George v. Norwood

• Decision Date: 02 December 1905
• Citation: 91 S.W. 557,77 Ark. 216
• Parties: GEORGE v. NORWOOD
• Court: Arkansas Supreme Court

91 S.W. 557

77 Ark. 216

GEORGE v. NORWOOD

Supreme Court of Arkansas

December 2, 1905

Appeal from Ashley Chancery Court; MARCUS L. HAWKINS, Chancellor reversed.

Decree reversed and cause remanded.

George & Butler and Robt. E. Craig, for appellant.

1. The court will sustain the sale, in the absence of affirmative proof that it was fraudulent, unfair or prejudicial to the defendant or contemplated purchaser. 99 Am. Dec. 461; 61 Ib 134; Jones on Mort. § 1676.

2. It is the policy of the law to uphold judicial sales. 145 U.S 349; 61 Am. Dec. 134; Jones on Real Mortgages, § 1676. When the sale is fairly conducted, after proper notice, and is struck off to a third person, it will require a strong case and some peculiar exigency to warrant a court in setting it aside. 80 Mich. 85. Had purchaser refused or failed to make good his bid, the court by order could have compelled compliance therewith. 36 Ark. 605; 94 Va. 250; 106 Ga. 102; 41 W.Va. 339.

3. Mere inadequacy of price is not sufficient to justify setting aside the sale. 13 Grat. (Va.) 437; 44 Ark. 502; 2 Swan. 492; 99 Am. Dec. 132; 5 Hump. 352; 7 Ib. 281; 3 Sneed, 200. Neither will such sale be set aside for an advance upon the price. 36 Am. Dec. 415; 80 Mich. 85; 20 Ark. 652; 65 Ark 152.

Hooker & Cone, for appellees.

1. There was no abuse of discretion on the part of the chancellor, and this court will not interfere with his action. 10 Ark. 428; 5 Ark. 208; 21 Ark. 329; 33 Ark. 838.

2. The commissioner is the agent of the court, the whole proceeding under its control, and the court may confirm or reject a reported sale as the law or justice may require. 20 Ark. 661; 23 Ark. 39; 32 Ark. 391; 34 Ark. 346; 49 Ark. 67; 53 Ark. 110; 55 Ark. 307; 53 Ark. 445; 59 Ark. 5.

3. Where the inadequacy of price is so great as to shock the conscience, the court will set aside the sale.

4. Until the sale is confirmed and deed executed by the commissioner to the purchaser, and the deed confirmed, no title passed, and no rights or property accrued to the purchaser. 34 Ark. 346; 55 Ark. 307.

OPINION

MCCULLOCH, J.

Appellant, G. P. George, Jr., became the purchaser of land at a sale made by commissioner in chancery, and appeals from a decretal order of the court setting aside the sale and refusing to confirm it.

The land was advertised and exposed to sale by the commissioner in accordance with the decree of court. Appellant bid the sum of $ 4,000 therefor, and, being the highest bidder, the commissioner knocked the same off to him at that price, and reported the sale to the court. One of the parties to the suit filed exception to the report on the alleged ground that the price was grossly inadequate, and appellee W. T. Cone offered an advance bid of $ 5,000 for the land. The court made a finding that the price for which the land was sold, $ 4,000, was grossly inadequate, offered to permit appellant to advance his bid to $ 5,000, which appellant refused to do, and then set the sale to appellant aside, and accepted the bid of appellee Cone, and directed the commissioner to make a deed to the latter upon payment of said sum of $ 5,000.

The fairness and regularity of the sale is unimpeached by evidence. Appellees introduced no proof to establish the market value of the land except the offer of appellee Cone to pay $ 5,000 for it, and appellant introduced four witnesses who testified that the fair market value of the land at the time of the sale was $ 3,500 to $ 4,000.

The questions which we are called upon to decide are, in the first place, whether an appellate court should under any circumstances disturb the order of a chancery court refusing to confirm a sale by its commissioner, and, second, whether the chancellor is sustained by the evidence in his conclusion that the price offered. by appellant was grossly inadequate.

In the case of Colonial & U. S. Mortgage Co. v. Sweet, 65 Ark. 152, 45 S.W. 60, this court affirmed the order of the chancellor confirming a sale of land for $ 2,500 and refusing to accept an advance bid of $ 3,981.67 made by one of the parties to the original decree. The proof was conflicting as to the market value, and the court found that the price at which the sale was made, $ 2,500, was a fair one. The court quoted with approval language of the Supreme Court of the United States in Graffam v. Burgess, 117 U.S. 180, 29 L.Ed. 839, 6 S.Ct. 686, as follows:

"In this country, Lord Eldon's views were adopted at an early day by the courts, and the rule has become almost universal that a sale will not be set aside for inadequacy of price, or unless the inadequacy be so great as to shock the conscience, unless there be additional circumstances against its fairness; being very much the rule that always prevailed in England as to setting aside sales after the master's report had been confirmed.

It may be therefore treated as settled in this State, following the rule adopted by a large majority of the American courts, that, in the absence of fraud, irregularity or misconduct affecting the validity of a judicial sale, the sale will not be set aside and confirmation refused in order to allow the bid of a purchaser to be advanced by another person.

It is equally well settled, here and elsewhere, that a judicial sale will not be set aside on account of mere inadequacy of price, unless the inadequacy be so gross as to shock the conscience or raise a presumption of fraud or unfairness. Nix v. Draughon, 56 Ark. 240, 19 S.W. 669; Fry v. Street, 44 Ark. 502; Brittin v. Handy, 20 Ark. 381; Graffam v. Burgess, 117 U.S. 180, 29 L.Ed. 839, 6 S.Ct. 686; Parker v. Bluffton Car Wheel Co., 108 Ala. 140, 18 So. 938; Stump v. Martin, 72 Ky. 285, 9 Bush 285; Allen v. Martin, 61 Miss. 78.

The chancellor found in this case that the price was grossly inadequate, but his finding was contrary to the decided preponderance of the evidence. Four witnesses introduced by appellant testified that the amount of his bid was a fair market value of the land. Some of them testified that it was above the market value. No other witness testified on the subject. But, conceding that the advance bid of appellee Cone fixed the value of the land at $ 5,000, we do not think that establishes such gross inadequacy in the price as, of itself, to afford grounds for setting aside the sale.

Courts have adopted, as a wise public policy, the rule that confidence in the stability of judicial sales should be maintained, so that competitive bidding may be encouraged by the assurance that, in the absence of fraud or misconduct the highest bidder will be accepted as the purchaser of the property offered for sale. And, while it is often said that the accepted bidder at such a sale acquires no independent rights until the sale be confirmed by the court, and that the court may exercise a discretion in either confirming or rejecting the sale, yet this discretion must be exercised according to fixed rules, and not arbitrarily, and the bidder has the right to insist upon its exercise in this manner only. He can insist that his purchase be not set aside by the court upon reasons...