Shirk v. Soper

Offutt, J., delivered the opinion of the Court. Henry Shirk, then residing in Baltimore City, died on! or about June 18th, 1891, leaving a last will and testament which in due course Was probated in the Orphans’ Court of ²⁷² Baltimore Oity Under that will the residuum of his estate was devised and bequeathed to his daughter and his grandsons in the following proportions: To Susan Hiss, his' daughter, one undivided onedialf interest, to his two grandsons, Isaac Shirk and Henry Shirk, the other undivided one-half interest. At the time of his death he was seised and possessed of a tract of land containing a little less than eight acres, which was bounded in part by the right of way of the Hampden and Lake Roland Railroad Company, and Prospect Avenue, and touched at one point Huntington Avenue, and which was included iu the residuum of the estate. It was contiguous to the xdght of way and tracks of the Maryland .and Pennsylvania Railroad, which appears to separate it from the Falls Road, and to the right of way and tracks of the Baltimore .and Ohio Railroad, and for many years a part of it has been operated as a quarry It is said to be underlaid to the depth of two hundred or more feet with a deposit of gneiss, a stone easily worked, durable, and suitable for the construction of all kinds of building's, and the whole tract is peculiarly adapted for development as a quarry property.

On April 4th, 1893, the owner of this tract sold about six-tenths of an acre of it for $14,000 to John G. Sehwind, who for some years operated it as a quarry. On Jnne 27th, 1899, Susan P. Hiss and P. Hanson Hiss, her husband, filed in the Circuit Court of Baltimore City a hill of complaint .against Henry and Isaac Shirk, for the purpose of having the property sold, on the ground that it was not partible in kind without loss to the owners thereof. The pleadings were perfected, testimony taken and filed, the case submitted and the court, on May 24th, 1900, passed a decree for the sale of the property, and appointed W. Starr Gephart and William. A. Fisher trustees to make the sale.

The trustees were authorized to sell at public sale, or, at private sale, “upon due proof and approval by the court, upon such terms as the court shall approve.” ²⁷³ Nothing further was done until April 18th, 1904, when the Security Storage and Trust Company, which had succeeded Mr. Fisher .as one of the trustees, filed a report and petition showing the proposed sale of two and a quarter acres of the property to* John G. Sehwind at $10,000 an acre. W. ‘Starr Gephart, the other trustee, did not join in the report because he did not believe the consideration adequate, hut he did file an answer to the report and petition filed by the Security Storage and Trust Company, in which, he protested .against the proposed sale on that ground, and also because the sale of the property would lessen the value of the unsold remainder of the whole tract. Testimony was taken in connection with the issues thus made and, on May 29th, 1905, the court passed an order dismissing the petition. On December 8th, 1909, both the trust company and Gephart joined in reporting a sale of 1.089 acres of the same property to John G. Sehwind .at $15,000 an acre, and on January 26th, 1910, that sale was finally ratified and confirmed.

On January 7th, 1922, Hon. Morris A. Soper, who1 had succeeded W. Starr Gephart as trustee of the estate, and the Security Storage and Trust Company, the other trustee, reported to the court a sale to the Falls Road Quarry, Incorporated, of the stone underlying a part (340 x 220 feet) of the property at twenty cents a ton for all stone quarried. The agreement of sale referred to in the report provided that the vendee should, accounting from the 1st day of November, 1921, quarry during each year not less than 15,000 tons of stone. No cause to the contrary having been shown, that sale was also ratified and confirmed, on February 9th, 1922.

On December 16th, 1922, the trustees reported a siale of two and seven-tenths acres of the remaining property to the American Woodworking Corporation, for $13,500, and on January 17th, 1923, Henry Shirk, in his own right and as administrator and heir at law of Isaac Shirk, excepted to the ratification of that sale on the ground that the selling price was inadequate. ²⁷⁴ Those exceptions were in ordinary course set down for a hearing, and testimony in connection with them taken in open court. At the conclusion of the testimony, and after counsel for the parties had been heard, the court finally ratified that sale, and it is from that order that the first appeal shown by the record before us was taken. It was taken on March 28th, 1923, and on June 26th, 1923, Henry Shirk, the appellant, filed a. petition in which, among other things, he charged that on March 29th, the day following his appeal, the trustees had conveyed the property described in the report of sale to the American Woodworking Corporation. He further averred that he was a man of limited means, and unable to supply a bond in a large amount, but that he could give an appeal bond to stay the execution of the decree in an amount sufficient to cover any costs which were likely to accrue, which under the circumstances of the ease he said was all that was requisite.

Upon that petition the court passed the’ following order: “On the aforegoing petition and affidavit, it is hereby certified that the Circuit Court of Baltimore City is willing to fix the amount of the appeal bond in the aforegoing case at one thousand dollars ($1,000), and to instruct the clerk to accept a proper bond in said amount conditioned to prosecute said appeal with effect; but, said Circuit Court of Baltimore City is willing only to fix the amount of said bond under condition that pursuant to article 5, section 29 of the Code of Public General Laws of Maryland, the decree or order appealed from in this case shall not be stayed by such appeal; and it is further certified that this Court has communicated said condition above set forth to the appellant herein, and he is unwilling to have the amount of the bond so fixed under the condition above-set forth; wherefore, this Court declines to fix the-amount of said bond. “Done this 26th day of June, 1923.” ²⁷⁵ Erom that order the second appeal was taken. The only question presented by the first appeal is, whether the sale made by the trustees to the American Woodworking Corporation should have been ratified. In dealing with that question we are not precisely in the position we would occupy had the decree in this ease been in the usual form, authorizing the trustees to sell at public or private sale and requiring them to report their sale to the court after it had been made, for in this case the trustees, by the plain and clear language of the decree, were not authorized to make a private sale except upon “due proof and approval by the court, upon such terms as the court shall approve.” The record in this case indicates that the sale under consideration was a private sale, made without the knowledge or approval of the court, and that at the time the contract was made no proof concerning it had been submitted to the court which was later called upon to ratify it The power to sell at private sale, conferred by the decree upon the trustees, was not an absolute power, but a conditional power, and ,as the1 right of the trastees to sell a,t all was necessarily derived from the decree, they had no power to sell until they had complied with the conditions prescribed by it as essential to the exercise of that power. The question before the lower court therefore was, not whether it should set aside a sale that had actually been made, but whether it should approve a proposed sale.

And the rule laid down in such eases, as Warfield v. Ross, 38 Md. 85 , cited by the appellee, that mere inadequacy of price standing alone “is insufficient to authorize an interference with a sale unless it is so inordinate as to indicate some mistake or unfairness for wihioh the purchaser is responsible, or misconduct or fraud in the trustee to whom the management •of the sale had been committed,” is not applicable, for the reason that in this case no sale had been made, since by the terms of the decree no sale could have been made without the •approval of the court after “due proof” had been submitted to it that the Sale proposed was fair and for an adequate consideration So that in dealing with the propriety of the sale ²⁷⁶ ■proposed -by the trustees upon the terms set out in their agreement with the American Woodworking Corporation, the court was not affected by any of those presumptions in favor of it, which are enumerated in the case of Wicks v. Westcott, 59 Md. 276 , where it is said: “Ordinarily, the presumptions are that the trustee did his whole duty, and that a sale made at public auction, after due notice, has brought the best price; but when facts are found to exist, calculated to prejudice the sale, the presumption is against the sale. In such cases a court -of equity will sometimes ratify a sale, when strict conformity to requirements has not been observed in making it, but such ratification will not be accorded unless it appears from the proof, that the sale is an advantageous one, and ought to be ratified notwithstanding the infirmity in the methods of proceeding. In such case the court will infer depreciated price from much lighter evidence than would otherwise be required,” to the same degree .that it would have been had the sale been made in strict conformity with the terms of the decree. The courts have used a variety of expressions in stating the rule that a judicial sale made by trustees in accordance with the terms of the decree appointing them will not-, in the absence of circumstances showing a grave dereliction of duty on their part, be set aside for mere inadequacy of price, unless the inadequacy is so glaring as to afford intrinsic evidence of misconduct, unfairness, mistake or fraud on the part of the trustees in making the sale, but all the essential elements of the rule are fully and clearly stated in the case of Boyd v. Smith, 127 Md. 364, in which the Court, speaking through Judge Pattison, said: “The law is well settled in this State by a long line of decisions that mere inadequacy of price, standing alone, is not sufficient to vacate a sale, unless it is so gross 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 making the sale.

Glenn v. Clapp, 11 G. & J. 1 ; Cohen v. Wagner, 6 Gill, 236 ; Johnson v. Dorsey, 1 Gill, 269; Gibbs v. Cunning ²⁷⁷ ham, 1 Md. Ch. 44 ; Hintze v. Stingel, 1 Md. Ch. 284 ; House v. Walker, 4 Md. Ch. 63 ; Hubbard v. Jarrell, 23 Md. 66 ; Warfield v. Ross, 38 Md. 85 ; Horsey v. Hough, 38 Md. 137 ;, Gould v. Chappell, 42 Md. 467 ; Bank of Commerce v. Lanahan, Trustee, 45 Md. 396 ; Mahoney v. Mackubin, Trustee, 52 Md. 357 ; Loeber v. Eckes, 55 Md. 1 ; Dircks v. Logsdon, 59 Md. 173 ; Chilton v. Brooks, 69 Md. 584 ; Condon v. Maynard, 71 Md. 601 ; Harritee v. Poplein, 73 Md. 322 ; Shaw v. Smith, 107 Md. 523 ; Hunter v. Highland Land Co., 123 Md. 644 .” The general rule as stated by the court in that ease: is. however subject to tins qualification, that the “inadequacy” of price necessary to justify such an inference cannot be separated from the circumstances under wbicb it was offered, and w'hat might be regarded as an “inadequacy” sufficient to warrant the court in refusing to ratify a private sale could be regarded as wholly insufficient to justify it in refusing to disturb a sale for the same price, made at public auction after full notice and in such a manner as would naturally and probably result in obtaining the best price for the property, and that qualification is.stated in Weinstein v. Boyd, 136 Md. 234 , in which the Court, through Judge Adkins, said: “The principles by which courts are governed in dealing with private sales are very different from those controlling in public sales. In the one case, slight inadequacy and reasonable expectation of a better price are; sometimes sufficient to justify the setting aside of sales where the approval of a court is necessary, or where it is invoked, while in the other, the inadequacy must be gross, and the prospect of a better price practically demonstrable, or the circumstances! such as to indicate the absence of fair competition. Kelso v. Jessop, 59 Md. 114 ; South Balto. Co. v. Kirby, 89 Md. 52 ; Mason v. Hubner, 104 Md. 554 .” Eor reasons already stated we do' not think that either the gpneral rule, or the rule as qualified in Weinstein v. Boyd, 136 Md. 234 , is. strictly applicable here, but in our opinion the lower court, before ratifying the sale, should have been ²⁷⁸ satisfied, from a consideration of all the facts and circumstances of the case, that the price offered was reasonably adequate, and the best likely to be obtained by the exercise of reasonable diligence on the part of the trustees.

Corning now to the facts of the case and the evidence relating to them, we will first refer to those about which there is no dispute, and which must be regarded as established. From them it appears that the whole property in question is underlaid by a valuable deposit of stone well suited for building purposes, that quarries for removing that stone have been operated on it for many years., and that there is a nearby market for all the stone that can by any reasonable development of the property be taken from it, and that at present the facilities for removing the stone from the quarries and transporting it to its natural market are sufficient. It further appears that from the first sale of any part of this tract referred to in the record, that made by Henry Shirk, the grandfather of the appellant, to John G-. Schwind, in 1893, to the last sale, which was made by the present trustees to the Falls Road Quarry, Incorporated, in 1922, every parcel sold from it has been sold for quarrying purposes, and that the prices realized at those sales ranged from approximately $20,000 an acre to $15,000 an acre, where the tracts were sold in fee simple, and that, in the single instance where the stone alone was sold upon a royalty basis, that the .annual income from a parcel of it fronting 340 feet on the property of the Maryland and Pennsylvania Railroad Company with a depth of 220 feet has produced an annual revenue of over $3,000, and may produce an annual revenue as great as $10,000.

On the other hand it appears that, while the stone from the quarries now operated on the property is removed across the Maryland .and Pennsylvania Railroad Company’s property, the right to. so remove it can be terminated at any time by the railroad company, and that at most the estate has no more than a mere revocable license terminable upon thirty days’ notice by that company, and that if the railroad com ²⁷⁹ pany elects to terminate,it, there would be no practicable way of removing stone quarried on the property without the expenditure of a large sum of money to install cable ways. The land and the stone underlying it are described in some detail by Daniel J. Hauer, a witness for the exceptant, and an engineer with thirty years’ experience in the quarry and construction business. In the course of his testimony for the exceptant he gave the following description of the land and the stone underlying it: “It is a gneiss rock, which is a grade of rock that very nearly equals granite, which is considered the best construction rock for any structures. This rock is very easily quarried.

It lies approximately north to sixty-five feet above the present quarry flour, which is about a level with the Maryland and Pennsylvania Railroad tracks. It has an overburden varying from possibly ten to twenty-five feet of dirt over it. It has every indication from investigation of extending a great many feet below the present quarry floor. I wo-uld say possibly one hundred or two hun - dred feet. * * * In addition to that this stone is very easily worked to get it out in a quarry.

It is very seamy. It is easily drilled and easily broken up, and yet it is a stone of hard texture and will stand a great deal of wear. It is very easily hammer dressed. It is the only stone in the immediate vicinity of the city that can he easily hammer dressed.

That means a great deal in the way of building, because ordinarily most bard stone must be tool dressed, which means extra work by hand or machine, hut you can take a hammer with this stone and not only break it up but shape it up' so as to make masonry of a. kind that is used very extensively in building construction around Baltimore. * * It can he dressed fairly well, but tlie great mass of work that is done here is rough work, like in our churches and public buildings, round houses, and a great deal of stone of that character is used for foundations of buildings and in that the work is simply dressed, so that this stone takes very good dressing. That has been done in the past, having gotten out a large amount ²⁸⁰ of curbing, which is dressing work, that is six inches or more from the top. * * * The greatest value that it has at the present time is the fact that it is easily hammer dressed and is accessible to the centre of the city, more so than any other quarry for furnishing stone of that kind. They used to crush this stone some years ago in some of the quarries there, but it is not being crushed now, but it makes a good grade of crashed stone. * * * There is no quarry closer than Port Deposit with the exception that there are some quarries in Howard County that may be a little closer than Port Deposit that have very good granite, but outside of those two there is nothing within ten or fifteen miles of the city that equals this, stone, that is for building purposes and structural purposes.” The evidence relating to the value of the property