Smith v. Rusmisell
Decision Date | 14 July 1999 |
Docket Number | No. 25429.,25429. |
Citation | 517 S.E.2d 494,205 W.Va. 261 |
Parties | Gerald Locke SMITH, Petitioner Below, Appellee, v. Betty M. RUSMISELL, Respondent Below, Appellee, Mike Ross, Inc., a West Virginia Corporation, Appellant. |
Court | West Virginia Supreme Court |
John E. Busch, Esq., Busch & Talbott, Elkins, West Virginia, Attorney for Smith.
W.T. Weber, Jr., Esq., W.T. Weber, III, Esq., Weber & Weber, Weston, West Virginia, Attorney for Mike Ross, Inc.
Ann Rusmisell, Pro Se, Attorney in fact for Betty M. Rusmisell. MAYNARD, Justice:
This case is before this Court upon appeal of a final order of the Circuit Court of Upshur County entered on May 6, 1998. In that order, the circuit court ruled that a $375,000.00 bid for property sold at a partition sale was "grossly inadequate" and ordered the tracts of land to be resold. In this appeal, the appellant, Mike Ross, Inc. (hereinafter "Ross"), requests that the final order of the circuit court be reversed and the property conveyed pursuant to the bid of $375,000.00. Ross contends that the evidence presented during the confirmation hearing established that its bid was not "grossly inadequate."
This Court has before it the petition for appeal, the designated record, and the briefs and argument of counsel. For the reasons set forth below, the final order of the circuit court is reversed.
I.
This case arises out of a suit to partition filed in the Circuit Court of Upshur County by Gerald Locke Smith (hereinafter "Smith") on December 12, 1996. Smith and Betty Rusmisell (hereinafter "Rusmisell") each owned a one-half interest in 16 parcels of land located in the Buckhannon Corporation and Buckhannon District of Upshur County. Smith's petition alleged that "due to the nature, character and amount of the said real estate," it could not be conveniently or equitably partitioned. Smith requested the court to order a sale of the real estate and division of the proceeds among the owners. Alternatively, Smith requested that he be allotted the property upon payment to Rusmisell for her one-half share.
On March 26, 1997, the circuit court appointed three commissioners to independently determine the susceptibility of the property for partition and to make a recommendation to the court. On August 25, 1997, the commissioners filed a report indicating the sixteen parcels of land could not be equitably divided and could only be partitioned by sale. Rusmisell objected to the sale of the property and filed exceptions and affidavits in opposition to the commissioners' report.
At a hearing in September 1997, the circuit court considered Rusmisell's objections to the sale of the property. However, ultimately, the circuit court determined that the property should be sold. John E. Busch was appointed Special Commissioner to hold the public sale.
Subsequently, Rusmisell attempted to prevent the sale by filing an appeal with this Court. After the appeal was refused, the Special Commissioner scheduled the public sale for March 6, 1998, and posted the appropriate notices. One day prior to the sale, Rusmisell filed a civil action in the United States District Court for the Northern District of West Virginia styled Rusmisell v. Smith, et al.
On the day of the sale, Ann Rusmisell, Betty Rusmisell's daughter,1 distributed copies of the complaint filed in federal court to those persons attending the sale. She claimed that the sale was illegal and threatened potential bidders that they would be joined as a party in the lawsuit should they attempt to purchase the property. Eventually, Ann Rusmisell was removed from the sale by members of the Upshur County Sheriff's Department and the sale proceeded as scheduled with several people bidding on the various parcels.
This appeal concerns only the bids that were tendered for tracts eight and nine, known as the Ridgeway property. The highest bid for this property was made by James Ross, president of Ross, in the amount of $375,000.00. A few days after the public sale, Jeffrey St. Clair (hereinafter "St. Clair"), tendered an upset bid on the Ridgeway property in the amount of $412,500.00. St. Clair had been present at the public sale, but stated that he was intimidated by the actions of Ann Rusmisell and was afraid to bid on the property.2
On April 29, 1998, the circuit court conducted a hearing to confirm the public sale. At the hearing, St. Clair presented evidence in support of his upset bid for the Ridgeway property. He offered the testimony of Steven Holmes, a qualified real estate appraiser, who valued the Ridgeway property at $675,000.00. In response, Ross offered the appraisal of the Upshur County Assessor which indicated that the value of the property was $246,700.00. Ross also presented the testimony of Hugh Hefner, a professional geologist, who testified that the value of oil and gas under the Ridgeway property was $49,690.00. Dale and James Woody, local timber operators, testified that the value of these specific tracts of land including the timber was between $350,000.00 and $400,000.00.
Thereafter, the trial court found Ross's bid of $375,000.00 "grossly inadequate," based on the evidence and "the Court's personal knowledge of the property in question." The trial court ordered that the sale be set aside and the Ridgeway property be resold by the Special Commissioner. This appeal followed.
II.
Ross contends that its bid of $375,000.00 was not "grossly inadequate," but instead was supported by the evidence presented at the confirmation hearing. In particular, Ross relies upon the Upshur County Assessor's appraised value of the tracts of land at $246,700.00 and the expert opinion of geologist Hugh Hefner valuing the oil and gas reserves of the property at $49,690.00. Ross also maintains that the testimony of James and Dale Woody, indicating the property had a total value of between $375,000.00 and $400,000.00, supports his bid. Ross further asserts that the circuit court's use of its own personal knowledge in finding that its bid was inadequate was an abuse of discretion because it had no way to counter the court's own opinion of value which was not based on any evidence presented during the hearing.
This case requires us to take another look at our law dealing with judicial sales and in particular, upset bids. In Syllabus Points 7 and 8 of Eakin v. Eakin, 83 W.Va. 512, 98 S.E. 608 (1919), this Court said:
Before confirmation the rights of the purchaser are inchoate, and upon a showing of inadequacy of price, or upon an offer of a higher bid, properly secured, it is discretionary with the court whether it will confirm the sale or set it aside and direct a resale. The exercise of this discretion depends in large measure upon the facts of each case, abuse thereof when effecting inequities being subject to review by the appellate court.
Upon the confirmation of a judicial sale the rights of the purchaser become vested. Thereafter nothing except fraud, accident, mistake, or some other cause for which equity would avoid a like sale between private parties, will warrant a court in avoiding the sale or in opening it for other bids. Mere inadequacy of price or tender of a higher bid will not suffice, unless they themselves clearly import fraud, or are accompanied by other facts or circumstances constituting good causes such as are above stated.
In other words, historically, in West Virginia, the matter of receiving upset bids has been left to the discretion of the trial court. State v. Hatfield, 136 W.Va. 342, 346, 67 S.E.2d 529, 531 (1951). We therefore hold that prior to confirmation, the decision whether to set aside a judicial sale and accept an upset bid is within the discretion of the circuit court. We have said, Syllabus Point 1, Old Nat'l Bank of Martinsburg v. Hendricks, 181 W.Va. 537, 383 S.E.2d 502 (1989).
Generally, courts have adopted one of three legal doctrines to determine the effect of an upset bid offered for property after it has been sold at a judicial sale but before the sale has been confirmed. 47 Am.Jur.2d Judicial Sales § 308 (1995). Some jurisdictions used to follow the "English doctrine" whereby the mere receipt of a substantially higher bid than that offered at the judicial sale was sufficient reason to refuse confirmation of the sale and reopen the bidding. This doctrine has generally been abolished, but some jurisdictions still follow a modified form of the rule. Id.3 Other jurisdictions have adopted the opposite approach of the "English doctrine" whereby the fact that a higher bid has been offered is not alone a sufficient reason to support a refusal to confirm the sale.4 Still, other jurisdictions, like West Virginia, leave the matter to the discretion of the trial court.5 Regardless of the approach adopted, it is virtually impossible to find any well-defined rule in any one jurisdiction. 47 Am. Jur.2d Judicial Sales § 308 (1995). This fact is easily illustrated by our own case law on this subject.
Although West Virginia has ostensibly adopted the approach of leaving the matter to the discretion of the trial court, this Court has cautioned that " Syllabus Point 2, Benavides v. Shenandoah Fed. Sav....
To continue reading
Request your trial-
Falbo v. Falbo, Civil Action No. 2:17-cv-04046
...sale, guided by the principle that they "must strive to obtain the best price possible for the property sold." See Smith v. Rusmisell, 205 W. Va. 261, 266 (1999); see also Smith v. Smith, 180 W. Va. 203, 209 (1988) ("Our cases do agree that a court does have rather broad discretion in decid......
-
IN RE: MCCLURE PROPERTIES Inc.
...may be set aside when the price received shocks the conscience well after the 1986 enactment of § 40-1A-3. E.g., Syllabus Pt. 3, Smith v. Rusmisell, 517 S.E.2d 494 (W. Va. 1999); Syllabus Pt. 2, Benavides v. Shenandoah Fed. Sav. Bank, 433 S.E.2d 528 (W. Va. 1993). In Count II, however, the ......
-
Anderson v. Wright
... ... Martinsburg v. Hendricks, 181 W.Va. 537, 383 S.E.2d 502 ... (1989) ... Syl. Pts. 1 & 2, Smith v. Rusmisell, 205 W.Va ... 261, 517 S.E.2d 494 (1999); see also Syl. Pt. 7, in ... part, Eakin v. Eakin, 83 W.Va. 512, 98 S.E. 608 ... ...
-
Rahmi v. Sovereign Bank, 11-1667
...to the fair market value of the real estate and does not shock the conscience or support a claim of fraud," citing Smith v. Rusmisell, 205 W.Va. 261, 517 S.E.2d 494 (1999) (directing the confirmation of a sale where the successful bid was 55% of fair market value). The circuit court further......