Robinson v. Amateur Ass'n
| Citation | 14 S.C. 148 |
| Decision Date | 06 September 1880 |
| Docket Number | CASE 915. |
| Parties | ROBINSON v. AMATEUR ASSOCIATION. |
| Court | South Carolina Supreme Court |
1. A sale by a mortgagee of the mortgaged premises under a power conferred in the mortgage, and in strict compliance with the conditions of the power, is valid, and bars the equity of redemption; and at such sale the mortgagee may, himself become the purchaser, if so authorized by the terms of the power conferred.
2. Such sale will not be set aside, because the terms of the contract were hard, the interest high, and the advertisement (which followed the description given in the mortgage) not sufficiently descriptive.
3. Mere inadequacy of price is not sufficient ground for setting aside such a sale, unless the inadequacy is so great as to furnish evidence of fraud.
Before ALDRICH, J., Charleston, December, 1879.
Controversy without action upon an agreed state of facts. The bond of plaintiff, Robinson, to Mordecai matured in two years, interest from date, at rate of ten per cent. per annum , payable quarterly in advance, the failure to pay these installments of interest when due, and also to pay state, county and city taxes upon the mortgaged premises, and to keep the buildings insured and in good repair, to be a forfeiture of the bond. The bond and mortgage were assigned by Mordecai to the defendant, the Amateur Literary and Fraternal Association of Charleston. The advertisement of the property by defendant was for three weeks, and described the property in the words of the description given in the mortgage, no mention being made of buildings in either, but there was a covenant in the mortgage that the mortgagor would " insure the house and buildings on said lot." The other material facts are stated in the opinion.
Mr. T. M. Mordecai , for appellant.
Mr. E. A. Marshall , contra.
1. Although the validity of mortgages, with powers of sale, has been generally recognized, sales under such powers are scrutinized by the courts with great care, and will not be sustained unless conducted with all fairness, regularity and scrupulous integrity; the mortgagee being considered and treated as a trustee. Perry on Trusts , (2 d ed. ) § 602, a, b, etc.; Sugd. on Vendors , (8 th Am. ed.) Vol. I. , 87, 96; 3 Metc. 311; 3 Meriv. 207; 2 Giffard 108.
2. When such mortgages contain a clause authorizing the mortgagee to become purchaser, and he avails himself of this privilege, thus acting as vendor and vendee, (characters that are inconsistent for " emptor emit quam minimo potest, venditor vendit quam maximo potest ," ) he is required to exercise unusual good faith and fairness, and if it appears that he has not used the best means to realize the largest amount of money, and the price is grossly inadequate, such sale will be set aside on application of the mortgagor within a reasonable time, and said mortgagor allowed to redeem. See 14 Allen 369; 115 Mass. 353; 122 Mass. 122.
3. Considering the mortgagee as trustee, he will not be allowed to speculate in trust property, and should he, after purchasing property of his cestui que trust (even though bona fide ), re-sell or attempt to re-sell at a larger price, the first sale may be set aside, or the profit must go to his cestui que trust or mortgagor. Perry on Trusts , (2 d ed. ) §§ 254, 602, v.; Willard's Eq. Jur. (Potter's ed. ) 186, 188; Story's Eq. Jur. , §§ 321, 322; 1 McC. Ch. 390; 4 Rich. Eq. 167; 7 S. C. 201.
The respondent asks that the appeal in this case be dismissed, and the judgment of the court below sustained on the grounds-
1. That the mortgagees did not exercise reasonable diligence and good faith in protecting the mortgagor's interest.
2. That the property was not sufficiently advertised to attract purchasers. 2 Jones on Mort. , §§ 1839, 1852, 1858.
3. That the mortgagees bought at a grossly inadequate price, and attempted to re-sell at a large profit to themselves. 4 Desaus. 715.
4. That constructive fraud will be presumed from the various circumstances of the case.
This is a case submitted, containing the facts agreed upon by the parties. On November 27th, 1877, Alexander Robinson executed a bond to T. Moultrie Mordecai, Esq., for $450 borrowed money, and at the same time, to secure the bond, gave a mortgage of a house and lot in the city of Charleston, which contained the following power to sell: " But in case of non-payment of the said bond, with the interest thereon, or any part thereof, & c., then and in such case it may be lawful for the said T. Moultrie Mordecai, his heirs, executors, administrators and assigns, and the said Alexander Robinson doth hereby empower and authorize the said T. Moultrie Mordecai, his heirs, executors, administrators or assigns, to grant, bargain, sell, release and convey the said premises, with the appurtenances, at public auction or vendue, at which sale they or any of them, shall have the right to become the purchasers of the said premises, and on such sale to make and execute to the purchaser or purchasers, his, her or their heirs or assigns, for ever, a conveyance in fee of the said premises, free and discharged from all equity of redemption," & c.
On January 3d, 1878, Mordecai, for value, assigned the bond and mortgage to the defendant corporation, who, Robinson having made default, advertised, under the power in the mortgage, the premises for sale, and sold them at public outcry April 15th, 1879, both the plaintiff and the officers of the defendant corporation being present at the sale. The corporation bid off the property for $400, complied with the terms of sale, received title and went into possession.
Subsequently the property was offered for sale at auction and bid off by one Francis Ryan for $850, but he refused to comply with the terms of sale, as in the meantime this controversy about the title had arisen.
On August 25th, 1879, Robinson made the claim that the first purchase by the defendant corporation was void, which they denied, insisting that the deed to them and possession under it, made their title absolute. The question was submitted to the court, the Circuit judge set aside the sale and adjudged that the plaintiff was entitled to redeem. The defendant appeals to this court on several grounds, but they may all be considered under the first exception, which is as follows " Because the sale under the power and the purchase thereunder, and the conveyance in conformity therewith, and the voluntary surrender of the premises by the plaintiff to the defendant under the conveyance, made the title of the defendant absolute, and there was and is...
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