority in the Franklin Company,
and that these respective corporations were seeking to obtain
possession and control of the Pewabic. But there was no wrong or
fraud in this, and no deception. Each party evidently knew the
interests and
Page 145 U. S. 358
relations of the other. In the answer originally filed by the
defendant in 1884, it was charged upon the plaintiffs that they
were acting in the interest of a rival mining company.
It is also contended that the sale was made at a time when a
severe financial condition existed in the country, especially
affecting mining stocks and mining property. But the sale had once
been postponed on this ground at defendant's instance, the
affidavits as to such depression were met by counter-affidavits on
the part of the plaintiffs, and it is a doubtful question, under
those affidavits, whether such depression did in fact exist. Even
if it were clear that it did, that would not necessarily be a
reason for further postponement. There comes a time in the history
of a litigation like this when, though the times may be depressed,
there must be a sale. The rights of the one party are to be
respected as well as those of the other, and it does not always lie
in the mouth of one who, by strenuous and protracted resistance,
has delayed for years a sale to claim still further delay on
account of the then depressed financial condition. A speedy end of
litigation, as speedy as is consistent with the rights of each
party, is to be desired, and they who prolong litigation by appeal
from court to court must not complain if sometimes they find
themselves, at the end, under burdens which would not have rested
upon them but for such delay. We think it must be affirmed that so
far as the general equitable considerations attending these cases
are concerned, they made in favor of the appellees, and that a
court should not for any light or technical reason disturb a sale
consummated at the end of seven years of litigation.
We pass, therefore, to some of the special matters presented.
First it is claimed that under the terms of the decree, the sale
was prematurely made. That decree directed
"that all the assets and property of the said Pewabic Mining
Company be sold at public vendue, for cash, to the highest bidder,
provided, however, that if at such sale the bid for the
aggregate of the property and assets of said company should not be
in excess of fifty thousand dollars above the amount of the debts
of said company existing at the time of the sale hereinafter
Page 145 U. S. 359
decreed, then that the arrangement for the sale of the property
of said company made at the stockholders' meeting in Boston on the
26th day of March, A.D. 1884, and as set up in the defendant's
answer, shall be carried out under the direction of the special
master hereinafter designated. . . . It is further ordered,
adjudged, and decreed that this cause be, and is hereby, referred
to Peter White, as special master,"
for the following purpose, and with the following powers,
to-wit: "That said master proceed to ascertain the assets and
property and the amount of the debts of the said Pewabic Mining
Company," and
"after ascertaining the assets and debts of said company and
making a report thereof to this Court, as hereinabove provided, and
the confirmation thereof, said master shall proceed to sell said
property at public vendue to the highest bidder in one body after
giving the notices of said sale required by law and the practice of
this court, and that he make report thereof, and that said property
be offered for sale at the front door of the courthouse in the
Village of Houghton, in the County of Houghton and State of
Michigan."
This decree was affirmed by this Court, the only modification
being in respect to an accounting with the directors for moneys
received by them after the expiration of the charter. It is
insisted that by these terms, no sale could be had until there had
been a final ascertainment -- a judicial determination -- of all
debts owing at the time of the sale as well as of all assets,
including therein claims due to the corporation; that by the
modification directed by this Court, there was also to be had an
accounting with the directors, and until that was finished, no sale
could be had, because it was not as yet judicially ascertained
whether they owed the corporation or the corporation owed them --
in other words, whether there were more debts or more assets. The
master to whom this matter was referred reported that all debts of
the corporation which existed at the commencement of the suit had
been paid; that all the personal property had been disposed of,
leaving only the mine and its appurtenances, and that the total
amount of all the claims against the company, added to $50,000, was
less than the amount for which he had the pledge of a responsible
bid,
Page 145 U. S. 360
secured by a certificate of stock. This report was filed
September 1. On November 4, the court confirmed so much of the
report as found that the indebtedness due at the time of the
commencement of the suit had been paid. Other exceptions to the
report were sustained, but the court added these findings and
orders:
"Fourth, that for the purpose of fixing the upshot price at the
sale, the amount of such indebtedness on said day is hereby found
and determined by the court to have been the sum of $80,191.20;
fifth, that the last-named sum, with interest thereon from the
last-named date plus $50,000, shall be the starting point for the
bidding at the sale; sixth, that the sale heretofore decreed in
this cause do take place after six weeks' notice thereof subsequent
to the date of this order shall have been given by said master, who
is hereby directed to postpone sale until after such notice, and
then to make said sale; seventh, all questions of any of the
parties with respect to their dealings with the indebtedness of
said company or any part thereof are hereby expressly
reserved."
The contention of the appellees is that the purpose of requiring
an ascertainment of the debts prior to the sale was the fixing of
an upset price, in order that, if no bid be made in excess of
$50,000 above the amount of the debts of said company, the
arrangement made in 1884 by the majority of the stockholders for
the transfer of the property to the new company should be carried
into effect, and that it was not contemplated that the sale should
be absolutely postponed until after a final judicial determination
of the amount of the several claims against the corporation, a
matter which, by reason of possible appeals from the circuit to
this Court, might delay the sale for many years. They further
insist that the conduct of the appellant showed a purpose to
promote delay, and therefore that even if a strict construction
sustained appellant's claim, the court was justified in modifying
the mere order of procedure. They urge that though all debts due at
the time of the commencement of the suit and when the life of the
corporation was ended were paid, the defendant caused to be
presented a series of claims for services of counsel and
Page 145 U. S. 361
officers of the Pewabic Mining Company, and for money claimed to
have been loaned to it, and then, on behalf of that company, filed
exceptions to the legality and sufficiency of these claims and,
having thus a form of controversy arranged before the master,
neglected and delayed in the matter of hearing the same, and in
support of this they call attention to a letter written by the
master to the trial court in response to inquiries as to why the
report was delayed.
With respect to this last matter, it is sufficient to say that
obviously the defendant was dilatory, and with reference to the
construction of the decree, we think the appellees are right. It
cannot be that the sale was intended to be the last act of this
litigation, and that it must be delayed till every claim arising
since the commencement of the suit had been passed to final
judgment, for, as the property remained in the hands of the
appellant, new claims for care and services might arise as fast as
old ones were determined, and indeed there were at the time of the
sale no debts save those arising since the commencement of the
suit. The purpose of the decree was a sale, provided such sale
would produce more than the plan proposed by the majority of the
stockholders and it was enough, the debts due at the time having
all been paid, that a mere statement of the amount of the claims be
presented, and upon that the upset price be fixed. It will also be
noticed that the court, for the purposes of the sale, found and
determined the amount of the indebtedness, and that ample provision
was made in the orders for the rights of all creditors and the
collection of all debts, and a fund was received from the sale
large enough to satisfy all possible claims -- $710,000, instead of
the $50,000 named in the resolution of the company in March, 1884.
We think, therefore, this contention of the appellants must
fail.
A second contention is that the sale was made to complainants
without leave given by the court to them to bid. But no leave was
necessary. The complainants were not the vendors. The English
practice does not obtain in this country. A sale made by a special
master under the directions of a court of chancery is not a sale
made by either of
Page 145 U. S. 362
the parties to a litigation or under his direction. The master
is a representative of the court, as a marshal or sheriff is in an
action at law. He is not under the control of either party; he is
not the agent of either to make the sale. At such public judicial
sale, either party, as a rule, may bid.
Richards
v. Holmes, 18 How. 143;
Smith v. Black,
115 U. S. 308;
Allen v. Gillette, 127 U. S. 589;
Smith v. Arnold, 5 Mason 414, 420. In that case, Judge
Story said:
"In sales directed by the court of chancery, the whole business
is transacted by a public officer under the guidance and
superintendence of the court itself. Even after the sale is made,
it is not final until a report is made to the court and it is
approved and confirmed."
In
Blossom v. Railroad
Company, 3 Wall. 196,
70 U. S. 208,
this Court said:
"Officers appointed under such decrees and directed to make such
sales have the power to accomplish the object, but they are usually
invested with a reasonable discretion as to the manner of its
exercise which they are not at liberty to overlook or disregard.
Acting under the decree, they have duties to perform to the
complainant, to the vendor and purchaser, and to the court, and
they are bound to exercise their best judgment in the performance
of all those duties. Such an officer, in acting under such a
decree, if directed to sell the property, should adopt all
necessary and proper means to fulfill the directions; but he should
at the same time never lose sight of the fact that, unless he is
restricted by the terms of the decree, the time and manner of
effecting the sale are, in the first instance, vested in his sound
discretion. Usual practice undoubtedly is that the officer in
selling the property acts under the advice of the solicitor of the
complainant, but it cannot be admitted that his advice is, under
all circumstances, obligatory upon the officer."
Nor is this a case where the complainants stood in any such
fiduciary relations as forbade them to purchase, or prevented even
their acting for others in bidding. They had litigated with the
defendant for years in establishing the right to have that property
sold, and when finally they had succeeded in getting a decree that
it be sold, they did not then assume a
Page 145 U. S. 363
duty to the defendant and become charged with the care of its
interests, or become incapacitated from bidding freely for
themselves or for others. None of those matters of a fiduciary
character which sometimes enter into and avoid sales existed in
this case.
Another matter complained of is that the sale was prematurely
confirmed. It took place on the 24th of January, 1891, and the
report of sale was filed February . On the 7th of February, an
order
nisi was entered that unless cause to the contrary
was shown within eight days, the sale would be confirmed. On
February 13, reasons why the sale should not be confirmed were
filed by the defendant, and on the same day, exceptions to the
report of sale. On the second day of March, upon notice, the
objections and exceptions of the defendant were heard by the court,
and overruled, and the sale confirmed.
In support of this complaint, reliance is placed on General
Equity Rule number 83:
"The master, as soon as his report is ready, shall return the
same into the clerk's office, and the day of the return shall be
entered by the clerk in the order book. The parties shall have one
month from the time of filling the report to file exceptions
thereto, and if no exceptions are within that period filed by
either party, the report shall stand confirmed on the next rule day
after the month is expired."
It is worthy of note, however, that exceptions were filed, were
heard and determined by the court, and no objection was made by the
appellant to the time of the hearing, or any suggestion of a right
to longer time in which to file exceptions. It would seem that if
there were error in this respect, the appellant was not in a
position to avail itself thereof. But there was no error. Rule 83
has no reference to a report by a master of mere ministerial matter
like a sale, but only to his report upon matters heard and
determined by him. In
McMicken v.
Perin, 18 How. 507,
59 U. S. 510,
it was observed:
"In
Story v. Livingston, 13 Pet.
359, this Court decided that no objections to a master's report can
be made which were not taken before the master, the object being to
save time, and to give him an opportunity to correct his errors and
reconsider his opinion."
But surely in the matter of a sale
Page 145 U. S. 364
there is no opportunity for objections before the master, or any
correction by him of his errors, or any reconsideration of his
opinion. The course pursued in this case in reference to the
confirmation was the correct practice -- an order
nisi,
followed, if no objection were taken in time, by an order of
confirmation. In 2 Daniell's Chancery Pleading and Practice, page
1274, 4th Am. ed., the author says:
"After the report has been filed and an office copy taken by the
purchaser, he must at his own expense apply to the court by motion
that the purchase may be confirmed. This motion requires no
previous notice, and the order made upon it will be that the
purchase may be confirmed
nisi -- i.e., unless cause is
shown against it within eight days after service of the order. The
purchaser must, at his own expense, procure an office copy of this
order from the registrar, and he may serve it on the solicitors for
all the parties in the cause. If no cause is shown within the eight
days, the purchaser must, at his own expense, apply to the court to
confirm the order absolutely, which will be ordered, of course, on
the production of an affidavit of the service of the order
nisi, and a certificate of no cause having been
shown."
And, again, on page 1305, in which he thus notes the reason of
the rule in respect to a report of sale:
"With respect to which it is to be observed that the object of
requiring this report to be confirmed is not to enable the parties
to bring the decision of the master under the review of the court,
but to afford time between the service of the order
nisi
and the absolute confirmation of the report to others to come in
and open the bidding, so as to secure the sale of the estate to the
best possible advantage."
And in 8 American and English Encyclopaedia of Law, p. 254, the
practice is thus stated:
"The master or commissioner making the sale should report his
action to the court, to the end that the sale may be confirmed. A
motion to confirm the sale with notice to the parties adversely
interested to the confirmation should be made. Confirmation
nisi will be ordered to become absolute within a
designated time unless cause is shown against it. If cause is not
shown, it stands confirmed."
See also Mayhew v. West Virginia Oil Co., 24 F.
205,
Page 145 U. S. 365
215, and as to the practice in the state courts of Michigan,
Jennison's Ch.Pr., p. 157, Rule 79. We think, therefore, that this
objection also must be overruled.
The remaining objections made by the appellant can be more
conveniently considered in connection with the appeal of Alfred A.
Marcus. The first appearance of Marcus in this litigation was in
this wise: the sale was made on the 24th of January, and at the
village of Houghton, County of Houghton, and State of Michigan. The
24th was Saturday, and late in the evening of January 23d, the
master received this dispatch:
"Boston, Mass., January 23, 1891"
"To Peter White, Special Master:"
"Please postpone sale of Pewabic mine. Just found out the sale
on our Jewish Sabbath. Never notified of sale until today. We hold
nearly three thousand shares. Our Jewish friends in London will buy
the mine. There are other Jewish buyers who will not attend sale on
Saturday. Will most cheerfully pay all expenses for postponement.
If not, please announce at sale 'we will protest against this
legality.'"
"ALFRED A. MARCUS"
On Monday, the 26th, he received the following:
"Boston, Mass., January 26, 1891"
"To Peter White, Special Master:"
"You ignored my dispatch; sold the Pewabic mine. I protest
against the sale, as you were bound to do all to get the highest
price. I claim the right now to bid seven hundred twenty-one
thousand dollars cash, being twenty thousand dollars more than bid
at the illegal sale. I shall claim the mine, being the highest
bidder, and protest against any transfer being made to anyone
except myself, and shall hold you personally responsible."
"ALFRED A. MARCUS"
In his report of sale, he gave copies of these dispatches,
simply adding that the sender of the dispatches was wholly
Page 145 U. S. 366
unknown to him and that he paid no attention whatever to them.
On the 3d day of March -- the day after the sale had been confirmed
and more than five weeks after the sale had been made -- Marcus
filed a petition for leave to intervene, in which he alleges
that
"he is the owner of 3,017 shares of the capital stock of the
Pewabic Mining Company; that he, for himself and other parties,
whose names he is willing to disclose, was desirous and fully
intended to be present or represented at the sale of the property
of the said Pewabic Mining Company by the special master duly
appointed by this honorable court in the above-entitled cause; that
he was ready to and would have bid at said sale, and paid a large
amount of money for the property of said company advertised for
sale by said special master; that on January 23, 1891, that being
the day before the sale of said property took place, your
petitioner discovered for the first time that the sale was
advertised for Saturday, January 24th; that thereupon and
immediately your petitioner, using all haste and dispatch possible,
sent by telegraph a message to the said special master, a copy
whereof is hereto annexed, marked 'A,' asking to have the sale of
said property postponed at his own expense, for the reason that he
was never notified of the sale until said date, and that said sale
was advertised to take place on the seventh day of the week, which
is the Sabbath of your petitioner, and upon which day he is
forbidden by his creed to do any business."
He further alleged that the master ignored the dispatch, and
sold the property for an inadequate sum, and for much less than it
was worth; that his offer on January 26 was
bona fide;
that he was willing and ready to pay all the expenses of a resale,
and that he would start with a bid not less than $800,000 --
afterwards by amendment raised to $900,000 -- and would give a bond
with satisfactory sureties for his good faith and ability to carry
out his offer. On the presentation of this petition, the parties
were ordered to show cause why it should not be granted. It is a
singular fact that his first appearance in the case was the day
before the sale, and his first appearance in the court the day
after the confirmation. If it had all been planned, he could not
have
Page 145 U. S. 367
been more opportunely ignorant before and more accurately late
after. To this order to show cause the parties appeared, testimony
was taken, and a hearing had. It is worthy of note that outside of
the petition of Marcus, there is no evidence of his ownership of
stock and nothing in that tending to show how or when he obtained
title to that which he claimed to own. Neither is there anything to
show what steps he had taken prior to the sale to inform himself of
what was going on in the affairs of the company. It would seem from
the multitude of judgments and attachments against him appearing on
the records of the courts in Boston that he was of no financial
responsibility. On the other hand, it is also true that the
affidavits of several responsible parties were presented showing
that Marcus was a man of large transactions, that he was an
orthodox Jew who did no business on Saturday, and that the parties
named were willing to give the proffered bond if a resale were
ordered. It would not be a strained inference from the testimony
that Marcus was acting for others, and was really put forward with
the idea of introducing a new factor into the litigation. But we
deem it unnecessary to inquire into the real character of this
intervention. It is enough that it comes too late. Surely no one
would suppose that an officer having charge of the sale of property
of such value -- a sale made at the end of prolonged litigation --
should at the last moment, in response to a dispatch from a
stranger, postpone the sale. The master's action was unquestionably
proper, and if the party desired the intervention of the court, his
duty was to apply at once, and not wait until after confirmation,
for then the rights of the purchaser are vested, and something more
than mere inadequacy of price must appear before the sale can be
disturbed. Indeed, even before confirmation, the sale would not be
set aside for mere inadequacy unless so great as to shock the
conscience.
See Graffam v. Burgess, 117 U.
S. 180,
117 U. S. 191,
where the matter is discussed at some length by Mr. Justice
Bradley. As the price bid by the appellees, and at which the
property was struck off to them, was about $580,000 in excess of
the upset price, it is hardly necessary to say that there is no
shocking inadequacy of price.
Page 145 U. S. 368
In conclusion, we may add that, after reviewing all the facts
disclosed by these records in the light of the prior history of the
litigation, it seems to us that the equities of the case are
decidedly with the appellees, and the decrees will be affirmed.
MR. JUSTICE GRAY did not hear the argument, and takes no part in
the decision of this case.
