Blossom v. Railroad Company/Opinion of the Court

by Nathan Clifford

United States Supreme Court

70 U.S. 196

Blossom  v.  Railroad Company

Respondents mortgaged their railroad to certain trustees as a security for moneys loaned and advances of various kinds, and to defray the current expenses of operating the railroad and of keeping the same in repair. Suit was brought by the trustees and certain creditors, named in the bill of complaint, to foreclose the mortgage for a breach of the conditions, and the cause proceeded to a decree of foreclosure and of sale. Substance of the decree was that the mortgaged premises should be sold at public auction, under the direction of the marshal of the district, unless the mortgagors should pay to the complainants, previous to the sale, the sum of two hundred and fifty-four thousand one hundred and seventy-five dollars, with interest from the date of the decree. Pursuant to that decree, the marshal, on the 6th day of June, 1862, offered the mortgaged premises for sale, but as no bids were received he adjourned the sale, under the instructions of the solicitors of the complainants, to the 19th day of the same month, at the same hour and place.

Report of the marshal also shows that he again offered the premises for sale at the time and place of adjournment, and that the appellant bid for the same the sum of two hundred and fifty thousand dollars, which was the highest and best bid received at that time. Fearing that the stock would be sacrificed if the sale should be completed, the agent of the stockholders made application to the solicitors of the complainants, requesting that the sale might be postponed for a short time, to enable the respondents to make some arrangements to pay the mortgage debt without a sale of the property. Yielding to that suggestion the solicitors gave such directions, and the marshal accordingly adjourned the sale for the period of two days, giving notice at the time that the sale at the expiration of that period would be again opened at the same hour and place, and that the bid of the appellant would be regarded as pending.

Such an arrangement having been negotiated during those two days, a further adjournment became necessary to enable the parties to carry it into effect; but when the sale was opened for that purpose the appellant was present and increased his bid to the full amount of the mortgage debt, including interest, costs, and expenses of sale. No other bids having been made the sale was adjourned, as directed, to the 1st day of October, and afterwards to the 15th day of January following, but before the day to which the last adjournment was made the respondents paid the amount of the decree to the complainants, and the sale was discontinued.

Record also shows that the appellant applied to the court by petition on the 9th day of October, 1862, to have the sale confirmed to him on his bid as increased to the full amount of the decree of foreclosure and sale, but the court denied the prayer of the petition, and from that order the petitioner appealed to this court.

1. Appellant contends that inasmuch as he bid the full amount of the decree, interest, and costs, at a time when the mortgaged premises were duly offered for sale, and inasmuch as his bid was the highest and best bid offered for the premises, it became and was the duty of the marshal to have struck off the property to him as the legal purchaser of the same, and that the District Court erred in denying his petition for the confirmation of the sale. On the other hand, the respondents deny that any sale was ever made, and insist that the bid of the appellant was a mere offer of purchase, which he might withdraw at any time before the bid was accepted or the property was struck off to him, and an entry to that effect was made by the marshal.

2. Sales of mortgaged premises under a decree of foreclosure and sale are usually made in the Federal courts by the marshal of the district where the decree was entered, or by the master appointed by the court, as directed in the decree. Such sales must be made by the person designated in the decree, or under his immediate direction and supervision, but he may employ an auctioneer to conduct the sale if it be made in his presence. Express directions of the decree in this case were that the mortgaged premises should be sold at public auction, unless the respondents, as mortgagors, should, previously to such sale, pay to the complainants the amount of the mortgage debt, as specified in the decree.

3. Contracts for the purchase and sale of goods or lands at public auction are contracts founded upon mutual promises and a mutuality of obligation, and consequently they cannot be regarded as having been perfected and made binding unless they have received the consent of the parties. Consent of parties being essential to the contract set up in this case, it becomes important to ascertain in what way and to what extent such assent must be manifested, and to distinguish accurately between mere offers or proposals by the one party not accepted or approved by the other, and mutual and positive engagements which neither party can retract or withdraw. ^[1]

Unaccepted offers to enter into a contract bind neither party, and can give rise to no cause of action; as, for example, if one merchant offer to sell goods to another, such an offer is not binding until it has been in some form accepted by the party to whom it was made. Liability cannot arise in such a case, because the party making the offer cannot be held answerable to the other for not selling the goods, unless that other by accepting the offer has bound himself to purchase.

4. Biddings at an auction, says Mr. Addison, are mere offers, which may be retracted at any time before the hammer is down and the offer has been accepted. ^[2] Leading case upon that subject is that of Paine v. Cave, ^[3] where it was expressly held that every bidding at an auction is nothing more than an offer on one side until it has received the assent of the auctioneer as the agent of the owner. Supreme Court of Pennsylvania held, in the case of Fisher v. Leitzer, ^[4] that a bidder at a sheriff's sale has a right to retract his bid before the property is struck down to him, and that the sheriff has no right to prescribe conditions which will deprive him of such a right. Express ruling was that a bid at an auction before the hammer falls is like an offer before acceptance, and that when the bid is withdrawn before it is accepted there is no contract, and that such a bidder cannot be regarded in any sense as a purchaser. Rule, as laid down in the last edition of 'Story on Sales,' is substantially the same as that adopted in the preceding case. Speaking of ordinary sales at an auction, the author says that the seller may withdraw the goods or the bidder may retract his bid at any time before they are struck off, and the reason assigned for the rule is, that so long as the final consent of both parties is not signified by the blow of the hammer there is no mutual agreement to a definite proposition. ^[5] But as soon as the hammer is struck down, says the same author, the bargain is considered as concluded, and the seller has no right afterwards to accept a higher bid nor the buyer to withdraw from the contract. ^[6] Same rules prevail upon a sale under common law process as in other cases of sales at public auction, so far as respects the question now before the court. Until the property is actually struck off to the bidder he may withdraw his bid as a mere offer or proposition. ^[7]

5. Judicial sales made under the decretal orders of courts of chancery, are also, in this country, governed substantially by the same rules, except that such sales are usually made by the marshal, or a master in chancery acting as an officer of the court, and are always regarded as under the control of the court, and subject to the power of the court to set the sale aside for good cause shown, or open it any time before it has been confirmed, if the circumstances of the case require the exercise of that power. Doubtless such sales are usually conducted under the advice of the solicitor of the complainant, and it is sometimes said that the solicitor, in all questions arising between the vendor and purchaser, must be considered as the agent of all the parties to the suit; but it is believed that the remark must be received with some qualification. ^[8] Suppose it to be so, however, in a qualified sense; still it is true that the marshal or master, as the case may be, is the officer of the court, and that as such his acts and proceedings are subject to the revision and control of the court. ^[9] In sales directed by a court of chancery, says Judge Story, the whole business is transacted by a public officer, under the guidance and superintendence of the court itself. Even after the sale is made, it is not final until a report is made to the court and it is approved and confirmed. Either party may object to the report, and the purchaser himself, who becomes a party to the sale, may appear before the court, and, if any mistake has occurred, may have it corrected. He, therefore, becomes a party to the proceeding, and may represent and defend his own interest, and may be compelled by process of the court to comply with the terms of the contract. ^[10]

6. Subject to those qualifications, and perhaps some others which need not be noticed, the question of sale or no sale, when it arises under a state of facts such as are exhibited in this record, may be fully tested by substantially the same rules as those which apply in cases of sales under common law process, or in other cases of sales at public auction. Tested by those rules, it is clear to a demonstration that there was no sale of the mortgaged premises in this case, because the property was never struck off to the appellant, nor was his bid, by act or word or in any manner, ever accepted by the seller, and the record shows that, at the hearing in the court below, nothing of the kind was pretended by the appellant. Instead of setting up that pretence, his complaint was that the marshal erred in refusing to accept his bid, which, if possible, is less defensible upon the facts and circumstances of the case than the theory of the sale and purchase.

7. Officers appointed under such decrees, and directed to make such sales, have the power to accomplish the object; but they are usually invested with a reasonable discretion as to the manner of its exercise, which they are not at liberty to overlook or disregard. Acting under the decree, they have duties to perform to the complainant, to the vendor and purchaser, and to the court, and they are bound to exercise their best judgment in the performance of all those duties. Such an officer, in acting under such a decree, if directed to sell the property, should adopt all necessary and proper means to fulfil the directions; but he should, at the same time, never lose sight of the fact that, unless he is restricted by the terms of the decree, the time and manner of effecting the sale are, in the first instance, vested in his sound discretion. Usual practice undoubtedly is, that the officer in selling the property acts under the advice of the solicitor of the complainant; but it cannot be admitted that his advice is, under all circumstances, obligatory upon the officer.

Granting that solicitors may properly advise the officer, still it must be borne in mind that the authority and discretion in making the sale are to a certain extent primarily vested in the officer designated in the decree. Unreasonable directions of the solicitor are not obligatory and should not be followed, as if the solicitor should direct the property to be struck off at great sacrifice when but a single bidder attended the sale. Under such circumstances, the officer might well refuse to do as he was directed, and he might be justified in postponing the sale to a future day to prevent the sacrifice of the property. Every such officer has a right to exercise a reasonable discretion to adjourn such a sale, and all that can be required of him is, that he should have proper qualifications, use due diligence in ascertaining the circumstances, and act in good faith, and with an honest intention to perform his duty.

General rule is, that a sheriff is not bound to obey the directions of the attorney of the creditor to make an unreasonable sale of the property of the debtor, if he sees that the time selected, or other attending circumstances, will be likely to produce great sacrifice of the property; but he may in such a case, if he thinks proper, postpone the sale, especially if it appears that the creditor will not sustain any considerable injury by the delay; and no reason is perceived why the same rule may not be safely applied in judicial sales made under the decretal order of a court of chancery.

8. Courts often say that an auctioneer is solely the agent of the seller of the goods until the sale is effected, and that then he becomes also the agent of the purchaser, for certain purposes; but the marshal or master, in carrying out a decretal order, is more than an auctioneer. They have duties to perform for all concerned, and in the performance of those duties they may adjourn the sale for good cause shown. Repeated decisions have established that rule, and in the leading case of Collier v. Whipple, ^[11] the court went further, and held that such an officer was bound to exercise a reasonable discretion in that matter. Same rule had been previously sanctioned in numerous cases, ^[12] and was expressly laid down by the chancellor in the case of Kelley v. Israel, ^[13] which is one of the latest cases upon the subject.

But the record shows, in this case, that the bid of the appellant was never accepted, and that the adjournments were made by the direction of the solicitors of the complainants to enable the respondents to pay the mortgage debt and save the mortgaged property from sacrifice. Negotiations to that effect were opened between the parties to the suit on the day the first bid of the appellant was made, and they were completed within two days, so that all concerned knew, or might have known, that a sale had become unnecessary. Subsequent postponement took place to enable the respondents to carry the arrangements into effect. They paid the debt, and the complainants executed a discharge for the same. Justice has been done, and all are satisfied except the appellant, and he has no just ground of complaint.

DECREE AFFIRMED WITH COSTS.

Notes

1. Addison on Contracts (ed. 1857), 23-154.
2. Addison on Contracts (ed. 1857), 26.
3. 3 Term, 148.
4. 23 Pennsylvania State, 308.
5. 1 Sugden on Vendors and Purchasers, 25.
6. Rutlidge v. Grant, 4 Bingham, 653; Cook v. Oxley, 3 Term, 654; Adams v. Linsdell, 1 Barnewall & Alderson, 681; Story on Sales, § 461.
7. Crocker on Sheriffs, 201.
8. Dalby v. Pullen, 1 Russel & Mylne, 296.
9. Collier v. Whipple, 13 Wendell, 229.
10. Smith v. Arnold, 5 Mason, 420.
11. 13 Wendell, 229.
12. Tinkham v. Purdy, 5 Johnson, 345; McDonald v. Neilson, 2 Id. 190; Keightly v. Birch, 3 Campbell, 321; Leader v. Denney, 1 Bosanquet & Puller, 359.
13. 11 Paige, 154.