McLean v. Peyser

Sloan, J., delivered the opinion of the Court. About nineteen years ago John R. McLean, of Cincinnati, died, leaving a will. Amongst his possessions was the newspaper known as the Washington Post, in which he owned a majority of the stock, the balance having been ³ acquired after his death by the trustees of his estate. By item X of his will he said: “I direct that no sale of any of the newspaper properties or of any interest therein belonging to me at the time of my death shall be made by my executor or trustee until the same shall have first been approved in • writing by my friend, Francis T. Homer, of the City of Baltimore, in the State of Maryland, provided he be living and capable of attending to business at the time thereof; or, if he shall fail to approve, then without the written approval of my son, Edward B. McLean, (the appellant).

I further direct that so long as my said friend, Francis T. Homer, shall be living and capable of attending to business, my Executor and Trustee (American Security and Trust Company of Washington, D. C.) shall seek and obtain the benefit of his judgment in all matters pertaining to the control and management of my estate, including the management of my said newspaper interests and all other matters connected with the administration of the trusts by this, my last will and testament created.” Before the transaction involved in this suit, Mr. Homer had died. The American Security & Trust Company of Washington, D. C., had been appointed trustee under the will of John R. McLean, and later Edward B. McLean was appointed by the Supreme Court of the District of Columbia as cotrustee, and together they operated the Washington Post as a daily newspaper. The paper had not been paying since the year 1924, and in 1931 the trustees decided it should be sold. Shortly after this decision by the trustees, Edward B. McLean, the defendant (appellant) orally agreed with the plaintiff, Julius I. Peyser, an attorney, of Washington, D. C., that if the latter should produce a purchaser at a price satisfactory to the trustees and to the court having jurisdiction of the .trust, he should be paid a commission of five per cent on the first $500,000 and two and one-half per cent on the balance of the purchase price, the commission in this case amounting to $87,500.

The plaintiff did produce a purchaser in the person of David Lawrence, whose offer ⁴ was made in the name of David Lawrence, Inc., the corporation by which title to the Post was intended to be taken. The Lawrence offer was to buy the physical assets and good will of the Post for $3,000,000, with a cash payment of $800,000, the balance to be secured by a mortgage, excluding the real estate, payable in twenty years, with certain sinking fund payments, the minimum amount of which would aggregate $800,000. The plaintiff, Peyser, had theretofore made some tentative offers to the corporate trustee, none of which were satisfactory, and told its president that he would expect a commission on the sale. Later the Lawrence offer of $3,000,000 was taken to Mr. Corcoran Thom, the president of the corporate trustee, by the plaintiff, and it was then he advised Mr. Thom that he expected the commission here sued for.

In April, 1931, the plaintiff had the defendant write a letter to his cotrustee as follows: “I want to place myself on record as one of the trustees of my father’s estate, that a price of three million dollars should be carefully considered and not lightly dismissed. * * * Please discuss this question with my counsel, Major Julius I. Peyser, who will be very pleased to arrange for a conference to consider the sale of the Washington Post. “2. The price of three million for the Washington Post as aforementioned, of course includes five per cent commission to the broker for the first $500,000 and two and one-half per cent commission for all over and above that amount, this with the understanding that it is sold to the person with whom the broker first entered negotiations.” It does not appear from the record that the trust company agreed to the payment of the commissions as stated in the letter, for, by its letter to Mr. McLean of June 4th, 1931, it said they seemed “to be quite steep” and “that 2 per cent would be ample, or a total of $60,000.” Later, ⁵ however, it appeared to have acquiesced, and it was represented to the chancellor that the Lawrence offer would net the estate $3,000,000 less $87,500. It does not appear exactly when, but early in June, 1931, the trustees filed a petition which would be known here as a “report of sale,” wherein they recited that they had this $3,000,000 offer for the Post from David Lawrence, Inc., and prayed “that, after receiving the reports of the guardians ad litem of the minor children of Edward B. McLean, (who were the remaindermen of the trust), and after hearing and consideration, the court may approve their acceptance of the offer of David Lawrence, Inc. for the purchase of the Washington Post and may authorize the consummation of the sale of said newspaper, its properties and franchises in such manner as the trustees and their counsel may deem for the best interest of the estate.” In the Lawrence offer there was this provision: “That before the consummation of such sale the necessary steps be taken by you, without cost to the undersigned company or its corporate assignee, to obtain, if possible, the approval or ratification by the proper court of the District of Columbia of the sale of such properties to the undersigned company or its corporate assignee for the considerations herein named, and to pass to the purchaser the complete, unincumbered title to all such properties.” The petition, praying the approval by the court of the Lawrence offer, was set down for hearing on the 15th day of June, 1931, there being present and participating in the proceedings, in person or by counsel, the trustees, Mrs. Edward B. McLean, wife of the defendant, the guardians ad litem of the minor children of the defendant, who were also the remaindermen under the John R. McLean will, the plaintiff, and the purchaser. Mr. William Randolph Hearst, another prospective buyer, was represented by counsel.

There was some evidence taken respecting the Lawrence offer, and more discussion in regard to it. The Hearst offer was not in any definite shape except that in the gross amount it equalled the ⁶ Lawrence offer. The guardians ad litem of the McLean children suggested that the Lawrence offer to buy the physical assets and good will of the Post be amended to an offer for the capital stock of the corporation, subject to the payment by the trustees of the debts and some other conditions not necessary to relate here. Counsel for Mr. Lawrence thought this could be done, and in order to give Lawrence and Hearst time to put their propositions for the purchase of the stock into shape, an adjournment was taken for two days, or until June 17th, 1931.

On the latter date the same parties were again in court, when the amended proposals of David Lawrence, Inc., and of the Washington Times (Hearst) were submitted, and the testimony of Mr. Thom, president of the American Security & Trust Company, was taken, which was in effect that of the two bids, he considered the Lawrence offer the better, this conclusion being based largely on the security tendered. A further postponement of consideration of the Lawrence and Hearst proposals was suggested and argued, and the time was extended to June 26th, 1931. In the meantime, both bidders amended their offers, which were submitted to the corporate trustee, Mr. McLean being ill during all this time, and on June 26th, 1931, a hearing was had, at which time the corporate trustee, through Mr. Thom, recommended the acceptance of the Hearst offer, for the reason that in his opinion it offered the better security for the deferred and final payments of the purchase money. At the conclusion of this hearing, Mr. McLean, by his counsel, presented the following communication from Edward B. McLean, the defendant in this case: “Since the original offer of Mr. David Lawrence was considered by me and the original petition submitting that offer was, filed in this proceeding, I have given consideration to present conditions and have carefully studied the testimony which was presented to the court on hearings had upon the 15th day of June and the ⁷ 17th day of June, 1931.

With deference to the Court, I have decided to and do hereby withdraw my approval heretofore given to the acceptance of the first offer of Mr. David Lawrence; and I do not approve, either individually or as trustee, of the acceptance of either the second or amended Lawrence offer, or the Hearst offer. “Further, I do not at this time give my approval to the sale of the interest of the John R. McLean estate in the newspaper property known as the Washington Post, as required by the tenth paragraph of the will of said John R. McLean.” Thereupon, counsel for Edward B. McLean asked that the proceeding be dismissed, and although there is no formal order in the record dismissing the petition of the trustees, there does appear the chancellor’s statement, “that there is not now anything pending before the court.” This was followed by a suit brought in the District of Columbia by Julius I. Peyser, the plaintiff here, against the American Security & Trust Company to recover $87,500 claimed to be due him, as commission for obtaining a purchaser for the Washington Post, for the very services here claimed against John R. McLean. The jury were instructed to find for the defendant and on appeal to the Court of Appeals of the District of Columbia the judgment of the trial court was affirmed. 63 App. D. C. 299, 72 Fed. (2nd) 92, 95. Edward B. McLean was not joined as defendant in the suit. Code, art. 50, sec. 2.

Suit was then brought by Albert E. Peyser, in the Circuit Court for Baltimore County, against the defendant, Edward B. McLean, then a resident of Baltimore County, the declaration setting up the contract heretofore described, and the securing of a purchaser, David Lawrence, Inc., which made the trustees of the John R. McLean estate an offer as a result of the efforts of the plaintiff, which they had accepted, and that “the de ⁸ fendant and his co-trustee further promised and undertook to and with the plaintiff, that they would take all necessary steps to obtain, if possible, the approval or ratification by the proper court of the District of Columbia of the offer of said David Lawrence, Incorporated, so accepted by the trustees as aforesaid,” and that thereafter they filed in the Supreme Court of the District of Columbia their petition praying the approval of the said Lawrence offer; that notwithstanding the promise and understanding of the defendant and his cotrustee to the contrary, they made no effort to obtain the ratification or approval of the offer of David Lawrence, Inc., “procured and obtained by the plaintiff as aforesaid, but on the contrary the defendant by his acts and conduct prevented such approval or ratification by the Court,” and “the plaintiff- thereby lost the commission which he otherwise would have received.” The declaration does not state, but the briefs show, that suit had been brought by the plaintiff, Peyser, against the American Security & Trust Company in the Supreme Court of the District of Columbia on the same grounds now alleged against the other trustee, John R. McLean, and from a judgment on a directed verdict for the defendant an appeal was taken to the Court of Appeals of the District and the judgment affirmed. Of the opinion in that case- more will be said later. At the trial of the case in Baltimore County, the plaintiff offered four prayers, of which the first was refused and the others granted. The defendant offered three prayers, all of which were refused, and the only exception taken by the defendant was to the rulings on the prayers adverse to him.

From a judgment for the plaintiff, the defendant appeals. The charge is that the defendant failed to perform his “promise and undertaking to take all necessary steps to obtain, if possible, the approval of the Court of the offer procured by the plaintiff” whereby the plaintiff “lost the commission which he otherwise would have received.” ⁹ It is not disputed that the plaintiff was the procuring cause of the Lawrence offer of $8,000,000 for the “Washington Post,” and the trustees submitted this offer to the Supreme Court of the District of Columbia, as they were bound to do under the terms of the decree of that court assuming jurisdiction of the trust (Gottschalk v. Mercantile Trust & Deposit Co., 102 Md. 521, 526 , 62 A. 810 ; Kramme v. Mewshaw, 147 Md. 535, 547, 548 , 128 A. 468 ), by which decree Edward B. McLean was appointed cotrustee with the American Security & Trust Company, which had been designated as sole trustee by the will of John R. McLean. The fact that the