Riggs v. Gillespie

• Decision Date: 27 February 1917
• Docket Number: 1471.
• Citation: 241 F. 311
• Parties: RIGGS et al. v. GILLESPIE.
• Court: U.S. Court of Appeals — Fourth Circuit

241 F. 311

RIGGS et al. v. GILLESPIE.

No. 1471.

United States Court of Appeals, Fourth Circuit.

February 27, 1917

Jennings C. Wise, of Richmond, Va., and Charles E. Hogg, of Point Pleasant, W.Va. (Boreman & Carter and C. B. Rigle, all of Middlebourne, W. Va., on the brief), for appellants and cross-appellees.

Thomas P. Jacobs, of New Martinsville, W. Va., and David F. Pugh, of Columbus, Ohio (John H. McCoy and Arlen G. Swiger, both of Sistersville, W. Va., and Pugh & Pugh, of Columbus, Ohio, on the brief), for appellee and cross-appellant.

Before PRITCHARD and WOODS, Circuit Judges, and ROSE, District Judge.

PRITCHARD Circuit Judge.

This is an appeal and cross-appeal from the District Court of the United States for the Northern District of West Virginia.

The facts are as follows: The father of appellee, Wm. H Gillespie, died in 1897, leaving a will and testament disposing of about $40,000 worth of property, and the appellee was his sole heir at law. Walter R. Smith, one of the cross-appellees, was appointed as his executor. The other appellants and cross-appellees and Lloyd L. Stealey, who died before the litigation was instituted, as his sureties executed a joint and several bond in the sum of $40,000. For about 14 years the executor administered upon the estate. He made no settlement of his accounts during that time. After the appellee became of age, he instituted a suit in the circuit court of Tyler county to compel him to settle his accounts. A commissioner was appointed by the court, who reported that appellee was entitled to the sum of $36,008.84 upon which the court entered a decree in his favor.

On the . . . day of October, 1914, appellee instituted an action at law in the United States District Court upon the bond of the executor and six sureties. The appellants filed a separate plea pleading an alleged release purporting to have been given by appellee to John M. Smith, one of the sureties. The release in question reads as follows:

'Whereas Walter R. Smith, of Sistersville, in the county of Tyler, and state of West Virginia, is administrator of the estate of William H. Gillespie, deceased, late of Sistersville, and John M. Smith, of Wilbur, in said county and state, is surety upon the bond of said Walter R. Smith as such administrator, and John Gillespie of said Sistersville is now the sole heir of said estate and of full age: Now, therefore, I, the said John Gillespie, in consideration of the sum of one dollar ($1.00) and other good considerations to me in hand paid by the said John M. Smith, have released and discharged and do hereby release and discharge the said John M. Smith from all and every obligation as a surety or otherwise upon the said bond of said administrator, and from all liability to me by reason of said bond.

'Witness my hand and seal this 29th day of September, 1909.'

Appellee, being of the opinion that in an action at law he could not traverse the defense made by this plea, instituted a suit in equity praying for injunctive relief, in which, among other things, it is alleged that the defense made by this plea in the action at law is inequitable in that:

First. There was no valuable consideration to the execution of said release.

Second. That it was not his intention to release the other sureties.

Third. That it was obtained from him by fraud committed by John M. Smith.

Fourth. That even if there were no such reasons for the impeachment of the release, it in equity only operated as a release to John M. Smith of his proportion of the liability on the bond, and to the other sureties of the one-seventh part of the total liability, for which the action at law was brought.

It is alleged in the bill that the release pleaded in the common-law action is neither a release to John M. Smith, who secured it from his nephew, the appellee, nor a release in any sense to the other sureties; that appellee could not in a court of law secure the relief which he seeks, to wit, to destroy and annul a fraudulently obtained release and to grant such other and further relief to which appellee may be entitled. Therefore this suit was instituted on the equity side of the court.

The bill alleges that on the 29th day of September, 1909, John M. Smith secured the release in question from his nephew, the appellee, at a time shortly after he had reached his majority; that appellee's mother was a sister of John M. Smith; and that the consideration recited in the release is $1, none of which was paid. It is further alleged: That at the time the release was secured appellee did not know how much W. R. Smith, executor, owed him, inasmuch as no settlement had been made at that time. That he was young and inexperienced and had no knowledge of the effect and character of legal papers or documents. That he was persuaded to sign the release by the false representations of John M. Smith to the effect that the execution of the release would not in any way prejudice his right as sole devisee, legatee, or heir of his father, and that he had no opportunity to advise with counsel or friends, being at the time at the home of John M. Smith, some 20 miles distant from his home and friends. That he was a mere child when his father died, about 12 or 13 years of age, and was brought up after the death of his father by W. R. Smith, executor, and Miss The Smith, his mother's sister, in his father's home, where he remained until his marriage in July, 1909, at which time he moved to himself; that shortly thereafter John M. Smith went to his home in the city of Sistersville and invited appellee and his wife to visit them, stating at the time that he wanted them to get better acquainted. That in response to this invitation they visited Smith on the 25th day of September, 1909. That he had been brought up from childhood under the Smith influence. That his uncle, W. R. Smith, and Miss The Smith had controlled his every action and exercised great influence over him, and that W. R. Smith, the executor and guardian, concealed from him the true condition of his father's estate. That after he had been at the home of his uncle, John M. Smith, for a few days, to wit, on September 29, 1909, John M. Smith presented a paper called a release, and while in the presence of his uncle, in his home and under his influence, requested him to sign the same, asserting at the time that he did not want anything to trouble him and that it could not make any difference, inasmuch as there were enough sureties on the bond to carry it, and that he wanted him to release him as surety. The paper which he presented was prepared by John M. Smith's brother, a lawyer, who resided in Minnesota. That under these circumstances he yielded and signed the paper for no consideration whatever. That at the same time John M. Smith told him that there was little, if anything, coming from his father's estate, and that the paper in question would not release any of the other sureties. That owing to his lack of knowledge of such matters he relied upon the statement of John M. Smith in this respect. That all this was simply a fraudulent scheme by which John M. Smith sought to release himself, if possible, from all liability on the bond. That while visiting his uncle he enjoyed his hospitality. That the members of the family were extremely kind to him, and that they secured the release at the opportune moment when he felt under great obligations to his uncle and family for their entertainment and at a time when he was in no mental condition to deny a request from his uncle. In this connection, it is alleged by appellee that neither he nor his wife were ever again invited to make a visit, nor were they ever visited by his uncle, John M. Smith. It is insisted by counsel for appellee that the facts as alleged clearly show that the release in question was obtained by fraud, imposition, duress, undue influence, and misrepresentation, and that therefore in equity such release is null and void.

The appellants filed a motion setting forth that the bill failed to allege any matter of equity, in that the release could be avoided in a court of law as well as in a court of equity, and that the question of the validity of the release could be controverted in an action of debt; that appellee has been guilty of gross laches in instituting this suit; and that therefore appellee is not entitled to the relief prayed for in the bill.

Appellants also filed their joint and several answers which consist of denials of the allegations of the bill, more especially the allegations as to misrepresentations and frauds imputed to John M. Smith.

In paragraph 23 of the answer, a further contract and agreement between appellee and appellants is set forth, the substance of which being that the appellee agreed with the appellants and the executor of L. L. Stealey, deceased, that in consideration of a loan of $17,000 to the appellee to enable him to purchase the Bloomingdale farm, in Henrico county, Va. (which the executor had purchased with money belonging to the estate), part of the purchase price being paid, and to secure the remainder, he had given a deed of trust under which it was about to be sold; that he released the sureties on the bond of W. R. Smith as executor from all liabilities of the payment of any money then due or to become due to him from W. R. Smith as executor.

In paragraph 24 (improperly numbered 23) it is alleged that C. S. Stealey as executor of L. L. Stealey, deceased, is a necessary and proper party to the suit.

The appellee entered a motion to strike out these two paragraphs of the complaint upon the ground that they did not constitute any defense to the bill. A consent order was entered, in which it is recited that all motions and questions raised thereby should be...