Further light, developed on the rehearing, has convinced me that our former opinion (ante, 144) is wrong. I concur with Mr. Justice WIEST in affirmance of the decree.
The principal issue is whether that part of the decree is in error which permits plaintiff, as trustee, to purchase the premises upon foreclosure sale without producing bonds or paying cash to cover the bid.
The authorities are in conflict upon whether, without provision in the trust instrument therefor, the court, on foreclosure, may authorize the trustee to bid at the sale, hold the property in trust, and dispose of it, for all the bondholders. See First National Bank in Wichita v. Neil,137 Kan. 436 (20 P. 528), and annotations, in 88 A.L.R. 1252.
That point was considered in Detroit Trust Co. v.Stormfeltz-Loveley Co., 257 Mich. 655 (88 A.L.R. 1263), but the case has no application here because the facts are different.
But no case has been cited or found which denies the validity or effect of such an express provision in the mortgage. Nor has reason been advanced why parties in sui juris may not so contract. *Page 720
In the mortgage at bar, the trustee is expressly given authority to bid for and purchase the premises at foreclosure sale. But for whom?
The mortgage does not declare in haec verba that the trustee may buy only for all the bondholders. But the instrument is incapable of any different construction. It precisely prescribes the rights and duties of the parties which arise, and what shall happen to the premises, when the trustee buys. Article IX, § 5, provides that if the trustee buys:
1. All bondholders shall pay the trustee their proportion of the costs and expenses of the foreclosure, including attorney and trustee fees, and certain other expenses and advances of the trustee; and the trustee has a lien therefor on the bondholders' interests in the premises and proceeds of subsequent sale. Parenthetically, this provision persuasively negatives the idea that the trustee must pay the bid, or any part of it, in cash in order that a payment may be made to the bondholders. It clearly contemplates that, instead of receiving money from the trustee when it bids and buys, the bondholders shall pay money to the trustee, not only for its general advances and compensation but for money spent by it in acquiring the title for their benefit.
2. The trustee may manage the property, sell it and distribute the proceeds ratably among those entitled thereto.
Other provisions of the instrument require pro rata distribution of all collections on the debt and proceeds of sale of the premises and emphasize the continuous representation of all bondholders by the trustee. It contains no language providing for or contemplating a purchase on foreclosure by the trustee personally, or for any person, or private group. The words declaring the effect of purchase *Page 721 by the trustee and setting up the future disposition of the premises are so clear that any bondholder, reading the instrument, would be advised that, no matter in what capacity the trustee assumes to buy or with what, it may buy only for all the bondholders.
This conclusion is reached upon the terms of the mortgage itself, without special consideration of fiduciary relationship and duties of trustee to bondholders and without dragging the second sentence of article X, § 2, from its ambush.
It is true that the trust instrument contains no provision expressly stating that the trustee may buy without cash or bonds. It is wholly silent upon whether the trustee must, or need not, pay in cash or bonds. Few, if any, contracts set up in words all the details that may be involved in their execution. When the occasion arises, the silences in them are made articulate by operation of law upon, or necessary or reasonable intendment from, the relationship, powers, rights and obligations expressly provided in the contract. If details of procedure are necessary on foreclosure to protect parties, the court may provide them in the decree.
What rule of law is applicable here? When bidding for all the bondholders, on authority from them, the trustee represents the entire mortgagee interest. Its position, therefore, is not different from that of a private mortgagee on foreclosure of his mortgage. This court holds that a mortgagee may purchase on foreclosure without payment of his bid, to the amount of his mortgage, because the ritualism of payment by the mortgagee to the selling officer and the return of the money by the selling officer to the mortgagee would make the payment no more than an "idle gesture." Griffin v. Union *Page 722 Guardian Trust Co., 261 Mich. 67; Feldman v. Equitable TrustCo., 278 Mich. 619.
It would be equally an "idle gesture" for a trustee, buying for all bondholders, to pay the bid price in cash to the circuit court commissioner because the commissioner would turn it back to the trustee to be applied as the mortgage requires. And if the trustee or others had advanced personal money to buy for all bondholders, the trustee would repay the advance and every one would be back at the point from which he started.
Also, in instances where bondholders are numerous or recalcitrant, so united action and proportional advance from all could not be had, the power of the trustee to bid for all the bondholders would be wholly or substantially nullified by a requirement that its bid be paid in cash or bonds because of the lack of incentive in anyone to advance money or bonds for the benefit of all bondholders instead of using the funds for personal benefit.
In my opinion, the instrument expressly provides that the trustee may purchase on foreclosure, but only for all the bondholders, and, by operation of rules of law and intendment from the power given, it need not pay the bid in cash or bonds.
The authorities, although few upon the precise question, support this position. None has been cited to the contrary.
Kitchen Bros. Hotel Co. v. Omaha Safe Deposit Co.,126 Neb. 744 (254 N.W. 507), is in direct point upon the essential facts that the trust instrument expressly provided that the trustee might bid, the use of bonds was permitted as at bar, no express provision requiring, or dispensing with, cash or bonds was set up, and the trustee was authorized to manage and dispose of the premises after the purchase. *Page 723 The court sustained a provision in the decree of foreclosure that the trustee could give the selling officer a receipt as the equivalent of money.
In Straus v. Chicago Title Trust Co., 273 Ill. App. 63, the court found in the trust instrument authority in the trustee to purchase without production of bonds (the equivalent of article X, § 2 above referred to in the instrument at bar) and held, not only that the trustee could purchase without bonds or cash, but, in the discretion of the court on petition of a bondholder, the trustee could be compelled to buy. It was the ruling on compulsion that was criticized in 29 Illinois Law Review, p. 218, as permitting the court to change the contract of the parties.
The Straus trust deed does not appear to have contained any provision as to disposition of the property after the purchase by the trustee and it was evidently in support of its construction of the trust deed that the court discussed, with approval, the cases holding the doctrine of inherent power in the trustee to buy and dispose of for all the bondholders, the theory rejected by this court in the Stormfeltz-Loveley Case. In Chicago Title Trust Co. v. Robin, 361 Ill. 261 (198 N.E. 4), the court rejected the inherent power doctrine and distinguished the Straus Case on the ground it concerned express contract power, approving the ruling that the bid need not be paid in cash and bonds in these words:
"A trustee may be authorized by a trust deed to take the trust property on foreclosure sale for the benefit of all the bondholders and have the necessary or incidental power to bid it in at such sale."
Cosmopolitan Hotel, Inc., v. Colorado National Bank, 96 Col. 62 (40 Pac. [2d] 245, 96 A.L.R. 1446), denied the trustee the right to bid without payment of cash, on protest of minority bondholders, because *Page 724 the court held the trust instrument in terms specifically required cash payment. The majority opinion stressed this point by distinguishing other cases on the ground that "nothing appears to indicate that the sale was required to be for cash." In the light of a strong dissenting opinion and the insistence of the majority on the terms of the instrument, it is fairly inferable that the court would have held cash payment by the trustee unnecessary had not the instrument expressly required it.
Smith v. Massachusetts Mutual Life Ins. Co., 116 Fla. 390 (156 So. 498, 95 A.L.R. 508), is not to the contrary. The trust instrument authorized the trustee to purchase and contained a provision which the court held permitted the trustee to discharge the purchase money by a receipt. The court held that these provisions authorized the trustee to purchase for the bondholders, and to take title and to execute a mortgage, but whether execution of the mortgage was under an express or implied trust the court would not say because it was unnecessary to decision. The point was upon the power to buy for the bondholders, not upon whether cash had to be paid. The opinion contains no expression as to the necessity to pay bonds or cash when the trustee is authorized to, and does, bid for all the bondholders and when the trust instrument defines the subsequent duties and powers of the trustee over the premises. It must be remembered that, in the case at bar, the trust instrument not only expressly authorizes the trustee to purchase but expressly provides for the care and disposition of the property by it.
It is suggested that a contrary conclusion is demanded because of the provision in the instrument that, if a purchaser uses bonds on his bid, he must present them for credit thereon of the amount apportionable *Page 725 to them. The argument is that when the trustee bids, but not with cash, it necessarily follows that it bids with bonds, and it must present them for credit.
We need not discuss the conflict upon whether express provision is necessary to entitle the use of bonds on a bid. The provision therefor is common to trust instruments, and whether necessary or merely precautionary, it is no more than (1) permission or (2) declaration of right, so to use the bonds. In either case, it cannot be construed as a command to use bonds nor a limitation on other rights. As a matter of fact, it is wholly for the benefit of the bondholders, to make it easier for them to finance a bid by using credit for cash. At most, it is an option, and if not exercised, the instrument stands as though the whole provision were stricken from it.
When the trustee buys for all bondholders, it has a decree in its favor, into which the liability on the bonds has been merged, at least for the purposes of the foreclosure (Shields v. Riopelle, 63 Mich. 458), and upon which automatic credit is given for the purchase price unless the court provides a procedure. The trustee uses the money decree, not bonds, to bid and buy.
But, it is urged, the power would be prejudicial to the mortgagor because he is entitled to have the bonds presented at foreclosure and proper credit indorsed thereon as protection in case of action at law on the bonds by individual holders. Bonds are not produced and credit indorsed when the sale is made for cash. The decree establishes the liability of the mortgagor and the sale price establishes his credit thereon for all purposes, regardless of what is used to buy. Also, it is the law of this State that, after *Page 726 foreclosure bill is filed, while suit is pending and after decree, no action at law on the debt may be maintained without leave of court. 3 Comp. Laws 1929, § 14367. In any event, and whether action at law be on the bonds or the decree, the mortgagor would have proper credit.
It has also been suggested that many evils may result from a ruling permitting the trustee to buy on foreclosure without producing bonds or cash. The complaint that competition would be stifled is fully answered in Detroit Trust Co. v.Stormfeltz-Loveley Co., supra. Other suggested evils may or may not occur. It may be that the authority would save bondholders from loss through sacrifice sale and by preservation of the property for a favorable market. This is the evident purpose of the power. Possibility of loss is inherent in all business transactions and all parties to a contract voluntarily assume the risks in it. The responsibility for the contract rests upon the parties. The court must give it effect as it is made. It cannot rewrite it because of a fear or conviction that it will not work well. And, of course, when the contract sets up trust relationships, courts of chancery still have jurisdiction. And actionable wrongs may be redressed in law or equity. See Sage v. Railroad Co., 99 U.S. 334.
While of no particular effect upon the construction of the trust instrument, it may be noted that no bondholder is here complaining of the decree permitting the trustee to bid and buy without bonds or money.
Defendants' contention that the ruling would carry the case into a new trust arising from purchase by the trustee and, thus, beyond the statutory jurisdiction of the court on foreclosure, is without merit. When the foreclosure is completed, the case *Page 727 is closed. Any rights and remedies outside the scope of foreclosure and existing or arising thereafter may seek another forum.
Upon reconsideration, I think the following statement in the former prevailing opinion was too broad:
"We hold the question of when the sale is to be made under a foreclosure in equity is within the sound discretion of the trial judge."
In ordinary foreclosures, it is for the mortgagee, not for the mortgagor or court, to determine the time of sale.Redfield v. Reid, 148 Mich. 545; 103 A.L.R. 1441, note. The note in A.L.R. indicates authority to the effect that in foreclosure of trust mortgages, the court, in its discretion and on petition of bondholders, may order the time of sale in certain cases. The refusal of the court in the instant case to order sale at or within a definite time was right, whether from the exercise of discretion or from lack of jurisdiction to do otherwise. Decision on the point may rest on such alternative reasons. The power of the court to fix the time of sale may be left to future consideration in a proper case.
SHARPE, and CHANDLER, JJ., concurred with FEAD, C.J.