Whitfield v. May

• Decision Date: 21 September 1935
• Citation: 89 S.W.2d 764,19 Tenn.App. 431
• Parties: WHITFIELD v. MAY ET AL.
• Court: Tennessee Court of Appeals

89 S.W.2d 764

19 Tenn.App. 431

WHITFIELD v. MAY ET AL.

Court of Appeals of Tennessee, Middle Section.

September 21, 1935

Certiorari Denied by Supreme Court Jan. 25, 1936.

Appeal from Chancery Court, Giles County; Thos. B. Lytle Chancellor.

Suit in equity by Cope Whitfield against J. H. May and another. From the decree, the defendants appeal.

Affirmed and remanded.

Eslick & Hagan, of Pulaski, for appellants J. H. and Rebecca May and John B. Wilkes.

E. B Rayburn and R. E. Lee, both of Pulaski, for appellee Whitfield.

CROWNOVER Judge.

The original bill in this cause was filed by the complainant for the purpose of recovering the surplus proceeds of foreclosure sale of mortgaged property after paying the mortgage debt.

The defendants answered and denied that any surplus remained after the satisfaction of the mortgage debt and the payment of taxes.

The chancellor held that a surplus of $215.81 remained after the satisfaction of the mortgage debt, and decreed that the complainant recover that amount, with interest and all costs of the cause, from the defendants John B. Wilkes, individually and as trustee, and Rebecca May, which was decreed to be a lien on the property.

The defendants appealed to this court, assigning eight errors, which, in substance, raise but a single proposition: That the chancellor erred in holding that J. H. May, as agent of Rebecca May, bought the property for her at the foreclosure sale and assumed all back taxes, and in rendering a decree against appellants.

The facts of the case are as follows: On February 27, 1932, the complainant and his wife executed a deed of trust with power of sale on their home to J. B. Wilkes, as trustee, to secure the payment of a note, executed to said Wilkes, for $399.16.

The mortgagors agreed in the deed of trust, among other things, "to pay all taxes and assessments, and to pay them when due; and in case we fail to do either, then said Trustee, or the creditor herein secured, may do either, and charge and treat the amount so expended as a part of the debt herein secured."

The note was not paid at maturity, and on May 1, 1933, the trustee advertised the land for sale, as was provided in the trust deed.

The notice of sale provided, among other things, that:

"Said property will be sold to the highest bidder for cash free from the equity of redemption, homestead and dower or courtesy, all being expressly waived in said deed of trust, but subject to any state, county, city or special taxes that may be due and payable. Proceeds derived from the sale of said real estate shall first be applied to the satisfaction of all cost and expenses of foreclosure in full, next to the satisfaction of the full amount due on the above note and trust deed securing said note. The balance will be paid to the parties legally entitled thereto."

On the morning of the day of the sale, June 3, 1933, the complainant talked to the defendant J. H. May about lending him enough money to pay off the mortgage. May told him that he thought that his daughter had some money, but that he would have to find out. May went down to the complainant's place with him and looked it over. Later in the morning, May called up the complainant and told him that he could not let him have the money since his daughter had promised to use it elsewhere. Later May discovered that his wife would let his daughter have enough money to pay off the mortgage, but he was not able to find the complainant and tell him so.

At 1 o'clock, the hour set for the sale, May went up to the courthouse, where the sale was to be held, and looked for the complainant, but could not find him there. The complainant did not attend the sale. The sale was started and May asked one of the bystanders, Bud Houston, to bid for him.

Before the sale was started, the defendant Wilkes publicly read the notice of sale with the terms. The sale was then opened by the auctioneer and the bidding started. After the bidding had progressed to a certain point, one of the bidders, Jerry Ragsdale, called out to Wilkes, and asked him the amount of taxes on the place. Wilkes replied that he did not know the exact amount of taxes that were due, but that possibly the 1932 taxes were due.

At this point, the person who had bid last, Mrs. Taylor Smith, asked to withdraw her bid of $635. She was allowed to do this. The auctioneer then turned to Houston, who was representing May, and asked him if his bid of $630, which was the next highest, still stood. Houston spoke to May, and then turned to the auctioneer and said that it did. The property was then sold to Houston for $630, subject to the terms of the sale.

Houston then told the auctioneer that he was representing May. Wilkes then asked May to whom did he want the deed made and May told him to make it to his wife.

May then made inquiry as to the amount of taxes on the place and found that the taxes were considerably more than he had anticipated. He then went to Wilkes and told him that he had misrepresented things to him. Later in the evening, May saw the complainant and told him that he had tried to save the property, and asked him what he wanted done with it. The complainant told him that "he was tired of fooling with it, and was going to let it go."

After May had been to see Wilkes, Wilkes wrote the complainant the following letter:

"June 3rd, 1933

Cope Whitfield, Pulaski, Tennessee

Dear Sir: When your property was sold today Mr. Henry May had Mr. Bud Houston to bid for him and when the property was knocked off at $630.00 Henry May and Bud Houston told me to make the deed to Mrs. Ida May, Mr. Henry May's wife. When I went to the office to draw the deed Mr. May refused to stand by his bid, claiming that he did not know there were so much tax at Street improvement outstanding though the sale was announced to be made subject to said taxes.

Please call at my office and let us determine what we want to do with reference to this bid of Mr. Mays. Kindly attend to it at once. Very greatly oblige.

Very respectfully,

Jno. B. Wilkes."

The complainant received this letter the next day, and went to see Wilkes about it. He told Wilkes that he wanted him to pay him (the complainant) the difference between what he owed him and what the place brought. Wilkes told the complainant that he had not collected anything and could not pay him.

Later they had another conversation, and Wilkes told him that he did not owe him anything. A few days after this conversation, the complainant saw Wilkes again, and a third time asked him for a check, but Wilkes told him again that he owed him nothing.

The complainant made an investigation, and found that Wilkes had executed a deed to Miss Rebecca May, the daughter of J. H. May. The deed recited, among other things, that Miss Rebecca May became the purchaser of the property by her bid of $630; that that amount was paid to Wilkes; that the place was unencumbered, "except as to the balance of taxes due, as hereinafter set out and shown"; that:

"The consideration paid to me for said real estate, of $630.00, was applied in the following way and manner: there was paid to the undersigned John B. Wilkes the sum of $414.19, being the amount due on said note, plus state and county taxes for 1931, paid by John B. Wilkes, of $15.03, leaving the sum of $215.81, and there is now outstanding and due as taxes on said real estate the sum of $11.48, state and county tax for the year 1932, and there is due and outstanding tax due the Town of Pulaski $33.60, and street paving assessments of $482.00, making a total of $527.08 due for said state, county and city taxes and street paving assessments to the Town of Pulaski, thereon, and at the direction of said Rebecca May said sum of $215.81 was applied to the payment of said state, county and city taxes and said street paving assessments, due on said property, by check of said Rebecca May, said sum of $215.81 not passing through the hands of John B. Wilkes, trustee."

Said deed was executed and delivered to the aforesaid Rebecca May about two weeks after the sale, and it was recorded.

We are of the opinion that the chancellor did not err in holding that the defendant J. H. May, as agent, bought the property at the foreclosure sale, and assumed all back taxes.

The sale of this land was advertised properly, a copy of the notice was mailed to the complainant, and he read it and understood the same. A copy of the notice was publicly read at the sale by Wilkes and was heard by all of the bidders. The terms of the sale stated that the property was sold "subject to any state, county, city or special taxes that may be due and payable." There was a controversy at the sale as to the amount of the taxes and one bid was withdrawn on that account. After this controversy and subsequent withdrawal of the bid, May's bidder was asked if his bid stood, and after conferring with May, he stated that it did.

May understood that he bought the property subject to the taxes. His bid meant that he bought the property for $630 plus any taxes that were due and unpaid. As further evidence that he understood that he bought it in this way, Wilkes wrote the complainant the letter, which we have just quoted, and told him that May "refused to stand by his bid claiming that he did not know there was so much tax at Street improvement outstanding though the sale was announced to be made subject to said taxes."

The complainant, upon conferring with Wilkes, refused to allow May to back out of his agreement, and told Wilkes that he was looking to him for the surplus over the debt.

The owner of property offered for sale at auction has the right to prescribe the manner, conditions, and terms of sale. Printed conditions under which a sale proceeds...