Opinion
No. 33163.
May 16, 1938.
INFANTS.
Under will raising trust and making trust income and principal payable to certain legatee or his heirs, judgment holding assignment of legacy by legatee and his living children valid, and holding that children had no interest in trust proceeds, which judgment was rendered in suit to which children and assignee were parties, was res judicata of child's suit against assignee to set aside assignment and obtain accounting.
APPEAL from the chancery court of Warren county; HON. J.L. WILLIAMS, Chancellor.
John B. Gee, of Rolling Fork, for appellant.
The purported assignment is void as to this complainant because of the failure of consideration to him. 39 Miss. 442; 97 Miss. 790; 155 Miss. 411; 124 So. 472.
Mutual and material mistake of fact is sufficient cause for rescission in equity, if the parties can be placed in status quo.
4 Kents Commentaries 203; McDaniel v. Allen, 64 Miss. 417; Halsey v. Gee, 30 So. 605; Ball v. Phelan, 49 So. 956; 24 Miss. 44; Powell v. Plant, 23 So. 399; Oswell v. McGhee, 28 Miss. 340; Remer v. Dugan, 39 Miss. 477; 73 Miss. 110; 132 Miss. 247; 134 Miss. 728.
The plaintiff cannot be held by this assignment to the payment of the preexisting indebtedness of his father.
56 Miss. 316; Baylor v. Commonwealth, 80 Am. Dec. 551.
The type of right, title and interest of the appellant in the legacy bequeathed by Item 45 of the will of Mrs. Johnson is what is known to the law as a future, contingent or expectant inheritance of an expectant heir, in an estate consisting of personal property, and as such is incapable of transfer or assignment, unless the consideration be fair, valuable and adequate.
Purcell v. Mather, 35 Ala. 570; Re Edelman, 113 Am. St. Rep. 231; Dailey v. Springfield, 144 Ga. 395; Spears v. Spaw, 25 L.R.A. (N.S.) 436; J.J. White Lbr. Co. v. Wheat, 150 Miss. 615; 7 Ohio St. 432; 17 A.L.R. 597; 44 A.L.R. 1465; 58 A.L.R. 339; 141 So. 283; 4 Am. Jur. 266; Re Galceron, 104 Cal. 370; 32 L.R.A. 595; U.S. National Bank v. Miller, 122 Or., 285; Taylor v. Swafford, 122 Tenn. 303; 9 R.C.L. 65, secs. 59 and 60; 28 R.C.L. 287, sec. 259; Stevens v. Stevens, 181 Mich. 438, Ann. Cas. 1916E; 5 L.R.A. 122; Gannon v. Graham, 73 A.L.R. 1050; Lennig's Estate, 182 Pa. 485; Avon State Bank v. Sav. Bank, 49 S.D. 575; Re Lind (1915), 2 Ch. 345, 8 B.R.C. 742; Needles v. Needles, 7 Ohio St. 432; Keys v. Keys, 148 Md. 397, 129 A. 504.
The devise made under Item 45 of the will of Mrs. Fannie Willis Johnson was a devise directly to Henry V. Phelps, Sr., as first taker, with remainder to a class. The class was not capable of determination until the death of the first taker. Hence, any attempted alienation by this appellant as a member of such class was void ab initio.
Bunting v. Spears, 41 Kan. 424; Merchants National Bank Trust Co. v. Port Gibson Oil Works, 141 So. 283; Butler v. Cotton Oil Co., 75 So. 975.
The learned Chancery Court should have treated the instrument as one of security, a mortgage or a pledge.
Wynn, Hafter Lake, of Greenville, for appellee.
Henry Vick Phelps, Sr., actually received the money from appellee and did pay the taxes, protecting the land from tax sale for himself and children, all of whom had lived on the property for many years, and had hoped to continue. Appellant's theory must be that any lack of consideration lay in the failure of any benefit or advantage moving to this appellant. The main advantage actually transpired. The Port Gibson Oil Works parted with its money, giving it to the Phelps, Sr., who paid the taxes. There is no necessity that there actually be any benefit moving to the appellant. There was a sufficient and valuable consideration for his execution of the assignment in that relying upon his execution of the assignment the Port Gibson Oil Works changed its position, forebore to collect the debt it had already held against Henry Vick Phelps, Sr., and advanced several thousand dollars further to him. There is valid consideration when the person to whom the promise is made refrains from doing anything which he has the right to do, whether there be an actual loss to him or actual benefit to the party making the promise or not.
Miller v. Bank of Holly Springs, 95 So. 129; Byrne v. Cummings, 41 Miss. 192; 13 C.J. 315, sec. 150; 33 Miss. 672; Restatement of Contracts, sec. 90; Dayhood v. Neely, 99 So. 440; Y. M.V.R.R. Co. v. Sideboard, 133 So. 669.
An expectancy, as we understand it, is a mere hope unfounded in any limitation, provision, trust or legal act whatever; a bare hope of the succession, to the property of another, such as may be entertained by an apparent heir. A child in Mississippi has an expectancy, but this expectancy can be defeated by the parent not devising or bequeathing any of his property to the expectant.
25 C.J. 171.
It occurs to us that appellant, in 1931, in the depth of the depression, was anxious for his father to obtain money to pay the taxes to save their plantation. The assignment was executed in 1931. The father died in the Spring of 1936. Appellant had every opportunity to raise the question of the invalidity of the assignment which he executed, but no question was ever raised as to the validity of this assignment until after his father's death in 1936. He has sought to avoid payment of this money in question to the appellee by most every ground for which chancery has jurisdiction. We think they have all been answered. He invoked the ground of mistake, want of consideration, that his interest was a mere expectancy; that it was a loan and usurious, and he was a volunteer, and as a final resort he raised the question in fact after the death of his father as to whether the money paid by appellee was paid as a purchase price or a loan. The question of law settled all of the other grounds presented by him.
To have an outright deed or assignment construed as a mortgage the courts seem to lay down the principal that the testimony must be clear, concise and definite and that it must be accompanied by deceit, fraud or coercion.
The executors of Mrs. Johnson's Estate were unable to pay the full amount of the legacy and the Merchants National Bank Trust Company, trustee of the legacy only received approximately $9400. Therefore, upon the advice of Mr. Phelps' attorney, it was agreed that an outright assignment and sale of the legacy should be made and as a consideration thereof the appellee cancelled an existing debt of $3600 and advanced $3500 in cash, totaling $7100. The assignment was signed, acknowledged and executed by the father and his then existing heirs, and recorded in Warren County, Mississippi, and a copy delivered to the Merchants National Bank Trust Company, trustee, but the trustee raised a doubt as to the validity of this assignment, thereupon the $3500 cash was paid over to certain trustees to be held pending the action of the court. When the Supreme Court finally passed on the question in 1932 the $3500 additional cash was paid to save the land from tax sales and the balance to the assignors. Certainly, it cannot be contended that $7100 was any thing but a fair consideration to appellant's father, himself and sister.
W.H. Watkins, of Jackson, Amicus Curiae.
As amicus curiae, I desire to point out to the court that it could not and, in justice to Mary Helen Phelps, should not pass upon said last will and testament in the absence of appellant's non compos mentis sister, Mary Helen Phelps. That said last will and testament involves lands situated in the State of Mississippi, and an adjudication by this court construing said last will and testament would be persuasive upon the Federal Court sitting in Mississippi; and for this court to construe said last will and testament adversely to Mary Helen Phelps, non compos mentis, would be very detrimental to her rights, though she would have remaining the question of estoppel on the part of her father and brother arising out of the recitations contained in said contract.
We respectfully submit that the court should not either affirm or reverse this case, but should refuse to proceed with the case, if it should find that a construction of the last will and testament of Mrs. Phelps is determinative.
Wilson v. Wilson, 146 So. 855, 166 Miss. 369.
Argued orally by John B. Gee, for appellant, and by Wm. T. Wynn, for appellee, and by W.H. Watkins, Sr., amicus curiae.
The appellant, complainant in the court below, filed a bill against the appellee, to declare void as to the appellant an assignment made by Henry V. Phelps, Sr., deceased, and joined in by Henry V. Phelps, Jr., and his sister, by which they undertook to assign to the Port Gibson Oil Works a legacy contained in the will of Fanny Willis Johnson in favor of Henry V. Phelps, Sr., known as item 45 of the will hereinafter mentioned, and to have an accounting of moneys paid to the Port Gibson Oil Works under the said assignment. This is the second appearance of this litigation, the first case being reported under the style of Merchants' National Bank Trust Co. v. Port Gibson Oil Works, 165 Miss. 314, 141 So. 283; in which case it was sought by the Merchants National Bank Trust Company to have the will construed as to item 45, and to test the validity of the assignment made by Henry V. Phelps, Sr., joined in by Henry V. Phelps, Jr., and his sister, Helen Phelps.
Item 45 of the will of Fanny Willis Johnson reads as follows: "I hereby give and bequeath unto Harry Vick Phelps, of the Town of Nitta Yuma, in Sharkey county, in the State of Mississippi, upon the terms and conditions hereinafter set forth, the sum of Ten Thousand Dollars ($10,000.00). This gift and bequest shall not be delivered in person to Harry Vick Phelps but shall be placed, in trust, in the Merchants National Bank Trust Company of Vicksburg, upon the terms and conditions hereinafter set forth, and held, in trust, for his use and benefit. One-tenth of the principal sum, and the income from the whole sum, as it shall decrease from year to year, shall be delivered to him annually. If said principal sum and the income therefrom shall not have been paid to him at his death the residue thereof shall go to his heirs, share and share alike." The said will was filed for probate October 7, 1931.
After the death of Fanny Willis Johnson, Henry V. Phelps, Sr., who was indebted to the Port Gibson Oil Works, and who owned a plantation in Sharkey county, Miss., sought to obtain approximately the sum of $3000 from the Port Gibson Oil Works, for the purpose of paying the taxes on his plantation. The application for the advance of this money was refused, and Henry V. Phelps, Sr., on account of his financial difficulties at that period, was unable to secure money elsewhere. He then proposed to embrace the debt he already owed the Port Gibson Oil Works in an assignment of the legacy mentioned in item 45 of the will of Fanny Willis Johnson. To this the Port Gibson Oil Works agreed, provided the assignment could be legally made, and Henry V. Phelps, Sr., and Henry V. Phelps, Jr., and Mr. Schillig, president of the Port Gibson Oil Works, consulted an attorney as to the legality of an assignment. It was concluded by the attorney that, if the assignment was made outright, and signed by Henry V. Phelps, Sr., and his living children, Henry V. Phelps, Jr., and Helen Phelps, it could be legally made.
The Merchants National Bank Trust Company, as trustee, and as an executor of the will, desired that the chancery court should determine that said assignment could be legally and validly made; and suit was accordingly filed in the chancery court, and a decree, dated October 27, 1931, adjudicated that the assignment was legal and valid, and that the assignment operated as a conveyance of full and complete "legal, equitable and valid assignment of all interest that Harry V. Phelps and his present heirs have, and that the title to said property was conveyed and became absolute and vested in the assignee, and whatever rights the said Harry Vick Phelps and his present heirs have now, or claim to have hereafter by virtue of said item Forty-five in said will, vests in the said Port Gibson Oil Works, and its assignee or assignees, and that the said Harry Vick Phelps and his present heirs, will not have any further interest therein."
The said final decree was appealed from, and affirmed by this court in the case of Merchants' National Bank Trust Co. v. Port Gibson Oil Works et al., supra. After the affirmance of this judgment annual installments of the legacy and interest were paid to the Port Gibson Oil Works during the life of Henry V. Phelps, Sr. He died on the 4th day of April, 1936, and Henry V. Phelps, Jr., and Helen Phelps are his heirs at law. The bill filed in the present case alleged that the interest of Henry V. Phelps, Jr., at the time he signed the assignment of said legacy was a mere expectancy, and inalienable; and also set up that the account which Henry V. Phelps, Sr., owed, or which was claimed to be owed, to the Port Gibson Oil Works was much less than the amount stipulated at the time of the execution of the instrument, and that in the taking of the assignment it was intended and represented to be a mere security for the payment of the debt which Henry V. Phelphs owed, and for the tax money, and that usurious interest in excess of 20 per cent. per annum, to-wit 37 1/2 per cent., was charged and embraced in the assignment; and that this rendered the assignment wholly void.
It was further alleged that while the assignment appeared to be an absolute assignment on its face, that Mr. Schillig, representing the Port Gibson Oil Works, represented that it was a mere security for the debt, and money advanced, and that all the Port Gibson Oil Works desired was its money, and that any amount received in excess of the amount necessary to pay the debt would be paid to the assignors, and that they could at any time redeem the assignment, which was really a pledge or security for the debt; that it would be returned to them on payment of the amount due.
There was testimony which tended to sustain the allegation in regard to the agreement that the assignment was to operate as a mere security or mortgage of the money under item 45 of said will, for the loan to pay taxes and the prior debt of Henry C. Phelps, Sr., to the Port Gibson Oil Works. But it appears that the appellant was a party to the suit of the Merchants' National Bank Trust Co. v. Port Gibson Oil Works, supra, and procured the chancery court to pass upon and adjudicate as legal and valid the assignment in question, and that it vested the rights of all parties in the Port Gibson Oil Works; that Henry V. Phelps, Sr., Henry V. Phelps, Jr., and Helen Phelps had no interest in the proceeds of item 45 of the will; and that as to them the assignment was valid.
We think that this judgment in the former suit having been procured through the assistance of the appellant, he being a party thereto, is res judicata, as to appellant, of the title to the proceeds of item 45 of the will, embraced in the assignment. We do not deem it necessary to go into the matter with any further elaboration, for we think the chancellor was correct in holding that the former judgment bound the appellant, and in denying him the relief prayed for.
The judgment is therefore affirmed.
Affirmed.