Benton v. Shreeve

4 Ind. 66, 1853 Ind. LEXIS 10

• Court: Indiana Supreme Court
• Decided: May 24, 1853
• Status: Published

Opinion

Stuart, J.

This was a bill in chancery by the heirs, &c., of Caleb Shreeve, deceased, against Benton and others. Benton answered. The other defendants made default. The cause was set down for hearing on the bill, answer of Benton, depositions, &c., and there was a decree in favor of the complainants. Benton prosecutes this writ of error.

It appears that on the 27th of May, 1837, lot No. 60, in Richmond, owned by one Forsha, was mortgaged to Joseph Derickson, to secure the payment of 200 dollars, and interest at 10 per cent. On the 24th of May, 1838, Forsha sold and conveyed the lot to Olds. In November following Olds mortgaged the lot to one Green, to secure the payment of 200 dollars. And in December, 1838, Olds executed a second mortgage on the same lot to Shreeve, to secure another 200 dollars, with 10 per cent, interest. Derickson assigned his mortgage to Sarah Derickson, and Keefer became the remote assignee of Green’s mortgage.

Both these latter mortgages were afterwards foreclosed. The Derickson decree was against Forsha and Olds, as defendants; the Keefer decree against Olds alone. Shreeve, the junior incumbrancer, was not made a party to either.

Executions were issued on the several decrees, and placed in the hands of the sheriff about the same time, though there is some confusion of dates. On the 30th of January, 1841, the lot was sold on the Derickson decree to Caleb Shreeve for 560 dollars. Shreeve paid 232 dollars and 60 cents on the Derickson execution, and failed to complete the further payment embraced in his bid. No deed was ever made or tendered by the sheriff, nor any further steps taken by him to compel Shreeve to pay. The sheriff returned the execution indorsed according to the facts. The Derickson decree was entered satisfied of record, with an express reference to the return of the sheriff as to the mode of payment.

On the same day, January 30, 1841, the sheriff sold the same lot on the Keefer decree to Benton, for 25 dollars. Deed by the sheriff to Benton accordingly.

Shortly after, Caleb Shreeve died, leaving the complainants below Ms heirs, &c. Olds is also dead, leaving the defendants of that name his heirs, &c. Keefer, the assignee of the Green mortgage, was a party defendant. Thus all the parties having an interest in the subject matter were before the Court.

The answer of Benton puts nothing in issue material to the decision of this cause.

The bill contains four alternative prayers. One is for the specific performance of the sheriff’s sale on the Berickson decree. That such a sale may be enforced in equity, is not without authority; but in this state it has been doubted. 8 Blackf. 105. Even if such sale could be enforced, the heirs of Shreeve are not in a position to seek it successfully. Neither by their ancestor nor by them was the purchase completed. To entitle a purchaser to such relief, he must have paid the money, or offered to pay it. He must follow up the tender by bringing the money into Court. Nor will specific performance be decreed where there has been unreasonable delay on the part of the purchaser. 4 Scam. 202.—4 J. C. R. 559. —4 Rand. 478.

Another of the alternative prayers was, that the Shreeve heirs be subrogated to the rights and remedies of Sarah Berichson. That was, in substance, the decree; and it is correct, as far as it goes. Shreeve had paid off that decree with the obvious purpose of protecting his own junior mortgage. He was not a party to the foreclosure, and, perhaps, he was still entitled to redeem. But it is sufficient that he had an interest to protect, and it is but fair to presume, what the whole transaction tends to show, that he acted with reference to the protection of that interest. He was, therefore, entitled to be subrogated. 2 Story 480.—7 Paige 248.—Leading E. C. 86-7.—Peet v. Beers, at the present term.

(1) The case of Eddy v. Traver, et al., is a strong illustration of the leaning of the American courts in favor of the doctrine of subrogation. 6 Paige 521.(2)

Another of the alternative prayers of the bill is directed against the validity of Benton’s purchase. Benton had no lien on the lot, no rights to protect. Nor is he a purchaser without notice; for he had constructive notice of the several mortgages. He had also constructive notice of all the facts returned by the sheriff as to the sale on the Derickson decree, and the payment of part of the purchase-money by Shreeve. Indeed, his answer, connected with other circumstances, goes far to establish actual knowledge. At the time Benton purchased for 25 dollars, most of the witnesses concur that the lot was worth 500 to 600 dollars; at the time of taking the depositions, 1,300 dollars; and that the rents and profits enjoyed by Benton were more than equal to the improvements he had made.

It thus appears that the price paid was about a twenty-fourth part of the value of the lot at the date of the purchase. On this ground, counsel contend that the sale to Benton was fraudulent and void, and rely on 1 Blackf. 410.—6 J. C. R. 411. But, on close examination, it will be seen that neither of these cases is in point. The ground on which those sales were set aside was, that the sheriff put up and sold at one time a large quantity of land, susceptible of division, and which should have been offered in suitable parcels. The amount due on the execution, and the price the land sold for, are thrown in by the Court in giving the history of the case, merely as supplemental. Here there is no pretence that the property could have been advantageously divided, but only that the price was inadequate.

As to what is inadequacy of price, the books are not agreed. Some authorities place the standard at one point, others at another. And in general, courts pay great regard to the circumstances and the equities involved in each case. Under the civil law, contracts for the sale of land were rescinded if the price was below half the value. 1 Story Eq. sec. 244, et infra. So it was in France, before the revolution. Kent, chancellor, in 2 J. C. R. 1. Perhaps a stranger, speaking of our appraisement laws, would refer them to the same class. At an early day, our statute placed the standard at one-half; later, at two-thirds, &c. True, at the date of the Keefer mortgage, there was no appraisement law in force. Yet, in the consideration of doubtful cases, under judicial sales, the repeatedly expressed opinion of the legislature, as to what the standard should be in such sales, is not without its uses to our own courts in aiding them to come to correct conclusions as to adequacy or inadequacy of price.

In relation to different contracts, courts recognize different standards. Thus Chancery will often refuse to enforce specific performance of a contract, whicli, if executed, it would also refuse to set aside, leaving the parties to their legal remedies. 2 Story’s Eq. 5.—11 Peters 229. —3 Cow. R. 445.—Sax. 320.—2 Blackf. 431. In Seymour v. Delaney, Kent, Chancellor, refused specific performance, adding, that the inadequacy of price was so great (one-half) as to give to the contract the character of hardship, unreasonableness and inequality. 6 J. C. R. 222.

In regard to the rescission of contracts on account of price, there is a general concurrence of authority in this rule, that mere inadequacy of price is not sufficient ground to set aside a sale, unless, the inadequacy be so gross as to be of itself evidence of fraud. Osgood v. Franklin, 2 J. C. R. 1—affirmed by the Court of Errors on appeal. 14 J. R. 527. Thus, also, land estimated by the witnesses at from 3,000 dollars to 3,500 dollars, was sold for 2,900 dollars; held, that the inadequacy was not so gross as to indicate fraud. 1 Hoff. C. R. 37. So where land valued at 1,800 dollars, was sold at sheriff’s sale for 400 dollars, it was held by this Court that the consideration could not be considered grossly inadequate. 2 Ind. 442. On the other hand, where a trustee sold and conveyed the trust lands worth 500 dollars, for 50 dollars, (one-tenth the value) the sale was set aside as fraudulent.

In view of these authorities, it is easy to conclude that the price paid by Benton was grossly inadequate.

But the authorities indicate a further distinction between priváte and public sales.

The rule that a sale will be set aside for gross inadequacy of price applies only to private sales, and not to sales at public auction. 1 Freem. 441. So in Livingston v. Byrne, the Court of Errors held unanimously that inadequacy of price was not sufficient to invalidate a judicial sale, unless there be additional circumstances to justify it. And that decision is placed on the authority of Lord Elden, in White v. Damon, 7 Ves. Jr. 34. See, also, accordingly, 3 Hay.—1 Spears’s Ch.351.—2 Green’s Ch.460.

The rule to be deduced from these authorities, as applicable to this case, is, that gross inadequacy of price is not sufficient, of itself, to set aside a judicial sale like that to Benton; but that such inadequacy may be a controlling element, in connection with other circumstances. The reason given in the books for this distinction between public and private sales, is, by no means, satisfactory. At first thought, the stringency should be the other way. It would seem, however, to have been recognized as the law, by this Court, in a very strong case, which, under all the circumstances, presses the doctrine to its utmost tension. Roe v. Ross, 2 Ind. 99. In that case, the sheriff sold a house and lot worth 1,200 to 1,500 dollars, for 111 dollars, and the Court held, that in the absence of fraud, the price was not inadequate.

It only remains to inquire whether the case under consideration furnishes any of the “ additional circumstances” contemplated by the authorities. We think it does. The number of parties having equitable liens on the lot, is a circumstance of no inconsiderable weight. In most of the authorities cited, the question arose, as in Roe v. Ross, supra, directly between the execution-defendant and the purchaser in an action at law. Such is the position, in part, of the heirs of Olds, in this case, to Benton. They reaped the benefit of all the mortgages. Theirs was the fault that these mortgages were not paid off without legal process. If they stood alone, the heirs of Olds would present a feebler claim to equitable relief. Not so with the other parties. They advanced their money. They took this lot as the security. It was ample, or nearly so, for the purpose. With great force and justice do they appeal to the equity of the courts not to suffer them to be defrauded under the forms of legal process.

There is another circumstance, of a very conclusive character. The sale of the lot on the Derickson decree, placed at the disposal of the sheriff more than sufficient to pay both mortgages. The sum (560 dollars) was in contemplation of law, in the hands of the officer for the very purpose of paying both. If Shreeve refused to complete the purchase, the law pointed out to the sheriff several modes of procedure. His act in accepting part of the purchase-money, committed him to one course—to take the proper steps to coerce payment, and apply the balance of the bid on the Keefer decree. To sell on the junior decree, after he had sold on the senior for sufficient to pay both, was useless trifling. There was nothing further which the sheriff had a right to sell on the Keefer decree, or that Benton could purchase.

Here, then, was property encumbered by three mortgages, of sufficient value to pay nearly all of them, already sold on a senior mortgage, resold on a junior mortgage, for a trifle, and to one having no interest in the lot, leaving the creditors unpaid, the security exhausted, and the mortgagor still liable for the debts as the law then stood. To support such a sale, a Court of equity should require very strong authority, directly in point, and based upon very strong reasons of public policy.

We therefore conclude that the second sale was, under all the circumstances, a gross abuse of his power on the part of the officer—a fraud on Keefer, and on all the parties interested. Connecting the acts of the officer with the position and knowledge of Benton, the transaction was clearly fraudulent, and must be declared void. 5 Blackf. 260.

The evidence fully sustains the decision of the Court below, that the rents and profits enjoyed by Benton were an equivalent for the improvements he had made. A strict adherence to the authorities would deprive Benton of the interest on the 25 dollars purchase-money. 1 Dana .-2 id. 374.-4 id. 507.—5 id. 119. But there are also numerous authorities the other way. With the rescission of the contract, and the refunding of the purchase-money, it seems the vendee (Benton) should be required to deliver possession of the premises. 4 Ham. 229.

C. H. Test, for the plaintiff. J. Perry, for the defendants.

The case is now in a position to enable the Court below to administer equitable relief to all the parties. The Shreeve heirs represent the first and third mortgages, Keefer and Benton the second mortgage, and the heirs of Olds the equity of redemption. The latter should be allowed a reasonable time, say sixty days, to discharge the incumbrances; in default thereof, the lot should be sold and the liens paid in the order of their priority.

Per Curiam.

The decree is reversed—the parties, plaintiff and defendants, to pay their own costs. Cause remanded with instructions to the Circuit Court to enter a decree in accordance with the principles above indicated.

Ante, p. 46.

In Eddy v. Traver, cited in the text, the facts were these: G. Eddy, the ancestor, died intestate in 1828, leaving four children, of whom Sally, the wife of Traver, was one. In April, 1829, Traver and wife conveyed with warranty to Ross, their undivided one-fourth of a parcel of the real estate of which the intestate died seized, leaving their undivided interest in the premises of which partition was sought in this case, undisposed of. The personal estate of the intestate being found insufficient to pay the debts, the personal representative obtained an order to sell a part of the lands conveyed by Traver and wife to Ross; and the proceeds thereof were applied to the payment of the intestate’s debts. As Traver and wife still owned their undivided one-fourth of the premises, which were subsequently decreed to be sold in the partition suit, Ross claimed to have an equitable lien on their undivided interest therein, to remunerate him for his one-fourth of the lands sold as aforesaid, the proceeds of which were applied to debts for the payment of which Traver and wife were liable on account of the lands descended to the wife. Ross also claimed interest from the time he was divested by the sale. On this state of facts, the chancellor held that Ross had an equitable lien upon the residue of the lands remaining in the hands of Traver and wife, to the extent of his share of the proceeds of the land sold by the order of the surrogate. And he lays it down as an established principle of equity, that a surety, or one who stands like Ross, in the situation of a surety, is entitled to be subrogated to all the rights and remedies of the creditor whose debt he is compelled to pay, as to any fund, lien, or equity which the creditor had against any other person or property on account of such debt. In the course of his opinion, the chancellor cites Watts v. Kinney, 3 Leigh’s R. 272, where the sureties had actually paid the debt, so that the lien of the creditor’s judgment was discharged at law; yet the Court decided that the sureties were in equity entitled to the benefit of the judgment, as a lien on the land, against the claims of an attaching creditor.