Olcott v. Bynum Et Al

• Decision Date: 01 December 1872
• Citation: 84 U.S. 44,17 Wall. 44,21 L.Ed. 570
• Parties: OLCOTT v. BYNUM ET AL
• Court: U.S. Supreme Court

84 U.S. 44

21 L.Ed. 570

17 Wall. 44

OLCOTT v. BYNUM ET AL.

December Term, 1872

ERROR to the Circuit Court for the District of North Carolina; the case being thus:

In the year 1854, the High Shoals Manufacturing Company owning 14,873 acres of land in the counties of Lincoln, Gaston, and Cleveland, in North Carolina, having upon it two water-powers, abounding in iron ore and other minerals, and having erected thereon two iron-works, forges, furnaces, machinery, and other fixtures for the manufacture of iron, sold the same, in a body, to one Groot, who paid $75,000 therefor; $25,000 in cash and a mortgage of $50,000 to two persons, Bynum and Grier, trustees for the High Shoals Company. This mortgage not being paid, Bynum and Grier, on the 1st of January, 1859, foreclosed it by a public sale of the property in a body; one Hovey presenting himself as the purchaser. As a matter of fact, however, Hovey was only 'a man of straw,' the real purchasers being one Olcott and a certain Stephenson. There had been an agreement previous to this sale that the purchase-money (which proved to be $48,500) should be paid:

Money down,......................... $8,500

Balance, mortgage,.................. 40,000

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$48,500

And it was so paid.

The money down was paid by Olcott and Stephenson, and

thus made up cash,................. $6,800

Certain dividends due Stephenson (equivalent to cash)

assigned,........................... 1,700

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$8,500

A deed was accordingly made to Hovey January 1st, 1859, and on the same day Hovey gave a deed of trust with power of sale, or deed in the nature of a mortgage, for the balance. which was to be paid:

1860, January 1, $13,333 33

1860, July 1, 13,333 33

1861, January 1, 13,333 34

All with interest from January 1st, 1859.

The deed of trust which was accompanied by a penal bond, provided,

'That if default shall be made in the payment of the said sum of money, or the interest that may grow due thereon, or of any part thereof, that then, and upon failure of the grantor to pay the first or any subsequent instalment, as hereinbefore specified, it shall be lawful for the trustee to enter upon all and singular the premises hereby granted, and to sell and dispose of the same, and all benefit and equity of redemption, &c., and to make and deliver to the purchaser or purchasers thereof a good and sufficient deed for the same, in fee simple, and out of the money arising from such sale to retain the principal and interest which shall then be due on the said bond or obligation, together with the costs and charges of advertising and sale of the same premises, rendering the overplus of the purchase-money, if any there shall be, unto the said Hovey, &c. which sale so to be made shall forever be a perpetual bar, both in law and equity, against the said Hovey, his heirs and assigns, and all other persons claiming the premises, or any part thereof, by, from, or under him, them, or either of them.'- A few days after the conclusion of these arrangements, that is to say on the 8th of January, 1859, Hovey, as he testified in a deposition found in the record, and as Olcott himself also testified, conveyed the premises to Olcott and Stephenson, by deed in due form. But no such deed was now to be found nor any registry of it. It was proved to have been lost, and a certified copy from the proper office was produced of a copy which had been registered there.

On the 18th of December, 1867, Stephenson released all his interest to Olcott, by deed in due form, of whose existence there was no question. Default in the first payment secured by the mortgage being made, the mortgagees, on the 31st of January, advertised the property for sale on the 8th day of March, 1860. Upon hearing of the advertisement of sale, Stephenson and Olcott wrote to Bynum, the acting trustee, as follows:

'NEW YORK, February 25th, 1860.

'DEAR SIR: You will recollect that when the High Shoal property hanged hands in January, 1859, we stated to you that our aim would be to pay off the entire amount of the mortgage before the expiration of the year. To bring about a result so desirable to all parties interested, we have taken the position with our friends, in organizing a new company, that a less sum than the whole amount required to satisfy the mortgage would not answer our purpose. This, we have felt assured, was the true policy for us to pursue, and the only ground we could take and do justice to them, and realize what we had encouraged you to expect. We are now, we think, on the eve of accomplishing our aim, having already a large part of the required sum offered to us, but as we may not be prepared with the whole amount on the day fixed by you in the advertisement, we beg to ask the postponement of the day of the sale for a short time, under the conviction that we shall be able to meet your wishes and our own at a very early day, and much in advance of the average time named in the mortgage. We should like to have the time of payment put off to the 1st May, but if that is longer than you think ought to be granted, we must be satisfied with a shorter date.

'Although, by the strict letter of the contract, you have the right to require us to fulfil its conditions punctually, yet, in view of the large amount already paid to the stockholders of the company which you represent, and the still larger sum expended upon the property, we hope it will not be deemed necessary to compel us to sacrifice these large disbursements at a time when the delay of a few weeks will enable us to protect them, and cannot jeopard or in any way prejudice the rights of those you represent.

'Recollecting and appreciating the good feeling evinced towards us by the stockholders of the old company during our long struggle with outside claimants, we dare venture to hope for the continuance of their indulgence for the brief period asked for to enable us to bring this our determined effort to cancel the entire debt to a successful issue.

'Believing that your good wishes are with us, and that you will, as far as you can consistently with your obligations to others, grant our request,

'We are, very respectfully, yours, &c.,

'E. S. STEPHENSON,

'T. OLCOTT.

'TO W. P. BYNUM, ESQ., &c.'

The sale was accordingly postponed; and on the 19th of March, 1860, the property was again advertised as about to be publicly sold 'at the High Shoals, Gaston County, N. C.,' on the 28th of April; it being announced that 'the sale will be positive and for cash.'

This, and the further history of the matter, was thus given in the testimony of Bynum himself:

'I postoponed the sale to the 28th of April, in compliance with the request of Messrs. Stephenson and T Olcott, having business elsewhere on the 1st May. Mr. Olcott was informed of this postponement, both by letter from myself and from Thomas Darling, the agent upon the premises, and I was informed by the said agent that the arrangement was satisfactory to all the parties. On the 28th April, the property was duly exposed to public sale by me and Grier, as mortgagees, when and where (on the premises at the High Shoals), William Sloan, as the agent of the High Shoals Manufacturing Company, being the creditors, became the highest bidder and purchaser, at the sum of $43,200 the estimated debt and interest due on the mortgage. I am not aware that there was any opposition bid, or that he made more than one bid. At the time of the sale, the creditor company were anxious to realize that debt without purchasing in the property. I and others accordingly made every reasonable effort, both before and at the sale, to induce the mortgagees to pay, or third parties to buy the property; and in fact, I did induce several capitalists from Charlotte to attend the sale, with the view of buying. But on surveying the property, they concluded to run the same to $35,000 and no more. At the time of sale, and during the entire bidding, both Hovey, the mortgagor, and Darling, the agent of the New York company, were personally present and assenting thereto, well knowing that Sloan was bidding in behalf of the creditors, the old High Shoals Company. I expressly deny that Sloan was the agent of the mortgagees, or employed by them to bid off the property, but known that he was directed by the High Shoals Company to bid for them to the amount of their debt, and no more. I was, before said sale, informed, both by Hovey and Darling, that the purchasers had failed, and were unable to meet the payments, and they acknowledged the necessity of the sale and acquiesced in it, as representing the New York company. After the sale, the same day, or shortly thereafter, the penal bond of Hovey for $80,000 was credited with amount of said bid by Sloan, and the bond itself was cancelled in satisfaction of said debt.

'Mr. Olcott came to North Carolina and visited this property in the year 1860, and after said sale, and in repeated conversations with me, and with a full knowledge of said sale and all the circumstances connected with it, acknowledged the validity of the sale and the full and complete title of the purchasers at it. In the summer of 1860, he, on two occasions, visited me with the view of procuring a lease on a portion of said property, for gold-mining purposes, and the further view of purchasing the entire property, if his mining project proved successful. In fact he did procure from me a mining lease (to himself and one Muir), on a part of the property, which was in writing, and for the period of six months from that time, subject to be revoked at any time on the sale of the property. And I am informed that he did make explorations, &c., but finally abandoned his lease and left the State in April, 1861, or thereabouts. In March, 1862, by the direction of the High Shoals Manufacturing Company, I contracted to sell the property to R. R. & J. L. Bridgers for the sum of $65,000; $30,000 of said sum was to be paid in North Carolina bank bills, and...