Raleigh & CR Co. v. Baltimore Nat. Bank

• Decision Date: 28 October 1941
• Docket Number: No. 548.,548.
• Citation: 41 F. Supp. 599
• Court: U.S. District Court — District of South Carolina
• Parties: RALEIGH & C. R. CO. v. BALTIMORE NAT. BANK.

41 F. Supp. 599

RALEIGH & C. R. CO. v. BALTIMORE NAT. BANK.

No. 548.

District Court, E. D. South Carolina.

October 28, 1941.

W. R. C. Cocke, of Norfolk, Va., for plaintiff.

Francis Key Murray, of Baltimore, Md., for Protective Bondholders' Committee.

H. M. DuBose, Jr., of Winston-Salem, N. C., for J. S. Farlee & Co., Inc.

Louis M. Shimel, of Charleston, S. C., for Garson Iron & Steel Co.

McEachin & Townsend, of Florence, S. C., for Hyman-Michaels Co., of Chicago, Ill., and another.

D. Heyward Hamilton, Jr., of Baltimore, Md., and Paul A. Cooper, of Columbia, S. C., for defendant.

WYCHE, District Judge.

Pursuant to the order of this Court heretofore made, the Special Master, therein appointed, offered for sale the property of the plaintiff described in the order, to the highest bidder, on Saturday, October 4, 1941, after due advertisement and making public proclamation of the terms and conditions of the sale, as provided for in the decree and notice of sale. At such sale Hyman-Michaels Company of Chicago, Illinois, and Rochester Iron & Metal Company of Rochester, New York, were the last and highest bidders, and the property was sold to them for the sum of sixty six thousand, nine hundred ($66,900) dollars, and they now apply to this Court for an order confirming the sale. J. S. Farlee & Company, Inc., a holder of plaintiff's 4% prior lien bonds, excepts to the confirmation of the sale to the successful bidders, and offers a bid in the amount of eight thousand, one hundred ($8,100) dollars, in excess of the highest bid received at the sale, and contends that the sale should be set aside for the reason that the highest bid is inadequate, and that investigation prior to the sale disclosed none of the property advertised for sale described as being situated in Robeson County, North Carolina, had appeared upon the tax books for several years listed in the name of the plaintiff, and that information was received from a Mr. Stanley that various parties in South Carolina had openly expressed claims adverse to any prospective purchasers for properties located in that state, and that this investigation and information caused Farlee and Company to reduce substantially the value that would otherwise have been placed upon the aggregate of the property to be sold, and that it was not until after the sale that it could be concluded that this apparent defect in title was due to failure to list the particular properties for taxes. Counsel for the Receivers and Trustee for the bondholders raised no objection to the confirmation of the sale. Counsel for the Bondholders' Protective Committee did not appear, but petitioned the Court before the hearing to confirm the sale. Garson Iron and Steel Company, one of the bidders at the sale, appeared by counsel and while raising no contest, its counsel stated in open court that if the sale were vacated his client would increase the total bid by ten thousand, one hundred ($10,100) dollars.

Concerning judicial sales it has been well-settled that: (1) When a sale of property is decreed by a court of equity as result of litigation, it is the purpose of the law that it shall be final; to assure reliance upon such sales and induce biddings, no sale should be set aside for trifling reasons or on account of matters which ought to have been attended to by the complaining party prior thereto; and it cannot be tolerated that either party should designedly wait until the property has been struck off to the other and then open the bidding and defer the sale by an increased offer. Pewabic Mining Company v. Mason, 145 U.S. 349, 12 S.Ct. 887, 36 L.Ed. 732. (2) A judicial sale is not final and complete until it has been duly confirmed and ratified by the Court under whose order it was made. Blossom v. Milwaukee & C. R. Co., 3 Wall. 196, 70 U.S. 196, 18 L.Ed. 43. (3) A judicial sale regularly made in the manner prescribed by law upon due notice, and without fraud, unfairness, surprise or mistake, will not generally be set aside or refused confirmation on account of mere inadequacy of price, however great, unless the inadequacy is so gross as to shock the conscience and raise a presumption of fraud, unfairness, or mistake. Whether the price bid is grossly inadequate and whether and upon what grounds confirmation should be refused are matters within the judgment and discretion of the tribunal ordering the sale, with the exercise of which an appellate tribunal will not interfere except in cases of abuse. Speers Sand & Clay Works v. American Trust Co., 4 Cir., 52 F.2d 831, 835. (4) If the inadequacy of price is so gross as to shock the conscience, a Court of Equity would doubtless seize upon other circumstances impeaching the fairness of the transaction as a cause for vacating it. Robinson v. Association, 14 S.C. 148; Schroeder v. Young, 161 U.S. 334, 16 S.Ct. 512, 40 L.Ed. 721. (5) But the circumstances impeaching the fairness of the transaction should relate to the conduct of the officer making the sale, or to the conduct of the purchaser participating, in the attempt to stifle competition, chill the bidding or to take any other undue or unfair advantage. Ex parte Cooley, 69 S.C. 143, 48 S.E. 92; Graffam v. Burgess, 117 U. S. 180, 6 S.Ct. 686, 29 L.Ed. 839. (6) Any...