Hitz v. Jenks

16 App. D.C. 530, 1900 U.S. App. LEXIS 5316

• Court: Court of Appeals for the D.C. Circuit
• Decided: June 6, 1900
• Docket: No. 960
• Status: Published

Opinion

Mr. Justice Morris

delivered the opinion of the Court:

The first and principal contention on behalf of the appellant is that the sale complained of was absolutely void, because at the time of the sale the property was in the possession of the court through its receiver.

The verbal criticism is probably unimportant, that a sale can not properly be characterized as absolutely void, which has been made by the person authorized to make it in full accordance with the power conferred on him, when the ground of invalidity is some extraneous matter to be shown by evidence; and such would be the pendency of an injunction against the sale or the possession of the property by the receiver of a court. A sale may be voidable in such a case; but it would scarcely be correct to regard it as absolutely void. We do not understand, however, that the distinction is of any importance in the determination of the question before us. For the sale may be vacated, whether it is void or only voidable.

In this connection, also, it may be stated, that the suggestion, that the appeal taken to the Supreme Court of the United States from the decree of December 11, 1883, together with the supersedeas bond accompanying it, operated to prevent the receiver Keyser from delivering the possession of the property to the receiver Tyier appointed in his place, requires no serious consideration from us; for it is no more than a suggestion, and is not seriously insisted on in argument. It can not well be maintained as a legal proposition. A change of receivers is a very different thing from the discharge of the receivership. To some extent the latter may be suspended by appeal and supersedeas; but it can not be that the court., in consequence of appeal and supersedeas, is deprived of the power of changing its own officer and of conserving the fund by the means which it deems best for the purpose. It is well settled law that the court which appoints a receiver and causes a fund to accumulate in his hands, may continue to make all proper orders for the conservation of the fund, notwithstanding the appeal. Goddard v. Ordway, 94 U. S. 672. If at the time of the decree Keyser had died, or resigned, or declined further to discharge the duties of the receivership, beyond question it would have been competent for the court, notwithstanding the appeal, to appoint another person in his place; and it is not apparent why a similar substitution could not be made for any good cause in the discretion of the court. But, as we have intimated, this change of receivers is not important in the determination of the substantial question in the case. This question is, whether, while the property in controversy was in the possession of the receiver, Tyler, it was competent for Tyler, as trustee, to sell it under the deed of trust?

Various cases are cited to show that a sale of property by another person, while that property is in the possession of a court by its receiver, is invalid. Wiswall v. Sampson, 14 How. 52; Peale v. Phipps, 14 How. 367; Goddard v. Ordway, 94 U. S. 672; Heidritter v. Elizabeth Oil Cloth Co., 112 U. S. 294; McLaughlin v. Janney, 6 Grattan (Va.), 609; Day v. Postal Telegraph Co., 66 Md. 354. The doctrine of these cases, if it ever was controverted, is, of course, no longer open to question. But we are unable to see that it is applicable to the case before us, where the receiver was in fact authorized to sell the property, as trustee. In all the cases cited, and in all other cases where the doctrine has been applied, the sale made or action taken, which was held to be illegal and invalid, was had or taken in derogation of the right of possession vested in the receiver and of the authority of the court which appointed him, and tended to impede the control and thwart the disposition of the property by the court. But no such condition arose in this case. The court had intervened in the first instance to prevent a sale until the rights of the parties could be adjudicated, and it appointed a receiver to preserve the property intact and to collect the rents and profits. It finally found that there was no good ground of equity for further interference with the enforcement of the deed of trust, and accordingly dissolved its injunction and permitted the trustee to proceed with the execution of the deed, retaining its receiver only until such time as the trustee was prepared to sell. The duration of the receivership was expressly limited to continue only until a sale should be had under the deed of trust. It did not authorize a sale by the trustee in express terms; for no such authority was necessary, since the authority under the deed of trust was ample; but it removed the obstacle which it had itself interposed to the exercise of the power of the trustee, and by the removal of that obstacle virtually authorized the sale. The sale, therefore, was not in derogation of the authority of the court, but in precise accordance with it; and it is very plain that it was contemplated in the decree of the court that it would speedily take place.

In fact, the continuance of the receiver in his position was in aid of the contemplated sale and in subordination to it. It is well settled law, that deeds of trust of the nature of that here involved, and which are the usual forms of mortgage with us, do not- of themselves create a lien upon the rents and profits antecedent to a sale under their provisions, and that the mortgagees have no right whatever to such rents and profits. But it is also well settled law that when a mortgagee has sought to enforce his security, and is prevented from so doing by the intervention of the court, ah equitable lien upon such intervening rents and profits is created in his favor, if he finally prevails in the suit, and the proceeds of sale are insufficient to satisfy the amount of the indebtedness due to him. He himself is entitled to have such a receiver, not to defeat his sale, but in aid of it and in subordination to it. And such undoubtedly was the purpose of the appointment of Tyler as receiver in this case. It was developed in the sequel that there was a deficiency of assets from the proceeds of sale, and it was decreed that Tyler’s collections made by him as receiver should be applied to the satisfaction of that deficiency. It is very clear to us that a sale is neither void nor voidable by reason of the limited possession of a receiver to collect the rents and profits, when the continuance of such possession is expressly made to depend upon the occurrence of such sale.

The case of Goddard v. Ordway, 94 U. S. 693, which is principally relied on by the appellant in this connection, presented a very different condition.. There, after appeal taken and supersedeas bond given, it was sought in the court below to discharge the receiver and to require him to turn over to the successful party in that court the money previously collected by him as such receiver. This was in the nature of execution of the decree, and this the Supreme Court held should not be done. But that plainly was a very different case from the present. It was not pretended in that case that the receiver should still go on collecting, as though, in consequence of the appeal and supersedeas, the decree had not terminated the further exercise of his functions. There is a very great difference between the conservation of a fund already collected in order to await a final decision on appeal, and the continuance of further collections which might have been made, if the decree had been different.

We are of opinion, therefore, that the contention of the appellant in this regard is not well founded in law, and is not supported by any adjudicated case.

2. The appellant’s second proposition is, that the decree or order of the special term of the Supreme Court of the District,- enjoining Tyler as trustee from selling the property, was in force at the time the sale was made, and that this fact of itself invalidated the sale.

This proposition is based upon the theory that the general term of the Supreme Court of- the District of Columbia was an intermediate appellate tribunal between the special term of that court and the Supreme Court of the United States, and that the superseding of the judgment or decree of an intermediate appellate tribunal by an appeal to a higher tribunal leaves the original judgment or decree in force until the final determination of the last appeal. But this theory, as applicable to the present case, is untenable. The foundation for it is wanting, since in the case of Metropolitan RR. Co. v. Moore, 121 U. S. 558, it was distinctly decided by the Supreme Court of the United States that the general term and the special term of the Supreme Court of the District was one and the same court, and that an “ appeal from the special to the general term was not an appeal from one court to another, but simply a step in the progress of the cause during its pendency in the same court.” Whatever, therefore, might be the law, when an intermediate appellate tribunal has reversed the decree of a lower court, and its own mandate is stayed by an appeal, with supersedeas, to a higher appellate tribunal, certainly a decree of the Supreme Court of the District of Columbia in special term could not have been revived as against a decree of that same court in general term reversing it by the mere process of appeal, with supersedeas, to the Supreme Court of the United States. As well might it be argued that an injunction pendente lite dissolved by the decree at final hearing could be revived by appeal from that decree, — which, although it seems to be the practice in some of our States, was not the practice of the English chancery, has never been the practice in this District, and has never been admitted into the Federal jurisprudence. Slaughter House Cases, 10 Wall. 273 ; Hovey v. McDonald, 109 U. S. 150; Leonard v. Ozark Land Co., 115 U. S. 465; Knox Co. v. Harshman, 132 U. S. 14.

. The decree of the Supreme Court of the District of Columbia in general term was the final decision of that court in the case, aud it took the place of all preceding orders and decrees of that court. Upon its rendition, the decree of the special term passed out of the case, and it could not be reviewed by any action of the parties.

There seems to have been some question whether there was any valid supersedeas upon the appeal of Mrs. Hitz to the Supreme Court of the United States; but that question has not been raised before us, and the appeal and supersedeas have been treated as valid for all the purposes for which they could legitimately have had effect. But, it is very clear to us that, under the law, they could have no further force than to stay execution of the decree in so far as the decree required execution in order to be practically effective. But, as was said by the Supreme Court of the United States, in the case of Hovey v. McDonald, supra, “a decree itself, without further proceedings, may have an intrinsic effect which can only be suspended by an affirmative order, either of the court which makes the decree or of the appellate tribunal.” And again in the same case, it is said: “Neither a decree for an injunction nor a decree dissolving an injunction is suspended in its effect by an appeal, though all the requisites for a supersedeas are complied with.” We think that this statement of the law by our court of last resort is decisive of the question here raised.

3. The appellant’s third proposition is, that the sale, if not wholly void under the two. previous contentions, is voidable and should be set aside for four several reasons; which are these: (1) That the terms of sale were unreasonable; (2) that an appeal was pending to the Supreme Court of the United States; (3) that the sale was a sham and bidders were discouraged; (4) that the price for which the property was sold was inadequate.

The second of these reasons, the pendency of an appeal to the Supreme Court of the United States, is but another form of the proposition which has already been considered. It is not apparent upon what rule of equity or justice a sale, against which an injunction has been refused and which the party making it has a perfect right to make, can after-wards be set aside on the ground-that an appeal has been taken. This proposition would give to an appeal all the force of the injunction which has been refused by the court. We find nothing in any of the cases cited that would justify any such proposition. The case of the Eastern Banking and Trust Co. v. American Ice Company, 14 App. D. C. 304, in this court, is supposed by the appellant to give some color to the contention. But we do not so understand that case. There the controversy w'as over the foreclosure of a mortgage on some wharf property in the city of Washington. There had been some buildings on the property, but they had been destroyed by fire and nothing was left for the mortgage to operate on except the ground. That ground was included in an area of land claimed by the United States in a suit in the SupremeCourt of the District of Columbia, that of the United States v. Morris and, others, wherein it is to be presumed the parties to this cause were also parties, and wherein it had been decided by that court that the title was in the United States, and not in any of the parties. The case was then pending in the Supreme Court of the United States on appeal; and subsequently by that court the decision was affirmed which adjudged the title to be in the United States. The case of the Eastern Trust and Banking Co. v. American Ice Company came before us while that appeal was pending. We reversed the decree of the lower court on other grounds, and remanded the cause for further proceedings, with the suggestion, inasmuch as the proceedings were wholly within the control of the court, that the sale, if sale should be decreed, should not he allowed until after the decision of the Supreme Court of the United States in the case of Morris v. United States. In this latter case it had already been adjudged that the United States, and not either of the parties to the suit before us, were the owners of the property in controversy. There was, therefore, as matters then stood, no property whatever to sell; and the only hope that there would be property to sell lay in the possibility that the decision in the case of Morris v. United States might be reversed. This was plainly a speculative contingency. But that is not the present case. Here there was no question as to the ownership. The validity of the deed of trust, it is true, had been contested by the present appellant; but it had been adjudged against her contention. And if there was doubt, thereafter, in regard to the respective rights of the parties, it was doubt which the appellant herself had created by her appeal. It would be a dangerous doctrine to hold that a mortgagor, by the mere institution of a suit, or by the taking of an appeal in a suit wherein he has been defeated, can render invalid a sale otherwise perfectly valid. We can not think that such a proposition as that here advanced is sound in law.

The other grounds, on which it is sought to invalidate the sale, refer rather to matters of fact than to matters of law. The first of them is that the terms of sale were unreasonable, in the requirement that the purchase money should all be, paid in cash. This is undoubtedly an unusual requirement so far as sales in recent times are concerned; but it is not unprecedented, and we can not say that it is of itself unreasonable. Theoretically, all sales are presumed to be for cash; and the giving of credit is an indulgence, and not a right. The trustee had been given the power to fix the terms of sale; and while the abuse of such power will be closely watched by a court of equity and relief given against it, we can not hold, as a rule of law, apart from the circumstances of the case, that the requirement of cash, instead of cash and credit, is unreasonable. No case is cited wherein any such rule has been held, and we do not think that any can be cited. Nor was there anything in the circumstances of the case to show that the requirement was in itself unreasonable. Reference is made to the fact that, when the trustee first advertised the property for sale, about the time of the commencement of the litigation, in 1879, his terms had been for part cash and part credit; and this seems to be relied on to some extent as showing the unreasonableness of the requirement for the later advertisement and sale in 1884. But there had been five years of harrassing litigation, wholly unfounded in justice so far as the creditor Jenks was concerned, as was held by the concurrent decisions of the Supreme Court of the District of Columbia and the Supreme Court of the United States; and the creditor had long been deprived of his money and of all return from it. He was entitled to have it all back, and not merely a part, and to be postponed for the residue for other years to come. When one lends his money for three years, it does not mean that he will be compelled to wait for five, or seven years, for its repayment. He is entitled to have the contract performed°as it has been made.

We do not mean to be understood as holding that a requirement that the whole purchase money in such cases should be paid in cash would be reasonable under all circumstances. Parties may have contracted with reference to a prevalent usage; or there may be circumstances which would make such a requirement harsh and oppressive. But when such a requirement is distinctly within the authority conferred on the trustee, as it-is here, we think that it is incumbent on the person who would attack it, to show its unreasonableness by competent testimony. Nothing of that kind is attempted in the present case.

In the next place, it is objected that the sale was a sham and that bidders were discouraged. We find no evidence whatever in the record to sustain this charge. There are some vague statements by unnamed and unauthorized persons that the sale was intended merely “to pass title,” whatever that may mean; but we find no evidence that would indicate in the remotest degree ■ that the sale was not conducted in good faith.

Finally, it is alleged that the price for which the property was sold was inadequate. But mere inadequacy of price, if it exists, as it has been well settled, is no reason for the vacation of a sale, unless there are some circumstances of unfairness in the conduct of the sale. If it could be shown that the inadequacy existed; that it was occasioned by the trustee’s requirement that the purchase money should all be paid in cash ; that bidders were thereby discouraged, and that these conditions were caused or contemplated by the trustee or the creditor Jenks, then undoubtedly there might be ground for the intervention of a court of equity. But we are not satisfied that'the testimony has established the fact of inadequacy of price, in all events inadequacy to such an extent as that a court of equity would be justified in interfering.

On this point five witnesses were called on behalf of the appellant, who testified variously that the property at the time of the sale in 1884, was worth from about $4.50 to about $8 a square foot, or from about $38,000 to $65,000 in all. But they were all men of very limited experience in real estate, and had no basis whatever of other sales in the nigbborbood upon which to base their opinion. On the other hand, some sixteen or seventeen witnesses, including some of the most prominent and experienced real estate agents in the city of Washington, were called on behalf of the appellees; and they all testified with one accord that the sum which the property brought at the sale, that is, $29,200, which was a little upwards of $3.50 a square foot, was a full and fair price for it at the time. Some would not have given so much, and some thought that $3 a square foot was all that it was worth, and all based their opinions on other sales in the neighborhood both on F street and on G street, at or about the same time. Some of them testified that they had gone to the sale, and had bid for the property, but that they had been unwilling to go as high as the figure for which it was sold. The preponderance of testimony is so overwhelmingly in favor of the appellees on this point that we do not deem it necessary to give it further consideration. It is very clear to us that the allegation of inadequacy of price is wholly unsustained by the testimony.

The appellant, in our opinion, has not, as complainant in the court below, proved her case; and being of that opinion, we regard it as unnecessary for us to examine the defenses of res judicata and laches set up by the appellees in defense of the suit, — the one based on the assumption that the validity of the sale in question was involved in the decree of the Supreme Court of the District rendered on July 13, 1885, and in the decision of the Supreme Court of the United States affirming that decree; and the other founded on the lapse of time between the date of the sale (March 26, 1884), and the time of the institution of the present suit (November 6, 1890), a period of more than six years and seven months-, during which Jeuks and one or two other persons connected with the transaction had died, but during the greater part of which time, it is true, the litigation was pending.

We conclude that no error has been shown in the decree of the Supreme Court of the District of Columbia, now appealed from, and that this decree should be affirmed, with costs. And it is so ordered.