Court Opinion

ID: 7119866
Source: CourtListenerOpinion
Date Created: 2022-07-24 12:37:07.036419+00
Date Added: 2024-06-11T16:14:04.012497
License: Public Domain

Salinger, J.
(dissenting.) I. The majority declares:
“The justices concurring in the majority opinion heretofore filed are still satisfied that the case was properly decided. Because of some features of the argument in support of the petition for rehearing, we are disposed to add to the former opinion this further word of discussion.”
Even if one note but part of the well made attacks upon said opinion, he will find that counsel have not misconceived it, and that it should not have the foregoing approval.
a. That opinion urges against the contract defendants have, that it deals with personal property owned by a partnership. Such holding is bad law, and conflicts with our own and other decisions. In Stewart v. Todd, 190 Iowa 283, we sustain such a contract, though its subject is confessedly partnership property, including personal property. In McKinnon v. McKinnon, (C. C. A.) 56 Fed. 409, the contract enforced deals with nothing but the personal property of a partnership. While Baker v. Syfritt, 147 Iowa 49, involves no partnership, it does uphold a survivorship agreement that deals with property both personal and real. And see Smith v. Douglas County, (C. C. A.) 254 Fed. 244.
b. One argument of the opinion is that a “commercial enterprise” cannot “be affected by a joint tenancy.” This is irrelevant and fallacious, because the contract gives rights, even if it were true that such enterprise may not so be affected, and because this contract deals, not with a commercial enterprise, but with future accumulations of that enterprise. As well say that money received from land is not personal property because the source is real property.
c. It not only “construes” what needs no interpretation, but it erroneously interprets plain words away. The contract says repeatedly that each signer and his estate shall, unless he be the last survivor, have no interest in or rights to the partnership property, “except such share * * * as shall be actually re*110ceived by each or shall be paid upon the order of each with the consent of the others from the general funds or income of said business.” The opinion declares that this is not a limitation upon inheritable rights, but merely a provision to guard against extravagance. This not only disregards the plain words of the contract, but is against reason. In such a contract as this, the share of any who die first is necessarily limited to what he has drawn in his lifetime. If all that belongs to him passes to another on his death, all he can have is what he has already obtained. He can add nothing to his estate after he has died.
d. There should be no approval of the pronouncement that “estates in joint tenancy have in modern times ceased to be in favor with the courts.” The statute sanctions such tenancies. See Wood v. Logue, 167 Iowa 436. At mildest, this is a declaration that the law of the land may be disfavored by the courts.
II. The “supplemental” opinion must be tested by itself. It neither supports nor is it supported by the original opinion. The “supplemental” opinion is neither a supplement nor a “further word of discussion.” The original does not touch what the supplemental one advances.
The majority says:
“In the last analysis, therefore, we have before us a contract; nothing more, nothing less. Being a contract, it may be enforced as such, unless there be some legal impediment thereto.”'
And then elaborates matter utterly irrelevant to the issue so stated. This shows that the only material question has been forgotten for the time being, and it tends to explain why the true issue seems not to have been determined at all.
What does it matter that, “in determining the effect of the contract, we cannot add to its terms the legal fiction involved in a common-law joint tenancy,” or that “the alleged joint tenancy was not created by act of any third party,” but “was created, if at all, solely by the contract of the alleged joint tenants;” or that the contract does not purport “in terms to create a common-law joint tenancy?” Surely, it cannot matter “that the theory of joint tenancy, in a common-law sense, is not available to carry the appellants any further than the terms of their contract carry them.” If they are entitled to relief to the extent to which “the terms of their contract carry them,” *111it cannot matter bow many things exist which give them no relief.
In a word, here is no question of names. No dictionary can rightly decide this suit. Eights ought not to be denied because there is a quarrel over the name of the rights, nor because immaterial things may or may not be done. As said in Wood v. Logue, 167 Iowa 436:
“Laying aside the question as to what name or designation we shall apply to the transaction between the grantor and grantees, what good reason can be assigned in law or equity for the court’s refusing to give it effect, according to its clear intent?”
And see Eood on Wills, Section 53.
III. It is stressed that the four signers created a corporation, with themselves as sole shareholders, each receiving his pro rata in shares, and that thereupon each purported to transfer his shares by indorsement and delivery. The preface of the court is: “We are not concerned with forms. We look to the substance of the property rights of this decedent.” But is that done ?
The plaintiff declares over and again that this corporation and these shares were and remained the property of the partnership, and her husband died seized “of an undivided interest in all the property of the partnership, which partnership property includes all the capital stock and property” of said corporation. So then, creating the corporation and so issuing and dealing with the shares is nothing but a change of form.' It should not be seriously contended by those who profess to disregard mere change in form that anything material was effected. If four partners conclude to symbolize hardware owned by the partnership by stock certificates issued to the partners, the rights of each in the hardware remain unchanged. The share certificate represents the hardware. I agree with the majority that:
“The property still remained in the dominion of the same parties. Its benefits still accrued to them. No fifth party had acquired any interest in or incumbrance thereon. * * # If they had then attempted a partition as between themselves, each must have received his one fourth thereof.”
But I cannot follow it in forgetting the effect of its statement. That effect is that the mere creating of the corporation *112and issuing said stock has no bearing at all upon the contract rights of the parties. ■
As to the inquiry, “to whom did he indorse and to whom did he deliver,” and the statement “there was no transferee and no taker of delivery, — they all put their shares into a common receptaele, and locked them in the safe to await eventualities,” I have to say I shall later attempt to show that all this is immaterial. It foreshadows a position more fully developed by the majority elsewhere, and is indicative of the thought that there was no delivery of the stock shares. It may well be said that these shares were in the possession of all four of the contracting parties as long as they lived, and on the death of one, these continued in the possession of the survivors; and that the deposit of the stock nominally in the deceased member, and the assigning by him in blank, amounted to a constructive delivery by him at the time he executed such assignment. But I need not pursue this now. The most the argument of the majority comes to is that the creation and assigning of the shares.effect nothing, because delivery was lacking. If that be granted, then the issuance and attempted transfer of the shares comes to nothing. The net result in law is that each partner retained the same interest in the partnership property as if no corporation had been created by the partnership and nothing whatever had been done by the corporation. In no view was more change effected in partnership rights than if the partnership had retired from business and put all the accumulations therefrom into government bonds. All that would accomplish is that a share in business accumulations would become a share in government bonds.
IY. But, as already indicated, lack of delivery, the retention of joint possession, and the preserving equal access to each partner are amplified in another branch of the argument of the majority. The sum of that argument is that somehow this suit is affected by lack of disseizin of one contracting party, and by failure to deliver to and vest in the other party, and that there is fatal uncertainty as to where title is lodged. It is an argument that has made much bad law, on so-called "contingent remainders. Can it be possible that a contract of survivor-ship wherein several agree that the one last remaining alive shall have all the property of the others is in any way affected by *113delivery, disseizin, and vestiture? If that be so, it is inexplicable why a survivorship contract was ever upheld. For in each and all the cases of such .contracting, no party was dis-seized, no party was vested with title to what he did not already own, and neither party delivered anything to the other except the contract itself. In each and all of such cases, each contracting party kept full control of and access to the individual property of his that had been made the subject of the contract. In each of them, it could have been said, “there was no transferee and no taker of delivery.” And what an absurdity it would be to require mutual delivery in such cases. A owns 10 horses; B also owns 10. Can they make no effective agreement that the survivor shall have all that remain of the 20 unless, when the parties sign, each delivers his 10 horses to the other ? To follow that to its end, the moment the exchange was made, it would seem to become necessary to keep on transferring and retrans-ferring. Must one who puts his farm into a survivorship contract deliver his farm at the time when he executes the contract ? In the supposed ease of the contract where each party has 10 horses, will it invalidate the contract because both parties had free access to both sets of horses, and, for that matter, if they both have control of both sets? In the Stewart general store case, not an item of the stock was ever delivered into the sole control or possession of either party to the partnership contract. Every item was at all times as much under the control and in the possession of one partner as of the other. There was never a moment when one party did not have equally full access to everything belonging to the' partnership. The benefits of the existence of the general store “still accrued” to both contracting parties. It was true there, too, that no party other than the ones contracting “had acquired any interest or incumbrance thereon.” There, as here, if the parties had attempted partition as between themselves, “each must have received his one fourth (%) thereof.” It is true that, in all cases of contract of sur-vivorship, that (in the sense the words are used by the majority) “they all put their shares in a common receptacle and locked them in the safe to await eventualities.” That is to say, in the Stewart case, the joint property was kept in the common receptacle, the partnership store, and kept there even as things *114are kept in a safe, to await the eventuality, tbe death of one partner, on the happening of which the property would be removed from the common receptacle where it was constructively locked up, and be given to the survivor. In the Stewart dnd in all like cases, just as here, the property “still remained in the dominion of the same parties.” It was true there, as here, in the sense that the majority uses the words here, that “there was no transferee and no taker of delivery.” As said, no sur-vivorship contract should ever have been upheld if here is the true theory, because not one could meet the test now formulated. Their very essence is that benefits and dominion shall be temporarily retained, with access and control, and that the final vesting of title must wait the happening of the contracted-for eventuality. There is inchoate title in all the parties, subject to the contract limitation that the last survivor shall have sole title.
Y. It is not unknown in the law that title vests, even though full use and enjoyment be postponed, and even though it may not, at the instant when title is said to vest, be known with definiteness who will ultimately have full title. Here, there was an agreement that the survivor should have “the property then owned by the said partnership, which should be and become the property of the survivor member of the said partnership.” I think it is not straining to say that, if vesting and divesting were material, each partner was so divested and each other so invested as that the title remained inchoate in the four until three had died, and that then full title vested in that survivor. We held in Wood v. Logue, 167 Iowa 436, that the last survivor becomes the sole and unqualified owner. Let me repeat that, if divesting and vesting be essential, there was the same flaw in every case wherein survivorship contracts have been upheld.
In AllbrigJit v. Hannah, 103 Iowa 98, at 102, the contract was that the plaintiff should have certain lands upon the death of one Remey, or when Remey and his wife were done with it, and we said that this “was either the present transfer of the fee, subject to a life estate, or an agreement to will the property to the plaintiff;” and that, “whichever it may have been, it was good if plaintiff accepted it and acted thereon, and took possession of the land thereunder. ’ ’ This may not fit the present discussion with absolute exactness, but it does settle that, for the *115purposes of sustaining survivorship contracts, that may be deemed a present transfer of the fee which for some purposes is not deemed to be such transfer.
Recurring to the uncertainty as to who will be the ultimate owner or beneficiary, that difficulty, too, was present in the eases wherein contracts such as this have been held to be valid. In Wood v. Logue, and in Stewart v. Todd, it was as uncertain who would get full title by becoming the last survivor as it was° uncertain, when the contract at bar was signed, which of the four brothers would live the longest.
On the reasoning of the majority, what this court has held as to contingent remainders is bad law, and there is no defending such decisions as that in Woodard v. Woodard, 184 Iowa 1178, and the numerous decisions therein cited in support. In that ease, it was contended that, when the will was executed, it could not be known what greatgrandchildren would be in being when the time for ultimate transfer and vesting arrived, and that, therefore, the remainder was a contingent one. We answered that, when said will was executed, named greatgrand-children were in being, with present capacity to take; that, therefore, though, it could not then be known that any of these greatgrandchildren would be living when the life estate in the grandchildren lapsed, or that later born ones would not then be in esse, yet the remainder was vested; and we said that, “unless something not yet discussed avoids it, the greatgrandchildren took title on the day the testator died.” The effect is that there was a vesting in the class known as greatgrandchildren, though no one could tell who, if anyone, would be in the class when the time for distribution came. On this line of decisions, it follows title was sufficiently vested in each of the brothers, because it was agreed that one of the four in their class should at some time have full title; and the fact that it could not then be known which one in the class would be such ultimate beneficiary, does not prevent a sufficient vesting of title in the class.
VI. I take it, on the authority of Stewart v. Todd, that, assuming the contract here to be on sufficient consideration, it would be enforced against heirs. If, then, it is not enforcible, it must be because the wife of a party to this contract is attacking it. I have already attempted to show that, when Charles *116died, his interest in the partnership property was incumbered, or perhaps it is more accurate to say, he had parted with it conditionally, to wit, on the condition that it should go to the last survivor. If that be sound, his wife took no more than an heir could, because there was nothing for either to take. On that reasoning, the case would stand precisely as if the husband, in his lifetime, had, for a sufficient consideration, made a Conditional sale of his property, with delivery to be made when he died; or as if, though he died seized of it, it was mortgaged to its full value. It is manifest that, in such case, the widow could take nothing. It seems to me the whole controversy at this point is disposed of by the single pronouncement in Mayburry v. Brien, 15 Peters (U. S.) 21, wherein the Supreme Court of the United States ruled that “the mere possibility of the .estate being defeated by survivorship prevents dower” from attaching. I repeat that, if the contender were other than the wife, no one would pretend to say that this contract is not enforeible, and I add it is immaterial that the wife is attacking, because the act of her husband in his lifetime worked that no marital rights attached to the property in question at the time when the husband died; that he-died seized of nothing.
Since it must be conceded that decedent in his lifetime had the right to give his property away, or to sell it for any price that pleased him (Lunning v. Lunning, [Iowa] 168 N. W. 140; Metler v. Metler’s Admr., 19 N. J. Eq. 457), it would seem that the death of the seller could not deprive a purchaser from him of property sold to him, to be delivered after death, merely because decedent had been more provident than is one who throws his property away or parts with it for an insufficient price. One can contract as to what shall be done after he die. McKinnon v. McKinnon, (C. C. A.) 56 Fed. 409; In re Estate of Neil, 35 Misc. Rep. (N. Y.) 254; and Page on Contracts, Section 397. If there be the right to sell if he yield possession, the sale must surely be as effective where, in addition to the purchase price, he demands and obtains the additional privilege of using the property without cost to himself until he shall die. If, had he not exacted this additional benefit, the property was lost to his wife, how can it be retained for her because he obtained an enlargement of the price by the retention of possession ?
*117VII. This brings me to the major argument now made by tbe court. It rests upon a perfectly sound premise, to wit: tbat the husband may not by will cut off the distributive share of the wife. The unsound deduction from this sound premise is that the defendants stand as if they were seeking to assert a will against the distributive share of the plaintiff. The argument is this: (a) This is a contract to make a will, which has been breached, (b) Whensoever such an agreement is made and broken, the remedy of the party not in fault is that-he is to be treated as if the will agreed to be made had been made, and he must be dealt with as one basing his rights upon a duly executed testament. I answer, first, that, whatever may result where a contract to make a will is made, that is immaterial where no such contract was made; and that here there is no thought of making an agreement to make a will, and no such contract was made. And whatever may result from the making and breaking of a contract to will, it does not result here, because the contract here is the permissible agreement that the future rights of the parties shall be based on the fact of survivorship (17 Am. & Eng. Encyc. of Law 650); was a lawful stipulation as to what should, at the death of all but one, be done with the accumulations the parties were then engaged in creating. Said text states, on the authority of Taylor v. Smith, 116 N. C. 531, Pritchard v. Walker, 22 Ill. App. 286, and Jones v. Gable, 114 Pa. St. 586, that the fact that survivorship is no longer regarded as an incident of joint tenancy does not invalidate contracts which definitely provide that future rights of contracting parties shall be based on the fact of survivorship; and that, “although the right [of sur-vivorship] as an incident to such tenancies be abolished by statute, it may nevertheless be given by will or deed, either expressly or by necessary implication. Nor does such a statute prohibit contracts making the rights of the parties dependent upon survivorship.”
VIII. But assume that here is a broken contract to make a will, does it follow therefrom that this creates a will, and that, therefore, these defendants are in the position of seeking to deprive the distributive share of a widow by what amounts to an attempt to take it from her by will? That can be. true only if, on breach of a contract to will, a will results. „ Such a con*118tract, though broken, remains just a contract, and the remedy on breach is a complaint of the breach, with demand for damages, quantum meruit, or other remedies allowed for breach' of contract. Hammerstein v. Thomson, Clark & F. 245; Henry v. Rowell, 31 Misc. Rep. (N. Y.) 384; Leahy v. Campbell, 70 App. Div. (N. Y.) 127; Furman v. Craine, 18 Cal. App. 41; and 1 Sehouler on Wills (5th Ed.) Sections 452, 453, 454; Allbright v. Hannah, 103 Iowa 98, 101. Or the remedy may, in some cases, be recovery of the value of what claimant has given for the premise (Frost v. Tarr, 53 Ind. 390; Shakespeare v. Markham, 10 Hun [N. Y.] 311); or quantum meruit (Taylor v. Wood, 4 Lea [Tenn.] 504, at 510; Jincey v. Winfield’s Admr., 9 Gratt. [Va.] 708; 1 Beach on Contracts 786; 2 Elliott on Contracts 454, Note 20). Both as to substance and remedy, such a contract is but a contract, — never a substitute for a ‘'will.” 3 Elliott on Contracts 218, 797; 1 Beach on Contracts 487; Bishop on Contracts (1st Ed.) 516, 518; Page on Contracts 2466.
“There is nothing peculiar about contracts to make provisions by will. An actual contract must be shown. The parties must have been competent. Their minds must have met on a certain and definite agreement, unless the facts imply a promise which would sustain an action on quantum meruit.” Rood on Wills, Section 54.
The inquiry of the majority whether the agreement here be “the equivalent of a contract to make a will” is, then, an immaterial inquiry. For, if it be conceded to be such contract, and to have been breached, not a step is taken towards putting these defendants in the position of one who is basing his rights upon a testament. As said in Stewart v. Todd, 190 Iowa 283, where it is true that the writing cannot be enforced as a testamentary instrument, it may, if on consideration, be enforced as a valid and binding contract. To the same effect is Baker v. Syfriit, 147 Iowa 49, 55. This means that a will 'can be a contract, too. But though a will may sometimes be dealt with as a contract, and though a deed or other paper executed as a will may be a testament, even if not in the usual form of wills, it has never been held that a contract to make a will, or any other contract which is not executed with statute formality, can be substituted for a will, or be treated as being a will,, either for *119the purpose of attack or of defense. The court may not manufacture a testament and thrust it upon a litigant, and thereupon deny him rights upon the ground that he has no rights, were he basing them upon a will. No writing which lacks the statute attestation is a will for any purpose. An attempted will which fails to be that, because not executed as required by statute, may be evidence to establish the existence of a contract to give, but is not and cannot be a testament. It ever remains a contract only. Studer v. Seyer, 69 Ga. 125; Walpole v. Orford, 5 Vesey Ch. Rep. 402. That is so true that it has been held that contracts to make a will are not entitled to probate, because “contracts cannot be probated.” Rood on Wills, Section 51-a. And the courts have gone s,o far as to deny probate to instruments that were wills, because they were executed in pursuance of a contract such as made the will irrevocable. Sir John Nicholl said: This very irrevocability “destroys its very essence as a will, and converts it into a contract, a species of instrument over which this court has no jurisdiction. ’ ’ And see Rood on Wills, Section 52; and Hobson v. Blackburn, 1 Addams 274, 275; Schumaker v. Schmidt, 44 Ala. 454; and Hggers v. Anderson, 63 N. J. Eq. 264 (49 Atl. 578).
Because of this very remarkable pronouncement by the majority, this point, that here there is no will, cannot be overemphasized.
IX. Availing itself of the statement that, up to a certain point, sufficient consideration has been merely assumed, the majority finally declares that there is something defective in the consideration.
It is not denied that mutual promises may be a sufficient consideration. It cannot be denied that here there were mutual promises. For the contract recites that the consideration is “the service of each of us rendered in the business of life insurance or of the income to be derived therefrom and of mutual stipulations herein contained.” It is not denied that such a writing imports a consideration. It cannot be denied that such service was rendered. What is intended is a claim that the contract is injuriously affected because complete performance of part of the mutual undertakings is impossible. It is said:
“In some respects, the contract on its face attempted the *120impossible. It attempted to dispose of the respective interests of the partners, and yet to retain the same; to do and yet not to do; to give and yet to withhold. In the nature of the case, such contradictions are not enforcible.”
I have said all I can about the alleged impossibility of performance. That assertion of impossibility is but a repetition of the assertion that no contract can work to deny this widow a distributive share, and that no attempt has been made to do so, except to assert a will. If these be not sound positions, there is no impossibility.
9-a
Upon the alleged impossibility rests a claim of partial failure of consideration. There is no such issue in the case. It is true the petition alleges that “said contracts are null and void, for the reason that they are without consideration and contrary to public policy,” and “as a transfer of property are without consideration, and colorable only.” This is a plea that the contracts are nudum pactum; that there is no consideration. Such a plea does not raise failure of consideration, or impossibility to give the full consideration. Such failure and part failure are matters which, under Section 3629 of the Code, must be “specially pleaded. ” It is said, in 13 Corpus Juris 741:
“A plea of partial failure of consideration in an action on a sealed instrument reciting a consideration is bad. And at common law partial failure of consideration could not be set up as a defense, unless the transaction was fraudulent in its inception; defendant was obliged to resort to a cross-action to recover his-damages, unless he could show an entire failure of consideration. ’ ’
While it is true the same text declares that now, either by statute or judicial determination, it is generally permitted to interpose the defense of a partial want of consideration, or of failure of consideration in the action on the contract (thus preventing circuity of action), of course that does not say that a denial of all consideration in a written instrument which imports a consideration is a good plea to raise a partial lack of or a failure of consideration. The text referred to makes that *121plain by the statement that, while such defenses may now be interposed, that is so only “when the facts constituting the defense are specially pleaded or set out by way of recoupment or as a bar to so much of the demand as may be thus answered. ’ ’ And I think that Mueller v. Batcheler, 131 Iowa 650, as analyzed in Steivart v. Todd, holds that this contract was fully supported by lawful consideration. At least it is a decision that the mutual promise creating the survivorship will support the contract.
X. I concede freely it may not be as clear to others as it is to me that the decision here is an absolute impairment of the right of contract. But I do think that all minds might agree that it is at least a most serious question whether there has not been such impairment. It would seem that the least that could be done by the majority would be to give some recognition that such a Federal question exists, to the end that, if the view now prevailing be here adhered to, an opportunity be given to have the Supreme Court of the United States consider this case.
XI. One of the things claimed by the plaintiff as partnership property is the proceeds of insurance policies, in $58,000. I am utterly unable to see why she should be permitted to prevail as to this, no matter what is done about the general contract. This insurance was effected upon the lives of each of the four contracting parties, by policies in terms made payable to the other three brothers, or survivor of them. The insurer is liable to no one but the beneficiaries thus specifically named. The widow of the deceased can have no possible claim against the insurer. There is no contractual relation between them. As said, I cannot conceive on what theory she is permitted to share in the proceeds of this insurance, which, in any view, is the property of someone other than herself, — is an obligation that can rightfully be paid only to others than herself.
XII. I have to say further, the evidence in this record demonstrates positively and unequivocally that the widow knew of and acquiesced in and profited by the joint arrangement evidenced by these contracts, and for many years. In my opinion, she should be held to be bound by an estoppel, as was the widow in the Allbright case, 103 Iowa 98, where there was less foundation for the estoppel than there is here.
*122One may grant, for the sake of argument, that this widow should not have been placed by her late husband in the position I find her in, and that judges, as men, may properly entertain a desire that she should have a distributive share in this property. But the judges should bow to the law as they find it, even if it results that what is desirable and abstractedly equitable may not be accomplished.
I would reverse.