172 P. 508 | Or. | 1918
Lead Opinion
Grant Watts, the notary public who took the acknowledgment of the deed, testifies that he had previously advised Mrs. Freeman to execute a deed to this effect, that on the day when the deed was executed Mrs. Freeman was in her right mind and seemed to know what she was doing.. He further testifies that he read the deed, told Mrs. Freeman that “it was a deed with a life
E. W. Price, one of the subscribing witnesses, corroborates this testimony in part. He says, “They told me it was a deed to Dan,” and that this remark was made in the presence of Mrs. Freeman. This was the only real estate which the grantor owned and she must have understood the remark as applicable to the property in question.
A. Bonser testifies that in April, 1912, Mrs. Freeman told bim she had conveyed the property to Dan. On May 21,1912, Mrs. Freeman joined with the defendants in a mortgage of the property to the Investors’ Mortgage Security Company Limited. O. M. Washburn, who took her acknowledgment of the mortgage, explained to her that her signature was necessary because of her interest in the place. Mr. Washburn testifies that Mrs. Freeman said she understood the transaction.
On the other hand, Mrs. H. A. Ehlers testifies that in August, 1912, Mrs. Freeman told her: “Dan has no deed; he has only a lease. ’ ’ Whatever the explanation of this testimony, the preponderance of the evidence is to the effect that Mrs. Freeman understood the purport of her deed when she executed it and that she realized several months thereafter that her son Daniel E. had a title to the property.
There is evidence that Mrs. Freeman was dissatisfied with the conduct of the • defendant Daniel E., but it nevertheless appears that in the last year of her life he was the only member of the family who saw anything of Mrs. Freeman, except only Carrie Freeman. This daughter died six months before her mother, after a lingering illness, during the latter part of which she
On January 17,1911, Mrs. Freeman gave a power of attorney to Daniel E. Freeman. This instrument was recorded in the records of Columbia County January 25,1911. On the advice of counsel who drew the deed in controversy, the power was revoked by Mrs. Freeman immediately prior to the execution of the deed. The powers granted by this instrument were very broad, but it appears by uncontroverted testimony that it was executed in order to empower Daniel E. Freeman to withdraw a deed which his mother had left in escrow with a Portland bank at a time when the sale of the property was contemplated. There is also some testimony that the power of attorney was given with a view to “some road matters down on the farm.” This last circumstance explains the fact that the power of attorney was placed of record. It does not appear that the power of attorney was used except for the purpose of withdrawing the deed from the bank.
The law applicable to the question in dispute is all based on the principle that no man can serve two masters. Where one owes a duty to another, he will not be permitted to take a position in which his interest
“It is true that a court of equity is by the settled law of this and other states required to, and it will, scan a transaction of the kind here in question with the utmost vigilance and scrutiny. But that is an entirely different thing from presuming the existence and actual exertion of undue influence from the circumstances mentioned”: Slayback v. Witt, 151 Ind. 376, 382 (50 N. E. 389).
Rehearing
Former opinion adhered to September 10, 1918.
On Rehearing.
(174 Pac. 727.)
For appellant there was a brief over the name of Messrs. Manning, Slater & Leondrd, with oral arguments by Mr. John Manning and Mr. Woodson T. Slater.
For respondents there was a brief over the names of Mr. W. A. Harris and Messrs. Cake & Cake, with oral arguments by Mr. Harris and Mr. William M. Cake.
The plaintiff sued to set aside a deed by her mother to her brother, the defendant Daniel E. Freeman, and to have herself decreed to be the owner of an undivided third of the land included in the conveyance. Her suit was dismissed by the Circuit Court and the decree was affirmed by Mr. Justice McCamant's opinion reported in 172 Pac. 508. An able petition for rehearing was granted and the cause has been argued again.
The leading case on that subject is Huguenin v. Baseley, 2 L. C. in Eq. 1156, 14 Ves. Jr. 273. In that instance a widow unaccustomed to business affairs became entitled to large estates in England and Jamaica. The defendant, a clergyman in whom she had great confidence and who seems to have been her spiritual adviser, insinuated himself into her good graces and induced her to withdraw her affairs from her solicitors and confer the sole management of her estates upon him. He used this confidence and his superior knowledge of the actual situation of her holdings to procure from her an interest in the property. Lord Chancellor Eldon commented on the fact that she did not have independent advice and used it as an argument to the effect that she did not fully understand and comprehend the effect of her dealings with the defendant. Summing up the whole matter after a discussion of that fact in connection with others appearing in the record, he said:
“Repeating, therefore, distinctly, that this court is not to undo voluntary deeds, I represent the question*443 thus: whether she executed these instruments not only voluntarily, but with that knowledge of all their effect, nature and consequences, which the defendant Baseley and the attorney were bound by their duty to communicate to her, before she was suffered to execute them; and though, perhaps,-they were not aware of the duties which this court required from them in the situation in which they stood, where the decision rests upon the ground of public utility, for the purpose of maintaining the principle, it is necessary to impute knowledge which the party may not actually have had.”
The essence of the discussion of the issue in that case is but a restatement in another form of the old rule, the substance of which is that if a grantor has sufficient reason and understanding to comprehend the nature, quality and consequences of the deed which he executes and the act is really his own and not virtually that of another who exercises undue influence over the grantor to that end, the deed is valid. Huguenin v. Baseley does not lay down the -rule that independent advice must appear absolutely and at all events in every instance where the grantor may have special trust and confidence in the grantee, or where a fiduciary relation exists between the two.
In this country the Supreme Court of New Jersey comes nearer than any other to establishing an absolute rule that in such cases the grantor must have had independent advice. The leading case from that state is Slack v. Rees, 66 N. J. Eq. 447 (59 Atl. 466, 69 L. R. A. 393). There the grantor was sixty-eight years of age and long had suffered from locomotor ataxia, which affected both his mind and body. The deed in question was executed the day before his death. For nearly three months prior to that event he was an inmate of the home of his daughter,1 the grantee,
Other eases from New Jersey are Haydock v. Haydock’s Exrs., 34 N. J. Eq. 575 (38 Am. Rep. 385), where the grantor was an old man devoid of mental capacity and clearly under the domination of his wife, without memory of what he had already done in the matter of conveyancing, and Albert v. Haeberly, 68 N. J. Eq. 664 (61 Atl. 380, 111 Am. St. Rep. 652), where the gift was by a girl to her stepmother, with whom she had lived since she was two years old, and the deed was made two months after the grantor became of age and while still a member of the grantee’s family. It will be noted that this latter case is an instance of a gift from a child to one standing in loco parentis. In Coffey v. Sullivan, 63 N. J. Eq. 296 (49 Atl. 520) a grantor was in some degree enfeebled both mentally and physically and had not the benefit of independent advice. The grantee endeavored to keep the grantor away from others of the family and did many things to conceal the conveyance, and there were other elements of suspicion surrounding the transaction. In that case the court stated the rule in this more modified form:
“The burden of proof was cast upon the donee to establish that the donor fully appreciated what he was doing, or at all events, in the doing had the benefit of disinterested and competent advice.”
“The existence of the confidential relation creates a presumption of influence, which imposes upon the one receiving the benefit the burden of proving the absence of undue influence by showing that the other party acted upon the competent and independent advice of another, or such facts as will satisfy the court that the dealing was at arm’s-length, or that the transaction was had in the most perfect good faith on his part and was equitable and just between the parties; or, as some of the authorities say, that it was beneficial to the other party.”
In Gibson v. Hammang, 63 Neb. 349 (88 N. W. 500), noted in plaintiff’s brief, the grantor was seventy-eight years old and much enfeebled by illness. The grantee, a daughter, was very importunate, made railing accusations against her brothers and sisters, represented that they were about to have a guardian appointed for the grantor, her mother, concealed the project from a brother living in the same house and from others of the family, especially a sister living near. In Disch v. Timm, 101 Wis. 179 (77 N. W. 196), a husband conveyed property to his third wife through her son-in-law. The grantor was enfeebled by cancer of the stomach and under the influence of opiates and other sedatives. The grantee had divorced two former husbands, kept a saloon and was of a domineering disposition. The son-in-law prepared both deeds, one to himself and the other from himself to the
In treating of transactions between parties between whom a fiduciary relation exists, the rule is thus stated in 2 Pom. Eq. Jur. (3 ed.), Section 958:
“There is, however, no imperative rule of equity that a transaction between the parties is necessarily, in every instance, 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 and complete understanding 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 or 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.”
“Transactions between parent and child may proceed upon arrangement between them for the settlement of property or of their rights in property in which they are interested. In such cases courts of equity regard the transactions with favor. They do not minutely weigh the considerations on one side or the other. Even ignorance of fights, if equal on both sides, may not avail to impeach the transaction. * * Where the positions of the two parties are reversed, where the parent is aged, infirm or otherwise in a condition of dependence upon his own child, and the child occupies a corresponding relation of authority, conveyances conferring benefits upon the child may be set aside. Cases of this kind plainly turn upon the exercise of actual undue influence, and not upon any presumption of invalidity; a gift from parent to child is certainly not presumed'to be invalid.”
From these excerpts it is plain that the text-writer does not make independent advice a sine qua non the absence of which alone will vitiate a conveyance, at least from parent to child. •. A well-considered case on this subject is Zimmerman v. Frushour, 108 Md. 115 (69 Atl. 796, 15 Ann. Cas. 1128, 16 L. R. A. (N. S.) 1087). In that case the grantor had lived as a housekeeper in the family of the grantee’s parents from his birth continuously to the time he was married, after which she lived in his household. She had nursed him from babyhood and thought as much of him as if he were her own child. When he came to manhood she intrusted to his keeping all her money and other property and relied upon him for advice and direction in all her business transactions. A more complete case
“That the question whether or not such advice was given is a material one, to be considered with other surrounding facts and circumstances, such as the nature and purpose of the gift and the condition and the relation of the parties, is readily conceded b.y all courts. That the donor had independent advice relating to the gift is generally recognized as a strong circumstance rebutting the presumption of undue influence that might be raised by reason of the relation of the parties. It is equally true that the failure of the donor to secure independent advice may tend strongly to show undue influence, especially if such failure was due to the persuasion or conduct of the donee. It is not, however, generally held that a necessary condition of a valid gift between parties occupying confidential relations toward each other is the interposition and advice of a third person in behalf of the donor.”
Even in New Jersey, in the case of James v. Aller, 68 N. J. Eq. 666 (62 Atl. 427, 111 Am. St. Rep. 654, 6 Ann. Cas. 430, 2 L. R. A. (N. S.) 285), the court found no difficulty in sustaining a gift of substantially all his property by a father to his daughter on the eve of his second marriage, although it did not appear that he had independent advice concerning the transaction. Again, in Groff v. Stitzer, 75 N. J. Eq. 452 (72 Atl. 970), the court' held in substance that where the grantor does not dispose of all his property the doctrine of “independent advice” does not apply in all
“That the bargain was a natural and provident one for the mother to make and was not the product of undue influence, and will not be set aside for failure to show that the mother had independent advice.”
In that case the court laid down this maxim:
“The test of mental capacity to make a deed is that a person shall have ability to understand the nature and effect of the act in which he is engaged and the business which he is transacting.”
Ralston v. Turpin, 25 Fed. 7, is a case where the effort was to set aside certain deeds of gift made to the respondent by the husband of the complainant, who claimed as his widow. The grantee in the conveyance had been an intimate friend of the grantor’s family, had acted for his mother in a fiduciary capacity, had been guardian of the grantor and later on, after
“A gift by a principal to an agent is valid, unless the party who seeks to set it aside can show that some advantage was taken by the .agent of the relation in which he stood to the donor. If it appears that the conduct of the agent is fair, honest, and bona fide, it is immaterial that the deed of gift may have been drawn up by his solicitor without the intervention of a third party.”
This case was affirmed on appeal to the Supreme Court of the United States in Ralston v. Turpin, 129 U. S. 663 (32 L. Ed. 747, 9 Sup. Ct. Rep. 420). Appended to the report of the case in 25 Federal Reporter is a valuable note differentiating two classes of confidential relations. In brief, the distinction is between such relations as guardian and ward, trustee and cestui que trust on the one hand, and principal and agent, parent and child and such like on the other, the reason for the difference being that in the first class the trustee or guardian has authority over the property of the beneficiary which cannot be revoked at the pleasure of the latter, whereas in the other relations mentioned there is no irrevocable authority over the property of the beneficiary, but he is at liberty to terminate the power at pleasure. The annotator reviews many authorities and contrasts Huguenin v. Baseley with Hunter v. Atkins, 3 Mylne & K. 134, which latter concerned a gift by a client to his solicitor, which was sustained. In Carney v. Carney, 196 Pa. St. 34 (46 Atl. 264), it was held that a child may accept a gift from his parent without being obliged to show that the grantor was
According to the gréat weight of authority, it is not reasonable to hold that because A has confidence in and trusts B the former is under such disability that he cannot give the latter anything unless he is able to, and does, find some stranger who will advise the execution of the gift. The circumstance of want of independent advice is nearly always found as an auxiliary or makeweight to a decision where there is a defect of mental capacity or other conditions which of themselves tend to nullify the questioned transaction. Aside from the New Jersey precedents, which are weakened by other decisions of the same court, there is no well-considered case in this country which holds that such counsel is a sine qua non like the writings required by the statute of fráuds or the production of more than one witness to prove usage or treason.
The complaint does not charge mental incapacity of the grantor beyond what may be implied from her illiteracy. The gist of the accusation is that the grantee reported the instrument to be a lease when in fact it was a deed. There is utterly no testimony whatever in the record tending to show that the defendant grantee made any such representation to his mother. On the contrary, his testimony is to the effect that he read the instrument to her at large and explained its meaning. That she understood the effect of the instrument is corroborated by the testimony of Watts, in substance, that he stated to her what it was and that she had previously talked to him on that subject.
Undue influence is made an incident of the plaintiff’s case by the following averment of her complaint:
“And because of her said confidence and trust in her son and by his undue influence and persuasion upon her, she did not protest against his following acts respecting a pretended execution of said deed;That thereafter said defendant took his mother to the store of J. Gr. Watts in Scappoose, Oregon, who was a notary public, and there without reading or further explaining said instrument to her, and in the presence of said notary, himself wrote his mother’s name at*453 the foot of said pretended deed and caused her to make her mark thereupon near where he had written her name. * * ”
The only other acts of the defendant there averred being his request that the notary certify the acknowledgment of the deed and that the grantee filed it for record. Beyond controversy, the notary, not the defendant, wrote the grantor’s name and she held the top of the penholder as her mark was made, all after the officer had explained to her that the writing was ‘ ‘ a deed with a life lease in it. ” It is not necessary, however, to rest the conclusion of this branch of the case on the contradiction of the plaintiff’s allegation by the testimony. It may be conceded that the defendant’s relation to his mother was more intimate than that of the plaintiff and that he enjoyed his parent’s confidence more than any other person. That is the most the plaintiff has proved, yet that does not of itself establish fraud or undue influence.
In Sawyer v. White, 122 Fed. 223 (58 C. C. A. 587), the plaintiff attacked a deed to the defendant executed by the latter’s father, a paralytic eighty-eight years of age. It was averred that the grantor had not sufficient mental capacity to execute the conveyance, that the grantee was the confidential adviser and the manager of the property of the grantor and that he procured the deed by undue influence. The opinion of Mr. Justice Sanborn on that point contains this language:
“There is no doubt that he was influenced to do so by his affection for and confidence in his son and by his gratitude to him for his years of devotion and service. But hatred or indifference is not indispensable to the validity of a gift, nor is gratitude or affection for the grantee fatal to it. * **454 The natural influence of the affection of a parent for a child is neither fraudulent nor illegal. * * Nor is the fact that the grantee or devisee occupies a fiduciary relation to his grantor or testator necessarily fatal to the gift. It is the use of that relation to secure a deed or devise against the free will or desire of the grantor or donor, and not the mere existence of the relation, that vitiates a grant. It is true that when an unnatural or unreasonable gift or devise is made — such as one by a ward to his guardian, or by a helpless invalid to his nurse, or by a client to his trusted attorney — the presumption at once arises that the fiduciary relation was used to overcome the will of the grantor and that the deed or devise is voidable. But when the natural gift of a parent to a loved and trusted child is in question, this presumption is met and overcome by the still stronger presumption that such a gift is the natural and reasonable act of the parent, and that the free will of the donor inspired the grant, uninfluenced by the trust relation. ’ ’
In Nicholson v. Duff, 189 Mo. App. 47 (174 S. W. 451), a transaction was upheld where the donor at the age of seventy-five years gave to her daughter a promissory note of a large amount and the transaction was held not to be affected by the fact that the daughter was caring for her mother, accompanied her to the bank where the mother got the note and to a lawyer, before whom the mother assigned it to her as a gift. It was held also that all these circumstances raised no presumption of confidential relation or undue influence: See, also, Towson v. Moore, 173 U. S. 17 (43 L. Ed. 597, 19 Sup. Ct. Rep. 332); Bonsal v. Randall, 192 Mo. 525 (91 S. W. 475, 111 Am. St. Rep. 528); Mallow v. Walker, 115 Iowa, 238 (88 N. W. 452, 91 Am. St. Rep. 158); McFarland v. Brown (Mo.), 193 S. W. 800; Sappingfield v. Sappingfield, 67 Or. 156 (135 Pac. 333); Tenbrook v. Brown, 17 Ind. 410; Teegarden v.
What, then, is the situation with which the grantor was confronted? All her children, except three, were in fact dead. Her daughter Carrie, a spinster, was as good as dead from the ravages of tuberculosis and succumbed to that disease within two months after the execution of the deed. The plaintiff had gone away to parts unknown and had not been heard of for more than ten years. Under such circumstances the presumption of law is that she was dead also: Section 799, snbd. 26, L. O. L. If we may credit Mrs. Elilers, the principal witness for the plaintiff, after the death of Carrie the old lady said that she had buried all her children except one. This indicates the legitimate attitude of her mind in the premises. It was thus naturally apparent to the mother when she made the deed that she had but two living children and one of them was even then almost in articulo mortis. The defendant had remained near his mother and given her the attention of a dutiful son. They had always lived apart, so that she was as independent of him as any other parent would be of an attentive child: It was natural that the mother would want him to have the farm upon which he had worked so long. She did not strip herself of the entire property, as appears in almost every case cited by the plaintiff. On the contrary, she reserved the use of all of it during her life. No effort was made on behalf of the defendant to keep her away from the plaintiff or from those who would give her independent advice. She knew all about the situation, and the natural objects of her bounty, as
