Wolf v. Palisades Trust & Guar. Co.

• Citation: 190 A. 94
• Parties: WOLF v. PALISADES TRUST & GUARANTY CO. et al.
• Decision Date: 20 February 1937
• Court: New Jersey Court of Chancery

190 A. 94

WOLF

v. PALISADES TRUST & GUARANTY CO. et al.

Court of Chancery of New Jersey.

Feb. 20, 1937.

Syllabus by the Court.

1. The test of mental capacity is whether the grantor possessed sufficient mind to reasonably understand the nature and effect of the act he was engaged in.

2. It is only that sort of influence that destroys free agency and constrains one to do what is against his will and what he would not otherwise have done that is frowned upon and condemned by law.

3. The rule as respects competent, Independent advice is not limited in its application to gifts but extends to all transactions, be they gifts or otherwise, in which a dominant confidential relationship exists between the parties and a resultant benefit or advantage accrues to the dominant fiduciary.

4. It is incumbent upon one who seeks to Invoke the competent, independent advice rule to first establish the existence of a dominant confidential relationship and the subordinacy of his status therein.

5. Parol agreements to reconvey land, especially when called into controversy only after death had intervened and silenced the alleged promisor, should be subjected to close scrutiny and permitted to stand only if and when established by evidence that is clear, cogent, and convincing.

Suit by Amelia Frederick Wolf against the Palisades Trust & Guaranty Company, executor and trustee under the last will and testament of Charles L. E. Wolf, deceased, and others.

Decree for defendants.

Hart & Hart, of Hackensack, for complainant.

Warren Dixon, Jr., of Hackensack, for defendants.

LEWIS, Vice Chancellor.

The bill of complaint is to set aside a conveyance of land on the ground that its grantor, complainant herein, did not understand the nature of the transaction, was unduly influenced, was not afforded the benefit of competent, independent advice, and did not receive a reconveyance of the property, contrary to the grantee's promise to reconvey it to her.

Complainant, ever since 1916, held title to a tract of land and a dwelling house thereon located in the city of Englewood. In January, 1933, she conveyed this property to her husband, who died in November, 1934, leaving her, his three children by a former marriage, and a last will and testament, since duly admitted to probate, under which he appointed the defendant bank as executor.

Testator, at and prior to his death, was afflicted with a valvular heart lesion, high blood pressure, shortness of breath, and a chronic arthritis. These ailments so incapacitated him that he, at first, was unable to even get about his home without the aid of a cane, and then, as his afflictions grew worse, without the aid of a pair of crutches. Complainant too, however, was not without physical infirmities. She, according to the testimony of her personal physician, was a sufferer from advanced progressive arthritis deformans, anaemia, and general physical weakness.

Apprehensive of their respective infirmities in view of their ages—he then being about 70 years and she about 56 years— testator in December, 1932, sent for his attorney and, in complainant's presence, discussed with him his desire to make provision for her during her life; to have his entire estate upon her decease pass to his children; to have her relinquish her dower rights and reconvey to him the property in question, title to which he had taken in her name; and, in exchange, to provide her with an annuity commencing on and from his decease and continuing for the remainder of her life. She heard, discussed, approved, and finally accepted all of his thus expressed wishes and plans, and thereafter agreed with him upon the sum of $2,000 as the amount of the annuity, which he was to provide for her; representing, as it did, the probable income from his entire estate. To effectuate these arrangements, the attorney thereupon departed from their home, drew the deed, the release of dower and the will, with all of which documents he and his secretary returned to that home on January 9, 1933, when and where, after he had explained their contents and effect, complainant, simultaneously with testator's execution of his will, signed and acknowledged the said deed and release before him.

That she was a sick person when she executed the deed is not to be denied, but that she did not understand or was mentally incapable of comprehending the nature of the transaction in which she was then engaged is far from being established. In conveying the property and releasing her dower rights in exchange for her husband's providing her with a $2,000 annuity, to be made not only out of the income of his estate, but, if necessary, out of the corpus as well, complainant displayed a keen perception and excellent judgment. This is strikingly demonstrated by the fact that the net income from his entire estate, inclusive of the property in question, was but the sum of $1,418.90 for the entire year 1935; whereas as an annuitant she had a first charge or claim upon the entire estate, income as well as corpus, for the amount of her said annuity. In support of her now asserted claim that the instruments were not explained to nor was their nature or effect understood by her, we have but the word of herself, which, however, in the face of the credible testimony of that attorney and his secretary to the contrary, is not at all impressive or persuasive.

There is no proof that complainant then, or ever, was afflicted with any psychosis, nor are there any circumstances from which mental incompetency can be fairly deducted. It is significant, indeed, that her own personal physician—manifestly called for the purpose of establishing her incompetency—would go no further in that direction than to characterize her as being "generally weak, physically and mentally." Even that characterization, aside from its extreme vagueness and indefiniteness, falls far short of saying that she was mentally incompetent or that her mental weakness, if any she had, was of such a nature as to leave her with insufficient mind to understand in a reasonable manner the nature and effect of the act that she was then engaged in. Wilkinson v. Sherman, 45 N.J.Eq. 413, 18 A. 228; Hill's Executors v. Day, 34 N.J.Eq. 150; Davren v. White, 42 N.J.Eq. 569, 7 A. 682; Kern v. Kern, 51 N.J.Eq. 574, 26 A. 837; McCambridge v. Daly, 109 N.J.Eq. 43, 156 A. 372.

Clearly, the evidence adduced justifies no conclusion other than that the now challenged instruments were fully explained to her and that she fully understood the nature of the transaction in which she was then engaged.

Nor does the evidence justify or sustain complainant's charge of undue influence on the part of her husband in the procurement of the now questioned conveyance. While it is true that one may be possessed of sufficient mentality to understand the nature of the transaction in which he is engaged, and still be so mentally impaired as to be unable to resist or guard against unfair importunity, wile or craft, Wilkinson v. Sherman, 45 N.J.Eq. 413, 18 A. 228, nevertheless it has been here neither claimed nor shown that testator wielded any dominance over, in anywise beguiled or took any unfair advantage of complainant. On the contrary, I find that their dealings were on terms of equality; that he was not shown to have possessed any greater strength of mind than she, nor to have exerted any dominating influence over her; nor can I find that she, because of any alleged, but not established, weakness, dependence, or trust reposed, was unfairly taken advantage of. Cowee v. Cornell, 75 N.Y. 91, 31 Am.Rep. 428; Slack v. Rees, 66 N.J.Eq. 447, 59 A. 466, 69 L.R.A. 393.

Critically viewed, the entire transaction fails to reveal anything inherent therein suggestive of any unfairness practiced upon or advantage taken of her, or from which it may be fairly inferred that her free agency was destroyed or that s...