Court Opinion

ID: 6695752
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:50:04.288166+00
Date Added: 2024-06-11T16:01:13.309026
License: Public Domain

ClaRx, C. J.,
dissenting: This was a proceeding for partition of certain lands lying in Polk and Henderson counties, brought before tbe clerk of tbe latter county by David A. Thompson, trustee, Samuel J. Justice, administrator, and Wil-lett Bronson, against Julia Ethel Rospigliosi and Prince Gian' Batista Rospigliosi, her husband, and 250 or more other defendants, many of whom are alleged in tbe petition to be minors, and others are alleged to be unknown, and many are contingent remaindermen. None of tbe defendants were served with process except by publication, but guardians act litem have been appointed for tbe unknown defendants and one or two of those who are known. It is alleged in tbe complaint that tbe Appalachian Power Company bad made an offer of $40,000 for tbe land described in paragraph 2, and that there were prospective purchasers for tbe other land. Tbe case was transferred to tbe Superior Court and docketed on tbe civil-issue calendar for 6 August, which calendar was advertised in tbe press. Tbe court was a special term, and began on 29 July. No answer was filed for any of tbe defendants, except tbe formal answer of tbe guardians wet litem, filed on 30 July, 1912, admitting tbe allegations of tbe complaint. Thereupon, on that day, tbe lands were ordered to be sold, without, stating whether at public or private sale. George W. Justice was appointed commissioner to sell tbe lands and George H. Valentine was appointed a referee to ascertain and report to tbe next term of tbe court tbe names of all parties interested in tbe lands and tbe extent of their interests. There is no suggestion in tbe complaint that a valuable water power was for sale nor any reference even to such power beyond tbe incidental expression, “land and water rights.”
*159On tbe same day, 30 July, on wbicb tbe order of sale was made tbe commissioner reported tbat tbe Appalachian Power Company bad made an offer to buy tbe property described in section 3, as well as tbat in section 2.
An agreement bad been made privately beforehand by one of tbe attorneys for tbe plaintiffs and tbe Appalachian Power Company, wbicb was in substance that tbe said power company should become tbe owner of tbe property described in paragraph 3 of tbe petition at tbe price of $90,000, and if other persons should bid for the property at a price in excess of $90,000 tbe surplus over $90,000 should be paid to said power company; and'a similar agreement was made at tbe price of $40,000 in regard to the property in paragraph 2 of tbe petition. On 30 July tbe court ordered tbe commissioner to sell tbe property to tbe Appalachian Power Company at those prices. Of said price $15,000 was paid down and tbe balance on twelve months credit without interest, title to be retained until payment in full.
On 5 August, 1912, tbe appellants Kuhn & ICulin filed their petition in tbe cause, tbe court being still in session, alleging they bad spent $15,000 relying upon tbe representations made by "William Redmond Gross, one of tbe defendants, in investigating tbe condition of tbe property, and at tbe same time offered $145,000 cash for said property, $15,000 down and security for tbe payment of tbe other $130,000 in cash upon acceptance of their bid by tbe court. They alleged tbat they bad been thrown off their guard and misled by tbe publication in the press tbat tbe case would be called on 6 August. At tbe same term of court, while it was in session, tbe appellant Bor-land filed a petition claiming an interest in the property ordered to be sold, asking tbat be be made a party to tbe action, offering proof of bis interest, and joining in tbe petition tbat tbe order of sale be set aside and the property resold at public sale. On 9 August, tbe court still being in session, Euhn & Kuhn filed an amended petition in tbe cause, asking tbat tbe order for sale should be set aside and tbe property resold at public sale, averring tbat means bad been used to suppress bids for said property, and giving detailed information of declarations made by one of the plaintiffs and bis attorney to tbat effect. *160They further stated that they would have made this offer of $145,000 for the property on 29 July if given an opportunity to bid, but were prevented by the advertisement by the court that the case would be called on 6 August. The petition of Borland to be made a party was denied, as was also the petition of himself and of Kuhn & Kuhn to set aside the sale and order resale at the advance bid.
The courts act as guardians and protectors of infants and unknown persons having interest in property in cases like this. It is always the duty of the court to see that the property is disposed of for the most it will bring. Revisal, 2513, provides that in partition “a report of the sale shall be made within ten days thereafter, and if no exception thereto be filed in twenty days the same shall be confirmed.” This requirement of twenty days clearly is, for the purpose of giving opportunity that the bid may be raised. There is no intimation in the statute of any distinction in this respect between private and public sales. But if there is any difference there is ten times more reason why there should be a delay given to raise the bid as to private sales than at public sales. In the latter case there has been some publicity, and the public has had at least an opportunity to bid, while in the former the transaction was made privately and there is much greater opportunity for fraud and collusion and, as in this case, the suppression of competing bids.
The bid here of Kuhn & Kuhn of $145,000 cash is nearly $20,000 over the bid of the Appalachian Power Company of $130,000, because the latter offered to pay only $15,000 cash and the balance on a credit of twelve months without interest. It is certainly to the interest of the vast mass of the parties in interest that the property should be put up at the advance price of $145,000. There are only three iffaintiffs, but they assumed to do all the bargaining and entire control of the whole proceeding in total disregard of the rights of the 250 or more defendants.
It is suggested that if the bid is reopened at $145,000 the offer of the Appalachian Power Company of $130,000 may be lost. Not so; they are bound by their bid until the court reopens the bidding by accepting the offer of the advance bid of *161Nuka & Kuhn, which the court would not do until it has received the approved security which Kuhn & Kuhn offered for the payment of their bid in cash. When that is done, it will be open to the Appalachian Power Company or any one else to bid at the sale then ordered, and if a new bid is put in at such sale there will be twenty days in which to raise that bid by an advance of 10 per cent. This is the regular proceeding prescribed by the statute and the practice of the courts in sales for partition. If observed on this occasion, and the common report as to the nature of the property is correct, a sum greatly in excess even of the $145,000 offered by Kuhn & Kuhn will doubtless be obtained. The complaint does not set out the horse-power, and indeed does not mention even that there is any water power. The answer does not set it out, for there is none filed except the formal answer of the guardians ad Utem admitting the allegations of the complaint. But there is reason to believe that on this property for which only $90,000 has been offered there are 70,000 horse-power that can be utilized by a power plant. At least the nature and extent of-such power should appear in the complaint and in the evidence before the court, for if the price offered is inadequate, a court of equity should set aside a sale and order a new advertisement, even when there is no advance bid. A property of this kind should be advertised in the press and in the commercial centers outside of the State.
In Dula v. Seagle, 98 N. C., 458, 460, it is said: “It is well settled that an advance bid of 10 per cent is sufficient grounds for reopening the bidding when the performance of the offer was properly secured.” In Clement v. Ireland, 129 N. C., 220, where there was a sale under foreclosure at the Spring Term, the court at Fall Term, upon motion, set aside the sale for irregularity, saying that it was contrary to the course of the court to confirm a sale without lapse of time between the day of the sale and its confirmation, that there might be opportunity to file exceptions and procure an increased bid, citing White ex parte, 82 N. C., 377; and further said that in analogy to the requirement of the statute in sales for partition, there *162should be at least twenty days allowed for such purpose. In the present case the sale was made privately by an agreement between three of the parties in interest who figured as plaintiffs, without any consultation with the 250 or more defendants, and the sale was confirmed the same day without any opportunity to file exceptions or to raise the bid, and the motion to set aside such order and raise the bid was made at the same term of court while the judgment was still in fieri.
Under the settled practice of the Court and under the statute, Kuhn & Kuhn were entitled to an opportunity to raise the bid within twenty days, and the courts should have examined their offer of security, and, if the security was approved, should have reopened the bidding and ordered a resale at the advanced .bidding. In not doing so, the court committed a grave error.
As Kuhn & Kuhn, or any one else, had the right, under the statute and according to the settled practice of the Court, to have the bidding reopened upon making an advance-bid of 10 per cent, such bid gave them a status in the court which entitled them to appeal if their bid was arbitrarily refused. In Attorney-General v. Navigation Co., 86 N. C., 408, after the sale was made an advance bid was offered and a resale ordered; thereupon the original bidders appealed. This Court entertained the appeal and affirmed the order of the judge reopening the bids. If that case was properly here on appeal, so is this.
“Any party aggrieved may appeal.” Revisal, 585; 2 Cyc., 627, 637. In Eneeland v. American L. and T. Co., 136 U. S., 93, it is said: “A bidder at a marshal’s sale makes himself thereby so far a party to the proceeding that for some purposes he has a right.of appeal,” and on page 95 it is said: “A party bidding at a foreclosure sale makes himself thereby a party to the proceedings.” In Blossom v. R. R., 1 Wallace, 656, which was quoted and approved in the case last cited, it is said that “a bidder at a judicial sale has a right to appeal from the judgment of the court refusing to accept his bid. And such appeal will not be dismissed, but entitles such bidder to have the case considered and decided on its merits.” Blossom v. R. R. was cited and approved on this point in R. R. v. Souter, *1635 Wallace, 662; Butterfield v. Usher, 91 U. S., 248; Hinkley v. R. R., 94 U. S., 468; Williams v. Morgan, 111 U. S., 698, and in many other cases.
It is true, the court will not open the bids after the confirmation except in cases of fraud. But that means when the confirmation is made in regular course after the twenty days required by the statute to give opportunity to file exceptions or raise the bid. It does not mean that the court will not set aside the decree of confirmation when it was entered irregularly and contrary to the custom of the court and the statute, without such delay and without opportunity to raise the bid. A motion to set aside such irregular judgment, as we have seen, was made in Clement v. Ireland, 129 N. C., 220, at the next term of the court, and allowed. Here it was made at the same term of the court. The practice in our courts to set aside a sale upon an offer of an advance of 10 per cent upon the price is well settled. Blue v. Blue, 79 N. C., 69; In re Bost, 56 N. C., 482; Wood v. Parker, 63 N. C., 379; Vass v. Arrington, 89 N. C., 13. In Daniel Ch. Pr., 1465, the rule is laid down that when property is sold under a judicial decree “the court considers itself to have greater power over the contract than it would have were the contract made betAveen party and party, and as the chief aim of the court is to obtain as great a price for the estate as could possibly be got, it is in the habit, after the estate has been sold, of ‘opening the biddings/ that is, of allowing a person to offer a larger price than the estate was originally sold for, and, upon such offer being made, and proportionate deposit being paid in, of directing a resale of the property.”
The sale in this case was conducted in a most peculiar manner. It Avas made secretly, without publicity and several days ahead of the time that according to the published calendar the case was to be called for an order of sale to be made. It was sold according to terms previously agreed upon privately between the three plaintiffs and the purchaser, which in its terms was a most remarkable contract and in total disregard of the rights or wishes of more than 250 defendants, none of whom have been served Avith process or were represented by counsel. *164A motion was made at that very term of court, while the judgment was in fieri, to set it aside and for a public sale upon an advance bid of more than $20,000. It was an error not to consider the advance bid and not to reopen the bidding if the advance offer was found to be properly secured? The bidders, Kuhn & Kuhn, are owners of large property in the immediate neighborhood of this.
Not only was there error and irregularity in failing to keep the report of the sale open for twenty days, as required by the statute, but there was further irregularity in this: The statute, Revisal, 2514, requires, for sales of land in partition, that “such sale shall be made after the same-notice as required by law for sales of real estate by sheriffs under execution.” Here there was a private sale, without notice to any one, and at least $20,000 under the price that a solvent party was ready and willing and able to pay. Certainly the Court ought not to hold that proceedings to sell land for partition are valid and regular when only the three plaintiffs and the guardians ad litem for only one defendant and for unknown persons who may be interested in the property were represented, and when, too, the sale has been made privately without the notice required by the statute, without the twenty days delay between the sale and confirmation which is required by the statute, and in the face of an advance bid of nearly $20,000, by parties owning large property in the vicinity and therefore known to be bona fide bidders.
It was error also to refuse to make Borland a party, who showed deeds which entitled him to an interest in the said property. Jones v. Asheville, 116 N. C., 817. On the refusal of his application to be made a party, he had the right to appeal. Rollins v. Rollins, 76 N. C., 264; Keathly v. Branch, 84 N. C., 202. Borland as well as Kuhn & Kuhn appealed from the refusal to consider the advance bid.
A'proceeding in violation of the express requirement of the statute, both as to giving notice of the sale and in failure to leave open the report of the sale for twenty days, cannot be sustained. The judgment was irregular on these accounts, and should be set aside. The court of equity, having due regard to the interests of the numerous defendants, none of whom were *165served witb process or were represented by counsel, should upon motion, made at the same term, have ordered the sale to be reopened. To affirm such proceedings as occurred in this case would leave wide open the door to collusion and fraud between the plaintiffs in such cases and a favored purchaser. The evidence herein of suppressing competition is plenary.
The judgment should be set aside. The court below should consider the bid of Kuhn & Kuhn, and, if it is found to be properly secured, direct a resale upon the notice given by the statute and with opportunity after that sale of twenty days in which to file exceptions. The requirements of the statute should not only be observed, but the courts should use diligence to prevent all opportunity of collusion or of imposition in judicial sales. The value of the property should be inquired into more fully before any sale is finally confirmed. Water power of the estimated extent of 10,000 horse-power is doubtless worth vastly more than even the advanced bid of Kuhn & Kuhn. The courts should always see that there is a fair sale without suppression of bidding, and order another sale even then, unless a fair price for the property, after full investigation of its- value by the court, has been offered. Such property as this is rare, and a good price can be had if fair and full opportunity is given to bidders. This has not been done in this case.