McFarland v. Bishop

• Decision Date: 02 June 1920
• Parties: BATES H. McFARLAND and PAUL V. JANIS, Trustees for HENRY B. GRAHAM and GEORGINE M. GRAHAM, Appellants, v. JOHN E. BISHOP and AMERICAN TRUST COMPANY, Trustees for HENRY B. GRAHAM, DOROTHY M. GRAHAM, et al
• Court: Missouri Supreme Court

222 S.W. 143

282 Mo. 534

BATES H. McFARLAND and PAUL V. JANIS, Trustees for HENRY B. GRAHAM and GEORGINE M. GRAHAM, Appellants, v. JOHN E. BISHOP and AMERICAN TRUST COMPANY, Trustees for HENRY B. GRAHAM, DOROTHY M. GRAHAM, et al

Supreme Court of Missouri, First Division

June 2, 1920

Appeal from St. Louis City Circuit Court. -- Hon. Wm. T. Jones Judge.

Affirmed.

Koerner Fahey & Young and Jourdan, Rassieur & Pierce for appellants.

(1) The instrument of May 23, 1916, is void as to creditors and purchasers under the provisions of Section 2880, Revised Statutes of Missouri, 1909. Jamison v. Mississippi Valley Trust Co., 207 S.W. 788; Bank v. Watkins, 126 Tenn. 453; Nolan v. Nolan, 218 Pa. 140; McIlvaine v. Smith, 42 Mo. 58. (a) Such conveyances are void as to purchasers whether with or without notice. Lewin on Trust (8 Ed.), p. 75, sec. 20; Underhill's Law of Trust and Trustees (7 Ed.), pp. 114, 115. (b) Such conveyances are void as to purchasers whether they are fraudulent or not. Jamison v. Mississippi Valley Trust Co., 207 S.W. 788; Robinson v. Robards, 15 Mo 466; Brooks v. Wimer, 20 Mo. 503; Walter v. Wimer, 24 Mo. 63. (c) The interests of Graham's children under the instrument of May 23rd, are entirely contingent, just as were the interests of the children of Bell in the case of Jamison v. Mississippi Valley Trust Co., 207 S.W. 790. They are contingent because the corpus of the estate is not reserved to the children, but may be expended by the trustees for Graham, and for his creditors. They are contingent because after Graham's death the trustees are to pay the children only such sums, as in the judgment of the trustees, may be necessary until the children reach the age of twenty-five years. They are contingent on each child of Graham surviving his father and reaching the age of twenty-five years. Emerson v. Hughes, 110 Mo. 627; Godman v. Simmons, 113 Mo. 122; Buxton v. Kroeger, 219 Mo. 224; Eckle v. Ryland, 256 Mo. 424; Emison v. Whittlesey, 55 Mo. 258; DeLassus v. Gatewood, 71 Mo. 379; Warne v. Sorge, 258 Mo. 171. A vested remainder may be disposed of by sale during life or by will, as the interest of the children under this instrument obviously could not. Dougherty v. Thompson, 67 N.Y.S. 200; Oldaker v. Spikey, 210 S.W. 61. (2) The plaintiffs are purchasers in the right of Mrs. Graham and the subsequent creditors. Chilvers v. Rice, 196 Ill. 80; Bank of Commerce v. Chambers, 96 Mo. 459. (3) The court erred in ruling that the declarations of Graham made before and after the instrument of May 23rd was signed should be excluded as "self-serving." The court allowed the defendants to introduce evidence as to supposed conversations by Graham about this time, but refused to allow the plaintiffs to show by various witnesses conversations between such witnesses and Graham in which Graham stated his plans and purposes before the instrument was signed, and in which he stated, after the instrument was signed, that he had made a temporary conveyance in trust. Such declarations were clearly competent. They do not violate the hearsay rule. They have rational probative value and are not excluded by any rule of evidence. 1 Wigmore on Evidence, p. 31, secs. 9, 10; 16 Cyc. 1146, 1176, 1183, 1184; 3 Wigmore on Evidence, secs. 1739, 1790; Mutual Life Ins. Co. v. Hillmon, 145 U.S. 295; State v. Hayward, 62 Minn. 474; Commonwealth v. Trefethen, 157 Mass. 180; Wilson v. State, 33 Ark. 557; Mooney v. Olsom, 22 Kans. 69; Schailer v. Bumstead, 99 Mass. 112; Cross v. Black, 9 Gill and J. 206; Rogers v. Wilson, 12 Amer. Dig. 62; Kyle v. Craig, 125 Cal. 107; State v. Abbott, 8 W.Va. 745; Thomas v. Wheeler, 47 Mo. 363; Allen v. Morris, 244 Mo. 357; Heynbrock v. Harmann, 256 Mo. 21; Minor v. Burton, 228 Mo. 558. An instrument signed under a mistake as to its contents is void. Essex v. Day, 52 Conn. 483; Smith v. Patterson, 53 Mo.App. 66; 16 Cyc. 68; Bleyer v. Bleyer, 219 Mo. 99; Raffel v. Safe Deposit Co., 100 Md. 141; Garnsey v. Munday, 24 N.J.Eq. 243. (4) An instrument that is signed by one who is suffering from the lond-continued excessive use of alcohol to such an extent that he does not understand the instrument is void. Longhead v. Commission Co., 64 Mo.App. 559; Rogers v. Warren, 75 Mo.App. 271; Mathis v. O'Brien, 137 Ky. 651; Hutcheson v. Tindall, 3 N. Y. Eq. 368; Freeman v. Dwiggin, 55 N.C. 162; Conant v. Jackson, 16 Vt. 335; Marshall v. Billingsly, 7 Ind. 250; Morrison v. McLeod, 22 N.C. 221; Calloway v. Witherspoon, 40 N.C. 128; Scoville v. Barrey, 40 Vt. 288; Hotchkiss v. Fortson, 15 Tenn. 67; Weeks v. Wortman, 84 Neb. 217. (5) Any conveyance made by a client to his attorney from which the attorney derives a profit is voidable and is open to the suspicion of fraud. Underhill's Law of Trust and Trustees (7 Ed.), p. 98; Thompson v. Sterns, 195 S.W. 43; Thomas v. Turner, 87 Va. 1; Tyrrell v. Bank of London, 10 H. L. Cas. 44. (a) An attorney owes a duty of absolute loyalty to his client. If he allows his mind to be subjected to the influence of a secret profit, the client is not bound. Especially is this true where the conveyance is to the attorney in trust and without consideration. Guinan v. Donnell, 201 Mo. 292; Witte v. Storm, 236 Mo. 470; Horner v. Spencer, 95 P. 575; Donelvan v. Compian, 20 C. C. A. 30; Montgomery v. Hundley, 205 Mo. 138, 11 L. R. A. (N. S.) 122; Bucher v. Hohl, 199 Mo. 327; Grumley v. Webb, 40 Mo. 444. (b) A voluntary settlement of all of the grantor's property without power of revocation is open to suspicion of undue advantage taken of the settler. Sims v. Brown, 252 Mo. 69; Perry on Trusts (6 Ed.), sec. 104; Everett v. Everett, L. R. 10 Eq. 405; Coutts v. Acworth, L. R. A. Eq. 588; Predieaus v. Lonsdale, 1. De G. J. & S. 433; Underhill's Law of Trusts and Trustees (7 Ed.), p. 93. (c) Donations made between parties occupying a confidential relation will be watched with great jealously by the courts. Every presumption is against them. The burden of proof in such cases is on the grantee. Yosti v. Laughram, 49 Mo. 595; Bradshaw v. Yates, 67 Mo. 221.

Wilfley, McIntyre, Nardin & Nelson for respondents.

(1) Section 2880, R. S., 1909, is not applicable to the trust agreement of May 23, 1916. The statute applies only to conveyances to the use of the grantor. (a) The trust created by the instrument of May 23rd was for the benefit of Graham's creditors, and for the benefit of Graham's children, and to preserve Graham's estate. (b) Section 2880, applies only to voluntary conveyances and does not affect conveyances founded upon a valuable consideration. Eaton's Admr. v. Perry, 29 Mo. 96; Robinson v. Robards, 15 Mo. 459; 18 C. J. pp. 163 and 164; Hutsell v. Crewse, 138 Mo. 1. (c) The instrument created a vested remainder in Graham's children (Dorothy, Marjorie and Henry B.), subject to its opening to let in any after-born children. Waddell v. Waddell, 99 Mo. 338; Heady v. Hollman, 251 Mo. 632; Jones v. Waters, 17 Mo. 589; Tindle v. Tindle, 167 Mo. 225; Tiedeman, Real Property (3 Ed.), sec. 302; Emerson v. Hughes, 110 Mo. 627; 18 C. J. p. 306; Gates v. Siebert, 157 Mo. 254; Warne v. Sorge, 258 Mo. 162; 13 Cyc. 647; Buxton v. Kroeger, 219 Mo. 261; Doemer v. Doemer, 161 Mo. 399. (d) A conveyance in trust containing no power of revocation, but reserving to the grantor or settler a life use of the property with a vested remainder over to certain persons or a class (as the settler's children) is valid, even though his creditors may in a proper proceeding reach the reserved life estate. See case note, 12 L. R. A. (N. S.) p. 370; Brown v. McGill, 87 Md. 161, 36 L. R. A. 806; Wentzell v. Powder, 100 Md. 36; Pacific Natl. Bank v. Windrum, 133 Mass. 175; Schench v. Barnes, 156 N.Y. 316, 45 L. R. A. 395; Sloane v. Birdsall, 58 Hun, 317. (2) The instrument of May 23, 1916, is valid, although Graham at the time may have been addicted to the use of alcohol. To render an instrument void on the ground of excessive use of alcohol it must clearly appear that there has been a total dethronement of the reason and understanding at the time the instrument is signed. 14 Cyc. 1105; Pomeroy's Equity Jurisprudence, sec. 949; 6 R. C. L. p. 598; Right v. Fisher, 65 Mich. 275; Case Threshing Machine Co. v. Myers, 9 L. R. A. (N. S.) 970; Eaton's Administrator v. Perry, 29 Mo. 96; Conant v. Jackson, 16 Vt. 335; Martin v. Harsh, 13 L. R. A. (N. S.) 1000, 231 Ill. 384; Saum v. Talbot, 152 Cal. 142; Longhead v. Comm. Co., 64 Mo.App. 559; Cavender v. Waddingham, 5 Mo.App. 465; Rodgers v. Powers, 75 Mo.App. 271; Cutter v. Zollinger, 117 Mo. 101; Masterson v. Sheehan, 186 S.W. 527. (3) At the time he executed the trust agreement of May 23, 1916, Graham was fully advised as to the contents of the instrument and its legal effect, gave his free consent thereto after he had personally read the same and it had been fully explained to him by Mr. Bishop. After Graham had had the benefit of independant counsel in the preparation and as to the meaning of the instrument, he executed it free from fraud, deceit and undue influence. Thornton on Attorneys at Law, p. 277; Bordie v. Ward, 151 Ala. 204; Donahue v. Chicago Cricket Club, 177 Ill. 351; Kidd v. Williams, 56 L. R. A. 880; President Bowdoin College v. Merrett, 75 Feb. 508. (4) The allowance by the trial court to the attorneys of the trustees was proper and reasonable. Pomeroy, sec. 1085; Perry on Trusts (5 Ed.), sec. 910; Coffman v. Gates, 110 Mo.App. 488; Albert v. Sanford, 201 Mo. 133; Denvir v. Park, 169 Mo.App. 350; Jacobs v. Jacobs, 99 Mo. 436.

SMALL, C. Brown and Ragland, CC., concur. Woodson, J., absent.

OPINION

SMALL, C. --

Appeal from the Circuit Court of the City of St. Louis. On May 24, 1916, Henry B. Graham of that city, then about 41 years of age, signed and delivered an agreement dated May 23, 1916, which is...