Crown Life Insurance v. Candlewood, Ltd.

BACA, Justice

(dissenting).

Although I find Justice Montgomery’s opinion persuasive, I respectfully dissent. I would affirm the trial court’s judgment on all issues, including its decision not to set aside the foreclosure sale and to confirm Stahl’s exercise of his right to redeem the property.

It is well-settled law that “a judicial sale will not be set aside for inadequacy of price unless it be so gross as to shock the conscience, or unless there be additional circumstances which would make it inequitable to allow the sale to stand.” Las Vegas Ry. & Power Co. v. Trust Co., 15 N.M. 634, 649, 110 P. 856, 861 (1910) (quoting Blanks v. Farmers’ Loan & Trust Co., 122 F. 849, 849 (5th Cir.1903) (emphasis added)). I am not convinced this purchase price was so gross as to shock the conscience of the court. Nor am I persuaded that in addition to the purchase price, there are other circumstances that would make it inequitable to allow the sale to stand.

In the instant case, the trial court exercised its sound discretion in declining to vacate the judicial sale. Absent a clear showing of an abuse of discretion, that decision should not be disturbed on appeal. Wolf & Klar Cos. v. Garner, 101 N.M. 116, 679 P.2d 258 (1984). The court specifically found that the price at which Crown Life (and thus Stahl) purchased the property at the sale was not so low as to shock the conscience of the court. While for the purposes of review it would have been preferable for the court to have clarified its reasons for its conclusion, the lack of additional findings on this issue does not mandate the reversal of an otherwise sound trial court decision.

Although the court made no precise finding as to the value of the property, there was sufficient evidence before it in the form of testimony and appraisals for the court to conclude that the purchase price did not shock its conscience. While conflicting inferences may be drawn from evidence presented, on appeal the evidence is viewed in the aspect most favorable to the action of the court. Jones v. New Mexico Racing Commission, 100 N.M. 434, 671 P.2d 1145 (1983). If the record is doubtful or deficient, we will indulge every presumption in support of the court’s judgment. Luxton v. Luxton, 98 N.M. 276, 648 P.2d 315 (1982).

The evidence at the trial established that the value of the property “as repaired” was approximately $1,480,000. Deducting an estimated $600,000 for repairs, the estimated value of the property at the time of sale was roughly $880,000. Thus, it appears that, in addition to the sale price, Stahl would have to invest an additional $600,000 for an investment worth perhaps $880,000 to $1,290,000. Considering the circumstances of this case and indulging every presumption in favor of the trial court’s decision, a comparison of the figures does not lead to the conclusion that the low bid price was so gross as to shock the conscience.

The majority also contends that the presence of “other circumstances” when combined with an inadequate price impeach the fairness of the transaction. Here, despite the absence of any misconduct,1 the majority relies on circumstances surrounding Crown Life’s mistakes and the loss Crown Life incurred as compared to Stahl’s “windfall” to justify vacating the sale.

The trial court, however, determined that these mistakes were unilateral mistakes, mistakes of law, and the result of Crown Life’s own negligence. As a general rule, when the party’s mistakes are so characterized, the trial court is justified in refusing relief. H. McClintock, Handbook of the Principles of Equity, § 90, at 244 (2d. ed. 1948). I am not persuaded that sufficient grounds exist to support the majority’s application of the exception to this general rule. Generally, “when relief is allowed for a unilateral mistake, the court has stressed the knowledge of the mistake by the other party.” Id. Whereas, in this case, as the majority opinion notes, Stahl’s actions were “innocent and proper.” So far as I can determine from the record and as the trial court found, Stahl did not commit any wrong in this transaction. The court found that Stahl was unaware of the bidding instructions, and any mistakes made by Crown Life were unilateral and not induced in any way by Stahl. The sale was widely advertised and the bidding was competitive. Nothing in the record indicates that there was any unfairness in the manner in which the sale was consummated, and the court’s findings have ample evidentiary support. See First National Bank v. Garrett, 80 N.M. 239, 453 P.2d 759 (1969).

Nor am I persuaded that the hardship to Crown Life is so great as to justify vacating the judicial sale. Both Stahl and Crown Life were knowledgeable in the ways of business, and both sought to use their best business judgment, expertise, and resources in an attempt to gain some advantage from this particular business venture. While it appears that Stahl may have gained the edge in the course of this transaction, his investment remains a speculative venture. At the time of the sale, the property was in extremely poor condition, requiring approximately $600,000 in repairs. Even if Stahl invests additional funds to repair these apartments, there is no guarantee that he will be able to make a profit where Crown’s debtors could not. Based on the record, one would need to resort to conjecture to determine whether Stahl actually acquired a windfall. At best, he purchased an uncertain investment at a moderately good price.

Many business undertakings are speculative in nature, and, therefore, give rise to numerous and sometimes large investment losses. Under these circumstances, I do not believe that our role is to equitably intervene to remedy the unfortunate effects of an unsound business decision. While our function is to apply legal rules and principles to right wrongs and remedy injustices, Armstrong v. Csurilla, 112 N.M. 579, 817 P.2d 1221 (1991), here, I perceive no violations of any rule or principle. The trial court clearly determined that Crown Life failed to overcome the presumption of regularity attending the judicial sale. Id. at 594, 817 P.2d at 1236; see 59 C.J.S. Mortgages § 752(e) (1949). In this instance, I cannot say the court abused its discretion in denying Crown Life equitable relief.

SOSA, C.J., joins in dissent.

. In Las Vegas Railway & Power Co. v. Trust Co., 15 N.M. 634, 110 P. 856 (1910), we listed a number of additional circumstances that justify vacating the sale. The identifying characteristic of each of the listed circumstances is the misconduct by the purchaser or other person connected to the sale. Id. at 650, 110 P. at 861. Here, there is no finding of misconduct, rather the court found only that Crown made several mistakes.