Court Opinion

ID: 9653290
Source: CourtListenerOpinion
Date Created: 2023-08-23 17:43:11.461228+00
Date Added: 2024-06-11T18:12:57.571075
License: Public Domain

George Rose Smith, J., dissenting. The majority opinion seems to rest primarily upon (a) the view that Mrs. Thomas did not reserve in advance the privilege of rejecting the bids at the auction and (b) the rule that a fiduciary cannot purchase an interest in the subject matter of his trust. My reasons for disagreeing with the conclusion reached can best be stated by taking the events in chronological sequence. The auction sale was held during the day on Saturday, August 25. Heitman testified that he heard the auctioneer announce that Mrs. Thomas had until sometime on Monday (noon or two o’clock) to reject bids. Heitman’s later conduct in surrendering his certificate of purchase and in persuading Mrs. Thomas to give him a written statement that she had not rejected his bid confirm his candid admission that he understood that the privilege of rejection had been reserved. In view of Heitman’s own testimony it is readily apparent that this is not a case in which the right of rejection was not properly reserved in advance. On Saturday night Mrs. Thomas met with her attorney, Gerland Patten, and with her son to evaluate the results of the day’s proceedings. The-main purpose of the auction had been to save the home place if possible. The bids were more than enough to pay the mortgage; so Mrs. Thomas directed that the offer for the home place be rejected. All three persons present agree that no decision was reached with respect to any other bid and that Mrs. Thomas gave Patten unlimited authority to act in the matter as he thought best. On Monday morning Patten decided to reject, in addition to the bid for the home place, the Heitman bid and two others. He testified that he refused the Heitman offer because he thought the property was worth moré than the amount bid. It was only after the notice of rejection had been delivered to the escrow agent that Collins inquired what Patten would take for the property. Patten asked $7,000 for the tract, and Collins countered with an offer of $6,500, of which $250 was to be paid by a reduction in the escrow agent’s fee. Patten left Collins’ office, telephoned Mrs. Thomas’ son, and discussed the new offer with him. The two decided that the offer should be accepted, and that afternoon Patten, who had long had authority to act for Mrs. Thomas, entered into a written contract of sale with Collins. During the same day Heitman was notified that his bid was rejected, and he surrendered his certificate of purchase and accepted the return of his earnest money. Heitman testified that he then thought the matter to be closed. At that point in the course of events it seems plain to me that Collins had acquired the prior and superior equity. The Heitman bid had been rejected by Mrs. Thomas’ agent, who undoubtedly had that authority. Collins had entered into a written contract which was unquestionably binding upon him as well as upon Mrs. Thomas. That he did not make a payment until a few days later is immaterial, as the mutual promises made the contract enforcible by either party. Doubtless Collins was motivated by self-interest in purchasing the land, but I do not see how that interest conflicted with any fiduciary duty on his part. The Heitman offer had already been rejected; there is nothing in the record to suggest that the rejection was a collusive maneuver having as its purpose a resale to Collins at a better price. When the Heitman bid was rejected in good faith the tract was withdrawn from the escrow arrangement, which had to do only with the sales at auction, and Mrs. Thomas was free to sell the land to anyone she chose. As far as I can see, Collins was equally free to purchase, since his fiduciary duty toward the bidder had been terminated by Mrs. Thomas’ attorney. We have indicated that the prick of conscience that would be felt by a punctiliously honarable man warns a fiduciary that he is violating the high standard of conduct required of trustees. Johnson v. Lion Oil Co., 216 Ark. 736, 227 S. W. 2d 162. It does not seem to me that even the most scrupulous person would have hesitated to act as Collins did in this case. If I am correct at this point the later events are immaterial. Mrs. Thomas’ written statement that she had not rejected Heitman’s bid was contrary to the facts as. the law must view them, for she had rejected the bid through her agent and had even agreed to sell the land to another. It may well be that her statement to Heitman gave him a cause of action against her, but it cannot be said that his rights relate back to the day of the auction,. His rights as a bidder were completely extinguished when he acquiesced in the rejection of his offer. Those rights cannot be revived through the doctrine of relation back to the detriment of an innocent purchaser whose interest arose in the meantime.