In re Herbert's Estate

• Decision Date: 24 March 1947
• Docket Number: 3292
• Citation: 356 Pa. 107,51 A.2d 753
• Parties: Herbert Estate
• Court: Pennsylvania Supreme Court

51 A.2d 753

356 Pa. 107

Herbert Estate

No. 3292

Supreme Court of Pennsylvania

March 24, 1947

Argued January 13, 1947

Appeal, No. 1, Jan. T., 1947, from decree of O.C., Montgomery Co., 1945, No. 49,290, in Estate of George D. Herbert deceased. Decree affirmed.

Bill in equity for specific performance. Before DANNEHOWER, J. specially presiding.

Adjudication filed finding for defendants and dismissing bill. Plaintiff appealed.

Decree affirmed; costs to be paid by the estate.

Alfred L. Taxis, Jr., for appellant.

Kirke Bryan, with him Wallace M. Keely, for appellee.

Before MAXEY, C.J., DREW, LINN, STERN, PATTERSON, STEARNE and JONES JJ.

OPINION

MR. JUSTICE HORACE STERN

Plaintiff, Jonathan B Hillegass, is seeking to obtain the conveyance to himself of a piece of real estate which he purchased at an auction sale. The court below dismissed the bill in equity which he filed for that purpose.

George D. Herbert, at the time of his death on May 20, 1944, was the owner of a tract of land of somewhat over 19 acres situate in Montgomery County. In his will he appointed Warren J. Herbert and Harry S. Herbert executors of his estate and directed them to sell all his real estate at public or private sale at any time when in their discretion it seemed proper. On October 28, 1944, the executors held a public auction sale of the above mentioned tract, the conditions of the sale being that ten per cent of the purchase money should be paid in cash, and settlement for the premises should be made by the purchaser on April 1, 1945, at which time the deed was to be executed and possession delivered. Plaintiff, with a bid of $6,000, was the highest bidder at the sale and the property was knocked down to him; he paid $600 on account and a memorandum of the purchase was signed by him and the executors. When, however, April 1, 1945, approached, he was informed by the executors, through their attorney, that they had meanwhile received a substantially higher offer for the property, but that, if he was still interested, he might, if he so desired, make another offer of his own. The executors had, on March 26, 1945, entered into an agreement with one Murray H. Gulack to sell him the property for $7,000. As plaintiff made no further offer the executors notified him that they were fixing April 27, 1945, as the date when everyone interested could appear and whoever was the highest bidder could become the purchaser. Plaintiff again failed to respond to this invitation and instead brought the present bill in equity for specific performance of the sale to him at the auction. On May 9, 1945, Gulack entered into a new agreement with the executors changing the price which he had agreed to pay for the property from $7,000 to $7,500.

We are not here concerned with the agreement entered into between Gulack and the executors. Whether that latter should carry out that agreement or should give to all parties in interest a further chance to make still higher offers, does not call for determination in this proceeding, which relates only to the right of plaintiff to obtain specific performance of his agreement. As to that question much testimony was taken in the court below in regard to alleged collusion and stifling of bidding at the auction sale. The executors produced evidence to the effect that Gulack had announced to plaintiff prior to the sale his intention to bid as high as $9,000 for the property but had been dissuaded from so doing because of assurances given him by plaintiff that he would be afforded an opportunity to purchase part of the tract after plaintiff had obtained the property; there was also testimony that another prospective bidder who would have bid up to $6,200 refrained from doing so because of a somewhat similar assurance. The court found that, while there was no fraud, there was at least a misunderstanding on the part of these bidders as a result of which the sale did not bring the price it should have brought, and therefore, having regard for the best interests of the estate, this was in itself a reason why equity should refuse to grant plaintiff specific performance. There was testimony that the land was fairly worth from $7,200 to $9,000, and indeed that plaintiff himself had made decedent an offer of it to $9,000 some time between the years 1930 and 1933, and therefore that plaintiff's bid of $6,000 did not represent the real value of the property. But, while all these considerations may serve as added justification for the court's refusal to grant plaintiff the relief prayed for, the fundamental reason why the action of the court was proper lies in Pennsylvania's long established law governing the sale of real estate by fiduciaries acting under a testamentary power or where approval by the orphans' court is required.

This case arose before the passage of the Act of May 24, 1945 P.L. 1944, which, according to its express provision, became effective only upon its enactment. The present controversy, therefore, as is admitted by all the parties, must be adjudicated under the decisional law as it existed prior to the enactment of that statute. By a continuous line of decisions stemming from Dundas's Appeal, 64 Pa. 325, extending through Orr's Estate, 283 Pa. 476, 129 A. 565; McCullough's Estate, 292 Pa. 177, 140 A. 865; Clark v. Provident Trust Co. of Philadelphia, 329 Pa. 421, 198 A. 36, and culminating in Kane v. Girard Trust Company, 351 Pa. 191, 40 A.2d 466 (see also Brereton Estate, 355 Pa. 45, 51, 48 A.2d 868, 870, 871), it was consistently held that, where such a fiduciary had agreed to sell trust property, he not only could, but must, repudiate the agreement at any time before final settlement and conveyance of the title if he received an offer for the property substantially higher than the price for which he had originally contracted to sell it. It was said in McCullough's Estate, supra (p. 181, A. p. 866): "It is not what was or what could have been obtained for the property, but what can be obtained for it that is the determining factor." It was not merely a power on the part of the fiduciary but a duty to dispose of trust property upon the most advantageous terms which it was possible to secure for the benefit of the estate, irrespective of the fact that a prior agreement which was being superseded might have been entered into by him in the utmost good faith and for what appeared at the time to be a fair and adequate consideration: Orr's Estate, supra, pp. 479, 480, A. p. 566; Clark v. Provident Trust Co. of Philadelphia, supra, p. 426, A. p. 39. in Kane v. Girard Trust Co., supra, it was held to be mandatory upon the trustees to accept a higher offer for the trust real estate even though made at almost the very last moment when the deed was being conveyed to an earlier purchaser. It was said in that case (p. 197, A. p. 469): "Our decisions show conclusively that title must pass to the buyer...