Goode v. Comfort

• Decision Date: 31 October 1866
• Citation: 39 Mo. 313
• Parties: FRANCES S. M. GOODE, Appellant, v. JAMES H. COMFORT, et als., Respondents.
• Court: Missouri Supreme Court

39 Mo. 313

FRANCES S. M. GOODE, Appellant,

v.JAMES H. COMFORT, et als., Respondents.

Supreme Court of Missouri.

October Term, 1866.

Appeal from St. Louis Land Court.

F. A. Dick, for appellant.

I. The trustee is by rule of law agent of both debtor and creditor, and as such has positive duties which he must impartially discharge to each. He must so conduct the sale that the property shall be offered to good advantage--Hill on Trustees, 479, 480, 495; Lewin on Trusts, 376, ch. 19; 18 How. 143; Anderson v. Bumgartner, 27 Mo. 77; Stine v. Wilkson, 10 Mo. 93; Gray v. Shaw, 14 Mo. 341; Rector v. Hart, 8 Mo. 460; Conway v. Nolte, 11 Mo. 76; 2 Am. Law Reg. (N. S.) 712.

II. The discharge of these duties requires the exercise of a discretion in the conduct of the sale, and the trustee fails to perform his office where he allows the creditor to disturb the exercise of such discretion at such a critical time as the commencement of the sale--Hill on Trustees, 479 et seq.; Lewin on Trusts, 367; 18 How. 143; 10 Mo. 93; 27 Mo. 77; 14 Mo. 341.

III. While the creditor is protected by any slight stretch of authority by a trustee done in the exercise of this discretion, yet where the creditor intervenes and disturbs this discretion, and interjects conditions of sale not expressed in the deed, such act of the creditor causes a variance or departure from the terms of the deed, not protected by the range of discretion to be exercised by a trustee, and yet being permitted by the trustee, becomes his act. And where such extraordinary acts tend to injure the debtor, they vitiate the whole proceeding--2 Am. L. Reg. (N. S.) 652, § 8; Lee on Abst. Tit., 6 and 376.

IV. The result of the sale in question, the selling of property worth $40,000 for one-tenth of its value, is the direct and inevitable effect of the hard terms announced at the sale; and the question under such circumstances is, not whether the terms announced are substantially the same as those named in the deed, but whether there is any variation in the terms. There is no discretionary power in a trustee to announce his sale in words different from those expressed in the deed. To permit such a substitution of language on the ground that the change of terms was immaterial, would be to destroy uniformity in these public sales, and to introduce a rule that would be ever varying--2 Am. L. Reg. 713, § 21; Powell v. Tuttle, 3 Comst. 396. Not only were the terms of sale as expressed in the deed added to, but

V. A new condition, substantial and detrimental to the debtor's interest, was added, namely, that the purchase money should be paid “directly upon the termination of the sale”--Lee on Abstr. Tit., 6 & 376; 58 Law Lib. 22, 217.

VI. This super-added condition of sale is the denial of a right of every purchaser of sufficient opportunity and time to inspect the deed to be made to him; to ascertain that in form and mode of execution it is correct. Thus, the creditor not only in this varied the terms of sale from those expressed in the deed, but added an unlawful feature to the sale-- Miller v. Evans, 35 Mo. 45; Hill on Trustees, 281, ch. 4, § 1; Id. 296; Daniel's Ch. Pr. 899, 900; Lloyd v. Griffith, 3 Ark. 264; Wilson v. McNeal, 10 Watts, 422.

In Stine v. Wilkson, 10 Mo. 93, it is said, “the trustee is regarded as agent for both debtor and creditor, and should stand indifferent between them, as it may not unfrequently happen that questions of importance will arise in the discharge of his duties, that will demand his impartial action.” 27 Mo. 77, says “a trustee making a sale is agent for both parties.” See also 2 Am. L. Reg. (N. S.) 712, § 20, article on “Sales and Titles under deeds of trust,” where this subject is fully examined and the authorities brought together.

These authorities show that the trustee is appointed by those who have conflicting interests to stand between them; when the necessary time for action comes, to do all acts himself according to his own discretion, not at the dictation of the creditor or debtor; but yet he is so to direct this discretion to the end of so offering the property that it will produce the best price. He could have divided this property into lots of ordinary size for building, and it would have been greatly to the advantage of the debtor, as the evidence shows that it was leased out, and had on it many buildings; and such an exercise of a discretionary power for a good end is commended by the former decisions of this court. Gray v. Howard, 14 Mo. 341, where the court say the trustees did not do wrong in dividing a larger lot for sale into building sized lots, such conduct was highly approved by the court. See also Greenleaf v. Queen, 1 Pet. 138; 1 How. 321; 5 How. 233; 12 Wheat. 570.

We have been considering the words added by order of the creditor, to give buyers his interpretation of the meaning of “cash”--namely, “gold coin”--and insisting that this change was unauthorized by the deed, as well as hostile to the fairness which should have characterized the sale; but now we come to the entire new condition that was inserted in the terms of sale by order of the creditor--namely, that the purchase money was to be paid “directly upon the termination of the sale.” This, of itself, introduced a fact not appearing on the face of the deed, that might well deter men who had money to lay out from putting it to such hazard. More than that, it was the denial of a right which every bidder at a sale is entitled to. Purchasers are entitled to fair terms; and conduct that denies them is injurious to the forced vendor. Hill on Trustees, p. 281, ch. 4, § 1, says: “Where the conveyance by the trustees is made under the direction of the court, it will be referred to the master to settle the form of the instrument; and the certificate of the master, having settled a conveyance under such a reference, may be excepted to by any party who is dissatisfied with it.” See also p. 296 as to the formalities and requisites of a conveyance by a trustee of the estate vested in him, and of the supervision of a court of equity over its form, where many questions are stated which arose upon such title deeds.--Dan. Ch. P., tit. Settlement of Deeds, p. 899; Lloyd v. Griffith, 264; Miller v. Evans, 35 Mo. 45. Markley v. Swartzlander, 8 Watts & Serg. 176, holds that a purchaser is not bound to accept a deed with an erasure. For an example of the many questions that may arise on a deed, requiring deliberate examination to settle, see Withers v. Atkinson, 1 Watts, 250. The payment of the purchase money and delivery of the deed are cotemporaneous acts--1 Hill. Vend. 185.

Cline & Jamison, for appellant.

The court below ought to have found for the appellant:

I. Because George W. Goode was insane at the time of the sale.

II. Because the property was sacrificed, being worth §40,000, and sold for only $4,000.

III. Because the property was sold en masse, when it was susceptible of a division, and would have brought more if subdivided and sold accordingly, as it had been leased out in lots, and the tenants had erected brick buildings on the same and desired to purchase.

IV. Because it was announced before the bidding commenced, that the purchase money was to be paid immediately after the sale and before the deeds were executed.

V. Because the creditor meddled with the duties of the trustee, pursued a course calculated to prevent competition, and became the purchaser at a greatly reduced price.

Equity has jurisdiction to control the acts of trustees under deeds of trust to secure the payment of money. A more strict compliance is required where the cestui que trust has meddled with the duties of a trustee, and become the purchaser at a greatly reduced price--Stine v. Wilkson, 10 Mo. 75.

Everything done by the parties at a sale under a deed of trust calculated to prevent competition renders the sale void--Longworth v. Butler, 8 Ills. (3 Gil.) 32.

If the creditor is the purchaser under a deed of trust, and he pursues a course calculated to prevent competition, the sale will be set aside--8 Ills. 32; Quarles v. Lacy, 4 Mumf. 252. A sale of land by a trustee will be set aside if the purchase is grossly inadequate, as where the land was worth $500 and it only sold for $50--Wright v. Wilson, 2 Yerg. 294.

It will be in connection with other circumstances--Cavender v. Smith, 1 Iowa, 306; Groff v. Jones, 6 Wend. 522; 1 Sto. Eq. Jur. (5 Adt.) 286, § 246; Osgood v. Franklin, 2 John Ch. 23; 14 Johns. 527.

Sale of land and town lots en masse, which are susceptible of division is illegal, and the sale will be set aside--Day v. Graham, 6 Ills. 435; Woods v. Morrell, 1 John. Ch. 501; Wakefield v. Campbell, 20 Me. 393.

Although advertised as an entirety, the trustee may, in the exercise of a wise discretion, sell in parcels--Gray v. Howard, 14 Mo. 341.

Bakewell & Farish, for respondents.

The respondents insist that the proof in the cause shows no legal or sufficient ground for the relief prayed:

I. Because the fact that the grantor in the deed of trust was insane, or civilly dead, is no reason to prevent a sale under the same.

II. At the time of sale, 1st February, 1862, it was customary to demand gold and silver in payment of debts; no other money purported to be legal tender, and the parties interested had a right to demand it.

III. The trustees sold the property in two separate parcels, as it was described in the said deed of trust; and it was not their duty, nor was it incumbent upon them, unless so requested and directed, to subdivide the property, and sell it in small lots. Perhaps, if they had done so without having been so authorized by the grantors in the deed, the sale could and would have been successfully attacked.

IV. Though the property was purchased for $4,000,--as the maker of the notes was insolvent, and amount of encumbrance upon same, with interest, was $16,699, the purchaser, as the holder of the notes, in point of fact paid that amount for the same; and had to pay, in addition, for taxes...