March v. Ludlum

The Assistant Vice-Chancellor.

Before looking into the merits of this case, I will dispose of the motion to suppress the testimony of D. C. Bloomer. Mr. Bloomer was an attorney and counsellor at law, and Smith went to his office and consulted him, in regard to the probable validity of Ludlum’s title against that of March ; Smith having taken a lease from Ludlum. The statements of Smith, which are sought to be proved by Bloomer, were drawn out from him by the inquiries which Bloomer made in order to advise him intelligibly. Smith offered no compensation, nor did Bloomer make or expect to make any charge for his opinion. But he was doubtless consulted because he was an attorney or counsellor, and no statement or inquiry would have been addressed to him, except for that cause.

Previous to this time, March had become the purchaser of the farm under his judgment, at a price so near its value, that no one was likely to redeem; and it vzas morally certain that in July following, March would receive a sheriff’s deed of the premises. Ludlum had already acquired an absolute conveyance of the same land, under the loan commissioners’ sale. These two titles were hostile to each other, and could scarcely fail to result in a legal collision. Smith was interested in that result,-as a tenant under Ludlum, and on the assumption in the bill in this cause, still more interested as a participant in Ludlum’s purchase. ■The bill was filed about eight months after the conversation with Bloomer.

The decisions, in this country, have been quite conflicting in regard to the extent of the privilege accorded to communications * between clients and their legal advisers ; and there has been no less disagreement in the courts in England. In this state, it has been held to extend to confidential communications between the attorney and client concerning the matter of the suit, orto which the retainer relates, where a suit is in contemplation. (See Coveney v. Tannahill, 1 Hill, 33.) There is no authority however which limits the privilege to the extent just stated.

In England, the tendency of the modern decisions has been to enlarge the privilege, and to carry out the principle upon which it is founded. The recent cases upon the subject are very numerous. I will content myself with a reference to a few of the leading decisions.

In Walker v. Wildman, (6 Madd. 47,) a motion was made for the production of letters which had passed between the defendant and her solicitor before the suit, in confidence, in the usual course of business between a solicitor and client. Sir John Leach, V. C., refused the motion; holding that the protection extended to every communication made by the client to counsel, or attorney, or solicitor, for professional assistance; and that it was not limited to such as were made pending an action or suit.

In Vent v. Pacey, (4 Russell, 193,) a letter which the defendant had written to his solicitor after the dispute arose, but before any suit, directing him to take the opinion of counsel upon the question ■ in dispute ; was held to be privileged by Lord Lyndhurst, Chancellor, affirming the order of the Vice-Chancellor.

In the previous case of Hughes v. Biddulph, (4 ibid. 190,) Lord Chancellor Lynd hurst decided that confidential communications between the defendant and her solicitors, or between the country solicitor and the town, solicitor, made in their relation of client and solicitors, either during the cause, or with reference to it, though previous to its commencement, ought to be protected.

In Greenough v. Gaskell, (1 M. & K. 98,) Lord Brougham, Chancellor, in an able opinion examining the philosophy and true grounds of the privilege, declared his judgment that, a solicitor cannot be compelled to disclose matters which have come to his knowledge in the conduct of professional business for a client, even though such business had no reference to legal proceedings, either existing or in contemplation; and he affirmed the decision of the Vice-Chancellor which went to the same point.

In his subsequent decision in Bolton v. The Corporation of Liverpool, reported in 1 M. & K. 88, Lord Brougham again discussed the principle, and refused to order the production of cases which the defendants had prepared and laid before their counsel, in contemplation of the litigation. And he affirmed the decision of Sir Lancelot Shadwell, V. C., in the same case, (3 Simons, 467.)

In Nias v. The Northern and Eastern Railway Company, (2 Kean, 76,) Lord Langdale, Master of the Rolls, who has steadily resisted all extension of the application of the principle of this privilege, almost to the extent of pertinacity; considering himself bound by Bolton v. The Corporation of Liverpool, held a case to be privileged which the defendants had laid before their counsel, prior to the suit, but after the matters in dispute had arisen. When the case of Nias came before Lord Cotfenham on the appeal from Lord Langdale, (3 M. & C. 355,) he expressed in strong terms his approbation of the decision in Bolton v. The Corporation of Liverpool, and of the principle upon which the privilege was upheld.

The principle was fully approved also, in Knight v. Marquis of Waterford, (2 Y. & C. 22, 30, 36,) by Lord Abinger, who thought however that the court in Bolton’s .case fell short in applying it to the extent that case called for. Lord Langdale in a prior case, Storey v. Lord George Lennox, had commented unfavorably upon Lord Brougham’s decision; and the latest instance which I have seen of his ruling on the point, may be found in Flight v. Robinson, July 31, 1844; (8 Lond. Jur. R. 888.)^(a)

To recur to the authorities which I proposed to cite, in Herring v. Cloberry, (1 Phill. R. 91,) Lord Lyndhurst, held the privilege to extend to all communications Avhich pass between an attorney and client, in the course of business in AA^hich the attorney is employed professionally by the client. And to the same effect fs his decision in Jones v. Pugh, (1 Phill. R. 96.)

In Clagett v. Phillips, (2 Y. & Co. Ch. Cases, 82,) Vice-Chancellor Knight Bruce, decided that where a dispute had arisen between tAvo parties, which might, unless amicably adjusted, terminate in a suit, there if confidental communications with professional men passed in the course of the dispute, they would be privileged if litigation ensued, though litigation might not have been contemplated Avhen the communications took place.

Vice-Chancellor Sir James Wigram, has in several instances had this subject under consideration, and has ably enforced the application of the privilege to all cases falling within its established principles.

In Lord Walsingham v. Goodricke, (3 Hare, 122,) written communications Avere held privileged from production, which passed between the defendant and his solicitor, before any dispute had arisen between the parties to the suit, so far as they contained legal advice or opinions. In that case the letters were written in relation to a sale, while negotiations for the sale and in regard to the title Avere proceeding, but before the date of the dispute. Wigram, V. C. says, it is norv settled, that the communications between a party and his professional adviser may be privileged where the solicitor is the party interrogated, although they do not relate to any litigation either commenced or anticipated.

In Woods v. Woods, (4 Hare’s R. 83 ; S. C. 9 Lond. Jur. Rep. 102, and 615,) the defendant in order to sustain a defence upon the lapse of time and the complainant’s acquiescence, filed a cross bill alleging the facts, and that the opposite- party, fifteen years before, had taken the opinion of counsel thereupon, and he set forth the alleged case and opinion. The answer of the defendant to the cross bill, admitted that he had taken the opinion of Mr. Bell on his title, (which was the subject of the suit,) about fifteen years before, and that the case and opinion were in his possession ; but he submitted that they were privileged communications between himself and his counsel, and that he was not bound to produce them. The production of the opinion was insisted upon, because the case and opinion were prepared and taken, before the dispute in the cause had arisen, and not with reference to any pending or expected litigation. Sir James Wigram, referring to his judgment in Lord Walsingham v. Goodricke, refused the motion for the production of the opinion.

Finally in Holmes v. Baddeley, (Nov. 25, 1844, 9 Lond. Jur. Rep. 289,)^(a) the complainant claimed as sole heir at law of S. H., and the defendants claimed also as her heirs, disputing the legitimacy of the complainant. The bill charged that the defendants had in their possession, cases, opinions, letters, &c., on the subject, which the bill required to be produced. It appeared that soon after S. H.’s death, one A. H. set up a claim as her heir, adverse to the defendants. They thereupon laid two cases before their counsel and obtained opinions, and several letters passed between their solicitors and different persons, respecting their •right to the property. The opinions and correspondence were obtained and carried on, in contemplation of legal proceedings against A. H. Some of the letters &c.. were written before A. H. made her claim, but after the defendants were apprised of her intention to make it. They contended that the documents were privileged, and so Lord Lyndhurst decided, reversing Lord Lang-dale’s order (reported in 6 Beavan, 521,) made for their production.

These authorities satisfactorily establish that where there is a dispute, and one of the parties consults counsel on the subject, the communications between them are sacred, and the courts will not permit them to be divulged without the client’s consent.

The opinions of several eminent equity judges go beyond this, and extend the privilege to professional inter-communications in regard to professional business, without reference to any dispute.

And the cases show that there is a dispute, where there are conflicting rights in existence or claims made to the same property, which unless abandoned by one party or the other, or arranged amicably, will terminate in litigation.

The point before me is clearly within these authorities. The dispute was already in existence when the communications were made, and it ripened into a suit in a few months afterwards.

It is highly important to the prevention of litigation, as well as indispensable to the administration of justice after it ensues, that the privilege of free and unreserved communication by parties with their legal advisers, should be preserved inviolate. And I have no hesitation in adopting the principle of the equity cases which I have cited, in its application to the testimony of Bloomer.

The motion to suppress his deposition is granted.

Next, in regard to the merits of the cause. The case is bne of very great hardship for the complainant, if it be remediless ; a hardship against which the court would fain grant relief, if consistent with established principles of law, and with rules of property which are important to be preserved.

The bill makes no specific charge of irregularity, in the sale by the loan commissioner. It alleges the complainant’s ignorance as to the posting of the notices required by law, and asks a discovery on that point. But it is plain that error or irregularity was not intended to be alleged as a ground for setting aside the sale; and I may dismiss that subject by saying that there is no irregularity established.

The gravamen of the bill is, that there was a gross and startling inadequacy in the sum bid at the sale; and that the sale itself, the price bid, and the purchase by Ludlum, were the result of a contrivance between Smith and Ludlum, aided by the collusion of Mr. Sayre, the loan commissioner, and designed to defraud the complainant for Smith’s benefit.

To examine these allegations in detail. 1. As to the inadequacy. This is unquestionably very great, for the property sold for less than one-twentieth of its value.

But I do not understand that the court of chancery, can on this ground alone, set aside a public sale made by an officer who is not acting under the direction of the court. Instances of greater inadequacy, are of constant occurrence in sales for taxes and assessments, made by our state and municipal authorities. The exercise of such a jurisdiction, would, I imagine, be more startling to the public mind, than any supposable inadequacy of price, would be to the mind of the court. Over judicial sales, made by its own officers, the court of chancery has always exercised a summary control, by motion or petition. But even in those cases, the court will not interfere, on the ground of inadequacy alone. (American Insurance Company v. Oakley, 9 Paige, 259; Brown v. Frost, 10 ibid. 243; Tripp v. Cook, 26 Wend. 143, 156, 159.) There must be some surprise, accident, fraud, or similar cause, other than the neglect of the party interested, or his inability to raise the money; to induce an order for a re-sale when the sale has been made by its own officers, and under its own process or decrees. Under any other rule, confidence in such sales would be entirely dissipated, and the final result would be, that creditors would become the purchasers upon their own terms. (And see 1 Story’s Eq. Jur. § 245.)

The point of inadequacy was urged in connection with the other facts, as evidencing fraud; and I will recur to it in that connection. Standing by itself, it furnishes no ground for relief. Before considering the circumstances of this sale, I will advert to the statute under which it was made. It is to be found in the Session Laws of 1808. chap. 216 ; (5 Vol. Laws, Webster’s ed. 392.) By the 15th section, if any borrower neglected for twenty-two days after the first Tuesday in May in any year, to pay the yearly interest to the commissioners, they became seised of an absolute, indefeasible estate in the lands mortgaged to them, and the mortgagor, his heirs and assigns were foreclosed of all equity of redemption therein. Within eight days after they became thus seised, the commissioners, by section 16, were required to advertise the lands to be sold on the third Tuesday of September ensuing. On that day, the-statute required them to expose such lands for sale at public vendue, and to convey them to the highest bidder, who thereby acquired an absolute title to the same. If no one bid as much as remained unpaid on the mortgage, the commissioners were to take possession of the lands for the benefit of the state.

2. Having these enactments in view, there is no pretence upon the evidence, to charge Mr. Sayre with collusion or connivance with the other parties. It was his imperative duty to advertise the land, on the non-payment of the interest. Whether Smith begged him to do this, or to omit it, he had no discretion to pursue any other course. He advertised it in the manner which had been his custom, for more than thirty years that he had acted as commissioner; he selected the newspaper and the places for posting the notices, which were the most likely to give general notice in the vicinity of the lands advertised; and he made this selection, without any concert or consultation with the other parties, and without their knowledge. The cases of King v. Stone, (6 J. C. R. 322,) and Jackson, ex dem. Warden, v. Harris, (3 Cowen, 241,) show that the publication and posting of the notice of sale are sufficient.

When the day of sale arrived, he made the sale in the accustomed place, the court room in the court house. He had no right to adjourn the sale, or to refuse Ludlum’s bid, and if he had declined to execute a deed to Ludlum, the Supreme Court would have compelled him to do it.

He knew nothing of the complainant’s interest in the matter, and he simply discharged his duty as a public officer, without turning- to the right hand or to the left.

3. The next inquiry is into the fraud and contrivance of Smith and Ludlum; and in pursuing it, I will take up the circumstances on which the complainant relies, in the order of time.

The first was Smith’s going to Mr. Sayre, to tell him that he should not pay the interest any longer, and requesting Sayre to advertise and sell immediately. There is no proof of any of this charge, except that Smith went to Mr. Sayre and told him the farm had been sold, and he, Smith, should not pay the interest. This is urged as a suspicious proceeding. If it could have accelerated the sale, or in any manner influenced it, the visit to the commissioner might have been deemed singular; but it could not and did not have the slightest effect. The statute was the inflexible guide of the commissioner. Mr. Sayre says, that he would probably have notified Smith before proceeding to advertise ; and Smith’s explanation that he went to save Mr. Sayre from that trouble, is the most probable that has been suggested.

The next indicia of fraud relied upon, are found in the manner of advertising the sale. As this was the act of the loan commissioner, without any participation or even knowledge, on the part of either Smith or Ludlum, it is not imputable as a fraud to them. I have already expressed my opinion that the mode of publishing and posting the notice of sale, was proper and sufficient.

Next in order, is the fact that Ludlum rode to the place of sale with Smith. It certainly is not surprising that Smith should go to the sale, or that he should prefer to have his farm bought by a neighbor, to having it fall into the hands of an entire stranger. Nor is it to be doubted, that he hoped" and expected, if a neighbor did buy it for a small sum, that he would at some day be permitted to purchase it back on moderate terms. In this, he neither hoped or expressed any thing improper, and he went to the sale as every bidder does who attends an auction, with a desire to obtain a cheap or advantageous bargain; which precisely as it equals his expectations, redounds to the disadvantage and loss of others interested in the subject matter of the sale. Instead of this being deemed wrong or improper, the law regards it as fair, and rather to be encouraged, so long as there is no combination to prevent competition, or other fraudulent practice respecting the sale.

Smith had no interest to prevent the sale of the farm. His title to it was effectually divested by the sheriff’s sale; not that the time for redemption had expired, but the bid was nearly or quite equal to its value, and he was insolvent and had no means with which to redeem.

It was not his duty, as between him and the complainant, to pay the interest; (Russell v. Allen, 10 Paige, 249, 255.) And he was under no greater obligation to notify the complainant of the impending sale on the mortgage, than any one who intended bidding at a master’s sale would be bound to notify a person having an interest in the property, whose attendance at the sale might interfere with his proposed speculation.

In short, Smith’s attitude towards that of the complainant was not that of duty, trust or confidence. He stood at arms length. The complainant had satisfied his debt by the sale of the farm. The farm was in effect his, and Smith bad as perfect a right to buy it in on an old mortgage, as he had to buy any farm of the complainant’s in which he never had an interest.

It is to be observed too, that there is no evidence of Ludlum’s having any idea whatever of buying the property or even attending the sale, until the morning it took place. On the contrary, his answer to the bill in this respect, is that he entertained no such intention. The ride to Ovid furnished an opportunity to concoct a conspiracy; but there had been abundant time for that purpose three months before, if any were in view. The mere fact of riding in the wagon with Smith,, instead of riding to the same place with Swan, if it proves any thing of the conspiracy, proves that Smith had not previously arranged it. If the matter had been understood before, Ludlum would naturally have gone with Swan. But the circumstance is fairly explained. Ludlum had an engagement for Swan, which would take him through Ovid; made without any reference to the sale. He was to go with Swan, but Smith came by his house with a wagon, and Ludlum instead of walking a mile to get into Swan’s wagon, took a seat with Smith, and rode all the way to Ovid. It was not quite so near a route for Smith to go by Ludlum’s, and it is probable he Avent that way in order to urge Ludlum to attend the sale and buy; for it is conceded that he did so urge him while on the way. It is alleged that Ludlum then agreed to buy, and to buy for Smith’s benefit. Both facts are positively denied, and there is no evidence against the answer. Nor is there any proof that Ludlum made up his mind to bid, until after he came to Ovid, and the direct assertion to the contrary in his answer, is sustained by the fact that he had no money Avith him, and did not know that he could borroAV any, until the hour of the sale.

Allied with this, is the circumstance that Smith informed Mr. Sayre a few minutes before the sale, that Ludlum would bid off the property. This was also cited as evidence of an agreement to buy for Smith’s benefit; but the impression of Sayre does not go so far as that, and if it did, it would be no evidence against Ludlum.

I Avill also advert, in connection Avith this, to the next point made, that there were only three persons present at the sale, besides the officer, viz: Smith, Ludlum, and Mr. Hanks, whom they requested to attend. This point is not proved. The answer states that there were at least four others present, and the witnesses mention the names of two. ' 1

It is alleged in the bill, that divers unknown persons were deterred from attending the sale by assurance from Smith or Ludlum or both, that the land was to be bid off by Ludlum for Smith. This charge embraces the circumstance that Smith so informed Sayre, and the whole charge is pointedly denied in the answer. The attempt to prove an opinion or impression of Mr. Sayre, failed ; and it could not overcome the force of the denial. The argument upon the absence of bidders, founded upon these circumstances, therefore has no basis, and falls to the ground. I agree with the complainant’s counsel, that if Smith and Ludlum had prevented purchasers from going to the sale, or persons in attendance from bidding, it would have been a fraud on the complainant. But I can discover no proof that they attempted to do either. I cannot derive that proof from the absence of bidders. It is a frequent occurrence in judicial sales in the country, that no one attends except the creditor or his agent.

Another badge of fraud is made of the facts that no one bid at the sale, except Ludlum, and he bid at once the amount of the mortgage. The latter fact, which was so much dwelt upon, is readily explained. He probably knew that by the statute, the property could not be sold to any person, for less than that amount.

With the fact of his being the only bidder, I will take another which was pressed very hard, viz. Ludlum’s borrowing the money of Barna Van Yleet, who was present at the sale, and who took no note for the loan. The bill charges no fraud or collusion on Yan Yleet, so that his loaning §150, to Ludlum, and trusting him several months without a note, are of no weight. But it is deemed extraordinary that Van Yleet, with the money in hand, did not Bid. It is proved that he came there to bid on another parcel advertised by the commissioner, which had been redeemed before the sale. Whether he came for a speculation or otherwise, it does not appear. He did not intend to bid on Smith’s land, and instead of bidding, he let Ludlum have the money for that purpose. Thus it seems he did not want the speculation, and that suffices. The money could not enable both to bid, and I do not see how the amount of the sale would have been enhanced, if Van Vleet had bid instead of Ludlum.

I now come to the inadequacy of price urged in connection with all the foregoing circumstances. But as each of those has proved to be unfounded or unimportant, the argument derives no additional force.

It was said there were peculiar relations between the complainant and these parties. This is a mistake. There was no relation between them, which inhibited either Smith or Ludlum from buying the farm for $ 146, or even a less sum, if they could.

Most of the authorities cited on this subject, were cases of specific performance where a court of equity declined to interfere because of inequality in the contract, or Avhere the court relieved because undue advantage had been taken of situations of confidence or duty. They have no application to public, statutory or judicial sales, made to bidders not affected by any duty, trust or fraud.

Two other circumstances remain to be noticed; the admissions of Ludlum that he purchased for Smith’s benefit; and Smith’s continuance on the farm. Whether he did or not so purchase, is of no consequence to the complainant, as a ground of relief. (Sherrill v. Crosby, 14 Johns. 358; Botsford v. Burr, 2 J. C. R. 405.) The fact, however, is pressed to raise the inference of combination betAveen them, to enlist sympathy and stifle competition at the sale.

The fact is positively denied by the answer, and the testimony of McKnight is too indefinite to prove its existence.

As to the possession of the farm, in which Smith remained when the testimony was taken in August, 1843. Prom May 1, 1842, he Avas under a lease and liable to rent. If Ludlum had turned Smith out of possession the spring succeeding his purchase, the whole country would have cried out upon his cruelty. He had a perfect right to do it, and no tribunal on earth could have prevented it. But it is not to be used to deprive him of his rights, that he has not exercised them to their utmost extent. An entire stranger to Smith, buying for such a price, would doubtless have been equally lenient. As Ludlum is a neighbor of Smith, I may suspect or even believe, that he feels sympathy for him, and intends to restore the farm to him ; but neither the suspicion or the belief, will warrant me in charging him with fraud in its purchase under the circumstances proved in this suit. In the case of Denning v. Smith, (3 J. C. R. 332,) relied on by the complainants, the sale was irregular and void for non-compliance with the statute ; and Chancellor Kent deemed the evidence of abuse of trust on the part of the commissioners, so strong, as to be indicative of fraud. It resembled this case only in one point, the small amount of the bid in reference to the value of the property, and that point was not dwelt upon by the Chancellor. King v. Stow, (6 J. C. R. 323,) was more like this case. The land was sold for one-seventh of its value, and Mr. King who was its owner by purchase at a sheriff’s sale, was ignorant of the existence of the loan office mortgage ; yet the sale was sustained by Chancellor Kent.

Upon the whole, 1 am unable to find any warrantable ground for interfering with this sale. The cause of the grievous loss which the complainant encounters, is not the defendants’ fraud or inequitable conduct. It is rather his own neglect to ascertain the true situation of the property. Mortgages to the loan commissioners, were a species of lien of more than thirty years standing, and readily to he found in the county clerk’s office. The law charged him with notice of the existence of this mortgage, and if he had no actual notice, it is not the fault of the statute which created the lien. It is a misfortune from which he cannot be relieved, without overturning established principles, and inflicting a greater public injury than can be made up by the remitted hardship of this case.

The hill must he dismissed, and the complainant must pay the costs of Mr. Sayre. I think under the circumstances, that the complainant ought not to be charged with the costs of the other defendants.

(a) Since reported in 8 Beavan, 22.

(a) Reported subsequently in 1 Phillips, 476. And see a more recent adjudication on the subject, in Carpmael v. Powis, before the Master of the Rolls, November 8th, 1845, and before the Chancellor, March 25, 1846; now reported, 1 Phill. R 689, and 15 Law Journal, N. S., Chancery, 275.