Pairo v. Vickery , 1873 Md. LEXIS 22 ( 1873 )

Bartol, C. J.,

delivered the opinion of the Court.

The facts of this case as disclosed by the record, so far as it appears material to state them, are as follows:

On the 20th day of January, 1865, Samuel O. Edes made his last will; by the tenth clause of which ho devised “to Thomas J. Carson, his heirs and personal representatives, all his estate, effects and property real, personal and mixed, wheresoever situate, in trust and confidence, for the objects and purposes in this clause of his will declared concerning the same; that is to say: that during the natural life of his mother, his estate, and property of every kind, (excepting the money and property devised and bequeathed by the preceding provisions of his will,) shall be preserved and kept together by his executor,, hereinafter appointed; who was thereby fully authorized to collect and receive all the income, rents and profits of the same; and he thereby directed that his executor, out of said income, rents and profits, should pay to ■his (testator’s) mother, the sum of two thousand dollars per annum, so long as she shall live, in quarterly instalments, &c., accounting from the day of his decease.”

The eleventh clause of his will was as follows :

“Immediately after the decease of my said mother, I will and devise all the-rest and residue of my property, real, personal, and mixed, not hereinbefore devised and bequeathed, to my brother Richard Andrew Edes, my sister Mary Jane Pairo, and my sister Elizabeth "W. Long, in equal proportions, share and share alike, to them and each of them, their heirs and personal representatives ; excepting only, and provided, that if my said brother shall marry within three years after our mother’s death, then and in that case, I bequeath to him the sum of-three thousand dollars, to he allowed to him out of the principal amount and interest'due me on certain promissory notes of my said-brother, now held by me,-(and which are not to he collected until- a general division is made of iny estate,) over and above what, by this section, is devised to my two sisters aforesaid. The property and money devised and bequeathed by this section to my said brother and sisters, are to vest in them, discharged from the trust created in item ten of this will.”

He appointed Thomas J. Carson executor, who took out letters testamentary on the 26th day of January, 1865.

At that time Mrs. Pairo, the appellant, who was one of the devisees in remainder, was absent from the State, having been sent South by the military authorities in 1863. She returned to her home in Baltimore in April, 1885 ; and on the 27th day of the same month executed and delivered to Thomas J. Carson the mortgage which she now, by her bill of complaint, prays to have annulled and set aside.

The mortgage, in which her husband, Charles W. Pairo, united, conveyed to Thomas J. Carson, his heirs, executors, &c., “ all the estate and interest, right, title, property, claim and demand, whatsoever, of Pairo and wile, and each of. them, of, in, into and out of all the estate, real, personal and mixed, whereof the late Samuel C. Edes, died seized, or possessed, or was in any manner entitled to, interested in, or could claim.”

The consideration stated in the mortgage was a debt of $16,864.86, recited therein, to be due and owing by Chas. W. Pairo to Thomas J. Carson; and its purpose was to secure the payment thereof with interest from the 24th day of April, 1865.

By the condition in the mortgage the debt and interest were payable on demand; and the instrument contained an assent to the passing of a decree for the sale of the property.

The appellant charges in her bill of complaint that the mortgage was extorted from her by Carson, by cruelty, and by means of threats that, unless his demands were complied with, he would dismiss her husband from his place in his (Carson’s) banking house; and destroy his business position and prospects. These grave charges have not been supported by legal proof; the testimony of Mrs. Long on that subject, being merely a repetition of the statements made to her by the appellant herself, are of course, inadmissible.

We do not consider it necessary to advert to the state of mental excitement under which Mrs. Pairo was suffering at the time the mortgage was executed, as described in the testimony of Mrs. Long; and which has been referred'to by her counsel as furnishing ground for impeaching the mortgage. In our opinion, there is a fatal objection to its validity, growing out of the fiduciary relation of Carson, with respect to the mortgagor, and to the property conveyed, which existed at the time of the mortgage, and which, under the circumstances of this case, entitles the appellant to equitable relief.

Under the will of Samuel O. Edes, Carson was charged with the two-fold duty of trustee and executor. The will vested in him the legal estate for the purposes of the trusts; it required him to keep the property together during the life of testator’s mother, to collect the income, rents and profits, and out of them to pay Mrs.'Edes her annuity of $2,000 per annum ; and at her death, to turn over the whole estate, real and personal, to the legatees and devisees in remainder, with the accumulations unim-. paired, except by the payment of the annuity.

The appellant, as one of.the devisees in remainder, had a vested interest or .equitable estate under the will, which could not come into possession until after the death of Mrs. Edes, the life annuitant. During her life the legal estate was held by Carson, as trustee both for the life annuitant and the devisees in remainder, who were interested in the faithful performance of his duties, both as trustee and executor,

When the mortgage was executed Mrs. Edes was living, and Carson held the property as trustee. The transaction, therefore, falls within the established rules of equity, which govern dealings between trustees and cestuis que trust, with respect to the trust property, and conveyances of the same to the trustee.

Upon principles of public policy, for the prevention of fraud, and to remove from trustees all temptation to violate their duties, by securing to themselves profit and advantage at the expense of those whose property and interests are confided to their charge, they are not allowed to purchase the property from the cestuis que trust, or acquire rights therein which may bring their personal interests in conflict with the discharge of their official duties. It has been held in numerous cases, and is well settled, that while such transactions are not absolutely void, they are discountenanced by Courts,of Equity; the presumption is against their validity, and they are never-upheld unless it clearly appear .that they are free from all taint or suspicion of unfairness. The onus of showing their perfect bona Jides is cast upon the party who sets them up, and not upon the cestuis que trust who assails them. In support of this proposition many authorities might be cited; but it is sufficient to refer to Smith vs. Townsend, 27 Md., 388, and the authorities there cited, and those collected in Hill on Trustees, 247, note 2, (4th Ed.,) and in 1 Story’s Eq. secs. 321, 322, and notes.

In view of this well settled rule, it seems to us that the mortgage in this case cannot be supported. It has been arguéd by the appellees’ counsel, that being amere charge or security, and not an absolute conveyance of the property, it does not fall within the rule above stated. But we think, when we look at the facts and circumstances as disclosed by the record, and apparent on the face of the mortgage, that there is no ground for such a'distinction. The effect of the instrument was to divest Mrs. Pairo of her whole interest in the trust estate as completely as if., it had been an absolute conveyance. It is stated in the answer that the whole property conveyed is insufficient to pay the debt it was intended to secure ; the equity of redemption therefore was of no substantial value. Pairo, the debtor, was insolvent; the debt was by the terms of the mortgage payable on demand, and was liable to be foreclosed immediately. Certainly no more effectual instrument could have been devised to divest the appellant of her whole trust estate. It is, therefore, obnoxious to the same objection, as if it had been an absolute conveyance ; and under the rule we have stated will not be supported as valid in a Court of Equity, in the absence of complete and satisfactory proof on the part of the mortgagee, or those.claiming under him, that it was freely and voluntarily made by the appellant, with full information as to her rights, and that no unfair advantage was taken of her condition and circumstances.

We consider it perfectly clear upon the authorities and for the reasons stated, that if this bill had been filed during the life-time of Carson, a Court of Equity could not hesitate, upon the state of facts disclosed by the record, to set aside the 'mortgage, without any imputation of actual fraud, or fraudulent intent on the part of the trustee in procuring it. It would be declared invalid upon the high ground of public policy, which we have before stated is the foundation of the rule.

It remains to be considered whether anything has occurred since the mortgage was executed, to deprive the appellant of equitable relief.

It has been contended that the deed of trust, executed by the appellant and others on the first day of September, 1866, operated as a confirmation of the mortgage. This •point was not much pressed by the appellees in’the argument, and we think it very clear that the deed can have no such operation or effect. It was not intended as a confirmation, it simply refers to the mortgage as existing, and recognizes the right of Carson to pay to himself the ■ mortgage debt out of Mrs. Pairo’s share of the money arising from the sale of the trust property.

“In order to constitute a valid confirmation, a person must be aware that the act he is doing will have the effect of confirming an impeachable transaction.” 1 Lead. Ca., in Equity, 117 m, and cases there cited.

In 16 Md., 456, and 20 Md., 151, it was said, “ to make an act of ratification effective the cestui que trust must not ¡only have been acquainted with the facts, but apprised of the law, how those facts would be dealt with if brought before a Court of Equity.” The deed of trust has none of the essential qualities, to give it the force and effect of a ratification of the mortgage. The main ground of defence relied on by the appellees, is the lapse of time since the mortgage was executed, and the death of Carson before the bill was filed. It was upon this ground that the Judge of the Circuit Oourt refused to grant relief, at the same time expressing his want of entire satisfaction with the conclusion to -which he came.

We have had the benefit of a most full and elaborate argument, and have been referred to a great number of authorities bearing upon this, as well as the other questions in the case; all of which we have examined; and have found none which we think would justify us in refusing to the appellant relief in this case, on account of supposed laches on her part, or lapse of time in filing her bill, or by reason of the death of Carson.

This we think will be manifest by reference to the cases cited and relied upon by the appellees’ counsel in support of the fourth point of their brief. In some of them, lapse of time, and the death of parties have been considered as circumstances affecting the equitable rights of the complainant to relief; and when the delay has been for along period of time, without excuse or explanation; it has been sometimes regarded as sufficient ground for refusing relief, especially where, in the meantime, other parties have acquired rights; or there have been other facts and circumstances from which the Court could see that injustice might be done by annulling a transaction, which had been long acquiesced in by the complainant.

On the other hand, a great many cases have been cited in which relief has been granted after the lapse of a much longer time, than has occurred in this; and where too the party, upon whom the law casts the onus of explaining the transaction, had died before the bill was filed.

To refer to the cases particularly, and to point out the special circumstances in each, which controlled the judgment of the Court, would require this opinion to be extended to too great length.

While we recognize it as a salutary rule, that Courts of Equity will refuse their aid to parties who have “slept upon their rights, and acquiesced for a great length of time,” before seeking relief, yet in dealing with a question of this kind, each case must necessarily depend very much on its own circumstances, and looking at this case in the light of the authorities, we do not find that there has been any such laches and delay on the part of the appellant as ought, in equity, to deprive her of relief.

The bill was filed in 1870, five years, after the execution of the mortgage. Carson died in 1869. We lay less stress upon the circumstance of his death, because the invalidity of the transaction impeached, depends mainly on the relations of the parties to each other, and the intrinsic nature of the transaction itself, as disclosed on the face of the mortgage, rather than upon any extrinsic cirouinstances; -and besides, the law has in some measure equalized the parties, by making the appellant an incompetent witness; because Carson is not living to testify. {Act 0/I868, ch. 116).

The delay in filing the bill is explained by the fact appearing from the testimony of Mrs. Long, in her answer to the 13th interrogatory, (to which no exception was taken,) that the appellant was not informed of her legal right to impeach the mortgage until in May, 1870 ; when for the first time she had the benefit of legal advice.

Her delay therefore could not he construed into acquiescence.

The principles upon which Courts of Equity proceed in determining the effect of length of time upon the rights of a party in a suit of this kind, are laid down in Hatch vs. Hatch, 9 Ves., 292; Morse vs. Royal, 12 Ves., 355; and Wright vs. Vanderplank, 8 DeG., McN. & G., 133; cited by appellees’ counsel.

In Hatch vs. Hatch, where the bill was filed in 1800 to impeach a transaction which took place in 1780, Lord Eldon said : “I do not deny, that length of time is of groat consequence in all these cases of fraud, breach of the policy of the law, &c. But in all cases it is some evidence, that the transaction was understood at the time not to be fraudulent; and that there might have been some circumstances of the possibility of which the party ought to have the advantage.”

He then adds: “But.the evidence in this case is the answer,” &c. In that case the transaction was set aside.

In Morse vs. Royal, Ld. Ch. Erskine said, “As to the effect of length of time, where there is no bar by the Statute of Limitations, a Court of Equity will never lay-down as a general proposition, that though the fact, that imposition has been practiced, is established, the party is too late; and by the accident of the death of the person who might have contradicted him, shall be deprived of his right to relief. The true operation of length of time is by way of evidence.” ****** ** And in the same case he says: “ The point upon the length of time is put thus : that I must shift the proof from the one to the other. I do not know, that I am to go to that length. I am to see that the transaction was fair; that no advantage was taken ; that there was no concealment.”

These decisions were followed in Wright vs. Vanderplank, where the Ld. J. Turner after quoting the language of Ld. Eldon in Hatch vs. Hatch, says of the case before him, which was a bill to set aside a deed of gift from a daughter to her father: “ The parties knew of their right to impeach the gift, and left the defendant to live on the income, and after ten years come to make him account. Looking at the lapse of time, and to the fixed, unbiased and deliberate intention of not impeaching the deed, which in. my opinion must be attributed to the daughter, I think the bill was rightly dismissed.”

(Decided 21st February, 1873.)

We do not find any thing in the principles established by these decisions, or cited in the argument, which, in our judgment, ought to deprive the appellant of relief.

There are no facts or circumstances disclosed by the record, from which it can be inferred, that she ratified the mortgage, or acquiesced in it with a knowledge of her rights to impeach it. The mere lapse of time, and the death of Carson, are not of themselves sufficient to bar her claim; and having instituted her suit without delay after being informed of her rights, we aré of opinion, that she is entitled to relief. The decree of the Circuit Court will therefore be reversed, and the cause remanded, in order that a decree may be passed annulling and setting aside the'deed of mortgage of the 27th day of April, 1865, and so much of the deed of trust of the first day of September, 1866, as relates to the 'said mortgage, in so far as the rights of the appellant are concerned; reserving, however, the rights of the appellees, under said mortgage and deed of trust, in so far as they may operate to convey any interest or estate in the property therein mentioned of Charles W. Pairo, the husband of the appellant. And under the prayer for general'relief, the appellant is entitled to a decree requiring an account of the trust property.

Decree reversed and cause remanded.