Simon Gratz's Executors v. Cohen

52 U.S. 1 (____) 11 How. 1

SIMON GRATZ'S EXECUTORS AND OTHERS, APPELLANTS,
v.
SAMUEL M. COHEN AND ELEAZER L. COHEN.

Supreme Court of United States.

The cause was argued by Mr. Reed and Mr. Clarkson, for the appellants, and Mr. Dallas and Mr. Budd, for the appellees.

Mr. Justice WOODBURY delivered the opinion of the court.

In this case, the plaintiffs in the court below, as children of Solomon and Beliah Cohen, and grandchildren of Joseph Simon, claimed an interest in certain lands which had been conveyed to Simon Gratz by Mrs. Phillips, the surviving executrix of Joseph Simon.

That conveyance was alleged to have been fraudulent, and the plaintiffs prayed that it be set aside, and Simon Gratz be required to account for any sales and rents of the land. The court below decreed that the conveyance was void for fraud; vet, as the lands had been bought of Gratz since by innocent purchasers, declined to set it aside, but ordered the respondent to pay over the full value of the lands, and without any deduction for debts, advances, or expenses.

This is an appeal from that decision; and in order to determine whether evidence enough exists to show that fraud was practised by either of the parties to the conveyance, as it is charged on both of them, it will be necessary to ascertain how the lands were situated, and the relation to them in which the grantor and grantee, as well as the plaintiffs, then stood.

Some time prior to 1804, Joseph Simon and Michael Gratz purchased in partnership large tracts of land in Pennsylvania, the title deeds running to the former alone, under an agreement to account to the latter for half the proceeds. As sales of them were made from time to time, difficulties and litigation arose between them as to the proceeds, extending even to eight reported cases in the courts of Pennsylvania, and all of which appear to have been decided against Simon.

He complained much that Gratz had obtained from him more than he was entitled to. Accordingly, when Simon made his will and died in 1804, he forbade, by the last codicil, any portion of his estate going to Michael Gratz or his wife Miriam, who was the daughter of Simon, and did not make either of them executors on his estate. But he appointed Levi Phillips and wife, the latter being another daughter, and Mrs. Cohen, a third daughter, executors. At first he bequeathed one third of the income of the residue of his estate to each daughter, but by the codicil increased Mrs. Phillips's and Mrs. Cohen's share each to one half of the principal, and, withdrawing Mrs. Gratz's share, empowered Levi Phillips to give to Mrs. Cohen the principal rather than the interest, or income. At the death of either daughter, her share was to vest in her children, as tenants in common. He gave to his executors, and the survivors of them, full power to sell his real, as well as personal estate.

Some suits between Simon and Michael Gratz in relation to their partnership property were pending at the death of the former; others were soon after brought, and others still, as sales of the land were made by the executors, and recoveries were had in some of them for portions of what Simon and they had sold. By the death of Mr. Phillips in 1832, and of Mrs. Cohen in January, 1833, Mrs. Phillips had become the sole surviving executrix, and she in February, 1833, proposed to Simon Gratz, executor of Michael Gratz, to make a final settlement of the claims on his part against the estate of Joseph Simon. At that time, Simon Gratz held unsatisfied a judgment against Levi Phillips and Mrs. Cohen, which had been recovered in 1831 for $7,916.73.

They had not been called "Executors of Simon" in the declaration, but the subject-matter of the action was connected with his estate, and with the proceeds of sales of the partnership lands.

There was another action pending, which was brought by Gratz's Executors against Simon's Executors, in which an award had been made to Gratz for $2,967, but exceptions had been taken to it, not yet acted on.

At that time, too, Mrs. Cohen had received from Simon's estate, as early as 1812, $1,008, which, with interest to 1833, amounted to near $6,500, and none of it had ever been refunded by her.

In this state of things the inquiry arises, whether, in the proposals by Mrs. Phillips, the negotiation for a settlement, and the conveyance of the lands to Gratz under the conditions and circumstances of the case, fraud is manifest so as to justify the rescinding of that conveyance, or if not, because the land is now in the hands of innocent purchasers from Gratz, to make the latter account for its whole value as if the sale to him had been void. In deciding this question, let us look first to the terms and circumstances of the agreement.

She stipulated, in relation to the suit then pending, to have the exceptions overruled, and the award confirmed for $2,967. She agreed further to discontinue a suit of doubtful merits pending by Simon's Executors against S. Gratz et al., Executors of Michael Gratz, and also as executrix to convey to S. Gratz all the unsold lands of the partnership, and all her own personal interest in Joseph Simon's estate. On the part of S. Gratz, he agreed to pay her $1,500 cash, — though nothing is said in the writing as to the release or discharge of the judgments against Joseph Simon's executors or other claims by S. Gratz; but they thus became virtually discharged, as all the remaining estate of Joseph Simon was then conveyed to S. Gratz. Nothing appears to have been said, likewise, as to the debt due from Mrs. Cohen, but probably that was deemed quite an equivalent to what remained of her share in Simon's estate; and she being dead, this was left as it had stood for twenty years.

On these leading facts, the first ground assigned to show fraud by S. Gratz is a supposed deficiency of consideration for this agreement and the conveyance. But in the family settlement it is proper to look to equitable circumstances, and not to expect all such technical formalities as prevail between strangers. The consideration actually paid in money was $1,500, and though Mrs. Phillips may have regarded it as for her rather than the estate of Simon, yet it made little difference, as she was the only residuary devisee of Simon surviving; and if Mrs. Cohen had been already paid more than her share, as seems probable, this sum would virtually go to Mrs. Phillips alone, as it would first in form belong to the estate, and then to her as devisee. It was in fact also paid to her for matters connected with the estate, and while she was executrix of the estate, instead of being, as is argued, a personal bribe to her.

Though a technical difference might exist between the executors as to their several liabilities (14 Serg. & Rawle, 152), and though different modes of proceeding might be necessary to enforce them, yet the estate of Simon was the only fund liable. The interest in the partnership lands, which belonged to Michael Gratz, was the only source of all his claims, and the parties properly looked at it in its true equitable light, through all the varnish and varieties of form, and negotiated with a view to the whole.

Thus, if one of these judgments did not describe the defendants as executors, yet the other did, and the first one was founded on the proceeds of sale by them as executors of lands, the title to which had stood in the name of Simon, though a moiety belonged to Michael Gratz, and the executors were acting in trust for Gratz as well as Simon. Now the $1,500 in money, and the $10,000 in the two judgments, with interest, were probably very near the value of the lands as situated in 1833. But to remove all doubt as to the fairness and fulness of the consideration, Simon Gratz further agreed to pay over to Mrs. Phillips any surplus the lands might yield after paying all reasonable expenses and legal claims. This cures every exception to the inadequacy of the consideration.

If the surplus, after an inquiry into the matter, and after allowing to Michael Gratz or his estate and executors all which is just, should be considerable, an administrator of Mrs. Phillips could enforce its payment on this agreement; and the administrator of Mrs. Cohen, instead of being injured or defrauded, could obtain her share, and divide it among her children, the present complainants, if she had not before her death received enough to cover this, as well as former interests or dividends.

It is next said in support of the alleged fraud, that Mrs. Phillips was an aged female, little accustomed to business, and likely to be overreached by so shrewd and capable a man as Simon Gratz. But Mrs. Phillips, though aged, is proved to have been intelligent and capable. She applied to him rather than he to her to make the settlement, and he suggested the advice and aid of her business friends rather than attempting a secret and sudden settlement. She did consult two intelligent business friends. Full time was given to make inquiries and calculations, rather than using haste. Though Mrs. Phillips did not confer with the plaintiffs, she was not bound to consult the Cohen heirs more than others; and the contract by Simon Gratz to pay over any surplus secured any eventual interest of theirs as fully as they themselves could have done, and wisely put an end to a protracted family litigation, as expensive and ruinous as it was derogatory.

Mrs. Phillips, at her advanced age, being sole representative of Simon's estate, had a good and sufficient motive to be anxious, at the first opportunity after Mrs. Cohen's death, to close that estate up, and the lawsuits and the trusts, and was not likely to do it then, as assumed, because she could then more easily defraud. She could not then, by having the $1,500 paid to herself, deprive the plaintiffs, if she desired, of any share in it they might be entitled to. It was received on account of interests conveyed in the Simon estate.

She was both executrix with a right to sell, and a devisee with a personal interest in the estate of Simon. What she received, then, of Simon Gratz, went to her in both capacities, it being proceeds of Joseph Simon's estate, and worked no injury to Mrs. Cohen's children, as Mrs. Phillips in her character of executrix would be liable to them for their share in what Gratz paid, if they had not already, through Mrs. Cohen, obtained enough to cover this.

Too much importance has, in our view, been attached to the payment being to her, and not repeating the words "as executrix," and the recovery of one judgment being against the other executors, without repeating their titles. These mere descriptions, inserted or omitted, cannot, however, in chancery, change the essence of a transaction, when they had nothing to receive, or grant, or account for, except as executors of Joseph Simon, and where the whole matters in controversy are connected with lands, the title of which was nominally in him, but the beneficiary interest in part in Michael Gratz and his executors.

Again, it is urged against the validity of the conveyance, that it included some lands of Simon, in which Michael Gratz had no interest. But Mrs. Phillips, as surviving executrix, had a right under the will to sell any estate of Simon; and there was a good reason for selling the whole on this occasion, in order, at her advanced age, to close up the administration of Simon's estate, as well as to convey enough to Simon Gratz to satisfy his claims on it as executor.

He, too, could manage it better than any female, and instead of taking advantage of her, or any body she represented, he became liable to account for any surplus, if any should occur.

It is further urged, that the wishes of Joseph Simon to disinherit Michael Gratz and his family were thus overcome, and are not to be trifled with.

But the inflexible will of Joseph Simon against Michael Gratz and his family having any portion of his estate was not thwarted in this way, since they received nothing as devisees or heirs, but merely purchased for a valuable consideration what any person in the community had a right to buy, and obtained in the end chiefly land which S. Gratz's ancestor owned and paid for as much as J. Simon.

In fine, we are at a loss to see any strong indications of fraud in any part of this transaction, either by S. Gratz or Mrs. Phillips; and most of what appears, at first, in some degree objectionable, seems reconciled with perfect integrity when we advert to the legal presumptions in favor of those charged with misbehavior, and to the family connection between the parties and the preponderating equities of the case.

These conclusions would not be different, whether the principal of Mrs. Cohen's share was under the last codicil to be considered as vesting in her, or only the interest of it.

Empowering an executor to make a change like that in a bequest is, however, usually regarded as expressing a wish to have it done, if it be not clearly a mere power, and to require that that be considered as done which ought to be done, if forgotten or omitted. Brown v. Higgs, 8 Ves. 574; 4 Wash. C.C. 278; 1 Story, Eq. § 98, and 2 Story, Eq. § 1068. Considering what are our views as to the validity of the conveyance, other points and exceptions in this case need not be examined, and especially that connected with the length of time which elapsed after the conveyance to S. Gratz, and before the filing of the present bill to avoid it.

Let the judgment below be reversed, and the case sent back to have the bill dismissed, unless the present parties agree to let others in interest come in, and to reconstruct and alter the character of the bill by amendments, so as to carry the agreement between Mrs. Phillips and Gratz into effect, and pray for the surplus or balance, if any be found due from Gratz, after paying all he has advanced, and all his expenses, and his equitable as well as legal claims on Mrs. Phillips and the estate of Joseph Simon.

Mr. Justice NELSON dissented.

Mr. Justice GRIER did not sit on the trial of this cause, being indisposed at the time.

Order.

This cause came on to be heard on the transcript of the record from the Circuit Court of the United States for the Eastern District of Pennsylvania, and was argued by counsel. On consideration whereof, it is now here ordered, adjudged, and decreed by this court, that the decree of the said Circuit Court in this cause be, and the same is hereby, reversed, with costs, and that this cause be, and the same is hereby, remanded to the said Circuit Court for further proceedings to be had therein in conformity to the opinion of this court