Cardoner v. Day

Citation253 F. 572
Decision Date25 January 1918
Docket Number680.
PartiesCARDONER v. DAY et al.
CourtUnited States District Courts. 9th Circuit. District of Idaho

Graves Kizer & Graves, of Spokane, Wash., Morgan J. O'Brien, of New York City, and Joseph R. Wilson, for plaintiff.

C. W Beale, of Wallace, Idaho, James E. Babb, of Lewiston, Idaho John P. Gray, of Coeur d'Alene, Idaho, and I. N. Smith and John H. Wourms, both of Wallace, Idaho, for defendants.

DIETRICH District Judge.

Plaintiff prays for a rescission of the sale by her to certain of the defendants of her one-sixteenth undivided interest in the Hercules mine, one of the large operating lead properties in Shoshone county, Idaho. The sale was definitely agreed upon October 28, 1916, at which time a part of the consideration was paid and the deed executed, and the balance of the consideration was paid and the deed delivered on November 14, 1916. Pursuant to the direction of defendant Eugene R. Day, to whom, through the agency of defendant Allen, the plaintiff negotiated the sale, the deed was made to the defendant Eleanor Day Boyce. At the time of the transaction each of the defendants, with the exception of Allen, had separate undivided interests in the property, the operating organization being in the nature of a mining partnership, as provided by the laws of the state. Besides a mill, which it had maintained from the beginning, the company had recently made provision for the more direct marketing of its product by the acquisition of stock in a smelter and refinery. For her entire interest-- that is, a sixteenth of all the partnership assets, including the cash reserve carried for operating purposes-- the plaintiff received $350,000. Eugene R. Day, who for convenience will hereinafter be referred to as Day, was, and for several years had been, the partnership manager. He was also the administrator of the estate of Damien Cardoner, the plaintiff's deceased husband, from whom she inherited her interest. At the time of the commencement of the suit the interest was owned in four several parts, by Day, his sister, Eleanor Day Boyce, and his brothers, Harry L. Day and Jerome J. Day, who are the only defendants having any real interest in the controversy; the others having been joined for procedural purposes only.

There are charges of both actual and constructive fraud. As to the former, in substance the plaintiff's claim is that the defendant Allen, instigated by, and in collusion with, Day, made false representations to the plaintiff as to the condition of the property and its future prospects, for the purpose of alarming her and inducing her to make a hasty and improvident sale, and that, because of her friendship for and confidence in him, she believed him, and was thus fraudulently induced to sell at a grossly inadequate price. In bringing about the sale, Allen undoubtedly acted as the plaintiff's agent, and the few circumstances which upon their face were perhaps sufficient to warrant suspicion of collusion are satisfactorily explained. Allen was not in the employ of Day or his sister, nor did he act in concert with or at their suggestion. I am convinced that he endeavored to get as high a price as possible. True, he suggested certain considerations to the plaintiff, which it may be assumed were intended to put her in a frame of mind to give serious thought to Day's offer; but such is the practice of real estate brokers who are trying to bring together the owner and prospective purchaser. He made no misrepresentation of facts, and laid before or discussed with her only possibilities which furnished legitimate subjects for consideration. Moreover, I am satisfied that at no time did the plaintiff entertain the view that he was representing Day's interests, rather than hers. To say the least, the earlier conferences between them are entirely consistent with the theory that she regarded him as her agent, and later, before the sale was consummated, she so designated and empowered him by a formal written instrument.

True, at the bank, when the escrow was being deposited, upon the question of Allen's compensation being raised, she seems to have made the suggestion that he was working for the Days. But I am inclined to think that the remark is more significant of thrift than of candor, and was not very seriously intended. Certain it is that she did not press the point, but, without objection or protest, aside from the single suggestion, she promptly turned over to Allen a check which she held, for $5,000, the amount mutually agreed upon. Their relations continued to be friendly, and Allen continued to act as her agent in looking after her property interests in Shoshone county. In respect to all other matters, as appears from the letters in evidence, he seems to have been painstaking and to have protected her with the most scrupulous care. His apparent candor and directness as a witness left no doubt in my mind of his good faith, and, besides, to take the plaintiff's view is necessarily to accept the wholly improbable theory that not only Day and Allen, but the latter's aged father-in-law, a state district judge, with whose family the plaintiff had long been upon terms of intimate friendship, and his wife, had entered into a conspiracy to defraud her. I have no hesitation in dismissing this charge.

It is urged, however, that Day's relations to the plaintiff were of such character that (1) under the statutes of Idaho he was without the capacity to make the purchase, or (2) if not wholly incompetent, his disability was such that he could purchase only for a fair price, after disclosing to plaintiff all the information within his possession, and that not only did he withhold material facts from her, but the price paid was in fact grossly inadequate.

The first contention is predicated upon section 5543 of the Idaho Revised Codes, which provides that 'no executor or administrator must, directly or indirectly, purchase any property of the estate he represents, nor must he be interested in any sale'; and the precise question is whether, at the time of the transaction of sale, or the negotiations pertaining thereto, the property sold was 'property of the estate' of Damien Cardoner, of which Day was the administrator. The material facts are as follows:

Damien Cardoner died in February, 1915. Upon the request of his daughter, and apparently with the plaintiff's approbation, Day was appointed administrator (with the will annexed) on July 29, 1915, and immediately qualified and entered upon the discharge of his duties. On September 27, 1916, he filed his final account, praying for its approval, and also for a decree distributing the estate. Upon the same day the plaintiff filed a petition representing that all claims had been paid, and that the estate was ready for distribution, and prayed for a decree distributing the whole thereof to her. Upon October 14, 1916, both plaintiff and Day, and their respective attorneys, being present, the court duly entered an order approving the account, and in compliance with the plaintiff's prayer, distributing the entire residue of the estate to her, consisting of about $120,000 in cash, and other property of the value of approximately $35,000, besides the mining interest here in controversy, all of which Day forthwith turned over to her. This order or decree was filed for record in the office of the county recorder of Shoshone county on October 25, 1916.

The order formally closing the estate and discharging Day from further responsibility was not entered until November 1, 1916; but this fact, upon which the plaintiff chiefly relies to support her contention, is thought to be unimportant. Under the state laws, the property of a deceased person passes to the heirs 'subject to the control of the probate court, and to the possession ' of the administrator. Section 5701. But upon the entry of a decree of distribution the right of possession in the administrator terminates and his authority relative to the property ceases. Sections 5626 and 5627. The property distributed is no longer a part of the estate intrusted to the care of the administrator. Touching it, both his rights and his obligations are at an end. If upon such distribution the property does not cease to be a part of the estate, when, if at all, is it withdrawn from administration? In a popular sense, of course, it may always be spoken of as the deceased's estate. But section 5543 is to be understood in a legal sense. The principle or reason upon which the section is predicated is obvious: A trustee (the administrator) is not to purchase property to which his trust relates. But distributed property is no longer a part of his trust; it is out of the trustee's possession and control.

Plaintiff directs attention to section 5631 et seq., where provision is made for the partition by proceedings in the probate court of distributed property; but, even if it were conceded that this is a matter with which the administrator is in any wise concerned or touching which he has any right or duty (which is extremely doubtful), it will be noted that to invest the probate court with jurisdiction for this purpose some person interested must file a petition for partition before the decree of distribution is made. Section 5632. In the absence of such petition the property not only ceases to be under the control of the administrator, but passes out of the jurisdiction of the court. Buckley v. Superior Court, 102 Cal. 6, 36 P. 360, 41 Am.St.Rep. 135; Morffew v. San Francisco & S.R.R. Co., 107 Cal. 587 40 P. 810; Moore v. Lauff, 30 Cal.App. 452, 158 P. 557. There is no pretension here that such petition was filed, or, indeed, that it was a case where it could be filed. Hence, when the decree of distribution was entered upon October 14th, not only...

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11 cases
  • Bettendorf v. Bettendorf
    • United States
    • Iowa Supreme Court
    • 19 Octubre 1920
    ...or means of knowledge of the value of the stock offered for sale. Colton v. Stanford, 82 Cal. 351 (23 P. 16, at 20, 21); Cardoner v. Day, 253 F. 572, at 585. would have to be said if there were claim or evidence that defendant overreached Voss, or that the two were in collusion, is not impo......
  • Grimsmoe v. Kendrick
    • United States
    • Idaho Supreme Court
    • 21 Abril 1926
    ...248 F. 596; Troup v. Horback, 53 Neb. 795, 74 N.W. 326; Southern Dev. Co. v. Silva, 125 U.S. 247, 8 S.Ct. 881, 31 L.Ed. 678; Cardoner v. Day, 253 F. 572; Coffin Ransdell, 110 Ind. 417, 11 N.E. 20; Davies v. Ball, 64 Wash. 292, Ann. Cas. 1914B, 750, 116 P. 833; Fogg v. Blair, 139 U.S. 118, 1......
  • Walter v. Holiday Inns, Inc.
    • United States
    • U.S. Court of Appeals — Third Circuit
    • 16 Febrero 1993
    ...to disclose insolvency of business, even though purchaser relied on seller to inform him of partnership affairs); Cardoner v. Day, 253 F. 572, 573, 577-80 (D. Idaho 1918) (where selling partner alleged that purchasing partner made "false representations ... as to the condition of the [partn......
  • Swinehart v. Turner
    • United States
    • Idaho Supreme Court
    • 23 Febrero 1924
    ...sec. 1441, note 78; Milburn v. East, 128 Iowa 101, 102 N.W. 1116.) Under C. S., sec. 7655, such a sale is only at most voidable. (Cardoner v. Day, 253 F. 572; French Phelps, 20 Cal.App. 101, 128 P. 772; Boyd v. Blankman, 29 Cal. 19, 87 Am. Dec. 146; In re Richards' Estate, 154 Cal. 478, 98 ......
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