Brisacher v. Tracy-Collins Trust Company, 6160.

• Court: U.S. Court of Appeals — Tenth Circuit
• Writing for the Court: MURRAH, , LEWIS, Circuit , and WALLACE
• Citation: Brisacher v. Tracy-Collins Trust Company, 277 F.2d 519 (10th Cir. 1960)
• Decision Date: 30 March 1960
• Docket Number: No. 6160.,6160.
• Parties: William H. BRISACHER, Appellant, v. TRACY-COLLINS TRUST COMPANY, Ethel H. Brisacher, Patricia Brisacher Landis Sobel, Barbara Ann Brisacher, a minor child, Bradley Landis, a minor child, and Tracy Landis, a minor child, Appellees.

277 F.2d 519 (1960)

William H. BRISACHER, Appellant, v. TRACY-COLLINS TRUST COMPANY, Ethel H. Brisacher, Patricia Brisacher Landis Sobel, Barbara Ann Brisacher, a minor child, Bradley Landis, a minor child, and Tracy Landis, a minor child, Appellees.

No. 6160.

United States Court of Appeals Tenth Circuit.

March 30, 1960.

William A. Rutter (of the firm of Irmas & Rutter), Beverly Hills, for appellant.

Calvin A. Behle, Salt Lake City, Utah (C. C. Parsons, A. D. Moffat and Keith E. Taylor, Albert J. Colton (of the firm of Fabian & Clendenin), H. R. Waldo, Jr. (of the firm of Ray, Rawlins, Jones & Henderson), Elliott W. Evans (of the firm of Evans & Nelsen), Salt Lake City, Utah, and Fink, Levinthal & Lavery, Los Angeles, Cal., on the brief), for appellees.

Before MURRAH, Chief Judge, LEWIS, Circuit Judge, and WALLACE, District Judge.

LEWIS, Circuit Judge.

On June 16, 1955, Leo Brisacher by written instrument entered into a trust agreement with Tracy-Collins Trust Company wherein certain real property in Salt Lake City was conveyed to the trust company to be held by it according to the terms and conditions of the trust. Appellant and each of the individual appellees were named as beneficiaries under the trust agreement. On March 17, 1958, Leo Brisacher died and shortly thereafter the appellant notified the trust company that he contended that the trust agreement was void and that the company would be "held accountable for any funds or property" distributed by the trustee to any one other than the decedent's estate or his heirs. Other beneficiaries asserted the trust to be valid and, accordingly, the trust company initiated this action in the United States District Court for the District of Utah, alleging diversity jurisdiction, paying the amounts it had on hand as trustee into court, and requesting the court to adjudicate the validity of the trust and to instruct the trustee.

Upon trial the principal issue litigated was the actual mental competency of the settlor at the time of the execution of the trust. Upon this issue the trial court found that "said Leo Brisacher was in full command of his faculties, was aware of the nature of his property, of the members of his family as the natural objects of his beneficence, and of the plan of disposition effectuated under said Trust Agreement and Warranty Deed." This finding is not now attacked. However appellant asserts that regardless of the actual mental competence of the settlor at the time of the execution of the trust instrument he was under a legal disability which rendered the trust instrument void; that the court did err in a finding that the claims of appellant were vexatious, perverse, and made without full and complete investigation;¹ that the court was without jurisdiction; and that the court abused its discretion in refusing to transfer the action to the United States District Court for the Southern District of California.

An understanding of the history of the legal proceedings affecting the status of Leo Brisacher's mental competence is necessary to present appellant's contention of legal disability asserted to exist at the time of the execution of the subject trust, June 16, 1955. Brisacher was an attorney who lived most of his life in California but who owned some valuable business property in Salt Lake City. In November, 1954, he had been adjudged mentally incompetent by a California court upon a petition filed by his wife, the appellee Ethel Brisacher. In February, 1955, a similar adjudication was made by a Utah state court and the appellee Tracy-Collins Trust Company was appointed guardian of his property in the state of Utah. On June 7, 1955, Leo Brisacher was restored to capacity by order of the Superior Court of Los Angeles and it was immediately after this adjudication that he journeyed to Salt Lake City where he executed the trust in question. Some two months later, on August 12, 1955, the Utah court entered an order restoring him to capacity and terminating the Utah guardianship. In both the proceedings to establish and to terminate the Utah guardianship that court relied upon evidence² of the earlier proceedings in the California court. However the Utah proceedings were not ancillary in the sense that either adjudication had a statutory dependency upon the California decrees. Finally, in January 1957, Brisacher was again declared incompetent by the California court and this order remained in effect until his death in 1958.

Since appellant neither questions the validity of the California decree restoring the decedent to capacity nor the finding of the trial court that decedent was in fact fully competent at the time he conveyed the property in trust to the trustee, his argument is singly premised upon the existence of the Utah guardianship at the time of the execution of the trust agreement in Utah conveying Utah property.

It is of course fundamental that a ward is not free to deal with his property when under the shelter of a valid and existing guardianship. Such indeed is the very purpose of the guardianship and were the rule otherwise the guardian could neither execute his trust nor could third persons rely upon the authority of the guardian. The rule appears conclusive where the rights of those who deal with the guardian are concerned and where conflict exists between guardian and ward. But in the instant case the rights of innocent third persons are not involved and the guardian has consented to and participated in the acts of the ward. Our consideration is thus limited to a determination of whether or not the bare existence of the guardianship constitutes an artificial but absolute bar to the validity of a contract made by a ward who is fully competent in fact and where the guardian gives fiduciary consent to the contract as guardian and upon termination of the guardianship continues to act as fiduciary under the contract.

There is neither statute nor case law in Utah on this precise point and cases in other jurisdictions under a multitude of varying statutes and fact situations are difficult to harmonize even within the same jurisdiction. In some jurisdictions it is held that the adjudication of insanity or incompetency resulting in the appointment of a guardian is conclusive evidence of subsequent incapacity to contract. In other jurisdictions, however, an adjudication of insanity and the appointment of a guardian is held to be merely prima facie evidence of incapacity to contract. See annotation at 7 A.L.R. 584; 68 A.L.R. 1313; 44 C.J.S. Insane Persons § 112, p. 270. And even in those jurisdictions holding that a conclusive presumption exists, exceptions are carved by reason of the particular statute under which the adjudication was made, Butler v. Butler, 225 Mass. 22, 113 N.E. 577; In re Meinders' Guardianship, 222 Iowa 236, 268 N.W. 537; the validity of the appointment, Turpin's Adm'r v. Stringer, 228 Ky. 32, 14 S.W.2d 189; abandonment by the guardian of control of the person or property in his custody, Nichols v. Clement Mortgage Co., 112 Okl. 155, 241 P. 167; Thorpe v. Hanscom, 64 Minn. 201, 66 N.W. 1; recovery in quantum meruit for performance of a contract, Masters v. Jones, 158 Ind. 647, 64 N.E. 213; the particular contract involved, In re Kaplan's Guardianship (Collins v. Marquette Trust Co., 187 Minn. 514, 246 N.W. 5,) and the purpose and extent of the adjudication, Carroll v. Carroll, 16 Cal.2d 761, 108 P.2d 420. Appellant would apply the strict rule that all contracts of a person adjudged incompetent and placed under guardianship are void without exception in Utah by reason of the descriptive words in the dicta of Andrus v. Blazzard, 23 Utah 233, 63 P. 888, 892, 54 L.R.A. 354, "the ward being civilly dead." However, in view of the particular facts of this case, we find it unnecessary to determine the concept of the Utah law on whether the contracts of one under general guardianship are void or merely voidable.

The record before us does not include the petition for the letters of guardianship in the Utah proceedings nor does it indicate who instituted the matter. The parties agree that the letters were issued solely upon the records of the California adjudication of incompetency. No independent inquiry as to the competency of Leo Brisacher was made in the Utah proceeding and the letters merely recite:

"Tracy-Collins Trust Company, a corporation of Utah is hereby appointed guardian of the estate of Leo Brisacher, Incompetent, located in the State of Utah, by order of the Court."

Under U.C.A.1953, 75-13-20, the state has defined the word incompetent, a term used both in the California adjudication and the Utah order:

"The words `incompetent,\' `mentally incompetent\' and `incapable,\' as used in this title shall be construed to mean any person who, though not insane, is, by reason of old age, disease, weakness of mind, or from any other cause, unable, unassisted, to properly manage and take care of himself or his property and by reason thereof would be likely to be deceived or imposed upon by artful or designing persons."

It has been held that this section does not change the test of mental capacity sufficient to make valid conveyances of property, Hatch v. Hatch, 46 Utah 218, 148 P. 433, 438, which is "were the mental faculties so deficient or impaired that there was not sufficient power to comprehend the subject of the contract, its nature and its probable consequences, and to act with discretion in relation thereto, or with relation to the ordinary affairs of life?" Thus it appears that the recognition by a court in Utah that a person is incompetent to manage his affairs is not tantamount to an adjudication that he is incapable of intelligently entering a contract.

It is to be noted that the trust agreement did not enlarge or diminish the powers or duties of Tracy-Collins Trust Company with respect to the property in the transition from guardian to trustee. Under U.C.A.1953, 75-13-41, the guardian had...