120 Va. 586 | Va. | 1917
delivered the opinion of the court.
The record in this cause embraces more than eight hundred printed pages. The case has been well argued, both orally and in the briefs. We have given it careful consideration, and it must now suffice to state briefly the essential facts as we find them and the principles of law governing the same.
In the year 1888, W. N. Armstrong, J. S. Darling, G. A. Schmelz, Geo. S. Schermerhom and James McMenamin obtained a charter of incorporation for the Powhatan Oyster Company with the purpose of acquiring oyster grounds and buying, planting and selling oysters. It appears that this company took charge of and planted certain oyster grounds theretofore assigned to some of the incorporators, and about the same time made a contract with Frank W. Darling to superintend its out-óf-door work, subject to the direction and control of its officers. Shortly thereafter the incorporators decided to abandon the use of the charter and to divide the oyster grounds and oyster business of the company into five equal shares, one to be owned by each of the
James McMenamin died in 1901, leaving a will whereby he appointed Henry L. Schmelz and Geo. A. Schmelz his executors. George Schermerhorn died in 1905, his widow succeeding to his rights in the oyster company. Geo. A. Schmelz died in 1911, and Henry L. Schmelz and John Garland Pollard became his administrators.
F. W. Darling was thus left as the sole survivor of the parties originally connected with this enterprise. From the outset he had been, under varying contracts, the manager for all the parties, and was more familiar with the business than any of the others; and: under his management it had been quite profitable to all concerned.
Some little time after the death of Geo. A. Schmelz, Darling called on Henry L. Schmelz for the purpose of discussing a settlement of the business; the latter asked him how a settlement could be made, and he replied as follows: “I stated to him that I was perfectly willing to abide by our
At the time this offer was made, there was still pending in the Circuit Court of Elizabeth City county a chancery suit under the style of McMenamin’s Ex’or v. McMenamin et al, which had been instituted by the executors shortly after the death of James McMenamin for the purpose of having a construction of the McMenamin will, and to obtain instructions by the executors as to certain of their duties.
H. L. Schmelz had the power, under the terms of the will, to make the sale, but he preferred to submit the matter to the court, and he accordingly filed his petition in the last-mentioned cause, reciting the proposition made by Darling and asking the instructions of the court., In this petition he recommended the proposition, but showed that he had not accepted it, and would not do so without the approval of the court. This petition named as defendants Mary Mc-Menamin Shepherd and James and John McMenamin, the
The sale was accordingly made, being consummated in July, 1912.
In August, 1913, on the day on which John McMenamin attained his majority, and under circumstances not necessary here to detail, but which plainly show that the executor, Schmelz, acted openly and above criticism, the three residuary devisees, Mary McMenamin Shepherd, James and John McMenamin, made a final settlement with the executor, executing to him their releases and receipt in full.
In October, 1913, the present suit was brought by Mrs. Shepherd and James McMenamin against H. L. Schmelz, surviving executor and trustee of James W. McMenamin, deceased, and Frank W. Darling, charging that the sale to Darling was procured by him by means of undue influence over the executor, and by fraud and misrepresentation on Darling’s part, and by negligence or connivance on the part of Schmelz; and the bill charges that the latter is liable to the complainants and to their brother, John McMenamin, who was made a defendant in the suit, for the fair cash value of the property, subject to a credit of $20,000, which was paid to the executor by Darling, and by him in turn paid to the complainants and John McMenamin. No specific relief is asked, however, against the executor in the prayer of the bill, except in so far as it is embraced in the prayer
So far as the case against the executor is concerned, it seems to be free from any sort of difficulty or question.
We find nothing in the evidence to show either negligence or bad faith on his part. A careful consideration of the history of the business and the conduct of Henry L. Schmelz in connection therewith, and particularly in connection with the transaction under consideration, shows that he acted cautiously and prudently, and did nothing to indicate that the confidence reposed in him by James-McMenamin, who evidently knew him well and trusted him fully, was violated; and in the negotiation with Darling he certainly acted with no less care than he or any other reasonably prudent man would have been expected to act in his own affairs. This was all that was required of him as executor and trustee.
Professor John B. Minor, in discussing the degree of care required of a trustee, says: “But nothing more is in general required than that he should act in good faith, and with the same prudence and discretion that a prudent man exercises in his own affairs. If more than this were exacted, it would tend to the disadvantage of persons interested in trusts in general because it would discourage competent persons from accepting the administration of trusts.” 2 Minor’s Inst. (4th ed.), p. 255. See also, to the same effect, 2 Pom. Eq. Jur., sec. 1070; Elliott v. Carter, 9 Gratt. (50 Va.) 541; Meyers v. Zetelle, 21 Gratt. (62 Va.), 733; Davis v. Harmon, 21 Gratt. (62 Va.), 199; Thompson v. Brooks, 76 Va. 166.
Coming now to the case as it affects Frank W. Darling, we are of opinion that it likewise must fail.
It is contended most earnestly by counsel for the appellants that, inasmuch as Darling occupied the relationship of a partner to the other parties, and especially in view of the fact that he was more intimately acquainted with the business of the company than any of the other partners, it was his duty to.make a full disclosure, and that the burden was upon him to show affirmatively that he did make such disclosure, and that he acted in all respects with the utmost good faith. In the recent case of Aronhime v. Levinson, 119 Va. 394, 89 S. E. 893, this court, while fully recognizing the rule requiring a purchasing partner to act openly and in good faith, expressly held that the burden of proof did not rest on the purchasing partner in a suit brought by the selling partner to set aside the purchase on the ground of fraud. Conceding, without discussion, that the appellants are right in contending that Darling occupied the relation of a partner to Schmelz, the decision in the Aronkime Case is absolutely controlling here so far as the question of the burden of proof is concerned. But were the rule otherwise, the
In the court proceeding above referred to, the proposition from Darling to Schmelz was, as we have seen, referred to a commissioner, who made a thorough investigation of the proposition, taking the testimony of .a number of widely known and experienced oyster men. Before his investigation was completed, John Garland Pollard, one of the co-administrators representing another interest, indicated that he would like to have some further proof taken, and thereupon the court directed certain additional evidence, and when this was in, the commissioner reported that the price offered was a good price, and that the sale would be an advantageous one for the James MeMenamin estate. The court thereupon confirmed the report, and directed the sale, which was accordingly made.
It is contended that Darling, during the negotiations leading up to the sale, acquired an undue influence over Schmelz by obtaining a controlling interest in two banks from each of which the latter was drawing a large salary. The evidence, we think, wholly fails to show any attempt on the part of Darling to exercise, or that he in fact possessed, any such undue influence.
The decree complained of seems to us so clearly right, upon the grounds already discussed, that we deem it unnecessary to go into the question as to whether the sale was a private or a judicial sale. Of course, if it was the latter, and we have not perceived why it was not, the present suit would have to fail because it does not meet the requirements of a suit to set aside the decree under which the sale was consummated. See Harrison v. Walton, 95 Va. 724, 726-7, 30 S. E. 372, 41 L. R. A. 703, 64 Am. St. Rep. 830, and authorities there cited.
Upon the whole case, we are of opinion that the decree complained of is plainly right, and it must be affirmed.
Affirmed.