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Vol. IV.)

BANK OF COMMERCE v. LANAHAN.

(No. 12.

fair competition at the sale; and he was further bound to act in perfect good faith throughout in his management in relation to the sale. He could not, in any degree, subserve the interest of one cestui que trust to the sacrifice or detriment of the rights of others equally interested. But bad faith or negligence on the part of the trustee will not be presumed, but, on the contrary, the presumption is that he has discharged his duty faithfully, and that presumption prevails until it is made to appear otherwise by those seeking to impeach the sale. Sales like the present are not to be impeached by slight circumstances. It requires good and substantial grounds to justify the court in setting them aside when regularly made ; for otherwise all confidence in their performance and security would be destroyed, and the public would be loth ever to bid for property thus offered.

The principles upon which the court acts in reference to these sales, when sought to be set aside, are well stated by the Vice-Chancellor, in the case of Woodhull v. Osborne, 2 Edwards' Rep. 616, quoted with approval by this court in Johnson v. Dorsey, 7 Gill, 287. It was there said, that " where a stranger or third person

becomes the purchaser in good faith, something more than a mere offer of a higher price must appear, to induce a resale ; such as fraud or misconduct of the master, or other person, having the control of the sale, or surprise upon the party interested, or his having been misled as to the time and place of sale.

Where circumstances of the latter description are relied upon, the party must show they proceeded from or were caused by the purchaser, or some person connected with or having the management of the sale. If he be of full age and under no disability, he cannot be permitted to allege his own negligence or inattention as the cause of his surprise or mistake.”

Here there is no pretence that there has been surprise or mistake on the part of those representing the appellant. More than usual diligence appears to have been observed in giving notice in all directions where bidders were likely to be found ; and all the creditors, as well as the public generally, appear to have had the amplest notice of the time and place of sale. Many of the creditors appear to be persons of large means, and if they did not attend the sale and make the property bring a better price, it would seem to be their own fault. Several of the creditors were present at the sale, but did not bid. The sale was conducted by an experienced auctioneer, at the Exchange Sales Rooms in the city of Baltimore, within convenient distance of the location of the property, and there is no suggestion that there were any unfair means used in the mode of conducting the sale ; but, on the contrary, the proof shows that the fullest opportunity was afforded every one to bid who desired to

That the sale took place on the day of the general state election can, of itself, certainly form no sufficient ground for setting it aside. It is not shown that a single individual was prevented from attending the sale by reason of the election. The proof is that the attendance was fair, the number being about as great as usually attend such sales. And as to the inadequacy of price, that is not of a character to justify the rejection of the sale. În regard to the salable value of property there is always more or less diversity of opinion, even among those who are supposed to be competent judges. Every controverted case in regard to the value of property exemplifies the truth of this remark. But, with all the diver

do so.

Vol. IV.]

BANK OF COMMERCE v. LANAHAN.

(No. 12.

so gross

sity of opinion upon this subject, no witness ventures to say that he will give more than the bid reported, if the property should go to resale. Indeed, they say they would not; and there is nothing in any portion of the evidence that gives any degree of assurance that, if the property were put up at resale, it would bring more than the price reported. Why then order a resale? The sale reported should not be set aside and a resale ordered as a mere experiment. That is forbidden both by reason and the well established doctrine of the law upon the subject. No principle is better established or more uniformly applied than that mere inadequacy of price, standing by itself, is not sufficient to vacate a sale, unless it be

and inordinate as to indicate some mistake or unfairness in the sale for which the purchaser is responsible, or misconduct or fraud on the part of the trustee. This is the doctrine maintained by this court in the cases of Cohen v. Wagner, 6 Gill, 236, and Johnson v. Dorsey, 7 Ib. 269, where the subject is fully considered. The proof in this case wholly fails to show any such gross inadequacy of price, if inadequate at all, as to indicate that there was either mistake or unfairness in the sale, or that the trustee has been guilty of any misconduct in relation to it. Moreover, in considering the question of the ratification of this sale, it should not be overlooked that a decided majority of the creditors in interest have strongly recommended that the sale should be ratified, being of the opinion, as they state, that the property would not sell for as much on resale as the price reported by the trustee.

Upon the whole, finding no sufficient ground for vacating the sale reported by the trustee, the order appealed from will be affirmed, with costs to the appellees.

Order affirmed, and cause remanded.

INDEX.

ADMIRALTY. 1. Under the local law of Louisiana claims for materials and supplies furnished a vessel

in her home port are a lien on the vessel, if recorded in the proper parish. Without such registry they have no privilege or priority over subsequent mortgages recorded by authority of the act of Congress, or claims of later date recorded by authority of

the state law. The John T. Moore, 406. 2. Claims for materials and supplies furnished in the home port, even if duly recorded,

are postponed to maritime liens. 1b. 3. The registry of a mortgage on a vessel to be effectual must be made in the customhouse of her home port.

16. 4. Where the mortgagee of a mortgage on a vessel, which was recorded in the proper

custom-house, had notice of a prior unrecorded mortgage, his mortgage was postponed to the unrecorded mortgage.

Ib. 5. Where A. had an unrecorded mortgage on a vessel, and B. had

mortgage on the same vessel of later date, duly recorded under the act of Congress, but had actual notice of the mortgage of A., and C. had a lien by virtue of the registry of his claim under the state law, subsequent in date to the mortgages of both A. and B., but C. had no notice of the mortgage of A., and the claim of either A. or B. was sufficient to absorb all the proceeds of the sale of the vessel : Held, that said proceeds should be first applied to the mortgage of A.

Ib. 6. The fact that a mortgage on a vessel has not been acknowledged before a notary

public, or other oflicer authorized to take acknowledgment of deeds, precludes its registry, but does not render it void as against the mortgagor, nor postpone it to the recorded mortgage of a subsequent mortgagee who had notice of such unrecorded

mortgage. Ib. 7. The wages of a watchman employed on a vessel while lying-up in port are not a mar

itiine lien. Ib. 8. There is no maritime lien for the premium due on a policy of insurance taken on a vessel by her owners.

16. 9. Where the vacillation of a sailing vessel in the exhibition of her lights is the cause of

a collision with a steamer, the steamer held not to have been in fault, even though the collision might have been avoided if the steamer had adopted a course different from that pursued. Marshall v. The Adriatic, 353.

BAILOR AND BAILEE. If a seller of merchandise, in order to maintain his lien for its price, refuses to permit

the purchaser to take possession or control of it, he thereby prevents an acceptance and receipt of it by the purchaser within the statute of frauds. Upon an agreement for the sale of merchandise and payment therefor by a satisfactory note, the purchaser examined the merchandise, had it weighed, marked with his initials, and piled up by itself in the seller's warehouse, to be taken away upon payment for it or giving a satisfactory note for its price. The purchaser never complied with these terms, and the seller refused to allow him to take the merchandise away, claiming a lien upon it for its price. After remaining for several monthis it was destroyed in the warehouse by fire. Helil, that there was no such delivery of the merchandise as to constitute the seller a bailee for the purchaser. Safford v. McDonough, 96.

BANKRUPTCY. 1. After a bankrupt had been discharged, a large fund was recovered in a suit against

the United States in the court of claims, by counsel employed by him before his bank

a

ruptcy, on a contract that they should carry on the suit to recover the same at their own costs and charges, and have and retain for their compensation one half the amount recovered. The fund so recovered being in possession of the bankrupt court, the bankrupt filed his petition, praying that the share of his said counsel in the fund might be paid to them, that a sufficient sum might be set apart to pay all debts proven against his estate, and also the costs and commissions of the bankruptey, and that the residue might be paid over to himself; held, that such a petition was one in the ordinary course of a bankrupt proceeding, and was not a bill in equity, nor did the relief prayed for require the filing of a bill in equity; nor was a decree of the bankrup: court, directing the payment to said counsel of their share in the recovery, the allowance of a claim against the bankrupt estate. The proper method, therefore, to reverse a decree made on such a petition was not by appeal, but by petition, addressed

to the supervisory jurisdiction of the circuit court. Maybin v. Raymonil, 21. 2. The common law on the subject of champerty and maintenance has not been gener

ally adopted in this country, the reasons on which the law was founded not existing here. Therefore a contract such as that mentioned in the first head-note, made by

a party with his counsel, is not an unlawful, but is a valid and binding contract. Ib. 3. Upon the facts stated in the first head-note, the attorneys who recovered the judg

ment were entitled to one half the amount recovered, notwithstanding the subsequent bankruptcy of the party with whom they contracted, and notwithstanding the recov

ery was subsequent to the bankruptcy. 16. 4. A paper writing purporting to be the discharge of a bankrupt, without date, signed

by the register without application therefor by the assignee, and which by inadvertence has found its way among the records of the court, does not put an end to the powers of the assignee, or terminate the bankruptcy proceedings; it is no part of the

record, and may be ordered by the court to be stricken from the files. Ib. 5. The discharge of a bankrupt is not such an adjudication of the fact that he has sur

rendered all his property for the benefit of his creditors as to bar the right of his assignee to recover property discovered after the discharge, and which the bankrupt had

failed to place upon the schedule. Ib. 6. Where an assignee in bankruptcy more than two years after his appointment is sub

stituted for the bankrupt as plaintiff in a suit pending in the bankrupt's name, and recovers a sum of money in the suit, the bankrupt cannot claim from the assignee the money so recovered, on the ground that the cause of action in favor of the latter was

barred at the time he was substituted as plaintiff in the suit. Ib. 7. Where authority was obtained from the bankrupt court upon the application of the

assignee to make the contract mentioned in the first head-note for the prosecution of a claim due the bankrupt estate, the court being kept in ignorance of facts which, if known to it, would surely have induced it to withhold such authority, the contract is not binding on the court or on the bankrupt estate, especially when the attorneys with whom the contract was made knew that the assignee had not communicated such facts

to the court. Ib. 8. Under the Bankrupt Act of 1867, the assignee might sue in the state courts to re

cover the assets of the bankrupt, no exclusive jurisdiction being given to the courts of the United States. Whether such exclusive jurisdiction is given by the Revised Statutes, quære. Claflin v. Houseman, 51.

BILLS AND NOTES. 1. A building association was organized in August, 1871, under the general incorpora

tion law of a state, and by the 9th and 11th articles of its association it was provided that its board might issue promissory notes on mortgages only, and that such notes should always be drawn to the order of the mortgagor, who should in all cases indorse the note thus drawn. The president, secretary, treasurer, and three directors were authorized to sign all promissory notes issued by the association. Under the authority of these articles the association issued its note to the appellees instead of money, for which a mortgage was given. The note was strictly in form a promissory note, payable to the order of the appellees. It was drawn at sixty days' time, and payable at a certain named bank; and was signed by the officers designated in the articles of association to execute promissory notes. In one corner of the face of the note there was the type or emblem of what was alleged to be the seal of the corporation; this alleged seal consisted simply of an emblem or symbol printed by the printer at the time when the printed blank'note was struck. The note was indorsed by the payees, and by them negotiated, and at maturity was duly presented for payment, and was dishonored and protested, and notice given by the notary to the said indorsers, and payment duly demanded of them. Suit was brought on the note by the indorsees against the indorsers, who contended that they were not liable by reason of their indorsement, because the instrument sued on was a single bill. Held, That the note was negotiable, and that by the indorsement thereof in the ordinary way, the indorsers became liable. That the nature of the transaction itself, the objects and purposes to be subserved by the issue of the note, as well as its form, indicated that the parties must have understood, that it would be so accepted and dealt with by the commercial community. That the printed representation of the seal, if it be conceded to be a sufficient seal, was not printed on the note to restrain its negotiability, or to change it into a specialty, but rather as a mark of genuineness. That the note in no manner depended upon the seal for its validity, but derived its authenticity from

the signatures of the officers authorized to execute it. Jackson v. Myers, 13. 2. A holder of negotiable paper, who takes it before maturity for a valuable considera

tion, in the usual course of trade, without knowledge of facts which impeach its validity between antecedent parties, holds it by a good title; but circumstances tending to show bad faith or fraud in taking such paper are admissible in evidence, and the establishment of such bad faith or fraud, whether by direct or circumstantial evidence, subjects the holder of paper so taken to defences existing between antecedent parties.

Johnson v. Way, 58. 3. The payee of a check which has not been accepted by the bank on which it is drawn

cannot maintain an action upon it against the bank. Until acceptance there is no privity of contract between the payee and the bank. So held where a check of the treasurer of the United States upon a depositing bank had been paid upon an unauthorized indorsement of the name of the payee, and where the action was brought by the true owner of the check. It does not alter the rule that there has been a settlement of accounts between the treasurer and the bank, and the check in question was allowed in the account to the credit of the bank, upon the supposition that it had been properly paid. Such erroneous allowance does not affect the real state of the accounts, but is open to correction when discovered. Payment to a stranger upon an unauthorized indorsement does not operate as an acceptance of the check, so as to authorize an action by the real owner to recover its amount as upon an accepted check.

First National Bank of Washington v. Whitman, 254. 4. An indorser of a promissory note is a competent witness to prove an agreement in

writing made with its holder at the time of his indorsement, that he shall not be held liable thereon, where the paper has not afterwards been put into circulation, but is

held by the party to whom the indorsement was made. Davis v. Brown, 337. 5. The case of the Bank of United States v. Dunn, reported in 6th Peters, explained and

qualified. 16. 6. An agreement like the one mentioned above and the indorsement, taken together, are

equivalent, so far as the holder of the note is concerned, to an indorsement without

recourse to the indorser. Ib. 7. The omission of indorsers on a series of notes, transferred to the holder in settlement

of their own note held by him, upon an agreement in writing that they should not be held liable on their indorsement, to set up the agreement as a defence to an action against them, brought by the holder on two of the notes, does not preclude them from setting up the agreement in a second action by the holder on others of the same series of notes. The judgment in the original action does not operate as an estoppel against

showing the existence and validity of the agreement in the second action. 16. 8. When a judgment in one action is offered in evidence in a subsequent action between

the same parties upon a different demand, it operates as an estoppel only upon the matter actually at issue and determined in the original action; and such matter, when

not disclosed by the pleadings, must be shown by extrinsic evidence. Ib. 9. Paper that is payable on demand is due at date. The collection of paper that is pay

able on demand, or at a fixed time, is barred by the statute of limitations, at the expiration of the statutory period from the date at which it became payable, whether demand has been made or not. Palmer v. Palmer, 366.

See PRINCIPAL AND SURETY.

BUILDING ASSOCIATION.

See Bills and Notes, 1.

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