Gilden v. Harris

MARBURY, C. J., delivered the opinion of the Court. On August 29, 1949, a decree was entered by the Circuit Court of Baltimore City in a case therein pending, involving the trust estate of Jane L. West, by the terms of which decree Helen West Harris, substituted trustee of the said trust estate, was authorized to sell the leasehold property situated in the city of Baltimore, known as Nos. 4003-4005 Belle Avenue. The decree stated that the sale might be at either public or private sale, and then, after a semicolon, added the following: “if at public sale, she shall give at least three weeks notice by advertisement, inserted in such daily newspaper or newspapers published in the City of Baltimore, as she shall think proper, of the time, place, manner and ³⁵ terms of sale, which shall be cash, upon ratification of said sale by this Court; or said Substituted Trustee may submit to this Court for its approval and ratification any offer or offers she may receive for the purchase of said property at private sale, provided no private sale shall be for a less amount than the value of said property as shown by the testimony in this case”. On March 21, 1950, the trustee reported that the appraised value of the properties was $8,250, that she had diligently endeavored to effect a sale, and she brought into court a duly executed contract for a private sale at $8,600 to Max Gilden, on which $1,000 had been paid by the prospective purchaser as a deposit.

The trustee further stated that the price was a fair and reasonable one, and was the highest price obtainable. A copy of the contract was attached. The contract provides that it shall be null and void unless approved by the court, and contains a provision that settlement is to occur within 60 days from ratification. It also contains the following sentence: “It being understood and agreed that in the event this sale is not ratified and approved by said court within 30 days from the date hereof, then the sale and this agreement shall be void and all deposit monies shall be returned to the Buyer.” An order nisi was passed on this report.

On March 30, 1950, Louis Silberstein, attorney for Abraham Klein, sent a letter to Judge Moser, who was sitting in the Circuit Court, stating that Klein had been informed by the Lincoln Realty Company, agent for the trustee, that the property could be purchased for $8,300, and that Klein executed and delivered to such agent a contract for that purpose, but that several days later, the contract was returned, and thereafter the trustee entered into the contract of $8,600 which had been reported to the court. The letter further stated that on March 23, 1950, an offer had been made on behalf of Klein to purchase the property at $8,800 which had been refused, as the Gilden contract had been reported. The letter further stated that Klein was now ³⁶ prepared to enter into a written agreement to purchase the property at $9,300, and the matter was therefore brought to the attention of the court. Subsequently, a petition was filed by Klein to the same effect, stating, in addition, that he had filed in the court a contract executed by him for the purchase of the property at $9,300, and had deposited with the clerk a certified check in the amount of $1,500 on account of the purchase price.

The petition asked for leave to intervene, and requested the court not to ratify the pending sale. An order to show cause was passed on this petition. The trustee answered, neither admitting nor denying the allegation with respect to the Lincoln Realty Company, and the $8,300. offer of Klein, and asking the assistance of the court in the determination of the several allegations. Gilden filed a petition for leave to intervene and was granted such leave, and he then demurred to, and answered, the Klein petition.

Gilden set out in his answer that the court lacked jurisdiction to vacate or set aside a trustee’s sale made in good faith, except on the ground of clear and unmistakable proof of inadequacy of price directly attributable to some failure of reasonable diligence or effort on the part of the trustee, and stated that the trustee exercised reasonable diligence and effort in making the sale to him. He further stated that it has always been the law of Maryland that any party whose interest is exclusively that of a disappointed bidder is not legally entitled to intervene, or to except to any judicial sale made in good faith, and reported to the court by a properly qualified trustee. He controverted the allegations of fact made by Klein in his petition. The court set these matters down for hearing.

The testimony shows that on March 16, 1950, the trustee was offered a contract of $8,300 by Abraham Klein through the Lincoln Realty Company. On March 17, the contract of Max Gilden of $8,600 was received by her. On March 24, the trustee’s counsel received a letter from Klein’s counsel offering $8,800. The president of the Lincoln Realty Company, Carl W. Juelg, said he ³⁷ was engaged by the trustee to sell the property on February 24, 1950.

The company placed For Sale signs on the property, advertised it numerous times, and showed it numerous times. They had one $8,000 offer and one $8,250 offer; then Mr. Klein offered first $8,000, and when he was told $8,250 had been turned down, he offered only $8,300, although he had been told by the witness that he should make an offer of at least $8,500. Klein said $8,300 was his top offer. This $8,300 offer was presented to the trustee, but she did not accept it. , The trustee testified that she was the direct beneficiary of the trust estate during her lifetime, and that she has two children aged, respectively, three and thirteen, who inherit the trust at her death.

She said that she thought she acted hastily in accepting the $8,600 offer, but she thought it was the best offer at the time, and she would now rather the sale not be ratified for $8,600 because the larger the price, the greater amount there would be in the trust estate. She had tried to sell the property herself since November, 1948. It was in very bad condition and needed repairs involving considerable expenditure. Mr. Lockwood, a real estate broker, had attempted to get her a customer, but the highest offer she had been able to obtain was $8,000; then she received an $8,300 offer from Mr. Klein, and then finally she got the $8,600 offer which she reported.

At that time, the Lincoln Realty Company told her that was the highest offer she was going to get. She says she thought she had acted hastily, in view of what she learned subsequently about the additional offers, and her reason for not wanting the sale ratified was that she had had these higher offers since. The chancellor dismissed the intervening petition of Gilden, and dismissed the petition filed by Klein, and said he was ready to receive any sealed bids anyone was prepared to offer. Gilden objected to the chancellor’s receiving any other bids, but the chancellor ruled that Gilden’s contract was a mere offer until approved by him, and that the trustee acted hastily, with inexperience, ³⁸ and improvidently.

He then opened the bids, and found two offers accompanied by certified checks, one of $9,500, and the other of $10,100 on behalf of Klein, also with a certified check. The trustee was instructed to prepare a contract on the offer of Abraham Klein. The sale reported by the substituted trustee to Gilden was rejected, and the trustee was directed to accept the $10,100 offer on behalf of Klein, and to report this sale. Gilden excepted to the report of the Klein sale, and the exceptions were heard by agreement on the testimony already taken, except for a letter dated March 16, 1950, written to the attorney for Klein by Carl W. Juelg.

This letter was admitted in evidence by agreement, over a general objection to any similar evidence, and is as follows: “Relative to our telephone conversation of today, and pertaining to the offer and contract of sale your client Mr. Abraham Klein has made on 4003-4005 Belle Avenue, Baltimore, Md. “It is our understanding that you have in your possession Mr. Klein’s check drawn in the amount of $500.00 and representing the deposit on the above mentioned property. Upon receipt of this letter you will surrender this check to us to be deposited in our escrow account. “In the event this sale is not approved and accepted by the Circuit Court of Baltimore City, or the Estate cannot convey the property by a good and merchantable title to your client Mr. Abraham Klein, then the entire amount of the deposit money, namely $500.00 shall be returned to Mr. Klein.” The court, on June 28, 1950, refused Gilden’s petitions and exceptions, and ratified the sale to Klein. Gilden appealed from the order passed on the ninth day of May, which rejected his bid and directed the trustee to accept the Klein bid, and he also appealed from the order passed on the twenty-eighth day of June, which overruled his exceptions and finally ratified the sale to Klein. We have set out the proceedings at some length because the contention is made that this case is an ex ³⁹ ception and should be so treated.

The appellees, who are the trustee and Klein, contend that the agreement of March 17, 1950, was merely an agreement to submit Gilden’s offer to the court; that the trustee was improvident because, if this was a sale, she did not intend it to be one, but thought it was merely an offer; that she was improvident because she did not notify the appellee, Klein, that a higher bid had been received, and give him an opportunity to increase his bid; and that the court was justified in refusing to ratify the Gilden sale because infants were involved, who are entitled to the special protection of the court. We are unable to find that the trustee acted improvidently, or hastily, as she belatedly attempted to admit. She was, it is true, not experienced in the sale of real estate, or in court proceedings, but that is true of many trustees. She had counsel, and she reported to the court the highest sale she had been able to make, after some months of effort through two real estate brokers on a declining market, and on the advice of the last one that this was the highest offer she was going to get.

It is true she now says she thought this was an offer only, but this statement cannot affect what she did, which was to report a sale, subject to the approval of the court, made by a contract which she had executed. There is no hint or taint of fraud in the transaction, and there was no obligation on the part of the trustee to go back to Klein when he had said $8,300 was his top offer. The letter from Mr. Juelg was written after Klein had made this statement, and, while it might contain some intimation that upon receipt of Klein’s deposit (which had not been turned over), the trustee would report the sale to the court, this was, of course, subject to any higher offer being received in the meantime, before the trustee had signed the contract and received the deposit. When the agent received the higher offer from Gilden, it had a right to assume that Klein was telling the truth when he said he had submitted his top offer, and, therefore, there ⁴⁰ was no occasion to see him again.

If Klein thereby lost his opportunity, it was his own fault. The trustee, of course, was anxious, and it was her duty, to get as high an offer as she could, and she is sorry now she reported the one she did, and does not want the sale ratified for the reason shé very frankly gives, that she and her children will thereby get more money. Simply