This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
An executor or administrator who buys property of the estate at his own sale, without the consent of the persons beneficially interested therein and without disclosing his identity to them, is guilty of constructive fraud.1 The approval of the court is not sufficient to enable the executor to acquire property of the estate unless the heirs consent thereto.2 An executor can not convey property of the estate to himself for his personal interest,3 nor can he sell such property to a syndicate of which he is a member,4 or to a corporation which he has formed to take such property over.5 A purchase of property belonging to the estate by the wife of the executor will be set aside unless it is shown that it was purchased as her separate property.6 The fact that the executor does not cause the sale at which he acquires property belonging to the estate is immaterial.7
22Fisher v. Fisher, 170 N. Car. 378, 87 S. E. 113.
1United States. In re Mitchell, 250 Fed. 1003.
Arkansas. King v. Turner, 112 Ark. 337, 165 S. W. 949; Holloway v. Eagle, - Ark. - , 205 S. W. 113.
California. Boyd v. Blankman, 29 Cal. 19, 87 Am. Dec. 146.
Georgia. Moore v. Carey, 116 Ga. 28, 42 S. E. 258.
Indiana. Murphy v. Teter, 56 Ind. 545.
Kentucky. Darcus v. Crump, 45 Ky. (6 B. Mon.) 363; Schlickman v. Dus-ing, 180 Ky. 506, 203 S. W. 295.
Mississippi. Deanes v. Whitfield, 107 Miss. 273, 65 So. 246.
New Jersey. Bassett v. Shoemaker, 46 N. J. Eq. 538, 19 Am. St. Rep. 435, 20 Atl. 52; Goodell v. Monroe, 87 N. J. Eq. 328, 100 Atl. 238.
North Dakota. Macfadden v. Jenkins, - N. D. - , 169 N. W. 151.
Ohio. Glass v. Greathouse, 20 Ohio 503; Riddle v. Roll, 24 O. S. 572; Piatt v. Longworth, 27 O. S. 159; Caldwell v. Caldwell, 45 O. S. 512, 15 N. E. 297.
Oklahoma. Vaughan v. Vaughan, - Okla. - , 162 Pac. 1131.
Pennsylvania. Mueselman v. Eshel-man, 10 Pa. St. 394, 51 Am. Dec. 493.
Virginia. Davies v. Hughes, 86 Va. 909, 11 S. E. 488.
West Virginia. Middleton v. Bowyer, 75 W. Va. 187, 83 S. E. 723; Haymond v. Hyer, 80 W. Va. 594, L. R. A. 1918B, 1, 92 S. E. 854.
Contra under special statute. Baldwin v. Dalton, 168 Mo. 20, 67 S. W. 599.
2Vaughan v. Vaughan, - Okla. - , 162 Pac. 1131.
3Ash v. Wells, 76 W. Va. 711, 86 6. E. 750. He can not acquire a liquor license which belonged to the decedent. In re Mitchell, 250 Fed. 1003.
4Fitzmaurice v. Merchants' Nat. Bank, 172 la. 554, 154 N. W. 895.
5Macfadden v. Jenkins, - N. D. - , 169 N. W. 151.
6In re Blackinton's Estate, 29 Ida. 310, 158 Pac. 492.
7Holloway v. Eagle, - Ark. - , 205 S. W. 113.
A transaction by which an executor acquires an interest in the property of the estate is voidable only and not absolutely void.8 The consent of the beneficiaries in advance to such sale,9 or their ratification of such sale,10 or their laches after the sale in setting such sale aside,11 may keep them from avoiding it. An executor can not make secret profit against the heirs.12 If an executor buys in claims against the estate and charges the estate only what he paid for them he is not guilty of constructive fraud.13 If the executor discloses his identity and the contract is fair and reasonable, the executor may deal with the beneficiaries with reference to the estate.14 The executor may buy realty belonging to the estate at a foreclosure sale if he does so with the knowledge of the beneficiaries and at their request.15 While an executor does not necessarily occupy such a relation of trust towards the heirs as to prevent him from dealing with them at arm's length for their interest in the estate of which he is in charge, when he discloses his adverse interest he may assume a special fiduciary relationship. Thus if the administrator agrees with his cousin, the sole heir, a non-resident, to act for her interests, and urges her not to employ an attorney, he assumes a fiduciary relation and must make full disclosure of all the material facts.16 If an executor is appointed as such without bond, the testator has in effect declared that the executor is a person of honor and integrity; and in such case he occupies a relation of trust and confidence to testator's widow.17 A transaction by which a widow lends a large sum of money to one who is named executor without bond, and agrees to convey to him part of the estate at an inadequate consideration is presumptively fraudulent.18 If an executor induces the beneficiaries to permit him to borrow money from the estate for use in his business, he must show that he made full disclosure to the beneficiaries of the material facts.19
8Williams v. Cobb, 210 Fed. 663, 134 C. C. A.217; Middleton v. Bowyer, 75 W. Va. 187, 83 S. E. 723.
9Voorhees v. Bailey, 59 N. J. Eq. 292, 44 Atl. 657.
10Comegys v. Emerick, 134 Ind. 148, 39 Am. St. Rep. 245, 33 N. E. 899; Grim's Appeal, 105 Pa. St. 375.
11 Williams v. Rhodes, 81 111. 571; Shelby v. Creighton, 65 Neb. 485, 91 N. W. 369.
12Woods v. Roberts, 185 111. 489, 57 N. E. 426 [reversing in part 82 111. App. 630]; Meyer v. Meyer, 106 Miss. 638,
64 So. 420; Macfadden v. Jenkins, - N. D. - , 169 N. W. 151.
13 Baldwin v. Dalton, 168 Mo. 20, 67 S. W. 599; Macfadden v. Jenkins, - N. D. - , 169 N. W. 151.
14Lombard v. Carter, 36 Or. 266, 59 Pac. 473.
15King v. Turner, 112 Ark. 337, 165 S. W. 949.
16Schneider v. Schneider, 125 la. 1, 98 N. W. 159.
17Rogers v. Brightman, 189 Ala. 228, 66 So. 71.
18Rogers v. Brightman, 189 Ala. 228, 66 So. 71.
The executor may enforce rights which belong to him personally, independent of his official position, even if, as a result of such enforcement, he acquires property of the estate.20 If the decedent had given a lease and an option to purchase, to a corporation in which the executor was a stockholder, the corporation may accept such option and transfer the property to such executor for his personal benefit, in accordance with the original agreement.21 If the lien of the executor on the decedent's realty existed before his appointment as executor, as where a mortgagee,22 or judgment creditor,23 is made executor and buys in the property covered by the lien, no fraud exists.
An administrator can not, in his official capacity, give a mortgage to himself in his individual capacity.24