First Federal Savings & Loan Ass'n of Dallas v. Sharp

359 S.W.2d 902

• Court: Texas Supreme Court
• Decided: July 26, 1962
• Docket: A-8488
• Status: Published

Opinions

HAMILTON, Justice.

This is a suit brought by respondent (plaintiff below) to obtain property bought at a deed of trust sale by petitioner (defendant below) and to recover rents from such property obtained since the sale. The case was tried to a jury, and after favorable answers to the two special issues submitted the trial court entered judgment that the trustee’s deed to petitioner be cancelled and set aside, that the trustee be ordered to execute and deliver to respondent a trustee’s deed to the property for a consideration of $5,000 (such sum having been deposited in the registry of the court by respondent), and further decreeing that certain money which was rent and revenue from the property be awarded to the respondent. The Dallas Court of Civil Appeals, Williams, J., has affirmed the judgment of the trial court. 347 S.W.2d 337.

The facts of this case are detailed at length in the opinion of the Court of Civil Appeals. Therefore, this opinion will merely state the basic facts surrounding the trustee’s sale.

The sale was to be held on Tuesday, January 7, 1958, between 10:00 a. m. and 4:00 p. m. at the Dallas County Courthouse “to the highest bidder for cash”. Sometime between 3:15 and 3:45 p. m. on that day the three trustees arrived at the courthouse for the sale. The only outside bidder was T. L. Hamilton, attorney and agent for respondent. At this time respondent was the owner of the mortgagor’s interest, which he had bought at a sheriff’s execution sale earlier that day. This fact was not known by the trustees. One of the trustees read the notice of sale and then asked for bids. Another of the trustees bid the unpaid balance of the mortgage ($4,527.50) on behalf of the petitioner mortgagor, and then Mr. Hamilton bid $5,000 for respondent. When asked for the cash, Hamilton offered a personal check. This was refused, and then Hamilton offered to go to a bank within two blocks to get the cash from a lock box. Hamilton estimated this would take him about five minutes. There was also testimony that the respondent was on his way to the courthouse with the money. The trustee refused to delay the sale for any length of time, and accepted the lower bid offered by one of the trustees for petitioner.

Petitioner maintains that the bid made by respondent was not a bid for cash as provided in the deed of trust, and the notice of sale, and the trustee acted properly in refusing the bid and in knocking the property off to the lower bidder, the petitioner’s agent. The respondent contends in effect that his bid was for cash and that the trustee acted arbitrarily and unreasonably in making the sale to the mortgagee, the lower bidder, without allowing respondent a few minutes’ time within which to produce the cash for his bid, when this could have been done without prejudice to the mortgagee. We agree with respondent’s contention and affirm the judgment of the trial court and the Court of Civil Appeals.

The findings of the jury were that either Hamilton or Sharp would have produced the cash within a reasonable time, which was defined to mean “such time under all of the circumstances a man of reasonable prudence and diligence would have needed to perform the act contemplated.” It is the opinion of this court that “reasonable time” should be limited to a reasonable time during the hours of the sale. If the jury finding is ambiguous or unclear, the courts must try to interpret the finding so as to uphold the judgment. State v. Hale, 136 Tex. 29, 146 S.W.2d 731. It is our opinion that in this case “reasonable time” means before 4:00 p. m. on the day of the sale. All the testimony and evidence clearly shows that the respondent could and would try to get the cash to the trustees before 4:00 p. m. We therefore construe the jury finding to mean that either Hamilton or Sharp would have produced the cash before 4:00 p. m. Under the facts of this case it was an abuse of discretion for the trustee not to wait a reasonable time before 4:00 o’clock before completing the sale.

In some cases there is a danger in allowing any delay. One of those instances would he where lower bidders, with cash, might get discouraged and leave the sale during a wait. If the high bidder failed to return, the next high bid would be lost.

Another situation that would prejudice the mortgagee would be where the high bidder did not show up by the close of the sale, thereby necessitating another sale. During such a delay something could cause the value of the property to fall. Also, the time and expense of another sale would be prejudicial to the mortgagee.

The record establishes that there were only two bidders for the property, petitioner’s agent and respondent’s agent. There is nothing in the record to indicate that the bid by Mr. Hamilton was in bad faith. To the contrary, the evidence is clear that he was in good faith. Petitioner maintains that the trustee was not required to wait any time for respondent’s agent to produce the cash. That position is untenable under the facts of this case. The only other bidder besides respondent was the petitioner itself. The trustee could have given respondent’s agent a little time without prejudicing the rights of the mortgagee. No bidders would have been lost, and had respondent’s agent not shown up with the money before 4:00 p. m. the trustee could still have accepted the mortgagee’s bid.

It must be remembered, as said by the Court of Civil Appeals below, that:

“ * * * The trustee in the deed of trust becomes a special agent for both parties, and he must act with absolute impartiality and with fairness to all concerned. We must equate the word ‘trustee’ with fairness, impartiality, and a maximum effort to achieve the obj ect of the trust. 29 Tex.Jur., § 30, p. 825; Hampshire v. Greeves, 104 Tex. 620, 143 S.W. 147; Zeiss v. First State Bank, (Tex.Civ.App.) 189 S.W. 524, (err. ref.). * * ”

Of course in this case the respondent stood in the shoes of the mortgagor. It is true the trustee did not know this at the time of the sale, but that should not make any difference. The trustee had a bid for the property which the bidder maintained was for cash, which was almost $500.00 more than the mortgagee had bid. In fairness to the mortgagor the trustee, who was the mortgagor’s agent, should have made a reasonable effort to determine whether the bid made by Mr. Hamilton was a cash bid. He not only made no effort, but refused the bidder’s offer to satisfy him in this respect.

The judgments of the Court of Civil Appeals and the trial court are affirmed.

GRIFFIN, SMITH and NORVELL, JJ., dissenting.