Williams v. Charles F. Dunn & Sons Co.

79 S.E. 512, 163 N.C. 206, 1913 N.C. LEXIS 153

• Court: Supreme Court of North Carolina
• Decided: October 8, 1913
• Status: Published

Opinion

WaleeR, J.

This is a motion to set aside an execution sale, and the title of the original action should have been retained, instead of making the motioner plaintiff and the purchaser at the sale a defendant. It is not a new proceeding, but a motion in the cause, as at first constituted, for the desired relief. The title on the docket here and below should be Williams v. Williams, motion by defendant, and not Williams v. Dunn. We hope that the clerks and attorneys will hereafter take notice of the procedure in such cases and be governed accordingly, as a compliance with the rule will prevent uncertainty and confusion, which is sure to follow its disregard, and will conduce to order and regularity in judicial proceedings — something much to be desired. The mistake in this case at first produced some little perplexity, which could easily have been avoided by proper attention to orderly arrangement. We believe, though, that we have, at last, succeeded in extracting from the record and stating correctly the relations of the parties and the facts of the case, and have thus removed its seeming complication and difficulty, and simplified the questions involved.

The defendant in the judgment and execution, John W. Williams, alleges that the sale by the sheriff is voidable by him because there was no legal advertisement or notice of the sale; that the execution was issued within forty days of the court to which it was returnable (Eevisal, sec. 624) ; that the land, consisting of three lots, was sold en masse and not in separate parcels, and that Charles F. Dunn, the real plaintiff, as assignee of the original plaintiff, did by fraudulent representations and conduct obtain the land, as purchaser, at an undervalue, the price he paid being grossly inadequate.

The law requires a sheriff to advertise a sale under execution and to serve a copy of the advertisement upon the defendant ten days before the sale. Revisal, secs. 641, 642. A failure to comply with .this provision of the statute, which is directory, will not render the sale void as against a stranger without notice of the irregularity, nor can it be assailed collaterally, but in such a case the defendant may, on motion, or by direct proceeding, have the sale vacated.

In Burton v. Spiers and Clark, .92 N. C., 503, Justice Ashe said for the Court: “It is well settled as a general rule, that a purchaser at execution sale is not bound to look further than to see that he is an officer who sells, and that he is empowered to do so by an execution issued from a court of competent jurisdiction,' and he is not affected by any irregularities in the conduct of the sheriff. Mordecai v. Speight, 14 N. C., 428; McEntire v. Durham, 29 N. C., 151. It follows from this, that a purchaser may get a good title at a sheriff’s sale, when there has been no advertisement of the sale; but this is subject to qualifications: As where the purchaser is a stranger, he will get a good title, notwithstanding any irregularities there may have been in the management of the sheriff. Oxley v. Mizle, 7 N. C., 250. But when the purchaser is the plaintiff in the execution, or his attorney, or any other person affected with notice of the irregularities, the sale may be set aside a-t the instance of the defendant in the execution by a direct proceeding. If not so corrected, they cannot be made available by a collateral attack on the purchaser’s title. ' Hence, an execution sale cannot be collaterally avoided because real estate was sold without first levying upon personalty, nor because of irregularities or deficiencies in the advertisements, ,nor for defects in the -levy (Herman on Executions, sec. 39; Oxley v. Mizle, supra) ; and it- was held by Chief Justice Ruffin in the case of Harry v. Graham, 18 N. C., 76, That an allegation of fraud against a purchaser at execution sale will not be heard from a stranger to the execution.’ ” Dula v. Seagle, 98 N. C., 458; Sanders v. Earp, 118 N. C., 275.

In the Dula case, Chief Justice Smith said: “The sheriff acts under the law that prescribes his duties, with a proper responsibility to those affected by what he does. If he sells under execution without advertising, as required by law, and the purchaser has no notice of this dereliction of duty, he acquires title; but it would be otherwise if the sale was at a time or place not warranted by law, because the purchaser is charged with knowledge of this legal requirement, and does not buy in good faith. S. v. Rives, 27 N. C., 297; Mayers v. Carter, 87 N. C., 146.”

Our case is a good illustration of the justness of the rule. For some reason, and none other than the omission to duly advertise the sale can be fairly assigned, there were no bidders present, and there was, consequently, no competition. In this way the> purchaser bid in the land at about one-eighth of its real value, and land worth $800 to $1,000 was sold to pay a debt of less than $45. “This is calculated to causé surprise and to make one exclaim, Why, he got it for nothing! There must have been some fraud or connivance about it.” Worthy v. Caddell, 76 N. C., 82. Such an apparently unfair sale should not be permitted to stand unless the strict right of the purchaser, under, the law, requires us to sustain it, and this we do not think is the case.

Apart from the irregularities in respect to the execution and sale, of which the purchaser, who had by assignment from Jesse E. Williams become the real plaiutiff, had notice, it appears by the finding of the clerk that the sheriff sold three distinct lots en masse, when if sold separately any one of them would have brought a price far more than sufficient to pay the total of debt, interest and costs, and five times as much as required for that purpose, if the lot thus sold had brought anything like its market value.

The counsel of John W. Williams, the debtor, contends that the fact of selling the three lots as one entire parcel is of itself sufficient to vitiate the sale, and there is strong authority to be found in the decisions of other jurisdictions to sustain this position. Eorer on Judicial Sales, sec. 730, and cases cited; Tiernan v. Wilson, 6 Johns. Ch. (N. Y.), 415. But our decisions have not, up to Jthis time, gone quite so far, as we will presently see.

It is generally agreed that it is tbe duty of the officer to sell in the exercise of a fair discretion, and to the best advantage, so as to make the debt and costs to be levied by the execution without unnecessary sacrifice of the debtor’s property. “The proposition is not to be disputed,” said Chancellor Kent in Tiernan v. Wilson, supra, “that a sheriff ought not to sell, at one time, more of the defendant’s property than a sound judgment would dictate to be sufficient to satisfy the demand of the writ, provided the part selected can be conveniently and reasonably detached from the residue and sold separately. The justice of this rule is self-evident. As long ago as the case of Wordye v. Baily (Noy., 59), Gawdy, J., said, and the rest of the Court agreed with him, that if the sheriff, upon a fi. fa. for 40 shillings, takes five oxen, each of the value of 5 pounds, and sells them all, the defendant may have an action of trespass against him. In addition to what has been repeatedly said in our own courts (8 Johns. Rep., 333, 18 Johns. Rep., 362; 1 Johns. Ch. Rep., 502), I would refer to the case of Executors of Stead v. Course (4 Cranche, 403), in which the Supreme Court of the United States held, that if the .collector sell a whole tract of land, when a small parcel of it would be sufficient, for taxes, he exceeds his authority, and a plea by the purchaser to a bill to set aside the sale was not to be sustained. It was the case of a sale in Georgia, under a law directing the collector to sell only so,much land as was necessary to pay the taxes in arrear. The rule must be the same, without any positive law for the purpose. It rests on principle of obvious policy and universal justice.” The learned Chancellor again says: “Any 10 acres taken from any corr ner of either of these lots would probably have raised the amount of the execution. The very circumstances of advertising and selling the whole supposed interest of the plaintiff, in both lots together, and for so small a demand, was calculated to excite’ distrust as to the title, and to destroy the value of the sale. It was a perversion of the spirit and policy of the power with which the sheriff was intrusted. It is difficult to define precisely the extent of property that a sheriff may sell together, in mass. There must be a sound discretion exercised by the officer, and each ease will furnish a rule applicable to it, under'all its circumstances. It is sufficient to say that here is a case in which the abuse of discretion is too flagrant to be endured, and that the law will adjudge such a sale, in such a case, fraudulent. No person can hesitate for a moment to say that the sheriff ought not to have sold more than the interest of the plaintiff in one lot, at one time, and in one parcel; and I believe every one will be ready to conclude that the sale of one lot would have raised the $10 with equal facility as the sale together of both lots. I shall, accordingly, set aside the sale as fraudulent and void in law.”

We have referred to this case at some length, as its facts so clearly resemble those to be found in this record, and yet our case more strongly appeals to the conscience of the Court for equitable relief to the debtor, who has so greatly suffered by the manner in which this sale was conducted at the instance of the plaintiff, who was the purchaser. The difference between the cases which makes in favor of this debtor is, that here there were three separate and distinct tracts, each having its own valuable improvements, while in the Tiernan case the tract was an entire one, and the Court held that a reasonably sufficient portion should have been cut off and sold, if the land was susceptible of such a division and the whole was not required to satisfy the writ. See, also, Kinney v. Knaebel, 51 Ill., 112, 121; Berry v. Griffith, 2 H. and G., 337; Howson v. Deggart, 8 Johns., 333; Winters v. Burford, 6 Cold., 328; Kiser v. Riddick, 8 Blackf., 382, 383; McLean Bank v. Flagg, 31 Ill., 290; Phelps v. Cowan, 25 ibid., 309; Freeman on Executions (3 Ed.), sec. 295, and especially 296.

Perhaps by no means can we procure a more correct and just view of the duties of the sheriff or other officer in the proceedings which he is authorized to take, after levying upon property for-the purpose of producing a satisfaction of the plaintiff’s demand, than by conceding that such officer is the agent of both parties, and as such is charged with duties which are not wholly compatible, and which must, nevertheless, be reconciled. It is true that the officer owes to the plaintiff the duty of making the money at or before tbe return day of tbe writ, and may be considered as tbe agent of tbe plaintiff, charged witb tbe duty of producing a satisfaction of tbe writ. On tbe other band, be is equally tbe agent of tbe defendant, charged witb tbe duty of so disposing of bis property that tbe writ against him shall be satisfied witb no needless injury or sacrifice. Hence, as tbe duty of selling tbe property is modified by tbe duty of not needlessly sacrificing • it, tbe officer has a discretion witb respect to tbe time and mode of sale. A reasonable discretion, however, is allowed to be exercised in order that tbe object of tbe writ may be accomplished, not frustrated, and 'that the property of tbe debtor be not causelessly sacrificed. There is no iron rule in regard to this matter, but it may be said that tbe officer should exercise a sound discretion, honestly and impartially, as between tbe parties, remembering that be is tbe sworn minister of tbe law and not tbe servant or emissary of either commissioned to advance, in a covetous manner, tbe interests of bis employer. As is tbe duty of tbe just and impartial judge, be should bold tbe scales evenly balanced.

Judge Freeman, speaking to this very question, said: “Where several distinct parcels of real estate, or several articles of personal property, are to be sold, what is called a dumping-sale’ can rarely be justified. Such a sale when objected to in due time, will not be upheld, unless special circumstances can be shown from which it must be inferred that such sale was either necessary or advantageous. It is sometimes said that such a sale will not be vacated until it is shown to have injured some one: Tbe command of tbe law that distinct parcels of land shall be offered for sale separately is founded on tbe assumption that, by so offering them, tbe best price will probably be secured and tbe sale not result in tbe taking from tbe defendant of any more property than is necessary to satisfy tbe writ.” Freeman.on Executions, sec. 296, p. 1703.

Some of tbe courts have expressed themselves strongly in emphatic condemnation witb regard to sales in mass of property divided into separate parts or lots, going to the length of saying that, “-Sales in a lump of real estate held in parcels are not to be countenanced or tolerated.” Borer Jud. Sales (2 Ed.), sec. 730, and the numerous cases in note 6.

But we have not referred to tbe authorities above for the purpose of approving all that is therein said, as this Court lias formulated a rule of its own upon the subject, which we will follow in this case, as it fully sustains the judgment below, and it is not necessary that we should go beyond it, as the facts are now presented to us.

In Wilson v. Twitty, 10 N. C., 44, Judge Hall opens his opinion by saying: “It is much to be regretted .that a more particular rule of conduct has not, by the law, been prescribed to sheriffs in sales of landed property under execution.” He then states that while he believes it is not usual to sell separate parcels at once and as a whole, it is not forbidden in express terms, and then adds: “But it is surely the sheriff’s duty to sell in the way that will likely be most beneficial for both parties. I mean in the way that will produce the most money.” He then strongly intimates that circumstances of fraud or oppression prejudicial to the debtor should avoid the sale, each ease to be judged by its own facts. At the same term it was held in Thompson v. Hodges, 10 N. C., 51, that “a sale by a sheriff, en masse, of tracts of land adjoining each other will be supported.” But in both of these cases the jury had found, under the evidence and charge of the court below (Nash, J., presiding in one and Norwood, J., in the other), that there was no element of fraud or oppression. In the Wilson case, Judge Nash had charged the jury that the duty of the sheriff was to levy on the entire tract and to sell the parcels separately, but he directed them to find whether the debtor had authorized the sale as made by the officer, and had furnished a description of the land to him. In the Thompson case, Judge Norwood charged the jury, “that a sheriff is bound to use such means in the sale of property under execution as any ordinary and prudent man would do in the sale of his own property, in order to make it bring the best possible price.” The verdict of the jury was for the lessor of the plaintiff, and the Court discharged the rule for a new trial. Both eases were affirmed in this Court. So tbe exact duty of tbe sheriff was not defined'by tbis Court in them, nor consequently was it decided what effect failure to perform it would have upon tbe validity of tbe sale.

In Jones v. Lewis, 30 N. C., 70, which soon followed tbe other two cases and cited them, it appeared that executions issued and were, by tbe sheriff, levied on tbe undivided interests of John C. and Atlas Jones in tbe premises, which consisted of several tracts. Tbe land was sold by tbe officer, and at the sale each tract was set up separately, and tbe interest of tbe defendant in it sold at one bid. Jesse Person was tbe purchaser, and to him tbe sheriff executed tbe deed. Tbe sale was attacked collaterally in an action of ejectment. No fraud or other equitable element was shown, if it could have availed anything in such an action, where there was no direct attack. Judge Nash said for tbe Court: “Tbe second objection is that tbe interests of John C. and Atlas Jones in tbe land were sold, at one bid, instead .of being sold separately. There is no allegation of fraud in tbe transaction, nor is there any complaint on tbe part of tbe owners of tbe land that their interests have been injured by tbe mode pursued. We admit that it is unusual, but we do not see that it is therefore contrary to law. Tbe law points out no specific mode in which a sheriff shall conduct tbe sale, but be is bound, by general principles, to sell tbe property levied on in such way as will probably raise tbe most money. Tbe office of tbe sheriff is a highly responsible one, and much discretion must, in many cases, be allowed him. In tbis case, John 0. and Atlas Jones were owners of two undivided fifths of tbe land sold; it might have been beneficial to them to have their respective interest sold by tbe same bid; tbe land thereby might have produced more. But tbis was a question of fact which, if pertinent to tbe case, ought to have been submitted to tbe jury, and we cannot say, as a matter of law, that tbe sale, for that case, is absolutely void.” That case was followed by Huggins v. Ketchum, 20 N. C. (Anno. Ed.), 550, in which Judge Daniel thus refers to the method of sale by tbe sheriff: “If tbe lands embraced in that description cpmpre-bended more tracts or parcels of land than one, a sale en masse by tbe sheriff will still be supported, because it is warranted' by Ms execution, and no fraud is shown either in the sheriff or the purchaser. Wilson v. Twitly, 10 N. C., 44; Thompson v. Hodges, ib., 51.” And he enlarged upon this view in the subsequent case of Davis v. Abbott, 25 N. C., 137, as follows: “Under the execution, issued to satisfy the first judgment mentioned in the case, the sheriff so^Ld by the acre as much of the land that had been levied on as made the debt and costs. This mode of sale is not usual, we admit, but we cannot conceive that there is anything illegal in it, and in this case there is no pretense of fraud in the sheriff or. loss by the debtor. If chattels are levied on, the sheriff sells the "same in parcels, so as to make the debt by as few of them as he can conveniently. If he can save to the defendant a part of his land levied on, and satisfy the execution out of the remainder, the defendant must generally be benefited by it. The sheriff is a high and responsible officer, and a reasonable discretion, exercised by him in making sales, whether by exposing the whole tract or selling by the acre, we think is allowable; both the plaintiff and the defendant may, in many cases, be benefited by it.”

The question arose in McCanless v. Flinchum, 98 N. C., 358, and Chief Justice Smith said: “Th'e defendants say that the sale was made by the sheriff in bulk, and they insist that his deed to the plaintiff was void for that reason. It is undoubtedly the duty of the sheriff to sell in such way as to realize, so far as he may be able to do so, a fair price for the property sold under execution, and if he fails to do so, the sale is voidable, and, upon objection, may be set' aside; but this is a question of fact which ought to be submitted to the jury. Jones v. Lewis, 30 N. C., 70.”

In. McLeod v. Pearce, 9 N. C., 110, the Court held that chattels, consisting of various specific articles, taken in execution, cannot be sold en masse; the sheriff should conform, as nearly as possible, to such rules as a prudent man would probably observe in selling his own property for the sake of securing a fair price. Judge Henderson, in the course of the opinion, said: “The sale is void, on the ground that the whole of defendant’s interest in the property held by his mother for life was put up by the sheriff and sold at one time, and even without pointing out what the property consisted of; such sale was unfair as tending to lessen the price, to give one bidder, who might have a knowledge of the property, an advantage over the rest, and to encourage speculation. -The law which constitutes the sheriff the agent of the parties without their consent will see that he acts fairly; and it is upon this principle that it is necessary for the sheriff to seize the property and have it ready to deliver to the purchaser when from its nature it is capable of seizure. The Court would not be understood to say that where property consisted of a variety of small articles, each article should be sold separately, or he be required to sell separately where it is usual for the owners to sell in the gross; for instance, hogs in parcels, a flock of geese, or sheep-, or other things, where it is customary for the owners of them to sell in such manner. Nor would a sale be invalidated where there might be difference of opinion as to the common or proper mode; it must appear palpably wrong; no man would adventure here, unless he had a knowledge which it was not to be supposed others possessed, or was a mere speculator.”

In Bevan v. Byrd, 48 N. C., 397, it appeared that a quantity of unshucked corn belonging to the plaintiff had been levied upon by a constable, who was sued in case for selling en masse, and in the absence of the plaintiff, thereby causing the corn to be purchased at a-n undervalue, to the plaintiff’s damage, and this Court held that it was no violation of the officer’s duty to divide the corn into small piles and sell it by the pile, Nash, G. J., saying: “When an officer levies an execution upon property,' it is his duty so‘ to conduct the sale as will be most beneficial to all parties. The law points out no particular mode in which an officer shall conduct his sales; but he is bound by general principles to sell the property in that way which will probably bring the most money. He is the agent of both parties, appointed by the law to conduct the sale, and must act in good faith to both, and both are interested that the articles shall bring the greatest amount of money; particularly is it important to the defendant. When various articles are levied upon, they cannot be sold en masse; the officers must conform as nearly as possible to such rules as a prudent man would pursue in selling his own property,” citing Jones v. Lewis, supra, and McLeod v. Pearce, supra. It was also held that whether the corn had been properly sold was a question of fact for the jury, to be decided by them under proper instructions from the court as to the law, the judge adding: “The practical eye of the experienced farmer can pretty well inform him of the quantity of corn, both in field and in a pile. The purchaser’s eye is his chapman.”

We have reviewed a few of-the cases somewhat at length, on account of the great importance of the question and for the further reason that very little has heen said about it by this Court in recent years. It may serve to stimulate officers to a just performance of their important and delicate duty, and to advise them in some manner as to how it should be performed.

One clear result to be deduced from the foregoing authorities is, that if property is sold en masse, or in bulk, when it could reasonably be sold in parcels without prejudice to the parties, creditor or debtor, and there is any fraud or oppression, or even unfairness, whereby it is sold at a disadvantage to the debtor, the sale will be voidable by him in a direct proceeding to set it aside.

The facts in this case are so plainly against the fairness of the purchaser’s conduct, he being also the plaintiff in the writ, that, as said hy Justice Beade in a somewhat similar ‘case (Andrews v. Pritchett, 72 N. C., 135), it requires no very nice application of them “to stamp this transaction with fraud.” Let us assemble a few of the most salient facts:

The land brought a grossly inadequate price, which is a badge of fraud. Charles F. Dunn knew the land, and took advantage of his superior knowledge to deceive and mislead the debtor’s attorney as to its real value, and at a time when investigation by the latter could not well be made before the sale. This was fraudulent conduct, as it accomplished its purpose. Machine Co. v. Bullock, 161 N. C., 1. There was no competition at the sale, by reason of the purchaser’s conduct and the failure, to advertise the sale properly, and he, therefore, bought.at his own. price — $125 for land worth nearly, if not quite $1,000; and finally, the land was sold when there was personal property sufficient to pay the amount due and the costs. The debtor, .aftei; the sale, tendered to Dunn not only the amount of the debt, interest and costs, which was all the law required him to do, but the full amount bid by him for the land, and he refused to accept it. The land was sold, notwith- ■ standing Dunn’s attention had been called to the irregularities in his execution, the levy and the advertisement. -The land, consisting of three separate lots, was sold as a whole, when if any one of the lots had been sold, the proceeds would have been far more than sufficient to pay the debt 'and costs.

This is not all, but it is- surely enough for the purpose of deciding this case. These facts show palpably that the plaintiff in the execution was coveting the land,' and not merely seeking, in a fair and legitimate way, the recovery of his debt. The process of the law should not be perverted to such an avaricious and fraudulent object. It will compel the debtor to pay, but will not tolerate unfairness and oppression.

The facts clearly bring this sale within the condemnation of the law, -without deciding whether, under our decisions, a much weaker showing would be sufficient to avoid it. Thp sale en masse, -with the attendant circumstances of fraud- and irregularity, render the sale void'as to the debtor. This- affirms the judgment.

It is just to the sheriff to say that no wrong can fairly be imputed to him. It was all due to the fault of the purchaser, who, under cover and the supposed protection of the court’s process and with special and peculiar knowledge of the facts, sought to use it for the evident purpose of deriving an unfair advantage, and thereby bought the property at a grossly inadequate price, to the great sacrifice and damage of his debtor. We have no idea that the sheriff'was cognizant of any such, inequitable conduct on the part of the purchaser; the debtor makes no charge against him of complicity, and we, therefore, fully acquit him of all blame.' The acts • of the creditor are alone sufficient to annul the sale.

No error.