While mere inadequacy of price has rarely been held sufficient
in itself to justify setting aside a judicial sale of property,
courts are not slow to seize upon other circumstances impeaching
the fairness of the transaction as a cause for vacating it,
especially if the inadequacy be so gross as to shock the
conscience.
If the sale has been attended by any irregularity, as if several
lots have been sold in bulk where they should have been sold
separately, or sold in such manner that their full value could not
be realized; if bidders have been kept away; if any undue advantage
has been taken to the prejudice of the owner of the property, or he
has been lulled into a false security; or, if the sale has been
collusively or in any other manner conducted for the benefit of the
purchaser, and the property has been sold at a greatly inadequate
price, the sale may be set aside, and the owner permitted to
redeem.
There are other facts in this case, stated in the opinion, in
addition to the grossly inadequate price realized for the property
that afford ample justification for the action of the court below
in permitting the plaintiff to redeem upon equitable terms, and
ordering a reconveyance of the property.
Quaere whether issue of an alias for the original
amount of the judgment, after the return of a prior execution,
satisfied to the amount of nearly one-half of such judgment, the
sale of property thereunder to an amount more than sufficient to
satisfy the amount actually due, and payment of the excess to
plaintiff's attorneys will not invalidate the entire
proceedings?
Whether the levy upon the interest of a co-tenant in a specific
part, designated by metes and bounds, of a certain larger quantity
of land is valid is not decided.
Before the time had expired to redeem from the execution sale,
the plaintiff was told by the defendant that he would not be
pushed, that the statutory time to redeem would not be insisted
upon, and, believing it, acted and relied upon such assurance.
Held that under such circumstances, the purchaser was
estopped to insist upon the statutory period, notwithstanding the
assurances were not in writing and were made without consideration,
and that there was a concurrent jurisdiction of a court of equity,
founded upon its general right to relieve from the consequences of
fraud, accident or mistake, which might be exercised
notwithstanding the statutory period for redemption has
expired.
This was a complaint in the nature of a bill in equity,
originally filed in the Third Judicial District Court of the
Page 161 U. S. 335
Territory of Utah by John M. Young against Frank B. Stephens and
wife and Albert T. Schroeder and wife, as defendants, to set aside
and cancel certain execution sales of real property in Salt Lake
City as fraudulent and void, and for permission to redeem from such
sales notwithstanding the expiration of the statutory time for
redemption, and for a decree compelling the defendants to convey to
the plaintiff the property mentioned, upon just and equitable
terms.
The material facts in the case were that on March 6, 1891,
Clark, Eldredge & Co., a corporation, obtained judgment by
default in said court against the appellee John M. Young, Henry
Goddard, and George Goddard in the sum of $1,673.36, with $30.50
costs. Frank B. Stephens and Albert T. Schroeder, partners and the
principal defendants, were the attorneys for Clark, Eldredge &
Co. in such action. The plaintiff, John M. Young, was the owner of
the undivided one-half of two parcels of land in Salt Lake City,
and plaintiff's sister, Lydia Y. Merrill, was the owner of the
other undivided one-half of the said parcels. Their title was
derived from the will of their father, and, as to the greater part
of such property, was subject to a right in Sarah Milton Young and
Ann Olive Young to receive each one-fourth of the money arising
from said property during their respective lives.
On April 29, 1881, an execution was issued in said action of
Clark, Eldredge & Co. against John M. Young, directing the
marshal of the United States, if sufficient personal property could
not be found to satisfy the judgment, to levy upon the real estate
belonging to Young and his codefendants in such action, and on May
7, 1891, the marshal gave notice that he attached and levied on all
the right, title, claim, and interest of the said John M. Young and
his codefendants in and to that parcel of land described as
beginning 101 feet north and 39 1/2 feet east of the S.W. corner of
lot 2, block 70, plat A, Salt Lake City survey, and running thence
east 15 1/2 feet, thence north 28 feet, thence west 15 1/2 feet,
thence south 28 feet, to the place of beginning, and also on that
part of the same lot described as beginning 32 1/2 feet west from
the S.E. corner of the said lot, running thence west 38 feet,
thence north 98 1/3
Page 161 U. S. 336
feet, thence east 38 feet, thence south 98 1/3 feet, to the
place of beginning, and also on a part of lot 12, block 8,
five-acre plat A, Big Field survey.
Afterwards, on July 25, 1891, the marshal certified that he had
sold the property described in the notice to John Clark, and,
deducting his commissions and expenses of sale, paid the balance
realized upon said sale,
viz., $962.36, to the attorneys
of Clark, Eldredge & Co., and further returned that there was
still due and unpaid on said judgment the sum of $886.90. The John
Clark mentioned in the return was a director and the principal
stockholder of Clark, Eldredge & Co . Afterwards, on July 28th,
an alias execution issued from the said court in such action for
the full sum of $1,673.36, and $30.50 costs, by virtue of which the
marshal levied upon a certain other parcel of the same lot
described as beginning 64 1/2 feet west of the N.E. corner of said
lot 2, running thence west 45 1/2 feet, thence south 20 rods,
thence east 78 1/2 feet, thence north 90 3/4 feet, thence east 31
1/4 feet, thence north 41 1/4 feet, thence west 16 1/2 feet, thence
north 148 1/2 feet, thence west 48 feet, thence north 49 1/2 feet,
to the place of beginning, and on August 25th the marshal returned
that he had sold these premises to the defendants Stephens &
Schroeder for the sum of $828.70, and further certified that the
judgment obtained by said corporation was still unsatisfied to the
extent of $100.
On September 30th, said marshal made a further return to the
last-mentioned writ in which he certified that he sold all of lot
12, block 8, five acre plat A, Big Field survey, situate in Salt
Lake county, and also a certain parcel of land described as
beginning 39 feet east and 81 feet north of the southwest corner of
said lot 2, running thence north 209 feet, thence east 16 1/2 feet,
thence south 209 feet, thence west 16 1/2 feet, to the place of
beginning, to Stephens & Schroeder, for the sum of $136, and,
deducting the costs and expenses of said last levy, amounting to
$30, paid the balance, $106, to the attorneys of Clark, Eldredge
& Co., and returned said writ fully satisfied.
The court found that all that part of lot 2 as described in
Page 161 U. S. 337
this statement, a plat of which appeared in the record,
constituted a single parcel of land, and should have been regarded
and treated as such, and not as being divided into separate lots or
parcels, and that the first parcel sold, being 15 1/2 by 28 feet,
had no ingress or egress, and that the same as sold would
necessarily be sacrificed on such sale on account of its location,
but that at the time of the sale of this parcel, neither Stephens
nor Schroeder had actual knowledge of any other realty owned by
plaintiff.
The other material facts are stated in the opinion of the
Court.
Before the case was called for argument, the suit was settled so
far as the defendants Stephens and his wife were concerned, leaving
Schroeder and his wife sole defendants. The case coming on to be
heard upon pleadings and proofs, the district court made a decree
permitting the plaintiff, Young, to redeem the property upon paying
to the defendants the sum of $723.25, less certain costs, but
subject to one-half of a mortgage executed by the defendants, who
were ordered to execute and deliver to plaintiff a deed of the
property. From this decree an appeal was taken to the supreme court
of the territory, which affirmed the decree of the district court,
whereupon appellants prayed and were allowed an appeal to this
Court.
MR. JUSTICE BROWN, after stating the facts in the foregoing
language, delivered the opinion of the Court.
Plaintiff relies mainly for a decree in this case upon the fact
that his interest in the property in question, which the trial
court found to be worth $26,000, was sacrificed at these several
judicial sales to pay a judgment of little more than $1,700.
While mere inadequacy of price has rarely been held
sufficient
Page 161 U. S. 338
in itself to justify setting aside a judicial sale of property,
courts are not slow to seize upon other circumstances impeaching
the fairness of the transaction as a cause for vacating it,
especially if the inadequacy be so gross as to shock the
conscience. If the sale has been attended by any irregularity, as
if several lots have been sold in bulk where they should have been
sold separately, or sold in such manner that their full value could
not be realized; if bidders have been kept away; if any undue
advantage has been taken to the prejudice of the owner of the
property, or he has been lulled into a false security; or if the
sale has been collusively or in any other manner conducted for the
benefit of the purchaser, and the property has been sold at a
greatly inadequate price, the sale may be set aside, and the owner
permitted to redeem.
Thus, in
Byers v.
Surget, 19 How. 303, lands to the amount of 14,000
acres, and estimated at from $40,000 to $70,000 in value, were sold
by the sheriff in satisfaction of a judgment for costs of $39, to
the attorney for the successful party, and conveyed to him for
$9.31 1/2. The sale was pronounced to have been fraudulent and
void, and a reconveyance of the property was decreed. It appeared
that the owner of the property had no knowledge of the suit until
he was informed of the sale of the land; that the attorney for the
successful party, the defendant, assumed himself the power to tax
the costs, the right of selecting the final process, of prescribing
the description and quantity of the property which he chose to have
seized in satisfaction, of directing the sheriff as to the various
steps to be taken by him, and of becoming the purchaser himself for
the petty sum of $9.31 1/2. Of this proceeding, Mr. Justice Daniel,
in delivering the opinion of the Court, remarks:
"Such is the history of a transaction which the appellant asks
of this Court to sanction, and it seems pertinent here to inquire
under what system of civil polity, under what code of law or
ethics, a transaction like that disclosed by the record in this
case can be excused, or even palliated."
In
Graffam v. Burgess, 117 U.
S. 180, two judgment
Page 161 U. S. 339
creditors became the purchasers for about $150 of unencumbered
property, worth at least $10,000, although the judgment debtor had
$3,000 worth of furniture and personal property in the house
subject to levy. During the temporary absence of the complainant,
the defendants entered upon the premises, broke into the house, and
took possession of it on behalf of the purchasers, removed the
furniture and other personal property, including the wearing
apparel of the complainant, took possession of her personal
correspondence and papers and the sum of $170 in money, and still
retained possession of the property at the time of the filing of
the bill. The Court found that the complainant was ignorant of the
issue of the execution or of the sale of the property; that the
purchasers knew that she was unconscious of it, and endeavored to
keep her so, and took an inequitable advantage of her ignorance to
get possession of it. In reply to the argument that the proceedings
were regular, Mr. Justice Bradley observed:
"It is insisted that the proceedings were all conducted
according to the forms of law. Very likely. Some of the most
atrocious frauds are committed in that way. Indeed, the greater the
fraud intended, the more particular the parties to it often are to
proceed according to the strictest forms of law."
The Court commented most severely upon the conduct of the
purchasers, and found no difficulty in setting aside the sale,
although four members of the Court dissented upon the ground that
the complainant had failed in her duty to redeem from the sale
within the time limited by law.
In
Howell v. Baker, 4 Johns.Ch. 118, a farm worth
$2,000 was sold under a judgment and execution, on which not more
than $80 were due, to the attorney of the plaintiff, who attended
the sheriff's sale, for $10. The sale was held upon a stormy day,
when no person but the attorney and the deputy sheriff was present,
and it was held that these facts, connected with the gross
inadequacy of price, were sufficient to authorize the purchaser to
be held as trustee for the respective interests of the parties to
the execution, and the bidder was allowed to redeem on equitable
terms. A large number of other cases are also cited by Mr. Justice
Bradley in his
Page 161 U. S. 340
opinion in
Graffam v. Burgess, and the general
proposition laid down, as above stated, that if, in addition to
inadequacy of price, there be other circumstances throwing a shadow
upon the fairness of the transaction, the judgment debtor will be
allowed to redeem.
There are other facts in this case than the grossly inadequate
price realized for this property that afford ample justification
for the action of the court below in permitting the plaintiff to
redeem upon equitable terms, and ordering a reconveyance of the
property.
1. The property was sold to Stephens & Schroeder, who had
acted as attorneys for the judgment creditor throughout the entire
transaction, and had been fully paid by the corporation for their
services. In this connection the trial court further found that
Stephens furnished the officer a description of the property to be
levied upon and sold, and that he accordingly did levy upon and
sell, as he was directed by Stephens, according to such
description. Add to this the further finding that at neither of the
sales was there any other bidder and no other person present than
Stephens and the officer conducting the sales, and we can readily
appreciate how inevitable it was that the property should be
sacrificed. Although there is no general rule that an attorney may
not purchase at an execution sale, provided it be not done to the
prejudice of his own clients,
Pacific Railroad v. Ketchum,
101 U. S. 289,
101 U. S. 300,
such purchase, in itself, is calculated to throw a doubt upon the
fairness of the sale, and as is quaintly said of such sales by the
Court of Appeals of Kentucky in
Howell v. McCreery, 7
Dana, 388:
"Public policy and the analogies of law require that they should
be considered
per se as in the twilight between legal
fraud and fairness, and should be deemed fraudulent, or in trust
for the debtor, upon slight additional facts."
See also Hall v. Hallett, 1 Cox 134;
Jones v.
Martin, 26 Tex. 57;
Byers v.
Surget, 19 How. 303;
Blight's Heirs v.
Tobin, 7 T.B.Mon. 612.
2. The alias execution of July 28th was not only issued for the
full amount of the original judgment, $1,673.36, and $30.50 costs,
without deducting $962.36, realized upon the first execution,
Page 161 U. S. 341
but under it the marshal sold, under the directions of Stephens
& Schroeder, property for an amount in excess of the amount
remaining unpaid on the judgment, and collected the excess and paid
it over to Stephens & Schroeder, who retained it. In this
connection, the trial court made the following finding:
"At the time of the last sale, to-wit, September 30, 1891, there
was a balance due Clark, Eldredge & Co. of only $25.57, and
their judgment had been satisfied except said sum, and to satisfy
said balance property was sold as aforesaid, amounting in all to
$136, $106 of which was paid by the United States marshal to said
Stephens and Schroeder."
Upon no theory were the judgment creditors entitled to any more
than the amount of their claim, and if, as may sometimes happen,
the property be sold for more than the amount of the execution, the
residue should be returned to the judgment debtor.
There is reason for saying that the issue of an alias execution
for the original amount of the judgment, after the return of a
prior execution, satisfied to the amount of nearly one-half of such
judgment, the sale of property thereunder to an amount more than
sufficient to satisfy the amount actually due, and the payment of
the excess to the plaintiff's attorneys, invalidate the entire
proceedings, the rule in some states being that a levy for an
amount exceeding the amount of the judgment or the amount actually
due upon the judgment, with interest and costs, is void. 2 Freeman
on Executions ยง 381;
Glidden v. Chase, 35 Me.190;
Pickett v. Breckinridge, 22 Pick. 297;
Peck v.
Tiffany, 2 N.Y. 457;
Hastings v. Johnson, 1 Nev. 614;
Patterson v. Carneal, 3 A. K. Marsh. 618. But however this
may be, there can be no doubt that this alias execution and the
proceedings thereunder were irregular so far as Stephens &
Schroeder were concerned, though perhaps not to the extent of
invalidating the title of a
bona fide purchaser.
Stead's Executors v.
Course, 4 Cranch 403;
French v.
Edwards, 13 Wall. 506;
Groff v. Jones, 6
Wend. 522;
Tiernan v. Wilson, 6 Johns.Ch. 411.
3. The court below was also of opinion that the property of the
debtor was sacrificed by the manner in which the sales
Page 161 U. S. 342
were made, and particularly be the successive sales of his
interest in different parts of lot 2, block 70, held in common with
his sister, Lydia Y. Merrill, and that a proper regard for his
interests required that his entire right to the whole land thus
held in common should have been sold at one time. This, however,
raises a question as to which the authorities are not entirely in
harmony,
viz., whether the levy upon the interest of a
cotenant in a specific part, designated by metes and bounds, of a
certain larger quantity of land is valid. In view of the other
manifest irregularities, we do not feel called upon to express an
opinion upon this point.
There is one finding, however, in respect to these sales which,
taken in connection with the facts that the defendants were the
attorneys for the judgment creditors, furnished the officer selling
the property with the description of the property to be levied upon
and sold, and became the purchasers of the property either directly
from the marshal or indirectly through their client Clark, which is
in itself sufficient to justify the action of the court below in
vacating the sales and permitting the plaintiff to redeem,
viz., that
"before any of said property was sold, said Stephens, who was
the sole bidder at each of said sales, formed the intention that
regardless of the value of the various pieces of property to be
sold, and that were sold, he would leave a balance after each sale
so that all of the plaintiff's property would be sold, and he so
bid at the various sales as to accomplish, and did accomplish, said
object and purpose."
As Stephens was appellant's partner in the practice of law, and
in the prosecution of the claim of Clark, Eldredge & Co., and
bought the property in for himself and partner, who now sets up
title in himself by virtue of such purchase, it is clear that he is
bound by Stephens' acts and representations. Certainly he cannot
set up a title acquired by Stephens' assistance and at the same
time repudiate his acts in connection with the acquisition of such
title.
There are other circumstances also found by the court below
which, taken in connection with the grossly inadequate price paid,
render it still more inequitable that purchasers standing in the
position of the defendants in this case
Page 161 U. S. 343
should insist upon the letter of the bargain, and throw
something more than a mere doubt upon the fairness of the
transaction. Before the time had expired for redemption, Stephens
& Schroeder requested the collector of taxes of that county to
allow them to bring suit against the plaintiff to recover the taxes
owing by him for the year 1890 on the part of lot 2 described in
the complaint, and agreed that if the collector so consented, they
would bring the suit and make the collection free of cost to the
collector -- an arrangement which was carried out according to its
terms. On April 10, 1892, plaintiff offered to pay defendants the
full amount of the judgment obtained by them, together with
interest at the rate of one percent per month, and also to
liberally compensate them for all their services and trouble, give
them $1,000 besides as a bonus, and pay all their advances, with
interest, if they would reconvey to him, which the defendants
refused to do. Of a similar offer and refusal, this Court, in 19
How.
60 U. S.
3109311, speaking through Mr. Justice Daniel, said:
"Another pregnant proof of the design of the appellant to grasp
and retain what no principle of liberality or equity could warrant
is the fact, clearly established, of his refusal after the sale to
accept from the appellee, for the redemption of his lands so
glaringly sacrificed, a sum of money considerably exceeding in
amount the judgment for costs, with all the expenses incidental to
the carrying that judgment into effect. The appellant, by his
irregular and unconscientious contrivances, achieved what he
conceived to be an immense speculation, and he determined to avail
himself of it regardless of its injustice and ruinous consequences
to the appellee."
About the same time, the plaintiff, being ignorant of the fact
that lot 12 had been sold and that the defendants had a deed
therefor, informed the defendant Schroeder that he intended to
redeem the lot from a sale that had been made for the taxes of
1891, and afterwards did so redeem said lot, and informed Schroeder
that it had been done; the plaintiff being still ignorant that the
defendants held a marshal's deed for it. Again, on April 24th,
plaintiff, being still ignorant that defendants held a marshal's
deed for lot 12, informed Schroeder
Page 161 U. S. 344
that he intended to redeem said lot from a tax sale that had
been made thereof for the taxes of 1890, and did subsequently
redeem the same, and informed Schroeder of the fact, and that
Schroeder never at any time informed him that he had obtained a
deed for the lot. The court further found that defendants purposely
and intentionally failed to inform the plaintiff that they had a
title to the said lot at the time the plaintiff was redeeming the
same from the tax sales. The court further found that the said
attorneys, in violation of their duty to obtain the highest
possible price for the property while acting in behalf of their
clients, became the bidders upon said property, and so acted as to
obtain the same for the least possible sum, so as to satisfy the
judgment, and at the same time to sell all the property belonging
to said Young. If these facts be not sufficient to justify a
rescission of these sales, it is difficult to imagine what would be
so considered.
4. Defendant relies mainly upon the fact that the statutory
period of redemption was allowed to expire before this bill was
filed, but the court below found in this connection that before the
time had expired to redeem the property, the plaintiff was told by
the defendant Stephens that he would not be pushed, that the
statutory time to redeem would not be insisted upon, and that the
plaintiff believed and relied upon such assurance. Under such
circumstances, the courts have held with great unanimity that the
purchaser is estopped to insist upon the statutory period,
notwithstanding the assurances were not in writing and were made
without consideration, upon the ground that the debtor was lulled
into a false security.
Guinn v. Locke, 1 Head 110;
Combs v. Little, 4 N.J.Eq. 310;
Griffin v.
Coffey, 9 B.Mon. 452;
Martin v. Martin, 16 B.Mon. 8;
Butt v. Butt, 91 Ind. 305;
Turner v. King, 2
Ired.Eq. 132;
Lucas v. Nichols, 66 Ill. 41;
McMakin v.
Schenck, 98 Ind. 264. In
Southard v. Pope's Ex'rs, 9
B.Mon. 261, 264, it is said that
"a refusal by the purchaser to accept the money and permit the
redemption to be made within the time agreed would be a fraud upon
the defendant in execution, and authorize an application by him to
a court of equity for relief. "
Page 161 U. S. 345
Probably if a motion had been made in the original case to set
aside the sale upon the ground of mere irregularities, such motion
would have to be made before the statutory period for redemption
had passed; but in this class of cases, where fraudulent conduct is
imputed to the parties conducting the sale, there is a concurrent
jurisdiction of a court of equity, founded upon its general right
to relieve from the consequences of fraud, accident, or mistake,
which may be exercised notwithstanding the statutory period for
redemption has expired. It is evident that where a sale has
culminated in the execution and delivery of a deed to the
purchaser, which is not void upon its face, or a mortgage has been
put upon the property, as in this case, no remedy is complete which
does not go to the cancellation of such deed and the complete
reinvestment of the title in the plaintiff. It also appears from
the findings that appellant has received rents from the property;
that various sums had been expended for taxes and other purposes;
that an accounting was necessary in adjusting the rights of the
parties, which could not be effectually carried on in a court of
law. There can be no doubt of the jurisdiction of a court of equity
in such case notwithstanding the expiration of the statutory time
of redemption.
Graffam v. Burgess, 117 U.
S. 180;
Blight's Heirs v. Tobin, 7 T.B.Mon.
612;
Day v. Graham, 1 Gilman 435;
Morris v. Roby,
73 Ill. 462;
Fergus v. Woolworth, 44 Ill. 374;
Bullen
v. Dawson, 139 Ill. 633;
Jenkins v. Merriweather, 109
Ill. 647;
State Bank v. Noland, 13 Ark. 299.
The appellants' brief deals largely with criticisms upon the
findings and upon the admission of testimony, which we do not feel
it necessary to discuss, as they do not involve the merits of the
case, which rest upon the undisputed facts. It would be a reproach
to a court of equity if it could not lay hold of such a transaction
as this is shown to be and set aside a sale of property acquired
under the forms of law and in defiance of natural justice.
The decree of the court below is therefore
Affirmed.
