Gottstein v. Hedges

The facts are stipulated. Under date of January 14, 1922, Peter Hopley signed and acknowledged a deed to defendant Wayland A. Hopley of a tract of land, "subject to grantee herein, his heirs or assigns, paying to Wayland A. Hopley, trustee, for the benefit of Eda May Hedges, the sum of $25,000 within ten years after the death of said grantor herein, with interest thereon at five per cent per annum from and after the March first following the death of said grantor herein, payable annually on March first of each year to said Eda May Hedges, during her natural life and at her death the said principal sum of $25,000 shall go to her surviving brothers and sisters, share and share alike, said Wayland A. Hopley being hereby named as the trustee of said trust fund * * *. Said grantee, his heirs or assigns having the right to pay said principal sum to himself as such trustee at any time before said ten-year period * * *. Should said Wayland A. Hopley not survive said Eda May Hedges then at his death the court shall appoint his successor who shall administer said trust fund and pay the net income therefrom to said Eda May Hedges during her natural life as above provided, and at her death said principal of said trust fund to go to her surviving brothers and sisters * * *." The deed was "delivered * * * to James G. Whitley to be held by him in escrow and to be delivered by the said James G. Whitley to the said Wayland A. Hopley upon the death of the said Peter Hopley * * * said deed was delivered by said James G. Whitley to said Wayland A. Hopley shortly after the death of Peter Hopley [which occurred March 9, 1926], who accepted said deed." The deed was recorded May 22, 1926.

Before the date of the deed, two judgments, and after its date (but in grantor's lifetime), a third judgment, were recovered by plaintiff against Eda (May) Hedges and Clarence Hedges in large amounts. Eda Hedges was insolvent for more than five years prior to the trial in May, 1928. Wayland A. Hopley on May 26, 1926, purchased another judgment against Eda Hedges. The stipulation is:

"That the said Wayland Hopley claimed the right to retain the sum of $1,250 per annum until said judgment was satisfied; that said Wayland Hopley was notified on the ninth day of February, 1928, by Eda Hedges delivering to him a certain document of her intention not to accept the annuities created in her behalf by said deed * * * that this renunciation * * * is the first notice that Wayland Hopley had from his sister Eda Hedges in reference to her intention regarding said annuity, and that he never paid her any sum or sums under said annuity * * *; that the said Eda Hedges had never assigned or taken any act in relation to said annuity * * *; that, in his capacity as trustee, if such capacity now exists, he [Wayland Hopley] has received no sum or sums of money under the provisions of said deed, either as annuity or principal."

Eda Hedges, on February 9, 1928, executed an instrument by which she did "finally renounce and reject any and all benefits, interest, gifts and annuities which do, may or might accrue to" her under the deed in question, "and all provisions of said deed * * * whether the same merely constitute a contract obligation in my behalf or as the beneficiary of a trust, either actual, constructive, resultant or implied." Original notice in the present suit, accompanied by copy of the petition, was served on Wayland A. Hopley and Eda Hedges July 7 and 9, 1926.

Plaintiff's argument is:

"The so-called renunciation was not a renunciation in the sense that renunciation is usually interpreted, because the grantee had accepted the deed, which by its terms bound him to pay Eda Hedges a certain annual income. His acceptance of the grant with the reservation immediately vested in Eda Hedges a definite, certain, ascertainable property. This being true, the legal effect of the renunciation was a release or waiver in favor of the reversioners, the other heirs of Peter Hopley, who, under the deed, took upon the death of Eda Hedges. * * * the reservation in the deed in favor of Eda Hedges created in her an equitable interest in the land. It was a burden upon the land, attached to it an equitable mortgage, which the grantee, Wayland Hopley, assumed to pay when he accepted the deed. * * * An absolute interest was established in favor of Eda Hedges, and under the equitable proceedings, her right and interest therein are reached by the lien therein established. * * * The $1,250 per year was intended by Peter Hopley, the grantor, to be a provision against want to his daughter, Eda. It was for her maintenance and support, and she acquired a mortgage or an equitable interest in this land when it was accepted by the grantee. * * * Eda Hedges had a property, a right, and interest that was accessible to the lien, under the statute, in equitable proceedings. If it was reached, then her renunciation does not avail her, nor does it avail the reversioners anything." "Acceptance vested in Mrs. Hedges at once the interest payable to her. * * * She can waive, release, or renounce, as she desires, and extinguish her right to the property, but not to the detriment of a creditor who had, under equitable proceedings, instituted by way of Section 11815 of the Code of 1927, fastened upon this property an equitable lien before she renounced. * * * a covenant in a deed of a grantee is of much deeper legal import than any legacy in a will, because not a legatee is present in this case to make an acceptance, but the grantee of the deed did accept the land, and thereby accepted for the beneficiary. * * * It took no express acceptance by Mrs. Hedges to make it good."

The provision made in the deed in favor of the judgment debtor was, as to her, a gift. We need not pause to discuss the question of who would take the gift in the event of renunciation by the donee. A gift, however created, whether by will or inter vivos, is wholly inoperative unless accepted by the donee. Cases post; 28 Corpus Juris 643. A creditor of the donee has no such interest, legal or equitable, as to enable him to control the right of the donee to refuse acceptance or renounce the gift.Funk v. Grulke, 204 Iowa 314; Schoonover v. Osborne, 193 Iowa 474; Robertson v. Schard, 142 Iowa 500; Piekenbrock Sons v.Knoer, 136 Iowa 534, 540; In re Estate of Stone, 132 Iowa 136. While acceptance of a gift which is beneficial to the donee and which imposes no burden upon him may be presumed (Kneeland v.Cowperthwaite, 138 Iowa 193; In re Estate of Bell, 150 Iowa 725; 28 Corpus Juris 672), the presumption prevails only in the absence of evidence of renunciation. Mahoney v. Martin,72 Kan. 406 (83 P. 982). The donee may, notwithstanding the presumption, renounce the gift, and thereby non-acceptance is proved. Gray v. Nelson, 77 Iowa 63, and cases above cited. The gift in the present case would, in view of the judgments against the donee, be of at least doubtful benefit to her. There might be various reasons (whether morally good or bad is legally immaterial), why she should prefer that its benefits go to her brothers and sisters, or other heirs of her father, rather than to her creditors. It is not argued that the delay in renouncing is such as to be evidence of acceptance. The record does not set out the original answer in this suit of the judgment debtor. By her substituted answer she pleads the renunciation. The renunciation is fully established. The grantee in the deed, while by its acceptance he bound himself to pay the $25,000 and the interest to whoever would, under the law, be entitled to it, could not, by his agreement to pay it, bind the judgment debtor to an acceptance of the obligation as one to pay her, or bind her to acceptance of it as a gift to her. — Affirmed.

ALBERT, C.J., and EVANS, FAVILLE, KINDIG, WAGNER, and GRIMM, JJ., concur.

STEVENS, J., not participating.

De GRAFF, J., dissents.