Ludington v. Patton

• Decision Date: 20 June 1901
• Citation: 86 N.W. 571,111 Wis. 208
• Parties: LUDINGTON v. PATTON ET AL.
• Court: Wisconsin Supreme Court

111 Wis. 208

86 N.W. 571

LUDINGTON

v.PATTON ET AL.

Supreme Court of Wisconsin.

June 20, 1901.

Syllabus by the Judge.

Harrison Ludington died testate, leaving substantially all his estate, upwards of $1,250,000 (part being real estate under lease with rent reserved, his wife having joined in the lease), to trustees who were also named as executors, in trust for the benefit of his widow, who had two adult children by her former husband, her provision being less than one-fourth in value of her legal rights, and the balance to his six children by a former wife. The will was read immediately after the funeral in the presence of the widow, the trustees, who were sons-in-law of the testator, and the children mentioned except one daughter of the testator. One of such trustees then said the provision for the widow was insufficient, to which she assented. He then announced that the heirs would consult as to making some concessions to the widow, and they all retired for that purpose. Thereafter, on the same day, the trustees, on behalf of the heirs, offered to increase the allowance to the widow, such increase not making the entire provision for her equal to one-half the value of her legal rights. In reliance upon the trustees, as they had good reason to know, to treat her justly, and in the belief, induced by their attitude in the matter, that she was dependent upon the heirs for what she might obtain in excess of the testator's provision for her, that they were all disposed to treat her generously, and that their offer was a liberal allowance for her in view of all her rights, she accepted it. She was then informed that she would be expected to sign the necessary paper to consummate the transaction and a petition for the probate of the will. Subsequently she signed such paper, it being presented by the attorney for the trustees, a person who had for many years acted as attorney for her husband and upon whom she relied, as the trustees had reason to know, to guard her interests in common with the interests of the others. No explanation was made to her of the nature of the paper so as to impress upon her mind its bearing upon her legal rights in the estate. It in terms sold and conveyed all such rights to the trustees in consideration of the allowance agreed to be made to her. The contract was carried out on both sides for over six years. When it was made, the widow was informed by the trustees that the value of the estate was about $1,000,000. It was in fact worth much more than that, and soon after the transaction she knew that fact by public report, but did not know of or appreciate the rights which she had signed away, and did not become informed thereof till shortly before the commencement of this action. The probate of the estate was seasonably completed and a decree regularly entered confirming the title to the property in the trustees upon the trust named in the will as modified by the aforesaid contract. The widow did not form any intent, within the year after the will was presented for probate, or theretofore, to take the provision made for her by law. She did not, during such time, know of her rights in the matter, but was induced to believe, as indicated, that she was dependent upon the favor of the heirs for any addition to the allowance made for her by the will. She commenced an action to rescind the contract, made as stated, on the ground of fraud, without restoring or offering to restore what she had received thereunder, but the complaint indicated her willingness to do equity in the premises. Subsequently she commenced two actions at law against one of the trustees for damages for the alleged fraud, which were discontinued before the action in equity was concluded. The heirs were not materially injured by delay in the commencement of the equitable action. Held:

1. The executors and trustees were trustees for the widow as regards her statutory rights in the estate, and, independent thereof, they occupied a position of trust and confidence towards her.

2. The executors and trustees did not owe the widow any duty to inform her of her legal rights in the estate of her husband or the value thereof, or how to secure the same, so long as they made no effort to extinguish such rights by purchase or otherwise but remained passive in the matter.

3. When they approached the widow to extinguish her legal rights in the estate by purchase, they owed the same duty to her to disclose everything within their knowledge affecting her rights as any trustee owes to his cestui que trust under similar circumstances. They should have fully disclosed to her all the knowledge which they possessed and should not have bought in her interests in the estate to her disadvantage.

4. The statute giving to a widow one year after the filing of the petition for the probate of her husband's will, within which to elect to take the provision out of her husband's estate made for her by law, is a statute of limitations, and when it has fully run against her it extinguishes her statutory widow's rights beyond the power of legal or equitable remedies to relieve her in the absence of fraud entitling her to relief upon the ground of equitable estoppel.

5. If a trustee deals with his cestui que trust to the disadvantage of the latter, such cestui que trust can repudiate the transaction upon discovering the fraud, hold the trustee responsible for damages for the wrong, or charge him upon a constructive trust of any property wrongfully obtained.

6. In all cases where a trustee by contract with his cestui que trust obtains the interest of the latter in the subject of the trust, the transaction is presumed to be fraudulent and void, casting upon the trustee the burden of affirmatively showing, clearly, that the two acted at arm's length in the transaction or that it was to the advantage rather than to the disadvantage of the cestui que trust, and that he was given all the information possessed by the trustee, and that the latter acted in the utmost good faith.

7. The disability of a trustee to deal for his own gain with his cestui que trust in respect to the subject of the trust, extends to any such dealing for the benefit of others.

8. The statute of limitations (section 4222, Rev. St. 1898) commenced to run from the time the widow knew of the fraud constituting the ground of her cause of action or might have known thereof by the exercise of ordinary care.

9. The trustees being chargeable with having created in the mind of the widow the impression that she was dependent upon the heirs for any addition she obtained to the provision made for her by her husband, section 4222, Rev. St. 1898, did not commence to run against her, as to the contract made with the trustees, till she obtained, or by the exercise of ordinary care might have obtained, information as to the extent and nature of her legal rights.

10. The fact that the failure of the widow to take her legal rights grew out of a mistake of law does not militate against the power of equity to grant her relief, since mistakes of law upon the part of a cestui que trust, induced by the trustee, or such mistakes occurring between persons where analogous relations exist, are relievable in equity as readily as mistakes of fact.

11. Mere delay in asserting a right, short of the limitation fixed by statute, does not bar the right in equity.

12. In respect to an action in equity for the rescission of a contract on the ground of fraud, previous restoration or offer to restore what was received thereon is not a condition precedent to the right to commence the same, as in case of an action at law. In equity it is only necessary to show by the complaint a willingness to do equity, and a failure in that regard does not go to the cause of action unless taken advantage of by a special demurrer. A demurrer ore tenus is not sufficient.

13. The doctrine that a person must stand upon his contract or rescind it in toto and restore or offer to restore all he received thereon, so far as strict equity requires, does not apply to an action in equity to rescind a contract on the ground of fraud, except as regards willingness to submit to a complete restoration of the original relations between the parties and the judgment to be entered in the case.

14. An action at law to recover back that which has been paid upon a contract void for fraud, supposes a precedent rescission of the contract by act of the plaintiff; an action in equity to rescind a contract supposes need of equity to effect that end and looks to the decision in the action to accomplish it and to impose such terms of the rescission as may be deemed equitable under all the circumstances.

15. A court of general jurisdiction like the circuit court, has jurisdiction concurrent with the probate court in all matters connected with the settlement of estates. Such jurisdiction is suspended by the jurisdiction of the probate court in the absence of peculiar circumstances rendering the latter jurisdiction inadequate to furnish as complete and effective a remedy as the former.

16. Where a judgment gives to a party to a proceeding in which it was entered an unconscionable advantage, the person aggrieved thereby may, by proceeding seasonably, obtain relief in equity by an action bearing directly upon the party to prevent him from enjoying the fruits of the wrong, such action not affecting the judgment or impeaching its validity in any way.

17. The commencement of an action at law for damages, upon the theory of an existing contract, after the commencement of an action to rescind such contract on the ground of fraud, does not affect the latter action. The commencement of the first action constitutes an irrevocable choice between inconsistent remedies.

18. The trustees and executors, having, by their wrongful treatment of the widow, prevented her from forming an intent to take the provision made for her by law, are chargeable with having fraudulently...