## Facts

- Dorothea Geick died testate in 1921, leaving a will directing her two sons-in-law, as executors, to sell her real estate and divide the proceeds equally among her five children.
- The executors conducted a public auction of a parcel known as the farm and sold it for $3,900 to Lewis Geick, a son of the decedent.
- Lewis purchased as a conduit for his sister, Josephine Dieker, who was the wife of one of the executors and the true beneficiary of the purchase.
- Roughly two months later, Josephine resold the farm to an unrelated third party for $5,500, yielding a $1,600 profit.
- After the executors’ final accounting, a daughter-beneficiary filed suit in equity challenging the sale; allegations of an agreement among the heirs to depress bidding and of actual fraud were not proven.
- The beneficiary ultimately sought relief on the ground that the executors lacked authority to sell to an executor’s spouse without prior court approval and requested either a resale or her share of the profit.

## Issues

1. Whether an executor acting under a testamentary power of sale may, without prior court authorization, sell estate property at the executor’s sale to the executor’s spouse (directly or through a nominal purchaser).
2. If the sale is improper, what remedy is available when the property has been resold to a bona fide purchaser for value.

## Decision

- The court held that an executor or trustee may not purchase from the fiduciary’s own sale without a court order, and the same prohibition applies to the fiduciary’s wife.
- The sale to the executor’s wife, accomplished through a nominal purchaser, was improper and voidable at the instance of the beneficiaries despite the absence of proven fraud.
- Because the farm had been conveyed to a bona fide purchaser for value, the court declined to set aside the conveyance or order a resale.
- The court required the executors and Josephine to account to the complainant for her one-fifth share of the $1,600 profit realized on the resale.

## Legal Principles

- A fiduciary empowered to sell property owes a duty of undivided loyalty and may not be both seller and buyer in the same transaction absent prior judicial approval.
- The prohibition on fiduciary self-dealing extends to indirect purchases and to purchases by the fiduciary’s spouse where the conflict is functionally the same.
- A beneficiary need not prove actual fraud or an unfair price to obtain relief from an unauthorized conflicted sale; the conflict itself makes the transaction subject to equitable relief.
- Equity will protect a bona fide purchaser for value by leaving title undisturbed, while shifting the remedy to disgorgement or an accounting against the fiduciary and the insider beneficiary who profited.

## Conclusion

The court enforced a strict loyalty rule barring an executor’s sale of estate property to the executor’s spouse without prior court authorization, protected the subsequent bona fide purchaser’s title, and ordered the insiders to disgorge the resale profit to the complaining beneficiary in proportion to her residuary share.


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