Cromer v. DeJarnette

Miller, J.,

dissenting.

I am unable to agree with the conclusion reached in the majority opinion.

. Appellant sought rescission of the sale and cancellation of the trustee’s deed on the grounds that (a) the property was improperly and insufficiently advertised, and (b) the price obtained grossly inadequate.

The terms of the deed of trust and the requirements of section 5167 of the Code in effect at the date of the execution of the deed permitted the property to be advertised “in such reasonable manner as the trustee may elect.” (Emphasis added.) His discretion was wide, but not unlimited. He could select the method of advertising provided it was reasonably calculated to notify the public within the customary area of the time, place and terms of the sale. Anything short of that cannot be termed advertising in a reasonable manner.

The sole mode selected was to mail handbills to different post offices in Orange county with the request that they be posted. Whether this constituted a proper exercise of his discretion and a sufficient performance of his duties present a factual question. It is to be determined and measured by *689a consideration of the local custom obtaining, if any, relative to the manner in which similar sales are advertised, what was actually done in this instance, the results obtained, and any other circumstances tending to establish the ultimate effectiveness of his actions.

It appears that there are at least fifteen post offices in the county. The trustee admits that he personally posted only one bill—that at Orange courthouse. Prior to the sale, he visited several places to which bills had been mailed, but neither inquired nor ascertained if any had been' actually

To whom and where he mailed these bills for posting was a fact peculiarly within his knowledge. Yet, from his and all other testimony in the case, it is only affirmatively established that they were posted in three places.

The trustee testified that the custom in Orange county for advertising sales under deeds of trust executed when this was executed; which was in 1939, was by posting bills at Orange and mailing others to the post offices in the county. However, another well-informed witness who is the publisher of the local newspaper testified that judicial and trustee’s sales were advertised in that paper in ninety per cent of the cases in which such sales are now made.

Appellant had no knowledge of the actual time and place of sale. The debt was past due about six and one-half years. The unpaid principal and accumulated interest amounted to between fifty and one hundred dollars. The last curtail had been made in 1943. The debtor was not advised or warned that unless payment was made by some fixed time his property would be sold. If the time and place of sale had been advertised in the customary -manner then obtaining, the chances are he would have learned of it and been able to protect his interest, though notice to him is not mandatory.

The five and one-half acres of land and modest residence thereon face State highway No. 20 and are slightly more than a quarter of a mile from Locust Grove, yet no handbill was posted at that nearby village and post office and' *690none placed upon the property. The nearest posted bill was more than three miles from the property and the sale held in Orange, Virginia, nineteen miles distant. These circumstances and conditions were not calculated to notify or secure attendance of persons likely to purchase.

One resident of Locust Grove who was interested in purchasing a home in that community testified that the property was worth $1,000. From the information he received, he erroneously thought it was to be sold on February 6th, and was not present at the sale. Had it been advertised in Locust Grove, he most likely would have known the correct day of sale.

There were only two bidders, the creditor and the purchaser. Though both the trustee and purchaser testified, the evidence does not show that any persons other than the creditor, trustee and purchaser attended. The purchaser started bidding at $100, then the creditor submitted a bid of $200 which was raised by the purchaser to $250. There the bidding ended. It might well be concluded that the creditor was only concerned in bidding an amount sufficient to insure payment of her secured debt and was not interested in obtaining the property at a reasonable price. She made only one bid and quit. This cannot be correctly termed a well attended sale where spirited bidding obtained, though “spirited bidding” is a recital in the trustee’s deed.

The mere selection of a proper method of advertising by the trustee is not a performance of the duty imposed upon him. It is encumbent that he actually advertise the property in a reasonably sufficient manner.

In my opinion, the sum total of these facts and circumstances -establish that the property was not advertised in an adequate manner. I deem it ample to overcome the prima facie presumption accorded thé recital in the trustee’s deed that the sale was properly advertised.

The majority opinion sustains the finding of the chancellor that the property was properly and adequately advertised. Having so concluded, it then considers the sufficiency of the price as a matter wholly separate and apart from the adver*691tisement and the circumstances incident thereto. I do not think the two assignments of error can be so completely divorced from each other.

Even if it be conceded that the advertisement complied with the letter of the deed of trust and the pertinent statute, yet I think the effectiveness and practical sufficiency of that bare compliance must be weighed and considered to some extent in finally passing upon the adequacy of the price and the rights of the parties. It secured the attendance of only two bidders. One of these was partially, if not wholly, interested in the payment of her debt instead of actually desiring to acquire property. When her one bid was made, all competition ceased.

• In affirming the decree, all conflicts in the evidence are resolved in favor of appellees—and the value found to be $600 to $700. If the very minimum figure of $600 be accepted, the sale price was only 41 per cent of that sum.

The cases of Hopkins v. Givens, 119 Va. 578, 89 S. E. 871, and Perdue v. Davis, 176 Va. 102, 10 S. E. (2d) 558, are cited as authority for the principle applied and the conclusion reached. I have no difficulty in agreeing with the fundamental principle announced—that is—that the sale should not be disturbed for inadequacy of price unless it be so great as to shock the conscience of the court and raise a presumption of fraud. Yet I also believe that if the price be decidedly inadequate, all circumstances surrounding the sale should be scrutinized and weighed in arriving at the ultimate conclusion. In other words, the practical sufficiency of the advertisement, the number of persons in attendance or possible bidders present, the character of the bidding, and the like should be considered.

In sustaining the sale in Hopkins v. Givens, supra, circumstances of like character were recognized and accorded their due weight in the final analysis. It was there established that handbills were posted in the town where the property was located and “the sale was well attended and several persons participated in the bidding.” Nor did the complaining party there prove the value of the property sold. *692The subject matter was an undivided interest in a lot and the witnesses gave their opinion merely as to the value of the entire lot. They expressed no opinion upon the value of the interest sold.

In Perdue v. Davis, supra, the owner was aware of the character and manner of advertising many weeks prior to the sale. He had secured a months adjournment and readvertisement before the ultimate sale was held. There were four participating bidders. The minimum value of the land was $6,000, and the sale price $3,250—that is—the sale was for more than 54 per cent of the minimum value.

I find here no such saving circumstances as appear in those two cases.

The same general principle is applicable when judicial sales are attacked for alleged inadequacy of price. Certainly after confirmation, they may not be set aside solely for mere inadequacy of price unless it be of such* moment as to in and of itself shock the conscience of the court and raise a presumption of legal fraud. In 50 C. J. S., “Judicial Sales”, sec. 59, p. 678, we find the rule stated thus—

“Although there is some authority to the contrary, ordinarily a judicial sale will not be set aside, even though the price is grossly inadequate, unless the inadequacy is so great as in itself to raise a presumption of fraud, unfairness, or mistake, or to shock the conscience of the court, and a resale may be reasonably expected to result in a substantially higher price.”

Among the cases there cited in which mere inadequacy of price was deemed sufficient to vitiate the sale is Walker v. Smith, 144 Va. 824, 130 S. E. 768. A bid of $1,000 had been accepted and confirmed by decree of court. An upset bid of $2,000 was made. The evidence previously submitted to the commissioner disclosed the value to be $2,250. The original purchase price of $1,000 was therefore about 44 per cent of the value determined from the testimony theretofore taken. The trial court set aside the sale and directed a resale with the bidding to start at $2,000, *693the amount of the upset bid. Upon appeal, that action was approved and affirmed.

That sale had been made “at public auction after due and sufficient advertisement in accordance with the directions contained in the decree,” nevertheless, in commenting upon the inadequacy of the price, which was the sole ground of attack made upon the sale, the court said:

“With this state of facts, was $1,000.00 a grossly inadequate price? We think that there can be but one answer to that question, and the decree of the learned chancellor in the lower court, holding that it was grossly inadequate, seems to us in that particular to be clearly right. We have been cited to no case, nor have we been able to find one, where the disparity was as great, that the courts have not held it to be grossly inadequate.”

There the confirmed sale price of $1,000 bore the relation of about 44 per cent to the previously ascertained value of $2,250. It was held to be grossly inadequate and the sale set aside. Here the $250 sale price bears the relation of about 41 per cent to the ascertained value of $600 and is allowed to stand.

I am not unmindful that public bidding should be fostered and not discouraged. To accomplish that, judicial sales should not be set aside for mere inadequacy of price unless it be so pronounced as to shock the "conscience, or the sale be attended with other circumstances of unfairness or mistake. Dunn v. Silk, 155 Va. 504, 155 S. E. 694, 71 A. L. R. 667; Keyser v. Federal Land Bank, 169 Va. 368, 193 S. E. 489, and Schweitzer v. Stroh, 182 Va. 842, 30 S. E. (2d) 689.

This, I think also applies with equal reason and full force to foreclosure sales. Yet, in my opinion, full recognition and adherence to that principle does not require or justify approval of a sale at a price so definitely and grossly inadequate with relation to the conceded value of the property as here disclosed when made under the conditions and circumstances appearing in this record.

Staples, J., concurs in this dissent.