Doheny v. Lacy

• Citation: 61 N.E. 255,168 N.Y. 213
• Parties: DOHENY et al. v. LACY.
• Decision Date: 01 October 1901
• Court: New York Court of Appeals

168 N.Y. 213

61 N.E. 255

DOHENY et al.

v.LACY.

Court of Appeals of New York.

Oct. 1, 1901.

Appeal from supreme court, appellate division, Fourth department.

Action by George Doheny and others against Henry Lacy. From a judgment of the appellate division (59 N. Y. Supp. 724) affirming a judgment for defendant entered on a verdict and an order denying a new trial, plaintiffs appeal. Affirmed.Frank Hiscock, for appellants.

Edgar N. Wilson, Theodore E. Hancock, and E. Raymond Cobb, for respondent.

GRAY, J.

The plaintiffs have sued the respondent upon allegations in their complaint which charge him with an accountability to the estate of their intestate for the value of certain shares of bank stock, for moneys received by him in connection with the possession of the bank stock, and for moneys loaned or advanced to him by the intestate. The defendant, admitting the possession of the bank stock and the fact of an indebtedness having existed to the intestate, as a defense to the plaintiffs' claims set up a written contract, whereby mutual claims held by each against the other had been adjusted, and the defendant's indebtedness had been resolved. This contract was made in 1892, and recited the sale and delivery by the intestate to the defendant of 1,697 shares of the capital stock of the Third National Bank of Syracuse at times and at prices specified; that it was part of the agreement of their sale that the defendant should have such ample time to make payment as to make it practicable from the dividends to be declared; that, by reason of Gleason's policy in the management of the bank, payments of dividends had been deferred, and the defendant therefore had been unable to make payment, and that Gleason, in appreciation of the defendant's services to him, was desirous of making the terms of payment liberal. It was then mutually agreed that defendant should give to Gleason his promissory note for $194,966.66, payable in 10 years, without interest; that Gleason should have a lien, by way of collateral security, upon the shares of bank stock, and provision was made for preserving that lien in case of the stock being pledged for Gleason's benefit; and, finally, that defendant might anticipate the payment of the whole or any part of the principal of the note. This sufficiently exhibits the contract which defendant sets up. It was further alleged in answer that the note called for by this contract was made and delivered by the defendant, and that subsequently it was paid by him. Upon the coming on of the trial, and after the opening of plaintiffs' counsel, the amount was agreed upon between counsel in open court, which would be due to the plaintiffs, if successful, as for moneys advanced by their intestate to defendant to be used in the purchase of bank stock. The trial judge then stated as follows: ‘I understand the only issue now to be tried is whether or not a certain contract, which has been spoken of here, was a valid and binding agreement, and that that depends entirely upon whether or not at the time it was executed Mr. Gleason was of sufficient mental capacity to make the agreement; in other words, that the only issue here is as to Mr. Gleason's mental capacity,’-to which statement by the court there was no dissent expressed by counsel. The trial proceeded, and a great amount of testimony was taken on both sides with respect to Gleason's mental and bodily condition from the year 1884, when, as it is claimed by the plaintiffs, his mind had become impaired, to December, 1892, when he executed this contract and made his will.

It appears that the deceased was the uncle of the defendant. He was unmarried, and had devoted himself with success to the management of the Third National Bank, and, except for the period of one year, was its president from its organization, in 1896, until his death, which occurred in 1893, at the age of 75 years. The defendant had been employed by his uncle in the bank in various clerical capacities, and had risen to the office of cashier, which he filled at the time of his uncle's death. In the latter part of 1892 Gleason was ill with the painful malady which terminated his life. He left a will, in which he simply constituted the defendant as his sole executor, but made no testamentary disposition of his estate. It may be mentioned that the defendant had been of service in aiding his uncle to secure a controlling interest in the stock of the bank, and he appears at all times to have possessed his uncle's affection and his entire confidence in his business capacity and integrity. At the close of the trial the trial judge reviewed the evidence in a charge to which no exception was taken, and instructed the jurors that the questions presented to them for determination ‘are whether that contract was made and executed by Mr. Gleason, and whether or not at that time he was of sufficient mental capacity to make and execute the same. If he was, and executed the contract, the plaintiffs cannot recover, and your verdict must be for the defendant. If, on the other hand, you find that he did not have sufficient mental capacity to make and execute the contract, or that in fact he did not execute the same, the plaintiffs are entitled to recover in this action the sum which I have stated, to wit, $157,857.12.’ The jury returned a verdict for the defendant, and the judgment entered thereupon his been unanimously affirmed by the appellate division. This disposition below of the issue between the parties has conclusively settled every question of fact involved. As the result of the stipulation by counsel and of the statements by the trial judge in his rulings and in his charge, the issue became one simply of the obligatory effect of the contract between the defendant and the plaintiffs' intestate. It had resolved the former's indebtedness into the form in which he had eventually discharged it as pleaded by him, provided the plaintiffs were unable to show that, for want of mental capacity in Gleason, it was not his contract, and therefore was void, and unavailable to the defendant. The pecuniary demands of the plaintiffs not being in dispute with respect to their amount, there was but the one question of fact upon the determination of which the issue depended, and that was whether the contract set up in defense had been competently entered into by the deceased. There is nothing for us to review except such questions of law as are raised by exceptions to rulings upon the trial in the admission or in the exclusion of evidence or to rulings upon the plaintiffs' requests to instruct the jurors. Upon the more important of these the opinion of Justice Spring at the appellate division is well and ably expressed.

After the trial judge had charged the jury, plaintiffs' counsel asked him to further charge ‘that, if the jury find that there were confidential business relations existing between Lucius Gleason and Henry Lacy, in respect to the affairs of Mr. Gleason, previous to Mr. Gleason's illness in December, 1892, and which were not disturbed or severed during that month, that the affirmative is upon Lacy to prove, and he must prove by a preponderance of evidence, that the contract of December 24, 1892, was not procured by the undue influence of Lacy, or those in his interest, over Gleason, and was not induced by fraud, and was executed by Gleason, he understanding and appreciating its various conditions and covenants.’ The court refused to charge ‘in the language of the request,’ and the plaintiffs excepted. The language was, in truth, involved, and possibly the court might have been warranted for that reason in so ruling; but, assuming that it was a direct request to charge that, if the jury found that ‘confidential business relations' existed between Gleason and Lacy, then the latter was under the burden of showing affirmatively that the contract in question was freely, fairly, and competently entered into by the former, I think the request was for an improper instruction, and should not have been granted. That the contract was executed by Gleason is placed, of course, beyond dispute, and, as the principal issue was as to its having been his free and conscious act, it is manifest that its settlement depended upon the quality and quantitly of the evidence adduced by the plaintiffs to destroy the force and obligation of the contract. Until the jury was satisfied that Gleason's mental incapacity was such as to avoid his agreement, it remained as a barrier to the plaintiffs' claims. The defendant was not required to prove negatively that it was not procured by undue influence, or in some fraudulent manner; but, when there was any evidence tending to establish that view of the transaction, he would be called upon to meet it with evidence in answer or in explanation. In other words, the burden of proving the invalidity of the contract could...