Equitable Trust Co. v. Gallagher

• Decision Date: 05 February 1954
• Parties: EQUITABLE TRUST CO. v. GALLAGHER.
• Court: United States State Supreme Court of Delaware

Page 538

102 A.2d 538

34 Del.Ch. 249

EQUITABLE TRUST CO. v. GALLAGHER.

Supreme Court of Delaware.

Feb. 5, 1954.

Stephen E. Hamilton, Jr., and H. Albert Young, Wilmington, for appellant.

Joseph Donald Craven, Wilmington, and, on the reargument, Edwin D. Steel, Jr. (of Morris, Steel, Nichols & Arsht), Wilmington, for appellee.

David F. Anderson (of Berl, Potter and Anderson), Wilmington, for J. Harry Gallagher, Hugh F. Gallagher, Jr., and Donald J. Gallagher, amici curiae in respect to the reargument.

SOUTHERLAND, Chief Justice, and WOLCOTT and TUNNELL, Justices, sitting.

TUNNELL, Justice.

This is an opinion following reargument. Our former opinion, reported in 99 A.2d 490, contains a statement of the facts of the case and a review of the meandering course of this litigation, so we shall not repeat them here.

Defendant's several contentions are divisible into three principal classifications: (1), that our decision recognizes as consideration something which the record does not factually establish and which could not be established without violating the parol evidence rule; (2), that the opinion overrides certain adequately supported findings of fact of the lower court and the 'law of the case' as previously settled in this court; and (3), that it accords legal force to an illegal contract. The most thorough manner in which these matters have been presented on reargument deserves their consideration in detail.

It is necessary first to re-examine our vital factual finding that Miss Kane orally obligated herself to surrender her life interest in 19 shares of Union Park Motors stock, releasing defendant from his trusteeship, in exchange for an absolute title to the same quantity of shares.

If we had no thoughts in the matter in addition to those we formerly expressed, it would, nevertheless, be quite impossible for us to escape the conclusion that the 1946 transaction was an attempted contractual substitution for the 1941 arrangement. The defendant's admissions--in the pleadings and deposition--and the statements of his trial counsel on the record preclude any other result and, since all these were quoted in the first opinion, there is no need to repeat them here.

But in our previous opinion we left much unsaid. Indeed, since we have restudied the record and reheard the arguments, we are now convinced that we were wrong in holding as we did that Miss Kane's promise was only oral. It was at least oral, but it may very well have been a part of the paperwriting, and there is no good reason why we should have excluded that possibility.

This instrument was drawn by an attorney. It was to be, and was, signed by Miss Kane. Why, if she promised nothing? The draftsman of the contract was representing the defendant, and since the obligations of defendant were spelled out in detail, and executed under seal, does it not seem strange that the paperwriting would altogether omit a statement of the obligation of the other party? Further, the draftsman was the same individual who filed the defendant's answer, in which it is expressly acknowledged that the 1946 instrument was 'meant to take the place of' the 1941 agreement.

By far the most eloquent fact, however, is defendant's course of conduct. Some time after Miss Kane's death, he got possession of all existing copies of this agreement and, although he denies the testimony that her mother vainly tried to persuade him to return Miss Kane's copy, he did not in fact return it, but proceeded to destroy all copies. He knew that the Kanes were under the impression that it conferred rights upon Miss Kane's estate. His explanation was that he destroyed these papers because he himself knew that the agreement was not enforceable after her death, and that he did not do so until after he had obtained legal advice as to its binding force, and even then not until someone had told him--falsely as it turned out--that the Equitable Trust Company was not going to serve as executor. In such a situation, of course, the normal reaction would have been to preserve the evidence in order to establish the supposed defense. The explanation--wholly lacking in logic--is almost as illuminating as the act of destruction itself. Both strongly suggest that the agreement was binding.

It is the duty of a court, in such a case of wilful destruction of evidence, to adopt a view of the facts as unfavorable to the wrongdoer as the known circumstances will reasonably admit. The maxim is that everything will be presumed against the despoiler. Armory v. Delamirie, 1 Strange 505, 93 Eng.Rep. 664; Hudson v. Hudson, 287 Ill. 286, 122 N.E. 497; 54 C.J.S., Lost Instruments, § 13, page 816. Wigmore on Evidence, 3d Ed., Vol. II, Sec. 291, at page 186, indicates preference for a rule of the strongest import:

'The truth is that there is no reason why the utmost inference logically possible should not be allowable, namely, that the contents of the document (when desired by the opponent) are what he alleges them to be, or (when naturally a part of the possessor's case) are not what he alleges them to be.'

This attitude of the law is in truth no more than the application of a rule of common sense, based upon the characteristics normally found in human nature.

We find that we need not, and we do not, resolve the question as to whether Miss Kane's promise was oral or written. But these strong inferences that it was actually in the writing, as well as the presumption of the law in a case of spoliation, perforce support our finding that it was somewhere in the transaction. Of that we can have no doubt, and to that extent our former conclusion is reaffirmed.

The more serious question is whether or not the law will enforce that which the parties undoubtedly sought to do, but which the defendant, upon Miss Kane's death, sought to undo.

Attacking the legality of the consideration, defendant first invokes the parol evidence rule. He points out that in our former opinion we flatly stated that Chancellor Harrington's reconstructed paraphrase of the instrument was 'couched in donative language' and set forth 'no supporting consideration'; yet, he says, we then proceeded to rely upon extraneous evidence that there was consideration. What the court did, therefore, says defendant, was to change an unenforceable gift into a binding bargain. Acknowledging the propriety of admitting parol evidence to amplify a recital of consideration, defendant says, however, that it cannot be done in any case where the result would be to 'vary or contradict the legal effect of the deed', citing, Florida Moss Products Co. v. City of Leesburg, 93 Fla. 656, 112 So. 572, 574; Wood v. Moriarty, 15 R.I. 518, 9 A. 427, 428; and like cases. Since we have stopped short of a finding that Miss Kane's promise was actually in the paperwriting, this argument, therefore, commands attention.

There can be no doubt of the force and value of the parol evidence rule in those cases to which it applies. It operates to prevent a party from reducing the fee simple plainly described in a deed to a defeasible fee ¹; to prevent proof that the scope of the land conveyed was less than that clearly called for in the deed ²; to prevent a showing that an agreement was not to be enforced against one of the signatories ³; or otherwise to prevent a person from talking the substance out of what he has put into writing.

Experience, however, produces a multitude of instances in which, without a relaxation of the parol evidence rule to let in accompanying oral covenants, perfectly sound agreements, entered into by both parties in good faith, would be defeated by a legal technicality. Hence, from the very inception of the practice of reporting decisions of the courts, it has consistently been held that parol evidence can be let in to prove that there was consideration for a deed, even though the deed may contain no mention of any consideration, and consequently may appear, so far as the text of the instrument is concerned, to effect a gift. Negus v. Reynal, 1 Keb. 12, 83 Eng.Rep. 780; Henry Harpur's Case, 11 Co. 24, 77 Eng.Rep. 1173 (1176); Hartley's Lessee v. McAnulty, 4 Yeates, Pa. 95, 2 Am.Dec. 396; Greenleaf on Evidence, 13th Ed., Vol. I, Sec. 304, p. 363. Nor has this wholesome principle lost any of its vigor with the passing of the years. See Restatement of Contracts, Sec. 240(2).

This is just such a case unless, as defendant urges, the statement that the stock 'is given' or 'was being given' alone bars the conclusion that the relationship was contractual in nature.

Putting aside any question as to whether this terse reconstruction of a lawyer's language, captured from the recollection of lay witnesses, is any proper basis for semantics, and assuming, arguendo, that the verb 'give' was actually used in the original paper, still no real contradiction is involved. 'How much will you give me?' in the idiom of the day, is frequently the precise equivalent of 'How much will you pay me?' and the entirely unexplained choice between these two expressions is no fit criterion upon which to determine important legal consequences.

We find, therefore, that our decision does not violate the parol evidence rule.

Defendant next says that because Miss Kane signed this paper in September and never either 'performed or tendered performance of her promise' prior to her death in the January following, and because her death, of course, destroyed the value of the life interest she was to surrender, therefore, there was a total failure of consideration, and defendant's obligation expired when Miss Kane died. He cites Restatement of Contracts, Secs. 281, 282, and Merritt & Co. v. Layton, 1 Boyce 212, 75 A. 795.

If we were to follow defendant's example and place emphasis upon the precise phraseology of the reconstructed form of the contract, this would be a case of the voluntary assumption of risk immediately upon execution of the contract. The statement that Margaret C. Kane 'is...