Shurtz v. Johnson
| Decision Date | 12 July 1877 |
| Citation | 69 Va. 657 |
| Court | Virginia Supreme Court |
| Parties | SHURTZ & als. v. JOHNSON & als. |
Absent, Anderson and Staples, Js.
1. In 1859 W conveyed to P a tract of land in York county, in trust to secure a debt of $8,000 with interest. In May 1866 W conveyed his equity of redemption in this land to N, in trust to secure a debt of $2,000 then lent to him. All the parties to this deed then living in Baltimore, the deed provided that in default of payment the trustee should sell, " at such place as he may think proper," the said property at public auction, & c. In July 1869 the trustee advertised and sold the said equity of redemption at public auction in Baltimore, when the creditor became the purchaser; and she afterwards sold it at a small advance, but not sufficient to pay the whole of her debt. At the time of the sale by the trustee the amount of the prior lien was ascertained. In November 1859 M recovered two judgments against W in Accomac county; and J and S, who claimed to have paid these judgments, had them docketed in York county in May 1867. On a bill by J and S to set aside the said sales and conveyances.--HELD:
1. The deed of trust leaving the place of sale to the discretion of the trustee, he had the authority to sell the property in Baltimore, or at any other place which he in his discretion might select. And the only question is, whether he exercised that discretion fairly and prudently--in other words, whether he committed a breach of trust.
2. The amount of the prior lien being certain and ascertained, the sale of the equity of redemption was proper.
3. The deed of trust having been taken without any notice to the trustee or creditor of the existence of the judgments in Accomac, and before these judgments were docketed in York county, the liens of the judgments were subsequent to that of the deed of trust and presented no objection to the sale.
II. When the plaintiff in equity by his bill calls for a material disclosure from the defendant on oath, and the defendant in his answer on oath makes such disclosure fully and unequivocally, the answer, to the extent of such disclosure is said to be responsive to the bill, and the statement must be taken as true, unless overcome by the satisfactory testimony of at least two opposing witnesses, or of one witness with clear corroborating circumstances.
This case was argued in Richmond and decided at Wytheville. It was a suit in equity to set aside a sale of land under a deed of trust, and the conveyance to the purchaser from the trustee and also a sale and conveyance by that purchaser to a purchaser from her. The case was heard upon the bill, the answers, and the exhibits; and the sales and conveyances were set aside and certain accounts ordered. And the trustee and the last purchaser applied to this court for an appeal; which was awarded. The case is sufficiently stated by Judge Burks in his opinion.
John H. Gilmer and Grattan, for the appellants.
John S. Wise and Crump, for the appellees.
This case presents the question as to the validity of a sale made by a trustee under a deed given to secure the payment of debts.
On the 17th of January, 1859, Samuel C. White by deed of that date conveyed his tract of land called " Temple Farm," lying in York county, Virginia, to W. S. Peachy, in trust to secure the payment of $8,000, with interest, to James P. Selby. By deed of the 31st of May, 1866, he conveyed the equity of redemption of this deed of trust to Nathaniel F. Williams, of Baltimore, to secure the payment to Martha E. Williams and Clara M. Hewson, of Baltimore, to each the sum of $1,000 and interest, for money borrowed of them. Williams (the trustee) on the 17th of July, 1869, made sale by public auction at Baltimore, of the equity of redemption conveyed to him by the last-named deed, and the said Clara M. Hewson becoming the purchaser, he conveyed the same to her by deed dated 23d of July, 1869.
Clara M. Hewson afterwards sold the equity of redemption to William D. Shurtz (the appellant here) and conveyed the same to him by deed of the 28th of February, 1870.
After the making of the trust deed aforesaid, but precisely when does not appear, White made a contract with Anthony M. Kimber and others, of Philadelphia, for the sale to them of eighty acres of the " Temple Farm; " but this contract was never carried out, and after the purchase of the equity of redemption by Hewson, it was rescinded.
On the 5th day of November, 1859, William K. Merritt & Co. recovered two judgments against White in the circuit court of Accomac county, which were never docketed in the county of York, where " Temple Farm" lies, until the 21st day of May, 1867.
Abel T. Johnson and E. K. Sneed, (appellees here) claiming, as sureties of White on an injunction bond, to have paid off these judgments, filed their bill in the circuit court for the county of James City and the city of Williamsburg, against Shurtz, N. F. Williams, (trustee), Clara M. Hewson and others, to set aside the sales aforesaid, and subject the equity of redemption to the payment of said judgments.
Shurtz, Williams, (trustee), Martha E. Williams, and Clara M. Hewson filed answers to the bill, and the cause having been matured as to all of the defendants, was removed to the circuit court of Gloucester county, where it was heard on the bill, answers and exhibits, (no depositions having been taken), and a decree entered setting aside the sale to Hewson by Williams (trustee), and ordering certain accounts, which need not be noticed. An appeal from this decree allowed to Shurtz and Hewson brings the case here for review.
It is admitted that the sale by the trustee was made at Baltimore, in the state of Maryland. The estate sold was an equitable interest in lands lying in the state of Virginia; and it is contended that the trustee had no power under the laws of this state to make sale at a place outside its limits and beyond its jurisdiction, and for this reason alone, if for no other, the sale was invalid; and such seems to have been the ground on which the decree complained of was based.
I know of no law of this state forbidding such a sale, and no decision of any court has been cited in support of the general proposition, that a trustee who is invested with power to make sale of real estate for the payment of debts, without express limitation as to the place of sale, cannot lawfully make such sale at a place outside the territory and beyond the jurisdiction of the state in which such real estate may be. The powers of the trustee must be determined from an examination of the deed under which he acted. The deed speaks this language: " Should said Samuel C. White fail to pay or cause to be paid such sums of money, or any interest, as the same becomes due and payable, it shall be the right and privilege of the said Nathaniel F. Williams, trustee, his heirs or successors, immediately upon such default to advertise for sale the whole or any part of the hereby mortgaged property in such public manner, and for such length of time, (not less than thirty days), and at such place as he or they may think proper, and after having done so, to sell said property at public auction for cash or on credit, at his or their option, and apply the proceeds of sale, & c."
It thus appears that neither Baltimore nor any other place is specially designated in the deed as the place where the sale is to be made, but, by the plainest implication, the selection of such place is left to the discretion of the trustee, as is usual in deeds of this character.
It may not be doubted, therefore, that the trustee had the power under the deed to make the sale at Baltimore, or at any other place which he in his discretion might select. The real and only question is, whether he exercised that power fairly and prudently; in other words, whether he committed a breach of trust. The statement in the answer, that at the time the deed was executed there was a parol agreement amongst the parties that the sale, in case of default, should be made at Baltimore, cannot be considered. It is an affirmative statement; and if, when proved, it had been competent evidence, still it was not proved.
In a deed of trust to secure the payment of debts, the trustee is the agent of both parties, debtor and creditor, and should act impartially between them; and in making sale of the trust subject he should use all reasonable diligence to obtain the best price. And if there be any cloud hanging over the title or uncertainty as to the amounts of the debts secured, or of prior encumbrances, or any other impediment to the fair execution of the trust which cannot be otherwise removed, the aid of a court of equity should be invoked by him to remove the impediment before sale; and if he fail or refuse to resort to the court for that purpose, the parties in interest who may be injured by his default, whether debtor, secured creditor, or subsequent encumbrancer, may apply to the court for relief. Rossett v. Fisher, 11 Gratt. 492, and cases there cited; Hogan v. Duke & als., 20 Gratt. 244.
The gravamen of the bill in this case is, that the sale was in Baltimore, outside the limits of this state; that no notice of the time and place of sale was ever published at any place in this state; and that the property was sold while it was heavily encumbered with prior liens and while clouds were hanging over the title, and was consequently sacrificed and sold for much less than it would have brought at a fair sale made in the county of York or its vicinity. These allegations the several defendants were called upon to answer on oath and Samuel C. White, Nathaniel F. Williams (the trustee), Martha E. Williams and Clara M. Hewson were especially required to discover...
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