The opinion of the court was delivered by: WEINFELD
The petitioner seeks the review of an order of the Referee in Bankruptcy which rejected his bid for the purchase of certain of the bankrupt's assets, consisting of real property and its contents, for $ 18,700, subject to liens amounting to $ 11,750, and denied confirmation of the sale to him. The order further directed the resale of the premises to consider higher offers received after the original sale had been concluded, as well as such other and higher bids, if any, which might be submitted upon the resale.
The original sale, at which petitioner made his bid, was conducted on December 5th, before the Referee. This was pursuant to an order previously entered, based upon a prior private bid of $ 10,000, subject to existing liens, which cash sum was fixed as the upset price. Appraisers appointed by the Referee had valued the property at $ 41,725. The sale had been extensively advertised and was well attended. The bidding started above the upset price, at $ 11,000, some twenty eight bids, each higher than the other, were made, until the petitioner offered $ 18,700, which was the highest. This offer of $ 18,700, plus the liens of $ 11,750, totalled $ 30,450, but was $ 843 less than $ 31,293.75, 75% of the appraised value of $ 41,725.
The attorney for the trustee, who acted as the auctioneer, announced the property sold to the petitioner. He then stated to the Referee, in the presence of the assembled group: 'The bid is slightly below the 75% of the appraised valuation. We have discussed it with the trustee and we feel under the circumstances, in view of the fact that we have had spirited bidding and it has been amply advertised and inspected, that your Honor should confirm the sale,' to which the Referee responded: 'Submit order.' However, no order was then submitted to, or signed by, the Referee. The trustee, on the day of the sale, duly deposited in his account a $ 5,000 check received from petitioner, which accompanied his bid. On the same day, the attorney for the trustee notified the petitioner's attorney that the closing of title would take place a week hence, December 12th, and also requested the title company to be ready to consummate the matter at that time.
Three days later, on December 8th, 1952, one of the unsuccessful bidders at the sale notified the trustee's attorneys that he desired to increase his bid to $ 20,000. On the same day they addressed a communication to the Referee, enclosing a proposed order of confirmation, advised him of the increased offer and called attention to his discretionary power to reopen the bids. Then, on December 11th, another prospective purchaser offered $ 25,000.
On December 12th, what was evidently an informal conference was held at the office of the Referee, attended by various interested parties. The trustee, notwithstanding his previous recommendation that the Referee confirm the sale, joined with creditors' representatives, who urged rejection of the petitioner's bid on the ground that it was less than the appraised value of the property, and urged reconsideration based upon the two increased offers. The petitioner, now represented by an attorney, pressed for confirmation of the sale. The Referee finally stated: 'In the light of the substantially increased offer and also in view of the fact that the highest bid reached at the last special meeting that was called did not reach 75% of the appraised value, and particularly in view of the fact that these new offers have been brought to the attention of the court before the confirmation order had been signed, I feel it to the best interests of the creditors that the offer be rejected of Mr. Ratett (petitioner) and a new sale be held and the matter left open for all purposes.' He thereupon signed an order refusing confirmation of the sale to petitioner and directing a new sale on December 30th, 1952. It is this order which petitioner seeks to reverse.
Since the sale was less than 75% of the appraised value, it was subject to the approval of the court. Section 70, sub. f of the Bankruptcy Act, 11 U.S.C.A. § 110, sub. f, provides:
'* * * Real and personal property shall, when practicable, be sold subject to the approval of the court. It shall not be sold otherwise than subject to the approval of the court for less than 75 per centum of its appraised value.'
Petitioner, in substance, contends that this provision of the law was observed. He urges that the circumstances attendant upon the sale on December 5th indicate that his bid, as the highest made thereat, was recommended by the trustee and his attorney to the Referee; that the Referee approved the sale then and there, and that the order of confirmation, although not signed, was a mere formality- a ministerial act- particularly so since Sec. 70, sub. f does not specify any particular form of approval.
If the Referee did, in fact, approve the sale, petitioner is entitled to an order of confirmation. If there was no approval, the question still remains whether there was, as petitioner further urges, an abuse of discretion in rejecting his bid.
To spell out approval, petitioner must rely upon the actions of the trustee and Referee in connection with the events of the sale and those subsequent thereto. It is stating the obvious that the recommendations of the trustee and his attorney and their actions at the sale and subsequent thereto are not binding upon the Referee. An accepted bid by a trustee makes the bidder no more than the one whose proposal has been recommended.
Sales under Sec. 70 of the Bankruptcy Act are not complete until confirmed,
and no action or conduct by the trustee can serve to establish such approval which involves the exercise of the court's discretion.
Thus, I come to the remaining ground which petitioner advances to support his claim of an in fact approval, the Referee's statement, 'Submit order.' made at the conclusion of the sale and following the trustee's recommendation of acceptance of the bid. Any inference of approval, sought to be drawn from the direction for the submission of a proposed order, is negatived by the fact that the Referee signed no order of approval, made no statement of approval and stated during the course of the spirited bidding: 'This is subject to confirmation.' Finally, Sec. 70, sub. f of the Bankruptcy Act, which gives the court power to confirm or set aside a sale of the bankrupt's property, requires the exercise of judicial discretion, and this may not be inferred. Judicial discretion is positive action taken in clear and unmistakable terms.
Under the circumstances, petitioner has failed to establish that the sale was, in fact, confirmed, and so he may not prevail on this ground.
The remaining question is whether the Referee abused his discretion in rejecting petitioner's bid and ordering a new sale based upon the increased offers.
There is no question but that the sale was well advertised, that bidding was spirited and competitive, that petitioner's bid was the highest and made with good faith. Further, there is a question as to whether the increased bid of $ 20,000, made by the unsuccessful bidder, was stamped in good faith. But these circumstances give petitioner, as the highest bidder, no enforceable interest which compels automatic confirmation of the sale.