59 U.S.

143
18 How. 143
15 L.Ed. 304

EDWARD C. RICHARDS, ISAAC BASSETT, AND ROBERT

W.
ABORN, COMPLAINANTS AND APPELLANTS,
v.
SYLVANUS HOLMES, A. H. HARPER, GEORGE A.
DWIGHT ET AL.
December Term, 1855

THIS was an appeal from the circuit court of the United States for the
District of Columbia, holden in and for the county of Washington.
The case is stated in the opinion of the court.
It was argued by Mr. Bibb, for the appellants, and by Mr. Fendall and Mr.
Tracy, for the appellees. There was also a brief filed by Mr. Bradley, as
counsel for Southworth, Litchfield, and Beach.
Mr. Bibb made the following points:
1. That the note was dated on the 1st of May, 1846, and payable in two
years. The trustee had no right to sell until the 1st of May, 1848, whereas
he sold on the 21st of October, 1847.
2. The allegation set up that Holmes had verbally agreed with Harper to
pay the interest semi-annually, &c., cannot be permitted to vary the deed
or enlarge the powers of the trustee. Nor could the consent of Holmes
impair the rights of Richards, Bassett, and Aborn. They had a right to
redeem the property when the note became due, the property being worth
more than the lien upon it.
3. The notice of sale was not properly given.
4. The auctioneer was seller and bidder for Harper.
The trustee could not purchase the estate himself; he could not buy as the

agent of another; he could not employ the auctioneer to bid for the estate
on behalf of Harper. Ex parte Bennett, 10 Ves. 393; Coles v. Trecothick, 9
Ves. 248; Ex parte James, 8 Ves. 345, 348, 350; Ex parte Lacey, 6 Ves.
625; Lister v. Lister, 6 Ves. 631, 632; Twining v. Morris, 2 Brown Ch. Ca.
326; The York Buildings Co. v. McKenzie, 3 Brow. Par. Ca., Appen.;
Davoue v. Fanning, 2 Johns. Ch. Rep. 254, 257, 268, 269, 270.
According to established principles, such a sale as this cannot stand in a
court of equity.
The counsel for the appellees, after justifying the sale in other respects,
thus noticed one of the points of alleged defectiveness:
The trustee did not bid at all; Harper's bid was regular. His rights as a
creditor, whose only security for his whole fortune was the property
advertised for sale, stood on ground as strong, at least, as that of the owner
of it. And, though it is not lawful for an owner to employ an agent 'to take
advantage of the eagerness of bidders, to screw up the price,' yet, as a
'defensive precaution,' 'a bidder may be privately appointed by the owner,
to prevent the estate from being sold at an under-value.' 1 Sugden on
Vendors, (9th ed.) 26, 27; Fonbl. Eq. Bk, 1, ch. 4, 4, n. X; 1 Mad. Ch.
Pr. (4th Am. ed.) 324, 325; Smith v. Clarke, 12 Ves. 477; Steele v.
Ellmaker, 11 Serg. & R. 86; Jenkins v. Hogg, 2 Const. Rep. (S. C.) 821;
Wolfe v. Luyster, 1 Hall, N. Y. R. 146; Phippen v. Stickney, 3 Metc. 384.
Harper made only one bid, and that for 'defensive precaution.' The bid was
made through the auctioneer, who was the agent of both parties. Smith's
Mercantile Law, 301, and the cases there cited; Conelly v. Parsons, 3 Ves.
625, n.
It is denied that the property was sold at 'a very inadequate price,' or that
the amount at which it is said to have been assessed on the books of the
corporation of Washington (of which there is no evidence) is a true test of
its value. But even if the price were 'very inadequate,' the inadequacy
would be no ground for annulling this sale. 1 Fonbl. Eq. 128; 1 U. S.
Digest, 344, pl. 33, and the cases there cited. It will be contended that the
sale was in all respects regular; and that, if it were not so, yet the
complainants cannot avail themselves of the imputed irregularities.
Mr. Justice CURTIS delivered the opinion of the court.

This is an appeal from a decree of the circuit court for the District of Columbia.
The appellants filed their bill in that court to set aside a sale, made to satisfy a

prior incumbrance on land, upon which they claimed to have a second

incumbrance. In the court below, some question appears to have been made
concerning the priority of the incumbrances; but none is made here, it being
conceded, that though that claimed by the complainants was the earliest in date,
the other was first recorded, and takes precedence.
2

The sale in question was made under a deed of trust, whereby Holmes, the
debtor, conveyed to the defendant, Philip R. Fendall, in trust to secure the
payment of a promissory note, bearing date May 1, 1846, payable in two years
from date, for $2,800 and interest, payable annually.

It is objected that the sale, which was made on the 21st of October, 1847, after
one year's interest had become due, but before the principal sum was payable,
was premature. This depends upon the meaning and effect of the power of sale
contained in the deed. It was competent for the parties to agree to a foreclosure
by sale for non-payment of interest, and the question is, whether they did so
agree. The event in which the trustee is empowered to sell, is thus described in
the deed:

'But if the hereinbefore described promissory note, with the interest legally due
thereon, shall not be fully paid off and discharged when said note shall be due
and payable, and payment of the same shall be demanded, or if any note or
notes given in substitution for or renewal of the hereinbefore described
promissory note shall not be fully paid off and discharged according to the
tenor and effect of the said substitute or new note or notes, together with the
interest legally due on such substitute or note or notes, so that any default be
made in payment of any part of the aforesaid debt of two thousand eight
hundred dollars and interest, then so soon after such default, &c.'

The omission to pay the first year's interest was a default within the express
words of this power. That interest was part of the interest secured by the note,
and a failure to pay it was a 'default in payment of part of the aforesaid interest.'
The deed authorizes the trustee to sell for any such default, and, consequently,
the sale was not premature.

It was argued that the trust deed does not describe the note as bearing annual
interest, and, consequently, that the subsequent incumbrancer has a right to
insist that, as against him, there was no power to sell for non-payment of such
interest.

It is true the deed does not purport to describe the interest which is to become

due on the note; but it clearly shows that it bore interest at some rate, and
payable at some time or times, and this was sufficient to put a subsequent
incumbrancer on inquiry as to what the rate of interest and the time or times of
its payment were. The deed, in effect, declares, and its record gives notice to
subsequent purchasers, that its purpose is to secure the payment of such interest
as has been reserved by the note; the amount, and date, and time of payment of
which are mentioned. We do not think the mere omission to describe in the
deed what that interest was to be, is a defect of which advantage can be taken
by the complainants.
8

The complainants further insist that the property was not duly advertised. The
provision in the deed of trust upon this subject is as follows: 'It shall be the duty
of the said Philip R. Fendall or his heirs to enter upon the hereinbefore
conveyed piece or parcel of ground and appurtenances, and sell the same at
public auction to the highest bidder, or at private sale, for cash or credit,
according to his or their discretion, after having given public notice of such
sale, by advertisement, at least thirty days previously thereto, in the National
Intelligencer, or in some other newspaper printed or published in the city of
Washington aforesaid.'

Inasmuch as the trustee was empowered to sell at private sale, as well as at

public auction, his power extended to a private sale made at any time after
thirty days' notice. Having given notice for the space of thirty days that he was
about to sell the property, he might, at any time after the expiration of that
thirty days, have proceeded to sell it at private sale. But this notice should be
such as to call for purchasers at private sale. The notice given was of a sale at
public auction. This did not call for purchasers, except at the time and place
mentioned in the notice. No sale was made at the time and place designated in
the thirty days' notice, published in the National Intelligencer. At that time and
place the attendance of bidders was so small, that the trustee believed an
attempt to sell for a fair price would be fruitless; and he adjourned the sale for
the space of fourteen days, giving notice of such adjournment in the same
newspaper of the next day. At the time and place thus fixed for the adjourned
sale another postponement took place, for the same reasons, for one week; and
the place of sale was changed from the premises to the rooms of the auctioneer.
Of this postponement, also, public notice was given on the next day, in the
same newspaper.

10

There is no reason to suspect the least unfairness on the part of the trustee, or
any one concerned. His conduct seems to have been dictated solely by an
honest desire to obtain the best price for the property. Nor is there any ground
for believing that either of these postponements prejudiced the interest of the

complainants. They stand upon the objection, that though the trustee might
have sold on the first day, of which thirty days' notice was given, he could not
on that day adjourn the sale.
11

But we consider that a power to a trustee to sell at public auction, after a certain
public notice of the time and place of sale, includes the power regularly to
adjourn the sale to a different time and place, when, in his discretion fairly
exercised, it shall seem to him necessary to do so in order to obtain the fair
auction price for the property.

12

If he has not this power, the elements or many unexpected occurrences may
prevent an attendance of bidders, and cause an inevitable sacrifice of the
property. It is a power which every prudent owner would exercise in his own
behalf under the circumstances supposed, and which he may well be presumed
to intend to confer on another. This power of sale does not undertake to
prescribe the particular manner of making the sale. It is to be at public auction,
and 'after having given public notice of such sale by advertisement at least
thirty days;' but it assumes that the sale will be conducted as such sales are
usually conducted. A sale regularly adjourned, so as to give notice to all
persons present of the time and place to which it is adjourned, is, when made,
in effect the sale of which previous public notice was given.

13

The courts of several States have gone further in this direction than we find
necessary, though we do not intend to intimate any doubt of the correctness of
their decisions. They have held that a public officer, upon whom a power of
sale is conferent time and may adjourn an advertised public sale to a different
time and place, for the purpose of obtaining a better price for the property.
Tinkom v. Purdy, 5 Johns. 345; Russell v. Richards, 11 Maine, 371; Lantz v.
Worthington, 4 Barr, 153; Warren v. Leland, 9 Mass. 265. If such a power is
implied where the law, acting in invitum, selects the officer, a fortiori it may be
presumed to be granted to a trustee selected by the parties.

14

The remaining objection is, that the defendant Harper, the creditor for whose
benefit the sale was made, through the trustee, requested the auctioneer to bid
for him the sum of twenty-five hundred dollars; that the auctioneer did so, and
there being no higher bid, the property was struck off to Harper. It is insisted
that this renders the sale void.

15

We do not deem it necessary to examine the numerous and somewhat

conflicting decisions upon the subject of by-bidding, or bidding by persons
standing in fiduciary capacities. This case stands clear of those decisions and of

the principles upon which they rest. No decision lays down a positive rule that
such sales, though affected by such bidding, are, per se, and as between all
persons, void. They may be avoided by parties whose just interests have been
injuriously affected by such misconduct, provided the rights of innocent third
persons are not thereby disturbed.
16

It was for the advantage of these complainants, as subsequent incumbrancers,

that this property should sell for the best price which could be obtained. Even
improper practices to enhance the price, if any such had been resorted to, could
not be complained of by them. It is only some practice to prevent bidding, or
procure a sale for less than the property would have otherwise brought, which
can be relied on by them to avoid the sale. We have no doubt the creditor, for
the satisfaction of whose debt the sale was made, had a right to compete fairly
at the sale; but whether he had or not, his doing so could not be injurious to the
complainants.

17

It is true he employed the auctioneer to bid for him; but this fact alone could
not depreciate the price. Such an authority may be used for fraudulent
purposes; but, if fairly used, its tendency is to enhance the price; and in this
case there is no evidence that it was intended to be, or in fact was, unfairly
used. On the contrary, there seems to be no room for doubt that the price bid by
the auctioneer for Harper was more than any other person was willing to give.
It must be remembered, that the auctioneer was not employed as the agent of
the creditor to purchase the property for him at the least price at which it could
be obtained. Such an agency an auctioneer should not undertake. It is
inconsistent with his relation to the seller, and with the faithful discharge of his
duty to the seller.

18

But an agency simply to bid a particular sum for a purchaser, amounting to no

more than receiving from the purchaser, before the auction, a bid which is to be
treated as if made there by the purchaser himself, is not necessarily inconsistent
with any duty of the auctioneer, and does not enable any one to avoid the sale.

19

And the same remark applies to the trustee. It was his duty to obtain for the
property the best price he could by the use of due diligence in a fair sale. It
would have been improper for him, in behalf of the creditor, to employ the
auctioneer to buy at any thing short of that best price. But there was no
impropriety in his employing him to bid a particular sum for the creditor, to
prevent a sacrifice of the property.

20

We have considered all the objections to this sale made by the complainants,

and finding neither of them valid, the decree of the court below is, in that
respect, affirmed.
21

As to so much of the complainants' bill as seeks relief against their assignors, in

the event of not obtaining satisfaction from the land, we are of opinion that
these assignors are under no such liability as is asserted by the complainants.
The complainants purchased a negotiable note which was overdue. The
assignors did not indorse it, but simply assigned it by deed. They entered into
certain specific covenants concerning the subject-matter assigned; and their
liability depends exclusively on these covenants. Neither of these covenants
appears to have been broken. The only one concerning which any doubt has
been raised is the following:

22

'And we do in like manner covenant, promise, and agree, that the said note of
three thousand dollars, hereinbefore assigned, shall be and is entitled to
payment out of any sale of the premises conveyed in and by the deed of trust
aforesaid, before the other note therein specified, and shall have a prior lien on
the said premises, or the proceeds thereof.'

23

We think the purpose and effect of this covenant was, not to secure payment out
of any sale which might be made by any party under any title to the premises,
but only to assure the priority of payment of the note assigned, in preference to
the other note, out of any sale made under the particular title to the premises
described in the deed of assignment.

24

The covenant that the note assigned is due, is shown to have been kept by the
note itself, in the absence of other evidence. The answer admits the receipt of
moneys from the maker on account of other debts, but denies any payment on
account of this note; and there is no evidence to the contrary.

25

The decree of the circuit court is affirmed, with costs.