Nay Aug Lumber Co. v. Scranton Trust Co.

Citations

• 240 Pa. 500
• 87 A. 843
• 1913 Pa. LEXIS 704

Syllabus

<p>Trusts and trustees — Trustee of corporate mortgage — Foreclosure sale — Purchase and re-sale of property — Equity.</p> <p>1. The trustee of a corporate mortgage is bound, in the exercise of the discretion left to it, to use the same diligence and care in protecting the interests of the bondholders that a prudent man would use in protecting his own interest, and such trustee, in the absence of a specific provision in the mortgage, has implied power to bid in the property at a foreclosure sale for the benefit of the bondholders at a figure sufficient to cover the debt, interest and costs, and not in excess of the value of the property.</p> <p>2. In such a case the trustee has the further right to make a resale of the property so acquired to the best advantage, and an order of court authorizing such sale is unnecessary.</p> <p>3. In a proceeding in equity to set aside a sheriff’s sale and to enjoin a public sale of land so acquired, the bill was dismissed where it appeared that the defendant, trustee under a corporate mortgage, had caused certain property subject to a lien of the mortgage to be sold and had purchased the same at a figure sufficient to pay debt, interest and costs, to prevent a sale at a sacrifice; and it further appeared that the action was taken in good faith and in the interest of all the bondholders as represented by the trustee and there was no suggestion that the bid of the trustee exceeded the fair value of the property; and there was no evidence tending to show that the re-sale cf the property by the defendant would be an inequitable or unjust exercise of its power.</p>