Case Name: The First National Bank of Coffeyville, as Executor, etc., of Perry K. Willett, Deceased, Appellant, v. John C. Wright and Another, Respondents
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1924-01-09
Citations: 207 A.D. 521
Docket Number: 
Parties: The First National Bank of Coffeyville, as Executor, etc., of Perry K. Willett, Deceased, Appellant, v. John C. Wright and Another, Respondents.
Judges: 
Reporter: Appellate Division Reports
Volume: 207
Pages: 521–534

Head Matter:
The First National Bank of Coffeyville, as Executor, etc., of Perry K. Willett, Deceased, Appellant, v. John C. Wright and Another, Respondents.
Third Department,
January 9, 1924.
Contracts — action to set aside assignment executed by plaintiff's testator of his interest in his nephew’s estate which was made to defendants in consideration of their caring for plaintiff’s testator during his life — action is based on fraud in execution of assignment — plaintiff’s testator at time of execution of assignment was living with and under control of defendants — burden is on defendants to show lack of fraud — assignment is set aside.
In an action to set aside an assignment which purports to transfer to the defendants all the interest that the plaintiff’s testator had in the estate of his nephew, it appears that plaintiff’s testator, a man past ninety years of age, had lived for more than forty years in Kansas; that the defendants, who were relatives of the plaintiff’s testator, upon learning that he was one of the heirs of a nephew who had recently died leaving a large estate, went to Kansas with their attorney and brought the plaintiff’s testator home with them; that a few days after he arrived in this State the defendants’ attorney presented to plaintiff’s testator a completed assignment of his interest in the estate of his nephew to the defendants in consideration of their caring for him during his life, which assignment he executed without the advice of counsel; that while plaintiff’s testator lived in Kansas he executed a power of attorney to a bank there for the purpose of managing his estate; that the defendants misrepresented to the plaintiff’s testator the value of his interest in his nephew’s estate; that plaintiff’s testator was very feeble and his memory was not good and he was easily influenced by those with whom he lived; and that at no time did the defendants freely and frankly discuss with the plaintiff’s testator the value of his interest in the estate, which the instrument in question purported to assign.
Held, that while the general rule is that the burden of establishing fraud rests upon the parties alleging it as a ground for defeating a contract, still where, as in this case, the relations between the contracting parties are 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 over-mastering influence, or, on the other, from weakness, dependence, or trust justifiably reposed, unfair advantage in the transaction is rendered probable, 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, and under such circumstances, if the burden is not met by the stronger party, constructive fraud may be found.
At the time of the execution of the assignment plaintiff’s testator was dependent upon and subject to the control of the defendants and he did not deal on terms of equality with the defendants and their attorney but placed confidence in them and signed the paper writing induced thereto by deception and concealment. Under the facts of the case the paper when executed was not understood by plaintiff’s testator and its execution was not his free and voluntary act and he did not thereafter ratify or confirm it.
Since the defendants have not met the burden of showing freedom from fraud in the transaction, the assignment will be set aside. Cochrane, P. J., and Hinman, J., dissent, with opinions.
Appeal by the plaintiff, The First National Bank of Coffeyville, as executor, etc., from a judgment of the Supreme Court in favor of the defendants, entered in the office of the clerk of the county of Washington on the 6th day of March, 1923, upon the decision of the court, rendered after a trial before the court without a jury, dismissing the complaint.
Rogers & Sawyer [John E. Sawyer of counsel], for the appellant.
Heaton & Mambert [Alvin E. Mambert of counsel], 'for the respondents.

Opinion:
Van Kirk, J.:
The action is brought to have vacated a certain paper writing in form transferring to the defendants all the interest of Perry Willett in the estate of Arthur Willett in consideration of one dollar and an agreement that the defendants would support, care for and bury Perry Willett, the original plaintiff. Perry Willett died before the trial and this plaintiff was substituted. Perry Willett was one of two uncles who survived and were the only next of kin of Arthur Willett who died intestate.
The real parties in interest are Perry's great grandnephew William Perry Bigelow, named after him, and the defendants, two of several nephews and nieces. Perry Willett made a will in 1905, in which he gave his property to this great grandnephew, who lives in Kansas. In 1919 he made another will, making the same disposition of his property, but naming the First National Bank of Coffeyville as executor in place of the person who had been named and giving a power of sale to the executor. This great grandnephew and his parents had in earlier years lived with Perry Willett and he apparently was very fond of the young man. Perry 'Willett's one brother who had survived Arthur died within about one month after Arthur died and Perry's nearest heirs at law and next of kin at the time of his death were nephews and nieces of different degrees. The defendants are brother and sister. During the years when the Bigelows came into Perry's life, that is during the forty years he lived in Kansas, he was having no communication with and apparently knew nothing of these other relatives, and they were, until shortly before his death, entirely indifferent to him.
The testimony of Perry Willett was taken by deposition. As evidence of facts recited this testimony and certain declarations made by Perry Willett to, or in the presence of, parties interested should generally be disregarded; they are hopelessly contradictory and simply disclose the condition of the man. Later reference to the evidence we think will show that he was entirely dominated and under the influence of those with whom he happened to be; he testified and talked in harmony with their wishes and suggestions. We must look for the facts of the case in the circumstances and in the testimony of other witnesses.
Some forty-two or forty-three years before his death Perry Willett had purchased a mortgage upon lands in Kansas, knowing nothing more about those lands than the description in the mortgage and probably the statements of the man who sold it to him. Because he had weak lungs and dreaded the cold winters in the east, taking the mortgage procured in such a simple and innocent manner, he went to Kansas, sought out and identified the land, procured a deed and ever since lived there. He was never married. At the time of his death in 1920 he was ninety-three or ninety-four years of age. He had but little education. He had a considerable recollection of the events of his earlier life, but a poor memory of passing events. He was frail in body and health. He had lived in Kansas the forty years next prior to 1920. He had gained friends in his neighborhood and in 1919, under the advice of these friends, he had given to the First National Bank of Coffeyville (the executor of his will) a power of attorney to look after his business affairs. His attorney in fact procured tenants on his farm, who were to support and look after him. The cashier of this bank did the business and says that Perry was well looked after and comfortable. The Bigelows had moved away to a place more than 100 miles from his home. Strangers had not given much attention to his person. Perry at that time knew little about his money or business affairs. He stated that he had been robbed of much personal property, though there is no proof that his statement was founded on fact.
It was at first supposed that the cousins of Arthur were his next of kin and heirs at law; but it was later comprehended that the uncles were the next of kin and inquiries for them were made. At length a letter came from California stating that Uncle Perry was living in Coffeyville, Kans., and that John Bigelow reported that Perry was " childish and quite feeble." On the afternoon of the day this letter was received, the defendant John Wright, his brother Sam and his attorney, Pratt, started for Kansas. Pratt says that Arthur Willett's estate had some interest in a second story of a building in Oklahoma, and that these three men were incurring the expense of a trip west, John at least being a man of almost no means, in order to investigate this property, as well as to see Uncle Perry. If so, they quickly abandoned the search for property. They arrived in Coffeyville and immediately drove to the farm of. Perry Willett. They found him. John asked him to go to Coffey-ville with them. He readily consented and went in the clothes and uneleanliness in which they found him. Though Perry's relatives in New York had not written to him or taken any interest whatever in him for more than forty years, yet, on the simple suggestion of John Wright in 1920, he was ready to leave his home and return tó Washington county, N. Y., which he had left because he dreaded the winters there. And later, with equal willingness, he returned to Kansas when his great grandnephew suggested it. Pratt and the nephews, in Coffeyville, inquired from a real estate agent concerning the value off his farm and a lot which he owned in town. They went late in the afternoon of the same day to the banks and in one of the banks at least Pratt procured a copy of his account. This bank was Perry's attorney in fact. There is testimony that they desired to draw sufficient money to buy him clothes and pay his fare to Washington county, but the cashier told them he would like to know more about the affair before the money was drawn; that they left, stating they would return in the morning. They did not return, but on the other hand took a train immediately for Washington county; this was the evening of the day they found him. Pratt furnished the money for his expenses, but they bought him no clothes and they did not clean him up. They reached Cambridge Saturday, June 19, 1920. Pratt's son says he was astonished to see them back so soon; and, although he had never seen Perry Willett, he knew it was Perry because they had gone out to see him. The feeble old man was taken immediately to the home of these defendants. They did not clean him up; they did not furnish him with any new or clean clothes. Five days later Pratt, who had not in the meantime seen Uncle Perry or heard from him, appeared with four copies of the paper writing in question 'in this action, completed in the form in which it was executed. It seems that in Kansas something had been said about Perry living on skim milk and cabbage. When Mr. Pratt came in, he said to Perry, who in the meantime had been ailing with stomach trouble and was unkempt and uncared for, that he had prepared a paper providing that he should no longer live on " skim milk and cabbage," and that he should have a woman's care through life and a Christian burial. Not a word about a transfer of his interest in the Arthur Willett estate, not a word about anything he was to give up or pay for such care and attention and not a word to these defendants as to whether or not they would assume the obli- gation on their part to be performed. Without further explanation Pratt asked if Perry desired to have the paper read. He said he did. He could not read. Pratt says that he thereupon read it in a clear distinct manner and Perry said it was just as he wanted it. John and his sister have added that he said he did not want anything from the east, that he had all that he wanted in the west and he did not come out here for any money. Although Pratt was a notary public, Dr. Ingraham, a notary public, was then sent for. Dr. Ingraham had known Perry before he had gone west. He says Perry looked like a tramp, dirty and unkempt, although he had been for five days with these people who were about to covenant to care for him and keep him clean; that Perry talked frankly and readily about earlier associations in the east; that he thinks Perry was rational and sane and capable of understanding the transaction. The paper was again read over in the presence of Dr. Ingraham and Perry reiterated that it was just as he wanted it, although he had never heard of it before, and never thought of such a paper and of course never knew till then that he wanted it. As will appear later, he had no definite appreciation of what he was transferring to buy his maintenance and Christian burial. During the execution of this paper no suggestion was made to Perry that he should have counsel or advice or talk with any friends.
We pass now to what knowledge or means of knowledge Perry had as to Arthur's estate. Pratt and the two brothers say that, in Kansas and on the trip back, they told him that Arthur was dead; that the two uncles, Perry and his brother John of Chautauqua county, N. Y., survived him; that Arthur's estate was in bad shape, much confused; that Arthur's father and mother had died, and there had been no inventories or statement of the amounts of their estates, but these were in Arthur's hands and mixed with his property; and that there was a claim against Arthur's estate of $18,000, but that would be fought to " the last ditch." Later they told him that the inventory of Arthur's estate was about $30,000. They never told him that Arthur's estate in fact inventoried $40,000, and, if any deduction was to be made on account of other estates mingled with it, that deduction should come out of the $40,000, and not out of the $30,000; or that Arthur's father had died intestate and whatever personal property he had went to Arthur; or that he, Perry, was the owner of one-half of the personal property of Arthur's estate. The evidence very plainly discloses that if Uncle Perry had intelligence enough to comprehend such a transaction, sufficient facts were not furnished him so that he knew what he was doing or so that he could make any reasonable estimate of the amount he was to transfer to these defendants. His own expression, just before he signed the paper, as stated by Pratt, was " if there was anything he wanted to give it to John and to Kate, and that he wanted to sign that paper."
In "our view the evidence discloses a distinct deception as to a principal element in the transaction. There never was any fair and frank statement to Perry Willett of the amount of Arthur Willett's estate, or of his expected share in it. Because he was told that Arthur Willett left surviving him two uncles, it cannot be presumed that he knew that he was entitled to one-half of Arthur's personal estate, since the attorney for the defendants did not know this for some time after the administrators of Arthur's estate were appointed. Neither the defendant John nor his brother Sam claim that they advised Uncle Perry what his rights were in the estate; and, from the testimony of the defendant Katherine, the inference is that she did not advise him until after the papers had been executed and then only indifferently. The defendants would have it inferred that they told Perry that the amount of the inventory of Arthur's estate was $30,000, because there was some $8,000 or $10,000 of his mother's estate mingled with his; but they did not tell this to Uncle Perry. When they told him of the $18,000 claim for damages, adding that they were going to fight it to the " last ditch," they very plainly gave the impression that it was a serious claim. Deducting from $30,000 the estate of Arthur's mother and the $18,000 claim, there would not be much left in Arthur's estate to pass to any next of kin. It was lis interest in Arthur's estate that was transferred to these defendants by this paper writing; and consequently it was of the greatest importance in fair dealing and honesty and in order that there be no deception, that he should be told frankly and fairly what the circumstances of that estate were and what his interest therein was before he was asked to sign the paper. These circumstances certainly furnish more than the slightest proof that an advantage was taken of the old gentleman and that more than the " least speck of imposition " was practiced upon him. (See Cowee v. Cornell, infra.)
Fraud vitiates all contracts, and it is the general rule that the burden of establishing the fraud rests upon the parties alleging it as a ground for defeating a contract. But there is an exception to this rule as generally recognized, which is stated in Cowee v. Cornell (75 N. Y. 91, 99) as follows: " 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." Under such circumstances, if the burden is not met by the stronger party, constructive fraud may be found. We have not here one of the usual cases of confidence placed and influence exerted, in which it is presumed that the parties dealt under terms of inequality, but rather a case in which the inequality is shown by the facts and circumstances of the case, and to such a case the same exception applies. In Smith v. Kay (7 H. L. Cas. 750; cited, 13 C. J. 407) it is said: " The relations with which the Court of Equity most ordinarily deals, are those of trustee and cestui que trust, and such like. It applies especially to those cases, for this reason and this reason only, that from these relations, the court presumes confidence put and influence exerted. Whereas in all other cases where those relations do not subsist, the confidence and the influence must be proved extrinsically; but where they are proved extrinsically, the rules of reason and common sense, and the technical rules of a court of equity, are just as applicable in the one case as in the other." Also the circumstances of a case may be of such a character " if not sufficient to shift the presumption, at least to authorize a setting aside of a contract without any decisive proof of fraud but upon the slightest proof that advantage was taken of the relation, or of the use of ' any arts or stratagems or any undue means or the least speck of imposition.' " (Cowee v. Cornell, supra, 101.) Where the circumstances justify it, the law will interpose " by adjusting the quality and measure of proof to the circumstances, to protect the weaker party and, as far as may be, to make it certain that trust and confidence have not been perverted or abused." (Matter of Smith, 95 N. Y. 516, 523. See, also, Barnard v. Gantz, 140 N. Y. 249, 259.) The general rule as to undue influence as stated in Story's Equity Jurisprudence (2d ed. § 238) is: "The doctrine, therefore, may be laid down as generally true, that the acts and contracts of persons who are of weak understandings, and who are thereby hable to imposition, will be held void in courts of equity, if the nature of the act or contract justify the conclusion, that the party has not exercised a deliberate judgment, but that'he has been imposed upon, circumvented, or overcome, by cunning, or artifice, or undue influence." This rule is applicable to all cases where the relation between the parties gives one a controlling influence over the other. (Sears v. Shafer, 1 Barb. 408; affd., 6 N. Y. 268.)
We think under the circumstances of this case the defendants were required to make explanation and that " without any decisive proof of fraud " the duty rested upon them of satisfying the court that the making of the contract was the free and intelligent act of Perry Willett and that the contract was procured without overreaching and without deception on their part, and was such as a court of equity can approve. One cannot read this record without being strongly persuaded that Perry Willett, suddenly called upon to act without counsel or advice, did not deal on terms of equality with these defendants and their attorney. The defendants were represented by counsel. Evidently the defendants knew beforehand the contents of the paper; it is the fair inference that it was the result of a plan agreed upon between them and Pratt, perhaps Sam being their instrument. We repeat that, when Pratt stated to Perry what the paper was, he did not mention in any way the obligations which the defendants were called upon to assume under the proposed contract. He did not ask them if they were satisfied; it seemed at once to be thoroughly understood by every one except Perry. We must accept the conclusion that Pratt was acting solely for these defendants and not at all for Perry Willett. The facts and conditions above recited leave the firm impression that Perry was a dependent old man, who relied upon other people for " maintenance and guidance and cleanliness," as expressed by Forest Kenyon, a witness for the defendants, and that he, without personal choice, trusted, and took his views from, those relatives with whom he was at the time and acted as they suggested.
This paper was prepared at the sole instance of the grantees, the grantor never having had it submitted to his consideration. This circumstance renders it subject to suspicion and " ' raises a presumption of fraud. * . For where an instrument is prepared by direction of the party who seeks advantage from it, and the other party has no person with whom he consults on the subject, a great degree of jealousy attends the instrument.' " (Sears v. Shafer, supra, 415.)
There is another bit of evidence in the case. On the same day the contract was made Perry Willett acknowledged the execution of a waiver of the service of a citation upon him to attend the judicial settlement of the- accounts of the administrators of Arthur Willett's estate; and therein it is recited, " I do hereby consent and request that a decree may be entered herein settling the said account as verified by the said Samuel P. Wright and Howard M. Hall, or either of them, whenever the same shall be presented to the said court for that purpose." The circumstances of the execution of this paper we do not find related anywhere in the evidence. It is not mentioned,, as far as we can find, in the testimony of any witness. Under this paper there was a substantial assurance that, whatever the amount of the estate and whatever developed upon the accounting, no information thereof would come to Perry Willett. The whole transaction was intended to be tightly closed.
We believe the cause of action above discussed is within the allegations of the complaint; but if there is evidence tending to establish a cause of action broader than that alleged such evidence was received without objection thereto.
In the complaint plaintiff " offers to return to defendants all that he received under, or as a consideration for said assignment."
The judgment should be reversed, with costs, and the case • returned to the trial court to determine what amount should be paid to defendants for moneys expended, services rendered or expenses incurred in behalf of Perry K. Willett under or as a consideration for the assignment.
We disapprove of findings 8, 12, 25, 28, 30, 31, 37, 44, 45, 46, 47, and find that, at the time of the execution of the assignment, Perry K. Willett was dependent upon and subject to the control of the defendants; that he did not deal on terms of equality with the defendants and their attorney; he placed confidence in them and signed the paper writing induced thereto by deception and concealment; that the paper when executed was not understood by him and its execution was not his free and voluntary act, the result of his deliberate judgment; that he did not ratify or confirm the assignment after its execution; that the assignment be set aside; and that the plaintiff recover from defendants any money or property received by them by virtue of such assignment.
All concur, except Cochrane, P. J., and Hinman, J., dissenting, each with a sepaiate opinion.