Gibbins v. McLaughlin

• Decision Date: 12 December 1957
• Docket Number: No. 8531,8531
• Citation: 319 P.2d 189,79 Idaho 410
• Parties: Melvin E. GIBBINS, Vernice Theriault Cromer, Annabelle Fitzgerald and Effie May Glenn, Individually, and as Heirs of Robert E. Andrews, Deceased, Plaintiffs- Appellants, v. Gladys McLAUGHLIN and Robert McLaughlin, wife and husband, individually, and Gladys McLaughlin, as Administratrix of the Estate of Robert E. Andrews, Deceased, Defendants-Respondents.
• Court: Idaho Supreme Court

Page 189

319 P.2d 189

79 Idaho 410

Melvin E. GIBBINS, Vernice Theriault Cromer, Annabelle Fitzgerald and Effie May Glenn, Individually, and as Heirs of Robert E. Andrews, Deceased, Plaintiffs- Appellants, v. Gladys McLAUGHLIN and Robert McLaughlin, wife and husband, individually, and Gladys McLaughlin, as Administratrix of the Estate of Robert E. Andrews, Deceased, Defendants-Respondents.

No. 8531.

Supreme Court of Idaho.

Dec. 12, 1957.

Leslie McCarthy, Lewiston, for appellants.

J. H. Felton, Lewiston, for respondents.

SMITH, Justice.

Appellants are the legal heirs, surviving brother and sisters of the half blood, and and respondent Gladys McLaughlin is a surviving first cousin, of decedent Robert E. Andrews, who died March 25, 1947. The probate court of Idaho County, April 12, 1947, appointed respondent Gladys McLaughlin administratrix of decedent Andrews' estate.

Decedent's estate consisted of a relatively small amount of personalty, and about two thousand acres of meadow, grazing and timber lands some situate in the vicinity of Joseph Plains and some on the slopes of the Salmon River canyon in Idaho County. Appraisers appraised the real property at the value of $8,780 and the personalty at $1,385, totaling $10,165.

While the estate was in process of probate, appellant heirs and their respective spouses, executed and placed with The First National Bank of Cottonwood, hereinafter called the Bank, for delivery, their warranty deeds, dated July 24, 1947, conveying the real property to Minnie L. and James O. Maher, wife and husband. The Mahers also executed and placed with the Bank for delivery their warranty deed likewise dated July 24, 1947, conveying the real property to respondent Gladys McLaughlin and her husband. Gladys McLaughlin is the niece of Minnie L. Maher.

The decree of distribution of decedent's estate entered September 8, 1947, recites that appellant heirs had disposed of their interests in the property of decedent's estate, both real and personal, for the inventoried value of $10,165, plus a small amount of after discovered property, to Minnie L. Maher and James O. Maher, wife and husband, as shown by the referred to warranty deeds and the administratrix' account, exhibited to the probate court. The court by such decree distributed the property of the estate, remaining after payment of debts and expenses of administration, i. e., $5,549.26, share and share alike to appellant heirs. The court then approved the heirs' conveyance and transfer of the real and personal property and distributed it share and share alike to Minnie L. and James O. Maher, husband and wife, as purchasers from the heirs. The court then discharged respondent from her office as administratrix by its decree of discharge entered September 8, 1947. The decree of distribution was filed for record September 9, 1947, and duly recorded in the office of the recorder of Idaho County.

Each heir received through the Bank a distributive share of decedent's estate. The Bank then caused the warranty deeds to be filed for record September 9, 1947, and they were duly recorded in the office of the recorder of Idaho County.

November 1, 1948, respondents, McLaughlin and wife, executed their deed granting and conveying to Wm. Berklund Forest Products all merchantable Ponderosa timber growing in and upon said real property in consideration of the principal sum of $5,110 to be paid in installments over a period of five years with interest on deferred payments. That deed was filed for record February 1, 1951, and duly recorded in the office of the recorder of Idaho County.

During 1951 respondent Robert McLaughlin conveyed said lands to respondent Gladys McLaughlin pursuant to a marriage settlement and proceedings culminating in their divorce. Respondent Gladys McLaughlin continued in possession of the lands claiming the same as her sole and separate property.

Appellants filed their complaint in this action July 19, 1956. They filed their amended complaint October 2, 1956. They allege that all the deeds of conveyance were and are fraudulent as a matter of law; also fraudulent as a matter of fact since executed at the request of respondent administratrix without full disclosure on her part of the extent and value of the property of the estate, of which appellants had neither knowledge nor ability to make inquiry, and because of inadequacy of the consideration paid.

Appellants allege discovery of fraud in June 1956 and institution of the action upon respondents' refusal of settlement demands. Appellants tender the amounts they received for the property or in the alternative allege their willingness to comply with terms as may be imposed by the court.

Appellants seek cancellation of the deeds and delivery of the property to them; also an accounting by respondents and payment of reasonable rental during their occupancy of the real property.

Respondents, each by separate answer, denied the allegations of the complaint and pleaded in bar the statute of limitations. Respondent Gladys McLaughlin pleaded laches of appellants; also her ownership of the property free and clear of any interest of appellants therein, her adverse possession and that of her predecessors in title, and payment of taxes on the property, for more than five years.

The trial court at the conclusion of the trial entered findings of fact and conclusions of law, and by its decree denied any relief to appellants, quieted title to the real property in respondent Gladys McLaughlin and dismissed the action with prejudice. Appellants perfected an appeal therefrom.

Appellants assign error of the trial court in decreeing that appellants have no title or interest in the real property of which Robert E. Andrews died seized; in not setting over the property to appellants, and in not requiring an accounting by respondents.

The issues narrow to the following principal questions. Is the transaction of purchase of the interests of appellant heirs in the real property, by respondent administratrix and her husband, through the interposition of a third party, void or voidable? Did respondents practice fraud by way of false representations to, or concealment from appellant heirs? Was a fair and adequate consideration paid for the real property? Does laches on the part of appellants bar the action?

Appellants assert that on statutory grounds alone the transaction is void, citing I.C. § 15-742, which provides: 'No executor or administrator must directly or indirectly, purchase any property of the estate he represents, nor must he be interested in any sale.'

In Burns v. Skogstad, 69 Idaho 227, 235, 206 P.2d 765, 769, this court, regarding such section of the statute, stated:

'The office of administrator of an estate being of a highly fiduciary nature, this statute may be considered as merely declaratory of the fundamental principle of trusteeship, which inhibits the trustee from dealing with the subject-matter of the trust in any way which may inure to his personal profit.'

The principle to be applied where a trustee purchases the trust property from the beneficiary, appears settled by the overwhelming weight of authority. It is stated in 3 Pomeroy on Equity Jurisprudence, sec. 958d, p. 814 (5th Ed.1941), to this effect, that a purchase by a trustee from his cestui que trust is not void, but is a voidable transaction subject to being set aside on behalf of the beneficiary, provided a want of equity and fair dealing appears and provided the beneficiary acts to avoid the transaction with reasonable promptness. In re Estate of Blackinton, 29 Idaho 310, 328, 158 P. 492, contains obiter expressions of ambiguous import on the subject, whereas Burns v. Skogstad, supra, recognizes such rule as applicable under the statutory prohibition of I.C.A. § 15-745 now I.C. § 15-742. See also Golson v. Dunlap, 73 Cal. 157, 14 P. 576; Haight v. Pearson, 11 Utah 51, 39 P. 479; Mills v. Mills, C.C.Or.1893, 57 F. 873, 878; Veeder v. McKinley-Lanning Loan & Trust Co., 61 Neb. 892, 86 N.W. 982; Littell v. Hackley, 6 Cir., 1903, 126 F. 309; French v. Phelps, 20 Cal.App. 101, 128 P.772; Broaddus v. Broaddus, 144 Va. 727, 130 S.E. 794; In re Hoya's Will, 173 Wis. 196, 180 N.W. 940; Johnson v. Johnson, 85 Okl. 274, 206 P. 205; Plant v. Schrock, 102 Okl. 97, 227 P. 439; Norton v. Fuller, 68 Utah 524, 251 P. 29; Dees v. Dees, 169 Okl. 598, 38 P.2d 508; Dorsey v. Green, 202 Ga. 655, 44 S.E.2d 377; Owens v. Owens, 196 Va. 966, 86 S.E.2d 181; Nelson v. Gossage, 152 Kan. 805, 107 P.2d 682; First Nat. Bank of Portland v. Connolly, 172 Or. 434, 138 P.2d 613, 143 P.2d 243; Eads v. Brinegar, 306 Ky. 343, 207 S.W.2d 772; In re Timken's Estate, 177 Kan. 545, 280 P.2d 561; Black on Recission and Cancellation of Contracts, 2nd Ed., Vol. 1, sec. 48; Perry on Trusts, 7th Ed., Vol. 1, sec. 205; Restatement of the Law of Trusts, Vol. 1, sec. 170; 33 C.J.S. Executors and Administrators § 240, p. 1246, and § 268, p. 1283; 21 Am.Jur., Executors and Administrators, sec. 626, p. 733; Annotations, L.R.A.1918B, p. 26; Annotation, 111 A.L.R., p. 1362; Compare Hammond v. Hopkins, 143 U.S. 224, 12 S.Ct. 418, 36 L.Ed. 134, with the earlier case upon which appellants rely of Michoud v. Girod, 4 How. 503, 45 U.S. 503, 11 L.Ed. 1076. We therefore conclude that the sale by appellant heirs of their distributive interests in decedent's real property, and purchase thereof by respondent administratrix and her husband is not a void transaction as a matter of law.

The evidence appears undisputed on the point that respondents did not make any actual misrepresentation relative to the property of decedent's estate.

The main question appears to be whether respondents were guilty of fraudulent concealment of the extent of decedent's lands situate on Joseph Plains, i. e., the Eller place and lands in the immediate vicinity, comprising some 400 acres of meadow and timber lands which appear to have been acquired by Robert E. Andrews, independent of...