125 P. 987 | Mont. | 1912
delivered the opinion óf tbe court.
This is a suit in equity, the purpose of which is, in effect, to set aside a sale of 40,983 1/3 shares of the capital stock of the Smith Bros. Sheep Company, made by Napoleon B. Smith, as executor of the last will and testament of William A. Smith, deceased, to John M. Smith in his lifetime, and to obtain an accounting. The plaintiff is a son and one of three heirs at law of William A. Smith, deceased. His two sisters, Annie Maud Kahle, residing in the state of Ohio, and Nellie Mae Moore, a resident of the state of Missouri, are the other heirs at law of their father. A suit, similar to the instant one, was begun in the circuit court of the United States for the district of Montana by Nellie Mae Moore; that court entered a decree in favor of the defendants, which was reversed on appeal by the circuit court of appeals for the ninth circuit, the latter court ordering a decree in favor of the complainant, substantially as prayed for. This cause was tried to the district court of Meagher county, sitting without the aid of a jury. The result was a decree or judgment in favor of the defendants, from which, and an order denying a new trial, the plaintiff has appealed. The action was, by stipulation, submitted to the district court on a printed transcript of the evidence taken in the case of Nellie Mae Moore against the defendants, theretofore heard in the federal court, supplemented by a brief examination of the plaintiff touching the circumstances under which he made settlement with his guardian, John M. Smith, on arriving at his majority. As stated in the brief of counsel for the appellant, “the cause is before this court for determination on identically the same evidence on which it was heard in the circuit court of appeals.” We therefore take the following statement of facts from the opinion in that case (see Moore v. Smith, 182 Fed. 540):
“The record shows that for many years John M. Smith and
“During the course of his examination as a witness, John M. Smith was asked what, if any request, his brother William made of him in his last illness regarding his children, and answered: ‘A. The last words that he said to me was, “N. B. Smith is my administrator and he will attend to the affairs in that way, and I want you to look after the interests of my children.” Those were the dying words that he said. Q. And did you say you would í A. I said I would, and I have, faithfully. ’ At the time of his death William A. Smith was the owner of 122,950 shares of the stock of the Smith Bros. Sheep Company — John M. Smith then owning a majority of the stock.
“The case shows that John M. Smith was himself then in poor health, as was his wife, and that in consequence he spent much of his time at Pasadena, California, where he was at the time of much of the correspondence hereinafter referred to. Some time after the business was incorporated one McNaught, who was a brother in law of John M. Smith, became manager of the prop
“On the 23d of November, 1897, McNaught asked for an option of purchase, to run until the end of the year, on all of the property, free of debts, except future payments on certain railroad land contracts, on which application J. M. Smith indorsed this: ‘My figures is two hundred and twenty thousand $220,000 Subject to the approvel of Mary -Smith (wife of John M. Smith) & N. B. Smith to date from Jan 1,1892 time to complete sale about to the 10 of Jan. 1898. J. M. Smith.’ The executor of the estate of William A. Smith indorsed thereon the following: ‘In case a buyer can be found for the property at the amount above stated I will immediately make application to the district court of Meagher county, Montana, to sell the interest of the Estate of W. A. Smith, deceased, in said property at the rate above stated. [Signed] N. B. Smith.’
“The evidence shows that the executor regarded the estimate of John M. Smith as to the value of the property at the time too high, as did others.
‘ ‘ On the 14th of December, 1897, J ohn M. Smith wrote a letter from Martinsdale, Montana, to the executor, which reads in part as follows: ‘N. B. Smith Der Sir & Nefue. * * * Mr. Me-Naught is back from Helena he could not get a party to take hold of the property, but I think the chance will be better next summer I want to sell out so as to go some piase that I can be with my famley & can send Stanley [his son] to school as long as I hold it I can’t be sadesfied away from it & I dont want to sell
“The record shows that on the 24th day of January, 1898, the judge of the probate court made an order based upon the application of the executor, authorizing him to sell all of the 122,950 shares of the stock of the company belonging to the estate of William A. Smith, deceased, ‘at private sale and without previous notice, provided that said personal property be sold at a sum not less than seventy-five thousand dollars, and may indorse said stock for the purpose of said sale, and may do all other acts and things requisite and necessary to transfer all of the interest of said estate in and to said stock and the property represented by said stock. That said stock be present at the time of said sale, and that said executor present to this court at the next. term thereof after such sale, an account of sale, verified by his affidavit.’
“On the 19th of the following March, John M. Smith wrote a letter from Helena, Montana, to the executor, which is in part as follows:
“ ‘Mr. N. B. Smith Dear Nefue
“ ‘I wish to get the least price that you can exeep for the children stalk [stock] I may have to dew some figuering to sell the Plant & in case I knawed fest how much I could drop and pay all debts it would give me a chance to handel my self what would you give me a opten on the Stock after the debts is payed I think you said the order was for you to sell for $75,000 but we think we can dew better then that I think I can get them 80 or 85000 out it clear for them now can you name enney price that
“‘[Signed] J. M. Smith.’
“On March 25, 1898, the executor replied as follows:
“ ‘Office of N. B. Smith, County Attorney, Meagher County.
“ ‘White Sulphur Springs, Mont., March 25th, 1898.
“ ‘Dear Uncle: Your letter in regard to the stock of the estate came to hand. I have been thinking over the matter. I think rather than see a sale go bye I would be willing to take $85,000 for the stock. I want to do what is fair by the estate and also by you. I want to see a sale go through in some shape, but at the same time I want to do the best I can for the estate. I would want the $85,000 alone for the stock, and the party who gets the stock to pay all the debts of the company, and also that the sheep company cancel whatever debts it might have against the Alice or Blackhawk Mining Companies.
“ ‘Yours truly,
“‘[Signed] N. B. Smith.’
“On July 2, 1898, John M. Smith wrote to the executor as follows:
“ ‘Smiths Ranch July 2 1898.
“ ‘N. B. Smith Dear Nefue
“ ‘I have been figerin Since you laft on this Sheep Sale you know that our Judgment difers as to the value of the property you being willen to take less then would satiesfy me & thaught that you would rether than miss a sail would take $80000 for the pert you represent rether then miss a sail it was on that bases that I made my offer to Me My offer gave me a maregen that would sadesfy me but I dont have a small margen it cuts me down so low that I dont feal sadesfiged if I had made my figers with the intent of giving you the benefit of my Judgment I should have piase my figers higher then I did so you can see that your astemate throwed me off in my calculation & will bring me out with less money then is sadesfactery to me & Mary I told her as you was willing to take less then I thought the stock worth & I was willing to take 80000 that I would have a margin to work
“ ‘Your uncel,
“ ‘JOHN M. Smith.
“ ‘If we dont sell this time we may get that much.’
“December 30, 1898, came without the effecting of any sale, although strenuous efforts in that behalf were made by John M. Smith (to one Miles, among others) as well as by MeNaught. On the day last mentioned Henry Neill made to the executor the cash offer of $80,000 for the stock belonging to the estate. The next day the executor wrote to John M. Smith this letter:
“ ‘Office of N. B. Smith, County Attorney, Meagher County,
“ ‘White Sulphur Springs, Mont., Dee. 31st, 1898.
“ ‘Dear Uncle: Neill of Helena was in to see me yesterday in regard to the ranch property. He wanted an option on my interest. I told him I could not give it at this time as I had let you have an option. If you are figuring on Miles making a trade I think you had better look for other parties. Neill thinks he can sell the property. I am very anxious to do something with the property as I feel that the estate is going to lose money by holding it. Heitman and Danzer have a large number of sheep feeding in east and it is the prevailing opinion of those who know that they will lose from 50 cents to a dollar a head on the transaction. Neill said he would make me a cash offer of $80,000 for the estate’s interest in the property. If you will make me a cash
“ ‘Your nephew,’
“On the 14th of January, 1899, John M. Smith wrote to Mr. George L. Ramsey, cashier of the Union Bank & Trust Company, Helena, Montana, this letter:
“ ‘Pasadena, Cal., Jan. 14, 1899. '
“ ‘Mr. George L. Ramsey Helena Mont.
“ ‘Would your bank lone ninty thousand dollars to me a& take the entire stock of the Smith Bros Sheep Co as security. I consider it gilt edge I am about to buy the estates intrest I will onley want it ontell I can make a sale of the property perheps 4 or 5 months Wire me your lowest rate of intrest & if I can get it wire at my expense all the compny owes is the $2000 — that I sent the Note for the othr day,
“ ‘Yeus Truly
“ ‘ J. M. Smith.’
“Two days thereafter, to-wit, January 16, 1899, John M. Smith wrote from Pasadena, California, to the executor at White Sulphur Springs, Montana, as follows:
“‘N. B. Smith Dear Nefue W. S Springs I wired you that I would except y-our offer for the Stock of the Sheep plant be-loning to the children I have not herd from Miles yet if he makes a raise I will pay you the $90000 if he fails I will give- you
“ ‘Your uneel John.’
“On the same day, to-wit, January 16,1899, the executor wrote from White Sulphur Springs, Montana, to John M. Smith at Pasadena, California, the following letter;
“ ‘White Sulphur Springs, Mont., Jan. 16, 1899.
“ ‘John M. Smith, Pasadena, Cal.
“ ‘Dear Uncle: Your telegram came to hand in which you said you would take the stock. I want a clear understanding with you, so that there may be no hereafter in the matter. It is understood that I am to get $85,000 for the stock and the estate is to have that and not owe the Company anything for money advanced for uncle Bill’s estate. Mack wrote me the other day about the four hundred dollars you were to pay, but I will make no claim as to that if you take the property at the above figure You had better pay a portion down and then I will make the return to the court, and if the court approves the sale, of which I have no doubt, I will want the remainder of the money. Píese let me hear from you at once in the matter.
“ ‘Yours truly,
“ ‘N. B. Smith/
“The record shows that on the 20th of January, 1899, the executor wrote to John M. Smith a letter which in some way disappeared, and is not produced. Before it could have been received at Pasadena, Cal., John M. Smith wrote from that place to the executor this letter:
“ ‘Pasadena, Cal. Jan 22 1899.
“ ‘N. B. Smith Dear Nefue I received yours of the 16 in reply to my telegram, I had written 2 letters that you have no dout receved befoar this in which I asked turms but have not herd from either yet it dont look as tho Miles is going to make a deel. I now will ask you the amount you wish me to pay down on the property & what interst you want on the balence I will take the astates Stock at $85000 and no claim on the astate for enny money advanced it at enny time tell me the least you will take as a down payment & what time you will give on the balence & what interst ontill payed & you hold all the property as securty I made you a propersition in my last but don’t know how it will soat you pleas give me yours best turms as soan as you get this and I will arange to meet it on the $85000 bases Yours Truly
“On the 21st of January, 1899, Mr. Ramsey, cashier of the Union Bank & Trust Company, of Helena, Montana, wrote this letter to John M. Smith:
“ ‘Mr. J. M. Smith, Pasadena, California,
“ ‘Dear Sir: In response to your favor of the 14th, we have wired you to-day that we would make the loan of $90,000 at 9% interest. We suggest in the telegram, however, that the offer to make would be based upon whether or not you should use the money at once. Unless you could take it light away, we would not, of course, want to carry so large a sum here for any particular length of time, awaiting investment. I really hope you will be able to use it. If you have not telegraphed us at the time this letter reaches you of your conclusion as to whether or not you can use the money, we want to ask you to do so, as the loan is a large one and we might have to loan the funds elsewhere, which we would not do, in anticipation of your possible call for these funds. Yours respectfully, George L. Ramsey, Cashier.’
“That John M. Smith replied by wire to the letter last quoted that he did not want the money is shown by this letter from Ramsey of date January 28th, 1899:
“ ‘January 28, 1899.
“ ‘Mr. John M. Smith, Pasadena, Cal.
“ ‘Dear Sir: We now have your telegram reading: ‘Do not want money, ’ which is interpreted to mean that you are not in a position to use the money just at the present time. But that you may possibly desire to later. If our surmise is correct, I beg to advise you that we will be glad to figure with you whenever you are ready; but we would not of course want to promise so large an amount of money at any time in the future as it is a considerable sum and we may have to invest it elsewhere. Just at this
“ ‘Tour respectfully,
“ ‘George L. Ramsey,
“ ‘Cashier,’
“January 24, 1899, the executor wrote to John M. Smith at Pasadena, California, as follows:
“ ‘N. B. Smith, County Attorney, Meagher County,
“ ‘White Sulphur Springs, Mont., Jan. 24, 1899.
“ ‘J. M. Smith, Pasadena, California.
“ ‘Dear Uncle: Tour letter of the 16th of Jan. came to hand. I cannot sell the way you indicated. The only way I can sell is for cash down. If you are appointed guardian of the children then I could turn the money over to you. As I told you all the time I have no right to sell on credit. Tou had better forward me a draft for ten thousand and then I will file the petition, and on the approval of sale by the court the balance can be paid. The offer that I had was a cash down offer. If you but [buy] the stock the company can run on just the same and I can act as one of the trustees as I have some stock in my own name. Give my love to all.
“ ‘Tours, etc.’
“Before the letter last quoted could have been received, John M. Smith wrote from Pasadena to the executor as follows:
“ ‘Pasadena, Cal. Jan. 27.
“‘N. B. Smith:
“ ‘Dear Nefue: I receved yous of the 20 & I think your plan good I will take steps to get the ten thousend down payment & we will proceed to business at once I will write to the Bank & arange for the money if you have me appointed garden for the Children as soon as I sell out I uou & [‘Wan to,’ according to original exhibit] invest in Gove bonds all thair money and also my one as I dont intend to try to dew enny buisness after I sell out & I fully intend to let goew this spring I think your sugjes
“ ‘Yous Truely
“ ‘ J. M. Smith.
“ ‘will wright agane soon.’
“On the same day, to-wit, January 27, 1899, John M. Smith wrote from Pasadena, California, to Ramsey, this letter:
“ ‘Pasadena, Cal Jan 27, 99.
“‘GL Ramsey Helena Mont
“ ‘I received yours of the 23 in regard to the mony I did not want it all at onse. I received a letter today from the admines-trator & now I am in shape to use ten thousand of the money at once. I wish the lone for 6 months with the understanding that I have the privilege of paying it at enny time I can befour it is dew intrest to be at the same for what time I have used the money. You understand I want the money to make a payment on the estate of my brother the money will be turned ovr to the adminestrator N B Smith at White Sulphur Springes, if you will you can make out a Note for ten thousand & send it hear to me I will signe & retem then I will turn it over to the admnes-tratr & close a deel then I will be the eentier oner of the Smith Bros Sheep Co
“ ‘Yous respctfuly
“ ‘J. M. Smith.’
“Four days thereafter, to-wit, January 31, 1899, John M. Smith wrote to Ramsey as follows:
“ ‘Pasadena Cal Jan 31 1899
“ ‘George L Ramsey Helena
“ ‘Sir: I have taken the liberty of drawing a cheek on your Bank for ten thousend Dollars $10,000 — in favor of N. B. Smith of White Sulphr Springes the adminestratr of my Brothers astate I dont think that the money will be caled for onley plast to his cr. I inclose his letter so you can se how we intend to manage so that I don’t think we will have to call for enny of the money will leave it as a creddet for .when I am apointed gardeen of the children I will turn it all back to the Bank and pay what intrest
“ ‘ J. M. Smith.'
“On the 2d of February, 1899, Ramsey wrote to John M. Smith as follows:
“ ‘Mr. John M. Smith, Pasadena, California.
“ ‘Dear Sir: We enclose you herewith a blank note for $10,000, sent agreeable to your favor of the 27th, drawn for six months, with the understanding that you shall have the privilege of taking it up at any time prior to maturity if you like, interest to-be charged only for the actual time the money is in use. I also-inclose several blank notes, which can be filled up by you at any time the money is needed. With regards, I am,
“ ‘Yours respectfully,
“ ‘George L. Ramsey,
“ ‘Cashier/
“On February 6, 1899, Ramsey wrote to John M. Smith as follows :
“ ‘Mr. J. M. Smith, Pasadena, California.
“ ‘Dear Sir: We now receive y-our letter of January 1st [31st] and beg to advise that we shall have pleasure in honoring your check for $10,000, when it shall be presented. We return herewith letter from N. B. Smith. With regards, I am “ ‘Yours respectfully,
“ ‘GeoRge L. Ramsey,
“ ‘Cashier/
“On February 6th Ramsey also wrote to N. B. Smith this letter:
“ ‘Union Bank & Trust Company of Montana.
“ ‘Helena, Feb. 6, 1899.
‘ ' ‘Mr N. B. Smith, White Sulphur Springs.
“ ‘Dear Sir: Receiving a letter to-day from Mr. J. M. Smith, advising that he had drawn on us for $10,000 in your favor, and
“ ‘Yours respectfully,
“ ‘ GeoRge L. Ramsey,
“ ‘Cashier.’
“On the 8th of February, 1899, John M. Smith wrote to Ramsey as follows:
“ ‘Pasadena Cal Feh 8 1899.
“‘CL Ramsey yours of the 2 came to hand last night I hear sign & return Note. When I am ealed on for the balence I will fill out & send on Notes to cover the balence of the perches. I dont think that one dollar of it will be ealed for except as a credet as you saw in my last letter the way N B Smith perposes to dew with me Many thanks for your acomedation
“ ‘Yours Truely
“ ‘John M. Smith.’
‘ ‘ On the same day, to-wit, February 8,1899, the executor wrote from White Sulphur Springs, Montana, to the Union Bank & Trust Company, as follows:
“ ‘White Sulphur Springs, Mont., Feb. 8th, 1899.
“ ‘Union Bank & Trust Co., Helena, Mont.
“ ‘Gentlemen: I don’t know yet what disposition I will make of the money that J. M. Smith will place to my credit. I would want a certificate of deposit payable on demand. If my Mr. Smith is appointed guardian this money will be turned back to him. I will make no arrangements about the money at this time as I want to get the estate settled up as soon as possible.
“.‘Yours truly,
“ ‘N. B. Smith.’
“On February 10, 1899, a certificate of deposit for $10,000 was issued by the Union Bank & Trust Company, and sent to the executor, with a letter of that date in which the bank said: ‘We are this morning placed in possession of your favor of the 8th instant and having instructions from the First National Bank
“On February 12,1899, the executor wrote to the Union Bank .& Trust Company this letter:
“ ‘White Sulphur Springs, Mont., Feb. 12, 1899.
“ ‘Union Bank & Trust Co., Helena, Montana.
“ ‘Gentlemen: Your favor of the 10th enclosing draft for $100000 [$10,000] came to hand. I am much obliged to you for your kindness in the matter. I presume I will leave the money with you for the present, as I have no use for it. If my uncle is appointed guardian of the children, then in that case, the money will all be turned back to him as guardian. I think I can wind up the estate within three months. I shall be pleased to meet you when I come to Helena which may be some time in this month.
“ ‘Very respectfully,
“ ‘N. B. Smith.'
“The executor proceeded to make application for the confirmation of the sale of the stock, and engaged, in behalf of John M. Smith, an attorney named Waterman to make application for the appointment of John M. Smith .as guardian of the children, the return of sale being filed with the court by the executor on the 20th of February, 1899, and three days thereafter, to-wit, February 23, John M. Smith’s application for his appointment as guardian of the children was filed by Max Waterman as his attorney. On that same day, to-wit, February 23, 1899, the executor wrote to Mrs. Beynolds this letter:
“ ‘Office of N. B. Smith, County Attorney, Meagher County,
“ ‘White Sulphur Springs, Mont., Feb. 23, 1899.
“ ‘Dear Aunt: Uncle John intends to apply to be the permanent guardian of the children. I presume you will be notified in the matter. Under our law a child that is fourteen years of age can appoint his own guardian. I think Willie is about that
“ ‘Yours etc.
*“N. B. Smith.*
“Onthe 1st day of March, 1899, John M. Smith wrote from Pasadena, California, to Mr. Ramsey at Helena, Montana, as follows:
“ ‘Pasadena, Cal., March 1, 1899.
“ ‘George L Remsey Helena Mont. If enny one deposets $5000 — to my cr for a option Wire me at once at my expen 481 El Dorado St Pasadena Cal. I cant say jest when I will be cald to turn over the other $75000 — on the Ranch Deele. the Money will not be drawed out of the Bank but left as a cr to the adminestrater N B Smith as soon as I am appointed gerdean the money will be turne back to me I pay intrest for what time I have it. Will I have to send my note or can you pay my check by Cr to N B Smith for the amout & he leave it in the bank & transfer it back to me.
“ ‘Yous Tuely
“ ‘J. M. Smith.*
“ ‘Union Bank & Trust Company.
“ ‘Helena, March 10, 1899.
“ ‘Mr. N. B. Smith, White Sulphur Springs.
“ ‘Dear Sir: As you are perhaps aware, we had made arrangements with Mr. John M. Smith to advance him the sum necessary to purchase the the estate’s half interest in the Company. He writes us by letter received to-day, as follows: ‘I can’t say just when I will be called to turn over the other $75,000 on the ranch deal.’ The amount to be advanced on this transaction is a large one, and we like to figure ahead a little bit, so that we may calculate at all times upon the amounts which we have arranged to advance to our several customers, and I am going to take the liberty of inquiring whether you can tell us at this time about when the balance will be called for, so that we can figure accordingly. We felt quite a bit complimented at your making us your depository for the payment that has already been made by Mr. Smith, and I assure you we will be happy to serve yon in the future as well.
“ ‘Tours respectfully,
“ ‘George L. Ramsey,
“ ‘Cashier.’
“On the 28th of March, 1899, the sale of the stock to John M. Smith was confirmed, and the order of confirmation signed and filed. On the same day, to-wit, March 28, 1899, John M. Smith, who was then in California, was appointed guardian of the persons and estates of the minors, the order made and filed reciting due notice of the application, and directing ‘that letters of guardianship of the persons and estates of said minors be issued to him upon his giving a bond to each of said minors in the penal sum of thirty thousand dollars, and upon his taking and subscribing the oath according to law. ’
“On the 18th of April, 1899, John M. Smith wrote from Pasadena, California, to Mr. Ramsey at Helena, Montana, as follows:
‘Mr. G. L. Ramsey Helena Mont
“ ‘I will be in Helena about the 18 of May. I leave hear the 13 then I will be redey to straten out business sadsfaetry I hopw I will have MvNaught send the Stock over to the Bank so it will be thair when I get back I will have N B Smith meet me in Helena & then we can fix up every thing sadesfactory I drew a check to N B Smith for $75,000 — but I dont think he will Send it in ontill I get back.
“ ‘Yous Truely
“ ‘J. M. Smith.’
“April 24, 1899, the bank replied to John M. Smith by letter, saying: ‘We are ready to honor your check for $75,000 when Mr. N. B. presents the same.’
“On the 27th of April, 1899, a four months note for $75,000 of John M. Smith, bearing 9 per cent interest, was cashed by the Union Bank & Trust Company, and the proceeds put to his credit, with which the bank paid the $75,000 check which John M. Smith had given upon it to the executor, and which was by the executor indorsed, such payment being then charged by the Bank & Trust Company to John M. Smith’s account. The before mentioned $10,000 certificate of deposit was at the same time surrendered by the executor, who took from the Bank & Trust Company a certificate of deposit to his order for $80,000 and deposited $5,000 of the amounts mentioned to his personal credit; $2,161.49 of which he paid himself as due him ‘on the sale of the property,’ and the balance to other persons and for other purposes.
‘ ‘ On the 28th of April, 1899, John M. Smith wrote from Long Beach, California, to the executor, this letter:
“ ‘Long Beach, Cal., Apr. 28,1899.
“ ‘N. B. Smith:
“ ‘Dear Nefue I return Pour of atorney [appointing N. B. Smith John M. Smith’s attorney in fact] with instictions to indors the stock that I bought of you to the union Bank as col-atral security for the payment of the $10,000 & $75,000 nots
“ ‘Tors Truly our love to orseal
“*J M S.’
“John M. Smith returned to Montana from California on the 18th of May, 1899, and on the 25th of the same month executed his bond as guardian and took the oath of office and filed them with the court. June 1, 1899, the executor filed the final account of his administration of the estate of William A. Smith, and on the 12th of June of the same year a decree settling the account and distributing the estate was signed and on the 14th of June, 1899, placed upon file, the decree providing, among other things: ‘ That the said executor shall be finally discharged from his duties as such executor upon his filing a receipt for the residue of said personal property duly signed by John M. Smith as guardian of William Smith, Nellie Mae Smith, and Annie Maud Smith, minor children of said deceased, and upon the filing of such receipt his bondsmen as such executor shall be discharged.’
“On the same day, to-wit, June 14, 1899, the executor paid the entire amount in his hands over to the guardian, John M. Smith, and took his receipt therefor as such guardian, whereupon an order of final discharge of the executor was signed and filed. John M.. Smith thereupon went to Helena, Montana, and on the 17th of June, 1899, there used the money of his wards so received by him in discharging his indebtedness to that bank, as far as it would go, giving a new note to the bank for the balance due it from him. John M. Smith was questioned in respect to that matter when upon the stand as a witness in this cause, and gave this testimony:
“ ‘Q. Mr. Smith, I believe you said this morning, that you had used the money turned over to you by Mr. N. B. Smith when you were appointed guardian, to pay your notes at the bank?
A. I did.
“ ‘Q. I will state, Mr. Smith, for your information, that these two certificates of deposit were produced here by the bank officers. A. The certificates of deposit were turned over to me as guardian of the children of William Smith by the administrator.
“ ‘Q. And you turned them into the bank in payment of your note? A.. I thought I had a right to.
“ ‘Q. But you did? A. I did, I thought I had a right to, because I gave security for the amount.
“ ‘Q. Did you understand when you did that that you were using money of minors for your own purposes? A. I understood I was using it, and that I had a right to; I didn’t talk with anyone about it.
“ ‘Q. You thought that you had a right to take the money of minors and use it to pay your debts? A. As I had given sécurity for that money, it was the same as though it was in my possession.
“ ‘ Q. Do you understand that you, as a guardian, had the right to use guardianship money, the money of minors, to pay your own debts and for your own personal account? A. I may have made a mistake, but I didn’t do it with the intention of defrauding anybody; I might have made a mistake.
“ ‘Q. But you knew what you were doing? A. I knew I was paying off my indebtedness.
“ ‘Q. And using the money of minors? A. The money that was given security for.
“‘Q. Without asking anybody’s permission? A. Without asking anybody’s permission.
“ ‘Q. Was it your view at that time that you as guardian had a right to do such a thing? A. I thought this way: that it was just the same as if I put it in government bonds if I paid the same interest. I acknowledge it may have been wrong, but I didn’t do it with the intention of defrauding anybody. I paid off my note, and that is the condition of things just as they were. ’
“N. B. Smith, the executor, testified that he did not know until the fall of 1899 what use the guardian had made of his wards’ money; that ‘in October, or before October,’ 1899, the guardian told him. He also testified in answer to the question, ‘Did you-report the fact to the judge of the court .that the money you had given to John M. Smith, turned over to him as guardian, had been used by him to pay off his own debts?’ ‘I nlade no such report whatever.’
“On the 20th of November, 1899, N. B. Smith wrote to Mrs. Reynolds this letter:
“ ‘Office of N. B. Smith, County Attorney, Meagher county.
“ ‘White Sulphur Springs, Mont. Nov. 20, 1899.
“ ‘Mrs. D. B. Reynolds, Fayette, Ohio.
“ ‘My Dear Aunt: Enclosed-find draft for four charges for looking after and caring for the minor children of uncle Bill, until December 1, 1899. Please sign the enclosed receipt. In regard to uncle John buying the stock will say that he borrowed the money from a bank in Helena to buy the stock. I would not let him have the stock until he had actually paid me the money. I had the money in my name in the bank until I was finally discharged from my trust. When I made my final account I showed the judge my draft, and my bank account subject to cheek. I turned over to him the money and took his receipt for the same, and filed the same in court and the same is now a matter of record. The Union Bank & Trust Company furnished
“ ‘Tour nephew.’
“Both John M. Smith and N. B. Smith gave some testimony tending to show that in 1899 the former had some talk with the judge of the court in which the guardianship matter was pending, about his (John M. Smith’s) using the money of the minors and paying interest on it at the rate of four per cent per annum.
“In December, 1900, this order was made and entered in the matter of tbe estate and guardianship of tbe minors:
“ ‘Tuesday, the Eleventh day of December, 1900.
“ ‘255.
“ ‘Estate and Guardianship of ¥m. Smith et al., Minors.
“ ‘Mas Waterman, counsel for guardianship, asked to have his name withdrawn as counsel in the case. N. B. Smith asked to have his name entered as counsel instead of the Max Waterman’s. John M. Smith, the guardian of said minors, having made application to the court for an order authorizing him to borrow the funds in his hands belonging to said minors amounting to the sum of about $82,000 at the rate of three per cent per annum. The court being fully advised in the premises: It is ordered that said guardian be authorized to borrow said sum of $82,000 at the rate of 3% per annum, and to so hold the same at said interest until the further order of this court. ’
“N. B. testified that he did not procure this order to be made, and did not know of it at the time. He admits in his testimony that he thereafter acted as the attorney for the guardian, and prepared the final account of the latter in which the wards were charged for the money paid by the guardian to the surety company for going on his bond as guardian, and in which also the guardian was charged interest on the money of the wards only from December 11, 1900, and at the rate of three per cent per annum, but claims that, as respects the interest, his doing so was an inadvertent mistake.
“In regard to his guardianship attorney John M. Smith was questioned and answered as follows:
“ ‘Q. Who was your lawyer in the guardianship matters? A. Waterman for about a year and a half or two years. I forget about it, but Waterman acted as my attorney.
“ ‘Q. Max Waterman, of White Sulphur Springs? A. Yes, he used to assist me about court matters and get the accounts in and accepted. I didn’t know anything about the business myself. Badger made out some first of it, and Waterman acted later on, and after that I had N. B. Smith. He was fairly con
“And there is in the record this letter from John M. Smith to Mr. Ramsey, of date October 15, 1900;
“ ‘Martindale, Mont. Oct 15 1890 [1900]
“ ‘Geo L Ramsey Helena I have sent to the Springs to have N. B. Smith fill out my report as Gardien of Brother William he is my attorney & Keeps My aeonnts it will be in in a few days as filed in caar.
“ ‘Tour treuly
“ ‘ J. M. Smith.’
“The appellant was but ten years old when the stock was sold, and became eighteen on the 27th of August, 1906. On the 5th of November of the same year her guardian paid her the amount shown to be due her by his final account, which had been approved by the probate court.
“In the deposition of the complainant which was introduced on the trial of the cause, she was asked, among other things, what information she had regarding the sale of the stock, when her guardian settled with her in November, 1906, to which interrogatory she answered: ‘I knew that the sale had been made, of course, and I knew that uncle John had been the purchaser— that is all I knew. I knew nothing about the stock company or the incorporation of the company. I received my money, and that was all I knew about it — what he gave me.’ Being asked what knowledge she had at that time regarding the method, validity and good faith of the sale of the stock, she answered: ‘I had no knowledge of its method, its validity, or of its good faith, and knew nothing about their intentions. ’ In response to the interrogatory, ‘What was told you by your uncle, John M. Smith, or your cousin, Napoleon B. Smith, the above-named defendants, about your affairs, and particularly about the sale of said stock?’ she answered: ‘Nothing was told me by either John M. Smith, or Napoleon B. Smith, concerning the estate in any way — unless I asked it directly, and I never talked to “Poly”
“Both John M. Smith and N. B. Smith were questioned in respect to conversations they had with the complainant. John M. Smith gave this testimony:
“ ‘Q. Do you remember when the complainant in this suit came out to the ranch at the time of the settlement? A. I don’t remember the date, but it was in August, I think.
“ ‘Q. Of what year? A. The 27th of August.
“ ‘Q. Of what year, I said? A. 1906.
“ ‘Q. About how long was she there? A. Well, she wasn’t there long. I can’t remember, but it wasn’t but a few days.
“ ‘Q. What occurred in her matters while she was there? A. N. B. Smith, I think was down there, and was talking about her loaning money. There was a party wanted to borrow the money.
“ ‘Q. Was there any settlement made with her? A. The settlement wasn’t made at the ranch.
“ ‘ Q. Where was it made ? A. At White Sulphur Springs.
“‘Q. Was it made that year? A. Yes, sir. I wasn’t present at the settlement. N. B. Smith done the entire business, he and the court, as I recollect it.
“ ‘Q. Do you recall any talk when N. B. Smith was down at the ranch and the complainant was down at the ranch, about her affairs? A. I cannot recall just what it was, no. They had some talk, but I cannot—
“ ‘Q. Who was present? A. I don’t know as I could say exactly who was present.
“ ‘Q. Was the complainant present? A. The complainant was present.
“ ‘Q. Was N. B. Smith present? A. N. B. Smith and myself.
“ ‘Q. Were you present? A. Yes, sir, and I think Mr. Flatt and I think probably my wife was. I don’t know whether she was or not. I know at the time she was there it was talked over, but I can’t recall the conversation.
“ ‘Q. What was talked over — what was it about generally? A. It was talked about what was best for her to do with the money, as near as I can remember.
“ ‘Q. Was there any talk about the matter of your purchase of the stock of the company? A. I don’t remember that that was talked over, but it might have been; I don’t remember.
“ ‘Q. Was there any explanation given her of her matters and how the results and amounts due her were arrived at? A. I think that N. B. Smith gave her full information in regard to it. I think so, as near as I remember, but I cannot recall what it was.’
“N. B. Smith was also questioned in respect to the same matter, and also in respect to a visit of the complainant to Montana in 1904, when she was about sixteen years old, as follows:
“ ‘Q. Do you recall when the plaintiff came out to Helena in 1901? A. Yes, sir; I recall when she came out here.
“ ‘Q. Where did she stop, if she stayed at all in White Sul-phur Springs? A. Well, she stopped with us a few days.
“ ‘Q. At your home? A. Yes, sir, at our home.
“ ‘Q. With yourself and wife? A. With myself and wife.
“ ‘Q. And during that time, was any explanation given to her of these matters about which you have been testifying? A. Yes, sir.
“ ‘Q. What was done in that regard, you may tell. A. I showed her the final account of myself as trustee or executor, as
“ ‘Q. Where were you when you showed them to her? A. I was there in my office at the little room at the north — there is two rooms to the office.
“ ‘You said as you had invited her in your letter? A. Yes, sir, in my letter I had invited her.
“ ‘Q. What letter did you refer to, the one of August 13, 1903, that is in evidence here ? A. August 13, 1903.
“ ‘Q. In connection with the explanation of the papers in question, did you say anything to her about it, or what did you say 1 A. Oh, I explained to her about the sale of the property.
“ ‘Q. As you have—
“ ‘Witness (continuing) : I explained to her about the sale of the property and the items of the account.
“ ‘Q. Did you tell her the facts about these matters as you have told.them here? A. I related the facts to her about the sale and why I sold the property.
“ ‘Q. Well, did you give her information the same as you now tell the matter, or definitely ? A. Well, the same information — probably I didn’t go into it quite as fully, but I explained generally the nature of the transaction and why I sold it, and what I got for it, and showed her the accounts.
“ ‘Q. Do you remember, in 1906, when the complainant came out to Montana? A. Yes, sir.
“‘Q. Did you see her at that time ? A. Yes, sir.
“ ‘Q. • Where?’ A. I saw her down at the ranch of.Smith Bros. Sheep Company.
“ ‘Q. What was she doing down there? A. She had, I think, come back from Germany if I remember correctly, and was going back.
“ ‘Q. Well, that states where she came from and where she was going to, but I asked you if you knew what she was doing
“ ‘Q. In the office, where do you mean? A. The office of Smith Bros. Sheep Company.
“ ‘Q. Who discussed it? A. Well, I discussed it with her and Uncle John.
“ ‘Q. Who was present? A. Mr. Flatt'was present.
“ ‘Q. And you discussed what matter? A. Oh, about the sale of the property, and how it had been handled, and how we had tried to manage the property for her.’
“In the same connection a letter written by N. B. Smith to the complainant’s younger sister on the 7th of April, 1905, is pertinent:
“ ‘N. B. Smith, County Attorney, Meagher County.
“ ‘White Sulphur Springs, Montana, April 7th, 1905.
“ ‘Dear Anna: Your favor of the 4th inst. came to hand. Will say presume you have my letter inclosing the $500. Yes, you will get your money in June. You need be at no expense about attorney’s fees. I would like to have you come out and be here when the estate is settled. You can go over all the accounts with me and see where the money has gone. I have taken receipts for everything and have paid out all money by checks. I want you to know everything and then I will feel that I have done my duty. * * *
“ ‘Your cousin,
“ ‘N. B. Smith,’ ”
John M. Smith, as guardian, settled his final account with the plaintiff on the same basis employed in settlement with Nellie Mae Moore, to-wit, three per cent interest on the principal sum held by him from December 11, 1900. The net amount received by the plaintiff was $23,954.01. The initial amount accounted for was one-third of $82,170.20, or $27,390.06. The complaint charges that the sale was “illegal, fraudulent and collusive,” and that “Napoleon B. Smith and John M. Smith colluded and
The additional testimony given by plaintiff in the state court was, in part, as follows: “I became twenty-one in 1906; had attended school in Missoula, at Shattuck Military School and at Notre Dame; had had no business experience; the settlement between myself and my uncle was transacted by myself, N. B. Smith and Mr. Flatt; Mr. Flatt gave me a check at the ranch for a part of the money and I think N. B. Smith gave me part of it; I saw the expense account and what the money was supposed to have been spent for; I did not question it further than this, that I asked what certain accounts were for and any account that I happened to pick out and see I would ask what it was. Q. Now, Mr. Smith, what, if anything, did you know at that time in relation to the circumstances and conditions under which your uncle, John M. Smith, became the apparent owner of the stock that had formerly been owned by your father in the Smith Bros. Sheep Company? A. Nothing at all, but one thing I asked my uncle John while on the ranch — I asked him why it was that our property was sold and he said that he did not feel that he wanted us children to take a chance so he bought the property. I knew nothing of the fact that the money
We approach the final determination of the case with the greatest respect for the decision of the learned judges of the circuit court of appeals. Nevertheless it is our duty to decide it in conformity with the dictates of our own consciences. In so doing we first consider the situations and characters of the persons accused of having formed a conspiracy to defraud the plaintiff; for unless such conspiracy existed, the conduct of the parties subsequent to the sale becomes altogether immaterial. The principal actor in the alleged plot is John M. Smith, a man sixty-four years of age, of comparative wealth, in poor health, who, whatever motive may have actuated his later conduct, appears beyond a doubt to have been sincerely desirous of disposing of his interests in the sheep business and retiring from active participation in industrial pursuits, at the beginning of the negotiations for the sale of the corporate assets. This man, who is now accused of so unnatural a purpose to overreach and defraud his brother’s orphan children, had been intimately associated with that brother for many years prior to his death. They lived in a sparsely settled community; John at least was illiterate ; but by their personal efforts and attention to business, they had succeeded in accumulating a considerable fortune. John, on account of the exposure incident to the conduct and management of a large sheep ranch, had contracted a disease which necessitated his spending the winters ■ in California. He died
The other alleged conspirator is Napoleon B. Smith, now and for many years a member of the bar of this court in good stand
The property in controversy consisted of stock in the Smith Bros. Sheep Company, of the appraised value of $61,475, which Judge Armstrong, presiding in the district court of Meagher county at the time, authorized the executor to sell for $75,000 at private sale and which actually sold for $85,000. Several bona fide efforts had been made to effect a sale of the whole plant, without success. Touching the value of the stock held by the executor, he testified that he figured $75,000 was what it was worth; that he had counseled with Mr. Anderson, Dr. Parberry, Perry Moore and Len Lewis, representative sheep men of the county, and they advised him to sell if he could get a fair price, which, in their judgment, would be $150,000 to $160,000 for the whole property.
Regarding the methods pursued in the probate proceedings growing out’ of the administration and guardianship matters shown by the records, it is well to note that White Sulphur Springs, the county seat of Meagher county, was at that time a village of about 450 inhabitants, situated many miles from a railroad; court was held four times a year and it is well known to the profession that probate matters were sometimes loosely conducted in those remote country districts, and the people generally regarded the district judge as a repository for all their troubles growing out of the administration of estates, and did not hesitate to seek his counsel and advice wherever they could encounter him and in the most informal manner.
Coming now to the correspondence which is claimed to disclose the conspiracy: As was well said by Judge Ross who prepared the opinion of the circuit court of appeals: “A sale by John M. Smith of his majority of the stock to a stranger might have worked to the injury of the minority interest of the children of the deceased William A. Smith,' so that both John M. Smith and the executor became desirous that both interests should be sold together.” The executor, therefore, indorsed upon the option to McNaught an agreement to immediately make
What relation did John M. Smith and Napoleon B. Smith bear to the Union Bank & Trust Company and Mr. Ramsey, its president, at this time? Substantially none, so far as the record shows, save that John M. Smith was very friendly with Henry Klein, the vice-president of the bank. The first account opened with the bank was on April 11, 1898, by the Smith Bros. Sheep Company depositing $2,000. John M. Smith’s account was opened April 27, 1899, by a deposit of $75,000. Yet on January 14, 1899, we find John M. Smith openly and frankly informing Mr. Ramsey in a letter, that he was about to buy the estate’s interest in the stock of the sheep company and asking if the bank would loan $90,000 on the entire stock. This letter also indicates that at that time he had a mind to sell the entire property at the first opportunity and thought he could make a sale in four or five months. On January 16, 1898, John M. Smith wrote to the executor saying that he had wired an acceptance of his offer to take $85,000 for the stock belonging to the estate, stating also, “If Miles makes a raise I will pay you the $90,000 that you ask you of course would put it in government bonds if you had it now to make things safe and you be absolutely safe I will give you all of the sheep company stock to hold as security and I will pay the same interest that you would get on government bonds and pay you 3 times per year until I can sell out to advantage then you will be safe and if any one is loser it will be me and I am willing to take the chances there never will be a time but what the whole business will be the best of security for that amount but I don’t intend to hold it very long at any time that I can make a good sale I will pay off your $85,000. I think this the best way for us to close up business you can get up the papers so you are safe and at the same time give me a chance to handle myself to advantage if Miles fails if you did have to pay taxes I will agree to pay it for you so it
It is claimed by the learned counsel for the appellant that in the circumstances disclosed by the record, John M. Smith was
The particular infirmity in the case of the plaintiff is that he is attempting to avoid the sale for a purely technical reason; a reason based in facts arising after the sale was complete, and which had no effect whatsoever upon the sale itself. It is claimed that this may be done because the whole course of action was fraudulent and therefore void; that the subsequent use of his money, pursuant to a prior design to so employ it, vitiated the sale theretofore made. But his premises are defective. Not any fraud in fact was contemplated or practiced in any part of the proceedings; at most a mistake was made by the guardian as to his right to so use the money; and a technical violation of duty on his part may not now be employed to overturn a transaction otherwise regular and legal, by which no one had suffered any injury.
Two very elaborate and able briefs have been submitted by counsel for the appellant. Numerous decided cases are therein cited, all of which we have examined with painstaking care, but not any of which, in our judgment, deal with the exact question here involved. It is contended that equity must frown upon such a proceeding as that disclosed by this record, because it has a tendency to “despoil the weak wards of chancery, even though in the individual case it may have been entered upon with the most praiseworthy motives and a fair and even liberal consideration for the property was paid.” But we conceive that a court
In addition to the basic question heretofore considered, several technical points of law are advanced in behalf of the appellant and elaborately argued. Some of them are incidentally disposed of by what has already been said; the others have no merit, in our judgment. The facts of the case are against the appellant.
The judgment and order are affirmed.
Affirmed.
Petition for rehearing pending.
