Case Name: SPRENGER v. SPRENGER
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1941-09-02
Citations: 298 Mich. 551
Docket Number: Docket No. 16, Calendar No. 41,301
Parties: SPRENGER v. SPRENGER.
Judges: Boyles and Wiest, JJ., concurred with Bushnell, J.
Reporter: Michigan Reports
Volume: 298
Pages: 551–581

Head Matter:
SPRENGER v. SPRENGER.
1. Appeal and Error — Questions Reviewable — Parties.
In suit to set aside trust instrument and deeds executed by plaintiffs, an elderly bachelor and his sister, a spinster, in which defendant, their younger brother, was grantee, whether or not an attorney for defendant had misappropriated funds belonging to the family is not decided where such attorney has not been made a party to the suit.
Undue influence used in procurement of benefit, see Restatement, Restitution, § 70.
Fraud by fiduciaries, see Restatement, Restitution, § 8. Grounds upon which a trust may be rescinded, see 2 Restatement, Trusts, § 333.
As to what constitutes a fiduciary relation, see 1 Restatement, Trusts, § 2, comment b.
2. Same — Chancery Cases — Review De Novo.
In hearing a chancery case de novo, it is the duty o£ the Supreme Court to weigh all the evidence and to reach a conclusion in accordance with the just rights of the parties.
3. Same — Review of Chancery Cases.
In reviewing a chancery case the Supreme Court should not reverse the decree entered unless persuaded that it is not in accordance with the just rights of the parties.
4. Deeds — Fiduciaries—Burden of Proof — Evidence.
In suit by elderly bachelor and his sister, a spinster, both of whom were uneducated, inexperienced and ignorant about property matters, to set aside a trust instrument and deeds whereby defendant, a younger brother who stood in a fiduciary relationship by virtue of his handling of plaintiffs’ property affairs for many years, without consideration procured the instrument conveying to him and his heirs the remainder interest in property valued at upwards of $400,000 to the exclusion of other presumptive heirs, decree dismissing the bill held, not justified by evidence, since defendant failed to sustain his burden of proving that plaintiffs fully understood the terms, import and effect of instruments executed and, if so understood, that no fraud or undue influence was exerted by himself to procure the instruments.
5. Trusts — Transaction With Grantor — Burden of Proof of Fiduciary — Undue Influence.
A fiduciary of the grantor who procures from latter a conveyance of latter’s property has the burden of showing grantor understood the effect of the transaction and, if so, that no undue influence was exerted by the fiduciary.
6. Same — Transactions Between Fiduciary and Cestui Que Trust — Presumptions.
Transactions between fiduciary and cestui que trust are regarded by courts of equity with suspicion and scrutinized with vigilance, the presumption being against their propriety.
7. Same — Equity—Setting Aside Transaction of Fiduciary with Cestui Que Trust.
Plaintiffs who were demonstrably not equal to protecting themselves in transactions with their brother whereby without consideration he acquired control of their property and a conveyance to himself and heirs of the remainder interest held, entitled to have management agreement and conveyances set aside and decree for money withdrawn by defendant from accounts belonging to plaintiff. ■
Bushnell, Boyles, and Wiest, JJ., dissenting.
Appeal from Macomb; Spier (James EL), J.
Submitted April 16, 1941.
(Docket No. 16, Calendar No. 41,301.)
Decided September 2, 1941.
Rehearing denied October 6, 1941.
Bill by Michael Sprenger and Elizabeth Sprenger against Leonard Sprenger and others to set aside a trust agreement and quitclaim deeds for fraud. Bill dismissed. Plaintiffs appeal.
Reversed.
Bruno L. Blinstrub, for plaintiffs.
Ernest Wunsch and Charles A. Retslaff, for defendants.

Opinion:
Bushnell, J.
(dissenting). This is an appeal from a decree dismissing plaintiffs' bill of complaint which was filed to set aside a trust agreement and certain quitclaim deeds which appellants claim were fraudulently obtained from them by their brother, Leonard.
Plaintiff Michael Sprenger, when he testified on March 6, 1939, was a single man, 74 years of age, and still living on the farm in Warren township, Macomb county, where he. was born. The other plaintiff, his sister, Elizabeth, 72 years old, likewise unmarried, also lived on the farm and kept house for Michael. Defendant Leonard Sprenger, plaintiffs' youngest brother, died after the trial at the age of 66. He lived in Grosse Pointe and left surviving him his wife, Mary, and four children,- Leonard, Jr., Rose, Ralph, and Irma, who were also named codefendants. After the death of his father, Leonard, Jr., was substituted as a defendant in his capacity as administrator of his father's estate.
The properties involved in this litigation were inherited by plaintiffs from their parents and an uncle. Two other brothers and a sister at one time also had an interest therein. Plaintiffs' brother, George Sprenger, who was declared an incompetent 'some years ago, died intestate in 1937, and his interest in the properties eventually passed to Michael, Elizabeth, and Leonard, when the five children of a deceased sister, Mary Sprenger Miller, released their interest therein. Michael also held an undivided interest in certain of the properties which he and a brother, John, who died in 1929, inherited from an uncle. These properties were largely farm acreage located close to the northeasterly section of the city of Detroit and were quite valuable, the assessed valuation of Michael's and Elizabeth's portion in 1938 being approximately $400,000.
The various Sprenger properties were not finally partitioned among the brothers and sisters and their heirs until 1938, although proceedings to accomplish this were begun by Mary Sprenger Miller's children in 1932. The trust agreement and various quitclaim deeds, which are the subject matter of this litigation, were executed by plaintiffs in 1938, after the partition had been consummated.
Ten years prior to the execution of these instruments, Edward F. Wunsch, a Detroit attorney, was retained by Leonard to represent him and other members of the family. Wunsch represented the Sprengers in a chancery suit in Macomb county, a lease involved therein, various condemnation proceedings, and many other matters.
One of the Sprenger properties is situated at the northeast corner of Gratiot and Eight-Mile road and is occupied by an amusement park. The State of Michigan in 1928 proposed taking some of the land for highway widening and agreed to pay $25,000 therefor. Considerable testimony was received concerning the disposition of this $25,000 received from the State. Deeds were executed.and recorded in 1929 and a State warrant for $25,000 was delivered to Wunsch. John Sprenger died about this time and, a few days later, Wunsch deposited the warrant in a bank account, carried in his own name, in the city of Detroit under the following indorsement: "Michael Sprenger, John Sprenger, by Edward F. Wunscb, their attorney." This indorsement was followed by the signature, "Edward F. Wunsch." There is considerable dispute as to whether this money was borrowed by Wunsch from Michael and John or whether it was to be credited upon Wunsch's bill for legal services which, at that time, amounted to more than $10,000. The record shows that in January of 1935, Wunsch made a $1,000 payment to Michael, Elizabeth and Leonard on this so-called loan, the check being indorsed by Michael and Leonard alone. It is claimed by Wunsch that when this payment was made the Sprengers were indebted to him in the sum of $25,564.94. Michael and Elizabeth testified that they knew nothing about this loan arrangement until after the present litigation was begun.
Neither Michael nor Elizabeth had more than a fifth-grade education. Michael was characterized by the trial judge as a very quiet man, rather hard of hearing, and with failing eyesight, who, although trying to be fair and honest in answering questions to the best of his recollection, indicated an obvious desire to agree with counsel on both sides of the case. Elizabeth, on the other hand, was of an aggressive nature with very decided opinions, and of a determined character. She was evidently a dominating personality in the household, and Michael, in order to keep peace, carried out her desires in all matters. The trial judge said:
"Elizabeth's defiant attitude toward counsel, even in the simplest- matters and questions, her rather childish conduct throughout the examination, and silly giggling and mannerisms when making some remark she thought was cute, throws a cloud upon her mental capacity. Her obvious prejudice against the defendant Leonard and her inconsistencies cannot help but raise a doubt in the mind of one hearing her as to at least the reliability of her present recollection of the circumstances surrounding the execution of the instruments under attack."
Leonard was the businessman of the family, and the almost continual litigation since 1928, involving the Sprenger properties, required considerable work-on his part to save them from tax sales and produce an income. When Leonard Sprenger left the homestead in 1928, he began to devote almost his entire time to looking after the Sprenger properties. In addition to seeing that the extensive litigation was successfully carried on, he also set about to pay up large amounts of back taxes and thus prevent loss of the properties by tax sales. The record indicates that more than $257,000 in taxes on the Sprenger properties had been paid by Leonard with money provided by him and other members of the family. The record shows that neither Michael nor Elizabeth had the education or capacity to carry on the complicated transactions necessary for the preservation of their properties. There is also evidence that for a good many years Leonard was left in complete charge of the properties and that Michael and Elizabeth continually expressed their desire that he take care of their interests. Michael for some time had been incapacitated with rheumatism and, near the close of the partition proceedings, both he and Elizabeth made it clear to Leonard that they wished him to "manage" the properties. From the record, it is evident that at least at that time Michael and Elizabeth felt that they were incapable of protecting their interests and they were extremely anxious to be spared tbe trouble and disputes caused by continual litigation and the clash of conflicting interests within the family.
This situation resulted in the preparation of instruments by "Wunsch, at the instruction of Leonard, which were designed to protect Michael and Elizabeth during their lifetime and provide for the disposition of their properties at their deaths. To this end, a trust agreement was drafted wherein Michael and Elizabeth expressed the desire to be relieved of the care and management of their property and yet retain the net income during their lives. The instrument conveyed the property listed therein to Leonard, his heirs and assigns forever, but in trust for Michael and Elizabeth, with the provision that, upon the death of the survivor, the properties were to go to Leonard and his heirs or assigns. It was further provided that, if Leonard should predecease the settlors, his four children were to be successor trustees.
Michael and Elizabeth executed wills in 1929 and again in 1938. In the wills executed June 25, 1929, they provided for bequests to their sister, Mary, of $100 and $1,000 to each of Mary's children. After several other minor bequests, the residue was divided by Michael, one-half to his sister, Elizabeth, and one-half to his brother, Leonard. Elizabeth, in the same manner, provided that the residue of her estate should go one-half to Michael and one-half to Leonard. Elizabeth, in an earlier 1929 will, had divided her estate three-eighths to Michael, three-eighths to Leonard, and one-quarter to Mary. Leonard's and Mary's shares were to go to their children in the event of their prior death. In wills executed on March 18, 1938, subsequent to the death of Mary, they made bequests of $200 to each of the children of Mary and divided the residue as in the June, 1929, wills. All of these wills named Leonard and Wunseh as executors.
Plaintiffs' claims may be summarized as follows: They contend that a fraud was perpetrated upon them by their brother Leonard and Wunseh, first of all by the claimed misappropriation by Wunseh of the $25,000 received from the State in 1929. They claim that a note, executed by Wunseh, payable to Michael and John and Elizabeth, which was produced at the trial, had never been previously seen by them; that this loan had never been reported by Leonard and Wunseh to the administrator of John's estate, and they aver that the note was manufactured for the occasion in order to explain the misappropriation. Plaintiffs also claim that in 1937 they were induced to execute certain quitclaim deeds to parcels of their property under the fraudulent representation that they were for lots sold in certain subdivisions, and that, in any event, these conveyances were made without any valuable consideration moving to them. They say that they did not know they were executing a trust agreement in 1938 and did not understand the nature of the transaction. They insist that they believed they were signing a management agreement and that they were induced to execute the trust agreement and the quitclaim deeds in connection therewith by fraudulent misrepresentations, and without any knowledge or intention of depriving themselves of control over their properties. They claim that Leonard abused the confidence and trust placed in him by his aged and uneducated brother and sister, and that he conspired with Wunseh to draft papers that would benefit himself and his heirs. They say that neither the deeds nor the trust agreement were executed in accordance with statutory provisions in that the notary who acknowledged them was not present and had no authority to acknowledge or witness the instruments. They aver that they were induced to execute wills on the same day as a part of a plan to lull them into a sense of security by the representation that they were not parting with control of their property and that they could make subsequent disposition thereof. They further charge that it was the duty of Leonard and Wunsch to have some disinterested person advise them as to the nature of the instruments they were signing.
The trial judge permitted a wide latitude in the admission of testimony and, at various times, interrogated witnesses himself. He filed a comprehensive written opinion which occupies 25 pages of printed record. As is our duty in a trial de novo, we have examined all the testimony.
All that is necessary for us to say concerning the alleged misappropriation of $25,000 by Edward F. Wunsch is that his statement of charges for legal services performed for the Sprengers stands uncon-tradicted. Plaintiffs have failed to make any claim that his charges were excessive or that the-services were not performed.
The deeds of 1937 become unimportant because of the legal effect of the trust instrument of 1938. The real question at issue is the validity of the 1938 trust instrument.
We are satisfied from our examination of the testimony that when plaintiffs executed the trust agreement they were fully aware of what they were doing. The terms of the instruments are in harmony with their actions and conduct during preceding years. The wills executed June 25, 1929,. show intentions consistent with the disposition of their
property as made in 1938. The trust agreement was not hastily executed but only after considerable discussion and only after the corrections requested by plaintiffs had been made. It is clear that Leonard Sprenger and Edward P. Wunsch were largely responsible for the preservation of the Sprenger properties. These and other circumstances indicate that plaintiffs fully understood the effect of the instruments, and that they were not obtained by mistake, fraud, duress, or undue influence.
With regard to plaintiffs ' claim of formal defects in the execution of the 1938 instruments, we said in Kerschensteiner v. Northern Michigan Land Co., 244 Mich. 403, 417:
"Deeds of real estate, to be entitled to record, must be acknowledged, but an acknowledgment is not a part of the conveyance. Brown v. McCormick, 28 Mich. 215, 219; Livingston v. Jones, Harr. Ch. (Mich.) 165. Title to real estate may be transferred by conveyances not acknowledged. Price v. Haynes, 37 Mich. 487. Deeds in order to be recorded should be witnessed, but a deed not witnessed is good between the parties."
Plaintiffs rely on Connor v. Harris, 258 Mich. 670. The rules stated in the Connor Case are applicable, but the facts are distinguishable from the instant case.
"In considering an equity case de novo, we are much impressed with the decision of a trial judge on a question' of fact when he had the advantage of seeing and hearing the witnesses. This is particularly true when his conclusions are supported by credible testimony." Fenwick v. Leonard, 255 Mich. 85, 90.
The decree dismissing plaintiffs ' bill of complaint should be affirmed, with costs to appellees.
Boyles and Wiest, JJ., concurred with Bushnell, J.
See 3 Comp. Laws 1929, § 13284, as amended by Act No. 162, Pub. Acts 1937 (Comp. Laws Supp. 1940, § 13284, Stat. Ann. 1940 Cum. Supp. § 26.527).—Reporter.