SAMPLE v. BUTLER UNIVERSITY ET AL.
No. 26,785
Supreme Court of Indiana
February 1, 1937
In the case of Norwood, Admr. v. Harness (1884), 98 Ind. 134, the administrator was charged with negligence in handling the trust property and was ordered to pay certain money into court. The court, in reversing the case, said (p. 148):
“Where there is testimony to sustain the finding, it can not be disturbed, but here the administrator was not liable unless negligent, and there is no evidence to show negligence. In such a case the judgment is always reversed.”
Judgment reversed.
Thomas A. Daily, Wilson S. Daily and John H. Daily, for appellant.
FANSLER, J.—Charles T. Whitsett and Lina B. Whitsett were married in 1896. Pursuant to the terms of an antenuptial contract, they each invested $10,000 in
“I, Charles T. Whitsett, of Indianapolis, Indiana, do make and declare the following as my last will and testament.
“Item 1. It is my will that all my just debts be paid from any fund available for that purpose.
“Item 2. Whereas, it has been agreed between myself and my wife, Lina B. Whitsett, that we shall each make a separate will bearing the same date disposing of our property owned by us jointly as husband and wife and situated in the State of Indiana, in such a way that our children shall derive a certain benefit therefrom after the death of the survivor of us, and that after said wills are so made neither of us will revoke or destroy either of such wills or make any other will or codicil without the full consent and agreement of both.
“Now, therefore, in consideration of said agreement and in execution thereof, I, Charles T. Whitsett, devise and bequeath all the property in the State of Indiana, which may be owned by myself and my said wife, jointly, and which may come to me as the survivor of us, and which I may own at the time of my death to Butler University, a corporation formed under the laws of the State of Indiana, and now conducting a school for higher education at Irvington, Indiana, now within the corporate limits of the City of Indianapolis.
“Subject, however, to the following charge and trust. Within thirty days after said property passes to said University its value shall be fixed by three competent and disinterested appraisers selected by
the parties interested or appointed by the Court having probate jurisdiction in Marion County, Indiana, and if either of the parties interested desires it there shall be a reappraisement of the same made in like manner at the expiration of each period of five years after the first appraisement. The said University shall then pay a sum equal to six per cent per annum upon the value so fixed, without any deductions for any purpose, in monthly installments at the beginning of each month to my son Albert Noble Whitsett, and my wife‘s daughter, Mrs. May C. Ricardi, in equal parts share and share alike so long as they both shall live, and after the death of either of them whether before or after this will becomes effective the whole sum to the survivor of them during the life of such survivor. Upon the death of the survivor of said children all of said property shall become the property of said University and free from any lien or charge created by this will, and if said University shall accept the terms of this will the payment of said sums to said children shall be a first lien and charge upon all of said property and all income therefrom which may be enforced by foreclosure or other appropriate proceeding. Under the supervision and direction of the court having probate jurisdiction in Marion County, Indiana, said University shall have the right to sell, exchange, repair or remodel any of said property provided only that the lien and charge above mentioned is in no way impaired by such change.”
Lina B. Whitsett died on the 16th day of November, 1913. On September 25, 1915, Butler University executed and delivered to Charles T. Whitsett the following instrument:
“ACCEPTANCE OF TRUST.
“WHEREAS: Butler University is now fully advised of all the contents of each of the separate Last Wills and Testaments of Charles T. Whitsett and Lina B. Whitsett his wife duly executed on the 24th day of September, 1912, and said execution duly attested by said John B. Elam, and Cassius C. Shirley, all of Indianapolis, Indiana, by which said wills the Real Property of said testator
and testatrix was disposed of after the demise of the survivor of them and Butler University named therein as final beneficiary on the condition as expressed in each of said wills, ‘if Butler University shall accept the terms of this will.’ “Now, therefore, Butler University does hereby accept the said trust upon all the conditions set forth in said will as to all the real property left or that may be left by either said testator or testatrix under and by virtue of said wills or either of them. But said Butler University hereby declines and disclaims any right, title or interest now, or at any further time, in any of the personal property owned at any time by either said testator or testatrix or jointly by both of them and whether covered by said wills or either of them or not.
“BUTLER UNIVERSITY,
“By Hilton U. Brown, President.”
Charles T. Whitsett died on August 21, 1928. At the time of the death of Lina B. Whitsett neither of their wills had been revoked or destroyed, and neither of them had made or executed any other will or codicil. On May 20, 1918, and August 5, 1918, Charles T. Whitsett conveyed to Butler University certain real estate, owned and held by Lina B. Whitsett and himself as tenants by the entireties at the time of her death, and, in consideration therefor, Butler University entered into three contracts with Charles T. Whitsett described as “Life Annuity Bonds.” The first bond recites that it is issued in consideration of a gift of real estate in the principal sum of $3,500, which is accepted by the University, and, in consideration therefor, the University agrees to pay an annuity of $210 to Charles T. Whitsett during his lifetime. The second bond recites that Charles T. Whitsett has made a gift to Butler University in the principal sum of $10,000, $9,000 in real estate and $1,000 in government bonds, which has been accepted by the University; that, in consideration of the gift, the University promises and agrees to keep the improve-
Appellant, the daughter of Lina B. Whitsett, brought this action to enforce payment to her of annuities by Butler University upon all of the property, real and personal, thus conveyed and delivered to the University. It is the theory of the complaint that all of the property conveyed to the University was the joint property of the Whitsetts; that Charles T. Whitsett had no power to divert it to any other use than that provided by the wills, and that, having cognizance of the terms of the wills, and having agreed to accept the property under the conditions provided by the wills, acceptance of it by the University binds it to pay the annuities provided for in the wills.
The facts above recited are taken from the special findings and are sustained by the evidence. There is also a special finding to the effect that at the time of the death of Lina B. Whitsett “all the property owned by said Lina B. Whitsett and Charles T. Whitsett, real
Appellee Albert Noble Whitsett filed an answer to the complaint admitting the allegations thereof. The other appellees filed a general denial, and, upon the facts found as indicated above, and upon others which we need not notice, the court concluded the law was with the defendants and that the plaintiff take nothing.
Appellant assigns error upon the overruling of her motion for a new trial and upon the conclusions of law.
The purpose of the parties in making the wills is so clearly indicated by the contract set out in item two that there can be no reasonable doubt as to their intention. It is contended by appellees, and the case seems to have been decided below upon the theory, that the words, “which I may own at the time of my death,” are controlling, and that they require the wills to be construed as intending to authorize the survivor to dispose of all of the joint property in any manner and for any purpose during his lifetime; that there was no intention that he should be bound by the contract referred to in the wills unless he chose to be bound by it by retaining the joint property of the parties until his death without disposing of it. But such a construction does violence to the very agreement which the wills were made to carry out. Under such a construction the contract to dispose of their property “in such a way that our children shall derive a certain benefit therefrom after the death of the survivor of us,” and the provision that neither would revoke or destroy the will or make another will or codicil without the consent of the other, were mere empty gestures, hardly worth the trouble of making. But effect can be given
Though it is not necessary to a determination of the intention of the parties, there is in evidence a letter from Charles T. Whitsett to his son, which clearly indicates his understanding of their intention and the purpose of the wills. He said:
“She (Mrs. Whitsett) wanted us to make wills and fix what we had so it would take care of she and I first as long as either of us lived—then—the children get what we lived on—the income of our property—and then after that so that the principal could not then be squandered or lost but give it to Butler College when both you and May were gone.
“That was our long studied plan—that you and she have just what we had—to live on while we both lived—
the income—and when either she or I died the other of us was to have all the income for life—less the expense of care and repairs and so forth, of course which would be perhaps 6% on the total valuation of the property net income. “So she made will to that effect—and so did I; whether others liked it or not—it was our judgment—from experience and our knowledge of both the children—that this was the best thing to do to satisfy our own minds that they would certainly have a monthly sum paid each & for life. And there were other reasons, not necessary to name. It simply means that on the death of the survivor of Lina and I—Butler College is to take charge of the property—manage it and no matter where you or May may be—only that you are living—they are to pay you and her 6% net of the then appraised valuation of the property we both owned or rather that the survivor of us owned at the time of the survivor‘s death—in monthly installments on the first of each month—share and share alike—while you both lived. Upon the death of either of you the full said 6% net is to be paid in like manner to the survivor of you two as long as the survivor of you and she should live. Then Butler College owns the property and the trust is ended; title going to them automatically upon the death of the survivor of you two.
“Our little monthly checking bank account—or that of the survivor of she and I is not included in the wills—nor any other personal property or household effects. But the real estate that we owned jointly at the time of the death of the survivor of us two is covered by the will.
“The survivor of us has the same right to rent, repair, rebuild, remodel, or sell any of the property covered by
the will—during the life of the said survivor—as if no will had been made by either of us. “Our aim was in short—double: that is after both she and I was gone,
“1st to make certain our children‘s support—to the extent named.
“2nd to prevent any of the property that had supported she and I and you and May for the life term of each should not be squandered but then used for educational purposes.
“This was her will. It was mine also. That is it will be mine when like her I am gone the way of all the earth.”
There is here no indication of a desire or intention that the survivor should be permitted to alienate the estate so as to provide an income for strangers to the exclusion of the two children.
Under the terms of the contract, as interpreted in the light of the provisions of the will, the survivor had the right to dispose of any or all of the corpus of the estate for his reasonable needs or for the purpose of reinvestment for the benefit of the estate, but in such event it is clear that the parties intended that the terms and provisions of their contract should attach to any property in which the corpus of the estate was reinvested. In other words, that which was necessarily used and consumed must, of course, be lost, but the remainder of their joint estate was to be preserved in its original form, or, if the investment were changed, then, in whatever form it might be at the death of the survivor, for the ultimate benefit of their children. The mutual agreement of the makers of the wills was sufficient consideration to bind the promisors. The agreement is similar in effect to a contract to bequeath or devise property at the death of the promisor. Concerning
And in Storey on Equity Jurisprudence (14th Ed) vol. 2, §1075, it is said: “If a person covenants or agrees or in any other manner validly binds himself to give to A by his will as much property as he gives to any other child, he may put it out of his power to do so by giving away all his property in his lifetime. Or if he binds himself to give to A as much as he gives to B by his will, he may in his lifetime give to B what he pleases, so as, by his will, he shall give to A as much as he gives to B. But then the gifts which he makes in his lifetime to B must be out and out. For if, to defraud or defeat the obligation which he has thus 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 protect the agreement or obligation which he has entered into, and to defeat the fraud at-
It is true that in the case at bar a fee simple interest in the property itself was conveyed, and no legal title was reserved in Charles T. Whitsett, but equity considers the substance and not the form, and though all legal title to the property, without reservation, vested in Butler University, still, in fact, he retained a beneficial interest in the thing which the property purchased, an annuity bond. In effect he converted the life enjoyment in the property and the annuity to be derived therefrom for his son and his wife‘s daughter into an annuity bond to be enjoyed by himself during his life and his son and others thereafter to the exclusion of his wife‘s daughter. Where property has been wrongfully converted and its character changed or its proceeds invested in other property, and the proceeds can be traced, equity has found no difficulty in recovering the latter property and applying it as the original property should have been applied. The agreement of the University, a substantial and solvent institution, was no doubt deemed as safe as a lien upon the property. The result was the same as though he had deeded the property to the University, subject to the payment
The conveyances of real estate to the University, with the exception of the residence, were not gifts, although so described in the annuity bonds. They were sales of the property for a consideration. The transfers of personal property were gifts without consideration. The University had notice of the terms of the will, and that the real estate conveyed was held by the husband and wife jointly at the time of the wife‘s death. By its acceptance it indicated its agreement to take the real property under the terms expressed in the wills, but indicated a doubt as to whether personal property was covered by the wills, and an intention not to accept personal property under the conditions provided for in the wills. Since it knew the terms of the wills, it accepted conveyances from the surviving husband, limited in their effect by his power to alienate the property under the terms of the wills. It had notice of all of the facts which limited his power of disposition, and was bound to know that he could alienate only for legitimate purposes, and not for the purpose of defeating his agreement with his wife. During all the time it was paying annuities to Whitsett he was making gifts of personal property to the University. These gifts, twenty-one in number, aggregated over $13,000 in ten years, which was only $5,000 less than the total annuities paid to him by the University. The fact that he had money, government bonds, and other securities, which he did
The same rule would apply to personal property which was the joint property of the husband and wife, but there was no evidence as to the kind or amount or character of this property. The husband survived his wife by fifteen years. He may have acquired personal property of his own. There is no evidence that any of the personal property which was given to the University was owned jointly by the husband and wife at the time of her death.
The finding of the court that, in accepting the conveyances of real estate, the University acted in good faith, is not supported by the evidence. Doubtless there was no actual fraud, but the thing which was done had the effect of defrauding appellant. The
The facts are not in dispute, and no good purpose would be served by ordering a new trial. The judgment is reversed, with directions to enter a decree which will require that appellee Butler University pay to appellant and to appellee Albert Noble Whitsett, annually, in equal shares, 6 per cent. upon the value of the property of which Charles T. Whitsett and Lina B. Whitsett were seized as tenants by the entireties at the time of her death and which was afterwards conveyed to Butler University; and that the value of the property from time to time, for the purpose of determining the amount of the annuities, shall be determined as provided for in the wills of the Whitsetts; and that upon the death of either appellant or Albert Noble Whitsett the annuities shall be payable to the survivor for life; and that the University shall pay interest at the rate of 6 per cent. on all deferred payments, but that it shall be credited as against Albert Noble Whitsett with any amount which it may have paid to him under the annuity contracts made with his father.
ON MOTION TO MODIFY MANDATE.
FANSLER, J.—Within the time for filing petitions for rehearing, which has now expired, the appellant has filed what is denominated a motion to modify the mandate in the opinion heretofore announced, but which is in substance a petition for a rehearing, since it seeks a change in the opinion with respect to the effect of the language in the will. It is contended that the contract and the wills must be construed as indicating an intention to affect all of the property of
The appellee Butler University has filed a petition to modify the mandate in so far as it affects Albert Noble Whitsett, who was an appellee. Mr. Whitsett assigned no errors and presented no brief, and the direction for a judgment in his favor was improvidently entered, for the reason that his cross-complaint asking a judgment below had been dismissed, and he has no pleading in the record by which he prays judgment of any kind in his favor. It further appears by a showing in connection with the petition to modify the mandate, that, by a written agreement between the appellees Albert Noble Whitsett and Butler University, all questions between them were settled and compromised before the termination of the trial.
The petition to modify the mandate is granted, and the mandate is modified to read: The judgment is reversed, with directions to enter a decree which will require that appellee Butler University pay to appellant annually, during her life, 3 per cent. upon the value of