Court Opinion

ID: 9789918
Source: CourtListenerOpinion
Date Created: 2023-08-31 01:43:55.887193+00
Date Added: 2024-06-11T07:37:25.192483
License: Public Domain

Dore, J.
(dissenting) — The majority holds that a receivership sale should be confirmed by a specific order of the court entered after the sale has become final and that the trial court's approval of the earnest money agreement did not constitute final confirmation. I disagree.
I
Generally, a sale by a receiver of property in his charge is not complete and binding, and the purchaser acquires no title thereunder until the sale is confirmed by the court, unless the sale is made in conformity with authority to sell on specific terms expressly given beforehand. Shaw v. Robison, 537 P.2d 487, 490 (Utah 1975); Harrison v. Brown, 222 N.C. 610, 24 S.E.2d 470 (1943); Tobey v. Poulin, 141 Me. 58, 38 A.2d 826 (1944); Wohlschlegel v. Uhlmann-Kihei, Inc., 662 P.2d 505 (Hawaii Ct. App. 1983); see J. High, Receivers § 199c (4th ed. 1910). The long accepted rule is set forth in Tobey at page 62.
It is elementary that a receivers sale is a judicial sale and the receiver acts only as an officer of the court, sells as and for the court, and sales conducted by him must be confirmed by the court in order to be valid. I Clark on Receivers (2d Ed.) §482, et seq.; 45 Am. Jur., §385, et seq. While it is the general rule that a sale by a receiver is not complete and binding until the sale is subsequently reported and confirmed by the court, if an offer for property in the hands of a receiver is reported to the court and a sale to that purchaser in exact compliance with the offer is authorized, the order is deemed an acceptance of the offer and a confirmation of the sale and no other and further confirmation is necessary. Files v. Brown, 124 Fed., 133, 138; In re Denison, 114 N. Y., 621, 21 N. E., 97; Yount v. Fagin, et al. (Texas Civ. A) 244 S. W., *4551036,1041; 53 Corpus Juris, 212. Confirmation of receivers sales by either of these methods has long been accepted as proper practice in this jurisdiction.
In Shaw where the court, in February 1974, approved recommendation of receiver and expressly directed him to accept offer to purchase corporate property by third party, it was not necessary for receiver, in May 1974, to again move the court to further confirm the sale and permit him to execute purchase agreement.
In the present case, the court confirmed the sale by approving as to form and signing the earnest money agreement, authorizing the receiver to sign "any further refinements" to "carry out the spirit and intent" of the agreement. Under the court's order, only changes "beyond the scope" of the earnest money receipt, agreement and addendum were to be brought before the court for approval. The two conditions of the earnest money agreement were both removed. The purchaser waived the first condition, and the second was met when permits were secured from the City of Seattle for the removal of sand and gravel and grading of the subject property.
The assignment of the earnest money agreement was not beyond the scope of the confirmation. A contract for the sale of real property is assignable. Paullus v. Fowler, 59 Wn.2d 204, 367 P.2d 130 (1961). There was no clause in the order approving the earnest money agreement prohibiting assignment. An assignee who receives full title and interest stands in the shoes of his assignor, acquiring the rights of the assignor. Morse Electro Prods. Corp. v. Beneficial Indus. Loan Co., 90 Wn.2d 195, 579 P.2d 1341 (1978). An assignment does not change the scope of the contract or agreement on which it is based. As the assignment in question did not change the scope of the receipt or agreement, there was no necessity for the judge to confirm the assignment.
*456The trial court further entered an order on April 13, 1979 which "approved, ratified, and confirmed" all acts of the receiver up to that date. Accordingly, I would hold that the sale of the real property was properly confirmed.
II
The final issue raised is whether certain fiduciary duties owed to the receivership and other limited partners were violated. Respondent's contention that Walton and Hanson, partners in Duwamish Heights Joint Venture (DHJV), breached a fiduciary duty in purchasing property from Duwamish Heights Associates (DHA) is fiction. Walton and Hanson were not involved in the execution of the earnest money agreement. The only dealings sought by DHJV with the receivership were to close the real estate transaction in accordance with the agreement entered into between the receivership and DHA some 19 months after the agreement had been executed and approved by the court. John Walton was employed by the receiver to assist him in the sale of various pieces of property, and had no association with the receivership other than being related to two other individuals who had interest in the property. Additionally, I see nothing inequitable and/or illegal in Walton and Hanson reaping some profit after doing work to procure the sand and gravel permits which increased the value of the property. Naturally, the property was worth substantially more after permits were secured from the City of Seattle.
I find helpful in my analysis the case of Farley v. Davis, 10 Wn.2d 62, 116 P.2d 263, 155 A.L.R. 1302 (1941). In Farley, Davis was a partner in a real estate company that had acted as agent for the collection of rentals on the subject property. Davis later purchased the property from the executor of the estate. The petitioner alleged that the price was inadequate and there was a breach of fiduciary duty on the part of Davis. The court said, at pages 79-80:
Appellant's final contention is that Davis, and the real estate firm of which he was a member, stood in the relationship of a trustee or fiduciary to the heirs of the *457estate, that they had special knowledge of the value of the property, and that therefore it should be held that Davis took title to the property in trust for appellant. In support of this contention, appellant cites a number of authorities to the effect that one standing in the position of trustee or fiduciary owes the beneficiary of the trust the utmost fidelity and loyalty. That principle of equity we readily accept, but we do not concede its application here. Davis was not a trustee of the appellant and the other heirs; he was but a real estate agent whose duties, at most, were to collect the rentals and to secure a purchaser of the property.
It is clear the duties of Walton in the present case were no greater than the duties of Davis in Farley. Even if Walton had been dealing directing with the receiver, rather than a third party, he would not be a fiduciary.
In every dissolution of a partnership where a receiver is appointed and a judicial sale follows, there is a possibility that one or more of the partners may buy at the sale. However, this is not wrongful so long as grounds exist for the dissolution of the partnership, the judicial sale is conducted properly and the partner/pur chaser is not guilty of any breach of the fiduciary duty owed to his partners. See Mandell v. Centrum Frontier Corp., 86 Ill. App. 3d 437, 407 N.E.2d 821 (1980). In fact, the most logical buyers of a dissolved partnership are the remaining partners. Maras v. Stilinovich, 268 N.W.2d 541, 544 (Minn. 1978).
The mere fact that Hanson is a partner in DHJV, which was assigned the earnest money agreement, does not indicate that there was a breach of a fiduciary duty owed to the partners of Overlook Heights Associates (OHA). Any of the partners of OHA were entitled to make an offer to purchase the property from the receiver. None did. Hanson only became involved when the successful purchaser assigned the earnest money agreement to DHJV 19 months later when valuable permits had been secured. Any possible fiduciary duty owed by Hanson to the dissolved partnership did not extend to the subsequent assignment of the earnest money agreement entered into by a third party.
*458Additionally, it should be noted that Hanson was merely a limited partner of OHA. A limited partner, though so called by custom, is not "in any sense" either a partner or a principal in the business or transactions of the partnership. "Succinctly put, a limited partnership interest in a business is in the nature of an investment." Klein v. Weiss, 284 Md. 36, 52, 395 A.2d 126, 136 (1978). The relationship between the general and limited partner is a fiduciary one similar to that existing between a corporate director and a shareholder, or a trustee and a beneficiary. Klein, at 52; Partnership Equities, Inc. v. Marten, 15 Mass. App. Ct. 42, 443 N.E.2d 134, 137 (1982); Watson v. Limited Partners of WCKT, Ltd., 570 S.W.2d 179, 182 (Tex. Civ. App. 1978). Accordingly, Hanson, as a limited partner, owed no fiduciary duty to the partnership and was entitled to purchase from the receiver.
Conclusion
The majority is in error in finding that the trial court did not confirm the sale.
I would hold that the Superior Court properly confirmed the sale to Duwamish Heights Joint Venture, and that there was no violation of any fiduciary duties by the parties.
I would reverse the trial court's order setting aside the sale from the receivership to Duwamish Heights Associates and the subsequent assignment to Duwamish Heights Joint Venture, and remand to the trial court with instructions to close the transaction in accordance with the terms of the earnest money receipt and agreement signed by the parties.
Williams, C.J., and Dimmick, J., concur with Dore, J.
Reconsideration denied December 13, 1983.