Lipscomb v. New York Life Insurance Company
| Decision Date | 09 March 1897 |
| Citation | 39 S.W. 465,138 Mo. 17 |
| Parties | Lipscomb et al., Appellants, v. New York Life Insurance Company |
| Court | Missouri Supreme Court |
Appeal from Jackson Circuit Court. -- Hon. E. L. Scarritt, Judge.
Affirmed.
Karnes Holmes & Krauthoff and Lipscomb & Rust for appellants.
(1) The record shows that the principal note was not due, and only one interest note of $ 600 was past due. The record also shows that the sale was made October 20, 1893, during the money panic, and that money could not be had at any price. The record shows that Mr. Clarke paid $ 45,000. It cost Mrs Hickman over $ 50,000, and at sale it was worth at least $ 35,000. We think the price, $ 21,000, bid for it, under all circumstances, is grossly inadequate and the sale should not be permitted to stand by a court of equity. The sale, while pretending to be public, was private. The trustee's action against objection of owner of equity amounts to unfairness. Stoffel v. Schroeder, 62 Mo. 147; Vail v. Jacobs, 62 Mo. 130; Meyer v. Jefferson Ins. Co., 5 Mo.App. 245; Benkendorf v. Vineenz, 52 Mo. 441. (2) The sale was not conducted according to law nor for the benefit of the holder of the equity, but solely in the interest of the New York Life Insurance Company, a New York corporation, through its attorneys, Austin & Austin, a firm of brothers, James H. Austin and A. A. Austin. The record shows that the firm of Austin & Austin, as attorneys were the only persons present at the sale, except J. H. Lipscomb and Mr. Tilhof, who were present only as witnesses to the sacrifice of the woman's property. What was the duty of the attorney and trustee at the sale when not a bidder was present but his brother, who with him represented only the New York corporation. Clearly in the interest of all parties, under all circumstances, he should have adjourned the sale. McMichael v. McDermott, 17 Pa. St. 353; Strong v. Catron, 1 Wis. 471; McDonald v. Neilson, 2 Cow. (N. Y.) 139; 2 Jones on Mortgages, sec. 1634; Young v. Smith, 23 Tex. 598. (3) Mrs. Hickman took the title to the property subject to the deed of trust. She did not assume and agree to pay. The trustee, James H. Austin, by terms of contract, is agent of both parties to the deed. While it might not have been permitted to Nettleton to revoke that agency, yet when it appeared to J. H. Lipscomb that the firm of Austin & Austin were the only representatives of the New York Life Insurance Company, in full charge of the sale, and James H. Austin, trustee, it was perfectly proper for J. H. Lipscomb to revoke the agency by giving the notices shown by the record and James H. Austin should have let the sheriff sell. A literal compliance with deed is not sufficient. Mr. Austin's loyalty to his client and his duties as trustee under the circumstances made his conduct an unfair sale. Cassady v. Wallace, 102 Mo. 575; Stewart v. Brown, 112 Mo. 171. (4) The power of sale given in the deed is a creature of contract and not law. The deed provides that upon default a public sale shall be had, a sale "at public vendue to the highest bidder." This language precludes a sale by a firm of attorneys, brothers, for a foreign corporation which lends and collects through them thousands of dollars yearly, one acting as attorney and trustee at the same time the other member of the firm acting as bidder. The highest bidder presupposes other bidders. There can be no highest bidder unless there is a lower bidder. There can be no public vendue with but one corporation present by its attorneys. The contract has not been complied with. The sale ought to have been adjourned. Cassady v. Wallace, 102 Mo. 575; Stewart v. Brown, 112 Mo. 171. (5) There was a great sacrifice of this property. We had a right under the circumstances to revoke the agency of James H. Austin when we learned that he was acting solely in the interest of his corporation client. We had a right to a public sale which we did not have. The object of an advertisement of sale is to draw a public crowd and attention to sale. If from panic, hard times, or other considerations no public sale can be had, the trustee and attorneys can not pretend a public sale and sell privately, which was done in this case and contrary to the deed of trust, law, justice and equity. McKee v. Spiro, 107 Mo. 452; Long v. Long, 79 Mo. 644.
Austin & Austin for respondents.
(1) Mr. Lipscomb, and the parties represented by him, knew when he bought the property that James H. Austin was trustee in the deed of trust then upon the property, and that he was one of the attorneys for the New York Life Insurance Company, and that the makers of the trust deed consented that he should act as trustee notwithstanding that fact. Said Lipscomb was bound by the covenants of the said trust deed to the same extent as Mrs. Nettleton and husband who made the same. Sternberg v. Valentine, 6 Mo.App. 176, 177, 178; Cloud v. Kansas Loan & Trust Co., 52 Mo.App. 318-322. (2) The fact that a trustee is attorney, officer or agent of the creditor does not disqualify him to act as trustee. Cloud v. Kansas Loan & Trust Co., supra; Ohnsorg v. Turner, 13 Mo.App. 533-549; Cassady v. Wallace, 102 Mo. 575-580; Ellis v. Railroad, 107 Mass. 1-13; Lewin on Trusts [5 Ed.] 459. (3) The rule is well settled in this state that mere inadequacy of price is not sufficient to set aside a sale under deed of trust, unless so gross as to raise the inference of fraud or imposition. Harlin v. Nation, 126 Mo. 97-102; Hardwick v. Hamilton, 121 Mo. 465. (4) The cases cited by appellant are all cases in which the trustee is held to have acted unfairly, making the sale at an unusual hour, accepting a bid for a smaller amount than he knew the mortgagee would bid thereon, or colluding with some party to the injury of the debtor. These cases have no application to the facts in this case. The trustee treated the debtor with the utmost fairness, postponing the sale at different times and delaying the sale upon the day of sale at his request, and seeing that the bid for the property, even where there were no competing bidders, brought a price representing the full value of the property.
On the fourth day of June, 1889, James C. Nettleton and Virginia P his wife, borrowed of the defendant the sum of $ 20,000, for which they executed their promissory notes of that date as follows, viz.: One principal note for $ 20,000, payable to the said insurance company five years after date, and ten semiannual interest notes payable to said company, successively in six, twelve, eighteen, twenty-four, thirty, thirty-six, forty-two, forty-eight, fifty-four and sixty months after date, all of said notes payable with interest thereon at the rate of six per cent per annum after...
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