Eichelberger v. Hawthorne

| Md. | Feb 2, 1870

Miller, J.,

delivered the opinion of the Court.

A statement of some of the material facts disclosed by the record is important to a proper understanding of the questions presented by this appeal.

Daniel Domer died in 1846, leaving a will by which he devised all his real estate to his wife for life, and on her death he directed and empowered his executors to sell the same, and execute deeds therefor to the purchasers as soon as the purchase money was paid, or secured to be paid, and to distribute the proceeds equally to his three children, the issue of any child dying before distribution to have the portion their father or mother would have been entitled to if living. He appointed David Domer, one of his sons, and the appellant, Peter Eichelberger, his executors. The widow died in 1851, and the executors, in execution of their trust, obtained, in February, 1852, an order from the Orphans’ Court directing them to sell the real estate, in pursuance of which they sold, on the 4th of August, 1852, one hundred and thirty-nine acres of land to the appellee, William Hawthorne, at $12 per acre. This sale was duly reported to the Orphans’ Court by the executors, and the Court, on the 7th of September, 1852, passed thereon the usual order of ratification nisi, but never passed any order finally ratifying the sale. The executors then passed a final account in the Orphans’ Court, on the 25th of April, 1853, in which they charged themselves with the purchase money for this land, and the same with other funds in their hands is by that account, after payment of debts, distributed to the parties entitled. It also sufficiently appears from the record that all the distributees have received their respective shares of this distribution, except George II. Domer, a grandson, who was then under age, and whose share amounting to $130/^o- still remains in the hands of the appellant as executor. On the 31st of October, 1853, the executors executed a deed for the land to Hawthorne, the purchaser, by which they acknowledge receipt of the consideration of $1,668.

In this condition as to title the land remained until the 17th of August, 1860, when Geo. H. Domer, by next friend, filed a petition in the Orphans’ Court alleging the sale was not fair and bona fide, but was made by collusion and according to previous concert and agreement since carried out between the purchaser and the executors, that the latter should become participants and partners in the purchase and share the benefit thereof; that the land did not sell for its real value, and the sale.has never been finally ratified; that he has never received any distribution from the estate of his grandfather, and for these reasons he objects to the ratification of the sale and prays that it may be disaffirmed and rejected. Hawthorne answered this petition insisting upon the fairness and bona fides of the sale and upon its ratification. The executors also answered, but admitted most of the allegations of the petition, stating, however, they were not aware at the time that they were violating the law or their duty as executors in becoming interested in the purchase; they also charge in their answer that Hawthorne never paid them but the sum of $800 on the purchase. Testimony in reference to the subject of this petition was then taken, and the Orphans’ Court upon hearing and argument of the case passed an order dated the 3d of November, 1860, rejecting and setting aside the sale, but the order on its face assigns no reasons for its passage. David Domer, one of the executors, then declined to act further as such, and the appellant thereupon gave a new bond, became sole executor, and then proceeded under the order of the Orphans’ Court to re-sell the property. After sales to several purchasers who refused to comply, he effected a sale about the 10th of December, 1863, to James Null for $1,750, in whose hands the purchase money remains, but he is willing to pay the same into Court under the present proceedings in equity provided he can obtain a good title to the land.

The prayer of the present bill in equity filed by the appellee originally against the executors and George H. Domer, but to which by various amendments all the distributees and the second purchaser Null are made parties, is that the original sale to the complainant be confirmed and his title to the land secured, but if this cannot be done then that he be reimbursed out of the purchase money due by Null the full amount he paid to the executors on the original purchase and for general relief.

One of the disputed questions of fact in the case is, did the complainant pay to the executors the full amount of the purchase money he contracted to pay them for the land ? Upon all the proof in the record, which we have examined with much care, we decide this question in the affirmative. We are also of opinion the land sold for its then fair value; there is certainly no such inadequacy of price shown as would justify a Court of Equity in setting the sale aside on that ground if it had been made under its decree.

The complainant has acquiesced in the refusal of the Court below to interfere with the order of the Orphans’ Court vacating the sale, and that question is not now before us. The chief ground on which the appellant’s counsel resists the relief to the extent of reimbursing the complainant his purchase money and for permanent improvements made on the land, is that the original contract of sale to him was illegal and fraudulent, and was so decided to be by the Orphans’ Court, and, therefore, ho is not entitled to the aid of a Court of Equity in respect to any money he has paid, or any thing he has done in pursuance thereof. The order of the Orphans’ Court, as we have seen, does not state the grounds on which it was passed. One of the Judges who signed that order was examined as a witness, and says the particular matter on which the sale was set aside was the fraudulent collusion therein between the executors and Hawthorne the purchaser. Conceding for the sake of the argument, without hoAvever intimating an opinion to that effect, that it is competent for a Judge thus to explain by his oral testimony what Avas intended to be decided by his judicial order, and that that order is open to explanation by evidence aliunde, Ave are clearly of opinion there is nothing in this case to show the sale was tainted Avith actual and positive fraud. The land was fairly offered at public auction, was competed for by other bidders present, and was sold for its fair value. The only ground on which that sale could be impeached Avas that the executors were interested therein, and thus became purchasers at their own sale, of property which they.held in trust for others. The purchaser, Hawthorne, can stand in no worse position in this respect than if he had been himself one of the executors, and the law does not denounce such sales as fraudulent in fact, or make them absolutely void. It declares them voidable and allows them to be set aside at the instance of a cestui que trust or any one interested in the estate, and it does this on grounds of policy established, it is true, in the soundest principles of equity, to remove all temptation from those acting as fiduciaries for others to promote their OAvn interests by violating their trusts. But whenever a party seeks the aid of a Court of Equity against a sale of this kind the rights and equities of the purchaser are never overlooked. Davoue vs. Fanning, 2 Johns. Ch. Rep., 252; Mason vs. Martin & Kemp, 4 Md., 124. In Smith vs. Townshend, 27 Md., 390, Avhere sales and deeds of the trust real estate from cestuis que trust to trustee were set aside upon the application of the former, this Court said: “ in granting this relief it is equitable that the complainants be required to repay the purchase money with interest thereon, and that the trustee should be allowed such sums as may have been expended in repairs and improvements of a permanent character.” There is certainly nothing to be found in this record tending to induce a Court of Equity to deny to this complainant and purchaser the benefit of these equitable doctrines, or those of like character annoúnced in Jones vs. Jones, 4 Gill, 87, and in the more recent case of McLaughlin vs. Barnum, 31 Md., 425. He purchased at a public sale for a fair price, has paid the purchase money, and made improvements under the impression he had obtained a good title, and the sale has been vacated for no other conceivable reason than because he agreed at the time the executors or one of them should become interested in the purchase or have some part of the land.

Such would be the undoubted rights and equities of the appellee, if any of these distributees had proceeded in equity to have the sale set aside and the deed from the executors to liim vacated. But it is said the Orphans’ Court had exclusive jurisdiction over the matter and in the exercise of that jurisdiction has pronounced upon the invalidity of the sale, and the only remedy the appellee had was by appeal from the decision of that Court, and that he cannot maintain a bill in equity for any relief on the subject or on any matter connected with the setting aside of the sale. It must be remembered here that the Orphans’ Courts are tribunals of limited powers, forbidden to “exercise any jurisdiction not expressly conferred by law.” As the law stood at the time this sale was made and since embodied in the Code, (Article 93, section 280,) it is provided a sale made by an executor under authority derived from, the will, “shall not be valid or effective unless ratified or confirmed by the Orphans’ Court, after notice- given by publication in the same manner practised in cases of sales of lands under decrees in equity.” It would be exceedingly difficult in view of the provisions of Article 16, section 68, that “nothing in the testamentary law of this State shall be construed in any manner to affect the general superintending power of the Courts having chancery jurisdiction with respect to trusts,” and of section 65 of the same Article, that “where a sale has been made by an executor under a supposed authority derived from a will, the Court” (of Chancery) “may at its discretion confirm such sale oh hearing of the parties interested, or ex parte in cases where a bill might be taken pro eonfesso,” to hold that the Orphans’ Courts have exclusive jurisdiction over the confirmation and rejection of such sales, but that question need not be decided in this case. Certain it is these executors could, if they had chosen, have invoked the aid of a Court of Equity and administered their trust under its supervisory power, and if they had done so and this sale had been set aside by that Court, the equities of the purchaser would have been at once recognized and protected. But if we should concede that in a case like this where the executors have proceeded to sell without asking the protection of a Court of Equity, and solely under the authority and direction of the Orphans’ Court, the law stated in Article 93, section 280, confers on that Court exclusive jurisdiction to confirm or reject the sale, it extends no further. The power to entertain and adjust the equities of the purchaser, resulting from the order vacating the sale, is not conferred upon that Court and it has no jurisdiction over that subject. Upon appeal from that order the only question open here would be the power of that Court to pass it and the propriety of its passage in the particular case. It would be manifestly unjust to deny the appellee relief in equity, because the distributee had the right to resort to a tribunal whose jurisdiction was adequate to grant him relief by vacating the sale, but totally-inadequate to protect the rights and equities of the purchaser, and under all the circumstances of this case we have no doubt of the right of the purchaser to maintain his bill in equity for the purpose of asserting these equities, and for relief to the extent granted him by the decree appealed, from.

That decree directs Null, the second purchaser, to bring into Court the purchase money due by him with the interest thereon, and also directs the appellant as executor to bring into Court the money remaining in his hands which was distributed by the Orphans’ Court account to George H. Domer, and then refers the case to the auditor to take proof and state an account allowing from the fund derived from these two sources, first, the costs of these proceedings, second, the proper share or distribution from the said purchase money to George H. Domer, third, the balance or so much thereof as may be necessary to the payment of the claim of the complainant, allowing him the whole amount of the purchase money for which the land was sold to hinx by the executors with interest thereon from the time of payment of the same, and also the cost of all permanent improvements made or erected on the premises during the time he had possession thereof, and charging him xvith the rents, issues and profits of the land during the same time, and the balance if any to be distributed to the heirs of the deceased testator.

(Decided 2d February, 1870.)

All parties interested in the estate have either by their answers repudiated all claim against the appellee and objected to any disturbance of the accounts under which they have already received their distributive shares from the executors, or acquiesce in the decree by declining to appeal therefrom. Even George H. Domer, who by his next friend, originated the proceedings in the Orphans’ Court to vacate the sale, and who was at the date of the decree at least twenty-three years of age, has not appealed. The only appellant is the executor, who can have no personal interest in the ixxatter, and as against him we have no hesitation in affirming the decree.

Decree affirmed and

cause remanded.