finding that confidential relationship exists between executor of will and deviseesSummary of this case from Garland v. Advanced Medical Fund, L.P.
15919, 15920, 15921.
SEPTEMBER 6, 1947.
Equitable petition. Before Judge Guess. DeKalb Superior Court. May 2, 1947.
G. H. Howard, Leonard Pennisi, and Wesley Bailey, for plaintiff.
Weekes Candler and Carl T. Hudgins, for defendants.
The allegations of the petition showing that the deed conveying all other property, real or personal, in which the petitioner had any interest in his mother's estate, was procured by fraudulent representations on the part of the principal defendant while acting as executor, together with a suppression of material facts in reference to the value of the petitioner's interest, sufficiently stated a cause of action for some of the substantial relief prayed against the principal defendant individually and as executor, and the trial court erred in sustaining the general demurrer interposed by him.
( a) Under the principle that, to authorize a recovery in equity, a party is not obliged to return, as a condition precedent, that which he will be entitled to retain, it was not necessary for the petitioner to tender to the principal defendant the amount received for his interest in the estate.
( b) Since the sole controversy was in reference to the petitioner's interest in his mother's estate, the other defendants were not interested in the outcome of the litigation, and the trial court did not err in dismissing the petition as to them.
Nos. 15919, 15920, 15921. SEPTEMBER 6, 1947.
Arthur Roy Dorsey filed in DeKalb Superior Court, against Mace J. Green and David B. Green, individually and as executors of the estate of Mrs. Elzora E. Green, Clairmont Estates Incorporated, Mrs. Maybelle Dorsey Wells, and Mrs. Lessie Green Coyne, a petition, which as amended alleged substantially the following: Mrs. Elzora E. Green executed her last will on December 28, 1937, and died in October, 1943. Mace J. Green and David B. Green were named as coexecutors in their mother's will, but David B. Green, who was a resident of St. John's County, Florida, did not qualify. The other defendants were residents of DeKalb County, Georgia. The petitioner was a son of the testatrix, a half-brother of Mace J. Green, David B. Green, and Mrs. Lessie Green Coyne, and a full brother of Mrs. Maybelle Dorsey Wells. Under the will of his mother, the petitioner, with the exception of certain property that was specifically devised, was entitled to one-fifth of her estate, which consisted largely of property that had been devised to her under the will of her late husband, John F. Green. The estate of the testatrix was administered by Mace J. Green who, as executor and half-brother, had a fiduciary and confidential relationship to the petitioner. However, Mace J. Green, disregarding the confidential relationship, took advantage of the position as executor and wilfully and maliciously cheated the petitioner out of his one-fifth interest in the estate, which interest was worth $15,841.20. The petitioner reposed his uttermost confidence in Mace J. Green, who appeared friendly and knowingly encouraged the confidence of the petitioner who, being a resident of Camden, New Jersey, and since no inventory was required under the terms of the will, had no way without going to great expense of ascertaining the whereabouts or value of the estate of his mother. The petitioner on a number of occasions inquired by letter what his share of the estate amounted to, and Mace J. Green in his replies concealed the true facts and falsely led the petitioner to believe that his entire interest was worth no more than $2500. The tax returns of the estate were not accurately made, and this amounted to a concealment of the petitioner's true interest, and the failure of the executor to make correct tax returns was intentionally done to mislead and defraud the petitioners and actually led him to believe that his interest was worth no more than $2500, as represented by Mace J. Green; when in truth his interest was worth more than $15,000. By the terms of the will of the petitioner's mother, the executors were authorized to make a division in kind of the real estate, so as to equalize values among her heirs, and the executor made a pretended division so as to allow the petitioner three small houses in a negro section of Atlanta, which were badly in need of repairs and were worth less than $2000. On May 14, 1945, the petitioner, relying on representations that had been made to him, executed a deed in consideration of $2500, conveying to Mace J. Green individually the above three small houses, and also "any other property, real or personal, in which the [petitioner] has any right, title, interest, equity, or claim, acquired under the will of [his mother] including any monies now in the hands of the said Mace J. Green, as executor, . . belonging to the [petitioner] or in which the [petitioner] may have any right, title, interest, equity, or claim, whether such interest be vested, contingent, or otherwise." The petitioner would not have parted with his interest if Mace J. Green had disclosed the true facts. In the summer of 1946 the petitioner learned that the representations of Mace J. Green were false and fraudulent, and that the true value of his one-fifth interest was $15,841.20. The $2500 received as consideration of the sale above mentioned has been expended and cannot be restored to Mace J. Green, but such amount does not exceed what is still due the petitioner. Clairmont Estates Incorporated was made a party defendant because it purchased described real property from John F. Green in his lifetime, and after his death the balance due on the purchase-money notes was paid to Mace J. Green and David B. Green, who had also been nominated in their father's will as executors. However, the petitioner in one of the amendments expressly disclaimed any right to relief against Clairmont Estates Incorporated.
The petitioner prayed: (1) that process issue and that a second original issue for service on the defendant David B. Green in St. Johns County, Florida; (2) that an accounting be had between the parties; (3) that the deed procured by the fraudulent misrepresentations of Mace J. Green be delivered up and canceled; (4) that the petitioner have judgment for $15,841.20; (5) that the defendants, and particularly Mace J. Green and David B. Green, be enjoined from encumbering, or otherwise disposing of the properties, either as individuals or as executors; (6) that the court grant the petitioner general equitable relief.
Separate general demurrers were filed by, (1) Mace J. Green, individually and as executor; (2) Clairmont Estates Incorporated; and (3) David B. Green, individually and as executor, and Mrs. Maybelle Dorsey Wells and Mrs. Lessie Green Coyne.
The trial judge passed three separate orders sustaining each of the general demurrers, to which rulings the petitioner excepted in three separate bills of exceptions.
"A general demurrer to a petition will not be sustained if the facts entitle the plaintiff to any of the substantial relief prayed." Arteaga v. Arteaga, 169 Ga. 671 ( 151 S.E. 5). "Any relation shall be deemed confidential, arising from nature or created by law, or resulting from contracts, where one party is so situated as to exercise a controlling influence over the will, conduct, and interest of another; or where, from similar relation of mutual confidence, the law requires the utmost good faith; such as partners, principal and agent, etc." Code, § 37-707. While this court has held that there is no presumption that a confidential or fiduciary relation exists between brothers or brothers-in-law solely from the fact that they are so related ( Crawford v. Crawford, 134 Ga. 114, 67 S.E. 673, 28 L.R.A. (N.S.) 353, 19 Ann. Cas. 932; Bryan v. Tale, 138 Ga. 321, 75 S.E. 205; Ellis v. Hogan, 147 Ga. 609, 95 S.E. 4; Stephens v. Walker, 193 Ga. 330, 18 S.E.2d 537; Johnson v. Sherrer, 197 Ga. 392, 29 S.E.2d 581), yet the relation between an executor and the devisees under a will is to a certain extent a relation of confidence and trust.
"The policy of the law forbids that administrators, executors, or trustees, having duties to perform in reference to property for their cestuis que trust, should deal with the beneficiaries with respect thereto, except upon the footing of the utmost candor and upon considerations demonstrative of the absence of any undue advantage. An executor can not purchase property from himself, directly or indirectly, and if he does so, the sale will be set aside at the instance of a legatee who is not in laches, however fair and honest it may have been. Fleming v. Foram, 12 Ga. 594. He may, however, purchase the property from a legatee who is sui juris and laboring under no disability, where all the circumstances of the transaction are fair and open and no advantage is taken by him of the legatee by concealment, misrepresentation, or omission to state any important fact, or by the exercise of undue influence, and the legatee understands the nature and effect of his act. But in such a case a court of equity looks upon the transaction with jealous eye, and will not uphold it unless it appears that the sale is fair and that there is no fraud, no concealment, and no advantage taken by the executor of information acquired by him in his character as such. Bryan v. Duncan, 11 Ga. 67." Collier v. Collier, 137 Ga. 658 ( 74 S.E. 275, Ann. Cas. 1913A, 1110; 21 Am. Jur. 736, § 632.
While a party must exercise reasonable diligence to protect himself against the fraud of another, he is not bound to exhaust all means at his command to ascertain the truth before relying upon the representations. Ordinarily the question whether the complaining party could ascertain the falsity of the representations by proper diligence is for determination by the jury. Elliott v. Marshall, 179 Ga. 639 ( 176 S.E. 770).
The executor in the present case did not purchase the petitioner's interest for the benefit of the estate, as was done in Collier v. Collier, supra; but, while he bought as an individual, the allegation is that he not only concealed material facts but, in addition thereto, misrepresented the value of the petitioner's interest for the purpose of taking an unfair advantage of him. The allegations are not as clear as they might have been in reference to the so-called division of the real property, and no copy of any deed from the executor conveying the "three small houses" to the petitioner is attached as an exhibit. However, the testatrix had been devised a one-fifth interest under the will of her deceased husband, and the value of her estate was dependent upon the value of her husband's estate. The same person qualified as executor in both wills, each of which contained a recommendation that certain property be not divided in kind, but be held as a whole until such time as it could be sold for a profit. The executor in each of the wills was relieved from filing an inventory and from making any return to any court. If it be conceded that no cause of action was set forth in so far as the three small houses were concerned, for the reason that the petitioner had accepted them as a part of his one-fifth interest in the estate of his mother, and that, when Mace J. Green subsequently purchased the three small houses individually, he was not acting as executor and therefore there was no confidential relation, the same would not be true in so far as the deed from the petitioner to Mace J. Green also conveyed "any other property, real or personal," in which the petitioner had any interest in his mother's estate. This portion of the property was still a part of the estate of the testatrix in the hands of the executor. The allegation of the petition is that the three houses were worth less than $2000, while the petitioner's one-fifth interest in his mother's estate is alleged to be worth $15,841.20. After eliminating the three small houses that had been accepted in a partial division of the estate, the executor still had possession of all other property, real or personal, in which the petitioner had any interest in the estate, and knew its value, while the petitioner was a resident of New Jersey and was not familiar with the properties of which the estate consisted. Taking the allegations of the petition to be true, as must be done on general demurrer, sufficient facts were alleged to show that in purchasing all other property, real or personal, in which the petitioner had any interest in the estate, the executor while acting in a fiduciary relation took advantage of information acquired by him in his character as executor. See Johnson v. Sherrer, 197 Ga. 392 (1).
Under the allegations of the petition, wherein it was charged that the defendant, Mace J. Green, was indebted to the petitioner in a greater amount than that received by him for his one-fifth interest in the estate, it was not necessary for the petitioner to tender to the defendant the amount received for his one-fifth interest. To authorize a recovery in equity, a party is not obliged to return, as a condition precedent, that which he will be entitled to retain. Cohen v. Cohen, 200 Ga. 33, 36 ( 35 S.E.2d 908), and cases cited.
It follows that the petition set forth a cause of action for some of the substantial relief prayed against the defendant Mace J. Green, and the trial court erred in sustaining the general demurrer interposed by him individually and as executor.
There were no allegations of any wrongful acts upon the part of the other defendants, and the petition clearly shows that the controversy is between the petitioner and Mace J. Green over the petitioner's interest in the estate, concerning which the other devisees have no interest. What has been said applies also to Clairmont Estates Incorporated, which, under the allegations of the petition, had purchased and paid for certain real property.
Accordingly, the trial court did not err in sustaining the demurrer of the other defendants on the ground that the petition failed to set forth a cause of action as against them.
Judgment reversed in Case No. 15919, and affirmed in Cases Nos. 15920 and 15921. All the Justices concur, except Wyatt, J., who took no part in the consideration or decision of this case.