Court Opinion

ID: 8040462
Source: CourtListenerOpinion
Date Created: 2022-09-09 03:30:14.507067+00
Date Added: 2024-06-11T16:37:18.073788
License: Public Domain

McCown, J.,
dissenting.
It is admitted that the public auction sale of a school land lease involved here was fully advertised and fairly conducted, that the plaintiff submitted the highest bid, and that the bid was a fair, adequate, and reasonable amount. Five days after the sale the Board of Educational Lands and Funds rejected the highest bid and ordered the lease to be resold. The upset bid, a 10 percent increase, was made by an unsuccessful bidder at the public auction sale who was also the previous leaseholder. At the time the board rejected the highest bid and ordered the lease resold, the upset bid was not even written, nor was there any specific amount involved. Neither had the upset bidder submitted any written offer, nor any guaranties or checks in support of the upset bid. Those documents were apparently executed later.
On those facts this court now holds that where a public auction sale of a school land lease is duly and fully advertised and fairly conducted, and the highest bid is for a fair, adequate, and reasonable amount, an unsuccessful bidder may obtain a resale simply by submitting a later upset bid for 10 percent more than the amount of the highest bid at the auction. Specifically this court holds that the action of the Board of Educational Lands and Funds in rejecting the highest bid at the public auction and ordering the lease resold was a reasonable exercise of its discretionary power to accept or reject all bids, and was not arbitrary or unreasonable. Indirectly this court holds that the rules governing upset bids at judicial sales are not applicable to sales of school land leases at public auction by the Board of Educational Lands and Funds. The decision in this case also *799means that the stability and integrity of public auction sales of school land leases by the Board of Educational Lands and Funds is of little or no importance, and that the discretion of the board to accept or reject the highest bid is far broader than the judicial discretion vested in a court to confirm or reject a similar bid at a judicial sale. Such distinctions have no legal, logical, or practical foundation.
The majority opinion concedes that this court has previously “suggested” that the rules governing upset bids at judicial sales were applicable to public auction sales of school land leases, and also concedes that the rules applied to judicial sales “may be helpful” in determining considerations arising in sales by the Board of Educational Lands and Funds.
In a case involving the sale of a school land lease, State ex rel. Raitt v. Peterson, 156 Neb. 678, 57 N. W. 2d 280, this court said: “We think the rule governing upset bids at judicial sales is applicable here. If the sale was fairly conducted and the property sold for a reasonable and fair value under the circumstances, the board would ordinarily be required, in the exercise of a reasonable discretion, to approve the sale and make the lease. An upset bid, made after the sale and before the approval and acceptance of the highest bid at the public auction, is relevant only to the extent that it bears upon the fairness of the sale and the adequacy of the highest bid at the public auction.”
Where, as in the case at bar, it is admitted that the public auction sale was fairly conducted, and that the highest bid was for a fair, adequate, and reasonable amount, it seems clear that the refusal of the board to approve the highest bid and make the lease was arbitrary and unreasonable.
A crucial difference between the Raitt case and this case, however, is that in the Raitt case the upset bidder had not been a bidder at the public auction sale, and there was no evidence that the auction bid *800was adequate or inadequate. That difference is critical and determinative. In Hull v. Hull, 183 Neb. 773, 164 N. W. 2d 455, this court referred to the problem involved in the stability and integrity of judicial sales where the upset bidder was present or bidding at the judicial sale. We held in that case that an upset bid following a judicial sale and before confirmation should be considered when it affords convincing proof that the property was sold at an inadequate price, and that a just regard for the rights of all concerned and the stability of judicial sales permit its acceptance. We said: “It has been generally understood by the profession and enforced by the courts that for obvious reasons one who has been a bidder at the sale by himself or by an agent will not, as a general rule, be permitted to put in an upset bid.” See, also, 47 Am. Jur. 2d, Judicial Sales, § 165, p. 429.
The only basis given for the majority policy decision in this case is the undisputed fact that the board holds the school lands as a fiduciary and must obtain the highest price possible. There is nothing unusual about that. The same thing is true in any sale by any fiduciary, and the same fact is certainly true in any judicial sale.
There is also a strong public policy in favor of preserving the stability and integrity of a public auction of school land leases, just as there is a strong public policy in favor of maintaining the stability and integrity of judicial sales. If a public auction sale for a fair and reasonable price can be upset and overturned by a later change of mind of a person who was present at the auction and had a chance to bid but was outbid, the stability and integrity of all school land lease auctions has been threatened and in the long run lower prices will result at auctions.
The facts in this case are admitted. As this court said in Rupe v. Oldenburg, 184 Neb. 229, 166 N. W. 2d 417: “If upset bids were permitted and accepted un*801der all circumstances, the holding of a judicial sale would be nothing more than preliminary bidding and not a method of purchasing the land. Such a practice would chill the bidding at the judicial sale by encouraging the filing of upset bids and render the judicial sale a mere formality and the elimination of the primary purpose of judicial sales. This is most harmful to the stability and true purpose of judicial sales which trial courts should not lightly disregard.”
A decision which places the acceptance or rejection of the highest bid at a public auction sale of a school land lease under different rules than those applicable to judicial sales, in my opinion, is not good public policy nor good judicial policy. Where the evidence and pleadings establish that the sale was regularly held and fairly conducted, and that the lease was sold for a reasonable and adequate price, an upset bid should not outweigh all the other evidence, much less be treated as conclusive evidence to the contrary.
In the case before us the District Court specifically found from the pleadings and the undisputed evidence that the lease sale auction involved here ‘‘was fully advertised and fairly conducted, and the plaintiff made and submitted the highest bid for a fair, adequate, and reasonable amount, and thereafter complied with all requirements incumbent upon him as the successful bidder to obtain said lease.” The District Court also found: ‘‘The persons having submitted the purported upset bid, having been present at the auction, having participated in the auction bidding, and having been available to submit a higher bid at that time, but not having done so, are barred and estopped from submitting an upset bid thereafter to overturn the results of the sale.” The trial court’s determination and judgment was eminently correct and should have been affirmed by this court.