IN RE: NAFTZGER'S ESTATE.

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District Court of Appeal, Second District, Division 2, California.

IN RE: NAFTZGER'S ESTATE. WEISS ET AL. v. NAFTZGER ET AL.

Civ. 14281.

Decided: December 16, 1943

Ernest C. Griffith, of Los Angeles, for appellants. Dryer, Richards & Page, of Los Angeles, for petitioner and respondent. John Boukather and T. C. Dalton, both of Los Angeles, for purchaser and respondent.

This is an appeal from an order of the Superior Court of Los Angeles County, sitting in probate, confirming a sale of real property belonging to the Estate of Louise Naftzger, deceased. There is also an appeal from the order of the court refusing to set aside its order confirming the sale of real property.

The essential facts are:

The will of decedent authorized the executor to sell property of the estate. The duly appointed and qualified executor, Fred E. Naftzger, sold at private sale, certain real property of the estate to appellants for $11,500.00 cash. There was not any broker's commission payable in connection with the sale. The inventory and reappraisement of the estate showed the property to be of the appraised value of $11,500.00. At the time of the hearing of the petition for the confirmation of sale of the aforementioned real property, respondent Preninger filed in open court a written bid in the sum of $12,650.00 cash for said property. This bid provided:

“The name of real estate agent procuring within bid, and to whom commission is to be paid, according to law, if confirmed by court to within bidder, is as follows: Geo. S. Preninger, 2015 Beverly Blvd. DR. 3363.”

The probate court accepted respondent Preninger's bid and confirmed the sale to her. The formal order of the court confirming the sale contained, among others, the following provisions:

“Said sale is subject to the payment of a commission to George S. Preninger, licensed broker, of 2 1/2% on $11,500.00, and 5% on $1,150.00, a total of $345.00, payable on consummation of said sale.”

There are two questions necessary for us to determine which will be stated and answered hereunder seriatim:

First: Upon the hearing of a petition for confirmation of the sale of real property by an executor of an estate, does the Superior Court, sitting in probate, have the authority under section 785 of the Probate Code to confirm a sale of the property to a bidder, who in open court bids a sum ten per cent over the amount for which the property was sold by the executor, but which sum is not ten per cent over the amount originally bid exclusive of expenses of the new sale?

This question must be answered in the negative and is governed by applying to section 785 of the Probate Code the following established rule of statutory construction, to wit: if possible, effect must be given to each sentence, word, and phrase of a statute, and unless the exigencies of a situation from a consideration of a statute, as a whole, imperatively demand that some word, phrase or sentence thereof be disregarded, rendered useless, or deprived of meaning, no such word, phrase, or sentence should be considered unnecessary or surplusage. (County of Los Angeles v. Emme, 42 Cal.App.2d 239, 242, 108 P.2d 695; Davidson v. Burns, 38 Cal.App.2d 188, 191, 100 P.2d 1105, 101 P.2d 568.)

Section 785 of the Probate Code reads thus:

“Upon the hearing the court must examine into the necessity for the sale, or the advantage, benefit and interest of the estate in having the sale made, and must examine the return and witnesses in relation to the sale; and if it appears to the court that good reason existed for the sale, that the sale was legally made and fairly conducted, and complied with the requirements of the previous section, that the sum bid is not disproportionate to the value, and it does not appear that a sum exceeding such bid at least ten per cent exclusive of the expenses of a new sale may be obtained, the court shall make an order confirming the sale and directing conveyances to be executed; otherwise it shall vacate the sale and direct another to be had, of which notice must be given and the sale in all respects conducted as if no previous sale had taken place. But if a written offer of ten per cent more in amount than that named in the return is made to the court by a responsible person, and the bid complies with all provisions of the law, it is in the discretion of the court to accept such offer and confirm the sale to such person or to order a new sale.”

In view of the above rule of statutory construction the words in the last sentence of section 785 of the Probate Code, viz., “and the bid complies with all provisions of the law” should be construed to refer to the requirement in the first sentence of the code section, that the sale is to be confirmed to the bidder to whom the property has been sold by the executor unless a sum exceeding such bid by at least ten per cent “exclusive of the expenses of a new sale” is made at the time of the hearing of the petition for confirmation of the sale.

As so construed, the provision for making “a written offer of ten per cent more in amount than that named in the return” of sale, in the last sentence of the quoted section, means ten per cent more, exclusive of the expenses of the sale. By placing this construction upon section 785 of the Probate Code, effect is given to the provisions in both the first and second sentence of the section, while if respondent's contention to the effect that the offer referred to in the last sentence in the section need only be ten per cent in excess of the original bid exclusive of expenses of the sale, were to be adopted, then the words in the first sentence of the section “at least ten per cent exclusive of the expenses of a new sale” would be rendered nugatory. (Estate of Flaherty, 69 Cal.App. 429, 431, 231 P. 591.)

Second: Is a real estate broker's commission an expense of sale?

This question must be answered in the affirmative. (Section 760, Probate Code; Estate of Shaw, 85 Cal.App. 518, 524, 260 P. 351; Estate of Hughes, 3 Cal.App.2d 551, 553, 40 P.2d 295.)

In view of our conclusions since respondent Preninger's bid did not exceed the bid of appellants by ten per cent exclusive of the expenses of the sale, the probate court's order was erroneous.

For the foregoing reasons, the orders appealed from are and each is reversed with directions to the trial court to confirm the sale to appellants.

On Motion for Rehearing.

Rehearing denied.

I dissent from the order denying a rehearing.

An analysis of section 785 of the Probate Code emphasizes the last sentence which reads as follows: “But if a written offer of ten per cent more in amount than that named in the return is made to the court by a responsible person, and the bid complies with all provisions of the law, it is in the discretion of the court to accept such offer and confirm the sale to such person or to order a new sale.”

Clearly this language does not contemplate that the court should, at the time of receiving a new bid at the hearing on confirmation, determine what the expense of the sale to the new bidder will be. The expense of “a new sale” is not there considered. The only occasion for the court to reckon on the expense of a “new sale” is when the court hesitates to confirm the reported sale by reason of the fact that it appears that a sale price might be obtained of sufficient magnitude to exceed the reported price by at least 10 per cent exclusive of the expense of a new sale. The procedure contemplated for a hearing on a sale and a confirmation is as follows: (1) If at the hearing of a reported sale no one offers a higher price than the reported offer and the court has no reason to doubt the justice or the wisdom of the price offered, the sale to the single offer is confirmed. (2) If the court concludes that the price is so inadequate that by a renewed effort the executor might obtain an advance of at least ten per cent exclusive of the expense of a new sale over the first offer, the hearing must be adjourned to a later day to hear the report of a new offer which would be a “new sale.” (3) But if at the hearing first reported a new offer is made in compliance with the requirements regulative of sales of real property and if it is “ten per cent more in amount than that named in the return * * * it is in the discretion of the court to accept such offer and confirm the sale * * *.”

It must have been intended by the Legislature that the additional ten per cent included in the bid made at the hearing on the return would be sufficient to cover any additional expenses, as well as the commissions to be paid the broker, and still leave a net advance over the reported bid. Section 761, Probate Code, provides a method for the division of commissions in event a sale is confirmed to a new bidder at the hearing. It allows one half of the commission on the full amount of the confirmed sale to the agent whose bid was returned for confirmation and the balance of the commission to the agent, if any, who procured the purchaser to whom the sale was confirmed.

The purpose of section 785 is to enable the court to secure “as high a price for the property as possible,” and if it can accomplish this result without subjecting the estate to the expense and delay attendant upon a new sale, it would seem to be in the exercise of a wise discretion to permit a competitive bidding for the property at the hearing upon the return. In re Estate of Griffith, 127 Cal. 543, 544, 59 P. 988; In re Estate of Bradley, 168 Cal. 655, 144 P. 136.

No new sale is necessary if the court accepts the new offer at the hearing. The estate profits by such new bid or bids. No new expenses are to be incurred when the court accepts a new offer made at the hearing on confirmation of the return. The property is disposed of then and there by confirming a sale to the highest bidder. No reason is suggested and none has occurred why the estate should not have the benefit of “ten per cent more in amount than that named in the return”, sec. 785, so long as it is to cost the estate nothing to obtain the excess.

A rehearing should be granted.

McCOMB, Justice.

MOORE, P. J., and W. J. WOOD, J., concur.