Burnes v. Burnes

• Decision Date: 01 May 1905
• Docket Number: 2,137.
• Citation: 137 F. 781
• Parties: BURNES et al. v. BURNES et al.
• Court: U.S. Court of Appeals — Eighth Circuit

137 F. 781

BURNES et al. v. BURNES et al.

No. 2,137.

United States Court of Appeals, Eighth Circuit.

May 1, 1905

Syllabus by the Court

The conveyance by administrators to distributees of their respective shares of the personal property of an estate which is not previously authorized, but which is subsequently approved by the probate court, devests the administrators of all title and interest therein, and vest it in the distributees as of the date of the conveyance.

In the absence of constitutional or statutory prohibition corporations have the inherent power to buy, to retire, and to sell their own stock.

A corporation which is not organized to grant, purchase, or dispose of annuities may legally contract to pay in annual installments during the lives of the vendors for property which it has corporate authority to buy, although corporations not organized to deal in annuities are expressly forbidden to do so. The power to pay on such terms as the vendor and purchaser agree is an indispensable incident to the power to buy and inheres in it. Such a transaction is not a dealing in annuities within the meaning of the prohibition.

Parties in fiduciary relations are prohibited by the law from using their knowledge or power to the detriment of their correlates. No such use can avail them when challenged.

Contracts and transactions between individuals and corporations of which they are controlling directors or officers, which are unfair, in which the individuals secure an undue or unjust advantage, in which an antagonism between the interest of the individuals and the duty of the officials results in the triumph of the former, are voidable at the option of the corporation or its creditors or stockholders.

The transfer of stock from a corporation to a trustee for a majority of its directors and others by the controlling votes of that majority is voidable at the instance of stockholders who are injured thereby.

The true end of the construction of wills is to ascertain the intention of the testator and to carry it into effect.

This intention must be deduced from the entire will, because the instrument without any part of it fails to clearly express the intention.

The court should put itself as far as possible in the place of the testator, and then, from a consideration of the instrument itself, of the relation of the testator to the parties in interest when he made it, endeavor to ascertain and give effect to his intention.

Words of desire, request, recommendation, or confidence in a will addressed by a testator to a legatee whom he has the power to command, create no trust in favor of the parties recommended unless (1) the intention of the testator to make the desire, request, recommendation, or confidence imperative upon the legatee, so that he should have no option to comply or to refuse to comply with it, clearly appears from the whole will and the relation and circumstances of the testator when it was made, (2) unless the subject-matter is certain, and (3) unless the beneficiaries are clearly designated.

When these three conditions exist, a precatory trust may be created in favor of the parties recommended.

The test of the first condition of a precatory trust is the clear intention of the testator to imperatively control the conduct of the party to whom the language of the will is addressed by the expression of the wish or desire, and not to commit to his discretion the exercise of the option to comply or to refuse to comply with the wish or suggestion expressed.

B. devised his property to his two brothers, 'to be held and disposed of by them absolutely as their own property. ' He expressed a desire in his will that these brothers should adopt his six children as their heirs and devisees, so that they would share equally with their own children in their advancements and estates, and he declared that nothing in the will, and no request, direction, or bequest made therein, should be construed to create a charge or incumbrance upon any of the property bequeathed to his brothers. Held, the will did not create a trust in favor of the six children, either in the estate of the testator or in the property of his brothers.

One who adopts a minor as his child and heir has, while living, the same unlimited power of disposition of his property that a natural father has. There can be no heir of the living.

One who is induced by fraud to execute a contract has the option to rescind or to affirm it.

Delay, silence, acquiescence, or a retention of the fruits of the agreement for a considerable length of time after a discovery of the fraud is an exercise of the option to affirm, and irrevocably ratifies the agreement.

A contract made without fraud or mistake may not be modified by a court of equity, to give either party a better bargain, while he retains all the benefits of the original trade.

Family settlements and compromises of conflicting claims to property are encouraged by the courts. They will not be avoided for inadequacy of consideration, nor without clear proof of fraud or mistake.

Four adopted children, who were entitled to an interest in property derived from their adopted fathers of the possible value of $275,000, made a family settlement with one of their adopted fathers and the sons of the other, whereby they accepted 177 shares of stock, then worth $115,000, in a certain corporation, in satisfaction of their interest. Their just proportion of this stock was about 243 shares more. Eleven years later, and after, by another agreement made four years before, they had affirmed the settlement, they wrongfully took from the heirs of the parties who made the settlement with them their interest in certain shares of stock in this corporation, and when the latter brought a suit in equity for the restoration of this interest the adopted children prayed the court to make an equitable redistribution of the stock, or to permit them to retain what they had taken for the purpose of the righting the wrong which they had suffered by the family settlement. The adopted father and the sons who participated in that settlement were dead. The stock in the corporation, which was worth $650 per share when the settlement was made, had become worth $5,000 per share. The adopted children had not restored the shares they obtained by the settlement. Held, there was no equity in their claim, and a decree for the restoration of the stock they had taken was rightly rendered.

These suits present the question whether four of the children of Daniel D. Burnes, deceased, or all the stockholders of the Burnes Estate, a corporation, are the beneficial owners of 300 shares of the capital stock of that corporation, which was the property of Calvin F. Burnes, a brother of Daniel D. Burnes, when he died intestate on July 29, 1896. The capital stock of the corporation is divided into 1,000 shares. Each share of this stock is worth $4,000, so that the amount involved in this litigation exceeds $1,000,000. Calvin F. Burnes owned 375 shares of this stock when he died. Mrs. Winningham, one of the children of Daniel D. Burnes, who, if the appellants are right, became the beneficial owner of 75 shares of this stock, sold it to Lewis C. Burnes, in trust for the corporation, on March 10, 1902, so that the controversy is really narrowed to the ownership of the remaining 300 shares. Daniel D. Burnes died in 1867, and left surviving him six children. In 1889, Mrs. Moore, another of these children, sold her interest in the property which is the subject of the controversy, so that only four of the children of Daniel D. Burnes are interested in the litigation before us. These four children of Daniel are James N. Burnes, 2d, Lewis C. Burnes, Katherine B. Gatch, and Virginia D. Burnes. These children are the only parties in interest on the side of the appellants. Marjorie Burnes and Kennett Burnes, the grandchildren of James N. Burnes, a brother of Daniel, and Frances B. Burnes, the widow of Calvin C. Burnes, one of the sons of James N. Burnes, and the father of Marjorie, are the parties in interest upon the side of the appellees. Kate H. Burnes, the widow, and Mary V. Burnes, the daughter, of Calvin F. Burnes, although appellants, had no pecuniary interest in these suits, because their claims constitute a charge upon 375 shares of stock which is conceded to be valid by all the parties to the litigation. For convenience and brevity the parties in interest upon the side of the appellants from 1867 to the decree will be termed the children of Daniel, although this designation may at some times include one or both of the two children who during that time parted with their interest in the property. The parties in interest upon the side of the appellees will be called the descendants of James, and the widow and daughter of Calvin F., who were without pecuniary interest in the controversy, will be styled the descendants of Calvin. The entire controversy is between the children of Daniel and the descendants of James.

Calvin F. Burnes died the owner of 375 shares of the stock of the Burnes Estate, and left surviving him his widow and daughter. He died intestate, but left an unexecuted will. After his death an agreement was made to carry out the provisions of this will between the descendants of Calvin, the children of Daniel, the descendants of James, the Burnes Estate, and the Ayr Lawn Company, a corporation whose stock was owned by the Burnes Estate, under which the 375 shares of stock were transferred by Ayr Lawn Company in August, 1896, and that corporation contracted to pay to the widow and daughter of Calvin, or the survivor of them, $1,000 per month as long as either of them should live. The result of this transaction was that the Ayr Lawn Company nominally,...