Drefahl v. Sec. Sav. Bank
| Citation | 132 Iowa 563,107 N.W. 179 |
| Parties | DREFAHL v. SECURITY SAVINGS BANK ET AL. DREFAHL v. CEDAR RAPIDS SAVINGS BANK ET AL. DREFAHL v. RABE. |
| Decision Date | 09 May 1906 |
| Court | United States State Supreme Court of Iowa |
OPINION TEXT STARTS HERE
Appeal from District Court, Linn County; J. H. Preston, Judge.
These three cases are submitted together and, save the pleadings, upon the same record. Decree was entered in each for the plaintiff. The defendants in each appeal. Reversed.Voris & Haas, for appellants.
Lewis Heins and B. L. Wick, for appellee.
Elizabeth Drefahl died intestate January 15, 1904, and a few days later the plaintiff, Chris Drefahl, her deceased husband's brother, was appointed administrator of the estate. On July 3d, preceding her death, she had on deposit with the Security Savings Bank of Cedar Rapids the sum of $2,075.70. Of this Carl Rabe withdrew $75.70 on that day, and $275 December 21st, following. Some deposits were made so that there was a balance in the bank of $1,865.75 on January 4, 1904. She also had on deposit with the Cedar Rapids Savings Bank $1,971.91 July 3, 1903, of which Rabe withdrew $71.91 on that day, and $250 December 21, 1903. There remained in the bank January 4, 1904, the sum of $1,650 with $37.15 accrued interest. On the day last named Rabe presented to this bank a check payable to himself purporting to bear her mark for the payment of the above amount. The check was honored, and the money transferred to his account, but is held by the bank to await the outcome of this suit. On the following day the amount on deposit with the Security Savings Bank was transferred in like manner. In these suits the administrator alleged that these funds belonged to the deceased and demanded a judgment that each bank pay him the amount on deposit with it, and a judgment against Rabe for such amounts and any moneys of deceased received by him and not expended for her benefit or that of the estate. The defense interposed by each bank was that the funds had been transferred to Rabe by the authority of deceased. Rabe, who was made a party defendant with each bank, in separate answers, averred that in the month of July, 1903, he and deceased had entered into a contract by the terms of which he promised to support her the remainder of her life, in consideration for which she agreed to transfer to him the money on deposit with the banks, and that in pursuance thereof he did support her, and she delivered the depositor's books and executed the checks mentioned. The same defense was pleaded in the separate suit against Rabe. The plaintiff denied the averments of each answer, and, by way of a reply to that of Rabe, alleged that any contract made by him with deceased was that of agency, and that he continued to act as her agent up to the time of her death; and further that “whatever arrangement said Carl Rabe had with deceased was so had and obtained by reason of confidential relations existing between the said Carl Rabe and the deceased, and the same was procured by unfair and undue means, and the said acts of the deceased, if any, were not free and voluntary acts of the said deceased, and that, by reason of the confidential relations existing between said defendant and deceased, the said arrangement by and between the said Rabe and deceased, if any there was, was void in law.” Upon hearing the relief sought by the plaintiff in each case was granted.
1. The issues to be determined are: (1) Whether such a contract as is alleged by Rabe was ever entered into with deceased; (2) if so, whether Rabe performed his part of the agreement; and (3) whether the deposits were transferred to him prior to her death. In their opening argument counsel for plaintiff proceed upon the theory that the moneys in the banks were claimed as a gift. No such issue is raised by the pleadings. On the other hand, counsel for defendants insist that, upon proof of the transfer of the amounts on deposit to Rabe by virtue of checks signed by deceased, the petition as to them should have been dismissed. The issue fairly raised by the pleadings is not whether the money was regularly transferred on the books of the banks by virtue of the check of deceased, or whether the banks acted in good faith in honoring such checks, but whether the funds belonged to plaintiff as administrator of the estate of deceased or to the defendant Rabe. The answers of the banks show that the moneys claimed have not been withdrawn. They are still in their control, and, as all laying any claim to them are before the court, there is no reason why payment to the true owner, regardless of entries which may have been made on the books, may not be directed. If the deceased had not parted with title thereto, the deposits belong to plaintiff, and judgment that these be turned over to him was the relief specially prayed for. Nor do we agree with appellants' counsel that no issue as to good faith on the part of Rabe is raised by the reply. The portion quoted is in the nature of a plea of confession and avoidance. It expressly avers that, whatever the arrangement, it was procured “by unfair and undue means” while Rabe was acting as deceased's agent and confidential adviser and was not free and voluntary. If so, then, as will be seen hereafter, such arrangement, even though entered into, cannot be enforced.
2. That Rabe had acted as the agent and confidential adviser of deceased is fully established by the record. Hays testified that he was such adviser and the manager of her affairs, and Dinwiddie that he understood he was transacting her business, and this was not contradicted. She had appointed him to act in her behalf in depositing and withdrawing moneys at the Security Savings Bank, and he had signed her name to checks on both banks on the 3d of July, 1903, and subsequently on the 21st of December following. Moreover, she was nearly 84 years old and so feeble that she required the care of an attendant, Mrs. Livermore, from some time in June, 1903, until her death. Under these circumstances, we think the burden of proof was on the defendants to show that any arrangement or agreement between deceased and Rabe was fairly and deliberately made. Spargur v. Hall, 62 Iowa, 498, 17 N. W. 743; Condit v. Blackwell, 22 N. J. Eq. 481; Rochester v. Levering, 104 Ind. 562, 4 N. E. 203;Cook v. Berlin Woolen Mills Co., 43 Wis. 433, 444; 1 Am. & Eng. Ency. Law (2d Ed.) 1082. Courts of equity will closely scrutinize such transactions, and see that the agent shall not, by reason of the confidence reposed in him by the principal, secure to himself an undue advantage from the contract. The transaction must be reasonably challenged, and, when this is done, the onus is upon the agent to show that the bargain was fair and equitable. The principle is well stated by Mr. Freeman in a note to Richmond's Appeal, 21 Am. St. Rep. 101: “Wherever a fiduciary or confidential relation exists between the parties to a deed, gift, contract, or the like, the law implies a condition of superiority held by one of the parties over the other, so that in every such transaction between them, by which the superior party obtains a possible benefit, equity raises a presumption of undue influence and casts upon the party the burden of proof, to show affirmatively compliance with equitable requisites and of entire fairness on his part and freedom of the other from undue influence.”
3. Was there such a contract as is alleged? Mrs. Rabe testified that she was present at a conversation between deceased and her husband which occurred in July, 1903, and in which she took no part; that deceased proposed that she (Mrs. Drefahl) would give her money to Rabe, if he would keep her, give her a good burial, and pay her funeral expenses, to which he responded that he would. The competency of this evidence is questioned, but, as it did not relate to any communication or transaction between the witness and deceased, it was admissible. Johnson v. Johnson, 52 Iowa, 586, 3 N. W. 661;Erusha v. Tomash, 98 Iowa, 510, 67 N. W. 390. This was corroborated by the testimony of defendant's son, who related that he was at the home of deceased in July, 1903, when she remarked, “Fred, what do you suppose I done?” and upon inquiry explained that she had turned all her money over to his father, for him to support her as long as she lived, and “then what is left is his”; that she had given him the bankbooks and supposed he had the money then; that he was to give her a good burial, and, if he died first, then the witness' sister was to care for her and for so doing was to have the house and lot. According to the witness, this conversation was repeated, in substance, at several different times. A daughter of defendant also testified to a similar conversation with her in September of that year, and to a conversation between deceased and defendant about Christmas, in which the former said, “My son, have you got that money fixed so you can get it and nobody else?” That defendant replied, “In one bank it is all right, but in the other you will have to sign another paper or check,” and she responded, “All right, you bring it, because I want you to have it, and I will have it fixed so you will have it right any way.” That she was willing to do anything so he could get it. The witness disclosed that at about the same time deceased turned to her and said: “If your father should die before I do, I want you to take care of me, and this house and this land shall be yours.” One Merritt testified that, two or three months before her death, in a conversation about sawing her wood, she had told him to saw it, and Mr. Rabe would pay him, and added: Charles Drefahl, a brother of Mrs. Rabe, swore that he called on her the 1st day of the year 1904, when she said: ...
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