Atwater v. Hadley

NELSON, District Judge. It must be conceded that the relationship of attorney and client, or principal and agent, existed, and was so understood by the parties, up to the time of the purchase. The burden is on the defendants to establish the fairness and equity of the transaction. The careful scrutiny which is bestowed by courts upon sales of this character between persons occupying fiduciary positions and their confidants is in accordance with public policy to prevent public mischief. The testimony in this case in my opinion brings it within the principle where the strict rule should be appliéd, and calls upon the defendants to establish the following characteristics without which this transaction cannot be sustained. The sale must have been fair, the price adequate, and the conduct of the defendants equitable; unless such was the case, the decision cannot be doubtful. That the price paid is wholly inadequate must be conceded. The value of the notes and mortgages is admitted to be $3,100, and the title' to the realty was evidently considered good by the defendants. The letter of C. W. Hadley written immediately after the sale expresses a disappointment that the deed upon which it was expected the plaintiff’s title could be enforced failed to be in conformity with the laws of the state of Minnesota, and shows that at the time of the purchase he regarded it conclusive upon the title. R. S. Hadley participated in the last effort between the plaintiff and the Seelys to settle the controversy, and it is stated by her that she would have yielded to a small demand on the part of the Seelys which broke up the interview, had not opposition been made by him. The defendants knowing the firm of Cogswell & 195 Johnson bad been employed to aid in bringing about an amicable arrangement with the Seelys, never informed ■ them oí a contemplated purchase of the property, and did not consult at all with them as to the fairness and equity of the transaction. It' was incumbent on the defendants to have fully communicated to these counsel their determination, and a failure to do so was unfair to the plaintiff, and not in accordance with the relationship existing between the parties. There can be no doubt that an advantage was obtained by the defendants, and so regarded by them. The plaintiff regretting the step taken, offered to pay a bonus for the surrender of the notes and mortgages and cancellation of the sale, but this was declined for the reason that the notes had been taken by R. S. Hadley to be sold, and had at that time probably passed out of the control of the defendants or either of them. The testimony conclusively shows this statement to have been untrue. Without further comment I am satisfied upon a full examination of the evidence the complainant is entitled to the relief asked for. Authorities consulted: 9 Pick. 231; Gibson v. Jeyes, 6 Ves. 266; 40 Barb. 521; 2 Hare, 60; White & T. Lead. Cas. Eq. (3d Amer. Ed.) 202; 1 Story, Eq. Jur. §§ 311-314; 63 Me. 17; 3 Edw. Ch. 309; Howell v. Ransom, 11 Paige, 538.