German-American Nat. Bank v. Interstate Trust & Banking Co.

Ethridge, J.,

delivered the opinion of the court.

This is an interlocutory appeal from an order of the chancery court setting aside a sale of lands under a deed of trust. -It appeared that the German-American National Bank filed its bill in the chancery court to foreclose a deed of trust upon certain lands in Wilkinson county; the deed of trust held by them being a second deed of trust to one held by the Interstate Trust & Banking Company. The decree of December 23, 1914, in ordering the sale, contained the following provision:

“It further appearing to the court that the complainants herein to the bill to foreclose have a second and subsequent deed of trust, dated March 19, 1912, on said land to secure their respective notes, and are entitled to a decree of sale on foreclosure of said lands to satisfy and pay their respective notes, it is therefore ordered and decreed that Lyt Lewis, clerk, be named as commissioner to make the sale of said land, subject, first, to the payment of the note held by the Interstate Trust & Banking Company and to the first and prior .deed of trust held and owned by the said Interstate Trust & Banking Company to secure its said note, and, after paying the said note held by the said Interstate Trust & Banking Company, thq complainants may apply the balance of the proceeds of sale, under their decree, to the payment and satisfaction of their respective indebtedness,” etc.

The sale made under this decree was set aside on the ground of insufficiency of the bid, on motion of the Interstate Banking Company, who offered to increase the bid in the method provided by statute, and give bond, etc. The second decree ordering the sale of this land decreed that the lands be sold subject to the lien in favor of the Interstate Trust & Banking Company “as decreed by this court at the December, 1914, term.” The commissioner, in giving notice under this sale, recited that the lands were sold subject to the deed of trust of the Interstate Trust & Banking Company, but did not refer to the decree of December, 1914. At this sale the Interstate Trust & Banking Company, through its attorney, W. F. Tucker, bid the sum of one thousand eight hundred dollars for the said lands, under the belief that under the decree above referred to, the note of the Interstate Trust & Banking Company would first be paid and the balance of the one thousand eight hundred dollars applied to the note • of the German-American National Bank; but the appellant contended that it was entitled to the entire one thousand eight hundred dollars, and that the Interstate Trust & Banking Company would have' to look to the land which it had bought for the protection of its deed of trust. The court permitted Mr. Tucker to testify as to his construction of the decree of sale, and to prove that the property bought was, in fact, only worth about two thousand dollars, whereas the debt of the Interstate & Banking Company, plus the bid of one thousand eight hundred dollars, would exceed the sum of three thousand dollars. The Interstate Trust & Banking Company expressed the willingness to pay the one thousand eight hundred dollars if their note and deed of trust was first paid ' out of said proceeds, but, if not, prayed that the sale be set aside because of the mistake of fact and a misconstruction’ of the decree of the court referred to. The chancellor set aside the sale, ordered a resale, and granted an appeal to settle the principles of the case.

We think the law governing the chancellor’s duties and discretion in matters of this kind is stated in Henderson v. Herrod, 23 Miss. 434. We quote, with approval, the following from the syllabi of that case:

‘ ‘ The chancellor, in refusing to confirm a commissioner’s sale, should exercise not an arbitrary but a sound legal, discretion, and what would be a sufficient ground for a refusal to confirm must depend in a great degree upon the circumstances of - each case, such as fraud, accident, mistake, or surprise in relation to the sale, or the time of the sale, or the title of the property sold, or the failure on the part of a purchaser to comply with the conditions of the sale in relation to security or otherwise, but this court does not pretend to specify all the causes which would justify the chancellor in withholding confirmation,” etc.

We think that by the recital of the decree above referred to, the bidder, the Interstate Trust & Banking Company, was warranted in believing that its note would be first paid out of the bid. The notice of the commissioner did not embrace the terms of the decree of December, 1914, and this may have misled the parties who bid at the sale. It would make a vast difference in the amount of the bid as to whether the bid was to'' be subject to the deed of trust, or whether the deed of trust should be paid out of the proceeds. We think the chancellor, on the facts in this record, rightfully exercised his decretion in ordering a resale; but the decree ordering the resale should specify more particularly as to whether or not the debt of the Interstate Trust & Banking Company was to be paid out of the proceeds of the bid, or whether the bid was to be subject to the outstanding incumbrance held by the Interstate Trust & Banking Company; and the notice by the commissioner should contain proper recitals in accordance with the decree ordering the sale.

The judgment of the court is affirmed, and the cause remanded for further proceedings.

Affirmed, and remanded.