93 N.Y.S. 291 | N.Y. App. Div. | 1905
Lead Opinion
The learned counsel for the appellant has insisted with much of iteration that in the disposition of the case presented by this appeal the learned trial court omitted to examine all of the
It is quite evident that the ability and skill manifested by Weld in handling the account made a deep and lasting impression upon the mind of Mrs. Blanchard, and was doubtless a controlling influence with her in the subsequent dealings and transactions had between the parties. His dealing with Mrs. Blanchard and her property from the time of her departure for Europe in 1902 down to the date of the execution of the transfer in January, 1903, was scrupulous in its fidelity to the interests of Mrs. Blanchard, and he seems to have been willing that she should reap the benefits of his manipulation without compensation. At least, the question of compensation was a secondary matter with Weld, as it appears that he never presented any claim to Mrs. Blanchard, or asked for a settlement, or in any wise mentioned the subject of his compensation to her, prior to the transfer. The fairness and fidelity of Weld toward Mrs. Blanchard and her affairs not only produced a conviction in her mind that he possessed ability and skill in connection with such business, but his fairness and devotion to her interests developed a sincere feeling of regard for him personally and for his wife. Her
The court further found that the transfers, notwithstanding their form and the consideration recited therein, were not intended or understood by the parties to deprive Mrs. Blanchard of the beneficial ownership of the property which purported to be conveyed thereby, and that the defendant held the title to the property as the agent of and in trust for Mrs. Blanchard; that the transfer in fact was colorable. This is the finding of the court in substance, and it presents the crucial question upon this appeal. It was testified by Weld that the proposition was made by Mrs. Blanchard to him on the 18th day of January to transfer all of her property to him, and in consideration therefor that he pay to her an annual income of $20,000 during her life. To this proposal he at first demurred, as well he might, for the property held by Mrs. Blanchard was clearly insufficient to produce such an income upon any settled business basis. As a business proposition, considering the age of Mrs. Blanchard and her then condition of health, it was the assumption of an obligation not justified by the value of her property, the amount of her indebtedness, and the precarious nature of some of her stocks. Apparently without much consideration of the magnitude of the burden which Weld proposed to assume, and with little discussion of the subject, according to his testimony, he yielded an acquiescence to Mrs. Blanchard’s wish. Immediately following this conversation, and in the same interview, Weld testifies that Mrs. Blanchard called his attention to the fact that a claim had been made by the heirs of her husband against his estate, and she produced a letter suggesting a compromise of the claim. Weld
“Then I suggested to her that she put her things in trust. As I understood the words ‘in trust,’ it meant that she would have the use and could will away the principal, if she so chose, but that the income from the property would not be over 4 or 4% per cent. No speculation could be carried; that the money would have to be used simply for the securities that could be bought outright, without being carried on margin.”
To this she replied that “she did not want any such thing.” Then followed a discussion over the amount of the income which she would require, in which he sought to have it reduced to $10,000 a year and anything over that amount which he might make out of the property. She refused to assent to this, and after a discussion concerning the property and its condition Weld said:
“No suit is contemplated from this report, so far as I can see, Mrs. Blanchard; but if you have decided that you wish to make such a paper as you say, and you think that there is any possibility that there might be any suit, I can only advise you that such a paper should be made before any suit is begun against you.”
She then said: “I wish your brother to draw these papers for me.”
It is clear, therefore, from Weld’s testimony, that when they were talking about the execution of the transfers to him there was embraced within it the claim which had been made against the estate by the Blanchard heirs, and a suggestion that the property should be transferred in trust, in order to' meet any contingency which might arise respecting such claim, and Mrs. Blanchard then directed the papers to be prepared. It does not appear that there was any discussion whatever with respect to a separation of the property which had come under her husband’s will from her own in making the transfer, save the suggestion which Weld states she made. At the close of the interview, therefore, respecting the subject of the transfers, the very last thing was the advice of Weld that they ought to be made before suit brought by the Blanchard heirs. There is no suggestion in that connection of any other motive inducing the transfers than the claim made by the Blanchard heirs, and it was to meet that condition that the direction was given at the close of the interview between Weld and Mrs. Blanchard. After the transfers had been executed the parties had considerable correspondence in relation to the property, both the stocks . and real estate, and running through the whole of this correspondence is a constant statement made by Mrs. Blanchard of ownership of the property. She continually speaks of it as her own, gives directions concerning it, and nothing is contained therein showing that she had surrendered the beneficial ownership of the property to Weld or that she had parted with her rights therein. Weld treated it in the same way. In a letter bearing no date, but which
“If you wish me to act as trustee, I will certainly do so with the best ability I can; or if you wish that I retain your affairs in my name, as they now are, I will do the best I possibly can for your personal benefit, and undertake the entire management the same as if it were my wife’s.”
And in other letters he consults her about the management of her different properties. Under date of February 18, 1903, he writes:
“As regards making arrangements with my brother, I have had an understanding with him that he is to attend to all papers, leases, or other legal matters that you may have, or that may become necessary in the management of your affairs, or that may be necessary in relation to anything that may come up regarding such of your affairs that I may have charge of for your account. You to have full use of and to ask his opinion on any matters that you feel you would like to inquire about, and gradually, as affairs are reduced in Mr. Brown’s management, you can turn them over to his keeping and attention, such as insurance matters, tax affairs, etc. In other words, he is to act as your attorney for the year, and such papers, etc., that he had already drawn are to be included in the sum I shall agree upon with him for the year. I have not yet settled it, as I wish first to ask if the amount of fifty dollars a month would be considered excessive by you. In case it should become necessary that Mrs. Skinner must appear by attorney in the will matter, I have agreed with my brother that he will act as her attorney without charge (it being upon your affairs), so that it would not be necessary to have a bill run up by Ingersoll or any one else for services rendered her on your a/c. If you consider the amount I mention as excessive, do not hesitate to so state, for in business matters I drive a bargain with my brother just the same as I would any one else, and, having charge of your affairs, I shall always endeavor to treat them the same as I would want my own interests taken care of.”
It is clear, therefore, that the claim of Mrs. Blanchard and the written statements of Weld himself show that Weld regarded and treated the property held in his name as the property of Mrs. Blanchard. Search will be in vain to find any statement, outside of his oral testimony, that during her lifetime he claimed any beneficial interest in the property.
The argument presented by the learned counsel for the defendant that these letters, when coupled with the oral testimony, are to be regarded solely as. having reference, by both Mrs. Blanchard and Weld, to an interest in the income which Weld was under contract to supply, is quite strained and unnatural. If his position was that of beneficial owner, why speak of it as her property and her affairs ? And, if he was charged with the use and management of the property solely for the purpose of producing the income, why was it necessary for her to employ and pay a lawyer to look after the drawing of her papers, the management and care of her real estate, and the adjustment of insurances, taxés, and other expenses. All of these matters, if the defendant Weld’s contention be upheld, were charges against him, for which he was bound to provide. She had no need of an attorney upon that theory, as she
It is claimed by the appellant, however, that, if this be so, yet the transfers were the free and voluntary act of Mrs. Blanchard, clear of any fraud or undue influence upon the part of Weld, and that, therefore, the parties are in pari delicto in a fraudulent scheme, and the law will refuse any relief to either. Undoubtedly, if this be the fact, a court of equity will refuse its aid in setting aside the transfer. Robertson v. Sayre, 134 N. Y. 97, 31 N. E. 250, 30 Am. St. Rep. 627; Renfrew v. McDonald, 11 Hun, 254. This rule, however, is subject to another, equally well settled, which authorizes a court of equity to interpose with its aid in setting aside the instrument between persons occupying confidential relations, wherein one party may naturally exercise an influence over the conduct of another. Boyd v. De La Montagnie, 73 N. Y. 498, 29 Am. Rep. 197. We have already observed that Mrs. Blanchard had become deeply imbued with the judgment, ability, and skill of Weld in the management of property such as she possessed. She relied confidently upon his judgment and implicitly in his integrity. This was the condition which had been created by the course of dealings between the parties. While she was not so ill at the time when these transfers were made as to mentally incapacitate her for understanding what she was doing, yet it is manifest that the claim which had been made by the heirs of her husband’s estate had greatly disturbed and worried her, and undoubtedly created in her mind an acute apprehension not justified by the facts. It was under these circumstances that she applied to Weld for advice respecting this subject. In the course of his dealings with her he had in a perfectly legitimate manner acquired great influence over her; but, however acquired, it was an influence which operated in a marked
In principle the case is not different from the condition which existed in Boyd v. De La Montagnie, supra. Therein it appeared that a wife, who sought to set aside a lease, had consented to the transaction for the purpose of defrauding creditors at the solicitation of her husband, and it was held that the parties did not stand on equal terms, and that the plea of particeps criminis on the part of the wife was not available under such circumstances. There the wife believed that she was liable for certain debts, and sought to avoid their payment by the transfer. The fear was baseless, and it was held that in the relation of husband and wife the latter did not act on equal terms. Here Mrs. Blanchard believed that the claim made against her might have substance, and did as she was advised in making the transfers by the superior influence of the defendant operating upon her mind. Under such circumstances the voluntary act of the party in making the transfer is not a defense to its being set aside, as the parties were not in pari delicto in such act. Freelove v. Cole, 41 Barb. 318, affirmed on appeal 41 N. Y. 619; Goldsmith v. Goldsmith, 145 N. Y. 313, 39 N. E. 1067; Watkins v. Jones, 78 Hun, 496, 29 N. Y. Supp. 557; Bingham v. Sheldon, 101 App. Div. 48, 91 N. Y. Supp. 917. In Wood v. Rabe, 96 N. Y. 414, 48 Am. Rep. 640, the court announced the principle upon which the doctrine rests in these words:
“When a person through the influence of a confidential relation acquires title to property, or obtains an advantage which he cannot conscientiously retain, the court, to prevent abuse of confidence, will grant the relief.”
The foregoing authorities support this doctrine.
It is quite evident that within this principle of law it is of little consequence whether Weld was actuated by an evil purpose in advising Mrs. Blanchard to make the transfer or not. The test is whether his advice operated upon her mind to the extent of controlling it in making the transfers, and the evidence upon such point was sufficient for the court to find that it did. The evidence leads fairly to the conclusion that during the lifetime of Mrs. Blanchard Weld acted towards her in the utmost good faith, and evidently intended so to act. He was willing to execute any paper at any time restoring to Mrs. Blanchard her property. He recognized as fully and completely as written words could the relation which he occupied to her and to the property, and, had he continued to occupy such position after her death, there would be no
The judgment which has been rendered, however, may not be sustained in its entirety. It provides for a personal judgment against the defendant for the sum of $128,667.20, with interest, amounting in the aggregate to the sum of $131,977.16. It is also directed by the judgment that the instruments of transfer executed by Mrs. Blanchard be wholly set aside and canceled of record, and that the defendant convey and transfer to a receiver all of the property which he received thereunder. Such a judgment is not authorized. The defendant is liable for the property and for its proceeds, if he has disposed of any; but the plaintiffs are not entitled to recover of him all of the property and also have a personal judgment for its value. The claim of the plaintiffs against the defendant will be entirely satisfied if all of the property of Mrs. Blanchard which the defendant has received is restored to the plaintiffs. Whatever loss has been sustained in connection with the defendant’s dealings with the property, for that he is personally liable; and he is also liable for any accretions thereto. This covers the time embraced within the injunction period. As the defendant was obligated to restore the property to the true owners upon the death of Mrs. Blanchard, his refusal so to do was a wrongful act upon his part, and the plaintiffs were authorized to resort to any remedy which would protect the property and secure its return. They were, therefore, authorized to apply for and obtain an injunction; and if, during that period, by reason of a decline in the value of the property, loss was entailed, such loss was a direct consequence of the act of the defendant in his refusal to surrender to the true owners the property of which he was possessed. It does not clearly appear from this record just what the amount and value of the property was which was transferred to the defendant. For that property he is bound to account. We are not .able to agree with the learned court below that he was entitled to no compensation' for the services which he rendered to Mrs. Blanchard prior to the transfer. On the contrary, the evidence is undisputed that the services were rendered, that it was expected some compensation
It necessarily follows, therefore, that the judgment should be interlocutory in form, and that it should direct that an accounting be had in which the rights of the parties can be adjusted, both as to the amount and value of the property received from Mrs. Blanchard by Weld, and also the value and amount of the services which Weld rendered for her, and for which he is entitled to compensation. It follows, therefore, that the judgment should be modified as indicated in this opinion, and, as modified, it should be affirmed, without costs to either party as against the other of this appeal.
VAN BRUNT, P. J., and McLAUGHLIN and LAUGHLIN, JJ., concur.
Concurrence Opinion
I concur with Mr. Justice HATCH, except in the discussion of the effect of the evidence as to the fraud of the appellant. It is quite possible, as stated by Mr. Justice HATCH, that that evidence would not justify a finding of fraud, if there had been' no confidential or fiduciary relations between the parties to the agreement by which the defendants acquired the legal title to substantially all of the testatrix’s property. The appellant was an employe of a firm of brokers who had the possession and control of a large amount of the plaintiffs’ testatrix’s property, and because of that position and the relations that existed between the parties to the agreement there was reposed in the appellant the greatest trust and confidence on the part of the plaintiffs’ testatrix. She had intrusted to him the management and control of her property during her absence, and I think that his relations to her prior to and at the time of the execution of this contract were in their nature ’ fiduciary, and that any agreement which he procured from her, resulting in the transfer of her property to him, while those relations continued, threw upon the defendant the burden of proving that she fully understood the nature of the transaction; that no unfair advantage was taken of her in procuring the execution of a contract, and the contract was, under the circumstances, a fair and beneficial one for her. In this, I think, the appellant fails to sustain the burden that was upon him. It is quite plain that she never understood that the execution of this contract divested her of her property; nor did the appellant make any such claim during her life. Both parties to this agreement, as appears from the correspondence between them, still treated the property as belonging to the plaintiffs’ testatrix, notwithstanding the fact that the appellant had procured from her an instrument which vested the absolute title to all her property in him, substituting for it an agreement by the appellant
As to the right of this appellant to recover compensation for the services that he alleges he performed for her, I do not understand that any claim for compensation was made during her life. As before stated, he was in the employ of a firm of stockbrokers who had charge of her property, and who was in the habit of making purchases and sales of stock for her account. When she was away she gave to the appellant discretion in relation to the purchase and sale of stock for her, and he apparently made a profit for her; but I have never understood that a stockbroker, or his employés, was entitled to charge for services rendered to a customer under such circumstances, more than the ordinary commission for the purchase and sale of the securities. And, as I understand this record, that was all that the appellant did.. As, however, the appellant will be required to account under the modification of the judgment suggested by Mr. Justice HATCH, in which I concur, the question of compensation to which the appellant is entitled for these services can more properly be determined upon that accounting.