Eaton v. Eaton, 233 Mass. 351

Eaton v. Eaton

233 Mass. 351 | Mass. | 1919

Rugg, C. J.

This suit in equity is brought by the persons named as executors in an instrument purporting to be the last will of Charles S. Eaton, late of Marblehead, who died in October, 1917, to enjoin the defendant, his widow, from contesting the allowance of the instrument as such last will and from petitioning for a widow’s allowance, and to compel her to perform specifically the terms of a certain antenuptial agreement executed between her and the deceased a day or two before their marriage in 1909.

The defendant filed a demurrer, for want of equity amongst other causes, and appealed from an interlocutory decree overruling it. The same matter was set up in answer. The defendant in open court has waived her demurrer. Under these circumstances it is necessary only to consider whether the court has jurisdiction of the subject matter. Consent or waiver by the parties cannot confer jurisdiction over a cause which is not vested in the court by law. It is the duty of the court to consider that point of its own motion. Peabody v. School Committee of Boston, 115 Mass. 383. National Fertilizer Co. v. Fall River Five Cents Savings Bank, 196 Mass. 458, 462. Fourth National Bank of Boston v. Mead, 214 Mass. 549. Boston Bar Association v. Casey, 227 Mass. 46, 50.

The bill sets out an antenuptial agreement, executed in due form, according to the terms of which the defendant agreed to accept certain testamentary provisions to be made in her behalf by the deceased in place of all other claims upon his estate, and alleges that the deceased complied with all the stipulations of that agreement on his part to be performed, and made and executed a will wherein all the obligations to the defendant under the antenuptial contract have been met; that the deceased by *365nominating the plaintiffs executors under the will imposed upon them the duty of presenting the will for allowance, and that in the attempt to perform that duty they find themselves obstructed wrongfully by the defendant in defiance of her covenant with the deceased. The prayer of the bill in substance and effect is that the obstacle in the way of their performance of duty caused by this unlawful conduct of the defendant may be removed. This presents a case under the circumstances within the jurisdiction of a court in equity. It is a necessary implication of every valid contract with covenants binding each party, that neither will interfere to prevent performance by the other. Hebert v. Dewey, 191 Mass. 403, 410. Bailey v. Marden, 193 Mass. 277, 279. Tighe v. Maryland Casualty Co. 218 Mass. 463, 468. It is an implied term of the antenuptial agreement here in issue that the defendant will not contest any will made by the deceased provided he carried out that agreement in all its parts. Such an agreement, after it has been fulfilled by the one agreeing or reserving to himself the right to execute a will, entitles his representatives to specific performance in equity. Sullings v. Richmond, 5 Allen, 187. Tarbell v. Tarbell, 10 Allen, 278. Jenkins v. Holt, 109 Mass. 261. Paine v. Hollister, 139 Mass. 144. Contracts made after the death of a testator, as to the disposition of property received under the will, between legatees, heirs at law and others having a pecuniary interest therein, are recognized as valid and are enforced in equity. Ellis v. Hunt, 228 Mass. 39, and cases there collected. The heir at law of a deceased person, who has entered into an antenuptial contract as to the share to be received by his wife from his estate, may enforce specific performance of the contract. Collins v. Collins, 212 Mass. 131.

The case at bar falls within the principle of these decisions. The plaintiffs, although not yet appointed by the Probate Court as executors, have the specific duty to present and seek to have allowed the instrument purporting to be the last will of the deceased. They have sufficient interest to invoke the aid of equity against one who under these circumstances hinders them in the discharge of that duty contrary to the terms of her contract with the deceased.

The case was heard on its merits by a single justice of this court, who made findings of fact incorporated in the record and *366ordered the bill to be dismissed. The case comes here on exceptions by the plaintiffs. The pertinent facts as thus found are that the deceased, a widower of about fifty-three years having three sons, became engaged to be married to the defendant, then a widow of about thirty-eight years, in 1909. The deceased had established and was the sole proprietor of a restaurant in Boston known as "Thompson’s Spa.” He was a man of unusual business ability and of more than average literary accomplishments, as well as of great foresight and determination in pushing through to a conclusion whatever he resolved upon. His business income from the time of his engagement until his death averaged not less than $100,000 per year. His other property was at least $180,000. In contemplation of his approaching marriage, the deceased conceived the idea of an antenuptial agreement, which he proposed to the defendant. It is conceded that this agreement was fairly made. After appropriate recitals, its essential ; terms enabled and bound him, provided the defendant became and continued his lawful wife and survived him, (1) to make such disposition of personal effects as he chose, (2) to give to such persons or purposes as he might name legacies not exceeding ten per cent in value of his real and personal estate as ascertained by the probate inventory, (3) to divide the residue into equal parts, one more in number than there were surviving children and issue of any deceased child taking by right of representation, one part to the defendant, one part to each surviving child, and one part to the issue of each deceased child by right of representation, the share of the defendant to be held by trustees on a spendthrift trust, the net income thereof to be paid to her during life, (4) to accept and receive from the estate of the defendant in case he survived her only that which might be willed to him. The defendant covenanted that, in case the deceased performed the stipulations resting on him under the agreement, she would accept the same in full of dower and other rights which otherwise she might claim from his estate. Three sons survived the deceased. He left no child nor children of a deceased child. Article 4 of the instrument offered for probate as the will of the deceased, after a recital in part of the provisions of the antenuptial agreement, and an assertion that it is made in pursuance of the terms of that agreement, establishes a spendthrift trust of one fourth *367share of the remainder of his estate for the benefit of the defendant during her life, with a gift over. The sale of his interest in the spa as soon as may be done without unreasonable loss is directed by Article 6. It there is provided that his sons or any of them shall be given a preference over other prospective purchasers to the extent of permitting them to purchase at the same price offered by any bona fide purchaser, payment to be made wholly or in part by their unsecured notes bearing interest not exceeding four per cent pending the settlement of his estate.

The plaintiffs' contend that this will, with all its antecedent and concurrent facts, constitutes a performance of the antenuptial agreement. The defendant contends" that the deceased intentionally violated that agreement during his life by giving to his sons for the purpose of defeating its covenants, a very large and substantial part of his estate.

It is not necessary to narrate the biographical details of the married lives of the deceased and the defendant. It is enough to say that, having been married in 1909, an estrangement came in 1914, followed by a separation, the deceased leaving the defendant at a house built at Pasadena, California, by him after the marriage at an expense including furnishings of approximately $175,000, to which the defendant had contributed $20,000, being substantially all of her estate. After a few months he returned to his home in this Commonwealth and later filed a libel for divorce, which was pending unheard at the time of his death. During the period of his married life with the defendant before the estrangement, the deceased made to her valuable gifts and was most generous in expenditure for her dress and travel, but not in amounts beyond or inconsistent with his ample income. From the time of the estrangement until the execution of the instrument offered for probate, the mind of the deceased “was centered upon the predominant purpose of so dealing with his property as to increase in so far as possible the share of his sons therein in rectification of what he considered the financial wrong done to them by the antenuptial agreement.” In execution of that predominant purpose, with the full knowledge of the ante-nuptial agreement and its relation to his testamentary rights, he deliberately did three main things: (1) He caused to be organized a corporation for the ownership of the Pasadena property, *368the ultimate result thereby accomplished, without setting forth its various steps, being the indirect acquisition by his three sons, through holding of capital stock of an unindebted corporation, of property worth at least $150,000 with an annual rental value of from $10,000 to $12,000 for $90,000, the share of each son in even that payment having been made by his non-interest bearing note. (2) He sold stocks owned by him at the date of the ante-nuptial agreement and out of the proceeds, probably combined with other investments of current income from the spa, between October, 1914, and August, 1917, gave to his three sons sums aggregating $170,577.42. (3) In November, 1915, he formed a partnership of the business of the spa with his two older sons. This business then was worth at least $550,000 exclusive of the good will, and on uncontradicted evidence was worth as a whole independently of leasehold or other rights in realty from $800,000 to $1,000,000. The share of each of the sons was' one seventh both in assets and profits and of the deceased, five sevenths. In August, 1917, the share of each son was increased to one sixth and that of the deceased diminished to four sixths. At the same time the deceased and these two sons agreed with the third and youngest son that he should become a partner and be given a one sixth interest by the deceased in 1922, provided this son should earn his right to it by faithful and diligent service in connection with the business at a salary commensurate with his work. Pursuant to this arrangement the two older sons in 1917, including salaries fixed at $15,000, each received $66,000 from the business of the spa. There was no past consideration for the copartnership and the sons contributed to it no capital. The interest of each was a pure gift from the deceased. The two elder sons as surviving partners of the spa would have the exclusive right to possession of the firm’s assets and to liquidation of its capital. In this connection the provisions of Article 6 of the will confer upon them a dominating position respecting that business. The finding of the single justice touching this matter is that the contracts of partnership were entered into for the ulterior purpose of rendering nugatory as far as possible the stipulations of the antenuptial agreement as to equality of participation and distribution of the residue as well as to enrich the sons at the expense of his wife, and that these agreements and transfers were “fraudulent and *369testamentary in character, although not testamentary in form” and were made for the purpose of evading the antenuptial contract. It is further found that “the taking of the sons Ezra and Malcolm into partnership was not a gift out and out of one seventh subsequently enlarged to one sixth, to each of them freed from any possible control by himself. He was to share, and shared during the remainder of his life in his proportion of the net profits from the whole business. It is only upon his death and a winding up or settlement of the partnership affairs that his interest as distinguished and separate from theirs and the rights of Charles [the youngest son] can be ascertained and sold under Article 6 of the will, the sons or any of them at such sale to be given the preference if they so desire over ‘any other prospective purchasers.’” Several changes in will and codicil were made during the period of estrangement, the practical effect of which was not to increase and probably was to diminish the defendant’s testamentary share in the estate of the deceased.

The findings of fact must be accepted as final. It is plain that they are supported by the evidence. That the conduct of the deceased was deliberately designed is manifest not only from all the circumstances, including his general intelligence and intellectual acumen, but especially from his refusal to accept and follow the advice of the one who had been his attorney for many years and who drew the antenuptial contract, to the effect that under its terms he could not give interests as partners in the spa to his sons, and his resort to the counsel of others.

The refusals to make certain findings of fact requested by the plaintiffs present no question of law. The single justice saw the witnesses and observed their manner of testifying, and was in a better position than any one else can be to pass upon their credibility. A bill of exceptions in equity presents only questions of law. Kennedy v. Welch, 196 Mass. 592, 594. Malden & Melrose Gas Light Co. v. Chandler, 209 Mass. 354, 357. It was the province of the single justice to make a final determination touching the facts put in issue by the pleadings. Requests for findings of fact in such connection have slight, if any, relevancy at this stage of the case. See Warfield v. Adams, 215 Mass. 506, 520.

The precise question presented is whether, when a man has made an antenuptial contract with a woman, who in reliance *370thereon becomes his wife, to give-her by will a share of his estate equal to that to be given by will to others, the husband lawfully may by deliberate design for the express purpose of diminishing the money value of the testamentary provision for the wife, make lavish gifts from his estate to others during his life. That question never before has arisen for adjudication in this court.

It was held in Redman v. Churchill, 230 Mass. 415, reviewing and affirming earlier decisions, that a husband, who was under no contractual obligation to his wife, has “the right to dispose of his personal property during his lifetime without her consent, and she cannot impeach a gift made by him as a fraud upon her because made to prevent her from acquiring any portion of it.” It was held in Kelley v. Snow, 185 Mass. 288, that a wife under no antenuptial covenants may make a present transfer of all her personal property to a trustee, retaining a beneficial interest to herself during life with gift over to a third person on her death, and reserving the right of variation by subsequent appointment, even though all this is done for the express purpose of preventing her husband from sharing in her estate. Those decisions do not reach to the point now to be determined, because no antenuptial contract was involved in either of them. The intent of a donor is of no consequence in such a case, because the rights of the relict in the property of the deceased spouse is purely the creature of statute. Each is entitled to that which the statute establishes and to nothing more, and the statute says nothing about intent. The fact alone is controlling.

The decisions are uniform, so far as we are aware, to the effect that where there is an antenuptial contract and the parties to the marriage have voluntarily elected not to depend upon the provisions of the law but upon the terms of an express agreement, a different rule applies. Such parties are not absolutely free to give away their property at their own volition. The reason for a different rule doubtless is that, where a man and woman who are to become husband and wife undertake to establish the rights of each in the property of the other by contract, they are held to reasonableness and good faith in its execution. The contract is of course to be interpreted according to its words. No contract is to be construed in conformity to the mere unexpressed expectation of the parties to it. Hope of the one or apprehension of the *371other not written into the agreement constitutes no part of its obligation. There are, however, certain implications which arise out of the nature of the transaction where a man and woman in contemplation of marriage attempt to settle by contract their respective property rights in the estate of the one who shall die first. The participants in an antenuptial contract do not stand at arm’s length with reference to each other. Their relation is one of highest trust and confidence. It demands the utmost good faith on the part of each. This is not only a necessary concomitant of the execution of such an instrument, but the performance of its stipulations must also be in the same spirit. Without analyzing further the grounds for a different rule governing the rights of parties to an antenuptial contract from that which governs the rights of a husband and wife unaffected by such contract, it is enough to say that the substantially universal consensus of common law courts to that effect is a sufficient basis for its existence, recognition and acceptance. What that rule is has been differently phrased by judges of eminence. One of the most frequently quoted statements is that of Lord Chancellor Brougham in Logan v. Weinholt, 7 Bligh, (N. S.) 1, upon which the plaintiffs strongly rely. That was a case where, amongst other matters, an uncle, after reciting the intended marriage of his niece, covenanted upon her marriage to give by will to her or to the issue of her marriage as much as he gave by will to anybody else. The marriage took place. Thereafter the uncle bought estates with life use to himself and remainder to persons other than the niece and her issue. It was with reference to those facts that it was said at page 53: “Now, upon due consideration of the authorities and principles of law, I take the rule touching these matters to be this: If a person covenants or agrees, or in any manner validly binds himself to give to A. by his will as much as to any other, he may put it out of his power to do so by giving all in his lifetime; or if he binds himself to give A. as much as B. by his will, he may in his lifetime give B. what he pleases, so as his will shall give A. as much as his will gives B.; but then, the gifts which he makes in his lifetime to B. must be out and out; for, if to defraud or to defeat the obligation which he has entered into, he gives to B. any property real or personal over which he retains a control, or in which he reserves an interest to himself; then in order to *372protect the agreement or obligation which he has entered into, and to defeat the fraud attempted upon that obligation, and to prevent his escaping, as it were, from his own contract, this gift to B. shall be taken as testamentary, — shall be taken as if included in the will, — and the subject matter of it shall be brought back and made the fund.out of which to perform the obligation: at all events it shall be made the measure for calculating and ordering the performance of, or dealing with the claim arising under that obligation.” To the same general effect see Fortescue v. Hennah, 19 Ves. 67, and Johnson v. Hubbell, 2 Stockt. 332, 337.

, It is manifest from the reasoning and decision of Kelley v. Snow, ubi supra, that such reservation of income for life and gift over of remainder at the death of the donor as was before the court in Logan v. Weinholt, is not “testamentary” in any true sense. There is nothing essentially testamentary in the act of a man making a present gift of his property to a trustee, reserving income for life to himself with remainder at his death to third persons. A man free from legal requirement to anybody respecting the disposition of his property may give it in that or a similar way and such remainder vests at once in the remainderman. An instrument of that sort need not be executed with the formality required for a will. Apart from any agreement and having regard to the statute of wills, the arrangement before the court in Logan v. Weinholt contravened no principle of law. Kelley v. Snow, ubi supra. But a court of equity laid hold of those facts and invalidated that arrangement in Logan v. Weinholt simply because it was unreásonable, or fraudulent, or lacking in good faith, or in violation of the implications of the agreement, and treated the disposition as “testamentary” in nature. The underlying justification for such interference by equity is that the act was designed to and would accomplish, if permitted to stand, the defeat of the obligation of the covenants and frustrate the fair performance of the contract. It also is to be noted that in that case the attempted gifts were held contrary to the contract. It was not necessary to state with fulness and precision the converse of the rule whereby gifts would be held valid.

The rule was put with more comprehensiveness and accuracy by Lord Hatherly, while Vice Chancellor Wood, in a case involving a *373covenant in a marriage settlement for the benefit of his son by a father, in these words: “It is true, that, notwithstanding the covenant, the father might have disposed of the whole of his property in his lifetime, provided such disposition were not made in fraud of or for the purpose of defeating his covenant, as it was in Jones v. Martin [3 Anst. 882, more fully reported in 5 Ves. 266, n.].” Eyre v. Monro, 3 Kay & Johns. 305, 309. These words are quoted with approval and followed in Keays v. Gilmore, Ir. R. 8 Eq. 290, 294, 295. The rule as stated by-Lord Hatherly was foreshadowed in Gregor v. Kemp, 3 Swanst. 404. The facts there were that Joan Kemp covenanted to will one fourth part of her estate for the benefit of A. Repenting of the terms of her agreement, she sought by present gifts to transfer £1,000 to' others. The Lord Chancellor was of opinion that the disposition was in fraud of the covenant. He conceded that, notwithstanding the agreement, Mrs. Kemp was not restrained from disposing of any of her estate in any way in her lifetime and had full power over it but “with this single exception (viz.) she was restrained from making a distribution on purpose to defeat the covenant.” The rule of Lord Hatherly was adumbrated by the still earlier decision of Webster v. Milford, 2 Eq. Cas. Abr. 362, 363, where the Lord Chancellor is reported to have said in substance though with brevity, that under marriage articles it is not in the power of the husband purposely to defeat the articles by alienation or gift of his property. See in this connection Randall v. Willis, 5 Ves. 262, and Jones v. Martin, 3 Anst. 882, reported much more fully in 5 Ves. 266, note.

In Dickinson v. Seaman, 193 N. Y. 18, 24, the query was put whether under a marriage agreement the deceased husband “could give away all his property to his own relatives, and thus defeat the antenuptial contract altogether.” .And it was said “assuming that he could not do this because it would be unreasonable, it is further asked where the line is to be drawn between the power to give away all and to give away nothing. That line is to be drawn where the courts always draw it when they can, along the boundary of good faith. If the decedent had given away property with furtive intent, for the purpose of defeating the antenuptial contract and of defrauding the plaintiff, the gift would have been void.” In Vanduyne v. Vreeland, 1 Beas *374142, an agreement by an uncle that he would take into his family an infant nephew and give him property at the death of the uncle and his wife, was the subject of inquiry. It there was said: “The defendant, Vreeland, had a perfect right to dispose of the property as he pleased, provided he did not make a disposition of it to take effect after his death, which would have been a fraud in law, or constructive fraud upon the agreement, whether he intended it as a fraud or not, or a disposition of it, for the sole purpose of defrauding the complainant, and depriving him of the benefit of his agreement, which would have been an actual and positive fraud.” In Austin v. Davis, 128 Ind. 472, it was recognized that under agreement for adoption of and testamentary gift to a child there was a limitation upon the right to make gifts to other persons during life; that they must not be made for the purpose of defrauding the child, and must be “made in good faith.”

Several of the decisions to which reference has been made involved agreements touching the disposition of property by will for persons who were not either the husband or the wife of the testator. There is at least as strong ground for holding that such agreements between persons in contemplation of marriage impose restrictions upon the right to give away property to others as there is for reaching such a conclusion as to like agreements made between persons not in contemplation of marriage.

Apart from the authority of decided cases and on reason there appears to us to be no sound distinction between an out and out gift by the covenantor under an antenuptial agreement for the purpose of defeating the agreement and a present gift to a third person for the same purpose of the principal of, a fund or estate with reservation of income or use to the giver for life, there being no clause in the agreement expressly covering the point. The one manner of giving is no more testamentary in its essence than the other, using the word “testamentary” with accuracy of meaning. If regard be had to the effect upon the wife, it is the same in either event. If regard be had to the effect upon the donor, he suffers no more by making such a gift of remainder than if he carried out his agreement. The effect upon him, however, is an immaterial factor. The antenuptial agreement, so far as concerns the wife, is not made for the benefit of the husband. His testa*375mentary power is affected, sometimes by restriction, sometimes, as in the case at bar, by enlargement. The purpose of the covenantor in case of either manner of giving is to prevent the operatian, of the agreement upon his property to the end that he may accomplish a detriment to his wife. The cases, which hold that a settlement with reservation of life estate to the donor and remainder over is bad, rest upon the proposition that it is a fraud upon the marriage agreement perpetrated to defeat its obligation. It well may be that such settlement is proof positive of a purpose fraudulent as against the marriage agreement. It is, however, equally a fraud upon that obligation and equally designed to defeat the covenant to make a present gift for that purpose. Harm to the covenantee follows equally in each case, whatever may be the form of the gift.

The circumstances under which an antenuptial contract is made import a purpose that it shall confer real rights and impose substantial obligations.. It is an implied term of such an agreement that it shall be fairly carried out and that it shall not be performed in hate, trickery, perversity, or distrust. The inference rationally to be drawn from the conditions attendant upon an antenuptial agreement is that it is designed to give something of value to the wife and that it is not an empty form. It is more consonant with the situation to infer that, if the parties intend that power shall be reserved to the husband wholly or in large measure to deprive the wife of property rights by making gifts for that purpose during life and thus leave nothing or much less than might rationally have been expected for the will to operate on, it should be expressed in the instrument, than it is to deduce the reservation of such power contrary to the whole spirit of the instrument and the nature of the transaction. The right secured to the wife by implication is that she shall be treated fairly and rationally in the matter of distribution of his property by the husband by gifts during his life.

The true rule, fairly to be deduced from the weight of authority and resting on sound' reason, is that a man, who has entered into an antenuptial agreement w]th a woman, who becomes his wife, . to give her by will a proportional part of his estate, may without breaking his agreement make gifts during his life in good faith and reasonable in amount having regard to all the circumstances, *376but he cannot make gifts either absolutely, conditionally, indirectly or otherwise for the main purpose of defeating his agreement and preventing it from operating for the benefit of his wife. The motive in such a case affects the validity of the transaction because it determines “the extent of a privilege to infringe upon the admitted right of another.” Leonard v. Leonard, 181 Mass. 458, 461. The adoption of any other rule in substance would put it in the power of a husband to strip himself during life of all his property, make his antenuptial agreement a barren instrument and leave his wife penniless. A- result like that would be contrary to every inference arising from the relation of the parties and the purpose of an agreement.

The conclusion here reached is somewhat analogous to many classes of cases where equity in the interest of good faith and fair dealing enjoins contrary conduct either by mandate or restraint. For example, prohibition of use of information, acquired through employment, to harm of employer, Essex Trust Co. v. Enwright, 214 Mass. 507, Aronson v. Orlov, 228 Mass. 1, 5; protection of vendee of good will against setting up of a rival business by vendor, Old Corner Book Store v. Upham, 194 Mass. 101, Foss v. Roby, 195 Mass. 292, and appropriation of appointed property to payment of debts of appointor, Shattuck v. Burrage, 229 Mass. 448, all are equitable doctrines, engrafted on written instruments silent upon the subject, because consonant with fundamental ethical rules of right and wrong.

The findings of fact bring the case at bar fairly within this principle. A court of equity will refuse any relief by injunction upon such facts.

The stipulation signed by the three sons and the persons named in the will as executors, purporting to relinquish some of the preferential rights of the sons in the partnership and agreeing that the interest of the deceased therein may be sold under order of corut, has no bearing upon the question whether the antenuptial agreement has been performed by the deceased.

It follows from what has been said that "all the plaintiffs’ requests for rulings were denied rightly. No error is disclosed on this record.

Exceptions overruled.