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THE PACIFIC COMMERCIAL ADVERTISER, HONOLULU, MAY 24, 1901. 13 pl,FK t 'OLKl Uf int l mtni l ORY OF E SL ' " ,r r ATT December Tbkm, 1900. ,1IKlS i '! 1 ' V ' J- A- MAGOON and EMMELINE , . ( Rorrr JrrxE, First Circuit. U?pEA' ' . . 1900. DecttjedMay 21, 1901. , , (il , J., and Circuit Judok Edings, in , 0K PeREV, J.,' DISQUALIFIED. w ocured through undue influence as shown , onfiflential relationships of attorney and Kd Drinoipa. Lgent between the parties, the mental ff and the inadequacy of the consideration. :. j.-rnsp nr rittififatinn when Hnno mViiu M -i"- 1"" mm """C HUT i nits over the plaintiff continued thouen t. i - jje ttnninati"'; oi tne reiauunauips oi attorney ana client rte grant to twuler to the grantee before suit what the lud paid to or on account of the grantor under the agree- i. .altari nn whpn the Ollftstion Was nnt raicoi-l in ho fisno- e leu 1(0nri and when the grantor alleged in his bill that he had M accounting which had been refused, had prayed for ami the erantee had received r.ents and orofits and ml appear how much the grantee had paid for or on account d the erantor had offered at the hearine in the E.TUi.LM. - . r w jsntopay whate ver the grantee had paid on his account Utnces the grantee under a deed obtained through influence is declared to be a trustee for the grantor and Lmatm ihe property tio him subject to leases made after of the deed. " OPINION OF THE COURT BY FREAR, C.J. I 1 - 1 . 1 ,1 1 "T 1. r nj n r l . -n . . . i rw. . f 'i i i . 'i i ' in cinr ifii 1 11 .v ttv-vyvi to the defendant Emmeline M. Magoon, of 2.47 .1 J TO i . r 1 1 on t lit- easier iv siue oi run street netween rienooi ets in Honolulu. The consideration named in 2 I I tlt ! hp. rpfl I PATKU Pi'il nmi woe an rvra i J 1 i ' ' " V. . - ' . . . - . . V V. ... V.Vril ' II (III III ( 1 TWV K II I P it I . MT Ilk M I 11 l I I t .Tl-t 1 II II I r-,' r o - 7 i 1 1 i iL. T: ftTe j.T ip.'i::i-e n imhii ufifiinuiiis lu iwv mm sru a muiiui 1 f 1 TT .1 L j. i i 1 il 1 on of them not until after the commencement of i r i a 3 .''. i t ; X . -r A a. . :i'uii: i l.i i i ri ii ii ii i-i i i 1 1 1 ir t-n 1-1 . i 1 1 1 r tiTiit'oi i i f on die ground that assuming that the defend- l.. t ,i i i ! .i.:ir j.u a tnouht tiiev did .o. ve-t oonsKlerlnp tneir rola- R ITin 1 T' t' ; i ATI i"i swat him hie uriiQL'iiiiccrw onri T h Blftimr ftt thp wincwiorariAn the' tranOAriAn was mip annoi unnoia. it win not oe necessary to review ir a r i v vi ift i 1 1 i Jrs iaimediatelv preceding the execution of the nvun He collected rents, prepared tax returns, paid Iftaiiwi i .-. . 1 J? i?- . -i - i " . 1 "1 i . a -.wjuu. biiu inni t me to i mp rPTKiprpn sfacernei is B iko advised him as to special matters of business ID POT! TICWt I An tt4 V Vt r rv-NArLnifTT -Vk oca awut. i the sale of personal property, and advanced him During thi? period the 'said defendant, who was r j aw acieu ior or aavisea tne piainim proies- TS"!f.": An.-.-: i r.r wlumiiiis, as witD reif'rence to a ciaim arising Action of a building upon this land, an assault nn th l.:."flp ,1 . t 1 A . - uic pianum, tne oostrucnon oi a ngnt oi way appurtenant to' this land, the possibility of the : 1 f n r . I "I- -f 1 1 r I - I e i ruin nis wne, anu uraiung utws 'nst in what capacity he intended to act is not alto- every case whether as acrpnt. attomev at law or b - C 7 tl . ng this j riod he was the only one employed litorriey by the plaintiff. At the time of the trans- uc as acting as pjaintin s agent in relation to . 1 1 a bad jost a'lvised and assisted him as to pub- "at - plaintiff, would not be responsible wife and offering his personal prop- in i,:. i ... "is r : nrfiTtPrtv fnr aoco onrl w5 oetnif M draft vat 1a oi a portion of the property and in drafting the deed in question. He incline M. Magoou, occasionally "in :i t ; . . . , . j-i 11 . 1 ll.i,. ;- "uuie aiier oince nours as as men number of Mr. Maroon's clients and took -tiii and nerformed various acts oi . . "lni- Mr. Matroon is an attorney at law and at , . 1,11,0,1 rxprrir.nce in land transactions. tan somp eivtv vmtm nf nirp. He is and wurKman ar rnar. xie aitu cai- 'V J'-u poultry business on the land in ques- onie tc.-io o,j i . -i .. ii ... u'e education and is somewhat deficient in his "toielUi, a-.i i . .... . ! p reads newspapers and books to US Tjiirifl i , . . -i ""res siowjy. lie is somewhat dull and H c to: - what he has to say and iorgeis jjb uoin 'r begins to talk on some discon- r e has little confidence in himself in business le jjj trustful ot" others, and has for many years Nhagement of his property to others. He has aDd 15 &o niatch for a bijpgg man. He had had a hard time for some years prior to selling his property. He worked in connection with his trade and his dairy business often from two or three o'clock in the morning until late at night. He suffered from sleeplessness and rheumatism. He was worried over his business and over his property and the demands of his tenants for repairs. He experienced much domestic trouble after his marriage in 1893 and occasionally in temporary fits of ex citement or despondency greatly abused his wife, for which he would appear penitent afterwards. Finally his wife with their young children left him in July, 1898. All these troubles greatly discouraged him and made him very irritable at times. The property in question had been purchased bv the plaintiff with his earnings in' lots from time to time and was his all. Part of it he used as his home and for dairy purposes and other parts he leased to various tenants. The transaction in question came about in this way.. The plaintiff was worried and despondent over his dairy, his property and tenants and his wife's desertion and was suffering from rheumatism. He had just inserted notices in the papers offering his cows and chickens for sale and his land for lease. One Wright had at once applied for a lease of a portion of the land and to purchase some of the cows and chickens. Ie and Magoon and Christley were negotiating in regard to these matters. On the evening of October 31, 1898, the defendants paid one of their visits to the plaintiff about sundown and after some talk over the plaintiff's troubles, and the advisability of his ceasing work and taking life easier, an agreement was entered into. The parties differ as to who introduced the subject of selling the property and as to tho degree of willingness or urgency mani fested by tliPin respectively in regard to the matter and also as to their understanding respectively as to just what the nature of the agreement was. The plaintiff contends that the agreement was to make a deed in trust for his, the plaintiff's, children and to pay the plaintiff $75 a month during his natural life out of the rents. The defendants testify in substance that the plaintiff said he had thought of asking some rich man to take the place, that he thought of asking James Campbell or Cecil Brown, they to give him so much a month, that he had not thought of asking him, Magoon, but that perhaps he would like to take it; that he, Magoon, said he was willing, but that perhaps it would be better to give it to Mrs. Magoon, as she had more real estate and he, Mr. Magoon, was in business and might go into something and lose his property; that Magoon asked him how much he would want, that he said he did not know how jnuch he would require, that Magoon asked him if $75 a month would be enough, that he said it was more than he would require, that Magoon said that he onght not to have any less, and asked him about drawing the deed and he said he would like to have him, Magoon, draw it. There is some uncertainty as to just what, if anything, was said at that time in regard to paying plaintiff's debts also as to whether the word "sell" or ips eqv ivalent wakUsed or merejy snch Words as "take," "give," 8rc. On November 2 the deed was drawn, executed and acknowledged. The consideration named was $10,000, which Magoon told plaintiff was a mere matter of form. A receipt for $6,000 was signed arid acknowl edged by the plaintiff and a joint and several promise was signed and acknowledged by the defendants to pay , to the plaintiff,, in consideration of $6,000, the sum of .$75 month so long as the plaintiff should live. The plaintiff in pursuance of arrangements made on the evening of October 3li, moved to the defendants home, where he continued to live for several months or until near the time when these proceedings were commenced. His wife then returned and he and she became reconciled once more. Much attention has been paid by counsel to the question of the adequacy of the consideration. Various points were dis cussed, such as the value of the monthly sum payable to the plaintiff and the value of his wife's unreleased dower interest, as determined by mortality and annuity tables and by the judg ment of business men, the value of the plaintiff's land subject to the inchoate dower right viewed from' the standjoint of an in vestor and that of a speculator, the extent of depreciation caused by the dower right, its effect on purchasers and upon lenders of money, the value of the property at the time of the transaction in question and at the time of the trial, its value based on the income whic h it yielded at the time and that which it could be made to yield and that which it was shortly afterwards made to yield, &c, .:e. As matter of fact the property consisted of 2.47 acres of land in fee simple in a residence portion of the city where there was great demand for small cottages. Those por tions of it which were then leased yielded in rents $113 a monyi. An arrangement had just been practically made to lease another portion for $50 a month, but shortly afterwards the proposed tenant concluded to give up the lease or declined to take it. In January following, a portion was leased at $5 a month and in February another portion at $50 a month for the first ten years, $75- for the second ten years and $100 for the third ten years. Thus within about four months the income was increased to $213 a month, with the prospect of further substantial increases in the future. A number of witnesses acquainted with this prop erty and familiar with values here were examined as to its value, and from these it may be gathered that $25,000 is a conservative estimate of its value at the date of the deed and free of dower right. Much stress is laid on the outstanding dower right and the extent to which it would affect the value of the property in the opinions of business men, whether for the purposes of sale or mortgage security. The plaintiff was about 60 years old and his wife about 30. Looking at the question from the plaintiff's standpoint, so long as he held the property he did so just as any other married man who held property in fee simple would hold it. He could manage and lease it and enjoy it and would not regard his wife's inchoate right of dower as depreciating the value of the property to him as any other man would who might own it subject to such right, and by retaining the property him self he would not only enjoy the income during his life but would have the property itself to dispose of by will subjectto the dower right. Looking at the transaction from the defend ants' standpoint, they had only to pay $4,000 of the plaintiffs debts and then out of the income of the property itself pay $75 a month during the plaintiff's life, retaining the restof the in come themselves, during which period plaintiff's wife would have no rights whatever in the property, and after the plaintiff's death they would have the property without the obligation to pay the $75 a month though subject to the wife's right to one third of the income until her death, after which they would own the property free from all such rights or obligations. The de fendants had no need of using the land for the purposes of mortgage security and certainly did not have to secure a loan on the property for the purchase price, for, except as to the $4,000 debts, they were to pay no money except the monthly allowance which they could pay out of the rents of the property itself. If the value of the land is so little when subject to an inchoate right of dower, as defendant-: counsel contend, looking at the value from the standpoint of conservative business men, what was the value of the consideration consisting as it did of an oral promise or understanding to assume $4,000 of debts and a mere unsecured though written promise to pay $75 a month for the plaintiff's life? In this transaction the defendants had every thing to gain and nothing to lose. After paying the $4,000, the interest on which at 7 would be only $280 a year, they could much more than pay the monthly sum of $75 out of the Jpcome from the property itself and might be able to purchase at dny time for a comparatively small consideration the wife's inchoate right of dower, and upon the plaintiff's death they would be re leased from the payment of $75 a month and on his wife's death from her dower right. Without going into detailed calculation as to the value of the dower right or the annuity or an extensive discussion of all the suggestions made as to the method of deter mining rhe value of the property, it is obvious that well located income producing city real property worth $25,000 when free of all incumbrances, is, when subject to only a dower or one third interest from the grantor's death to the death of his wife, worth more than $4,000 plus an unsecured promL-e of $75 a month for the grantor's life, even though the promisors were worth, as in this case, $200,000 or more at the time. That spec ulators or money lenders would for their purposes throw off 40 in fee as the depreciation due to the inchoate 33 Jo life inter est, or that an annuity of $75 a month payable by a responsible insurance company for the expected life of the grantor is worth nearly $10,000, does not alter the result. The plaintiff did not have independent advice, nor was it sug gested to him that he take such advice, Xo suggestion was made that better terms might be obtained. The deed contained a i covenant of warranty except as against the dower right although i there was an outstanding mortgage on it;' the debt secured by which was part of the $4,000. The deed contained no provision for the assumption of the mortgage debt by the grantee?, nor' was it made conditional upon the payment of the $75 a month. ' There was no written promise whatever for the payment of the debts and no securitv civen for the navment of the annnitv v w a. -. r y - -" - The debts were in fact not all paid for several months. TW detendant Mr, Magoon was acting for both parties. He sug- OrPetfvl ttltl tormi vf tllO OIlTOOmmit an A Vlf Wl Vi fA yvf nnmnrinn 4 viii.. i. i- .v-.Miu v - uuw ug.vUii.ub tiii'i Ll i j ull.liVU VI UU1J Ail 1: : out and the plaintiff apparently submitted to everything lie pro- - i posed without question. Mr. Magoon testified that he did not suppose that $5,000 more or less would have been a considera- tion to the plaintiff but that all he wanted was a certain amount i QfTAATI f OCt 1 We need not go into the question as to whether the plaintiff, as ne now claims, triougnt ne was signing a deed m trust for ins children subject to the payment of $75 a month to him for life out of the rents. There is certainly much evidence that it is difficult to reconcile with that theory, as well as some in support of it. "We may even assume that the defendants thought they were being magnanimous toward the plaintiff, at least to the ex tent of thinking that the new arrangement was better for him, considering all his troubles, than the old. But in view of the then existing relationship of principal and agent with reference- ' to this property, the relationship of attorney and client, the plaintiff's weaknesses and his trust in the defendants, the defend ants' interest in the transaction, and the inadequacy of the con sideration, equity must on well established principles undo the transaction. The presumption from such relationships is against the defendants. It is for them to show adequacy of considera tion and that the parties were dealing with each other at arm's length or that they advised and acted with reference to the plaintiff's interests as if the latter had been dealing with'a third party. The plaintiff while he may have understood that that was done which was done, apparently did not fully realize what it all meant. He trusted to the defendants to do what was best for him. The presumption of undue influence arises from the existence of the fiduciary or confidential relationship. Such re lationship in this connection has a broad meaning. It includes the relationship of attorney and client and even that of prin cipal and agent. The presumption is based on grounds of public policy and upon the principle that one may not serve himself, while serving another, so as to work injury to that other. The presumption is stronger where the relationship exists in respect of the property in question, where the party claiming to be in juriously affected is mentally inferior to the other, and where the consideration paid is not clearly adequate. This presumption arises in the present case and has not been overcome. The defendants further rely on ratification or acquiescence, on the ground that, if the plaintiff did not realize what was done at the time, he did afterwards and yet continued to accept for sev- Coatlnued on Page 14.)