Estate of Brownfield , 193 Pa. 151 ( 1899 )

Opinion by

Mr. Justice Mitchell,

The testator devised his land to his two sons, also naming them as executors, but desired them “to pay to each of my daughters, Jane, Malinda, Elizabeth and Anna Crossland, a sum of money equal to the sixth part of the value of the coal under all my lands; my executors to have power to carry out this provision of this my will, by selling if necessary the whole or any part of the said coal if they should consider that the best way to carry the same into effect, but this does not require them to sell the same unless they wish to do so.” The effect of this provision, as correctly held by the learned auditor and court below, was not to give the daughters any estate or interest in the coal, but merely a money legacy, the amount of which was to be determined by the value of the coal. The moment that value was liquidated in any valid way, the coal ceased to be a factor in the matter. And the value was to be estimated as of the date of the will or of testator’s death, which was so soon after as to be for this purpose contemporaneous. There was no direction to sell, or obligation on the part of the executors to do so. The power to sell was merely a tentative mode of fixing the value, suggested by the testator, but left entirely to the discretion of the executors.

The testator died in September, 1890. In November the six children met and made an amicable division of the personal property xvhicli the will had left to them in equal shares, and in March, 1891, they met again and executed a formal sealed agreement of liquidation of the value of the coal, so far as it affected the amount of the legacies to Malinda Brownfield and Anna B. Crossland, two of the daughters. The .validity of this agreement is the main question in the cas,e.

The auditor found as facts that the agreement was executed by the two daughters now objecting, with knowledge of its contents; that they had opportunity to examine and consider it before signing; that the accountants, the two sons, made no attempt to conceal the effect of the agreement from their sisters, but advised them to obtain outside advice; that they did not in any way misrepresent the amount of coal, but that one of them had information upon that subject which he did not communicate ; and that such information being essential to the safe entry into the agreement the failure to communicate it, under the confidential and fiduciary relations between the parties, rendered the agreement invalid, tie thereupon proceeded to take testimony as to the amount and value of the coal, and to surcharge the accountants with this valuation in place of that fixed by the agreement.

The relation of the parties was somewhat exceptional. The sons were devisees of the land, including the coal, and as the daughters had no estate, title or interest in the coal, but merely a claim for money against the executors depending upon the value of the coal, the sons as owners of the land occupied no fiduciary relation at all to their sisters, and were entitled to deal on this subject at arm’s length. But the sons were also named by the testator as executors, though the will had not yet been proved, nor was it offered for probate till three years later, at the instance of the purchaser of the coal. The reasons for this delay are not very clear, but it was certainly in pursuance of an amicable family understanding if not of positive agreement. It is argued by the present appellants that not having yet taken out letters testamentary they were not in any relation of trust or confidence at all at that time. But the auditor was clearly right in holding that the parties dealt on the understanding that the will gave the sons as executors the power and duty to ascertain and fix the value of the coal as the measure of the daughters’ legacies, and they were therefore so far in a trust relation that the equity rules as to transactions between trustee and cestui que trust had a bearing on the case. But he erred in applying the rule too strictly. There was no purchase of trust property by the trustee, no strict relation of trust which gave either superior knowledge or power of moral coercion, but there was a confidential relation requiring entire good faith. Not only was this clearly present but the valuation is shown to have been a reasonably fair one, by that which, the auditor himself arrived at. The agreement put the valuation at $13,000 for each share; the auditor, after full adverse investigation, with the light of four years’ subsequent developments in the coal business, put it at $15,500, coupled with the admission that “ this is a higher price than any of the coal in the neighborhood had sold for up to that time.”

The agreement was entered into as a family settlement, was carried out without objection for four years, and until the sale of the coal under an unprecedented rise in price made the objectors regret that they had not waited as the others had, to realize on their legacies. In the entire absence of fraud or any act of bad faith, and in view of the clear proof of knowledge by the objectors before execution, the double position of the appellants, one of which carried no duty at all of disclosure of facts, the very evenly balanced testimony whether or not the brothers had. any undisclosed knowledge, the evidence that the valuation was in fact a fair one, and the very strong presumption in favor of a family settlement unimpeached for four years, it was error to set aside the agreement of 1891.

The facts of this case as already said are exceptional and no close precedent has been found, but Grim’s Appeal, 105 Pa. 875, is analogous, and the principles as applied there are applicable here.

The agreement of 1891 being valid and the proper basis of the account, the interest must of course be adjusted in accordance therewith, and not at six per cent prior to the sale as the auditor calculated it.

The counsel fees claimed by the accountants appear to us moderate, but they have been slightly reduced by the auditor and the court, and we are without evidence on which we can say there was error in this respect.

The decree is reversed and the account directed to be restated in accordance with this opinion. Costs to be paid by the appellees.