Court Opinion

ID: 3863584
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:57:07.748779+00
Date Added: 2024-06-11T13:49:39.860608
License: Public Domain

Upon the hearing of the bill and answer in this suit, an order was made that the estate held by the trustee should be sold, and the proceeds held to satisfy the complainant's lien. As the trustee was authorized by the deed under which he held the property to sell it at public or private sale, and upon terms in his discretion, we gave no directions about the sale, supposing that he had better opportunities than we had to know how to sell it most advantageously to the creditors. In order, however, to guard against any possible impropriety of sale, we provided that either party might apply to the court for directions, and under this provision the trustee now applies for instructions upon proposals to purchase the entire estate at a fixed price.
The duty, as well as the desire of the court, is to see that the property is disposed of to the best advantages of the creditors for whom it is holden. To this end, therefore, it must be sold as speedily as it can be, for all who have been before us agree that it is rapidly wasting in idleness.
All of the property located in this State, at least, can be sold *Page 403 
now. So far as we are advised, unless upon a small portion of the bank stock, no liens, clouds upon the title, or other obstructions to a sale remain. The lien decreed to the Quidnick Company in this case, being simply for a money claim, in case of sale, is to be upon the proceeds, instead of the property itself, and is therefore no hindrance to a proper disposition of it. Some of the property in other States is under attachment or other litigation in local suits, but that should not delay a sale of the debtors' interest in it, if the creditors desire it to be sold. To put off judicial sales until all questions have been litigated and adjudicated would be oppressive and ruinous to the creditors. It is a very common thing to sell on execution, all the right, title, and interest of a debtor, where there are adverse claims, and there is no reason why the same course should not be taken in this case. It certainly would be unjust to delay the settlement of this estate until the end of those suits, which we have been told will not be reached for many months, and may not be for several years hence. The creditors are entitled to the present value of the trust estate. A purchaser can make satisfactory allowance in his offer for the insecurity of that portion of his title, and can abandon the disputed property, compromise or contest the claim, as he sees fit, and do many things about it that a trustee could not do. If, therefore, the creditors prefer the present value of this property to its uncertain future value, they are entitled to an immediate sale.
How, then, should it be sold? Considering only the large amount and the great variety of the property, we should say without hesitation that it would be best to sell it in parcels; that there would be likely to be many persons who would want to buy certain pieces or kinds of property, while very few would be likely to seek, or be able to buy, so many widely different kinds, and of such large extent as are embraced in this trust. But as this estate belongs to the creditors, and they are entitled to its proceeds, they are also entitled to say in what way they would be best served in its disposition. Whatever mode we might think to be the best, if they want a different one, which is not illegal or improper, we think they should have their way.
In December last an offer was made to the trustee for the entire *Page 404 
estate at a fixed price, which he referred to a committee of the creditors. The creditors advised him to reject that proposition, but voted to accept another of the same tenor, made in the interest of such of the creditors as could, and should join in it. This the trustee accepted subject to the approval of the court, and presented his request for approval accompanied by the signatures of those holding a major part of the trust mortgage notes. At the same time a similar but larger offer was made by another party, accompanied by the petition of the assignee and debtors, and urged by the counsel for the complainant in this case. This was continued for three weeks, to give ample opportunity to the creditors and others to consider the matter, the court intimating that if no other or better offer was made, this one would be recommended. Unless we could be reasonably certain that the estate would bring more, if sold in some other way, we could not in justice to the creditors ignore these offers for a fixed sum, and direct the trustee to exercise his authority to sell regardless of them, for the property might not bring as much; but if, after suitable time for notice and deliberation, no better offer should be made to the trustee, we would then clearly have been justified in assuming that to be its fair value, and clearly not justified in jeopardizing the interests of the creditors by directing the trustee to reject a certainty for an uncertainty; while in case of a better offer, we should then know that other parties wanted to buy the property, and that the trustee may reasonably expect to realize from competition that which it would be idle to attempt if only one party was willing to purchase. This offer came before us with the approval of other creditors holding nearly a majority of the indebtedness. We, therefore, have the vote of a meeting of the creditors; the signatures of about three quarters, in amount, of the holders of the votes; the assent and approval of the trustee; a letter from the committee of the creditors to the trustee, and the request of the debtors, all favoring a sale of the property by bulk; and, after ample notice, no creditor objects to it.
Where all the parties in interest substantially agree as to the best course to pursue, we think we should follow it, especially as this course does no injustice to any one. It is easy to see that the creditors may consider that in a sale by bulk a possible loss from *Page 405 
lack of competition will be compensated by the speedy and definite ascertainment of the net value of the property; that the increased expense of sales by parcels may approximate, if not equal, the additional amount to be realized; that the average net result would not be much different from the amount offered for the whole, or that it is safer to accept a known sum than to run the risk of a general auction. Certainly these are cogent reasons for the plan.
For what sum then should it be sold?
The offer made by Mr. Lapham is $2,880,000. Within the time limited, still another offer is made, to bid the same amount as an upset price, at an auction sale of the estate.1 We think this is a better offer than Mr. Lapham's, because under the latter, no more than the sum named could be realized, while under the former no less than that sum, and possibly more, will be bid. It is unnecessary to compare the details of the two offers, for as we have now ascertained that there is likely to be competition for the estate, we think it should be sold under such circumstances as to allow full and free competition.
Although the last offer is not so satisfactory in its form as those which have preceded it, yet from the well known character of the firm that makes it, we do not doubt its good faith or full performance.
We, therefore, advise the trustee to name an early time and convenient place to receive offers by open competition for all his right, title, and interest in the estate, and that he then and there execute a contract of sale with the party or parties, being satisfactorily responsible, whose offer; in accordance with the terms of sale, shall be the highest. These terms of sale should be such as to secure to the trustee the performance of the contract, and the terms of the contract such as to secure the creditors as speedy payments as possible, and, in case of deferred payments, ample security. As certain details of sale have been brought to our attention, we would suggest:
a. That none of the personal property, except, perhaps, that *Page 406 
necessary to the running of the mills, should pass out of the hands of the trustee until its full value has been paid, or that he should be authorized to sell it and apply the proceeds in reduction of the purchase money, over and above the first instalment.
b. That the trust notes should not be accepted as cash, in excess of dividends due upon them, under any distribution resulting from this sale, as this would be equivalent to giving the holder of such notes his payment in full upon them at once, while others would be required to wait, and their payment would be delayed in proportion to the amount of such notes received as cash.
c. That if any deed is delivered as an escrow, it should be delivered to the clerk of this court, to be by him deposited in the registry of the court.
d. That the contract should provide that failure on the part of the purchaser, for a specified time, to make any required payment, should forfeit the contract and all payments made thereunder, and that the purchaser, and all persons holding under him, shall be deemed to be tenants by sufferance only of said estate, or any part of it. In other respects the terms contained in the offers before submitted seem to be proper.
The trustee may prepare terms of sale embodying the foregoing suggestions, with such others as he may deem proper, and submit them to the court for approval.
1 This offer was the one made by Wilbour, Jackson  Co., under date of March 3, 1882, and printed infra, p. 422.