Hayes v. Huddleson

Mr. Chief Justice Shepard delivered the opinion of the Court: 1. The first proposition on behalf of the appellant is: “The burden of proof is upon persons dealing with holders of expectant interests to show affirmatively that a full and valuable consideration was paid.” Upon whom is imposed the burden of proof in such cases is a matter of no importance in the present case. What the actual market value of plaintiff’s interest was, at the time of her conveyance, is a matter of uncertainty. The elder life tenant was about ninety or ninety-one years of age at the time; but the other, whose age and state of health do not appear, was evidently not a very old woman. While the restraint upon alienation in the mother’s conveyance to plaintiff and her sisters was doubtless inoperative, as matter of law, it would probably tend to deter purchasers, and therefore depreciate the market value. Without undertaking to determine the value of the interest from the evidence introduced, which is not definite in some important particulars, we are satisfied that it was worth considerably more than the $10,000 consideration paid. That the defendant thought it was worth more than $10,000 is apparent from his offer. That it was worth more at the time this [189] suit was begun, not only by reason of the death of the- younger life tenant, but also by the enhancement of the value of real estate in the neighborhood, is also apparent. The interest of the plaintiff at the time of conveyance was, however, more than a mere expectancy in the legal sense. The will of Columbus Alexander devised his entire estate to his widow for life. The particular lot to which this' controversy relates was devised to trustees, who, after the death of the life tenant, were directed to pay a portion of the net rents to a son, Columbus S. Alexander, during his life, and the remainder to three daughters, one of whom was the mother of plaintiff. After the death of Columbus S. Alexander the trustees were directed to sell the entire lot, and distribute the proceeds equally between the said three daughters, “the children of any one who may be deceased to take the parent’s share.” Columbus S. Alexander died before the plaintiff conveyed; the grandmother and mother were alive. The interest of plaintiff as one of the three children of her mother was contingent upon the death of her mother before the direction to sell and divide the proceeds could be carried out. Whatever interest she took, therefore, was under the will; it was not a mere hope or expectancy of succeeding to the estate by inheritance from her mother. At the time of her conveyance to the defendant, one third of the mother’s vested remainder had passed to her by the mother’s conveyance; the latter reserving the rents and income thereof to herself for life. It is unnecessary to show that the law was settled, at an early day in England, that expectant heirs are entitled for mere inadequacy of price, to have contracts for sale rescinded upon terms of refunding the money actually received, with interest. Such contracts were regarded as a fraud upon the ancestor from whom was the expectation of the estate, who, being kept in ignorance of the transaction, was misled to leave his estate, not in fact to his heir, but to artful persons who had taken advantage of the improvidence and necessities of the expectant heir. The rule has been regarded as declaratory of sound pub190 lie policy, and as such has been upheld by many of the American courts. Boynton v. Hubbard, 7 Mass. 112; M’Kinney v. Pinckard, 2 Leigh. 149, 21 Am. Dec. 601; Nimmo v. Davis, 7 Tex. 26; Parmelee v. Cameron, 41 N. Y. 393; Butler v. Duncan, 47 Mich. 94, 41 Am. Rep. 711, 10 N. W. 123; Bacon v. Bonham, 33 N. J. Eq. 614; McClure v. Raben, 133 Ind. 507, 36 Am. St. Rep. 558, 33 N. E. 275. As this was not a sale of a mere expectancy, the question to be determined is whether the same rule shall be applied in the case of a sale of a vested interest not in possession of the vend- or. The earlier cases in England seem to hold that there is a substantial distinction between the two conditions; but the doctrine that the person entitled to such reversion or remainder is to be treated as an expectant heir, and his contracts of sale governed by the same rule was finally established, and remained in force until abolished by act of Parliament in 1868. 31 Vict. chap. 4. While the rule of the later English cases, that contracts of sale by a reversioner or remainderman will be vacated for mere inadequacy of consideration alone, has the support of eminent text writers and some judicial decisions in this country, it has not received the sanction of the Supreme Court of the United States. On the contrary, it may be regarded, inferentially, as having been denied. Jenkins v. Pye, 12 Pet. 241—252, 9 L. ed. 1070—1074. In that case a daughter had conveyed her remainder in an estate to her father, who was tenant for life. As in this case, the present value of the remainder was rendered uncertain by the existence of the life estate of the father, who was apparently in good health. Under the circumstances, it was said that the sum received “might be considered nearly, if not quite, an adequate consideration.” It was found that no imposition had been practised, no undue influence exercised by the parent; and the conveyance was upheld. Mr. Justice Catron, who concurred with the majority of the court in dismissing the bill on account of laches, in a separate opinion in which the English cases are reviewed, maintained the doctrine which governed in the court below, that the daughter was “an heir of an estate in reversion, which descend [191] ed to her in tender infancy, and in regard to the possession and enjoyment of which she must be deemed and treated, in a court of chancery, as an expectant heir.” 12 Pet. p. 257. Since that case (decided a. d. 1838), the question seems not to have arisen. The court of appeals of Virginia, in a well-considered case, in 1856, rejected the English rule as inapplicable. In a most able and learned opinion delivered by Allen, P., it was said: “Whatever principle may be adopted in reference to contracts with expectant heirs secretly selling the chance of a parent’s or some relation’s bounty; it seems to me that the actual adult owner of a vested interest in property, whether in reversion or remainder, should not be reduced to the condition of pupilage from regard to any supposed rule of public policy, or for the purpose of extending to him any particular protection. No such rule of public policy exists in this country; and all attempts to fetter the action of the owner by restricting his power of alienation operate injuriously to him. They lessen competition, and so depreciate the market price of his property. There is no valid reason for making this an exceptional case. The contracts of such reversioners or remaindermen, * * * if ma(je by those competent to contract, if they are not gained by ill practice, nor made against the laws, should be kept.” Cribbens v. Markwood, 13 Gratt. 495—507, 67 Am. Dec. 775. We are well satisfied with the reasoning of that opinion and the conclusion reached. See also Whelen v. Phillips, 151 Pa. 312, 25 Atl. 44; Phillip's Estate, 205 Pa. 511, 55 Atl. 212. . There being no proof of actual fraud or imposition practised upon the plaintiff, the mere fact that she did not receive full market value for her interest did not warrant the rescission of her conveyance, and the court below was right in so holding. It remains to inquire how far the validity of the conveyance is affected by the relations of the parties. The evidence does not show any contractual or active fiduciary relation. The defendant Henry P. ITuddleson was the husband of the daughter of Thomas W. Hay, the trustee in the will, who was the great-uncle of plaintiff. [192] While the relations between plaintiff and her two sisters were strained, defendant was the intimate friend of all of them. Plaintiff regarded him as a friend and kinsman, and reposed implicit confidence in him. He had, upon occasion, given her and her mother and sisters advice and assistance. He had graduated from a law school in the District of Columbia, but had not been admitted to the bar. At the time of, and for some years before, the transaction he had been employed in one of the Departments of the government at the capital. He had never acted as the attorney of the parties in respect of the administration of the estate; but had at plaintiff’s request, prepared deeds relating to the conveyance of the mother’s estate, for which he made no charge and received no compensation. The plaintiff, apprehending that an action for damages might be brought against her mother, suggested the conveyance by her. It seems that some mistake was made in including other property than this particular interest, that necessitated a reconveyance, and another deed confined to the lot in which there was this community of interest was executed. Plaintiff was a woman of mature age and managed her own affairs. She was familiar with the property, and had every opportunity to ascertain its value. Sometime before the sale to the defendant she had invested in an ice plant in Florida, the machinery in which seems to have been erected subject to a payment therefor of $3,000. She was unable to pay the money, and was threatened with the removal of the machinery. She believed that the ice plant would prove remunerative if the machinery could be retained, and that there would be a destructive loss if it were removed. She visited Washington in an endeavor to borrow money upon her said interest, in which she did not succeed. Defendant and an attorney to whom she applied were unable to assist her. Hearing that she would probably have an offer from a well-known investor in speculative titles, of $6,500, for her interest, the defendant wrote to her advising her to sell out the ice plant at a sacrifice rather than sell to said person, and suggesting that, if she was determined to sell the Washington property, he might sell it for her if she would name a price. She, [193] thinking that her sisters might offer to purchase her interest, wrote that she would probably sell to the aforesaid party. This was also written as an inducement to them to consent to a sale. She wrote defendant, saying that, while she thought her interest worth $20,000, she would sell for $10,000. Defendant then wrote, saying that he would purchase at $10,000, provided the sisters would consent to the conveyance. The sisters preferring that defendant rather than a stranger would make the purchase, defendant submitted the terms of payment, which, with some changes, were accepted by plaintiff. "When the deed was sent to plaintiff to execute, the consent of the sisters was indorsed thereon. She executed, acknowledged, and returned it, and the consideration was paid. While, as we have said, there were not express fiduciary relations between the parties, there was such relation as that of confidence reposed by the plaintiff, and the probable amount of influence on the part of the defendant growing out of that confidence is of a nature that a court of equity would not permit an advantage to be taken and retained in a transaction which could not be impeached where no such confidential relations existed. Tate v. Williamson, L. R. 2 Ch. 55, 15 L. T. N. S. 549, 15 Week. Rep. 321. That case is a leading one on the subject of transactions between persons where relations of confidence exist, and has been cited with approval by us in several cases. Murray v. Hilton, 8 App. D. C. 281—285; Holtzman v. Linton, 27 App. D. C. 241-256. As was said in Murray v. Hilton, supra: “Where those relations are contractual and active, as in the case of trustee and beneficiary in a deed or will, of guardian and ward, and of attorney and client, and the like, the safest ruleis to declare void, on grounds of public policy and utility, all conveyances made by the cestui que trust, and so forth, upon his application therefor within a reasonable time, subject, of course, to the return of any actual benefits received. Where, however, the relations are not of this active and positive character, but are imputed, in equity, to certain special circumstances and conditions that may exist for a time between particular persons, or in a particular case, the rule cannot, with good rea-