Yokley v. Wian, WD

• Decision Date: 31 May 1994
• Docket Number: No. WD,WD
• Citation: 877 S.W.2d 179
• Parties: Eugene D. YOKLEY, Respondent, v. Bruce WIAN, et al., Appellant. 47105.
• Court: Missouri Court of Appeals

Page 179

877 S.W.2d 179

Eugene D. YOKLEY, Respondent, v. Bruce WIAN, et al., Appellant.

No. WD 47105.

Missouri Court of Appeals,

Western District.

May 31, 1994.

Timothy J. Murphy, Kansas City, for appellant.

Dwight D. Sutherland, Jr., Olathe, KS, for respondent.

Before ULRICH, P.J., and BRECKENRIDGE and SPINDEN, JJ.

ULRICH, Presiding Judge.

Bruce Wian appeals the judgment of the Circuit Court, exercising its equitable powers, that set aside the execution sale and deed transferring title to two parcels of real estate known as 2505 and 2515 Jackson Avenue, Kansas City. ¹ Mr. Wian claims the Circuit Court erred (1) in ruling that the sale price at the Court Administrator's sale was inadequate because it applied an incorrect standard, and (2) because the judgment violated the equitable principle that to receive equity one must do equity, by granting equitable relief without requiring Eugene D. Yokley to reimburse Mr. Wian for the value of the improvements Mr. Wian made to the properties after Mr. Wian purchased the properties at the execution sale.

The judgment of the Circuit Court is reversed, and this case is remanded.

On January 22, 1988, judgment in the amount of $6,001.00 plus costs was entered against Respondent Eugene D. Yokley. ² A writ of execution was ordered, and the Court Administrator of Jackson County levied upon two parcels of property owned by Mr. Yokley located at 2505 and 2515 Jackson Avenue.

On June 22, 1988, the parcels were sold at a public Court Administrator's sale following proper publication of required notices. The 2505 Jackson property sold for $100, and the 2515 property sold for $200. Bruce Wian purchased both of those properties.

On June 22, 1989, Mr. Yokley filed a petition to set aside the sale, naming Mr. Wian as a defendant. In his petition, Mr. Yokley alleged, inter alia, that the Court Administrator's sale of his two properties was illegal in that the amount obtained from the sale was not representative of the fair market value of the properties and requested that the sale be set aside.

Trial was conducted on July 18, 1991, at which the jury provided an advisory opinion as to the fair market value of the two properties. ³ The jury determined that the fair market value of the 2505 Jackson property was $1,500.00, and the fair market value of the 2515 Jackson property was $3,300.00. ⁴

On August 28, 1991, the parties tried the remainder of the case before the court, sitting in equity, without a jury. Judgment was entered on July 31, 1992. The trial court acknowledged that any encumbrances should be applied after the jury had determined the fair market value of the property at the time of sale. The court's order, however, indicates that it used the fair market value of $4800 without any reduction as the basis to determine adequacy. The trial court found the actual sale price of the properties, when compared with the fair market values, to be "so inadequate as to shock the moral sense and outrage the conscience of this Court."

On August 14, 1992, Mr. Wian filed a motion to vacate the judgment or in the alternative to amend the judgment. However, because the trial court did not rule on the motion, it was deemed overruled after ninety days. Rule 78.06. Mr. Wian appealed.

On appeal, the trial court's judgment will be sustained unless there is no substantial evidence to support the trial court's decision, the court's judgment is against the weight of the evidence, or the trial court erroneously declared or applied the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976).

I

Mr. Wian first contends the trial court erred in ruling "that the sale price of the property was so inadequate as to shock the moral sense and outrage the conscience of the court," because it applied an incorrect standard to determine "inadequacy." Mr. Wian asserts the court should have compared the price paid at the sale with that which would have been paid at a fair sheriff's sale and not the fair market value. He also challenges the trial court's judgment on the ground the court failed to discount the fair market value of the property by the amount of any liens and encumbrances. ⁵

In support of his contention, Mr. Wian cites St. Louis v. Peck, 319 S.W.2d 678, 684 (Mo.App.1959), in which the court held the "recognized test of inadequacy, in the absence of statute, is the price received in comparison with what the property would bring at a fair sheriff's sale." See Wieser v. Linhardt, 257 S.W.2d 689 (Mo.1953); see also Robert R. Wisdom Oil Co. v. Gatewood, 682 S.W.2d 882, 884 (Mo.App.1984) (inadequacy alone will not justify setting aside a judicial sale unless the price is so inadequate that it shocks the moral sense and outrages the conscience). Wieser involved an action to set aside a sheriff's deed pursuant to a sale under execution on a default judgment. The sole issue before the court in Wieser was whether the sum paid by the appellant at the sheriff's sale was so grossly inadequate and unconscionable as to amount to fraud. Id. at 690. The Wieser court found the disparity (between the sale price of $289.97 paid by the appellant for the property and the property's net value) was so great as to shock the conscience and to require cancellation of the deed for fraud based upon gross inadequacy of consideration. Id. at 690-91. Although the value of the lot had initially been determined to be $6,000, the court noted the amount of "other and prior charges against the lot" must first be deducted to reach a net value which is then compared to the amount paid for the property. ⁶ Id. at 690. The court affirmed the chancellor's decree setting aside the sale upon the condition that the purchaser be reimbursed for her outlays for taxes and other expenses. Id.

Case law in Missouri equates grossly inadequate amounts paid at forced sales under law, as a "ground of fraud as evidenced thereby." Wieser, 257 S.W.2d at 690. Fraud generally requires an intentional act misleading, chilling or unduly influencing another. In the court administrator's sale to Mr. Wian, there are no allegations of any act by any party that could even colorably be termed "fraud" in its general meaning. A nontypical category of fraud is "fraud in law." "Fraud in law is fraud in contemplation of law; fraud implied or inferred by law; fraud made out by construction of law." BLACK'S LAW DICTIONARY 595 (5th ed. 1979). Fraud in law is a type of constructive fraud. Id. As it is used to set aside sheriff's sales, fraud in law is a legal fiction fashioned by courts to rectify a perceived "shocking" result in cases where there have not been any evident irregularities or bad acts. "We find no other expressed reason for this court's application of the rule ... than its refusal to permit property to be so sacrificed as to amount to confiscation." Wieser, 257 S.W.2d at 690.

Mr. Wian is correct in contending that an adequacy analysis in Missouri requires a determination of what the property would bring in a fair sheriff's sale. "Market value may be considered in determining the adequacy of the sale price but it is not the measure of adequacy. The test of adequacy in a judicial sale is the price received in comparison with what the property would bring in a fair sheriff's sale." Koester v. Koester, 543 S.W.2d 51, 55 (Mo.App.1976) (emphasis added).

On remand, the trial court may use, as a starting point,...