Court Opinion

ID: 6382643
Source: CourtListenerOpinion
Date Created: 2022-06-25 00:02:37.151032+00
Date Added: 2024-06-11T15:50:16.003948
License: Public Domain

Bolger, J.,
dissenting. — The majority opinion goes unnecessarily far in its broad ruling that the Act of July 2, 1941, P. L. 227, does not, by its terms, protect a broker who produces a second bidder with whom the executor contracts, even though his contract be not finally accepted. It is perfectly clear that in order to obtain the best possible price for the estate an executor may enter into two or more contracts in turn for successively higher prices. If he does not do so, he might properly be subject to surcharge. It is his duty to obtain the higher price and to bind the prospective purchaser in every instance. Judge Ladner, in his work on Conveyancing in Pennsylvania, vol. I, p. 95, sec. 45(a), Fiduciary Agreements of Sale, states that it is the duty of a fiduciary, even after the agreement of sale has been executed, to accept a substantially higher offer if made before actual settlement, citing Orr’s Estate, 283 Pa. 476, and McCullough’s Estate, 292 Pa. 177.
It may be said that a fiduciary cannot legally enter into more than one contract to sell the same real estate, because in making the first contract he divests him*668self of the equitable title and there is nothing therefore he can sell to anyone else: Kerr et al. v. Day, 14 Pa. 112; Driebe et al. v. Fort Penn Realty Co. et al., 331 Pa. 314. But this principle does not apply to sales by a fiduciary. As previously stated, the rule as laid down in Orr’s Estate and in McCullough’s Estate that a higher offer must be accepted, if made at any time prior to actual settlement, is the one applicable to fiduciaries. Such acceptance, of course, if made, can be by contract only, which presupposes the right and the necessity to contract. Sales of real estate by fiduciaries may or may not require the interposition of the court; the will of the testator is often the governing authority. The doctrine of Orr’s Estate, supra, does not distinguish between sales made with or without the approval of the court, and we therefore must take it that the rule appliés to both classes of case.
As stated in Neely v. The Pennsylvania Co., etc., et al., 152 Pa. Superior Ct. 70, the Act of 1941, supra, was passed for the purpose of effecting equality among brokers in the division of one commission where they all may have earned compensation for their services. By its terms, the act now protects all brokers who are “entitled to commissions for said agreements of sale”, provided that the total aggregate commission paid shall not, in any event, exceed five percent of the gross consideration of the final sale. This, in my opinion, protects the broker for a second contractor, although unsuccessful, as well as a first bidder who was unsuccessful. Both bids are unsuccessful for the same reason, viz, insufficiency of price.
To argue that the first broker is in a preferential position because he produces the first offeror begs the question, which is which offer will yield the top dollar to the estate. Furthermore, a second broker might do the estate as much service as the first. Here the exceptant, Mr. Grady, broker for the second party, appeared as an expert witness at the first hearing before *669the master and testified that the only offer then before the court, $15,000, was inadequate. On cross-examination he was asked if he had a higher bid. .He said he did not. Apparently he met this challenge by going out and obtaining a higher bidder at $16,500. In doing so he contributed to procuring the increase in the purchase price paid by the ultimate purchaser. In presenting this offer to the trustee, however, he was careful to insure himself that he would be paid for his services by obtaining an agreement of sale between his client and the trustee. Had he merely submitted a bid which was not accepted he would probably not have been entitled to a share of the commission. No one can criticize this transaction. The trustee had to contract in order to protect himself and the estate. He could not merely say to Mr. Grady, “appear before the master and make your bid”. That might have seared Mr. Grady off because he could readily perceive that by merely entering a bid his commission would be endangered, and the trustee might have been surcharged if Mr. Grady did not appear and make his bid. But being willing to split the commission, exceptant was willing to, and did, have his client contract to purchase the property. Therefore, the conclusion in the majority opinion that Mr. Grady’s client’s contract under the circumstances was not a contract, but was merely an offer to the court, is incorrect. It was just as much an, obligation as was the original contract then before the court.
The statement in the majority opinion quoted from Neely v. The Pennsylvania Co., etc., et al., 152 Pa. Superior Ct. 70, is applicable equally to a second bidder as well as to a first bidder. There the agreement expressly provided no commission was to be paid if settlement under the agreement was not actually completed, and the court said:
“The purpose of the amendment was to place brokers who have earned commissions in positions of equality *670by a division between them of the amount of a single commission. ... A broker is more likely to exert himself to secure a purchaser on acceptable terms by the assurance that he will not be wholly barred from compensation by the chance that another broker may offer more . . .”
Any other construction of this act might lead to a diminution in the zeal of brokers to cooperate with executors and other fiduciaries in the sale of real estate, and therefore deprive estates of the opportunity of getting the top price. The latter is, after all, the most essential element in the controversy.
The further argument that chaos will result if the act is construed as herein viewed likewise begs the question — what is the best price for the estate? If brokers are willing to split commissions, that is their business and we should have no objection. Furthermore, it would appear to me that if more than two bidders or contractors appear before the court upon the presentation of the fiduciary’s petition for leave to sell at private salé, such appearances might constitute evidence from which the court could find that a market actually exists for the property, and that the fiduciary’s averment in his petition that no market exists and that the price stated in the petition is better than any that could be obtained at public sale is not justified, and that in consequence the court should direct a public sale. While under the law public sale is the rule the reverse is true, if we are to judge from numerous petitions for private sale presented to the court compared to the rarity with which public sales are requested. The attention of those interested in the administration of decedents’ estates is called to this circumstance.
In my opinion the exceptions should be sustained the provisions of the Act of 1941, supra. He procured because Mr. Grady has clearly brought himself within *671an agreement of sale in good faith for a higher price than that which then existed and is therefore entitled to share the commission equally with the broker for the successful bidder.
President Judge Van Dusen joins in this dissent.
Note. The foregoing decision was reversed on appeal: 156 Pa. Superior Ct. 185.