Rich v. Black & Baird
Rich v. Black & Baird
Opinion of the Court
Opinion by
The rule of public policy which avoids, at the instance of the cestui que trust, purchases made by agents for sale is practically absolute in its character. Courts of equity view such transactions with jealous eye; and it is only under special circumstances ' amounting to a dissolution of the trust relation, when the parties have dealt at arms length, that their validity is recognized: Davoue v. Fanning, 2 Johns. Ch. 254. And the reasons are obvious. On the one hand, the : elation which such
These appellants misapprehend the rationale of this rule. They insist that because, as they claim, the sale was satisfactory to Mrs. Rich, the rule has no application. Conceding that in the first instance it was satisfactory, that fact would not take away her option to rescind; for these appellants then and for a long time afterward ostensibly maintained toward her the character of agents for sale, and willfully concealed the fact of their own interest; they maintain their character of inconsistency even now by claiming not only title as purchaser, but commissions as agents for sale. Roll, whom they first reported as the purchaser, confessedly knew nothing of it; the alleged interest of Gillespie and Neeb is more than doubtful, and, if it ever existed, was soon parted with; to all practical intents and purposes these agents were the real purchasers without the knowledge of their cestui que trust: Rosenberger’s App., 26 Pa. 67. However Mrs. Rich may have felt in the first instance in regard to the sale, it is not likely that it would have been satisfactory had she been fully informed of the facts. When she gave her agents a minimum price, it was manifestly intended as a guide to them in negotiating sale, and implied a just expectation on her part, and an engagement on theirs, that they would make an honest endeavor to obtain a higher price. If Roll, Gillespie and Neeb were really intending purchasers, the obvious course was that these agents for sale should take competitive bids; they did not occupy the position of middlemen with equal duty to both; their primary duty was to Mrs. Rich. But, so far as appears, no bona fide effort was made by them to perform this duty; instead, Mrs. Rich was asked to take less, and when this was refused they hastened to avail themselves of the minimum price in their own interest; and had already made large profits before Mrs. Rich’s discovery of the facts. If they could realize profits for themselves, they could and should have done so for their cestui que trust; that was their employment and that their undertaking; and equity will treat that as done which ought to have been done. To sustain the purchase' made in
Having taken action in time, the plaintiff was entitled to the relief which the decree of the court below is intended to secure,
Decree affirmed and appeal dismissed with costs to be paid by appellants, and it is ordered that the record be remitted to the court below for further proceedings.
Reference
- Full Case Name
- Martha K. Rich v. Black & Baird
- Cited By
- 17 cases
- Status
- Published
- Syllabus
- [Marked to be reported.] Principal and agent — Trust and trustees — Purchase by trustee at his own sale — Public policy. On grounds of public policy, purchases made on their own account by agents or trustees for sale, will be set aside at the instance of the cestui que trust, even where the latter has sustained no actual injury. Where a cestui que trust seeks to set aside a sale made by a trustee to himself individually, the cestui que trust is not bound to prove nor is the court bound to judge, that the trustee has made a bargain advantageous to himself. In such a case the cestui que trust must move to set aside the sale within a reasonable time; but what shall amount to a reasonable time will depend on circumstances, and lies in the discretion of the court. In the absence of special circumstances which may lengthen or shorten the time the analogy of the law is followed. Plaintiff placed real estate in the hands of defendants to sell, naming a minimum price. The defendants made no efforts to obtain competitive bids, and although naming certain persons to plaintiff as purchasers, really bought in the property themselves. Held, that plaintiff was entitled to have defendants account for profits made by them on a resale of a portion of the lands, and for a reconveyance of the unsold portions of the lands.