Opinion
January 4, 1940.
February 1, 1940.
Contract — Specific performance — Agreement for sale of real estate — Approval of participating bondholders — Provision for termination.
In an action for specific performance of a contract for sale of real estate, in which it appeared that the vendor was a trustee for bondholders; that the contract expressly provided that the sale of the property was subject to the approval of the participating bondholders, and that if the participant should fail to approve the sale the seller might terminate the agreement by refunding to the buyer the amount paid on account of the purchase price; that all of the participating bondholders had not approved the sale; and that after a higher offer was received from a third person, the trustee returned the vendee's deposit; it was held that the agreement had been terminated and, under its express terms, the vendee could not have specific performance.
Argued January 4, 1940.
Before SCHAFFER, C. J., MAXEY, DREW, LINN, BARNES and PATTERSON, JJ.
Appeal, No. 7, May T., 1940, from decree of C. P. Dauphin Co., No. 1426, in equity, in case of Chester A. Good v. Capital Bank Trust Company et al. Decree affirmed.
Bill in equity.
The opinion of the Supreme Court states the facts.
Decree entered dismissing bill, opinion by Fox, J. Plaintiff appealed.
Errors assigned, among others, related to the dismissal of exceptions to the findings and conclusions of the chancellor.
Gilbert Nurick, with him Sterling G. McNees, of McNees, Hollinger Nurick, and James H. Booser, for appellant. George H. Hafer, with him Arthur H. Hull, of Snyder, Hull, Leiby Metzger, for appellee trust company.
R. D. Hospers, for appellees.
Thomas D. Caldwell, with him Robert T. Fox, Carl B. Stoner, of Caldwell, Fox Stoner, and Maurice Yoffee, for intervenor.
The learned chancellor dismissed plaintiff's bill seeking specific performance of a contract for the sale of real estate with Capital Bank Trust Company, acting as trustee, on the ground that as the Bank, after entering into the agreement, had received a higher offer from another, it must dispose of the property upon the highest terms possible to be obtained. The chancellor cited Clark v. Provident Trust Co., 329 Pa. 421, 198 A. 36, as in his opinion controlling.
We think there is another reason than the one assigned for dismissal of the bill. The Bank was trustee for the holders of bonds secured by a mortgage against the property. The mortgage was foreclosed and the Bank acquired the property at the sale. In the depository agreement under which the bondholders turned their bonds over to the Bank, it was provided that the Bank should endeavor to accomplish a sale of the property "such sale, however, to be consummated only after due notice given to participants." In the agreement of sale with plaintiff, it is set forth that it is made "subject to the approval of participants whom it represents as Trustee. Seller will attempt to obtain the consent of the said participants to the sale of the real estate herein described, but in the event that said participants shall fail to approve such sale, Seller may terminate this agreement by refunding to Buyer the amount paid on account of the purchase price." The holders of 86% of the participation certificates had approved the sale, 8% had disapproved, 2% had come to no conclusion and 4% had not indicated their attitude when the substantially higher offer was received. After notice to plaintiff of the higher offer, the Bank received sealed bids from him and two others. His bid was not the highest. The Bank returned his deposit and refused to consummate the sale to him. As the agreement was terminated, under its express terms plaintiff cannot have specific performance: 58 C. J. 884; 5 Williston on Contracts, 3974; 3 Bogert, Trusts and Trustees, 2200.
Decree affirmed at appellant's cost.