Hannon v. Mechanics Bldg. & Loan Ass'n of Spartanburg

• Decision Date: 12 June 1935
• Docket Number: 14089.
• Parties: HANNON et al. v. MECHANICS BUILDING & LOAN ASS'N OF SPARTANBURG, S. C., et al. DIXON et al. v. CUDD.
• Court: South Carolina Supreme Court

180 S.E. 873

177 S.C. 153

HANNON et al. v. MECHANICS BUILDING & LOAN ASS'N OF SPARTANBURG, S. C., et al.

DIXON et al. v. CUDD.

No. 14089.

Supreme Court of South Carolina

June 12, 1935

Appeal from Common Pleas Circuit Court of Spartanburg County; T. S Sease, Judge.

Proceeding in the matter of C. H. Dixon, as receiver of the First National Bank of Gaffney, South Carolina, and others, against J. N. Cudd, wherein petition was filed by R. A. Hannon and another, as co-receivers of the estate of J. N. Cudd, against the Mechanics Building & Loan Association of Spartanburg South Carolina, and others, for leave to sell certain realty belonging to the estate of J. N. Cudd. From the decree, J. N Cudd appeals.

Appeal dismissed.

See also, Penn Mut. Life Ins. Co. v. Cudd, 172 S.C. 88, 172 S.E. 787.

Evans, Galbraith & Holcombe, of Spartanburg, for appellant.

L. G. Southard, of Spartanburg, for respondents.

A. L. GASTON, Acting Associate Justice.

On the 20th of December, 1934, Judge Sease granted a decree for the sale by the receivers of J. N. Cudd of certain real estate belonging to the estate of J. N. Cudd. The suit was begun by a petition in behalf of the co-receivers of the estate of J. N. Cudd, which set forth in detail the matters and facts upon which the judgment of the court was sought for leave to sell and convey the real estate to T. P. Sims for the sum of $60,500 upon the terms of his offer of purchase. Upon this petition a rule was issued whereby the parties named as respondents herein were ordered to show cause why the co-receivers should not be authorized to effect the proposed settlement, and convey the real estate. A consent order of reference was taken referring the matter to the master to take the testimony and to report thereon. No return to the rule or other pleadings apparently were served or filed, and it appears that J. N. Cudd was not a party against whom the rule to show cause was directed. He was not a party to the proceeding, and did not apply to the court for leave to intervene, or to be allowed to appear.

The decree of Judge Sease, among other things, shows that the master's report was filed on the 3d of December, 1934. Thereafter, the attorneys for J. N. Cudd, the attorneys for J. W. Boyd as receiver for J. J. Cudd, and the attorneys for J. J. Cudd, served and filed exceptions to the report of the master. In the meanwhile the attorney for the petitioners, who are the co-receivers of J. N. Cudd, served notice that he would move for a decree in this case. At the hearing Mr. Eugene S. Blease, as attorney for J. J. Cudd, stated that if the sale of this property were held open for a period of sixty days, that he would withdraw all of his exceptions to the master's report. Mr. A. E. Tinsley, representing J. W. Boyd, as receiver, stated the same thing. The report was confirmed and all exceptions overruled.

After a careful consideration of the record herein on appeal, we find that the salient facts are fairly and succinctly stated in the brief of appellant. This statement is adopted and shows that on the 8th day of December, 1930, the appellant, J. N. Cudd, who is now in receivership, executed and delivered his promissory note by which he promised to pay to T. P. Sims, two years thereafter, the sum of $53,616.24 with interest from December 10, 1930, at 8 per cent., payable annually. The maker's son, J. J. Cudd, who is also in receivership, indorsed the note before delivery.

To secure the payment of the note, J. N. Cudd simultaneously conveyed, by way of mortgage, to T. P. Sims three pieces of real estate, to wit: (1) An undivided one-half interest in a business lot on the corner of East Main and Dunbar streets in the city of Spartanburg, on which are located two or three wood and tin buildings and a filling station; (2) a lot fronting 22 feet on East Main street in the city of Spartanburg on which is located a building, with a restaurant occupying the ground floor (the first mortgage of approximately $16,500 on this property is held by Provident Mutual Life Insurance Company); and (3) a 75-acre farm in Spartanburg county. The Sims mortgage is a first mortgage lien on the half interest in the corner lot first above described and on the 75-acre farm.

Unpaid taxes and paving assessments charged against the three pieces of property amount to approximately $8,686.79. The two pieces of business property are rented for $3,857.50 a year, and the farm appears not to be rented at the present time. There has been paid on the Cudd note held by T. P. Sims the sum of $2,040, leaving unpaid thereon the sum of approximately $68,733.44, including interest.

The mortgagee, T. P. Sims, who has since died, made an offer to purchase the three pieces of real estate for a total purchase price of $60,500, from which he proposed to deduct and pay all taxes and paving assessments, the mortgage held by Provident Mutual Insurance Company, the commission of J. N. Cudd's receivers, and the fee for the receiver's attorneys. It is proposed to credit the remainder of the purchase price on the Sims note and to prove the balance of the note as a general claim against the estate of J. N. Cudd.

The circuit judge, affirming the master's report, ordered the receivers of J. N. Cudd, after advertising six weeks in the Spartanburg Herald, to accept bids up to March 1, 1935, with upset prices equal in amount to the sum offered by T. P. Sims fixed, and, in case of no higher bids, to accept the Sims offer. From this decree, J. N. Cudd has appealed to the Supreme Court.

Notice was served by the attorney for the receivers and duly filed of a motion before this court to dismiss the appeal on the grounds that it is frivolous, without merit, intended solely for delay, and because J. N. Cudd is not a party to this suit.

Appellant makes nine exceptions which are argued as involving five questions.

The first two questions raised are that the court below erred in ordering a sale of the premises at the present time at a fixed upset price for cash.

Manifestly no issue as to the propriety, wisdom, or necessity of placing the property of J. N. Cudd in the hands of receivers can arise in this case, but all such questions have been finally adjudicated and settled, so that no dispute can now arise in regard to the fact that the court after mature deliberation has taken charge of the real estate and other property of J. N. Cudd, to be handled by the receivers and disposed of as the court shall direct for the benefit of all creditors, who have a paramount interest in the assets of an insolvent person, for the protection of the lien creditors, and for the best interest of the owner of the property, who by reason of financial misfortune finds himself unable to pay his debts and forced into receivership. The appellant has had his day in court in respect to these matters and consented to the order for receivership which was granted on motion of certain of his creditors and is now bound by such proceedings. Penn Mutual Life Insurance Co. v. Cudd, 172 S.C. 88, 172 S.E. 787.

3. A sale of receivership property by the receiver, under an order of court, is a judicial sale. The court has the right and power to determine the terms and conditions of the sale in advance and to fix the minimum price. Tardy's Smith on Receivers, Vol. II, page 1781, § 640; Hewitt v. Walters, 21 Idaho, 1, 119 P. 705, Ann. Cas. 1913C, page 35.

The courts of this state have uniformly exercised the power to order that a receiver, duly appointed, shall sell the real estate and other property of the person or corporation whose assets are in the hands of receivers, in order to distribute the proceeds among creditors, stockholders, and other parties interested, and to liquidate and wind up the affairs of such insolvent person or corporation. It has been recognized that it is often of great importance that such assets should be disposed of by a receiver, duly appointed, because of his special knowledge of such assets; and because the receiver by law takes the manual possession and custody of the property for the purpose of disposing of it and distributing the proceeds. Buist v. Merchants' & Planters' Bank, 65 S.C. 487, 43 S.E. 958.

The sale of real estate made by the receiver is a judicial sale, subject to the confirmation of the court and the order directing the sale, and the advertisement thereof, should state definitely the time and place where the bids may be received. In re Ragland, 172 S.C. 544, 174 S.E. 592.

4. When the court deems it expedient for the welfare of the parties to the order and for the trust, it may make an order to the receivers to sell at private sale, or the court may accept an offer made directly to the court, or may ratify a sale already made. Clark Law of Receivers, § 618.

The trial court, in the first instance, when the decree of sale is entered, may in the sound and informed discretion of the court require, direct, and order that the property should be sold for a sum not less than a fixed minimum or upset price. Union Trust Co. v. Curtis, 182 Ind. 61, 105 N.E. 562, L. R. A. 1915A, 699; Section 619, Clark; 34 Cyc. 319, 320.

Whether a sale by a receiver shall be for cash or credit is ordinarily under the control of the court. 34 Cyc. 320.

Property in the hands of a receiver is in custodia legis, Peurifoy v. Gamble, 145 S.C. 1, 142 S.E. 788, 71 A. L. R. 783; although the title logically remains in the insolvent party for whose assets the appointment of a receiver was made, to be disposed of as the court may decide, through its officer the receiver. In re American Slicing Machine Co., 125 S.C. 214, 118 S.E. 303.

The possession of the property of the insolvent debtor in the hands of the receiver as an officer of the court is the possession of the...