Callaway v. Hubner

Pearce, J., delivered the opinion of the Court. This record brings up exceptions to the ratification of a sale made by trustees under somewhat peculiar circumstances. The late Mrs. Frances E. Slingluff by her will and codicil thereto devised to her two sons, Fielder C. Slingluffand Frank Slingluff, two tracts of land in Baltimore County, known as “Beech Hill” and “Forest Farm,” in trust to sell, lease, manage, and develop the same as in their judgment should seem for the best interests of the estate, the proceeds to be equally divided between her seven children. This will was probated May 13th, 1890, and on September 22nd, 1890, the Circuit Court of Baltimore City, upon petition of the trustees, assumed jurisdiction of the trust.

The trustees borrowed considerable sums of money to develop the estate, and appear to have acted in this respect with sound discretion. From time to time, they sold considerable portions of the property so developed, the last sales having been made in May, 1902, .when the tract now in question, embracing 92.8-10 acres, was excluded from the sale and advertisement, having in November, 1901, been offered by the appellant, as agent of the trustees, to the Water Board of Baltimore City, as an exceptionally desirable site for a high-service reservoir which was then contemplated by the •board, subject to the passage of an enabling Act. That Act was passed and approved April 8th, 1902, and shortly thereafter an ordinance providing for the issue of stock to carry out the plan. was passed by the Mayor and City Council, and was ratified by the people. On December 6th, 1902, the or ⁵³¹ dinance of estimates for 1903 was passed, appropriating $350,000 for the purchase or acquisition of land for a new reservoir and the cost of construction, and this was approved by the Mayor December 8th, 1902.

On November 20th, 1902, Geo. R. Vickers, trustee, authorized the appellant to offer twelve acres of land adjoining the 92.8-10 acres, at $2,000 per acre for a reservoir site, and on the very day of the approval of the appropriation of $350,000, December 8th, 1902, the North Avenue Land Company authorized the appellant to sell, for the same purpose, 10 acres of adjoining land at $2,000 per acre. On December 21st, 1902, the trustees filed a petition stating they had an offer from the appellant, F. H. Calla-way, of $700 per acre for about 92 acres of Forrest Farm, provided they could give him a six month’s option thereon; that these 92 acres were the least valuable part of the tract, being very low, and traversed by large ravines, and so situated that it could not be easily developed; that they had been selling other portions of this tract on open streets and electric car lines, at about the same rate per acre as offered for this, and they believed such sale would be most advantageous, and they therefore prayed an order to grant such option. An order was accordingly passed on the same day, and on the following day the option was granted, to extend for six months from date, it being expressly stated therein that the land was required for the construction of a city reservoir; that unless the option was exercised within six months it should be void, and that in order to be availed of, the purchase-money must be paid in cash, or properly secured before the expiration of the option.

It was admitted that no consideration was given for this option. On June 10th, 1903, Callaway accepted this option upon the terms and conditions stated therein. Before such acceptance however, he had on May 15th, 1903, in consideration of one dollar, given to the Mayor and City Council án option upon these 92.8-10 acres, together with the 12 and 10 acre adjoining tracts before mentioned, at $2,000 per acre for each of said three tracts, for a reservoir site, and this option was ratified by the trustees of the Slingluff estate ⁵³² and by said Vickers, trustee, and said North Avenue Land Company. On'the following day, May 16th, 1903, the Mayor and City Council accepted said option, the purchase^money to be paid in cash within sixty days from date.

It is to be observed that in granting this option Mr. Callaway acted as agent for Vickers, and for the North Avenue Land Company, but undartook to act in his own right as to the 92.8-10 acres, though'he did not accept the Slingluifif option until nearly a month afterwards. On June 25th, 1903, the trustees reported the granting and acceptance of their option to Mr. Callaway, both of which were filed with said report, together with copies of his option to the Mayor and City Council, and their acceptance, and the trustees prayed for such order thereon as the Court deemed proper. Upon this report the usual order nisi was passed. Before the granting of the option by the trustees to Mr. Callaway, the trustees and Horace Slingluff, three of the seven parties interested in the trust estate, had met with pecuniary reverses, and had been adjudicated bankrupts, and their respective trustees in bankruptcy filed exceptions to the ratificar tion of the sale to Mr. Callaway, upon the following grounds among others: 1st.

Because of inadequacy of price; 2nd, because no proper effort was made by the trustees to sell to the be§t advantage; 3rd, because the petition for authority to grant the option to Mr. Callaway did not properly describe the land, nor fully and fairly inform the Court as to the existing situation and especially as to Callaway’s purpose to re-sell to the city for a reservoir site; 4th, because the said petition represented the conformation of the land as a defect depreciating its value, whereas it was this very conformation which gave it exceptional value as a reservoir site, and value superior to that of any of the other six tracts offered for that purpose, the trustees being then informed of Callaway’s purpose to re-sell to the city for a reservoir site; and fifth, because the 'order to grant the option was passed upon an ex parte petition, which petition and order were immediately upon the passage of the order withdrawn from the files of the Court, and were not dis ⁵³³ closed by any docket entry nor otherwise brought to the knowledge of the exceptants until shortly before the report of sale was filed, it being admitted that the averments of the last ground of objection are correctly stated. Charles H. Stanley and Charles S. Hayden, trustees of Trueman C. Slingluff, and of his children as remaindermen, also filed similar exceptions, so that it is seen that four out of the seven persons interested in the property, occupy the position of exceptants. It was contended in the Court below, and also in this Court, that the trustees should be required to report the sale as made to the city of Baltimore, through Callaway, as their agent, at and for two thousand dollars per acre, and that the sale so reported should be ratified, and this contention will be first considered. If this result could be reached upon the testimony in the case, and in accordance with sound practice, it would, in our opinion, work substantial justice to the present parties, but there are insuperable objections to this course of action.

The Mayor and City Council are not parties to these proceedings; and even if they could be properly made parties, there could be no assurance that they could be required to accept the position of purchaser from one with whom they have not dealt directly. Moreover we have judicial knowledge from the case of Callaway v. The Mayor and City Council, decided in this Court April 12th, 1904, that the city denies, and is contesting, the validity of the acceptance by the Mayor and Comptroller of the option given by Callaway and we cannot venture to assume today the ratification of a sale, which tomorrow we may be required to declare void. Finally, the evidence in this case does not sustain the contention that the appellant, in his negotiations with the city, acted as agent for the trustees of the Slingluff estate. The proof is clear there was no agreement, express or implied, that the trust-estate should have any part of his profits, or should bear any part of the expense incurred by him in effecting a sale to the city, and the proof is equally clear that in all, he did he acted entirely in his own behalf.

The sale as now reported, must therefore either stand or fall. ⁵³⁴ Nor do we discover any evidence tending in the slightest degree to impeach the integrity and good faith of the trustees in making this sale. There is no room for suspicion that they had any interest,' direct or indirect in the enormous profits which Mr. Callaway will reap if this sale be confirmed, or that they were actuated by any other consideration than the pur•pose to fulfill what they regard as a binding obligation upon them. We agree with the Circuit Court that the only issue is whether the trustees, under all the circumstances of the case, as disclosed to them, or as open to reasonable investigation, exercised due diligence and discretion in their efforts to obtain a fair and full price, and whether, the conduct of Mr. Callaway in the transaction, has been such as to entitle him to the consideration accorded on grounds of public policy, to purchasers-from trustees in equity. The rules by which the duty and discretion of trustees is governed in making sales of property, have been plainly and frequently declared by this Court.

In Gould v. Chappell, 42 Md. 466 , it was said: “It- is their duty in making a sale of property to act in a prudent and business like manner, with a view to obtain as large a price as might, with due diligence and attention, be fairly and reasonably obtainable under the circumstances. In other words, to exercise that diligence and caution which a careful and prudent owner would observe in the sale of his own property. If the sale be made under circumstances of haste and imprudence, or if the trustees fail in reasonable diligence in inviting competition, or adopt an injudicious or disadvantageous mode of selling the property, a Court of equity ought not to ratify the sale. * * * And if they fail to exercise that caution and prudence which may fairly and reasonably be expected from a provident owner in regard to the sale of his own property, and in consequence thereof, the property is sold at a