they create substantial rights they are not always followed in a judicial foreclosure sale.29

A bid may be revoked any time before the hammer falls.** A party to the suit who is not a trustee has the right to buy at the sale without expressing leave in the order or decree, although it is usual to grant such permission expressly." A sale does not take effect until it has been confirmed by the court.32 The proper practice in order to obtain a confirmation of a sale is to obtain an order nisi, unless cause to the contrary be shown within a specified time, that the sale shall be confirmed, and, after service of the same upon the parties to the cause or their solicitors, to apply to the court for an order of confirmation absolute confirming upon the production of an affidavit of the service of the order nisi and proof that no cause has been shown.33 The court may confirm the sale in vacation as well as term time.34

Before the confirmation of the sale any person interested, whether a party or a stranger, may intervene and have the sale set aside upon payment of the purchaser's expenses and the offer of a sufficient advance in price. Before the confirma

29 Low v. Blackford (C. C. A.), 87 Fed. R. 392; Toler v. East Tenn., V. & G. Ry. Co., 67 Fed. R. 168.

30 Blossom v. Railroad Co., 3 Wall. 196. See Mayhew v. West Va. O. & O. L. Co., 24 Fed. R. 205, 215.

31 Smith v. Black, 115 U. S. 308; Pewabic Mining Co. v. Mason, 145 U. S. 349, 363. "Such a provision is inserted merely to obviate the technical rule that parties to the action cannot buy, and is not intended to determine equities between the parties to the action, or between such parties and others." Scholle v. Scholle, 101 N. Y. 167, 172. Where a trustee has an interest which he wishes to protect by bidding at the sale, he may obtain leave to bid upon a special application to the court upon notice to all parties interested. Scholle v. Scholle, 101 N. Y. 167, 172; Merkle's Estate, 182 Pa. St. 378. See

also Cooley v. Cooley's Heirs (Tenn. Ch. App.), 37 S. W. R. 1028.

32 Mayhew v. West Va. O. & O. L. Co., 24 Fed. R. 205, 215; Pewabic M. Co. v. Mason, 145 U. S. 349, 364; Tennessee v. Quintard (C. C. A.), 80 Fed. R. 829, 835.

33 Pewabic M. Co. v. Mason, 145 U. S. 349, 363, 364; Daniell's Ch. Pr. (1st Am. ed.) 1461. The English practice, which has been followed in the District of Michigan, is to provide in the order nisi that cause be shown within eight days. Ibid. In railroad foreclosures and other cases where the persons interested live at a distance from the place or sale, more time should be allowed.

34 Central T. Co. of New York v. Sheffield & B. C. L. & Ry. Co., 60 Fed. R. 9.

35 Blackburn v. Selma R. Co., 3 Fed. R. 689; Central Tr. Co. v. Sheffield & B. C. L. & Ry. Co., 60 Fed. R. 9.

36

39

tion, any person may intervene and obtain an order establishing a lien upon the property. The confirmation may be upon terms, or subject to such claims against the property as may thereafter be asserted.38 As a condition of the confirmation of the sale, the purchaser may be required to assume responsibility for obligations of the receiver or for the payment of claims entitled to a preference over the mortgage. Such provisions in the decree for a sale or for a confirmation of a sale are considered to be equivalent to the reservation of a lien for the payment of purchase-money, and they may be enforced by the court upon a summary application at any time. Should the purchaser fail to pay any part of the amount promised, a resale will be ordered either before or after the confirmation of the original sale, provided that the rights of third persons have not

36 Tennessee v. Quintard (C. C. A.), set up against such claims a title 80 Fed. R. 829.

37 Farmers' L. & Tr. Co. v. G. B. & M. R. Co., 10 Biss. 203; s. c., 6 Fed. R. 100; F. L. & Tr. Co. v. Central R. Co. of Iowa, 17 Fed. R. 758.

acquired at a subsequent sale by another court. Baltimore Tr. & G. Co. v. Hofstetter (C. C. A.), 85 Fed. R. 75. It has been held that a decree directing the sale of railroad property

38 Tennessee v. Quintard, 80 Fed. R. upon foreclosure, "subject only to 829.

39 Farmers' L & Tr. Co. v. Central R. of Iowa, 17 Fed. R. 758. Where an appeal has been taken from so much of a bill as grants a preference, the confirmation may be conditioned upon the payment to a surety upon a supersedeas bond of the amount paid by such surety to the preferred creditor upon an affirmance; or a lien upon the property may be given to such surety. Continental Tr. Co. v. American Surety Co. (C. C. A.), 80 Fed. R. 180. Where a decree of sale directs that the purchaser pay certain preferential claims, he cannot upon such payment be subrogated to the rights of the original claimants and prove the claims against the fund in the hands of the receiver for distribution. Morgan's L. & T. R. & S. S. Co. v. Moran, 91 Fed. R. 22. Cf. Southern Ry. Co. v. Bouknight, 70 Fed. R. 442. It has been said that the assignee of a purchaser cannot

the liens, in respect to the portions of property enumerated, to the burden of which such sales were specified herein directed to be made," by implication releases the purchaser from liability to pay taxes which accrued before or during the receivership; and that he can insist upon the payment of such taxes from the earnings of the receivership or out of the purchase money. The same case holds that, in the absence of a provision in the decree to the contrary, the purchaser of railroad property at foreclosure sale takes the same subject to any existing defects in its title, and that he cannot insist that claims for unpaid rights of way shall be paid from the proceeds of the sale. First Nat. Bank v. Ewing, 103 Fed. R. 168. See infra, § 325.

40 Continental Tr. Co. v. American S. Co. (C. C. A.), 80 Fed. R. 180. See Dubuque & S. C. R. Co. v. Pierson (C. C. A.), 70 Fed. R. 303.

intervened." He may be compelled by attachment issued upon a rule, or order to show cause without a new suit, to pay the difference between his bid and the amount realized from the second sale, even though the sale has not been confirmed. Such a resale may be ordered by a summary proceeding upon the return of an order to show cause served upon the purchaser," and upon the parties at whose suit the sale was made."

A judicial sale may be set aside for fraud," mistake," accident or other unconscionable circumstances.47 It seems that the stockholders of a corporation hold their voting power and control over the officers subject to a quasi-trust for the benefit of its creditors; that consequently when they or their officers waive a defense or take other proceedings which shorten a foreclosure suit, an arrangement made orally or in writing before the sale under which the purchasers reorganize the assets and convey them to a new corporation, the bonds and stock of which are divided among the bond and stockholders of the mortgagor, excluding any other creditors from an interest in the same, even when stockholders have to pay for the right to participate in the reorganization, is fraudulent, and that for that reason the foreclosure will be set aside.48 A sale will not

41 Stuart v. Gay, 127 U. S. 518. A purchaser who has delayed payment of his bid for some time after the confirmation of the sale will not be allowed the earnings of the property in the intervening time. Boyle v. Farmers' L. & Tr. Co. (C. C. A.), 80 Fed. R. 930. The court will not refuse to confirm a sale upon the ground that the purchaser has not made the full cash payment required, when he has paid a substantial sum, and there is no reason to suppose that he will not pay the balance upon the entry of the order of confirmation. Fidelity I., Tr. & S. D. Co. v. Roanoke Iron Co., 84 Fed. R. 752.

42 Stuart v. Gay, 127 U. S. 518; Camden v. Mayhew, 129 U. S. 73; Central Tr. Co. v. Cincinnati, J. & M. R. Co., 58 Fed. R. 500.

43 Stuart v. Gay, 127 U. S. 518. Jaffrey v. Brown, 29 Fed. R. 476.

See

44 Terbell v. Lee, 40 Fed. R. 40.

45 Louisville Tr. Co. v. Louisville, N. A. & C. Ry. Co., 174 U. S. 674; James v. Milwaukee & M. R. Co., 6 Wall. 752.

46 Whitney v. Nat. Ex. Bank, 84 Fed. R. 377.

47 Schroeder v. Young, 161 U. S. 334; Seaman v. Riggins, 2 N. J. Eq. 214; Chamberlain v. Larned, 32 N. J. Eq. 295; Woodward v. Bullock, 27 N. J. Eq. 507; Wetzler v. Schaumann, 24 N. J. Eq. 60; Mut. Life Ins. Co. v. Goddard, 33 N. J. Eq. 482. See Gardner v. Schermerhorn, Clarke's Ch. (N. Y.) 101.

48 Louisville Tr. Co. v. Louisville, N. A. & C. Ry. Co., 174 U. S. 674; C., R. I. & P. R. Co. v. Howard, 7 Wall. 392. This salutary decision of the Supreme Court, in 174 Ü. S., was se verely criticised by Judge Wood in the same case, Farmers' L. & Tr. Co.

be set aside after the confirmation for inadequacy of price, unless the inadequacy is so gross as to shock the conscience.49 The court may impose as a condition for setting aside a sale that the moving parties first tender to the purchasers repayment of the purchase-money 50 or file a bond with a sufficient surety to pay the costs and expenses of the new sale.51

So long as the court keeps control of the case an application to set aside a judicial sale must be made in the foreclosure suit, and an original bill for that purpose will be dismissed unless the circumstances are extraordinary.52 How long after confirmation such relief can be granted upon motion is a matter 'which rests largely in the discretion of the court and depends upon the circumstances of the litigation." Where the original suit has been finally determined without leave reserved to move at the foot of the decree, and the next term after the entry of the final decree has expired, relief can only be granted upon a

v. Louisville, N. A. & C. Ry. Co., 103 Fed. R. 110. See pp. 129, 130, where he cites a number of authorities in support of the validity of such a reorganization. It is believed, however, that the decision will stand, and will be a means of preventing many frauds.

In the absence of fraud or insolvency, it seems that the failure of the purchaser at a foreclosure sale to perform a promise to allow secondmortgage bondholders to participate in the reorganization is not a reason for setting aside the sale, but that the only remedy is a suit to enforce the agreement. Robinson v. Iron R. Co., 135 U. S. 522. The court refused to sustain an objection to a bid that it was the intention of the purchasers to form a corporation to create a monopoly. Olmstead v. Distilling & C. F. Co., 73 Fed. R. 44. For a case where a failure to assess the stock in order to prevent a foreclosure was held to be no ground for setting aside a foreclosure sale, see Symmes v. Union Tr. Co., 60 Fed. R. 830. A judgment of foreclosure is not collusive or fraudulent simply because

the mortgagor who has no valid defense enters an appearance or files an answer failing to defend the suit before his time to appear expires. Dickerman v. Northern Tr. Co., 176 U. S. 181. Nor is it a ground for setting aside a foreclosure sale that the same persons were interested as officers of corporations or otherwise upon both sides of the suit, where there was no defense and there is no proof of fraud. Leavenworth County v. Chicago, R. L. & P. R. Co., 134 U.S. 688.

49 Fidelity L, Tr. & S. D. Co. v. Roanoke Iron Co., 84 Fed. R. 752. For a case where the amount of the price was considered and held adequate, see Lake S. L. Co. v. Brown, B. & Co., 44 Fed. R. 539.

50 Cunningham v. Macon & B. R. Co., 156 U. S. 400.

51 Chase v. Driver (C. C. A.), 92 Fed. R. 780.

52 Sayre v. Elyton Land Co., 73 Ala. 87, 96.

53 Farmers' L. & Tr. Co. v. Bankers' & M. T. Co., 148 N. Y. 315; Brown v. Frost, 10 Paige (N. Y.), 243; Campbell v. Gardner, 11 N. J. Eq. 423.

54

bill. Where a sale is set aside, a purchaser to whom the property has been delivered is in the position of a mortgagee in possession.55

57

The purchaser at the sale and those who purchase from him take the property subject to the right of the court to modify the decree or the terms of the sale, on appeal, or at the same or the succeeding term of the court.56 A material change of the terms may be a ground of relieving them from the purchaser. A party bidding at a foreclosure sale makes himself thereby a party to the suit, and subject to the jurisdiction of the court for all orders necessary to compel the perfecting of his purchase.58 He has the right to be heard on all questions thereafter arising affecting his bid,59 which are not foreclosed by the terms of the decree of sale, or expressly reserved to him by such decree.60 Where not concluded by the terms of the decree, any subsequent proceedings to determine in what securities, of diverse value, his bid shall be made good are matters affecting his interests on which he has the right to be heard. From the rulings thereupon, and upon all matters whereby his interests are injuriously affected, he has the right to appeal after the final decree;" and he is estopped by them

61

54 Sayre v. Elyton Land Co., 73 Ala. 85, 96; infra, § 352.

55 Compton v. Jesup, 167 U. S. 1, 36; Huguley Mfg. Co. v. Galeton Cotton Mills, 94 Fed. R. 269.

60 Kneeland v. Am. L. & Tr. Co., 136 U. S. 89, 95; Swann v. Wright's Ex'rs, 110 U. S. 590. Thus, when the rights of the claimants are not adjudicated in the decree of sale, which

56 Olcott v. Headrick, 141 U. S. 543, directs that the purchaser pay all re547; infra, § 352.

57 Olcott v. Headrick, 141 U. S. 543, 547. Where purchaser at a foreclosure sale had paid his bid in full, it was held that the court could not compel payment of a judgment rendered against the receiver after the sale had been confirmed. Chicago & O. R. Co. v. McCammon (C. C. A.), 61 Fed. R. 772. But see Southern Ry. Co. v. Bouknight (C. C. A.), 70 Fed. R. 442.

58 Kneeland v. Am. L. & Tr. Co., 136 U. S. 89, 95; Stuart v. Gay, 127 U. S. 518.

59 Kneeland v. Am. L. & Tr. Co., 136 U. S. 89, 95; Williams v. Morgan, 111 U. S. 684.

ceiver's debts or claims adjudged or to be adjudged as prior in lien or equity to the mortgage, he can contest the rights of such claimants, provided that they have not been previously adjudicated; and he can appeal from the order directing him to pay such a claim. Southern Ry. Co. v. Carnegie Steel Co., 176 U. S. 257; Lackawanna I. & C. Co. v. Farmers' L. & Tr. Co., 176 U. S. 298.

61 Kneeland v. Am. L. & Tr. Co., 136 U. S. 89, 95.

62 Kneeland v. Am. L. & Tr. Co., 136 U. S. 89, 95; Blossom v. Milwaukee & C. R. Co., 1 Wall. 655; Williams v. Morgan, 111 U. S. 684.