Case ID: misc_27/html/0240-01.html
Source: Caselaw Access Project
Author: {"author": "Gildersleeve, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Mary Hays, Plaintiff, v. Union Trust Co. of New York et al., Defendants.
    (Supreme Court, New York Special Term,
    April, 1899.)
    Action by grantor .. to set aside a trust deed —Undue influence and constructive fraud.
    Where an unmarried woman,, aged thirty, transfers her property, without receiving any consideration therefor, to ■ a trust® company upon the trust that it pay her the income for life and, failing issue upon her part, that it pay the principal at her death to the issue of her uncle, and it appears that her uncle was. her. sole a.dviser,- and that she executed the trust deed at his earnest solicitation and that of his wife, and that she did not then understand that it was an irrevocable disposition of her property, and that when she did so understand she promptly brought action to have the deed set aside, such relief will be granted her, as it cannot be said that the contracting parties dealt oñ a footing of equality, even though no actual fraud is shown.
    Action to set aside a trust deed. The facts are fully stated in the opinion.
    Bassett & Williams for plaintiff.
    . W. H. Beckham, for defendant Union Trust Company.
    H. Randolph, for defendant Simeon J. Drake.
   Gildersleeve, J.

This is an action to set aside a trust deed, given by plaintiff, on June 12, 1893, to the defendant Union Trust Company of 'Hew York. By this deed, the property of the plaintiff, consisting of specified securities, was given in trust to said company, which, by the terms of said deed, is to pay to plaintiff the income of the said property during her life, and at her death to pay over the principal to the issue of the plaintiff, should she leave any; and if she dies without issue, then the company is to pay over the property to the issue of De Witt C. Hays, the uncle of the plaintiff. Blaintiff’s father left a considerable estate, upon his death in 1874, to bis wife for her life, and on her death, to his children, of whom plaintiff is the sole survivor. De Witt C. Hays was the executor of said will, and had the exclusive management of the estate, and of the business affairs of the plaintiff, and of her mother, for a good many years. The only witnesses called on the trial were the witnesses off the plaintiff. All the defendants withdrew from the action, except the trust company and the infant defendant, Simeon J. Drake, the grandson of De Witt C. Hays, and one of the remaindermen under the trust deed. The plaintiff is unmarried, and was about thirty years of .age at the time; of the making of said deed. It appears that the plaintiff had the utmost confidence in her uncle, who had the sole management of her property; and it is clear, from the testimony, that De Wht C. Hays discharged the duties assumed by him, as executor and' as custodian of plaintiff’s property, with fidelity and ability, and that plaintiff’s confidence in him was fully justified. It further appears that pláintiff had no. .knowledge whatever of business matters, and had no other adviser than her said uncle, upon whom she relied absolutely. It appears, from the uncontradicted.' evidence of the plaintiff, and of' her aunt, Catharine Hays, with whom she lived, that the uncle was obliged to use a great deal of persuasion to induce the plaintiff to sign the deed, which the plaintiff strongly objected to, on account of the ultimate disposition made of the property. It appears .that the aunt and her brother, the said De Witt 0. Hays, were obliged to coax and tease and beseech the plaintiff for some time before she finally consented to sign the deed. . While it is admitted that the deed was read over to the plaintiff before she signed it, and that she understood that the property was to go to the issue of De Witt 0. Hays-, in case she ■died without issue, still both the plaintiff and her aunt swear that they both understood that the instrument was a will; and not a deed. The aunt swears that she coaxed the plaintiff to sign the deed, because her brother was sick and Worried, and was very anxious to have the deed signed, and that she, the aunt, joined in the effort to induce the plaintiff to sign the deed for the sake of peace.” The uncontradicted evidence of the plaintiff shows that she did not understand that it was an irrevocable deed, and not a revocable will, until-after the death of her uncle, when she wished to borrow money on the principal, and found that.she could not; and^that, ■after making this discovery, she promptly put the matter into the lhands of her lawyer, and commenced this suit to set aside the deed. Tt appears that the plaintiff was not represented by any lawyer in "the matter of the deed, and relied wholly upon the advice and «counsel of hér uncle. It appears that the income" of the property us'about $10,000 a year, and that the company charges a commission of 2i per cent, on said income for taking charge of the prin«cipal, and also that the company is to have its legal commission on “the principal at the termination of the trust. The trust company •expresses itself as perfectly indifferent to the result of this action, -except that it claims its commissions in case the deed is set aside, :as if the trust had been fully carried out and the company were turnihe: over the. proceeds to the parties, entitled -to it-under the •trust deed. The counsel for Simeon J. Drake maintains that the deed should be sustained for the reason that' no fraud or undue influence on the part of De Witt C. Hays is shown,.and for the further reason that- it is for the benefit of the plaintiff herself to uphold the deed, to prevent her from squandering or misapplying the principal. While this .last assertion may perhaps be true, still, as she is thirty-kix years of age, and as there is no evidence that she is of unsound mind, and as she swears that since her uncle’s death she has become enlightened with regard to the management of property and business affairs, the evidence hardly seems to support the defendants’ claim in this respect, that plaintiff should be deprived of the control of her property. The plaintiff’s counsel-claims that the deed should be set aside on account of the fiduciary relations existing between the plaintiff and De Witt C. Hays, the influence through which it was obtained, her misunderstanding of its contents, .the lack of consideration, the omission of a provision for revocation, plaintiff’s complete reliance on her uncle and respect for his advice, and because she was without independent legal counsel. It appears that, under her father’s will, upon the death of her mother — which occurred in 1892 — the plaintiff was given full control of her property, and would presumably have had full control of the same to-day had she not been influenced to make this deed of trust. In the case of Ten Eyck v. Whitbeck, 156 N. Y. 353, the court of last resort, by' Martin, J., used these words, viz.: “ Where the relation between the parties is that of parent and child, principal and agent, or where one party is situated so as to exercise a controlling influence over the will and conduct of another, transactions between them are scrutinized with extreme vigilance, and clear evidence is required that the transaction was understood, and that there was no fraud, mistake or undue influence. Where those relations exist there must be clear proof of the integrity and. fairness of the transaction, or any instrument thus obtained will be set aside or held as invalid between the parties.” In the case at bar, it is true that the uncle reaped personally no benefit from the trust deed, but his children or descendants, for whose welfare' he was naturally solicitous, were placed in a position of •advantage, in case of the death of the plaintiff without issue. Again, in the case of Green v. Roworth, 113 N. Y. 470, the Oourt of Appeals, by Ruger, Ch. J., laid down the following principle, viz.: “It may be stated aá universally true that fraud vitates all contracts, but, as a general thing, it is not presumed but must be proved by the party seeking to relieve himself from an obligation •on that ground. Whenever, however, the relations between the contracting parties appear to be of such a character as- to render it 'certain that they .do not deal on terms of equality, but that either on the one side from superior knowledge of the matter -derived-from a fiduciary.relation,or from overmastering influence, or on the other from weakness: dependence or trust justifiably .reposed, unfair advantage in a transaction is rendered probable,, there the burden is shifted, the transaction is presumed void, and it is incumbent upon the stronger party to show affirmatively that no deception was practiced, no undue influence was used, and that all was fair,, open, voluntary and well understood.” The uncontradicted evidence, in the case at bar, shows the absolute trust reposed by plaintiff in her uncle, her misunderstanding of the nature of the instrument, the persuasion and influence exercised upon. her by her uncle and aunt, her lack of other counselors, and her ignorance! of such matters. It seems to me that, without discussing the other points raised by the plaintiff’s counsel, it must- be held that the act of plaintiff in executing the trust deed 'was not voluntary or well understood by.her, and that for this reason the deed shoiild" be set aside. ■ As to the claim of the trust "company for commissions on the principal, as if the .'trust had been'fully executed, I will hear argument when the decision herein is handed up for signature. The-plaintiff will give two days’ notice of the- settlement of the decision. Judgment for the- plaintiff,, but, under the circumstances, without costs.

Judgment for plaintiff, without costs. ‘ ,