Meserve v. Jordan Marsh Co.

• Decision Date: 06 April 1960
• Citation: 165 N.E.2d 905,340 Mass. 660
• Parties: Robert W. MESERVE, Special Adm'r, v. JORDAN MARSH COMPANY. Charles C. CRAIG et al. v. Robert W. MESERVE et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 905

165 N.E.2d 905

340 Mass. 660

Robert W. MESERVE, Special Adm'r, v. JORDAN MARSH COMPANY.

Charles C. CRAIG et al. v. Robert W. MESERVE et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued March 8, 1960.

Decided April 6, 1960.

Robert W. Meserve, Boston (Jerry M. Brown and Frederick S. Paulsen, Boston, with him), for Meserve.

Philip B. Buzzell, Boston (Charles M. Ewing Boston, with him), for Jordan Marsh Co.

Arthur J. Martin, Boston, for Craig and others, submitted a brief.

Before WILKINS, C. J., and SPALDING, WILLIAMS, COUNIHAN and CUTTER, JJ.

CUTTER, Justice.

In 1951, the Dowling Block, 'a 100% location' in the business section of Malden, was owned by Jewell A. Dowling, except for a portion (Lot A) owned by Dowling as trustee of a trust under his father's will. On June 14, 1951, when Dowling was nearly seventy-five, he executed as trustee and individually a lease to F. N. Joslin Company (Joslin) of the whole block for a term of fifty years at an annual net rental of $35,000. The lessee could terminate the lease unless by July 1, 1952, a Probate Court decree should establish Dowling's authority to lease Lot A. On June 8, 1954, Mr. Meserve, an attorney, was appointed Massachusetts conservator of Dowling's property. On November 26, 1954, he filed a bill in equity against Jordan Marsh Company (Jordan), with which Joslin had been consolidated, to obtain rescission of the lease and other relief on the ground that on June 14, 1951, Dowling was 'mentally incompetent.' After Dowling's death in 1955, Mr. Meserve as special administrator was substituted as plaintiff. The case was tried together with a bill in equity brought by Dowling's two successors (the successor trustees) as trustees seeking rescission of the lease and reconveyance of Lot A to the trustees. Lot A had been conveyed by Dowling as trustee to himself individually on February 21, 1952, by a deed reciting that the consideration was $202,000 'paid.'

The trial judge found that in June, 1951, Dowling 'had the mental capacity to make that particular lease; that he knew and understood * * * [its] contents * * * and was satisfied with it; * * * that he had the mental capacity to negotiate with respect to the lease and to take care of his personal interests and to get what he wanted; that no one took advantage of him; and that there was no undue influence, imposition, or misrepresentation.' In the case brought by the successor trustees, the judge found that 'Dowling was guilty of a breach of trust in paying for Lot A * * * with his personal note * * * that neither Jordan * * * and * * * Joslin * * * nor their attorneys knew of this breach of trust,' but that 'they relied on the statement in the deed that' the $202,000 was paid by Dowling. The judge also found that on June 14, 1951, 'the net rental value of Lot A was' $8,000 a year.

Mr. Meserve has appealed from a final decree dismissing his bill. A final decree was entered upon the successor trustees' bill directing the reconveyance of Lot A to them and awarding them their share of the rent accrued from Dowling's death to January 1, 1959, with interest. It further directed that $8,000 per year, in quarterly instalments, be paid from and after January 1, 1959, to the successor trustees from the rent under the lease, which was not set aside by the decree. From this decree also Mr. Meserve has appealed. The successor trustees have waived their appeal.

The evidence is reported. The scope of our review is that stated in Lowell Bar Ass'n v. Loeb, 315 Mass. 176, 178, 52 N.E.2d 27.

1. The rule as to avoiding transactions because of mental incapacity was stated in Reed v. Mattapan Deposit & Trust Co., 198 Mass. 306, 314, 84 N.E. 469, 471, as follows: '[T]he true test is, was the party whose contract it is sought to avoid, in such a state of insanity at the time as to render him incapable of transacting the business? When this fact is established the contract is voidable * * * and it is no defense * * * that the other party acted fairly and without knowledge of his unsoundness, or of any circumstances which ought to have put him upon inquiry.' In Sutcliffe v. Heatley, 232 Mass. 231, 232-233, 122 N.E. 317, 318, this court set aside the transaction of an alleged incompetent, saying, 'If she could not understand the nature and quality of the transaction or grasp its significance, then it was not the act of a person of sound mind. There may be intellectual weakness not amounting to lack of power to comprehend. But an inability to realize the true purport of the matter in hand is equivalent to mental incapacity.' See Hermanson v. Seppala, 255 Mass. 607, 609-610, 152 N.E. 363; Id., 272 Mass. 197, 200-202, 172 N.E. 87; McNally v. Clare, 281 Mass. 82, 84, 183 N.E. 173; Wodell v. John Hancock Mut. Life Ins. Co., 320 Mass. 1, 3, 67 N.E.2d 469; Kressler v. Flynn, 323 Mass. 610, 611, 83 N.E.2d 876, and cases cited.

2. Mr. Meserve argues that Dowling's incapacity is shown by the 'shocking inadequacy of the consideration received by * * * Dowling under the lease,' by his ineffective efforts at negotiation, by his conduct of other transactions, by medical testimony, and by Dowling's personal and medical history. The evidence has been examined to determine whether the judge's findings were plainly wrong and his conclusions improper, giving them due weight.

In 1934, Dowling was in a hospital because of a spontaneous subarachnoid hemorrhage. In 1940, when he was sixty-four, he suffered a cerebral accident and was hospitalized for twenty-one days. He recovered gradually although, after 1940, he suffered from paralysis of the right side, walked with difficulty, and needed assistance. He showed from then on symptoms of arteriosclerosis and high blood pressure. He became more intensely stubborn, opinionated, and quick tempered. Although he could carry on conversations intelligibly, he became repetitive and talkative, and sometimes forgetful, particularly about recent events. He 'was not as sharp in the * * * years * * * around 1948 to 1952--as he previously had been. He had changed in his dress, in his habits, which a man of * * * normal mental capacity would not do,' in the opinion of his family physician. He continued, however, to participate to some extent in managing certain properties, with the assistance of employees, even during and after the period of the lease negotiations. As the judge found, prior 'to 1940, Dowling was a neat dresser. A few years later he became careless in his dress. He was physically unable to * * * control * * * his bladder, and he began wearing khaki pants which were frequently stained. * * * On some occasions he * * * [relieved himself] in a public street alongside of his car and on several occasions in a chair.'

Dowling's mental deterioration became sufficiently pronounced in 1954 to require the appointment of a receiver of his Florida property and a conservator in Massachusetts. The first time, however, that a physician, who saw him frequently, made a notation that Dowling had 'slipped mentally' was October, 1952. The testimony of two qualified medical expert witnesses revealed conflicting opinions about his mental condition in 1951. The whole testimony thus presented the isue of fact whether Dowling had so deteriorated by June 14, 1951, as to render him incapable of understanding 'the nature and quality of the transaction' in contrast with 'intellectual weakness not amounting to lack of power to comprehend.' See Sutcliffe v. Heatley, 232 Mass. 231, 232, 122 N.E. 317, 318, supra.

The judge found that 'Dowling was a wealthy man and * * * a liberal spender. He * * * spent considerable money in maintaining two boats. He had no one dependent upon him. He never had any children. In * * * 1951, his wife owned' assets worth more than $147,000, and had a personal income from securities, before taxes, of $11,521. In addition to the Malden property, Dowling owned real estate in Miami (gross rental, $53,000) and in Allston (gross rental, $28,000). These findings were justified, but there was also evidence the Dowling maintained the two boats, one at least in bad shape, principally because it gave him 'pleasure to see them tied up at the dock.'

After making the 1951 lease he had to borrow $30,000 from a bank. Some of his real estate was substantially mortgaged. His liquid cash position was poor. His expenditures rose and his income after taxes declined. By the end of 1952 he had also borrowed $20,457.65 from Mrs. Dowling and owed $22,626.91 in delinquent taxes. Mrs. Dowling thought her husband was 'in an awful condition' and 'was complaining bitterly * * * that he should have a conservator,' but the evidence indicated that he and Mrs. Dowling had led a somewhat unhappy relationship for a considerable period. She was declared incompetent herself later.

With respect to the lease negotiations the judge found the following facts among others. Joslin was owned by Allied Stores Corporation (Allied). It had occupied part of the block as a department store under two successive leases, the second for a term of ten years expiring in 1953. Early in 1951, Puckett, chief executive of Allied, told Brett, Joslin's manager, that 'a long-term lease should be negotiated or a new location * * * obtained, or *...