Ham v. Ham

^* Corpus Juris-Cyc. References: Deeds, 18CJ, p. 231, n. 91; p. 232, n. 2; p. 422, n. 95; p. 423, n. 97; p. 427, n. 51, 54; p. 447, n. 46. Burden on party claiming fraud to establish it, see 12 R.C.L. 424; 2 R.C.L. Supp. 1427; 5 R.C.L. Supp. 644; 6 R.C.L. Supp. 707. This is a suit in equity in which the appellants seek to set aside a deed executed by C.M. Ham, now deceased, to the appellee, Eugene Ham, and the appeal is from a decree dismissing the bill. The complainants in the court below, the appellants here, are a brother, a sister, and the heirs at law of a deceased sister, of C.M. Ham, and the principal defendant in the court below, and the principal appellee here, is a brother of C.M. Ham. The ground on which the deed is sought to be canceled is that when it was executed the relations between C.M. and Eugene Ham were of such a fiduciary nature as to make the execution of such a deed primafacie fraudulent and void.

The case was tried on bill, answer and proof, and the facts appearing therefrom are, in substance, as follows:

C.M. Ham was a bachelor and was, for a number of years, engaged in the mercantile business in Greenville, Miss. In 1902, he induced his brother, Eugene, to come to Greenville and join him in the business, giving him a one-half interest therein, the business being thereafter conducted under the firm name of "C.M. and E.G. Ham." In February, 1905, C.M. Ham executed a will by which he devised all of his property to his brothers and sisters. On April 23, 1924, he conveyed practically all of his property, which consisted of real estate and his interest in the firm of "C.M. and E.G. Ham," to Eugene Ham, the consideration being that Eugene would pay C.M. Ham two hundred fifty dollars a month for the remainder of C.M. Ham's life, and, in addition, would pay his physician and hospital bills, in event of his illness, and his funeral expenses at his death. In 1921, C.M. Ham's health began to fail, and he gradually grew worse until his death on January 17, 1925. The active management of the business, because of C.M. Ham's ill health, devolved more and more upon Eugene Ham, and, for some time prior to the execution of the deed, it was practically under his sole supervision and control.

The relations between C.M. Ham and Eugene Ham were close and intimate, C.M. Ham having a very strong and intense affection and admiration for Eugene Ham. The physician who advised and treated C.M. Ham after his health began to fail looked to Eugene for the execution of the various plans devised by him for C.M. Ham's comfort and convenience. C.M. Ham objected to some of the things which his physician advised him to do, but seems to have acquiesced therein on the advice of Eugene. The disease with which C.M. Ham was stricken was incurable, and was, according to his physician, who advised him and Eugene Ham, certain to result in death within a reasonably short time.

The deed to Eugene Ham was not intended as a gift, but, according to the evidence of Eugene himself, was a straight bargain and sale. Why C.M. Ham executed the deed does not appear, unless, as seems to be intimated by some of the evidence, he was afraid he would become an invalid and feared trouble over his property from some of his relatives. Eugene testified that when his brother decided to execute the deed that he told him to advise with his attorney. Shortly thereafter C.M. Ham and Eugene Ham together consulted with an attorney, advising him what C.M. Ham wished to do. This attorney advised them as to the character of the instrument which should be executed in order that C.M. Ham might be protected in the receipt of the annuity which Eugene Ham was to give him for the property, drew up the deed, and submitted it to C.M. Ham, who suggested some changes therein. This attorney had, for a long time, been the attorney for both C.M. Ham and Eugene Ham, and continued as such for Eugene thereafter.

The evidence does not disclose that Eugene brought any pressure to bear on C.M. Ham to induce him to execute the deed; the evidence being barren of any facts, other than as hereinbefore stated, which led to the execution of the deed. While there is some evidence tending to show that C.M. Ham was not as mentally alert at the time of the execution of the deed as he had been prior thereto, his physician and others testified that his mind was in no way impaired, and the appellants do not predicate their right to the cancellation of the deed on either mental inefficiency or undue influence, in fact.

At the death of C.M. Ham, his will was probated by Eugene Ham, who was named as executor therein, and he took into his possession, under the will, a small amount of cash and some clothing, that being all the property left by C.M. Ham unless the deed here in question should be canceled.

The appellants attempted to prove the value of the property conveyed by C.M. Ham to Eugene Ham, but, on objection by counsel for the appellee, the evidence introduced for that purpose was excluded. There was some evidence as to the value of the property which seems not to have been excluded, from which it seems to appear that it was worth, in round numbers, about eighty thousand dollars. The evidence offered by the appellants, but not permitted to be introduced, was for the purpose of showing that the property was worth more than that amount. The money paid by Eugene Ham to C.M. Ham, and for his physician, hospital bills, and burial expenses, under the terms of the deed, amounted to three thousand five hundred dollars.

It will be observed from the foregoing statement that the conventional, fiduciary relation that existed between C.M. Ham and Eugene Ham was that of partners in business. A partnership is essentially a relation of trust and confidence, but we are not called upon here to decide a case where the fiduciary relation is that only which grows out of a partnership, for it is beyond dispute that the relation which existed between C.M. Ham and Eugene Ham was much more close and intimate than that which the law presumes from the mere fact of their being partners in business. We will treat the partnership simply as one of the evidences of the existence of a fiduciary relation between them in fact. The rules governing gifts, conveyances, etc., between parties to such a fiduciary relation are the same as those governing gifts, conveyances, etc., between parties occupying the conventional fiduciary relations, such as physician and patient, attorney and client, guardian and ward, trustee and cestui que trust, etc.

"It is settled by an overwhelming weight of authority that the principle extends to every possible case in which a fiduciary relation exists as a fact, in which there is confidence reposed on one side, and the resulting superiority and influence on the other. The relation and duties involved in it need not be legal, it may be moral, social, domestic, or merely personal." 2 Pomeroy Equity Jurisprudence (4th Ed.), section 956.

When such a relation exists, and the parties thereto — "consciously and intentionally deal and negotiate with each other, each knowingly taking a part in the transaction, and there results from their dealing some conveyance or contract or gift, . . . the principle literally and directly applies. The transaction is not necessarily voidable, it may be valid, but a presumption of its invalidity arises which can only be overcome, if at all, by clear evidence of good faith, of full knowledge, and of independent consent and action." 2 Pomeroy Equity Jurisprudence (4th Ed.), section 957.

The burden of overcoming this presumption is on the party claiming under the conveyance, contract, or gift. Meek v.Perry, 36 Miss. 190; Hitt v. Terry, 92 Miss. 710, 46 So. 829.

We are not here confronted with, and express no opinion on, a case where the consideration for a deed appears adequate, for, according to the evidence, the value of the property is either not disclosed, or, if disclosed, the value thereof, as hereinbefore set forth, is such as to make the consideration therefor grossly inadequate. The evidence fails to disclose that when he executed the deed, C.M. Ham had full knowledge of the value of the property conveyed, of the relation of the consideration therefor thereto, and that it was executed of his own independent consent and action.

The usual method of proving independent consent and action in such cases, and probably the only way it can be clearly proven, is by showing that in making the deed the grantor acted on the advice of a competent person, disconnected from the grantee and devoted wholly to the grantor's interest. 2 Pomeroy Equity Jurisprudence (4th Ed.), sections 958 and 960, and notes on pages 2040, 2041; 1 Black on Rescission and Cancellation, section 40;Nobles v. Hutton, 7 Cal.App. 14, 93 P. 293; Spiva v.Boyd, 206 Ala. 536, 90 So. 289; Thomas v. Whitney, 186 Ill. 225, 57 N.E. 810; Post v. Hagan, 71 N.J. Eq. 234, 65 A. 1026, 124 Am. St. Rep. 997; Soper v. Cisco, 85 N.J. Eq. 165, 95 A. 1016, Ann. Cas. 1918B, 452; Pironi v. Corrigan, 47 N.J. Eq. 135, 20 A. 226; Hall v. Otterson, 52 N.J. Eq. 522, 28 A. 910.

Instead of dismissing the appellant's bill, the court below should have granted the prayer thereof.

Reversed and remanded.