Phalen v. United States Trust Co. of New York

• Decision Date: 09 October 1906
• Citation: 186 N.Y. 178,78 N.E. 943
• Parties: PHALEN v. UNITED STATES TRUST CO. OF NEW YORK et al.
• Court: New York Court of Appeals Court of Appeals

186 N.Y. 178

78 N.E. 943

PHALEN

v.UNITED STATES TRUST CO. OF NEW YORK et al.

Court of Appeals of New York.

Oct. 9, 1906.

Appeal from Supreme Court, Appellate Division, First Department.

Action for specific performance by Charles James Phalen against the United States Trust Company of New York, trustee under the will of James Phalen, and others. From an order of the Appellate Division (91 N. Y. Supp. 537), sustaining a demurrer to the complaint, which had been overruled at Special Term (89 N. Y. Supp. 699), plaintiff appeals. Reversed, with leave to defendant to withdraw demurrer and file answer.

This action was brought by the plaintiff, Charles James Phalen, to enforce specific performance of formal marriage articles entered into in the city of Paris, France, on August 7, 1873, in contemplation of the plaintiff's marriage to Julia de Zakrevsky, the daughter of a Russian nobleman. The parties to such articles were the plaintiff, his father and mother, his intended bride, and her father. His father, the testator, James Phalen, covenanted and agreed in such articles, so far as material to the questions presented on this appeal, to make no distinction between his children in the distribution of his estate by will. The marriage contemplated by the articles took place a few days after their execution. The plaintiff's father died in 1887. He left a will, dated May 15, 1882, whereby he carried out his agreements contained in the marriage articles. He subsequently executed various codicils thereto, none of which conflicted with the provisions of the articles, except the seventh and last. By that codicil the testator directed that the portion of his residuary estate which he had bequeathed to the plaintiff absolutely should be held in trust, the income thereof to be paid to him during his life, and upon his death the principal was to go to his heirs at law. The testator had, however, given corresponding portions of his residuary estate to his other children absolutely. The will and codicil were thereafter admitted to probate. An accounting was had by the executors, upon which the plaintiff duly appeared and interposed objections, but subsequently withdrew them. A final decree was thereafter entered distributing the estate in accordance with the directions contained in the will and codicils and not according to the marriage articles. The foregoing are, substantially, the material facts set forth in the complaint. The defendant trust company, as trustee under the will of the testator, interposed a demurrer to the complaint upon the ground, among others, that it did not set forth facts sufficient to constitute a cause of action. The demurrer was overruled at the Special Term, but sustained by the Appellate Division.

O'Brien, Haight, and Vann, JJ., dissenting.Alexander R. Gulick and Frederick S. Woodruff, for appellant.

Edward W. Sheldon, for respondent.

WERNER, J. (after stating the facts).

We think the complaint sets forth a good cause of action in equity. To hold otherwise we would have to overturn principles of law and equity that have been recognized and established for centuries. Antenuptial contracts, whereby the parents of the parties about to marry have agreed to settle property upon one or both of the spouses, either upon the performance of the marriage ceremony or by testamentary devise or bequest, are of such frequent occurrence, especially in England, that they form a distinct class in the body of our law. For the purposes of this discussion we may assume that this action could not be maintained at law, although there is very respectable authority to the contrary in England, where actions at law have been maintained even upon informal agreements of this nature. Shadwell v. Shadwell, 30 L. J. C. P. 145; 9 C. B. (N. S) 159; Douglas v. Vincent, 2 Vernon, 201. One of the very purposes of equity is to aid where the law fails. In the determination of this appeal it should be borne in mind that a court of equity will take into consideration the facts and circumstances appearing when the case is tried. If it should then appear that the plaintiff's habits are such as to endanger the safety of the fund which he claims, and that its transmission to him might deprive his wife and children of proper means of support, or if for any other good reason a court of equity might deem it unfair, inequitable, or unjust that specific performance of the contract in suit should be decreed, a wise judicial discretion would, of course, be interposed to withhold a decree, the effect of which would be to defeat the very object for which the contract was made. A court of equity can always mold its decrees so as to measure out justice to all concerned, and the question whether specific performance will or will not be decreed in a given case is always addressed, in the first instance, to the sound judicial diseretion of the court whose aid is invoked. Seymour v. De Lancey, 6 Johns. Ch. 222;Margraf v. Muir, 57 N. Y. 155;Day v. Hunt, 112 N. Y. 191, 19 N. E. 414;Conger v. N. Y., W. S. & B. R. R. CO., 120 N. Y. 29, 23 N. E. 983;Stokes v Stokes, 155 N. Y. 590, 50 N. E. 342. And it is usually a question that must be decided in the light of the facts and circumstances existing at the time of the trial, so that it can rarely be disposed of upon a demurrer to a complaint.

It is suggested that, if we should give effect to the antenuptial contract formally drawn up and signed by the plaintiff and all other parties in interest, we would be treating it as a testamentary instrument which the plaintiff is, in some unexplained way, precluded from enforcing because he interposed no objections to the probate of his father's will. We think there is no force in this contention. Such agreements have been upheld for hundreds of years, although their ultimate effect is usually to change the current of attempted testamentary disposition of estates. The direct, and, indeed, the only, purpose of this agreement, plainly expressed, was to secure to the plaintiff an equal share with his sisters in the distribution of his father's estate. That was the end in view, and equity, if no good reason intervenes, will give effect to the expressed intention. The principle upon which such agreements are sustained was stated by Lord Camden as early as the year 1769, in Durfour v. Ferraro, Hargrave's Jurid. Arg. 304, and it was not then new. That was a case of mutual wills, in which the learned jurist said (page 309): ‘Though a will is always revocable, and the last must always be the testator's will, yet a man may so bind his assets by agreement that his will shall be a trustee for performance of his agreement. A covenant to leave so much to his wife or daughter, etc. * * * These cases are common; and there is no difference between promising to make a will in such a form and making his will with a promise not to revoke. This court does not set aside the will, but makes the devisee, heir, or executor a trustee to perform the contract. * * * No man shall deceive another to his prejudice. By engaging to do something that is in his power, he is made a trustee for the performance, and transmits that trust to those that claim under him. This court is never deceived by the form of instruments. The actions of men here are stripped of their legal clothing, and appear in their first naked simplicity. Good faith and conscience are the rules by which every transaction is judged in this court; and there is not an instance to be found since the jurisdiction was established where one man has ever been released from his engagement after the other has performed his part.’

We deem it unnecessary to discuss the intermediate cases which have fully and firmly established the principle that a man's representatives shall be trustees of a resulting trust for the benefit of those to whom he has bound his estate by such a contract as is here involved, for we consider the comparatively modern case of Johnston v. Spicer, 107 N. Y. 185, 13 N E. 753, decisive of this whole controversy. In that case the husband by an antenuptial contract had provided that in case of his death without issue all his property should belong to the lady whom he was about to marry. The parties intermarried, and the husband predeceased the wife, intestate and without issue. This court held that by virtue of the contract the husband's estate went to the heirs of the wife, and, speaking through Ruger, C. J., said: ‘It has been the constant practice of the courts of this country, as well as of England, to enforce antenuptial agreements according to their terms, whether they relate to existing or after-acquired property, and to decree a specific or substituted performance of them according to the nature of the case [citing authorities]. * * * The suggestion that such contracts may be invalid, as being of a testamentary character and as contravening the statute regulating the execution of wills, is of no force in view of the fact that for many centuries they have been sanctioned and protected by the courts, and their validity in this state has been expressly ratified and approved by statutory provisions. Laws 1848, p. 308, c. 200, § 4; Laws 1849, p. 529, c. 375, § 3.’ To the same effect are numerous other cases in this state, and they are all based upon the principle that, although a contract may contain covenants to leave property by will, that is no reason why it should not be performed. The facts of those cases are too voluminous and various for repetition here, and a few of them are cited merely to show how firmly the principle is established. Parsell v. Stryker, 41 N. Y. 480;Stanton v. Miller, 58 N. Y. 192;Shakespeare v. Markham, 72 N. Y. 400;Winne v. Winne, 166 N. Y. 263, 59 N. E. 832,82 Am. St. Rep. 647;Gall v. Gall, 64 Hun, 600, 19 N. Y. Supp. 332;Gates v. Gates, 34 App. Div. 608,54 N. Y. Supp. 454.

Neither do we subscribe to the proposition that this complaint does not state a good cause of action, because...