Cleere v. Cleere , 82 Ala. 581 ( 1886 )

CLOPTON, J.

The only assignments of error urged in argument are directed to that part of the decree from which the appeal is taken, which gives effect to a compromise and settlement entered into by appellant with James E. Moore, as executor of S. S. Anderson. The instrument, which is signed by appellant alone, acknowledges having received from Moore, as such executor, the sum of fifteen hundred dollars, by the assignment of the proceeds of one hundred and thirty-one acres of land, specially described, which constituted a part of a large tract pf land mortgaged by appellee, G. D. Oleere, to Anderson. Moore, as such executor, agreed to sell the lauds under the mortgage, at as early a-day as the law will permit, and appellant agreed to bid for the lands the amount assigned; and should the mortgage be satisfied without a sale, Moore was to pay appellant fifteen hundred dollars, which sum paid, as above mentioned, appellant accepted as full payment from the estate of Anderson, and from the sureties on the bonds of Oleere as administrator and as guardian, and released and discharged them from any and all liabilities as individuals and as such sureties. Appellant further agreed to waive all liens, as vendor or otherwise, to which he was entitled, on the lands embraced in the mortgage to Anderson, or in any mortgage to the sureties on the guardian’s bond, and to .dismiss the present suit as to all the defendants, except the administrator and guardian, and especially as to.the estate of Anderson and the sureties on both bonds ; Moore agreeing to pay one half of the accrued costs. On . the presentation of the instrument, the register or chancellor was authorized to dismiss the suit, on the terms stated, as to the parties mentioned. We have stated the substance and legal effect, as the instrument is unnecessarily prolix. A statement of the purposes of the bill, and of the state of the litigation, showing the relative rights and liabilities of the partieseis necessary to a full and correct understanding of the settlement and release.

Upon the death of complainant’s father, the defendant, G. D. Oleere, qualified as administrator of his estate, and was subsequently appointed guardian of complainant, who was then a minor. Under an order of the Probate Court, the administrator sold the lands of the estate, and himself became the purchaser. The sale was reported and confirmed, but no report of the payment of the purchase-money was made, and no conveyance executed under au order of the court. The administrator, while being both administrator and guardian, made a final settlement of his administration, in April, 1860, on which he was charged with the purchase-money of the lands and the personal assets, and was directed to retain as guardian the share ascertained to be coming to complainant, being $3,492.34. This settlement is a nullity, the Probate Court being without jurisdiction on account of the antagonistic interests represented by the administrator ; and the case must be considered as if no final settlement had been made.—Hays v. Cockrell, 41 Ala. 75; Tankersly v. Pettis, 61 Ala. 354.

On April 8, 1876, the administrator executed to Anderson a mortgage on the lands, except a quarter-section which he conveyed to his wife, to secure a described indebtedness of over ten thousand dollars; and subsequently, but on the same day, made a second mortgage to the sureties ou his bond as guardian, to indemnify them as such sureties, and to secure certain debts which he owed them individually. The bill was brought by appellant, in July, 1878, to obtain a final settlement of the administration and .guardianship,' and to enforce a vendor’s lien on the lands, for the amount of the unpaid purchase-money due him, claiming a lien superior to the lien created by the mortgages. Anderson having died, Moore was made a defendant as his executor, and as an individual; and the other sureties on both bonds, included in the compromise and settlement, were made parties. Moore, as such executor, filed a cross-bill to appoint a receiver, and to marshal the securities ; and a cross-bill was also filed by the sureties on the guardian’s bond, being the mortgagees in the second mortgage. This was the status of the suit and the litigation at the time the compromise and settlement was entered into, January 20, 1880, so far as necessary to be stated for the purposes of this case. On May. 11, 1880, the settlement and release were set up by amendment of the answers of Moore as executor, and of the sureties, and by amendment of the cross-bills. In the view we take of the question raised, it is unnecessary to consider whether effect should have been given to, the settlement without requiring the performance by the defendant contracting party.

Sections 3039 and 3040 of the Code are legislative enactments founded on the policy of the law, which favors the compromise and termination of litigation,.whatever maybe its character. The first declares : “ All receipts, releases, and discharges in writing, whether of a debt of record, or a contract under seal or otherwise, must have effect according to the intention of the parties to the same.” And the second provides: “ All settlements in writing, made in good faith for the composition of debts, must be taken as evidence, and held to operate according to the intention of the parties, though no release under seal is given, and no new consideration has passed.” The purpose of each section is the abrogation of certain common-law rules, technical in their nature., The effect is, to make valid and operative written discharges, and written settlements for the composition of debts, though executed without a seal, and without new or additional consideration. — Singleton v. Thomas, 73 Ala. 205. Other than these exemptions from the rules at common law, releases and compromises derive no potency from the statutes, and are governed by the rules which equity applies in such cases. The statutes are designed to give effect to releases and compositions according to the intention of the parties, when made in good faith. They maybe shown to have been given by mistake of fact, or by surprise, or obtained by undue influence, or by misrepresentation or concealment of material facts, or may be avoided for any cause sufficient in equity to invalidate a contract.—Cowan v. Sapp, 74 Ala. 44.

Though mere inadequacy of consideration, ordinarily, is not sufficient to annul and set aside a contract, when the parties are in a situation to exercise independent judgment in determining its value, and to act knowingly and intentionally ; and though it furnishes no ground for the interference of equity, which in such case leaves the parties to the consequences of their own improvidence; yet the inadequacy may be so gross as to furnish “ the most vehement presumption of fraud.” In 2 Pom. Eq. Jur., § 927, the learned author says : “ The doctrine is settled by a consensus of ideeisions and dicta, that, even in the absence of all other circumstances, when the inadequacy of price is so gross that it shocks the conscience, and furnishes satisfactory and decisive evidence of fraud, it will be sufficient ground for cancelling a conveyance or contract, whether executed or executory.” In such case,- the inadequacy of consideration is not the ground of interposition, but the fraud, which follows as a conclusion from the degree of grossness, whereby the conviction arises and abides, though there be no direct evidence, that the contract was obtained by imposition, or by some improper means.—Saltonstall v. Gordon, 33 Ala. 149; 2 Lead. Cas. in Eq. 1238.

It is morally certain from the evidence, that Moore was cognizant of the financial inability of the mortgagor to pay the mortgage debt, without a sale of the property. Hence the alternative agreement, that complainant should bid for the land the stipulated amount. While the nominal consideration was stated at fifteen hundred dollars, there was no absolute'agreement to pay that amount.- The land was the real consideration in probable and reasonable prospect, the value of which, disconnected from the balance of the tract, according to the evidence disclosed by the record, did not exceed five hundred dollars. Practically, ior this consideration the complainant waives his lien on the lands, and releases the sureties from all liability. It may be that, coupling the agreements to assign fifteen hundred dollars of the proceeds, and, if necessary, to take the land at that estimated value, relieves'the consideration from inadequacy so gross as to furnish of itself satisfactory and decisive evidence of fraud. But it is not necessary in this case to infer, from the mere inadequacy of the consideration, that the compromise was improperly obtained. When gross inadequacy, though not sufficiently gross to be the basis of an inference of fraud, is combined with incidental circumstances showing bad faith, or undue advantage; when it is coupled with weakness of mind, produced by any cause, with pecuniary distress, or suspicion of fraud; the courts will withhold the benefits of the contract from the offending party, whether claimed affirmatively or defensively. Lester v. Mahan, 25 Ala. 444.

The complainant was a man of intemperate habits, which was known to Moore, who invited him to go to Belgreen, where Moore resided, away from his friends and relations. Moore informed the ladies, includiug his own daughter, at the hotel where he was boarding, that complainant was coming, and that he wanted to make a compromise or trade with him; and requested them to make it pleasant and agreeable to him. Complainant remained at Belgreen, staying at the hotel at which Moore was boarding, about a week, during which time he drank to excess, Moore informed Petree, at whose saloon complainant had drank at times, that he wanted to effect a compromise, and was anxious to get it fixed, and requested Petree not to interfere' in the compromise. When complainant went to Petree for advice, it was refused because of this promise. No person seems to have been present at any interviews between Moore and complainant, during his stay at Belgreen, nor is it shown that any interview took place; if any, they were private. On the morning of the last day of. his stay, complainant signed and acknowledged the settlement, which was written by Moore, before the clerk of the Circuit Court, who says he was apparently sober. This, is the first information given of the compromise having been made.

The evidence makes a case of a deliberate and preconceived plan, by a man of experience and mature years,.to induce a young man of dissipated habits, addicted to excessive drinking, to become his guest at the hotel'at which he and his family resided, and at a distance from his friends and relations, to bring him under influences that would make him more plastic, and more easily induced to make the compromise, which Moore was anxious to effect; to prevent the advice and interference of others, and to procure his signature to a settlement, when a suitable timé and occasion were afforded. ' These circumstances are not purged of their suspicious 'character, because complainant may have had mental capacity to contract, nor because he may have been sober after leaving Belgreen, nor because he may have wanted to get the money while living. It is not a question of mental capacity, but good faith, though the probable effects of previous excessive drinking may be considered. Threats of protracted litigation, and a pressing desire and need of money, may have been inducements brought to-operate on him. The record is silent as to the circumstances under which he agreed to the compromise, and his knowledge of its contents. The incidental circumstances, combined with gross inadequacy of consideration, which create a conviction of circumvention and undue advantage, call for explanation, and exact of those claiming the benefits of the compromise to show that complainant acted intentionally, with knowledge of its nature and contents, and that no undue advantage was taken of his situation. In the absence of such explanation, the conclusion of fraud follows, and equity will not give effect and operation to the settlement.—Campbell v. Spencer, 2 Bin. 129; McKinney v. Pinckard, 2 Leigh, 149; McCormick v. Malin, 5 Blackf. 509; 2 Pom. Eq. Jur. § 928.

There are other considerations. Neither Moore, nor'any of the sureties, paid or obligated themselves to pay complainant anything. No consideration moved from them'for their discharge and' release. The whole burden’ of the consideration was attempted to be cast on Anderson’s estate, though the sureties were to receive large personal benefits. They claim under and by virtue of a contract made with thé personal representative, and purporting only to bind the estate. The successor in the administration of the’estate, Moore having died, repudiates the compromise on the record, and refuses to perform it. We shall not consider the authority of Moore, as executor, to bind the estate in the manner attempted, nor whether a court of equity would enforce tbe agreement against the estate. We take it to be a rule without exception, that equity will not enforce a contract in favor of a party who, not only does not ask its enforcement, but repudiates the contract, and subject the other party to a separate suit and different litigation to get the reciprocal benefit. The succeeding administrator had the same authority to rescind, as tbe executor had to make the contract. The complainant was authorized to treat it as rescinded, all parties being thereby placed in statu quo. The sureties have no independent equity, and claiming under and through the compromise, whatever equity they may have had thereunder, falls with the right and equity of Anderson’s estate.

In either aspect, the parties are not entitled to the benefits of the compromise. As the register has reported that there is nothing due from Cleere as guardian, which report has been confirmed, no liability rests on the sureties on his bond as such. They can only be made liable for the costs of any unsuccessful litigation instituted by them.

The conclusion reached by the chancellor precludes the consideration of other questions, which may now become material. They are not properly before us. The taxation of the costs wiíl be different on another hearing.

Reversed and remanded.