Court Opinion

ID: 9772651
Source: CourtListenerOpinion
Date Created: 2023-08-29 17:24:49.87446+00
Date Added: 2024-06-11T07:31:46.572606
License: Public Domain

SMITH, Justice
(dissenting).
I respectfully dissent. I cannot agree with the majority that its holding in this particular case is justified on the ground that Sharp’s bid was, in effect, for cash and that the trustee acted arbitrarily and unreasonably in making the sale to the mortgagee, a lower bidder than Sharp, without allowing Sharp “a few minutes’ time within which to produce the cash for his bid, when this could have been done without prejudice to the mortgagee.” Sharp relies upon this ground and the majority sustains the contention in spite of the well-settled rule that a sale under a power in a mortgage or a trust deed must be conducted in strict compliance with the terms of the power. See 59 C.J.S. Mortgages § 572, p. 959. A trustee under a deed of trust is the agent and representative of both the mortgagor and the mortgagee (Sharp was neither the mortgagor nor the mortgagee) and his duties are set forth in the Deed of Trust. The Deed of Trust in this case provided that in the event of default in the payment of the note secured thereby, the property described therein would be sold at public sale for cash. The notice of sale recited that the property would be *905sold for cash at the Courthouse door of Dallas County, Texas, on January 7, 1958, between the hours of 10 a. m. and 4 p. m. A trustee under such a Deed of Trust should never be under an obligation to determine whether or not a bid made at a sale has validity.
In the early case of Moore v. Owsley, 37 Tex. 603, 605, this court announced the rule which should be followed in the present case. The court said, in part:
“We understand the law governing sales at public auction to be, where the sale is advertised to be on specific and restricted terms, any bid made at that sale, not in strict conformity with the terms advertised, is no bid at all, and the crier is not bound to notice same." [Emphasis added.]
The trustee in this case conducted the sale not only in' accordance with the strict terms of the Deed of Trust, but concluded the sale in accordance with the terms of the Statutes of the State of Texas. Article 3816, Vernon’s Annotated Civil Statutes, provides that:
“When a sale has been made and the terms thereof [have been] complied with, the officer shall execute and deliver to the purchaser a conveyance ¡¡¡ * ⅝»
This does not mean that the terms have been complied with when it has been found by a jury that the bidder was able, willing, and ready within a reasonable time to produce the cash. In order to be a successful bidder, possessed with the legal right to compel a sheriff or trustee to execute and deliver a deed to the property involved, the bidder (unless it is the mortgagee) shall be able to tender the amount of his bid in legal tender. In this case, Sharp was charged with knowledge of the terms of the Deed of Trust, and was charged with knowledge that upon his failure to tender the amount of his bid in cash, the law required that the trustee proceed to again sell the same property on the same day within the hours provided in the Deed of Trust and the Statute. See Tanner v. Grisham, Tex.Com. of App., 295 S.W. 590.
Rule 653, Texas Rules of Civil Procedure, which applies to sales under a Deed of Trust as well as to sales of .real property under execution, provides:
“When the terms of the sale shall not be complied with by the bidder the levying officer shall proceed to sell the same property again on the same day, if there be sufficient time; but if not, he shall re-advertise and sell the same as in the first instance.”
It is stated in Texas Jurisprudence, Vol. 29, page 991, that “After the trustee has accepted a bid, and while the bidders are still present, the sale may properly be reopened if the successful bidder refuses to pay.” The fact that we have a Rule of Civil Procedure that directs a sheriff or a trustee to make a second effort to sell property on the same day and within the prescribed hours when the bidder fails to comply with his bid indicates very clearly to me that the seller (sheriff or trustee) is not required to wait while the bidder departs from the scene of the sale in an effort to obtain the cash. Hamilton, when he made the bid for Sharp, was charged with notice of the law, the terms of the Deed of Trust, and the notice of sale, and he should have known that no sale could be effected unless his bid of $5,000.00 was immediately paid upon the acceptance of his bid. The courts cannot engraft exceptions even though in this particular case it can be admitted that the tendered check was drawn on a bank situated only about two blocks from the Courthouse, and Hamilton had offered to go to the bank and withdraw $5,-000.00 in cash from his personal lockbox. The jury found in this case that both Sharp and Hamilton could have obtained the amount of their bid within a reasonable time, but when we look at the picture from *906the trustee’s standpoint, the request for delay was unreasonable. I do not think the trustee had any discretion in the matter, but be that as it may, the bidder was not the original borrower, the trustee did not know the bidder, the trustee did not know that the check would be good, the trustee did not know that the bidder had cash in the bank two blocks away. The trustee did know the terms of the Deed of Trust, he did know that he had until 4 o’clock that afternoon to hold the sale, and he knew that if he did not sell the property by 4 o’clock that afternoon the property would have to be reposted for sale. The courts should be slow to adopt a rule which would allow or require a trustee to speculate on the bidder’s ability or willingness to pay his bid. Where deeds of trust are unambiguous and such contracts contain strict provisions that the property be sold for cash and sold within certain specified hours on a day certain, it would be unreasonable and unwarranted for the trustee to accept a bid from an unknown bidder with no evidence of his ability or willingness to pay other than his unsupported assertion. This would be true, granting that such assertions were made in good faith. Such action would not be in strict compliance with the power granted, and would be without regard to the trustee’s duty to conduct the sale fairly and with due diligence and sound discretion to the end that the rights of the mortgagor and mortgagee will be protected. See 59 C.J.S. Mortgages § 572, supra.
The rule to pay the trustee cash does not apply to mortgagee at a trustee’s sale, Blum v. Rogers, 71 Tex. 668, 9 S.W. 595, but it does apply here.
In Wiltsie Real Property Mortgage Foreclosure, Sth Edition, 1939, Vol. 2, at page 1081, we quote the following:
“But if any person other than the mortgagee becomes the purchaser, where the sale is for cash he must comply strictly with the terms of sale and pay the price bid in cash; a note to the party entitled to the proceeds of the sale is not cash, and the tender of such note will not be in compliance with the terms of sale. It has also been held that the officer may .refuse to receive checks.”
In support of my position, I quote from the following decisions in other jurisdictions :
The Supreme Court of Georgia in 1902 in the case of Dwelle v. Blackshear Bank, 115 Ga. 679, 42 S.E. 49, held in effect:
“An express stipulation that a sale be for cash must be complied with. Bidders at the sale were bound to inquire into the authority of the Trustee to sell and terms and conditions upon which the sale was to be had. Being charged with notice and not having tendered the amount of their bid in cash either at the time of sale or during legal hours of sale, the bidder had no right to come into a court of equity and pray for specific performance of a contract of sale which was never completed on account of their failure to comply with the terms of sale.”
In the case of McLendon v. Harrell, 67 Ga. 440, the Court said:
“Cash not credit is that which the law requires them to exact from every bidder and no man’s note or check or draft is in the cold and impartial eye of justice the equivalent of cash. Once relax the rule and the gate to collusion and fraud is thrown back so wide that an ocean of corruption would enter and the fairness of public sales would be at an end.”
In the case of The Haytian Republic, 64 F. 214, 216, the court said:
“Cash sale is necessarily a sale for cash to be paid at the time of sale. The purchaser must be in readiness to pay at the place of sale if required.”
*907In the case of Stern v. Maxwell, 44 S.W.2d 482, 487 (Tex.Civ.App.), the court said:
“To constitute a valid tender, the money must be present, ready, produced and offered to person who is entitled to receive it.” 26 RCL, par. 5, page 626.
The holding of the Court of Civil Appeals and the majority holding by this court will, in effect, amount to the writing of a new contract for the parties and not only that will go farther and impair similar contracts presently in existence. First Federal’s motion for instructed verdict should have been granted. It was not, and two issues were submitted to the jury. The answers of the jury to the issues submitted were not determinative as to the judgment to be entered. The trial court merely asked the jury to determine whether or not Mr. Sharp and Mr. Hamilton were “able, willing and ready within a reasonable time to produce cash to pay their bid.” First Federal also moved for judgment notwithstanding the verdict of the jury. This motion should have been granted. The question of Sharp’s and Hamilton’s actual ability to pay is not the true question. The question was as to whether the facts and circumstances were such as to have convinced a man of ordinary prudence that the bid would be paid before it was too late to resell the property on the same day. The trustee had to make his decision on what he saw and heard at the sale. Had Hamilton complied with the terms of the sale and paid the price bid in cash, Sharp could have suffered no injury. The equitable title would have vested in Sharp immediately and such a title has been held to support a cause of action by a successful bidder against the trustee to compel delivery of a deed. I see no reason why the situation here is not analogous to a sale under execution as in the case of Burnam et al. v. Blocker et al., Tex.Civ.App., 247 S.W.2d 432, wr. ref. (1952, Culver, J.,), where it was held that “[T]he giving of a deed by the sheriff, being a ministerial act, is not essential to investiture of title.”
The judgments of the trial court and the Court of Civil Appeals should be .reversed! and judgment rendered for First Federal Savings & Loan Association of Dallas.
GRIFFIN and NORVELL, JJ., join m this dissent.