Tabet v. Goodman

118 S.E. 230, 136 Va. 526, 1923 Va. LEXIS 102

• Court: Supreme Court of Virginia
• Decided: June 14, 1923
• Status: Published

Opinion

Sims, J.,

after making the foregoing statement, delivered the following opinion of the court:

The single question presented for decision by the assignments of error is the following:

1. Was the advertisement—“Terms: Cash or credit, announced at sale”—a substantial compliance with the provisions of the trust deed which authorized the trustees to sell “upon such terms and conditions as they may deem expedient,” but required them to “first” give notice “of such * * terms” by the advertisement?

The question must be answered in the negative.

The advertisement failed to state whether the terms of sale would be cash or credit, or part cash and part credit, or, if the latter, what part would be cash and what part credit, and what time would be given as to the deferred payments, if any, permitted by the credit. When analyzed, the language of the advertisement in question plainly conveyed no other meaning, which the public could rely and act upon in attending or not attending the sale, than that they would not know the terms of the sale until the day of sale, when the announcement at the sale would determine whether the terms of sale would be cash, or part cash and part credit, and, if the latter, what part cash and what part credit, and the time given on the deferred payments, if any. That is to say, it is plain that the advertisement failed to contain any terms of sale fixed and determined upon by the trustees prior to or at the time of the commencement of the advertising, notice of which, after so determined upon, was to be given in the manner and for the period mentioned in the trust deed, as required by such deed; and merely contained the statement, in substance, that the terms of sale would be announced at the sale. This, in effect, left the terms of sale wholly undetermined and unadvertised prior to the day of sale.

‘ Under the rule on the subject applicable in a suit in equity, such as that before us, as established by the .great weight of authority, and by the unbroken line of decisions in Virginia, such advertisement was not a substantial compliance with the requirements of the deed of trust with respect thereto, but was such a material •departure therefrom as vitiated the sale, and because of which the conveyance to the purchaser and the trust deed executed by the latter, mentioned in the bill, must he cancelled and adjudged null and void.

On the subject of the mode of sale by a trustee under a deed of trust, in 2 Minor’s Inst. (3d ed.), pp. 333-4 (1), so far as material to be quoted, this is said:

“He must conform to tbe terms of the deed in respect to the time and manner of giving notice. * * *• 1 Lom. Dig. 427; 1 Tuck. Com. 108, B II; Harvey v. Steptoe, 17 Gratt. (58 Va.) 289; Walker v. Beauchler, 27 Gratt. (68 Va.) 526-7; Shurtz v. Johnson, 28 Gratt. (69 Va.) 664, 667-8.

“But although the trustee should sell ever so much contrary to the terms of the deed, * * yet the legal title passes, and the purchase is to be assailed in a court of equity alone. In that court, however, any material departure from the provisions of the deed * * will vitiate his proceedings. But if his conduct has been fair .and honest, although it may have been irregular, the court will interpose very reluctantly, especially after the lapse of a considerable time. Taylor v. King, 6 Munf. (20 Va.) 366; Harris v. Harris, 6 Munf. (20 Va.) 368; Gibson v. Jones, 5 Leigh (32 Va.) 370; Hughes v. Caldwell, 11 Leigh (38 Va.) 348.

For the reasons stated above, we do not consider the Instant ease one in which the conduct of the trustees has been merely “irregular.” They wholly failed to advertise any terms of sale; and, hence, there was in the ease before us an entire material departure by the trustees from the requirements of the power under which they undertook to act.

In Preston v. Johnson, 105 Va. 238, 53 S. E. 1, as stated in the opinion (and so far as material to the cause now before us repeated here), the deed of trust stipulated that in the event of sale it should be made “* * .after advertisement of * * terms (of sale) for such time and in such manner as he (the trustee), should deem .advantageous, for cash sufficient to defray the expense • of executing the trust and to discharge the debt; and the residue, if any, of the purchase price, to be on such credit and secured in such manner as the grantor might direct, or in fault of such direction as the trustee might determine.” The advertisement contained no statement of the terms of sale. The sale was on the terms of all cash. In the opinion of the court this is said:

“It is the well settled doctrine in this jurisdiction that a trustee for sale is the agent of both debtor and creditor, and as such it is incumbent upon him to act towards each with perfect fairness and impartiality; and, moreover, in executing the trust he must in all material particulars substantially conform to the stipulations of the deed. Norman v. Hill, 2 Patton & Heath 676; Taylor v. King, 6 Munf. (20 Va.) 358, 8 Am. Dec. 746; Harris v. Harris, 6 Munf. (20 Va.) 367; Gibson v. Jones, 5 Leigh (32 Va.) 403; Wood v. Krebbs, 33 Gratt. (74 Va.) 685; Sulphur Mines Co. v. Thompson, 93 Va. 293, 315, 316, 25 S. E. 232; Wilson v. Wall, 99 Va. 353, 355, 38 S. E. 181; 2 Min. Inst. (4th ed.) 341.

“In note to Taylor v. Herring, 19 Am. St. Rep. 263, at pp. 287-288, Mr. Freeman observes: ‘Where the instrument creating the trust has given directions concerning the mode of sale, they must be substantially pursued. Any direction regarding the notice of sale is. material, and the trustee is not at liberty to disobey it. His sale without complying with it, will, in most jurisdictions, be regarded either as absolutely void, or as liable to be vacated upon complaint of any person interested in the execution of the trust.’ Citing Sears v. Livermore, 17 Iowa 297, 85 Am. Dec. 564.

“The learned annotator then proceeds: . ‘Manifestly the objects to be accomplished by a notice of sale are to-advise the public of what is to be sold, and the time, the-place where, and the terms upon which it may be bought; and the essentials of a notice under a trust deed. are, therefore, a statement of the time, place and terms of sale, and such a description of the property to be sold as, if read by persons familiar with the neighborhood, will advise them of what is to be sold, and upon what terms it may be bought, and to induce them to attend the sale as prospective bidders, should they feel an inclination to invest in the property to be sold.’

“ * * a sale made without the proper prescribed notice is invalid. * * * The purchaser is bound to know what the requirements of the deed or statute are in this respect, and to see that they have been complied with; and the mortgagor and others interested in the equity may redeem all the same, if the power is illegally exercised.’ 2 Jones on Mortgages (5th ed.) sec. 1810.’

“Lewis on Trusts (notes by Flint), bottom p. 576; 1 Devlin on Deeds (2nd ed.), sees. 389, 398, 403; 2 Perry on Trusts (5th ed.) p. 188; Hill on Trustees, p. 746; Greenleaf v. Queen, 1 Pet. (U. S.) 144; Allie v. Lawrence, 12 Gray (Mass.) 373; Hunt v. Townsend, 31 Md. 336, 100 Am. Dec. 63; Farr v. Simms (S. C.), 24 Am. Dec. 400; Yellowly v. Beardsley (Miss.), 24 So. 973, 71 Am. St. Rep. 538.”

See, also, to same effect 27 Cyc. 1465, 1466-7; 28 Am. & Eng. Ency. L. (2d ed.), pp. 783, 785-8, 791, 811, and authorities cited.

It is urged in argument for the appellees that the trustees advertised that the sale would be for cash, and that they sold for cash. That the fact that the advertisement also said that the sale might be made on a credit to be announced at the sale, if it were conceded that the trustees had no power to so advertise, cannot invalidate a sale made upon terms authorized and actually advertised as required by the trust deed. The fallacy of this argument lies in the statement that the advertisement was of a sale for cash. As we have seen, the advertisement was so phrased that it did not in fact state any terms of sale as having been fixed and determined upon by the trustees previously to the sale, but left the terms wholly undetermined by,the advertisement and to be announced at the sale. Hence, as aforesaid, there was no advertisement of the terms of sale.

The following authorities are cited in behalf of the appellees, namely: Hubbard v. Jarrell, 23 Md. 66; Powers v. Kneckoff, 41 Mo. 425, 97 Am. Dec. 281; Stine v. Wilkinson, 10 Mo. 75; Dana v. Farington, 4 Minn. 433 (Gil. 335); Markey v. Langley, 92 U. S. 142, 23 L. Ed. 701; Horsey v. Hough, 38 Md. 130, 139; 28 Am. & Eng. Ency. L. (2d ed.), p. 971; State v. Fawcett, 58 Neb. 371, 78 N. W. 636-7; and Plattor v. County of Elkhart, 103 Ind. 360, 2 N. E. 544. We find nothing in the holding in any of these authorities contrary to what we have said and quoted above. Only in the single case of Hubbard v. Jarrell, supra (23 Md. 66), is there anything which could be said to be in conflict with our holding above. In that case there was a variance between the terms of the sale as actually made (the sale having been in fact made for all cash) from the terms of sale advertised (the terms advertised being “one-third cash and residue on credit of six and twelve months,” etc.); but, as stated in the opinion of the court, there was no objection made to the sale on that ground; the only objection, as also stated in the opinion, was that “the terms of sale (prescribed by the mortgage deed) were departed from in selling partly for cash and partly on credit, when the power in the mortgage directed a sale for cash only.” (Italics supplied.) The court, however, held that, while it was true that a change from a cash to a credit sale was advertised (which was a departure from requirement •contained in the mortgage power in that particular, but which, however, was not material to the decision .as no objection was made on that ground), the sale as actually made was for cash, which complied with the requirement of the mortgage, and “was no departure from the specified terms” of sale contained in the mortgage. And in the course of this very opinion the court said this: “It is true that in a ease like this no departure from the terms and conditions of the instrument would "be sanctioned, they being a contract of the parties, which neither could violate without the consent of the •other, and over which the court would have no control.”

The decree under review will, therefore, be reversed, :set aside and annulled, with costs in this court decreed .in favor of the plaintiff, and- the cause will be remanded to the court below with directions that, upon it being made to appear to such court that the plaintiff has, within a reasonable time, paid or tendered to the Contract Building- and Loan Association all of the instalments of the deed of trust debt which were past due and ■payable to such association, together with legal interest .thereon, as of the date it received the check of the plaintiff for $94.72, mentioned in the bill and in exhibit ‘“B” therewith, the court will enter a proper decree cancelling the deed of conveyance from the said trustees to the said purchaser and the deed of trust executed by the 'latter, mentioned in the bill, adjudging the same to be null and void, providing for proper entries of record to 'be made in the premises, and decreeing in favor of the plaintiff all taxable costs in that court, both preceding .and following the appeal, and the expense of making -said entries of record, if paid by the plaintiff.

Reversed and remanded for final decree.