292 Mass. 113 | Mass. | 1935
The facts appear in a master’s report confirmed by the Superior Court. Adolph Sommer, born and educated in Germany, was a druggist in California, where he first studied and then taught in the State University at Berkeley. There he discovered the formula from which he afterwards made his principal product, Visco!. About 1890 he removed to Cambridge, Massachusetts, and opened a factory. He lived alone, had no social relations, worked an unusual number of hours every day, never took a vacation nor allowed his employees to take any, permitted no conversation or cooperation among his employees, and dominated the business absolutely. He was “industrious, alert, keen, strong willed and stubborn.” Yet he was kind to his employees when they got into financial difficulties, and some of them remained many years in his employ.
As early as 1914 Sommer employed a lawyer to work at the factory and give all his time to the business, which Sommer conducted under the name of Vised Company. Various lawyers served in that capacity for periods ranging from a few months to five or six years. In addition, he retained at times lawyers practising in their own offices to handle special matters.
In December, 1926, Sommer bought a farm near Lowell, which he called Colab Farm. • On the farm were old factory buildings. He had in mind removing his factory at some time to the farm, and also living on the farm when he should retire from business. His investment in the farm, and his losses in its operation, amounted to $200,000. Business at the factory began to be poor as early as 1931, his accumulated savings in banks had to be used to meet his obligations, and in the latter part of 1932 and 1933 some of his debts remained unpaid.
During 1928 and 1929 Sommer was anxious to find a person who in character, ability, industry and initiative was fit to assume executive responsibility and to succeed to the management of the business when Sommer should retire. About the middle of October, 1929, Sommer answered an advertisement inserted in a newspaper by the plaintiff to the effect that a “law trained man seeks opening in mercantile or manufacturing house.” Correspondence and interviews followed. Sommer told the plaintiff that he wanted a man with legal training to learn all about the business and eventually to manage it when Sommer should retire. In view of the prospects, the plaintiff accepted the position at $30 a week.
About the time when he moved to Boston, the plaintiff told Sommer that he was working for small pay and losing his opportunities in practice, and ought to be protected by a definite arrangement. Sommer agreed, saying that he thought the plaintiff would be a satisfactory man. A partnership and a corporation were both considered, but Sommer decided that he wished a “living trust” formed, and told the plaintiff to wait, before trying to draft any instrument, until the plaintiff and Sommer could sit down and go carefully into the matter. The plaintiff objected that that might occupy months, and in the meantime he would be left unprotected. He obtained permission to draw an agreement which would give him some feeling of security. Twelve or fifteen successive drafts of such an agreement were made, and all were carefully studied and corrected by Sommer. On February 1, 1930, an agreement was executed. By it, the plaintiff agreed to devote himself to the business at a salary of $50 a week. Sommer agreed that, when he should die or retire, that all his property should be conveyed to the plaintiff, the plaintiff paying to Sommer during his lifetime and to his widow after his death half the net profits of the estate and business. Liquidated damages for breach were established at $100,000 for breach by Sommer and $5,000 for breach by the plaintiff.
This agreement was deemed not the final agreement between the plaintiff and Sommer, but only a stop-gap until a deed of trust could be prepared. By oral arrangement, the plaintiff drew only $35 a week as salary, notwithstanding the written agreement. Late in 1930 the
The trust instrument purported to convey all Sommer’s property, real and personal, to the plaintiff as trustee. Sommer “shall operate, manage and control the conduct of said business, as . . . heretofore, for a period of five years from the date hereof, or until” his death. By implication the trust property was to be used in carrying on the business. It was declared that Sommer intended “to perpetuate the business of Yiscol Company through the said Trustee David P. Israel by means of this Trust.” After his retirement from active management, Sommer was to be paid by the trustee “one half ... of the net profits of said business, but not less than one hundred ($100.00) dollars each week in weekly payments during my life time.” Apparently after Sommer’s death, his wife was .to receive $100 each week out of-the net profits of the business during her lifetime, and also $10,000 in cash within one year after Sommer’s death, provided she would accept the provisions of the trust instrument within thirty days after Sommer’s death. The trustee was to receive “such salary and compensation for the management and operation of said business as in his judgment is fit and proper.”
The trust was to continue for twenty years after the death or retirement of Sommer. At the end of that period, the plaintiff was to have, as his own, half the trust estate, which half was to include at a nominal valuation of one dollar all the patents, trade marks, secret processes, formulas and the good will of the business. The other half
Before execution of the trust instrument, Sommer took it, with the approval of the plaintiff, for the purpose of obtaining independent advice concerning it, kept it several weeks, and then returned it to the plaintiff, saying that he had consulted someone about it and had found that it was just what he wanted. The master finds in substance that the plaintiff had explained honestly to Sommer the meaning of every provision of the trust instrument. There is no suggestion that the plaintiff did not work faithfully as long as Sommer lived, or that Sommer ever became dissatisfied with the transaction. Sommer never lost his mental power, but until his death remained keen, alert and continuously in control of the business.
The master finds that there was no undue influence or violation of duty on the part of the plaintiff, and that the execution and delivery of the trust instrument was the free act of Sommer, unless a violation of duty necessarily follows as matter of law from the facts stated in the report.
On October 23, 1933, the plaintiff brought this bill against Emmeline R. Sommer, who had taken possession of the property and business as administratrix, to restrain her from interfering with his right of possession as trustee. She answered both individually and as administratrix, as did the nephew and niece in Germany who intervened as defendants, being heirs of Sommer. Apparently a receiver was appointed. The master’s report was filed on May 21,
The procedural questions present no great difficulty. There was no error in the .denial on March 5, 1934, of the motion filed on December 21, 1933, that the master be ordered to report the evidence. This was discretionary, even though the motion was filed before the report. American Agricultural Chemical Co. v. Robertson, 273 Mass. 66, 80. The defendants appealed from the denial on June 26, 1934, of motions to recommit the report for the purpose of requiring the master to report a brief, accurate and fair summary of evidence said to be necessary for the purpose of presenting questions of law, under Rule 90 of the Superior Court (1932). The motions to recommit, in setting" forth the evidence desired, do not refer to the objections in such a way as to show that the alleged questions of law to which the evidence relates were actually raised by objections brought in under that rule. Neither is there any affidavit, showing what would constitute a “brief, accurate and fair summary” to be appended to the report. No error is shown by the record. Pearson v. Mulloney, 289 Mass. 508, 512, 513. As' to the objections to the report brought in by the defendants and appended to the report, which became exceptions by force of the rule cited, all of them fall under the familiar principles of practice that a conclusion of fact by a master, though it contains an admixture of law, must stand in the absence of conflicting subsidiary facts or evidence (MacLeod v. Davis, 290 Mass. 335, 338), and that an exception to a master’s report can be sustained,
The defendants introduced in evidence before the master an application for a mortgage loan, made by Sommer to a Federal Land Bank on August 2, 1932, in which Sommer stated with the consent of the plaintiff, as the master found, that Sommer was the owner of the property, although under the plaintiff’s theory the title had already passed to him as trustee. Sommer was always desirous of keeping secret the existence of the trust. The nineteenth objection and exception to the master’s report declared that the finding of the master as to this application was “vague, indefinite, incomplete, ambiguous and misleading in that it fails to indicate and set forth other important and material facts and statements contained in said application,” which facts and statements, as set forth by the defendants, appear only to emphasize, but not to add to, the statement of ownership reported by the master. At the hearing on the exceptions to the master’s report, the defendant administratrix offered in evidence the application, “to which the plaintiff objected upon the ground that the court had no authority to receive evidence at a hearing upon the overruling of objections and the confirmation of a master’s report, whereupon the court upon such ground, [sic] the court excluded said document, and saved this defendant’s exception to such ruling.” The ruling was right. The hearing was merely upon exceptions to the report, which must be based exclusively upon the face of the report. O’Brien v. Keefe, 175 Mass. 274. Zuckernik v. Jordan Marsh Co. 290 Mass. 151, 155. The taking of evidence at such a hearing would be incongruous.
The master finds “that during the period when the conversations between Sommer and the plaintiff took place with relation to the execution of the trust instrument, and when the trust instrument was executed and delivered, Sommer did not rely upon the plaintiff to give him, Sommer, the usual advice that an attorney gives to a client, and that
The case resolves itself to this: Do the subsidiary facts stated by the master show error in his conclusion that there was no fraud, undue influence or violation of duty on the part of the plaintiff in obtaining the execution of the trust instrument of September 21, 1931, or in the conclusion of the judge that the plaintiff is entitled to enforce that instrument?
In Gibson v. Jeyes, 6 Ves. 266, 271, Lord Eldon said, “An attorney buying from his client can never support it; unless he can prove, that his diligence to do the best for the vendor has been as great, as if he was only an attorney, dealing for that vendor with a stranger. That must be the rule. If it appears, that in that bargain he has got an advantage by his diligence being surprised, putting fraud and incapacity out of the question, which advantage with due diligence he would have prevented another person from getting, a contract under such circumstances shall not stand.” Again he said (page 278), “if he will mix with the character of attorney that of vendor, he shall, if the propriety of the contract comes in question, manifest, that he has given her all that reasonable advice against himself, that he would have given her against a third person.” In Hill v. Hall, 191 Mass. 253, 262, Sheldon, J., said, “the attorney who bargains with his client in a matter of advantage to himself must show, if the transaction afterwards is called in question, .that it was in all respects fairly and equitably conducted; that he fully and faithfully discharged all his duties to his client, not only by refraining from any misrepresentation or concealment of any material fact, but by active diligence to see that his client was fully informed of the nature and effect of the transaction proposed and of his own rights and interests in the subject matter involved, and by seeing to it that his client either has independent advice in the matter or else receives from the attorney such advice as the latter would have been expected to give had the transaction been one between his client and a stranger.” It is true, that the
Applying these principles to the present case, it becomes manifest that the trust instrument cannot stand. Under its terms, Sommer bound himself to pay $100,000 to the plaintiff or his estate "as liquidated damages and full compensation,” in case the plaintiff should “die or become totally incapacitated from doing work” within five years, even though the event should happen within a week after the execution of the instrument. Such a payment would have borne no relation to any services performed by the plaintiff, and Sommer would probably have been ruined in the effort to raise the money. Again, though Sommer
The plain duty of any attorney was to advise Sommer not to sign any such instrument. Wright v. Carter, [1903], 1 Ch. 27, 57, 58. The plaintiff does not contend that he gave any such advice to Sommer, but says that he explained every provision. That was not enough. If the plaintiff himself failed to comprehend the dangers to Sommer that lay in the instrument, that cannot make it valid. The plaintiff was bound to see that Sommer had unselfish and competent advice. The report fails to show that Sommer had independent legal advice of any sort. It shows merely that Sommer consulted someone, probably a banker now deceased. These facts control the general finding of the master that there was no undue influence or violation of duty. Very likely the plaintiff deserved some provision from Sommer, and Sommer intended to make one for him. But the instrument before us cannot stand.
It follows that the exceptions are overruled, that the interlocutory decrees are affirmed, except the decree of September 7, 1934, which adjudged that the plaintiff is entitled to the possession of the property described in the trust instrument, which decree is reversed, and that, after the accounts of the receivership shall have been settled, a final decree is to be entered dismissing the bill with costs.
Ordered accordingly.