Stewart v. Todd

Gaynor, J. 1- partner- & survivor11^ Irty* subsequent" Wlll‘ — Samuel M. Stewart and one Emma A. Stewart were husband and wife. On or about February, 1881, they entered into a contract in writing. The original of this contract was not produced on the trial. Its absence was accounted for, and secondary evidence of its contents rightly permitted. From this evidence it appears that the contract so entered into was substantially as follows: ‘ ‘ Contract entered into this......day of February, 1881, by and between Emma A. Stewart and S. M. Stewart, both of Van Burén County, Iowa, witnesseth: “That said parties have agreed to start a general store under the firm name of E. A. Stewart, in which each party is to be an equal partner. S. M. Stewart is to transact and do all the business, sign the firm name of E. A. Stewart to any and all papers necessary; and all the property accumulated, purchased and owned by either party to be in the firm name of E. A. Stewart. Both parties to use any money they need, and at the death of either party the one living shall fulfill all contracts, pay all debts, and have all property left or owned by either party, or in the firm name.” Upon the execution of this contract, the parties thereto opened a general store at Mt. Sterling, Iowa, in the name of' E. A. Stewart. The capital used in this enterprise was very small, but the larger portion of it was undoubtedly furnished by Samuel M. Stewart. From that time until 1894, the store was run in the name of E.- A. Stewart, managed and controlled, so far as this record shows, by Samuel M. Stewart, Mr. and Mrs. Stewart both assisting in the purchase and sale of goods and in the conduct of the business generally. This proved a successful venture, and the close of each year found a large profit to the credit of the firm. On the 25th day of September, 1894, the stock of merchandise and fixtures in this store were sold to Madden & DeHunt, the contract reciting “that E. A. and S. M. Stewart have this day sold to Madden & DeHunt their stock of merchandise and fixtures, situated,” etc., describing the location. The consideration paid was $8,000. The exact amount is not clearly ascertainable from this record. — 285 — On February 28,1894, before the sale of this stock and while the store was being operated under the contract aforesaid, Emma A. Stewart and S. M. Stewart entered into a written contract with one John Grwinup for the purchase of 196 acres of land for $6,550. This contract was signed by Emma A. Stewart and S. M. Stewart. In the consummation of the contract, the deed was made on June 2, 1894, to Emma A. Stewart. The original deal was made by S. M. Stewart, and the preliminary contract signed by both. The purchase price was paid with partnership money, the proceeds of accumulated profits during the continuance of the business. The record affirmatively shows that, up to this time, neither party had any source of revenue except that which came from this partnership venture. There is some suggestion that Mrs. Stewart may have received money from her father, but there is no substantive evidence of this fact, and therefore we say that the record discloses that this land was purchased and paid for out of partnership funds. Soon after the purchase of this land, Samuel M. Stewart and his wife took possession, and thereafter continued to occupy it as their home farm until the death of Mírs. Stewart. The land is referred to in the record as the home farm. After the purchase of this farm, it was managed and controlled by Samuel M. Stewart. Stock was purchased by him and placed on the farm. In fact, he had the full management and control of it. The farm also proved profitable, and, in the course of time, other lands were purchased, and title taken in the names of E. A. Stewart and Emma A. Stewart, a detailed description of which is not necessary to the determination of the matters involved in this suit. But the record discloses that, after the sale of the store, there was no source of revenue to these parties except that which came as profits from this farm venture. In fact, all property the legal title to which stood in the name of Emma A. Stewart or E. A. Stewart, at the time of the death of Mrs. Stewart, on September 9, 1913, was purchased from accumulated profits arising from the original enterprise started by these parties under the contract of partnership made in 1881, and is traceable to that enterprise, except the lands conveyed to Emma A. Stewart in 1896 by her father and mother. The record of these conveyances is found in Book — 286 — 59, pages 108 and 109 of the Clark County records of the state of Missouri, and in Book 36, page 66, of the Van Burén County records of this state. There seems to have been no consideration paid for either of these pieces of land, either by Mr. or Mrs. Stewart. The plaintiff, however, does not rely upon a claim of partnership as a basis for the relief sought in this case. He bases his claim of right to all the property, whether in the name of E. A. or Emma A. Stewart, on the claimed binding force of the original contract, entered into in 1881, providing “that, at the death of either party, the one living shall fulfill all contracts, pay all debts, and have all property left or owned by either party, or in the firm name,” supplemented by two reciprocal Wills, executed on the 1st day of May, 1896. The existence of the partnership is only an incident, and not the basis on which plaintiff rests his right to relief in this case. The rights he seeks to enforce are based upon the original, written contract of partnership, entered into in 1881, supplemented by the two reciprocal wills executed on the 1st day of May, 1896. It is claimed that the formation of the partnership, the investment of money in the partnership, and the subsequent investment of the earnings of the partnership in land, in the name of one of the parties, show a consideration for a performance of and such reliance on that contract that its binding force and legal efficacy, supplemented by the wills aforesaid, cannot be avoided by the acts of one of the parties to it, without the consent of the other. In May, 1896, Mr. and Mrs. Stewart went.to the office of William M. Walker, a practicing attorney in Van Burén County. They had with them at that time the original contract of partnership, hereinbefore set out. It was submitted to Mr. Walker for examination. He read it. He said: “The contract was handed to me, and I was asked to read it and give my opinion as to whether or not it was a valid and binding contract. After an examination, I said to them that, in my judgment, it was a .valid and binding contract, and that I would advise that she and her husband each make a will in favor of the other, and then, in my judgment, the contract and the wills would be binding and valid. At that time, Mrs. — 287 — Stewart’s father and mother and husband were all present. Mrs. Stewart said, at that time, that it was her thought and her husband’s that she would, in all probability, outlive him, and they wanted to know whether the contract would have the effect of giving to her, in case of his death, all their property; and wanted to know, in case of her death, would it have the same effect as to him. They expressed the desire that, in case of death of either of them, the other should have all the property which they owned at the time. Thereupon, I prepared two wills, one for each. They were exactly alike, except that Mrs. Stewart made a special bequest of her watch to one of her nieces.” After the wills were executed, they discussed between themselves a place of deposit. They concluded, however, to deposit them with the clerk of the district court, on Mr. Walker’s suggestion. The will executed by Samuel M. is substantially as follows: “I will and bequeath that all my just debts and funeral expenses be paid. “2d. After the payment of my debts and expenses, I will, devise and bequeath all my property, both real and personal, of whatever kind and wherever situated, of which I may die possessed, to my beloved wife, Emma A. Stewart.” Mrs. Stewart’s will was the same, except as to the devise of her watch to her niece, and devised all the property of which she died seized to Samuel M. Stewart. These reciprocal wills were deposited with the clerk of the court, but were subsequently taken from his custody and placed in a receptacle, to which both parties had access, in the home of Mr. and Mrs. Stewart. So far as Samuel M. Stewart knew, or had reason to know, they remained there and were there at the time of the death of Mrs. Stewart. Upon the death of Mrs. Stewart, however, it developed that, on the 17th day of August, 1907, Mrs. Stewart executed another will, in which she revoked and canceled any and all former wills made by her, and undertook to and did make a disposition of her property inconsistent with the provisions of the reciprocal will heretofore referred to. It is this will that provokes the controversy. This will was produced and duly probated, and under this will claims are being urged, antagonistic to the claims of plaintiff in this suit. — 288 — This is the record on which the rights of the parties in this suit are to be determined.- Before coming to the real merits of the controversy, we have to say that the contract relied upon was one which the parties had a right to make. There is no statutory inhibition against the making of such a contract, and, when it rests upon a good consideration, it is enforcible. A married woman can contract freely with relation to her own property. The inhibition of Code Section 3154 relates only to trafficking in her inchoate right in the property of her husband. Baker v. Syfritt, 147 Iowa 49. That she had a right to enter into a partnership with her husband and carry on a partnership business, the same as a stranger might do, has been settled by the decisions of this court. Hoaglin v. Henderson & Co., 119 Iowa 720. 2. Attorney and prifiieged^transaction. As said before, the original written contract of partnership was not produced. Its contents are proven by the testimony of Mr. Walker, to whom it is claimed it was submitted, at the time tlie reciprocal wills were drawn. Both Parties were present at that time. It was submitted to him for a legal opinion, at the request of both parties, and in the presence of the father and mother of one of the parties; and it is claimed that what was said is privileged, under the statute. This position cannot be sustained. The privilege does not apply to cases where two or more persons consult an attorney for their mutual benefit. Mueller v. Batcheler, 131 Iowa 650, 653. It is claimed that the contract is testamentary in its character, at least in so far as it purports to give to her husband all property left by Mrs. Stewart at the time of her death; and that, being testamentary in character, and not executed as the law requires testamentary instruments to be executed, it cannot be enforced. It is true that as a testamentary instrument it cannot be enforced, but an agreement to leave property to another, resting upon a consideration, is valid and binding, and will be enforced by the courts. In Mueller v. Batcheler, 131 Iowa 650, the facts were that one William C. Knight executed and delivered to his wife a deed to certain real estate and a bill of sale to certain personal property; that, as part of the same transac — 289 — tion, Mrs. Knight executed and delivered to William C. Knight a deed to all the real estate of which she was then owner. The mutual agreement between them was that the survivor of them, on the death of the other, was to own all the property, that the deed executed by the survivor was to be destroyed, and that the survivor should give, by deed or by will, all the property which such survivor should own, at the time of his or her death, to the plaintiff in the action, the consideration of each deed being the mutual promise of the other. William C. Knight died intestate. His wife also died intestate. At the time of her death, she was the owner of all the property claimed by the plaintiff in the action. Plaintiff brought an action against her heirs to recover the property. The court below granted him the relief prayed for, and this court affirmed the action. As said in Baker v. Syfritt, 147 Iowa 49, 55: “It has often been held that an agreement upon sufficient consideration to make a will is valid, and that, upon breach of such promise, the beneficiary thereof has a right of action for damages, or, under some circumstances, may enforce specific performance. And the person coming into the possession of such property otherwise than as an innocent purchaser is held in equity to be trustee thereof for him to whom it ought of right to have been devised.” See Carmichael v. Carmichael, 72 Mich. 76 (40 N. W. 173). In this case, it is held that, where a husband and wife bind themselves to make a particular disposition of their property by will, and such contract is fully performed on the part of the husband, and the benefits received and accepted by the wife, equity will prevent the wife from violating her part of the contract in fraud of parties interested; and that, if a conveyance is made by her, after the death of her husband, in violation of her agreement, the conveyance may be set aside, at the suit of the parties for whose benefit the agreement was made. See, also, Teske v. Dittberner, 70 Neb. 544 (98 N. W. 57). This doctrine has been quite generally recognized by the courts, to wit, that, where one makes a valid agreement, resting upon a sufficient consideration, to dispose of his property by will, such agreement may be enforced, after his decease, against his — 290 — heirs, devisees, or personal representatives. A part performance of an agreement to make a particular disposition of property by will takes it out of the operation of the statute of frauds. Dicken v. McKinley, 163 Ill. 318 (54 Am. St. 471); Johnson v. Hubbell, 10 N. J. Eq. 332 (66 Am. Dec. 773); Burns v. Smith, 21 Mont. 251 (69 Am. St. 653). In Turnipseed v. Sirrine, 57 S. C. 559, it was held that, if two persons make an oral agreement to make mutual wills, and one of them, in execution thereof, bequeaths to the other, who subsequently dies without making a will, a legacy of $10,000 and the residue of her estate, this is such a part performance of an agreement on her. part as takes the case out of the statute of frauds, and permits the agreement to be proved by parol, and authorizes a decree against the heirs of the deceased to the effect that the party who has made her will is the equitable owner, and entitled to be clothed with the legal title to all of the property which she would have received, if the will of the other party to the agreement had been made. See, also, Allen v. Bromberg, 147 Ala. 317 (41 So. 771). If, therefore, it can be said to be the rule that one can make an agreement in writing or in parol, without executing it in the form required in the execution of testamentary instruments, and bind himself by such agreement to give his property, upon his death, to another, and that such agreement can be enforced after the death of the promisor, provided it is shown that the agreement rests upon a valid consideration, there can be no logical reason for holding that, where one makes such a contract, resting upon a consideration, and thereafter, in pursuance of the contract, makes a will for the purpose of making more effectual this agreement and promise to make the will, the original contract becomes less binding upon him. We are met, however, with the proposition that, before the death of Mrs. Stewart, she revoked the reciprocal will by executing another will, disposing of her property to the defendants in this suit. Now, of course, this reciprocal will could not be probated. She had revoked it. The revocation destroyed the right to probate, but the contract still remained, and the last will, being probated, gave no added right by its probation. It simply pointed out and designated the persons who were appointed — 291 — in. her stead to perform the contract made. The will undoubtedly passed the property to these parties named in the last will, but they took it impressed with a trust, in favor of the party to whom the promise was originally made.' Courts of equity, considering that done which ought to be done, will enforce the original contract by impressing a trust on the property received under the second will, in favor of the original promisee. Inasmuch as their original contract rested on the mutual promise of the contracting parties, carried out and recognized by the making of reciprocal wills, it cannot be rescinded, except by the consent of both. As it takes the mutual consent of both to make a contract, so it takes the mutual consent of both to rescind or destroy the contract. We have said that the promise must rest upon a consideration. A promise made upon a consideration binds the promisor and promisee. What is the consideration for the promise made in the contract executed between these parties in 1881, and what was the consideration for the mutual promise made in the reciprocal will ? It appears that all the property, except that which came from the father and mother of Mrs. Stewart, is simply the product of the growth and development of the original business, entered into at the time the contract was made. The money used in purchasing the Gwinup farm was the money of the partnership. The title to it was taken in the name of one of the parties. It was purchased at a time when the commercial enterprise was still in operation. It belonged to the partnership, and, upon the dissolution of the partnership, if there was any dissolution, the property became the joint property of the partners. It was managed and controlled by the husband. The record shows that practically all the business that made the farm profitable was done by him. The proceeds of this joint property were invested in other property, and this continued to be the joint property of these parties. After the purchase of this Gwinup farm, Mr. and Mrs. Stewart made their visit to the office of William M. Walker. The original contract was then exhibited to him, and recognized by them as a then binding contract between them. This was after the sale of the store, and after the purchase of the Gwinup farm. The husband continued to recognize the con — 292 — tract as binding, and labored in the interest of the joint enterprise, giving his-time and attention and money to make it effectual and profitable. Without his consent, and without notice to him, his wife, on the 17th' day of August, 1907, made her will, in which she attempted to revoke, and we may assume did revoke, the reciprocal will made in 1896, and undertook to relieve herself of the obligation of her contract, without the knowledge or consent of Mr. Stewart. This will was admitted to probate. Mr. Stewart filed an election not to take under the will, and brought this action, in which he claims to be the owner of all the property left by the deceased at the time of her death, unaffected by the provisions of this later will. The court below found in his favor, and we think rightly so, for the reason that the original contract and its' agreements therein, supplemented by the reciprocal wills made later, became and are as one contract, binding upon both parties, and not revocable by either. Brown v. Webster, 90 Neb. 591 (134 N. W. 185), supports this conclusion, and is such a full and fair discussion of the question involved in this suit that we invite a careful reading of it. See, also, Keith v. Miller, 174 Ill. 64 (51 N. E. 151). The record in this case discloses that the plaintiff devoted the best years of his life to the performance, in good faith, of the original contract entered into in 1881. For 13 years, a mercantile business was carried on in the name of E. A. Stewart, a name agreed upon under which the partnership business should be transacted. So far as this record shows, the entire accumulation of these years was invested with his consent, and in reliance, no doubt, upon the original contract, in lands in the name of his wife. After much of this land had been purchased and taken in the name of his wife, they together consulted Mr. Walker. Some question had undoubtedly arisen in their minds touching the legal efficacy of the contract. They both recognized it as binding upon them, if enforcible at law. To make sure that the contract was binding, they applied to Mr. Walker. He informed them then that the contract was legal and of binding efficacy upon both, and suggested that, to avoid any doubt as to the legal efficacy of this contract, reciprocal wills should be made. These reciprocal wills were made, undoubtedly, for the purpose of making more effectual and more fully evidenc — 293 — ing the agreement made in the original contract. They could have been made for no other purpose, so far as Mrs. Stewart was concerned. The property at that time was all in her name. So far as Samuel was concerned, the will and contract remained in full force, with all the legal efficacy that attached to it, up to the time of the death of his wife. It was then, for the first time, that he discovered that she had attempted to repudiate her obligation, and to assume to be the owner of all the property in her own right, and to make disposition of it accordingly. We may assume that she revoked her reciprocal will to the extent that it could not, upon her death, be admitted to probate; but the contractual rights which the contract and the will created could not be destroyed by her act, without the consent of her husband. Therefore, the rights of the plaintiff in this suit rest upon the agreement evidenced by the original contract of 1881, of which the reciprocal will, attempted to be revoked, was a part, by mutual consent of both parties, as evidenced by the testimony of Mr. Walker. While it is true that any effort at a testamentary disposition of property can be made effectual only by following the statute governing the making of testamentary instruments, yet it does not follow that two parties cannot make an agreement, upon consideration, touching the disposition of the property of each upon the death of either. If such contracts were not binding upon the parties, no suit could be maintained for a breach thereof; and yet this court has recognized the right to maintain actions as for a breach of such contracts, and damages have been recovered. Equity may enforce a contract, a breach of which might be the foundation of a civil action for damages. It will not always do so, but it lies in the power of the court to do so. Chehak v. Battles, 133 Iowa 107; Stiles v. Breed, 151 Iowa 86. In this case, plaintiff claims that a contract was entered into, by the terms of which he was to live with decedent until attaining his majority, and, upon decedent’s death, he was to take all his property, as though his own son. The court said: “That a contract such as alleged may be enforced was decided in Chehak v. Battles, 133 Iowa 117. There the contract was in writing, while in this ease oral evidence is relied on. The only difference is in the manner of proof. Such an agreement, — 294 — if resting in parol, must be fully established by clear, satisfactory, and convincing evidence;” The evidence is conclusive that plaintiff complied with all the terms of his alleged agreement. The court found the contract was enforcible, and enforced it against the heirs of the deceased. See, also, Horner v. Maxwell, 171 Iowa 660. It is argued, however, that the contents of this original instrument are proven, if at all, by parol testimony. The right, however, rests upon a written instrument. The proof of the contents of the written instrument is by parol. We say the proof of the contents leaves in our minds no doubt of the existence of the original contract and of its contents, as claimed by the plaintiff. The proof of the contents was made by a lawyer skilled in his profession, to whom the original instrument was submitted for advice, submitted by both parties, and its contents examined, for the purpose of giving advice as to its efficacy as a legal document. It was read carefully by the lawyer, and, upon reading, the advice was given which resulted in the preparation of the reciprocal wills. The existence of the original contract was fully proven, its contents were fully proven, and this justifies us in saying that the writing was substantially as hereinbefore set out. The loss of the contract was fully accounted for. Search was made in every place where the contract was likely to be. While there is some statement in plaintiff’s petition that it might be in the hands of White, White was on the stand, and denied that he ever had possession of it. It seems to be conceded by the defendant that the loss of the contract was fully proven. Further, the objections first urged to the instrument as a copy were withdrawn by the defendant, and no point is made in defendant’s brief points as to the sufficiency of the evidence to show that the contract was lost, and not within the power of the plaintiff to produce. ' toppef tondeny validity. It is urged in argument that, because the plaintiff did not oppose the probate of this last will, and filed his ' election not to take under the will, he is estopped to claim that the will was not efficacious, as an instrument disposing of all rights which he might have urged under the original contract, now sought to be enforced. — 295 — This contention is not sound, inasmuch as it was his duty, under the law, to file the will with the clerk for probate. There is a penalty for suppressing it. Section 5043 of the Code of 1897. It is the duty of the clerk to fix the date for proving it. On a hearing, the only issue is: Is the instrument the last will and testament of the decedent? Was she of sound mind when she signed it, etc? It is probated or proven when this is shown. A husband cannot contest the will of his wife. If he does not care to take under the will, he can file his election not to take under the will. In filing his election not to.take under the will, no matter what its provisions are, he receives the same share in his wife’s estate as he would receive, had there been no will. No matter what the provisions of the will are, when probated, it confers no rights in property not owned by the testator at the time of her death, and in no event could it be made to avoid contractual obligations assumed during her life. There is no estoppel shown in this case. No prejudice resulted to any of the contesting parties as a consequence of the silence, or even active participation, of the plaintiff in the probate of this will. It is only a circumstance tending to show, if anything, that he consented to the revocation of the original reciprocal will; and it is our opinion that it has no such tendency, under the record in this case. The will neither negatives nor affirms the ownership of the property mentioned in the will, against the rights of third persons. The court below in its decree found in favor of the plaintiff, and adjudged him to be the owner and éntitled to all the property owned by Emma A. Stewart at the time of her death, except the watch and chain referred to in her reciprocal will hereinbefore set out, and decreed specific performance of said contract. There are other questions discussed, but they do not reach the merits of this controversy. On the whole record, we think the court was right in its decree, and the cause is — Affirmed. Ladd, C. J., Weaver, Preston, and Stevens, JJ., concur. — 296 — Supplemental Opinion. Per Curiam. — Upon further examination of the record, we have reached the conclusion that the contract entered into by Stewart and his wife should be construed as one of partnership, and as having relation only to property which might be invested therein in the prosecution of its business, and the profits, together with its earnings, investments, and to profits derived therefrom. In this view, the farm of 136 acres acquired by Mrs. Stewart from her parents in the distribution of their estate would not be included in that passing, under the contract, to Stewart upon her death, but would descend under the general law or will; but what disposition shall be made thereof is not adjudicated in this action. The reasons for this conclusion appear-in the first two paragraphs of Judge Evans’ dissent to the main opinion. With this modification, the petition for rehearing is overruled, and the decree as so modified is affirmed.