Smith v. Woodward

• Decision Date: 24 January 1918
• Citation: 94 S.E. 916,122 Va. 356
• Court: Virginia Supreme Court
• Parties: SMITH . v. WOODWARD et al. STORY . v. SAME.

94 S.E. 916

(122 Va. 356)

SMITH .

v.WOODWARD et al.

STORY .

v.SAME.

Supreme Court of Appeals of Virginia.

Jan. 24, 1918.

Appeal from Circuit Court, Southampton County.

Suit by Benjamin P. Woodward and another against J. W. Smith and E. Frank Story to set aside a sale of real estate under a trust deed. Decree for plaintiffs, and defendants separately appeal. Affirmed.

Buford & Peterson, of Lawrenceville, R. R. Hicks, of Norfolk, and E. Frank Story, of Franklin, for appellants.

J. N. Sebrell, Jr., of Norfolk, for appellees.

BURKS, J. This was a suit to set aside a sale of real estate made by a trustee under a deed of trust to secure a creditor. The circuit court set the sale aside, and from its decree setting aside the sale and adjusting the rights of the parties consequent thereon separate appeals were taken by the purchaser and by the trustee.

Benjamin P. Woodward and wife, by deed bearing date June 1, 1912, conveyed to E. Frank Story, trustee, three parcels of real estate, consisting of a tract of land, a dwelling house and a factory lot, in trust to secure to Mrs. Pattie M. Story the payment of a bond for $7,000, of even date with the deed. The deed provided that:

"In the event that default shall be made in the. payment of the above described bond, or any part thereof, principal or interest, when the same shall be demanded, then the trustee on being thereto requested by the then legal holder of the said bond, shall sell the property hereby conveyed at public auction to the highest bidder for cash."

The deed then proceeds to prescribe the terms of advertising and the application of the purchase money to the payment of the expenses of sale and the debt secured, and directs that the residue, if any, shall be paid to the grantors. The deed also requires the grantors to keep the dwelling insured for at least the sum of $4,000. The deed does not prescribe the order in which the different parcels shall be sold, if a sale Should become necessary. Subsequently, two other deeds of trust were executed by the same grantors, on the same property, to the same trustee, to secure creditors. One bearing date January 27, 1915, secures to F. P. Pope a bond for $3,933.38 bearing even date with the deed, payable on demand, and the other, bearing date February 5, 1915, secures to J. Davis Woodward a bond for $2,542.81, bearing even date with the deed, and payable on demand.

B. P. Woodward made default in the payment of principal and interest of the debt secured in the first deed, and the creditor secured was demanding its enforcement. In the latter part of December, 1914, or early in January, 1915, and before either of the last two deeds of trust had been executed, B. P. Woodward, the debtor, upon being in formed by the trustee of the demand for a sale under the first deed, requested the trustee to advertise only the dwelling and the factory lot, and not the farm. The trustee did not assent to this, but said he would have to advertise the whole. The trustee did not at that time advertise the property for sale, but he did subsequently, and after the date of the last deed of trust, advertise the property to be sold under the first deed of trust, and stated in the advertisement that the sale was to be made at the request of the beneficiary in that deed and of B. P. Woodward, the grantor therein. The sale was advertised to take place at 12 o'clock on March 20, 1915. The amount of Mrs. Story's debt was then about $6,700. At that time, it does not appear that any demand had been made for any part of the debts secured in either of the last two deeds of trust, recently theretofore executed, or that the debtor was in any default in relation thereto. On this subject, the trustee says:

"No default in interest on the last two, if I remember. Wait a minute—I am not sure about that. I don't think there was any default in the interest of the last two, because they had been recently given for the purpose of closing up the indebtedness that was then past due by Mr. Woodward."

Certainly no request for a sale under either of those deeds had been made by any one, and the trustee testifies that he did not advertise nor pretend to sell under either of them. So far as the deeds are concerned, the sale was made solely under the power conferred by the first deed of trust. It is true that the trustee also claims to have acted upon the request of the grantor, but we shall see later on that whatever authority, if any, was conferred by the request of the grantor in the preceding December or January was withdrawn before the sale, and the trustee was requested not to sell any more land than was necessary to pay the debt secured by the deed under which the sale was being made.

The creditors secured in all three of the deeds of trust were present or represented on the day of the sale. The debtor made earnest efforts that day to obviate the necessity for the sale, and negotiations were conducted several hours between him and the creditor secured in the first deed looking to a postponement of the sale, but they were ineffectual, and the sale which was to have taken place at 12 o'clock did not commence until some time between 2 and 3 o'clock. There is conflict in the testimony as to what took place before the sale relating to what was to be sold and as to several other matters. The trustee was insisting upon a sale of all of the property conveyed, and seems to have been under the impression that the debtor assented to it, provided possession of the farm was not given until January 1st following, and that the debtor be allowed to take the rents for that year. The debtor.however, Insists that this arrangement applied only to the sale of the farm, and that he insisted that no more land should be sold than was sufficient to pay the debt be cured in the first deed under which the sale was being made. In this matter, the debtor was represented by Mr. R. Howard, president of the Bank of Newsoms. He is very positive in his statements as to what trans pired about the sale. He says he told the trustee that he was representing the debtor, and, after giving other conversations, he says, in speaking of a conversation with the trustee

"I then requested him not to sell any more than enough property to satisfy the deed of trust of Mrs. Pattie Story, as the other property was not advertised, and he told me under the terms of the deed of trust he would have to sell all.

Referring again to the same subject, the witness says:

"He then told me that he would have to sell the whole of it. There was no question. I asked him not to sell any more than would satisfy Mrs. Story's deed of trust—if he would satisfy Mrs. Story's deed of trust it would not be necessary to sell any more. He said under the terms of the deed of trust he would have to sell it all. I told him I thought after satisfying the deed of trust he could not sell any more, and he said he could do it, and would have to do it"

The trustee does not deny this, but says: "So far as the specific request that I sell enough property only to satisfy the trust deed I do not recall. I do not believe Mr. Howard would make a statement that lie did not believe to be true, but if such a request was made of me, in the language read, or otherwise, I do not recall it.'"

The statements of Mr. Howard are fully sustained by the testimony of the debtor, Woodward, and are not contradicted by any witness, except so far as the testimony of the trustee may be regarded as a contradiction. There can Be little doubt, upon this testimony, that the request was made, and it is conceded that it was not granted. It is also conceded that, at the request of the debtor, the farm was the first piece of property offered, and that it brought $8,800. The debtor testifies that he requested that the farm should be sold first because he was satisfied it would bring sufficient to pay the debt secured and the costs. Mrs. Story's debt was originally $7,000, and bore interest from June 1, 1912, so that, if no payments had been made thereon, it amounted, on the day of sale, to about $8,178, thus leaving upwards of $000 to cover expenses. As a matter of fact, however, the debt amounted to only about $6,700, so that there could be no question that the farm brought more than enough to pay the debt. The debtor states that he made no further remonstrance about the sale of additional property, and went Into the store In front of which the property was be ing sold, and does not know in what order the other pieces of property were sold. After the sale of the farm, the trustee sold the dwelling and t^e factory lot, and J. Davis Woodward became the purchaser of each, and afterwards transferred his purchase of the dwelling to J. W. Smith, under circumstances hereinafter to be stated. It is the sale of this piece of property which is the chief subject of contention in this litigation.

After the debtor was notified by the trustee that Mrs. Story, the beneficiary in the first deed, was demanding a sale to pay her debt, he requested the trustee to advertise and sell the dwelling and factory, as he then desired, for reason stated by him, to retain the farm. This was a request for a sale under the deed, and was made before the second and third deeds were executed. The record does not disclose any other request by the debtor of the trustee for the sale of his property. The advertisement of the property, though referred to in the deposition of B. P. "Woodward as filed therewith, does not appear in the record, but from a copy thereof in the petition for appeal it appears to bo an advertisement of a trustee's sale, that the property was to be sold under the deed of trust to secure Mrs. Story, bearing date June 1, 1912, and that the sale wider that deed was to be made at the request of both the debtor and the creditor. There is nothing to show that the trustee was to go outside of his duty as trustee and sell property as the agent of the debtor. Indeed, it Is stated in the brief of counsel for...