Court Opinion

ID: 9645050
Source: CourtListenerOpinion
Date Created: 2023-08-22 21:11:27.157055+00
Date Added: 2024-06-11T18:11:21.926446
License: Public Domain

CARVER, Justice,
dissenting.
I respectfully dissent because it is unjust to impose liability for wrongful foreclosure upon a creditor who is without fault.
In our case, the fault was shown to be the Trustee’s fault alone since only the Trustee was obligated, and failed, to post notices of the sale in two additional public places, as well as the courthouse door, as was done. The creditor was not shown to have knowledge of, or to have been a party to any failure, or fault, of the Trustee.
The Trustee was an agent for Harwath, as well as for Hudson, in his office as Trustee. First Federal Savings & Loan Association v. Sharp, 347 S.W.2d 337 (Tex.Civ.App.—Dallas 1961), aff’d, 359 S.W.2d 902 (Tex.1962). See Hampshire v. Greeves, 104 Tex. 620, 143 S.W. 147 (1912); Zeiss v. First State Bank, 189 S.W. 524 (Tex.Civ.App.—Beaumont 1916, error ref’d). One of the duties of the Trustee owed to both principals-was to gain the interest and attendance of prospective bidders at the foreclosure sale through posted notices. The Trustee’s failure to post two of the three notices required by the deed of trust, and his consequent failure to gain the maximum attendance of bidders, and higher bidders hopefully, is the heart of Harwath’s complaint for damages. Harwath’s only tenable theory to warrant relief against Hudson for the fault of the Trustee is that the Trustee was Hudson’s agent so as to impute the Trustee’s failure to Hudson, as his principal. The difficulty with Harwath’s imputation theory lies in the fact that, since the Trustee was also Harwath’s agent, Hudson, who was likewise deprived of a possibly higher bid, can equally rely upon the same reasoning to obtain the identical relief against Harwath. Simply put, if either Harwath or Hudson has a claim against the other for the failure of their common agent to perform his posting duty, which, supposedly resulted in the absence of a better and higher bidder at the foreclosure sale, then the other has the same claim in reverse resulting in full offset.
I would hold that, where both the creditor and debtor are innocent and identically injured by their common Trustee’s failure to post the required notices of a deed of trust foreclosure, neither creditor or debtor, each co-principals of the same agent, may impute their common agent’s failure to the other, but each must look solely to their agent for such damages each may be able to prove.
*855It may be properly argued that, while the foregoing solution is a legal solution, it is hardly an equitable solution because it leaves the creditor unjustly enriched by the proceeds of his subsequent sale of the property. No enrichment has in fact accrued. The summary judgment record reflects, without dispute, that after Hudson innocently bid $100,000 at the foreclosure sale, he resold it for cash and notes totaling $829,065.50. Harwath’s counterclaim, current at the time the summary judgment was entered, conceded that the debt due Hudson was $860,626.74. Consequently, equity which must first see Hudson’s debt paid before imposing any damages upon him, would find no damages in our case.
I would hold that equity requires: (1) in the event of a foreclosure sale which is irregular and without fault of the creditor who is the successful bidder and who still holds title, that the sale be set aside, without damages, and the parties restored to their positions immediately before the irregular foreclosure proceedings were commenced; or (2) upon the same facts, save where the title has been transferred by the creditor-bidder to a third party before the irregularity becomes apparent, that the debtor is entitled to the difference, if any, between accrued debt, on the date of transfer to the third party, and the value paid by the third party and actually realized by the creditor.
The trial court’s judgment was correct on the record and we need not determine whether the “reason” relied upon by the trial court was the correct reason. If Har-wath is seeking “legal” relief against Hudson, such relief should be denied because Hudson was without fault. If Harwath is seeking “equitable” relief against Hudson, such relief should be denied because Har-wath was not damaged when the arms-length resale by Hudson was insufficient to discharge the debt of the property. The trial court’s judgment should be affirmed and I would so hold.