Dunn v. Silk

• Citation: 155 Va. 504
• Parties: MILDRED EDDY DUNN v. W. H. SILK, ET ALS.
• Decision Date: 13 November 1930
• Court: Supreme Court of Virginia

Page 504

155 Va. 504

MILDRED EDDY DUNN v. W. H. SILK, ET ALS.

Supreme Court of Virginia, Staunton.

November 13, 1930.

Present, Prentis, C.J., and Holt, Epes, Gregory and Browning, JJ.

1. JUDICIAL SALES AND RENTINGS — Adequacy of Price — Affidavits and Values Fixed for Taxation. — Neither ex parte affidavits nor values fixed for taxation are usually very convincing upon the question of whether an adequate price has been obtained at a judicial sale, but they have some value.

2. JUDICIAL SALES AND RENTINGS — Upset Bid — American and English Practice. — A practice prevailed in England prior to the act of 30 and 31 Vict., chapter 48, of opening the biddings in a judicial sale upon the receipt of an advance bid before confirmation, usually required to be an advance of ten per cent. This rule of practice, now no longer the English rule, has been rejected by a majority of the American courts, but seems to have been followed by the earlier cases in Virginia, but not by the later cases.

3. JUDICIAL SALES AND RENTINGS — Infants. — The settled principles governing judicial sales are applicable alike to infants and adults, and they have never been disturbed because infants were interested in the subject matter of the sale.

4. JUDICIAL SALES AND RENTINGS — Inadequacy of Price. — The ancient rule that property should not be sold at judicial sales for grossly inadequate prices is still effective.

5. JUDICIAL SALES AND RENTINGS — Inadequacy of Price — Upset Bid — Burden of Proof to Show Inadequacy. — If the auction sale has been fairly conducted after proper advertisement and the property brings a fair price, the sale should generally be confirmed to the highest bidder, notwithstanding a belated upset bid of ten per cent advance thereon, thereafter submitted. If, however, the original bid is grossly inadequate, and this is shown, the sale should not be confirmed. Of course, the burden of showing such gross inadequacy is upon those who allege it.

6. JUDICIAL SALES AND RENTINGS — Adequacy of Price — Upset Bid — Rights of Bidder at a Reasonable Sale. — When the court undertakes to sell land, it, like an individual, is naturally anxious to obtain the best possible price, and if there were never to be another sale, an upset bid, however small, might with reason be received, although this does not necessarily follow because the first bidder has some rights. It is to be remembered that judicial sales must continue and so a course of dealing must be mapped out which will, in the long run, operate in the interest at large of those whose property is forced upon the market and which will also be fair to purchasers who sometimes at cost and inconvenience make arrangements to buy at public offerings.

7. JUDICIAL SALES AND RENTINGS — Bidding to be Encouraged. — At judicial sales and rentings public bidding should be encouraged and not chilled. Certainly it would not be fostered were it known that the successful bidder would take nothing but the right to bid again at another sale.

8. JUDICIAL SALES AND RENTINGS — Inadequacy of Price — Upset Bid — Particular Facts of Case. — When inadequacy of price is alone relied upon to support an upset bid, where the sale was fairly held, it should not be received unless it affirmatively appears from the evidence that the inadequacy was gross. It is difficult to formulate any more definite rule than this, and each case must in a large measure turn upon its own peculiar facts.

9. JUDICIAL SALES AND RENTINGS — Upset Bid — Case at Bar. — In the instant case plaintiff in error was the purchaser of a farm at public sale for the sum of $21,000. The commissioners recommended a confirmation of the sale unless an upset bid was filed complying with the laws governing upset bids, in which case they would not recommend a confirmation as they believed the property was worth more than $21,000. Shortly thereafter defendant in error put in an upset bid for $23,100, which was accepted by the court. No fraud or sharp practice was suggested. The case therefore was merely the naked effect of an upset bid of ten per cent, made by a bidder not present at the sale, fully and fairly advertised, as against a purchaser who had fully complied with its terms. As the trial court believed $23,100 was a fair and adequate price, if its judgment in this particular was sound, $21,000 could not have been grossly inadequate. From the affidavits of the auctioneer and a witness present at the sale, $21,000 appeared to have been a fair price. No counter-affidavits were filed on behalf of the upset bidder.

Held: That the upset bidder had no standing and the sale to him must be set aside and that made to the original bidder, plaintiff in error, confirmed.

Appeal from a decree of the Circuit Court of Bath county. Decree in favor of an upset bidder at a judicial sale. The original bidder appeals.

The opinion states the case.

R. B. Stephenson and C. C. Collins, for the appellant.

H. H. Byrd, Bryan Carver, and Revercomb & Revercomb, for the appellees.

HOLT, J., delivered the opinion of the court.

This is a suit brought to partition a valuable tract of land in Bath county, containing about 445 acres. The trial court became satisfied that partition in kind could not be had, and ordered sale. Commissioners appointed for the purpose did sell it at public auction, on May 11, 1929, to Mrs. Mildred Eddy Dunn, for the sum of $21,000. Their report is as follows:

"In obedience to a decree entered in the above styled cause at the April term, 1929, your undersigned commissioners made sale on the premises May 11, 1929, of the lands in the bill and proceedings mentioned, after very exhaustive and wide advertisements by hand bills and colored signs posted within a radius of 100 miles of Warm Springs, and as far west as Charleston and Parkersburg, W. Va., and by advertisement in the Bath County Enterprise and the Covington Virginian and Richmond Times-Dispatch, and the sale was fairly well attended. We first offered the two tracts separately and the bids were held totalling $19,300 and the property as a whole was then offered as a whole and struck off to Mrs. Mildred Eddy Dunn at the gross price of $21,000, that being the last and highest bid. Whereupon Mrs. Dunn paid to H. H. Byrd, bonded commissioner, $7,000, in cash, and executed her two notes payable in one and two years each in the sum of $7,000, with interest from date and waiver of homestead, with Capt. Wm. McKee Dunn as her security, and while your commissioners feel that the property sold under its value we did everything possible to give the sale publicity and the $21,000 was the best that we could get, and we recommend a confirmation of the sale, unless an upset bid be filed which complies with the law governing upset bids, in which case we would not recommend a confirmation as we believe the property is worth more than $21,000."

Shortly thereafter this upset bid was put in:

"Your petitioner, W. H. Silk, of New York City, desires to put in an upset bid in the sum of $23,100 on the B. A. Gwin farm, which was sold at public auction on the premises May 11, 1929.

"Your petitioner respectfully represents that he was ignorant of this sale and at the time the sale was conducted was in the city of New York. That shortly afterward he had occasion to come to Hot Springs on a visit and at this time learned that the farm, consisting of 445 acres, had been sold at a judicial sale."

The trial court being of opinion that $21,000, the sum offered by Mrs. Dunn, was an inadequate price, said so in its decree of June 24, 1929. The upset bid was received. The bidding was reopened, there were no other offers to purchase, and so Mr. Silk's bid of $23,100 was accepted. The court in said decree stated that this latter sum was fair and adequate, and it is from this decree that an appeal has been allowed.

Later on, these sale commissioners, in what is termed a report of sale, after reciting all that had gone before, stated that the sum offered in the upset bid more nearly approximated the real value of the property, and that the court, in their judgment, acted wisely when its acceptance was decreed.

No fraud or sharp practice is suggested and so we have before us merely the naked effect of an upset bid of ten per cent, made by a bidder not present at a sale fully and fairly advertised, as against a purchaser who has fully complied with its terms. It will be noted that the trial judge believed $23,100 was a fair and adequate price. If we take his judgment in this particular to be sound, $21,000 could not have been grossly inadequate. The assessed value was $7,875. From the affidavits of William McKee Dunn, who was present at the sale, and of J. B. Greenway, the auctioneer, who was well acquainted with values in that county, $21,000 appears to have been a fair price, and was, as we have seen, the highest offer received at a sale widely advertised. The day was fair and there were a goodly number of possible bidders present. Neither ex parte affidavits nor values fixed for taxation are usually very convincing, but they have some value and no counter affidavits have been filed on behalf of the defendants in error.

"A practice prevailed in England prior to the act of 30 and 31 Vict., chapter 48, of opening the biddings in a judicial sale upon the receipt of an advance bid before confirmation, usually required to be an advance of ten per cent." 11 A.L.R. 400. 35 C.J., page 105; Minor on Real Property, section 637; Everett Forst, 50 App.D.C. 215, 269 Fed. 867.

The English rule did not receive there whole-hearted support, and was criticised by Lord Chancellor Eldon in Andrews Emerson, 7 Ves.Jr. 420, and in White Wilson, 14 Ves.Jr. 151. As we have seen it has since been changed by statute.

The heavy weight of authority in this country is against it. 35 C.J. 105; 16 R.C.L., section 70; 11 R.C.L. 399; Everett Forst, supra; Jacobsohn Larkey (C.C.A.), 245 Fed. 538, L.R.A. 1918C, 1176; Graffam Burgess, 117...