Onanian v. Leggat

• Decision Date: 23 October 1974
• Citation: 2 Mass.App.Ct. 623,317 N.E.2d 823
• Parties: Peter ONANIAN v. John E. LEGGAT.
• Court: Appeals Court of Massachusetts

Page 823

317 N.E.2d 823

2 Mass.App.Ct. 623

Peter ONANIAN v. John E. LEGGAT.

Appeals Court of Massachusetts, Middlesex.

Argued March 21, 1974.

Decided Oct. 23, 1974.

Robert F. Murphy, Jr., Lowell (John E. Leggat, Lowell, with him), for defendant.

Benjamin Goldman, Boston, for plaintiff.

Before ROSE, GOODMAN and GRANT, JJ.

ROSE, Justice.

The defendant appeals from a decree of the Superior Court in which the plaintiff was declared entitled to the payment of a sum of money, with interest, in lieu of specific performance of an agreement for the purchase of certain real property from the defendant. Since we have before us the judge's findings of fact and a transcript of the evidence heard by him, all questions of law, fact and discretion are open for our decision, and we can and do find facts not expressly found by the judge. JUERGENS V. VENTURE CAPITAL CORP., --- MASS.APP. ---, 295 N.E.2D 398 (1973)^A.

On July 17, 1970, the defendant qualified as executor under the will of one L. Francis F. Knowles. The will devised the decedent's real property to certain persons, but conferred a power of sale thereof upon the defendant as executor. The defendant received at least two offers to purchase the real property, one of which was from the plaintiff. During the last week of November, 1970, the plaintiff and the defendant executed an agreement for the purchase and sale of the property (the agreement) for $32,500, title to pass on or before January 1, 1971. The agreement was in typical form, but contained the following provision: 'This conveyance is subject to and contingent upon the issuance of a license to sell from the Probate Court for Middlesex County in the Estate of L. Francis F. Knowles.'

On December 3, 1970, the defendant filed a petition in the Probate Court for Middle sex County in which he represented that 'an advantageous offer for the purchase of said real estate ha(d) been made to (him) in the sum of ($32,500)' and prayed that he 'may be licensed to sell said real estate . . . at private sale in accordance with said offer or for a larger sum . . ..' The defendant also filed documents signed by each of the devisees assenting to the 'petition for license to sell real estate for the sum of $32,500 without further notice to me.' On December 15 a judge of the Probate Court entered a decree to the effect that the defendant be licensed to sell the property 'at private sale in accordance with said offer or for a larger sum, or at public auction, if he shall think best so to do . . ..'

By a letter dated December 29, 1970, the defendant informed the plaintiff that the license had been obtained. In the same letter, however, the defendant stated that another prospective purchaser was interested in the property and that it would be sole to the highest bidder on January 4, 1971. The plaintiff filed his bill in equity on December 31, 1970, seeking specific performance of the agreement and other relief, but, without waiving his rights under the agreement, submitted a bid to the defendant in the amount of $35,155, and obtained title to the property for that price during the pendency of this suit. The decree appealed from declared the defendant indebted to the plaintiff for the difference between that price and the contract price of $32,500, with interest from December 31, 1970.

We are uncertain whether the thrust of the defendant's argument is that his agreement with the plaintiff was not binding upon him or that a condition to which his obligation thereunder was subject was not fulfilled. Under either interpretation the argument is without merit.

1. Under the first of these interpretations, the defendant is contending that because he was under a duty to obtain the highest possible price for the property, he was excused from performing the agreement when a higher offer than the plaintiff's was received. The first of these propositions is unquestionably true, Newhall, Settlement of Estates (4th ed.) § 120. But the second proposition does not inevitably follow from it. The fiduciary duty of an executor or administrator is separate and distinct from the contractual duty he may incur when he enters into agreements with third persons. The first is owed to and enforceable by the beneficiaries of the estate, while the second is owed to and enforceable by a stranger to the estate. And, with a few exceptions not here material (see Wilder Grain Co. v. Felker, 296 Mass. 177, 5 N.E.2d 207 (1936), and cases cited), an executor or administrator is liable on contracts he makes for the benefit of the estate, if at all, individually and not in his representative capacity. Luscomb v. Ballard, 5 Gray 403, 405 (1855); Dresel v. Jordan, 104 Mass. 407, 413--414 (1870); Kingman v. Soule, 132 Mass. 285, 288 (1882); Tomlinson v. Flanagan, 287 Mass. 38, 44--45, 190 N.E. 785 (1934); Grueby v. Chase Harris Forbes Corp., 292 Mass. 156, 159, 197 N.E. 624 (1935); Anglo-American Direct Tea Trading Co. v. Seward, 294 Mass. 349, 351, 2 N.E.2d 448 (1936); Marsh v. Drowne, --- Mass.App. ---, ---, n. 5, ^b 307 N.E.2d 595 (1974). Thus, the two types of duties are enforceable by different persons and, in the eyes of the law, against different persons. See Eaton v. Walker, 244 Mass. 23, 30--32, 138 N.E.798 (1923). The executor or administrator, of course, is entitled to reimbursement for expenses reasonably and necessarily incurred for the benefit of the estate. Tomlinson v. Flanagan, supra, 287 Mass. at 45, 190 N.E. 785. But whether he can obtain such reimbursement is a question to be answered by the Probate Court in the settlement of his account, a separate proceeding which is not before us (Luscomb v. Ballard, supra), and as to which we make no comment (O'Brien v. Dwight, --- Mass. ---, ---, ^c 294 N.E.2d 363 (1973)).

That the contracts of an executor or administrator are enforceable in an action at law, however improvident they may be from the standpoint of the estate, is well settled by the cases cited in the preceding paragraph. It has been said that personal liability attaches even where the fiduciary entering into such a contract lacks authority to perform it in accordance with its terms. Dresel v. Jordan, 104 Mass. 407, 414 (1870). Additionally, where he has authority to sell a decedent's real property (contrast Dresel v. Jordan, supra ¹), has entered into a contract to do so (compare Weinstein v. Green, 347 Mass. 580, 199 N.E.2d 310 (1964)) and his obligation thereunder has become unconditional (contrast Grennan v. Pierce, 229 Mass. 292, 293--294, 118 N.E. 301 (1918)), the contract may well be specifically enforceable against him. See Justice v. Soderlund, 225 Mass. 320, 322--324, 114 N.E. 623 (1916); O'Neill v. Niccolls, 324 Mass. 382, 384--385, 86 N.E.2d 522 (1949). We need not decide whether the plaintiff could have obtained a decree ordering the defendant to convey the property, however, as no such decree was necessary. Having already acquired title to the property, the plaintiff received by the decree what amounts to nothing more than money damages in the nature of a refund of the excess of the price he paid over the price stipulated in the agreement--which he could just as well have recovered in an action at law.

It has been suggested that an executor or administrator can escape such personal liability to third persons by an agreement exempting himself therefrom. Anglo-American Direct Tea Trading Co. v. Seward, 294 Mass. 349, 351, 2 N.E.2d 448 (1936). Reilly v. Whiting, 332 Mass. 745, 746--747, 127 N.E.2d 567 (1955). But the agreement in the present case contains no provision purporting to grant such an exemption. The fact that the defendant is identified in the opening clause of the agreement as 'Executor u/w/o L. Francis F. Knowles' and that his signature is followed by the abbreviation 'Execr.' is insufficient to protect him against personal liability. Reilly v. Whiting, supra; Marsh v. Drowne, --- Mass.App. ---, ---, ^d 307 N.E.2d 595 (1974). Nor is it of any consequence that the defendant may have understood the agreement as affording him such protection, especially where as here, he was its draftsman. No such mistake of law on the defendant's part can free him from liability. Scirpo v. McMillan, 355 Mass. 657, 660, 247 N.E.2d 368 (1969). Rather, his liability is governed by '(t)he general rule . . . that . . . one who signs a written agreement is bound by its terms whether he reads and understands it or not . . .' Spritz v. Lishner, 355 Mass. 162, 164, 243 N.E.2d 163, 164 (1969).

2. If the defendant's argument is interpreted as one that his obligation under the agreement was conditional upon his not receiving a higher offer for the property, it must also fail. There was no evidence of any antecedent understanding between the parties in this regard. There was nothing in the agreement itself expressly relieving the defendant of liability upon receipt of a higher offer. The defendant seems to argue, however, that the provision making his obligation conditional upon obtaining a license from the Probate Court impliedly had this effect.

Though no such license is required by law where an executor has power under the will to sell real estate (Reilly v. Whiting, 332 Mass. 745, 747, 127 N.E.2d 567 (1955), and cases cited; contrast Roper v. Murphy, 317 Mass. 176, 178, 57 N.E.2d 569 (1944); RUSSO V. INZIRILLO, --- MASS. ---, 277 N.E.2D 302 (1971)^E), fiduciaries having that power commonly obtain such a license (Newhall, Settlement of Estates (4th ed.) § 113, n. 14), and an agreement which is conditional upon the procurement of a license will not be enforced unless and until the license has been obtained irrespective of the executor's powers under the will (Grennan v. Pierce, 229 Mass. 292, 293--294, 118 N.E. 301 (1918); cf. Forester v. O'Connell & Lee Mfg. Co., 328 Mass. 377, 380, 103 N.E.2d 705 (1952)). In the present case the agreement provides only that the conveyance of the property is contigent upon 'the issuance of a license...