De Hart's Estate, In re

• Decision Date: 23 October 1961
• Parties: In the Matter of the ESTATE of Walter DE HART, Deceased. Woodrow L. LEWIS et al., Appellants, v. Walter Eugene DE HART, Administrator, Respondent. Civ. 25502.
• Court: California Court of Appeals Court of Appeals

Page 603

16 Cal.Rptr. 603

196 Cal.App.2d 452

In the Matter of the ESTATE of Walter DE HART, Deceased.

Woodrow L. LEWIS et al., Appellants, v. Walter Eugene DE HART, Administrator, Respondent.

Civ. 25502.

District Court of Appeal, Second District, Division 2, California.

Oct. 23, 1961.

Woodrow L. Lewis, in pro. per.

Ball, Yudelson, Brown & Di Giuseppe, Van Nuys, Collman E. Yudelson, Studio City, for respondent.

FOX, Presiding Justice.

This is an appeal from an order vacating a minute order confirming a sale of real property.

The property here in question was located at 21307 Caroldale Ave., in Torrence; it is a part of the Estate of Walter De Hart, deceased, and was appraised at $10,500. The administrator engaged Woodrow L. Lewis who is licensed and operates as a real estate broker under the fictitious firm name of A & M Real Estate, to obtain a purchaser for this property and agreed to pay said broker a commission for effecting a sale thereof. In due course the broker presented to the administrator a proposal from Agnes M. Lewis to purchase this property for $9,600. The administrator thereupon filed a petition for the confirmation of the sale to Mrs. Lewis, which came on for hearing in the probate court on July 5, 1960, at which time a minute order was entered confirming the sale and providing for the payment of a commission to A & M Real Estate for services as agent in obtaining the purchaser and effecting the sale. On July 7th an escrow was opened to consummate the sale between the estate and Mrs. Lewis. The purported purchaser Mrs. Lewis, is the mother of Woodrow Lewis, the broker. This relationship, however, was not disclosed to the administrator, although inquiry was made on behalf of the administrator as to what, if any, relationship existed between the broker and his prospective purchaser. ^* Seventeen days later, on July 22d, a contract was entered into by Mrs. Lewis for the sale of this property to Michael P. Brink, who testified that the purchase price was $11,900, with a down payment of $500, a first trust deed of $8,400, and a second of $3,000; with monthly payments of $97, $67 of which was to be paid on the first encumbrance and $30 on the second.

The initial phase of the Brink transaction was handled by Mr. Lewis. He received and receipted for the down payment the Brinks made. It appears that the Brink deal contemplated that the estate would subordinate its interest of $3,000 in the property to a new and increased first encumbrance of $8,400. Provision for a new first encumbrance was made in the escrow instructions between the estate and Mrs. Lewis. It was there stated: 'It is hereby understood that a new first deed of trust, the loan to be executed by Lewis and Sons [a firm name under which Mrs. Lewis' other two sons also acted as brokers], will be placed on the subject property.' A loan commitment for $8,400 had been made by a lending institution.

On September 15th, the probate judge, who entered the minute order referred to above, issued on his own motion a citation directing Mr. Lewis, Mrs. Lewis, Mr. Brink, and the administrator to appear in his court at a specified time and there to show cause why the order confirming the sale of said real property to Mrs. Lewis should not be vacated and set aside. After an inquiry into the various phases of the aforesaid transaction, the trial court vacated its minute order of July 5th confirming the sale of the said property to Mrs. Lewis and authorizing the payment of a commission to A & M Real Estate [Mr. Lewis] as broker. In support of its order the trial court found, inter alia, that A & M Real Estate was employed by the administrator to obtain a purchaser for said property, that it agreed so to act and accepted such employment; that after agreeing so to act and in connection with such bid and previously confirmed sale said A & M Real Estate 'in truth and in fact represented not the Administrator and the estate in accordance with such employment, but, at all times after the acceptance of such employment, represented said purchaser [Mrs. Lewis], and that such facts were wrongfully and fraudulently withheld from the court and the Administrator'; that said property was resold by Mrs. Lewis to Brink for $11,900 (a gross profit of $2,300) while the escrow covering the sale from the administrator to her was pending; 'that A & M Real Estate, through Woodrow Lewis, a partner in such real estate firm, had knowledge' thereof; that 'the foregoing facts constitute[d] a fraud upon this court and upon the Administrator in connection with the sale of said real property by the Administrator and the confirmation thereof'; and that such sale was not for the best interests of the estate or the beneficiaries thereof. The evidence and the reasonable inferences therefrom adequately support the above findings.

'The relationship between a broker and his principal is fiduciary in nature, and imposes upon the broker the duty of acting in the highest good faith toward his principal. This duty of good faith precludes the broker from assuming a position adverse to that of his principal unless the principal consents. Moreover, it places upon the broker a legal obligation to disclose to his principal all the facts within his knowledge which are material to the matter in connection with which he is employed.' 9 Cal.Jur.2d 199; Bate v....