Edward Richards, Isaac Bassett, and Robert Aborn, Complainants and Appellants v. Sylvanus Holmes Harper, George Dwight Et Al

• Decision Date: 01 December 1855
• Parties: EDWARD C. RICHARDS, ISAAC BASSETT, AND ROBERT W. ABORN, COMPLAINANTS AND APPELLANTS, v. SYLVANUS HOLMES, A. H. HARPER, GEORGE A. DWIGHT ET AL
• Court: U.S. Supreme Court

59 U.S. 143

18 How. 143

15 L.Ed. 304

EDWARD C. RICHARDS, ISAAC BASSETT, AND ROBERT W.

ABORN, COMPLAINANTS AND APPELLANTS,

v. SYLVANUS HOLMES, A. H. HARPER, GEORGE A. DWIGHT ET AL.

December Term, 1855

THIS was an appeal from the circuit court of the United States for the District of Columbia, holden in and for the county of Washington.

The case is stated in the opinion of the court.

It was argued by Mr. Bibb, for the appellants, and by Mr Fendall and Mr. Tracy, for the appellees. There was also a brief filed by Mr. Bradley, as counsel for Southworth, Litchfield, and Beach.

Mr. Bibb made the following points:——

1. That the note was dated on the 1st of May, 1846, and payable in two years. The trustee had no right to sell until the 1st of May, 1848, whereas he sold on the 21st of October, 1847.

2. The allegation set up that Holmes had verbally agreed with Harper to pay the interest semi-annually, &c., cannot be permitted to vary the deed or enlarge the powers of the trustee. Nor could the consent of Holmes impair the rights of Richards, Bassett, and Aborn. They had a right to redeem the property when the note became due, the property being worth more than the lien upon it.

3. The notice of sale was not properly given.

4. The auctioneer was seller and bidder for Harper.

The trustee could not purchase the estate himself; he could not buy as the agent of another; he could not employ the auctioneer to bid for the estate on behalf of Harper. Ex parte Bennett, 10 Ves. 393; Coles v. Trecothick, 9 Ves. 248; Ex parte James, 8 Ves. 345, 348, 350; Ex parte Lacey, 6 Ves. 625; Lister v. Lister, 6 Ves. 631, 632; Twining v. Morris, 2 Brown Ch. Ca. 326; The York Buildings Co. v. McKenzie, 3 Brow. Par. Ca., Appen.; Davoue v. Fanning, 2 Johns. Ch. Rep. 254, 257, 268, 269, 270.

According to established principles, such a sale as this cannot stand in a court of equity.

The counsel for the appellees, after justifying the sale in other respects, thus noticed one of the points of alleged defectiveness:——

The trustee did not bid at all; Harper's bid was regular. His rights as a creditor, whose only security for his whole fortune was the property advertised for sale, stood on ground as strong, at least, as that of the owner of it. And, though it is not lawful for an owner to employ an agent 'to take advantage of the eagerness of bidders, to screw up the price,' yet, as a 'defensive precaution,' 'a bidder may be privately appointed by the owner, to prevent the estate from being sold at an under-value.' 1 Sugden on Vendors, (9th ed.) 26, 27; Fonbl. Eq. Bk, 1, ch. 4, § 4, n. X; 1 Mad. Ch. Pr. (4th Am. ed.) 324, 325; Smith v. Clarke, 12 Ves. 477; Steele v. Ellmaker, 11 Serg. & R. 86; Jenkins v. Hogg, 2 Const. Rep. (S. C.) 821; Wolfe v. Luyster, 1 Hall, N. Y. R. 146; Phippen v. Stickney, 3 Metc. 384. Harper made only one bid, and that for 'defensive precaution.' The bid was made through the auctioneer, who was the agent of both parties. Smith's Mercantile Law, 301, and the cases there cited; Conelly v. Parsons, 3 Ves. 625, n.

It is denied that the property was sold at 'a very inadequate price,' or that the amount at which it is said to have been assessed on the books of the corporation of Washington (of which there is no evidence) is a true test of its value. But even if the price were 'very inadequate,' the inadequacy would be no ground for annulling this sale. 1 Fonbl. Eq. 128; 1 U. S. Digest, 344, pl. 33, and the cases there cited. It will be contended that the sale was in all respects regular; and that, if it were not so, yet the complainants cannot avail themselves of the imputed irregularities.

Mr. Justice CURTIS delivered the opinion of the court.

This is an appeal from a decree of the circuit court for the District of Columbia. The appellants filed their bill in that court to set aside a sale, made to satisfy a prior incumbrance on land, upon which they claimed to have a second incumbrance. In the court below, some question appears to have been made concerning the priority of the incumbrances; but none is made here, it being conceded, that though that claimed by the complainants was the earliest in date, the other was first recorded, and takes precedence.

The sale in question was made under a deed of trust, whereby Holmes, the debtor, conveyed to the defendant, Philip R. Fendall, in trust to secure the payment of a promissory note, bearing date May 1, 1846, payable in two years from date, for $2,800 and interest, payable annually.

It is objected that the sale, which was made on the 21st of October, 1847, after one year's interest had become due, but before the principal sum was payable, was premature. This depends upon the meaning and effect of the power of sale contained in the deed. It was competent for the parties to agree to a foreclosure by sale for non-payment of interest, and the question is, whether they did so agree. The event in which the trustee is empowered to sell, is thus described in the deed:——

'But if the hereinbefore described promissory note, with the interest legally due thereon, shall not be fully paid off and discharged when said note shall be due and payable, and payment of the same shall be demanded, or if any note or notes given in substitution for or renewal of the hereinbefore described promissory note shall not be fully paid off and discharged according to the tenor and effect of the said substitute or new note or notes, together with the interest legally due on such substitute or note or notes, so that any default be made in payment of any part of the aforesaid debt of two thousand eight hundred dollars and interest, then so soon after such default, &c.'

The omission to pay the first year's interest was a default within the express words of this power. That interest was part of the interest secured by the note, and a failure to pay it was a 'default in payment of part of the aforesaid interest.' The deed authorizes the trustee to sell for any such default, and, consequently, the sale was not premature.

It was argued that the trust deed does not describe the note as bearing annual interest, and, consequently, that the subsequent incumbrancer has a right to insist that, as against him, there was no power to sell for non-payment of such interest.

It is true the deed does not purport to describe the interest which is to become due on the note; but it clearly shows that it bore interest at some rate, and payable at some time or times, and this was sufficient to put a subsequent incumbrancer on inquiry as to what the rate of interest and the time or times of its payment were. The deed, in effect, declares, and its record gives notice to subsequent purchasers, that its purpose is to secure the payment of such interest as has been reserved by the note; the amount, and date, and time of payment of which are mentioned. We do not think the mere omission to describe in the deed what that interest was to be, is a defect of which advantage can be taken by the complainants.

The complainants further insist that the property was not duly advertised. The provision in the deed of trust upon this subject is as follows: 'It shall be the duty of the said Philip R. Fendall or his heirs to enter upon the hereinbefore conveyed piece or parcel of ground and appurtenances, and sell the same at public auction to the highest bidder, or at private sale, for cash or credit, according to his or their discretion, after having given public notice of such sale, by advertisement, at least thirty days previously thereto, in the National Intelligencer, or in some other newspaper printed or published in the city of Washington aforesaid.'

Inasmuch as the trustee was empowered to sell at private sale, as well as at public auction, his power extended to a private sale made at any time after thirty days' notice. Having given notice...