ARKANSAS COURT OF APPEALS

NOT DESIGNATED FOR PUBLICATION ANDREE LAYTON ROAF, JUDGE

DIVISION I

HUGH B. AND JANELLE CHALMERS

APPELLANTS

V.

NINA CHALMERS

APPELLEE

CA00-1438

December 5, 2001

AN APPEAL FROM CRITTENDEN COUNTY CHANCERY COURT

E-94-60

HONORABLE RICE VAN AUSDALL, CHANCELLOR

AFFIRMED

Hugh B. and Janelle Chalmers (the Chalmerses) appeal from an order confirming a foreclosure sale. On appeal, the Chalmerses contend that the appellee's bid of $10,000 is so low as to shock the conscience of the court and that the trial court erred and abused its discretion in failing to set aside the bid and in confirming the sale. We affirm.

Nina Chalmers (Ms. Chalmers), the appellee, filed suit against the Chalmerses seeking to foreclose a deed of trust on the Chalmerses' undivided one-half interest in certain commercial real property located on East Broadway Street in West Memphis, Arkansas. The amount owed Ms. Chalmers on the promissory note, secured by the deed of trust, was $35,000. Ms. Chalmers was awarded foreclosure along with a money judgment in the amount of $35,000. The trial court ordered the subject property sold at a public auction.

Only one bid of $10,000 was made on the property, by Ms. Chalmers. The Chalmerses filed a motion for the court to set aside the sale on the grounds that the property had a value far in excessof the purchase price and that the bid price was so low as to shock the conscience of the court. The trial court subsequently entered an order confirming the sale. The Chalmerses appeal from this order. On appeal, the Chalmerses argue that the trial court erred and abused its discretion by failing to set aside as unconscionably low the bid received at the foreclosure sale and confirmed by the court. The Chalmerses argue that the court confirmed the sale despite evidence that the property is valued much higher than the bid amount of $10,000, in view of the fact that the property: (1) is currently zoned commercial, (2) spans at least 500 linear feet along the intersection of Broadway and Grove Drive, (3) has been under lease to provide $1,000.00 monthly income, and (4) has been operated as an automobile dealership for more than fifteen years. Specifically, the Chalmerses contend that the $10,000 bid is between four and nine percent of the value of the property, and that under Ark. Code Ann. § 18-49-107 (1987), it has historically been found that in a sale of this type that no bid be accepted if less than two-thirds the market value of the property. Ms. Chalmers counters, arguing that the findings of fact and conclusions of law by the court were entirely appropriate under the evidence presented, and that $10,000 for the Chalmerses' undivided one-half interest in property burdened by a $437,000 superior mortgage does not amount to evidence that would shock the conscience of the court.

In judicial sales, the court is the vendor, and in the exercise of sound judicial discretion, it may confirm or refuse to confirm a sale made under its order. Kellett v. Pochontas Fed. Savings & Loan Ass'n, 25 Ark. App. 243, 756 S.W.2d 926 (1988); Estate of Hodges v. Wilkie, 14 Ark. App. 297, 688 S.W.2d 307 (1985). When examining a discretionary decision made by a chancellor, the question is not what the reviewing court would have done, but whether, as a matter of law, the chancellor abused his discretion. Pingel v. Troy & Nichols, Inc., 51 Ark. App. 41, 907 S.W.2d 757 (1995). In reviewing the action of the trial court to see if there has been an abuse of discretion, theappellate court will not substitute its own decision for that of the trial court, but merely reviews the case to see whether the decision was within the latitude of decisions which a judge or court could make in a case. Looper v. Madison Guaranty Savings & Loan Ass'n, 292 Ark. 225, 729 S.W.2d 156 (1987).

Judicial sales are not to be treated lightly, and to give them desired stability, the court should not refuse to confirm a sale for mere inadequacy of price. Campbell v. Campbell, 20 Ark. App. 170, 725 S.W.2d 585 (1987); Kellett, supra. Mere inadequacy of price, unless so great as to shock the conscience of the court or amount to evidence of fraud, will not justify the court in refusing to confirm a sale. Looper, supra. However, when inadequacy of price is shown, equity will seize upon slight circumstances to go along with the inadequacy of price and justify a refusal to confirm the sale, even in the absence of fraud or misconduct. Campbell, supra.

A price that "shocks the conscience" of the court depends on a variety of circumstances including: the value of the property, the circumstances surrounding the sale, the price, the rights of the parties, and the harm that may result if the sale is confirmed. Pingel, supra. Nevertheless, the decision is one for the chancellor to make using sound discretion. Id.; Looper, supra. There is no fixed formula that exists to measure what is a shocking price at a sale, but there are fixed rules for review of such a case. Pingel, supra. The appellate court does not retry cases, and factual determinations made by the chancellor must be upheld unless clearly erroneous. Id.

In Looper, supra, the supreme court affirmed the chancellor's refusal to confirm a foreclosure sale. The sale price for the property, $1,900, was 4.4% of the market value of $42,500, and the total amount of the judgment, interest, and costs against the property amounted to $46,470.61. The trial court determined that the price bid was "so grossly inadequate as to shock the conscience," and that the defendant would suffer great harm by becoming subject to a largedeficiency judgment of more than $44,000. Looper, supra at 230. However, there were other irregularities with the sale, including the fact that appellant's counsel failed to attend the sale on time and missed the opportunity to bid as per the appellant's instructions.

In the case at bar, there were two mortgages encumbering the property. One was the mortgage held by Ms. Chalmers in the amount of $35,000, which was subordinated to two other notes that totalled $437,000 by the time of the hearing. These notes, however, were secured by several pieces of property. Hugh B. Chalmers testified that he believed the property to be worth in excess of $200,000. Jerry Clark, executive vice president at Fidelity National Bank, stated that the property including lots across the street had been valued some years earlier at $1,075,000, but that in his opinion, the present market value of the subject property was only $325,000.

In confirming the sale, the trial court stated that it was dealing with a situation where the property was encumbered by a large debt that also encumbered other property with a principal balance exceeding $400,000. The court found that the $10,000 bid for the property was not a nominal bid because the property was vacant and no assurances were given that if another sale were held, the parties would not be back in court. The court observed that it could not just go out and make people bid on the property.

The Chalmerses reliance on Ark. Code Ann. § 18-49-107 is misplaced, at best. Ark. Code Ann. § 18-49-107 was repealed in 1987, and provided that property under mortgage should not sell for less than two-thirds of the appraised value. However, this section addressed private sales pursuant to power of sales clauses contained in a mortgage, and has no application to public, judicial sales such as occurred in the present case.

There is no fixed mathematical formula by which to determine if a price offered at public sale shocks the conscience of the court. Pingel, supra. However, mere inadequacy of price issimply not a sufficient ground for the chancellor to set aside a sale, and this court must defer to the chancellor in making the determination of whether to exercise discretion in confirming or setting aside such a sale. Viewing the evidence and findings of fact in a light most favorable to Ms. Chalmers, we cannot say that the trial court abused its discretion in confirming this sale.

Affirmed.

Bird and Jennings , JJ., agree.