Gibbs v. Claar, 6479

• Decision Date: 18 January 1938
• Docket Number: 6479
• Citation: 75 P.2d 721,58 Idaho 510
• Court: Idaho Supreme Court
• Parties: L. E. GIBBS, Appellant, v. JOHN N. CLAAR, JNO. B. WHITE and C. J. HAHN, Trustees of Twin Falls Athletic Association, a Defunct Idaho Corporation; ARTHUR L. SWIM, ARTHUR L. SWIM & COMPANY, a Corporation, ARTHUR L. SWIM and W. G. SWIM, Doing Business as SWIM INVESTMENT COMPANY, E. B. WILLIAMS and DUDLEY DRISCOLL, W. L. WOLTER, R. E. SMITH, L. J. GRIMSMAN, W. P. HANEY, W. R. CAMERON, MEL COSGRIFF, and COSGRIFF OUTDOOR ADVERTISING COMPANY, INC., Respondents

75 P.2d 721

58 Idaho 510

L. E. GIBBS, Appellant, v. JOHN N. CLAAR, JNO. B. WHITE and C. J. HAHN, Trustees of Twin Falls Athletic Association, a Defunct Idaho Corporation; ARTHUR L. SWIM, ARTHUR L. SWIM & COMPANY, a Corporation, ARTHUR L. SWIM and W. G. SWIM, Doing Business as SWIM INVESTMENT COMPANY, E. B. WILLIAMS and DUDLEY DRISCOLL, W. L. WOLTER, R. E. SMITH, L. J. GRIMSMAN, W. P. HANEY, W. R. CAMERON, MEL COSGRIFF, and COSGRIFF OUTDOOR ADVERTISING COMPANY, INC., Respondents

No. 6479

Supreme Court of Idaho

January 18, 1938

CORPORATIONS-DISSOLUTION-TRUSTEES-JUDICIAL SALE-CONFIRMATION-APPEAL AND ERROR-THEORY OF CASE.

1. One who had been accepted by directors of defunct corporation appointed by court as trustees to sell corporation's realty, as purchaser of realty, subject to confirmation of court, was not in position to contend that sale was not a judicial sale and that there was no provision of law for appointment of defunct corporation's directors as trustees, where he was not a stockholder, director, officer or creditor of the corporation. (I. C. A., sec. 29-158.)

2. One whose bid for realty of defunct corporation was rejected by court could not urge for first time on appeal that sale was not a judicial sale, or that directors of corporation could not be appointed by court as trustees to wind up its affairs where contentions were entirely inconsistent with his position in trial court, since litigants are bound, on appeal to the supreme court, by theory on which their cases were tried.

3. The action of the district court in continuing to a later date the hearing on the report of trustees, who had been appointed to wind up affairs of defunct corporation, as to sale of corporation's realty subject to confirmation of the court, was discretionary.

4. The confirmation of a judicial sale is a judicial act necessitating the exercise of a sound, judicial, reviewable discretion, which cannot be arbitrarily exercised.

5. The rejection by court of bid of $4,000 for realty of defunct corporation, which had been made without published notice and which had been accepted, subject to confirmation of court, by trus- tees appointed by court, and the confirming of a competitive bid of $5,026 thereafter made, did not constitute an abuse of judicial discretion.

APPEAL from the District Court of the Eleventh Judicial District, for Twin Falls County. Hon. James W. Porter, Judge.

Appeal from order of district court confirming sale to highest bidder of defunct corporation's real estate and rejecting other bids. Affirmed.

Affirmed. Costs awarded to respondents.

James R. Rothwell and Harry Povey, for Appellant.

Last board of directors become statutory trustees upon forfeiture of charter. (I. C. A., secs. 29-611, 29-158; 14A C. J. 1171, sec. 3838; Life Assn. of America v. Rundle, 103 U.S. 222, 26 L.Ed. 337.)

Statutory trustees are not subject to supervision of courts in absence of neglect. (14A C. J. 1172, sec. 3840.)

The possibility of a higher bid from a prospective purchaser does not justify continuance of hearing on petition for confirmation. (Central Trust & Sav. Co. v. Chester County Elec. Co., 9 Del. Ch. 123, 77 A. 771; Rogers v. Rogers Locomotive Co., 62 N.J. Eq. 111, 50 A. 10; Fidelity Trust & Safety Vault Co. v. Mobile St. R. R. Co., 54 F. 26.)

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 confirmation refused on account of mere inadequacy of price, however great, unless the inadequacy is so gross as to shock the conscience and raise the presumption of fraud, unfairness or mistake. (16 R. C. L. 95, 96; George v. Norwood, 77 Ark. 216, 91 N.W. 557, 113 Am. St. 143, Ann. Cas. 1914D, 3, and cases cited; Blanks v. Farmers' Loan & Trust Co., 122 F. 849, 59 C. C. A. 59; Page v. Kress, 80 Mich. 85, 44 N.W. 1052, 20 Am. St. 504.)

Walters, Parry & Thoman, J. R. Keenan and A. J. Myers, for John N. Claar, Jno. B. White and C. J. Hahn, Trustees.

District court's order of May, 1935, appointing three directors trustees of the defunct corporation, is not subject to attack by appellant, because

(a) Time for appeal has long passed, and the order bound the corporation, its stockholders and other directors. (Rowe v. Stevens, 25 Idaho 237, 137 P. 159.)

(b) Appellant, being neither stockholder nor director of the defunct corporation, is not a party in interest entitled to appeal.

No appeal lies from such an order as that of March 19, 1937, directing a continuance in the confirmation proceedings. (2 Am. Jur. 900, sec. 86; 3 C. J. 473, sec. 295; 4 C. J. S. 211, sec. 115 B.)

Ordering a continuance purely a matter of the discretion of the court. (Aumock v. Kilborn, 53 Idaho 506, 25 P.2d 1047; Pacific Coast Joint Stock Land Bank v. Security Products Co., 56 Idaho 436, 55 P.2d 716.)

This order of continuance, opening purchase to other bidders, and so altering order of May, 1935, was within the discretion of the lower court. (In re Great Western Sugar Beet Co., 22 Idaho 328, 125 P. 799, 83 L. R. A., N. S., 671; 16 R. C. L. 52, sec. 37; Saunders v. Stultz, 189 Iowa 1090, 177 N.W. 516, 11 A. L. R. 394; In re Security Bank of Winner, 59 S.D. 622, 241 N.W. 743.)

Appellant has not the rights of a purchaser before confirmation of sale. (Saunders v. Stults, supra.)

Harry Benoit, for Respondents E. B. Williams and Dudley Driscoll, and E. L. Rayborn, for Respondents W. L. Wolter, R. E. Smith and L. J. Grimsman, filed no brief.

MORGAN, J. Holden, C. J., and Budge, J., concur, AILSHIE, J., Givens, J., Concurring in Part.

OPINION

MORGAN, J.

November 30, 1920, Twin Falls Athletic Association forfeited its charter for failure to pay its annual corporation license tax. At that time it was and, until the sale hereinafter discussed, continued to be the owner of blocks 122 and 136, in Twin Falls. April 26, 1935, respondents, John N. Claar, Jno. B. White and C. J. Hahn, three of the five members who constituted the board of directors of the corporation at the time its charter was forfeited, petitioned the district court to appoint them trustees with power to settle its affairs and for authority to sell the real estate above mentioned, in such manner and by such method as should be directed by the court, and for such other or further order as should be meet and equitable in the premises.

After notice and hearing an order was made appointing petitioners as such trustees. It was recited in the order:

"That said trustees be and they are hereby authorized to sell said premises above described at private sale without further notice subject to confirmation by the court and upon making a sale thereof at a price and on terms satisfactory to said trustees, the trustees shall report the same to the court for confirmation and further proceedings herein."

March 10, 1937, the trustees filed a report in the district court wherein it was recited:

"that your trustee Jno. B. White has found an interested purchaser for said property, namely, L. E. Gibbs, who has made the offer to purchase said property for the total price of $ 4,000 cash, payable upon confirmation of said sale by the court, and delivery of abstract of title and that such offer is the best and highest sum offered for said property."

It is further recited in the report that the trustees believed the sum offered was not disproportionate to the value of the property and was a fair and reasonable price for it; also that it was for the best interests of the corporation that the property be sold to Gibbs for $ 4,000. The trustees prayed that a hearing be had on the return and that the court fix the time thereof and direct what notice should be given of the time and place, when and where, it should be had.

Thereupon the district court made an order fixing March 19, 1937, at 10 o'clock A. M., as the time and place for hearing on the return of sale and directed

"that notice of said hearing and of the nature of said hearing setting forth the property to be sold and the price offered for same be published at least five (5) days preceding the date of said hearing in one issue of the Twin Falls Daily News, a newspaper of general circulation published in said county."

Although the order directing notice to be given made no mention that other bids than that of Gibbs would be received or considered, the published notice stated

"that Friday the 19th day of March, 1937, at 10 o'clock in the forenoon of said day and the court room of said court in Twin Falls in said county of Twin Falls and State of Idaho, have been fixed as the time and place for hearing of the said return of sale and for the confirmation thereof when and where any person interested may appear and file written objections to the confirmation of said sale or may appear and make a bid and offer for the purchase of said real estate."

March 19, 1937, L. J. Grimsman filed a bid to purchase the property for $ 4,100, accompanied by a check for $ 1,000. He offered to pay $ 3100, in addition to the check, as the purchase price for the property as soon as an abstract was furnished showing merchantable title and freedom of property from encumbrances.

The court minutes of March 19, 1937, which appear in the transcript, show that, among others, L. E. Gibbs, appellant herein, was present in court; that E. L. Rayborn made a bid on behalf of his client, W. R. Wolter, of $ 4,100; that J. E Roberts advised the court he had a prospective purchaser for the property and that before making a bid, such purchaser desired to complete a survey of the premises; that the court directed Mr. Rayborn to make a bid on behalf of his client, in writing, and to attach it to a check in sufficient amount to show good faith. The minutes also...