Farley v. Davis, 28357.

• Decision Date: 14 August 1941
• Docket Number: 28357.
• Citation: 10 Wn.2d 62,116 P.2d 263
• Parties: FARLEY v. DAVIS et al.
• Court: Washington Supreme Court

116 P.2d 263

10 Wn.2d 62

FARLEY v. DAVIS et al.

No. 28357.

Supreme Court of Washington

August 14, 1941

Department 1.

Appeal from Superior Court, Pierce County; Joseph A. Mallery, Judge.

Action by H. Ramsay Farley against Harold I. Davis and Etta V Davis, his wife, and the National Bank of Washington to have certain real property subjected to a constructive trust and to obtain an accounting of the rents and profits therefrom or, in alternative, to recover judgment against defendants for the value of the property, less amount of any existing encumbrances and of any legal charges paid by defendants. From judgment dismissing the action, plaintiff appeals.

Affirmed.

Ralph Woods, of Tacoma, for appellant.

Metzger Blair & Gardner, of Tacoma, for respondents.

STEINERT Justice.

Plaintiff brought suit to have certain real property subjected to a constructive trust and to obtain an accounting of the rents and profits derived therefrom, or, in the alternative, to recover judgment against defendants for the value of the property, less the amount of any existing encumbrances and of any legal charges previously paid by defendants. Demurrer to the complaint was sustained, and, plaintiff having elected to stand upon his pleading, judgment dismissing the action was entered. Plaintiff appealed.

The allegations of the complaint are substantially as follows: Mary B. Farley, a resident of Tacoma, died testate on November 24, 1937. She left surviving, as her heirs, devisees and legatees, three sons and four grandchildren. Appellant, H. Ramsay Farley, is one of the sons.

In her will, which was executed in 1931, the testatrix bequeathed certain articles of adornment and wearing apparel to various named legatees, created a trust in a specified amount in favor of her four grandchildren, and bequeathed and devised the remainder of her estate to her three sons, with the proviso that the real estate belonging to her should not be sold, mortgaged or alienated by her sons, or by any of them, within ten years from and after her death. The will further directed that her real property be retained intact for a like period of ten years, Before distribution should be made, and that during such period there should be no sale of any part of such realty unless necessary in order to comply with the terms of the will. Respondent, National Bank of Washington, a corporation, was nominated sole executor of the will, with power to administer the estate without intervention of any court.

On November 26, 1937, the will was admitted to probate by order of the superior court of Pierce county, the nomination of respondent bank as executor was confirmed, and letters testamentary were issued.

The inventory and appraisement, filed June 24, 1938, showed the following property of the estate, together with its appraised value:

                            An improved tract of ground referred to herein as the
                            "A" street property,
                          
                            $10,000.00,
                          
                            Two lots located in Lincoln Avenue Factory Sites Add.,
                          
                            40.00,
                          
                            Acreage in Kitsap county,
                          
                            100.00,
                          
                            Checking account in respondent bank,
                          
                            93.73,
                          
                            Savings account,
                          
                            1.02,
                          
                            Balance of an account with Alpha Corporation,
                          
                            393.43,
                          
                            Household goods,
                          
                            100.00,
                          
                            -----------
                          
                            Total,
                          
                            $10,728.18.
                          
                

The total appraised value of the personal property listed in the inventory above amounted to $588.18, and that of the real property amounted to $10,140. The Kitsap county acreage, appraised at one hundred dollars, was subsequently sold by the executor for one hundred thirty-five dollars.

The controversy in this case relates chiefly to the "A" street property, which was encumbered by a mortgage in the sum of six thousand dollars and was subject to a contract with Pierce county for the payment of delinquent taxes.

Three claims, including those of the undertaker and of a cemetery association, all totalling $437.98, were filed against the estate.

On September 15, 1939, which was approximately one year and ten months after the death of the testatrix, the executor petitioned the probate court for an order to sell the "A" street property at private sale. The petition set forth the number and amount of claims against the estate, alleged the necessity of paying the taxes on the property and the expenses of administration, and advised the court that the executor had an offer of thirteen thousand dollars for the "A" street property, less a commission of five per cent to the real estate agents representing the estate. Pursuant to that petition, the court on the same day entered an order directing that the property be sold at private sale.

The "A" street property was thereafter reappraised at a value of thirteen thousand five hundred dollars, and notice of the proposed sale thereof was regularly published as required by law. Two bids for the purchase of the property were received, one for thirteen thousand five hundred dollars by Healy Bros., Inc., and the other for thirteen thousand six hundred dollars by respondent Harold I. Davis. The bid made by Davis was accepted, and on October 11, 1939, the executor reported to the court the facts concerning the bids and the sale.

On October 20, 1939, Healy Bros., Inc., made a new bid amounting to thirteen thousand eight hundred dollars for the property. That bid, however, was not accepted, because it was not in an amount "equal to ten per cent higher than the bid upon which sale [to Davis] was made by the executor," as required by Rem.Rev.Stat. § 1502, nor was the bid accompanied by a deposit of twenty per cent of the amount thereof, as is also required by that statute.

Upon a hearing on the return of sale, the court, on October 23, 1939, confirmed the sale made to Davis. The executor thereupon paid to Comfort & Davis, a real estate firm of which respondent Davis was a partnership member, a commission of five per cent, or six hundred eighty dollars, on the consummated sale, as agreed.

On November 20, 1939, the executor made its final report showing that, after the payment of the mortgage and the delinquent taxes on the property, the commission and other expenses of sale, and the claims against the estate, there was left in the estate the sum of $3,325 in cash, the Alpha Corporation account, and the Lincoln Avenue Factory Sites property which had been appraised at forty dollars. Upon a hearing on the report, the court, on December 20, 1939, entered its final decree of distribution, and therein allowed the sum of five hundred dollars to the executor and a like sum to its attorney for their respective fees.

Appellant, individually and as trustee for the other heirs, refused to accept the money and property distributed to them under the final decree, and thereafter took from the other heirs an assignment of all their interest in the estate.

In addition to the foregoing recital, the complaint contains the following allegations, in substance, upon which appellant bases his alleged right of action: (1) That if the executor were not willing to administer the estate according to the terms of the will, it should have refused to be appointed, or else should have resigned; (2) that the "A" street property, here in question, was actually worth twenty-five thousand dollars, but was sold for one-half its value; (3) that it was unnecessary to sell the property or to incur the expenses of sale thereof for the purpose of paying the outstanding mortgage or the delinquent taxes, because the mortgagee of the property was not demanding payment, and because the income from the property was sufficient to pay the taxes according to the contract with the county; and that the property "seems to have been sold for the principal purpose of paying executor's fees and attorney's fees"; (4) that the property was sold without the actual knowledge of any of the persons interested in the estate that the executor knew the addresses of appellant and his brothers, but never advised any of them that the property would be sold; that appellant was often in the bank of respondent executor, but was never given notice that such sale was contemplated; that, in fact, respondent's trust officer and its attorney both told appellant at different times that the property would not be sold, mortgaged, or alienated until ten years had elapsed after the date of the death of the testatrix; that appellant relied on such representations, and for that reason did not watch the proceedings in court; and that the executor, because of its fiduciary relationship to the heirs, was obligated to inform them as to the state of the business and interests entrusted to it; (5) that the executor unnecessarily incurred expenses of sale of the "A" street property and unlawfully allowed the real estate firm of Comfort & Davis, of which respondent Davis was a partnership member, a commission upon such sale; and (6) that the firm of Comfort & Davis had for several years been the trusted agent of the testatrix for the collection of rentals from the "A" street property, and had continued to act as such agent for the executor after the death of the testatrix; that Comfort & Davis had special knowledge concerning the value of the property; that the members of that firm, likewise, stood in a fiduciary relationship to the heirs, which relationship required them to act with fidelity and good faith toward those interested in the estate; and that, because of such relationship, respondents Davis should, in right, justice, and good...