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Keirs v. Mt. Comfort Enterprises, Inc.
Citations: 266 Ark. 523; 587 S.W.2d 8; 1979 Ark. LEXIS 1514Docket: 79-95
Court: Supreme Court of Arkansas; September 24, 1979; Arkansas; State Supreme Court
Appellant, a minority stockholder, sought involuntary liquidation of Mt. Comfort Enterprises, Inc. under Arkansas statutes. The corporation was deemed insolvent, leading to the appointment of a receiver to sell its assets, including a 220-acre poultry farm, through public auction. The sale notice indicated that assets with existing liens would be sold separately, highlighting three outstanding mortgages exceeding $440,000, all in default. Bidders were required to qualify by depositing bonds or letters of credit. The property and personal items sold for a total high bid of $4.00 to S. E. Prince, but due to the mortgages, the effective sale price was $446,414.39. Appellant petitioned to set aside the sale, alleging inadequate purchase price and collusion to suppress bidding. The court's discretion in judicial sales was emphasized, noting that it could confirm or refuse sales based on its judgment. To overturn the sale, the petitioner must demonstrate a grossly inadequate price and additional factors like fraud or unfair conduct. Evidence indicated that appellant did not prove gross inadequacy, with an expert valuing the farm at $525,000 a year prior, including personal property sold separately. The expert acknowledged that the farm's value declined since it ceased operations, and the appellant's unsupported valuation was $600,000. The final sale price represented 85.03% of the expert's valuation and 74.40% of the appellant's estimate, leading the court to deny the petition. Courts have recognized gross inadequacy in sale prices when there is a significant disparity between the property's value and its sale price. Examples include Stevenson v. Gault, where a property valued at $3,500 was sold for $500 (14% of its value), and Mulkey v. White, where a 40-acre farm was sold for $975 despite higher bids being made in court. The law dictates that property sold at public auction by a decedent's representative must achieve at least 75% of its appraised value. In this case, the property sold for approximately 80% of its true value, and the appellant did not demonstrate that the sale price was grossly inadequate. The chancellor's refusal to set aside the sale was deemed appropriate. Additionally, the appellant's claims regarding the suppression of bidding were unsupported, as there was no evidence that potential bidders were excluded or that bidding was dissuaded. The court found no merit in the appellant’s arguments, leading to the affirmation of the lower court's decision.