Austin v. Hatch

Lathrop, J.

The plaintiffs, second mortgagees, by a bill in equity, seek to set aside a sale made under a power contained in a first mortgage. The case is before us on an appeal by the plaintiffs from a decree sustaining a demurrer filed by the purchaser at the sale and dismissing the bill. The legal advertisement of the sale described the estate as a certain parcel of land, and gave the metes and bounds as described in the mortgage. After the mortgage was delivered, the mortgagor erected four houses on the land. This fact was not known to the mortgagee until the day of the sale, and was not stated in the advertisement. Though the plaintiffs do not impute bad faith to the mortgagee, they contend that it was carelessness on his part not *199to ascertain the condition of the property, and give notice in the advertisement of the fact that the land was improved.

We are of opinion that this is not a sufficient reason for setting aside the sale. The description given in the mortgage was followed. The improvements were obvious to those who attended the sale. There is nothing in the bill to show that there was not a number of bidders present, or that the sale was not conducted as an auction sale should be conducted. Stevenson v. Hano, 148 Mass. 616.

It is further alleged in the bill, that the property was worth $5,000, and was sold for $2,525; and the plaintiffs seek to have the sale set aside on the ground of inadequacy of price. Mere inadequacy of price is no reason for setting aside a sale. King v. Bronson, 122 Mass. 122, 128. Wing v. Hayford, 124 Mass. 249. Learned v. Geer, 139 Mass. 31. In Clark v. Simmons, 150 Mass. 357, 361, it is said, “ Inadequacy of price will not invalidate a sale, unless it is so gross as to indicate bad faith, or a want of reasonable judgment and discretion in the mortgagee.” In King v. Bronson, the property sold for $600. It was found to be worth more than $2,000 and less than $2,600. In Wing v. Hayford, the land was sold to the agent of the mortgagee for $3,000, though it appeared that the mortgagee authorized the agent to bid as high as $6,000. In Learned v. Geer, the sale was for $2,000, and the property was found to be worth $2,500. In Clark v. Simmons, the sale was for $1,200, “ which amount was at least two hundred dollars less than its fair market value.” The amounts in the last two cases are taken from the papers on file.

In the case at bar there is no allegation that an adjournment of the sale would have resulted in a higher price being realized. It is a notorious fact that, when land is sold by auction under a power contained in a mortgage, it seldom, if ever, brings a price which reaches its real value. If this is a hardship upon a mortgagor or those claiming under him, it is owing to the contract which he has made, and which the mortgagee has a right to have carried out. On the allegations of this bill we see no reason for setting aside the sale.

It is further contended by the plaintiffs, that the purchaser is a son in law of one of the owners of the equity of redemption, and that he acted in collusion with such owners for the purpose *200of acquiring the estate for them, relieved of the claims of the plaintiffs, who hold subsequent mortgages. There is, however, no allegation of any collusion between the mortgagee who made the sale and the purchaser, or between the mortgagee and the owners of the equity. The mortgagee is therefore entitled to receive the purchase money, which, after his own claim is paid, he will hold in trust for the parties entitled to it. As he is entitled to have the sale carried out, we cannot restrain by injunction the purchaser from paying the money to him.

Gf. D. Smith $ W. C. Smith, for the plaintiffs. S. L. Whipple, for the purchaser.

Decree affirmed.