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Hartman v. Hartle - 95 N.J. Eq. 123, 122 A. 615 (1923)

Rule:

A trustee cannot purchase from himself at his own sale, and his wife is under the same disability unless leave to do so has been previously obtained under an order of court.

Facts:

Dorothea Geick died testate in 1921, naming her two sons-in-law executors of her estate. The two executors sold part of Geick’s 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 was the wife of one of the executors. Thereafter, Josephine Dieker sold the property to the defendant Mike Contra for $5,500. The complainant, one of Dorothea Geick’s children, expressed to the deputy surrogate her dissatisfaction with the price realized from the sale of the farm. She then 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.

Issue:

  1. Under the circumstances, did the executors improperly make the sale to Josephine Dieker?
  2. Could the complainant recover the property from the third-party innocent purchaser, Mike Contra?

Answer:

1) Yes. 2) No.

Conclusion:

According to the Court, a trustee cannot purchase from himself at his own sale. The trustee's wife was subject to the same disability, unless leave so to do had been previously obtained under an order of the court. In the case at bar, the sale to Josephine Dieker, the wife of one of the executors, was illegal and void because it was done without previous authority from the court. However, in view of the fact that the property was now owned by innocent purchaser (Contra), a resale could not be ordered, but as an alternative, Josephine Dieker and the executors were held to account for complainant’s one-fifth share of the profits made on the resale of the property.

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