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decided: May 14, 1888.



Author: Matthews

[ 127 U.S. Page 526]

 MR. JUSTICE MATTHEWS, after stating the case as above reported, delivered the opinion of the court.

The appellant cannot justly complain of the decree for a resale on the ground that it was rendered upon a rule to show cause. It does not appear that he was or could have been prejudiced by the summary nature of the procedure. He had full opportunity to answer, and was heard upon all the matters of defence, both in his answer to the rule and his petition for a rehearing of the decree of January 5, 1884. All the equities to which the appellant conceived himself entitled were fairly and fully before the court. No rights of innocent strangers had intervened, although the appellant had conveyed his title to the White Sulphur Springs Company. That company acquired its interest pendente lite, and with full notice from the record that the purchase money was in part unpaid, and that there was a subsisting lien reserved as security for its payment. The action of the court was simply to enforce its own decree against a purchaser from itself to compel compliance on his part with his contract. The cause was open and pending, awaiting a final decree distributing the proceeds of the sale, in which no further step could be taken until those proceeds were paid into court in compliance with its orders. For that purpose the court had control of the title to the real estate sold by virtue of the decree for sale, and the reservation of a lien for the unpaid purchase money expressed in the deed.

[ 127 U.S. Page 527]

     There was no reason for a resort to an original bill; the most suitable and convenient practice was to enforce the obligation of the purchaser in the same cause by a supplemental proceeding, and it was within the discretion of the court to adopt as the proper method in this case the form of a rule to show cause.

Such is the clear implication from what was said by this court in Koontz v. Northern Bank, 16 Wall. 196, 202: "If . . . the court was deceived by the report of the receiver or master, and the purchaser participated in creating the deception, it could undoubtedly, at any time before the rights of innocent purchasers had intervened, have set the whole proceedings, including the deed, aside. But after the rights of such third parties had intervened its authority in that respect could only be exercised consistently with protection to those rights."

The rule is thus laid down in 2 Daniell's Chancery Practice, 1282, c. 29, ยง 1: "According, however, to the present practice, a more complete remedy is afforded against a purchaser refusing without cause to fulfil his contract; for the plaintiff may obtain an order for the estate to be resold and for the purchaser to pay, as well the expenses arising from the non-completion of the purchase, the application, and the resale, as also any deficiency in price arising upon the second sale. This order was made by Lord Cottenham in Harding v. Harding, 4 Myln. & Cr. 514, after consultation with the other judges of the court; and although in that case the purchaser was a defendant in the cause, it does not seem that that fact was considered as necessary in order to enable such an order to be made." In Campbell v. Gardner, 3 Stockton (11 N.J. Eq.) 423, 425, it was held that after a sale upon an execution out of a court of chancery, and a delivery of the deed, the court may, upon a proper cause made, open a sale upon a petition, and it is not a valid objection to this course that the deed has became a matter of record. If a resale is ordered, the court may require the first purchaser to release to the purchaser on the resale all the title he may have acquired, so that the title may stand upon the record wholly disembarrassed. See Conover v. Walling, 2 McCarter (15 N.J. Eq.) 173.

[ 127 U.S. Page 528]

     As the court below committed no error to the prejudice of the appellant in the mode of the procedure, we have to consider whether it disallowed any substantial equity to which he was entitled. The equity of the appellant, then asserted and here renewed, arises upon his construction of the orders and decrees of the court. The decree of March 1, 1882, upon the authority of which the deed was executed and delivered to the purchaser, and which directed that a lien should be reserved therein for the unpaid purchase money until the same is fully paid off and discharged, also directed the commissioners to settle with the purchaser upon his application, so far as the bonds for the purchase money had already matured, or as the same should thereafter mature, "by crediting upon the said bonds the amounts to which the said William A. Stuart is entitled to credit for the liens held by him, as recognized by the previous decrees of this court establishing the order and priority of liens, and by receiving from him in cash so much of the amount of said bonds as may be going to other lien holders." And the commissioners were "also authorized to cancel and deliver to said William A. Stuart any one or more of his said bonds, whether the same have matured or not, on being satisfied that the said Stuart is then holder and owner of all the claims payable out of the proceeds of such bond or bonds."

It appears that in pursuance of this authority, the commissioners of sale, on October 20, 1883, received from Stuart certain securities designated by reference to the list and classification contained in the master's report of April 21, 1876, specifying the amount of the principal sum represented by each, but without any calculation of interest, or any statement of the aggregate amount which on account thereof was to be credited on the bonds of the purchaser given for the purchase money. The language of the receipt given by the commissioners is: "Received of W. A. Stuart the above securities, which are applied first to the discharge of the three purchase-money bonds of said Stuart first falling due, given for the Greenbrier White Sulphur Springs property sold by the United States District Court, at Charleston, the said bonds

[ 127 U.S. Page 529]

     being for $61,290 each, and bearing interest from March 31, 1880, and which are this day delivered to said Stuart. The amount covered by this list of securities, after discharging the three bonds aforesaid, is to be by us credited on the fourth bond of said Stuart of like amount with each of the other three and bearing interest from same time."

The specific claim made by the appellant is, that he is entitled to have these securities credited on his purchase-money bonds at an amount in the aggregate ascertained by a calculation of simple interest, upon the face of the principal sum, from the time when interest began to accrue and became in default until the date of their application to the payment of the purchase-money bonds, with the exception of the instances where by previous decrees interest upon interest had been expressly allowed; whereas the rule adopted by the court by the order of January 5, 1884, required the commissioners of sale, in distributing the proceeds of sale, and in paying therewith the debts reported and decreed to be paid, to calculate interest upon the aggregate amount of principal and interest thereof aggregated as of October 15, 1875, the date to which the calculations are brought in the report of the master filed April 21, 1876.

It is complained of this decree that it was made after the rights of the parties had become fixed by what had already been done under the previous orders of the court, and that the situation of the appellant was thereby altered greatly to his disadvantage. In reliance upon his construction of the previous orders of the court, the appellant had become the purchaser of almost all the obligations enumerated in the sixth class of the master's report in the expectation that, upon a calculation of the amount due to those entitled to priority, the obligations thus acquired by him would be satisfied, or nearly so, out of the proceeds of the sale. The transactions by which he acquired the ownership of these claims took place, respectively, on April 23, 1875, March 15, 1876, and March 31, 1880, the last being the date of the sale.

It is evident, in the first place, that the cause of complaint asserted by the appellant does not belong to him legitimately

[ 127 U.S. Page 530]

     in his capacity as purchaser. The decree for sale rendered May 15, 1877, did not contemplate payment of the purchase money otherwise than in money. It gave a credit running through a period of five years in equal annual instalments, with interest on each. There was nothing in the decree which authorized the purchaser to assume that he would not be called upon to pay each instalment as it fell due in cash. As a purchaser, therefore, bound for the payment of specific sums at given dates, and who cannot be compelled to pay more, and has no right to expect to pay less, it must be a matter of indifference how the proceeds of that sale shall be distributed among the creditors entitled thereto. The different modes of computing interest on the debts to be paid may affect relatively the creditors themselves, giving to one class more and to the other less, but it can make no difference in the amount of the fund to be distributed arising from the proceeds of the sale. The complaint of the appellant, therefore, if he has any, must be put forward in his capacity as a creditor in respect to his rights upon distribution; but upon the view most favorable to him the distribution of the proceeds of the sale, and all questions arising thereon as between creditors, were before the court and undecided, except in the instances already referred to where express declarations were made in respect to the mode of computing interest upon interest in individual cases. The appellant was bound to know, and ought to have acted upon the assumption, that all possible matters of question to arise upon the distribution of the proceeds of the sale were still open for the final decision of the court. If he chose to act upon his individual judgment of what that decision would be, he acted at his peril. The decree of January 5, 1884, was such a decision, directing the mode of calculating interest upon the debt in distributing the proceeds of sale, and there is nothing in it inconsistent with any prior decision or decree of the court upon the same subject. Neither the decree of sale of May 5, 1877, nor the decree of March 1, 1882, directing the execution of the deed and reserving a lien for the unpaid purchase money, contained any direction as to the mode of computing interest upon the debts to be

[ 127 U.S. Page 531]

     paid. It cannot, therefore, be now held that the appellant has been misled to his disadvantage in having acted upon the faith of any of the previous decrees of the court in the cause.

The question, however, still recurs whether the rule for computing interest on the debts as the basis of distribution adopted by the court in its decree of January 5, 1884, is correct as a matter of law. On this point there is no reason for doubt. The decree of sale, as we have already stated, contained no finding of the amount of the indebtedness, nor of the persons to whom it was owing, and no order for its payment as a condition of redeeming the property from the necessity of sale. But the report of the master of April 21, 1876, contained a full and carefully prepared detail of all the items constituting the indebtedness, with a list of the creditors, a classification according to the order of priority in the matter of lien, and a calculation of interest to October 15, 1875, upon all debts, except those embraced in class No. 1, in respect to which special provision was subsequently made showing the total amount then due to each creditor. It is not stated anywhere in the record why the date of October 15, 1875, was selected by the master as a place of rest in the calculation of interest, but it must have been taken as the most convenient day for calculations in reference to closing the report, which evidently required considerable time for its preparation. If the calculation had been made as of the date of the decree for sale, with a view to the insertion therein of the amounts due to the several creditors, on payment of which the sale might be averted, the interest would have been brought down most properly to that date and added to the principal to constitute the whole sum then payable. If not paid at that time, the aggregate of principal and interest thus combined would have constituted the new principal, which, according to the uniform practice of the court, would bear interest from that date. In that case there could have been no complaint made against compounding interest. We think a similar effect must be given to the decree of the court confirming the master's report made April 28, 1876. It substantially declared the amount due October 15, 1875, as consisting of the principal

[ 127 U.S. Page 532]

     sums and interest to that date added for the purposes of the sale and distribution, and the decree of January 5, 1884, directing the calculation of interest for purposes of distribution upon the aggregate amount of the principal and interest as of October 15, 1875, was only a proper explanation of the decree of April 28, 1876, confirming the master's report. The date of the confirmation of that report was a suitable period in the progress of the cause, where the creditors were so numerous and the calculations so complicated, for the court to fix, for the information and guidance of all concerned, the amount severally due to each creditor with the order of priority in which he was entitled to be paid. The amounts to be found due necessarily embraced the principal sum with the accrued interest up to a fixed date, and from that period the aggregate became the sum of the debt, the whole of which thenceforth properly carried interest. No exception wax taken to the report; it was confirmed by the court; and, in our opinion, it cannot reasonably bear any other construction than that which the court subsequently placed upon it.

Upon the whole case, no injustice has been done the appellant; and the decree of the District Court of West Virginia is



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