New York’s Appellate Division has reversed a determination of the Dutchess County Surrogate’s Court which had originally granted an application which cancelled a real estate contract of sale on the grounds that the executor did not get the highest price obtainable.

In the Matter of Helen P. Lovell, deceased 808 N.Y.S. 2d 227(A.D. 2d Dept 2005) the appellate court found that the contract could not be cancelled absent evidence of fraud , duress, overreaching or unconscionability. The court also found that in performing his duties under the express terms of the decedent’s will, the executor was required to use good business judgment.

Therefore, even if the facts and circumstances surrounding the contract did not support an application to cancel the contract of sale, to the extent that good business judgment was not used , the beneficiaries had the right to seek to surcharge the executor. In order to actually obtain the surcharge, it is “not enough for the contestants to show that the representatives of the estate did not get the highest price obtainable; it must be shown that they acted negligently , and with an absence of diligence and prudence which an ordinary man would exercise in his own affairs”.

The Appellate Division also noted that the decision of the lower court to cancel the contract pursuant to the provisions of the Surrogate’s Court Procedure Act Section 2107 was actually contrary to that law which does not empower the Surrogate’s Court to substitute its judgment for that of the executor, “especially when the executor is exercising a specifically-granted power, and to cancel a contract it deems inadvisable.