Dunn v. Silk

• Decision Date: 13 November 1930
• Citation: 155 S.E. 694
• Court: Virginia Supreme Court
• Parties: DUNN. v. SILK et al.

155 S.E. 694

DUNN.

v.SILK et al.

Supreme Court of Appeals of Virginia.

Nov. 13, 1930.

Error to Circuit Court, Bath County.

Partition proceeding in which the land involved was sold at judicial sale to Mildred Eddy Dunn, but sale was not confirmed, W. H. Silk having filed an upset bid. To review a decree receiving the upset bid and confirming the sale to W. H. Silk, Mildred Eddy Dunn brings error.

Reversed.

R. B. Stephenson and C. C. Collins, both of Covington, for plaintiff in error.

H. H. Byrd, of Warm Springs, and Revercomb & Revercomb, of Covington, for defendant in error.

HOLT, J.

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 heldtotalling $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 1 and 2 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 recommended 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 10 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 & 31 Vict. chap. 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 10 per cent." 11 A. L. R. 400; 35, C. J. p. 105; Minor on Real Property, § 637; Everett v. Forst, 50 App. D. C. 215, 269 P. 867.

The English rule did not receive there whole-hearted support, and was criticised by Lord Chancellor Eldon in Andrews v. Emerson, 7 Ves. Jr. 420, and in White v. 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., § 70; 11 R. C. L. 399; Everett v. Forst, supra; Jacobsohn v. Larkey (C. C. A.) 245 F. 538, L. R. A. 1918C, 1176; Graffam v. Burgess, 117 U. S. 180, 6 S. Ct. 686, 29 L. Ed. 839; Pewabic Mining Co. v. Mason, 145 U. S. 349, 12 S. Ct. 887, 36 L. Ed. 732; Ballentyne v. Smith, 205 U. S. 285, 27 S. Ct. 527, 51 L. Ed. 803.

In the case last cited Mr. Justice Brewer said, at page 290 of 205 U. S., 27 S. Ct. 527, 528: "In England the old rule was that in chancery sales, until confirmation of the master's report, the bidding would be opened upon a mere offer to advance the price 10 per cent; but this rule has been rejected, and now both in England and this country a sale will not be set aside for mere inadequacy of price unless that inadequacy be so gross as to shock the conscience, or unless there be additional circumstances against its fairness. But if there be great inadequacy, slight circumstances of unfairness in the conduct of the party benefited by the sale will be sufficient to justify setting it aside. Graffam v. Burgess, 117 U. S. 180, 191, 192, 6 S. Ct. 686, 29 L. Ed. 839, 842, 843. It is difficult to formulate any rule more definite than this, and each case must stand upon its own peculiar facts."

This rule of English practice, now no longer the English rule, "has been rejected by a majority of American courts. It has, however, with some modifications, been adopted by some. Under the English rule the biddings seem to have been opened as a matter of course, upon the receipt of the advance bid. In the American jurisdictions—viz., North Carolina, Pennsylvania, Tennessee, West Virginia, and, in the early cases in Virginia—which incline to the English rule, the courts, with the possible exception of the Tennessee court in its later decisions, have vested a very considerable discretion in the court. The rule seems no stronger than that, in the absence of special circumstances, the biddings will be opened upon the receipt of an advance bid of sufficient amount. The courts which take this view emphasize the fact that the purchaser at a judicial sale is a mere preferred offerer until confirmation." 11 A. L. R. 402.

Many cases dealing with this subject have been before this court, and in most instances decision has rested upon the facts of the particular case rather than upon any special rule of law. Early cases, however, do tend to support the old English rule, and that rule was frequently followed on circuit, as many of our older practitioners can remember.

In Effinger v. Ralston, 21 Grat. (62 Va.) 430, Judge Moncure said that the rule of practice in Virginia was the English rule, and quotes from Sugden to the effect that a 10 per cent. advance is sufficient to open up a sale, and sometimes less is enough where large sums are involved.

In Brock v. Rice, 27 Grat. (68 Va.) 812, Judge Staples said that confirmation was a matter within the sound judicial discretion of the court, but that sales fairly made should not be set aside merely because the purchaser had gotten a good bargain.

In Roudabush v. Miller, 32 Grat. (73 Va.) 454, Judge Anderson said: "In a proper case, where it would be just to all the parties concerned, this court may be understood as having sanctioned a practice in the circuit courts, in the exercise of a sound discretion, of setting aside a sale made by commissioners under a decree and reopening the bidding upon the offer of an advanced bid of sufficient amount deposited or well secured; and to that extent the former English practice has been allowed in this state. But it has never been held that it is imperative upon the courts to set aside the sale, and reopen the bids. It is a question addressed to the sound discretion of the courts, subject to the review of the appellate tribunal, and the propriety of its exercise depends upon the circumstances of each case, and can only be rightfully exercised when it can be done with a due regard to the rights and interests of all concerned—the purchaser as well as others. Where the sale has been fair and for a fair price, it should never be set aside, when there is good reason to believe that the upset price has been offered to gratify ill will or malice towards the purchaser."

In this case Judge Moncure, in a concurring memorandum, said he thought the English practice was the settled practice in Vir ginia and could be changed only by legislation.

The rule laid down by Judge Anderson was approved in Berlin v. Melhorn, 75 Va. 639, and in Hansucker v. Walker, 76 Va. 753.

In Coles v. Coles, 83 Va. 525, 5 S. E. 673, 675, the court concluded a review of earlier cases with this statement:...