Collier v. Collier, 137 Ga. 658

Collier v. Collier

137 Ga. 658 | Ga. | 1912

Evans, P. J.

(After stating the foregoing facts.)

1. The action is by a legatee against the executors, to vacate a conveyance to the latter by the former of his interest in the testator’s estate. The policy of the law forbids that administrators, executors, or trustees, having duties to perform in reference to property for their cestuis que trust, should deal with the beneficiaries with respect thereto, except upon the footing of the. utmost candor *664and upon considerations demonstrative of the absence of any undue 'advantage. An executor can not' purchase property from himself, directly or indirectly, and if he does so, the sale will be set aside at the instance of a legatee who is not in laches, however fair and honest it may have been. Fleming v. Foran, 12 Ga. 594. He may, however, purchase the property from a legatee who is sui juris and laboring under no disability, where all the circumstances of the transaction are fair and open and no advantage is taken by him of the legatee by concealment, misrepresentation, or omission to state any important fact, or by the exercise of undue influence, and the legatee understands the nature and effect of his act. But in such a case a court of equity looks upon the transaction with jealous eye, and will not uphold it unless it appears that the sale is fair and that there is no fraud, no concealment, and no advantage taken by the executor of information acquired by him in his character as such. Bryan v. Duncan, 11 Ga. 67. Professor Pomeroy thus states the principle as deduced from the authorities: “A purchase by a trustee from his cestui que trust, even for a fair price and without any undue advantage, or any other transaction between them by which the trustee obtains a benefit, is generally voidable, and will be set aside on behalf of the beneficiary; it is at least voidable upon the mere facts thus stated. There is, however, no imperative rule of equity that a transaction between the parties is necessarily, in every way, voidable. It is possible for the trustee to overcome the presumption of invalidity. If the trustee can show, by unimpeachable and convincing evidence, that the beneficiary* being sui juris, had full information of all the facts concerning the property and the transaction itself, and the person with whom he was dealing, and gave a perfectly free consent, and that the price paid was fair and adequate, and that he made to the beneficiary a perfectly honest and complete disclosure of all the knowledge or information concerning the property possessed by himself or which he might with reasonable diligence have possessed, and that he has obtained no undue and inequitable advantage, and especially if it appears .that the beneficiary acted in the transaction upon the independent .information and advice of some intelligent third person, competent to. give such advice, then the .transaction will be sustained by 'a ¡court of equity.” 2 Pom. Eq. Jur. § 958. The same rule applies where th& purchase is made by the executor for the benefit of *665the estate, as enuring to the other beneficiaries. Adams v. Cowen, 177 U. S. 484 (20 Sup. Ct. 668, 44 L. ed. 851); Ludington v. Patton, 111 Wis. 208 (86 N. W. 571); Taylor v. Taylor, 8 How. 183 (12 L. R. A. 1040). And this is especially true where the executors are legatees under the will, and will reap their proportionate share of whatever benefit may come from their purchase.

The general object of this rule is to prevent imposition on the part of trustees. The petition alleges, as a reason why the transaction was not fair, the gross disproportion between the value of his interest in his father’s estate and the value of that which he received from the executors in consideration of his relinquishment of that interest for the benefit of the other legatees, among whom were the executors. He alleges, that he had no conception of the value of his father’s estate; that his habits of life, his social and financial condition, and his lack of knowledge of real-estate values incapacitated him to judge its correct value; that his financial stress was such that he eagerly accepted the value placed thereon by the executors, who were his brothers and who had considerable experience in business and were fully acquainted with the estate and its value; that the executors represented to him that they had the power, under the will, to withhold his legacy just as long as they desired, and his pressing needs for money were such that he was prepared to accede to anything by which he could get money; that the executors had previously sold some land, which was not nearly as valuable as other portions of the land, for as much as $600 per acre, and he did not then know of this; and that the actual value of his legacy was more than twice what he received for it.- On demurrer these allegations are to be taken as true, and are sufficient to cast upon the executors the burden, of showing that the transaction was fair, and that they did not withhold any information which they should have given to the plaintiff.

On the trial, in a comparison of the value of the plaintiff’s interest with what he received under his contract with the executors, the discretion of the executors as to the manner of disposing of the land as provided in the will is to be considered. Also, that the plaintiff was not entitled to his remainder interest in the share of his mother until after her death. In' determining whether -the plaintiff received the substantial equivalent of his legacy, it’s value is to be estimated under these circumstances, and at its then pre's*666ent worth, and not at the value at which the executors subsequently sold the land; and should it appear that there was no concealment or misrepresentation by the executors, and the transaction was fair, and the plaintiff received the substantial equivalent of the then present worth of his interest in the estate, the contract of sale should not be rescinded.

2. One ground upon which the plaintiff relies for the cancellation of his deed and acquittance receipt to the executors is a lack of consideration. It appears from the petition that within the year after the qualification of the executors they had sold off some portions of the land, receiving therefor the sum of $31,000; but it does not appear how much money was in their hands at the time of the transaction. The bulk of the estate, which was in land, had not been disposed of by the executors, for the reasons explained to the plaintiff in the letter from tbeir attorney. The executors deemed it inopportune to throw the whole bulk of the estate on the market, and the plaintiff was anxious to realize on his legacy. The transaction between the executors, who acted with the approval of all the other beneficiaries, and the plaintiff involved a relinquishment of the latter’s interest in the estate to the executors for the benefit of his colegatees, in consideration that the executors turn over to him certain property of the estate and give to him the notes of the estate. He converted the land conveyed to him by the executors and their notes into money, and thus realized a present enjoyment of what he contracted to receive as the equivalent of his interest in the estate. The transaction is similar to that of a cotenant who accepts a conveyance in severalty to a part of the joint property, in consideration of his release of his interest in the remainder. Such a transaction is not without consideration, but whether it is fair depends upon the principles discussed in the preceding division of the opinion; and in determining as to that, the court may compare the value of the plaintiff’s interest in the estate with the value of what he received.

3. It is further contended that the plaintiff can not maintain the action, because he has not returned the money, notes, and deed which he received from the executors as a consideration for his relinquishment of all interest in the estate of his father. We recognize the general rule to be that “ where one who has received money in consideration of land sold and conveyed seeks to rescind the sale *667on the ground of fraud, it is incumbent on the seller, before instituting legal proceedings for that purpose, to return, or offer to return, the consideration received.” Bowden v. Achor, 95 Ga. 245 (14), 263 (22 S. E. 254). Such a rule is particularly applicable in transactions between parties dealing at arm’s length, where the consideration wholly proceeded from the purchaser, and the seller had no interest in the same, either equitably or indirectly. But there are exceptions to this rule; as, in the case of an infant who disaffirms his deed upon attaining majority, he is not required to tender the money received in payment of his land as a condition precedent to the rescission of his deed, where it appears that the money has been expended for an education or for food which has been consumed. Timmerman v. Stanley, 133 Ga. 850 (51 S. E. 760, 1 L. R. A. (N. S.) 379); White v. Sikes, 129 Ga. 508 (59 S. E. 228, 121 Am. St. R. 188). The facts of the present case furnish another instance of the inapplicability of the general rule. The executors, in purchasing the legatee’s interest, acted in their representative capacity. Their proposal to buy was made as executors; they took the legatee’s conveyance to themselves as executors. ' They contracted to give what the legatees and themselves agreed was a fair value of the legatee’s interest in the estate of his father. The legatee was entitled to receive this much in any event, as1 a bequest or devise from his father. If the estate was of such value at the time of the legatee’s conveyance that his legacy was of greater value than what he received from its sale (and the demurrer admits this), and he is-entitled to a rescission under the principles already discussed, there would be no necessity to restore or offer to return what he had received, as a condition precedent to his right to rescind, because the executors have only paid him in .part what was his under his father’s will. A party is not obliged to return that which he will be entitled to retain as a condition precedent to a cancellation of a.contract. 6 Pom. Eq. Jur. § 688. If the plaintiff has -received no more than what was bequeathed to him, his offer to account for the same, in the adjustment of the equities of all parties concerhed, sufficiently meets the requirement that he who asks equity must do equity.

Judgment reversed.

All the Justices concur, except Hill, J., not presiding.