Glenn v. Mickey

Opinion,

Mb. Justice Stebbett :

In April, 1888, appellants, J. D. Glenn and wife, executed and delivered to W. A. Mickey, one of the appellees, a deed of *596assignment in trust for tire benefit of all the creditors of said J. D. Glenn. The deed was duly recorded and trust accepted by the assignee. According to the evidence, the liabilities of the assignor, including a judgment for $2,522.25 in favor of his wife, did not exceed $12,00.0. His assets consisted of personal property, from which about $1,000 was realized at the assignee’s sale, August 30, 1888, and a farm of 160 acres, which on same day was struck down to Mr. Manifold, one of the appellees, at his bid of $76.50 per acre, amounting to $12,240. Prior to the sale, it was understood by the assignee that Mrs. Glenn desired to purchase a portion of the farm, and she was induced to believe that she would have at least an equal opportunity of doing so, with other bidders. With the view of offering the land in parcels, the assignee caused a survey to be made, and the farm divided, by a scaled line, into two purparts, one containing 60 acres, and the other, 100 acres. On the day of sale, the larger purpart was first offered, and bid up to $79.75 per acre by Mr. Manifold. The smaller purpart was then offered, and the highest bid therefor was $82 per acre, by Mrs. Glenn. The next lower bidder for same was Mr. Dye, the remaining appellee. Neither of these bids being accepted, the farm was then offered as a whole ; but, no bid equal to the others having been received, it was again offered in parcels, and Mr. Manifold renewed his bid of $79.75 per acre for the larger piece. Without endeavoring to ascertain whether either Mrs. Glenn or Mr. Dye would renew their former bids for the smaller piece, or giving either of them an opportunity of doing so, the farm was again offered as a whole, and struck down to Mr. Manifold at $76.50 per acre. Before that was done, however, there was an understanding or agreement between Mr. Manifold and Mr. Dye, that if the former became the purchaser, the latter should have the smaller piece at same price per acre. Whether the assignee was fully informed of this agreement or not, is, perhaps, doubtful; but, before the property was struck down to Mr. Manifold, the latter asked him whether Mr. Dye would be accepted as purchaser of the smaller piece, and the reply was that he would. On same evening, after the parties had returned home, the assignee, being fully informed of the previous arrangement, agreed that Dye should be considered the purchaser of the smaller, and Manifold the purchaser of the larger *597piece, at same price, viz., $76.50 per acre, and declared his purpose to convey to them accordingly. Before the sale was consummated by conveyance, however, the bill was promptly filed by the assignor and his wife, complaining of the conduct of the trustee and the alleged purchasers, and praying that the former be restrained and enjoined from executing and delivering a deed to the latter, or either of them, and that he be directed again to make public sale of said real estate, on terms and conditions most advantageous to the creditors and parties interested therein.

The foregoing and other facts substantially averred in the bill and found by the learned master are fully sustained by the pleadings and evidence. But it should be observed that the acts of the appellees mainly complained of are charged in the bill as having been done by them fraudulently and collusively. The master, in a very able and comprehensive report, after carefully reviewing the evidence, reached the conclusion that the alleged fraudulent and collusive qualities of said acts were not shown with sufficient clearness. He says he “ has carefully considered all the evidence, and finds it inadequate to satisfy him that the defendants, or either of them, resorted to artifice or trickery to procure the land at less than its value, or to silence competition on the part of Mrs. Glenn, or that they, or either of them, entered into any secret agreement or fraudulent scheme to enable Manifold and Djm to procure the farm at an under-value.” The quality of the'acts complained of is to be inferred from the established facts and their surrounding circumstances, rather than from positive proof of collusive or fraudulent intent. But, accepting as correct the conclusion of the learned master that the proof of actual fraud was insufficient, the acts above recited must be accepted as established facts, and their legitimate consequences cannot be ignored. The bid that was finally accepted for the farm, as a whole, was $12,240, while the aggregate bids offered for it in purparts was $12,895, a difference of $655 in favor of the latter. The acceptance of the former necessarily involves a loss of the latter sum to the assigned estate, and a corresponding gain to the purchasers. The only reason suggested for selling the land as a whole, instead of in purparts, is that Mrs. Glenn was an irresponsible bidder. The first answer to that is that no opportu*598nity was afforded her of showing her responsibility. The terms of sale were 10 per cent down, one half on execution and delivery of deed, and residue on credit with security. What right had the assignee to assume that Mrs. Glenn would not comply with the terms of sale, in case she had become the purchaser of the smaller piece, and had been required to do so ? None whatever. But, suppose she was unable to comply with the terms of sale, he had no right to assume that Mr. Dye, the next lower bidder for same purpart, would decline to take it at his bid, $81 per acre. He knew that Manifold was a bidder for the larger piece, and Dye a bidder for the smaller one, and that their aggregate bids, for the two pieces separately, amounted to nearly $600 more than he agreed to accept from them on the same day. Is it at all likely that any prudent man would thus deal with his own property ? It is the duty of the court to guard against pecuniary loss to cestuis que trustent, resulting, not only from fraudulent acts, but also from the imprudent and improper conduct of trustees. Mrs. Glenn, although she was the wife of the assignor and a party to the deed of assignment, had a right to expect and receive, at the hands of the trustee, at least as fair treatment as any other bidder at the sale. There is no evidence that she demanded anything more. She was interested as a judgment creditor, and naturally desired to secure her claim, and use it as the means of saving part of their homestead. There was nothing improper in this; certainly, nothing that can be regarded as a justification of the trustee’s conduct in refusing her bid, on the alleged ground of irresponsibility, without even affording her an opportunity of showing the contrary. But was she, in any proper sense of the term, an irresponsible bidder? The evidence shows she was not. The trustee himself is compelled, on cross-examination, to admit that the proceeds of the sale of the farm, at Mr. Manifold’s bid, in connection with the proceeds of the personal property, was sufficient to discharge all the liabilities of the assigned estate : “ Q. Didn’t the land sell, as you sold it, for more than was necessary to pay Mr. Glenn’s indebtedness ? A. I think it would have paid it. Q. Would not there have been some money left ? A. I don’t know. There may have been some outstanding debts, which have not been exhibited. Q. Are there any of these liens that are not secured? A. No, *599sir; I guess not. Q. Would not the liens have been paid in full, and money left? A. Yes, sir; I think they would.”

If there would have been some money left at the bid which was accepted for the farm as a whole, it follows that the surplus would have been increased by from $600 to $700 by accepting the bids of Mr. Manifold and Mrs. Glenn for the separate parts, and the assignor would have been just that much better off. The evidence shows very clearly that by accepting these bids the estate would have been the gainer, and the trustee would have incurred no increased risk. The matter was practically in his own hands. In addition to all this, the evidence shows that a responsible friend of Mrs. Glenn stood ready to assist her to the extent of at least $1,500; but no part of that would have been needed, if. the trustee had been disposed to act fairly and reasonably.

It was the duty of the trustee to sell the assigned property for the best price he could obtain. His co-defendants knew that he was attempting to sell the farm to them for about $600 less than the amount of their aggregate bids for same when it was offered in separate purparts, immediately before. They knew, or ought to have known, that that was an improper and unjust mode of disposing of trust property, and have no just reason to complain if they are not permitted to reap the fruits of the undue advantage they thus obtained.

If the assignee had been selling under an order of court, the usual course for the parties aggrieved would have been to except to the sale, and ask the court to set it aside; but, having obtained the consent of creditors to sell, without an order of court, divested of liens, the assignee was not acting under any order of court, and hence the only course open to them was to file the bill. In view of the facts established by the pleadings and evidence, there can be no doubt as to the jurisdiction of the court in the premises; and we are of opinion that the relief prayed for should have been granted. Our act of assembly, in express terms, gives Courts of Common Pleas the jurisdiction and powers of a court of chancery, so far as relates, inter alia, to “the control, removal, and discharge of trustees,” etc. The trustee in this case has shown, as we think, by his acts, that he is a proper subject for the control of a court invested with equity powers.

*600The farm should again be offered at public sale, so as to afford all parties an opportunity of bidding for the same as a whole and in parcels, as heretofore divided, and sold in such way as will command the highest and best price, and be for the best interests of the assigned estate. The offers of admittedly responsible parties are sufficient to' insure the realization of a sum more than enough to discharge the liabilities of the assignor and the legitimate expenses of administering the trust.

The percentage advanced by two of the appellees on account of their respective purchases, should be reimbursed, under the direction of the court, out of the proceeds of the sale, or otherwise.

Decree reversed; and it is now ordered and decreed that W. A. Mickey, the trustee, be restrained and enjoined from executing and delivering a deed or deeds to the defendants Joseph R. Manifold and John Dye, or either of them, conveying the real estate in question, or any part theréof, under or by virtue of any alleged sale heretofore made to them, or either of them, and that the said W. A. Mickey pay the costs of this suit, including costs of this appeal; and it is further ordered that the record be remitted to the court below, with instructions to order a public sale of the farm referred to, in accordance with this opinion.