122 A. 615 (N.J. Ch. 1923)
Mrs. Dorothea Geick died testate on April 8th, 1921, leaving five children, one of them being the complainant. She named her two sons-in-law executors and they qualified. Among other matters the will expressly directed her executors to sell her real estate and to divide the proceeds equally among her children.1
On February 9th, 1922, the executors sold part of the real estate known as the farm, at public auction, for $3,900, to one of the testatrix’s sons, Lewis Geick, who actually bought the property for his sister, Josephine Dieker, who is the wife of one of the executors.2 Subsequently, on April 11th, 1922, Mrs. Dieker sold the property to the defendant Mike Contra (and another who is not a party to the action) for $5,500, part cash and part on mortgage.3
The executors settled their final accounts on April 21st, 1922, and at or about that time complainant expressed to the deputy surrogate her dissatisfaction with the price realized from the sale of the farm.4 About March 21st, 1923, she filed her bill in this cause, charging the sale of the farm to have been improperly and fraudulently made by the executors, to Mrs. Dieker, and further charging that Mrs. Dieker and the other heirs of the testatrix had agreed at the sale, because of slow bidding and inadequate price, to have the farm bid in for the benefit of all the heirs.5
At the hearing each and every one of these allegations were shown to be untrue by the great weight of the testimony; and this proof was so conclusive that it left complainant with but one contention to sustain her case, viz., that under the law the sale of the property by the executors and trustees to Mrs. Dieker, the wife of one of them, without previous authority from the court, was illegal and void, and that it should be set aside and the farm resold, or if that be found impossible because of the sale made by Mrs. Dieker to Contra, an innocent purchaser, then that complainant should have paid to her one-fifth of the $1,600 profits realized by Mrs. Dieker from the sale of the property.6 In view of the fact that the property is now owned by innocent purchasers a resale cannot be ordered.7
Whether the sale of the farm by the executors to Mrs. Dieker, the wife of one executor, without prior court authority was illegal and void?8
It is the settled law of this state that a trustee cannot purchase from himself at his own sale, and that his wife is subject to the same disability, unless leave so to do has been previously obtained under an order of the court.9
Yes. Mrs. Dorothea Geick died testate on April 8th, 1921, leaving five children including the complainant, and her will directed the two sons-in-law executors to sell the real estate and divide the proceeds equally among the children.10 On February 9th, 1922, the executors conducted a public auction of the farm and sold it for $3,900 to Lewis Geick, who purchased the property for his sister Josephine Dieker, the wife of one executor, without any prior court order authorizing the transaction.11 This arrangement placed the sale directly within the settled prohibition on self-dealing by trustees and their spouses.12
The sale was illegal and void.13
Whether the complainant was barred by laches from challenging the sale?14
Under the circumstances of the case complainant cannot be charged with laches under the view expressed in Bechtold v. Read.15
No. The executors settled their final accounts on April 21st, 1922, at which time the complainant expressed dissatisfaction with the sale price to the deputy surrogate.16 She filed her bill approximately eleven months later on March 21st, 1923, after the resale to an innocent purchaser had already occurred.17 These timing facts align with the standard applied in Bechtold v. Read and do not support a finding of laches.18
The complainant was not barred by laches.19
Whether the complainant is entitled to one-fifth of the profits realized by Mrs. Dieker on the resale to an innocent purchaser when a court-ordered resale of the property is no longer possible?20
In view of the fact that the property is now owned by innocent purchasers, a resale cannot be ordered.21 As an alternative, Mrs. Dieker and the executors will be held to account for complainant’s one-fifth share of the profits made on the resale of the property under the authority of Marshall v. Carson.22
Yes. Mrs. Dieker acquired the farm for $3,900 and resold it on April 11th, 1922, to Mike Contra for $5,500, generating $1,600 in profits.23 Because the property passed to an innocent purchaser, the court cannot order a resale of the farm itself.24 The appropriate remedy is therefore to require Mrs. Dieker and the executors to account to the complainant for her one-fifth share of those profits.25
The complainant is entitled to one-fifth of the profits.26