« ΠροηγούμενηΣυνέχεια »
ed by a just regard for the rights of both
(186 N. Y. 178) states and the rights of the incorporation | PHALEN v. UNITED STATES TRUST CO. under each, or else double taxation imposed
OF NEW YORK et al. upon a shareholder.
(Court of Appeals of New York. Oct. 9, 1906.) It is also argued that the courts of 1. SPECIFIC PERFORMANCE-CONTRACT TO DEMassachusetts have passed upon the very
VISE ANTENUPTIAL CONTRACT ENcontention here being made by appellants,
A court of equity, in determining an action and in the case of Moody v. Shaw, 173 Mass.
for the specific performance of an antenuptial 375, 53 N. E. 891, have rejected the claim contract by the father of the bridegroom to dethat the valuation of stock in this same vise property to the son, will, in the exercise of corporation for the purposes of transfer
a sound discretion, consider whether, under the
circumstances, it is equitable and just to compel taxation in Massachusetts should be based
the trustee, holding the property under the will upon any apportionment of property between in trust for the son and his heirs, to turn such the Massachusetts and New York corpora
property over absolutely to the son. tions. The opinion in that case does not
[Ed. Note.-For cases in point, see vol. 44,
Cent. Dig. Specific Performance, SS 17, 18.] seem to warrant any such construction. Ap
2. SAME. parently the only question under discussion
Though testator's son has not objected to was whether the transfer of stock in said the probate of the will, a valid contract of the corporation was taxable at all in Massachu- testator to devise property to such son may setts, and the question of any apportionment
be specifically enforced by him against a trus
tee holding the property under the will in trust was not passed upon. Such expressions as for him and his heirs. are found in the opinion touching that point 3. SAME. certainly do not indicate to my mind that
Such contract is not rendered unenforceif involved and passed upon it would have
able in equity by the fact that it will not sup
port an action at law. been decided adversely to the views here
[Ed. Note.-For cases in point, see vol. 44, expressed.
Cent. Dig. Specific Performance, $S 223, 224.) Lastly, it is urged that there will be great 4. SAME-REQUISITES OF CONTRACT—CONSIDpractical difficulty in making an apportion- ERATION. ment of property for the purposes of valu
Formal marriage articles, by which a fa
ther agrees to devise property to his son, the ation and taxation upon the lines suggested,
prospective bridegroom, equally with the other and the learned counsel for the respondent children, and under which the son subsequently has suggested many difficulties and ab- marries, are supported by a sufficient considera
tion to enable the son to maintain an action for surdities claimed to be incidental to such
specific performance thereof. course of procedure. Most of them certain- [Ed. Note.-For cases in point, see vol. 44, ly will not arise in this case, and they Cent. Dig. Specific Performance, $8 190, 223, probably never will in any other. Of course,
224.] an appraisal based upon an apportionment
O'Brien, Haight, and Vann, JJ., dissenting. of the entire property of the consolidated
Appeal from Supreme Court, Appellate company between the New York and
Division, First Department. Massachusetts corporations may be made a
Action for specific performance by Charles source of much labor and expense if the par
James Phalen against the United States ties so desire. Possibly it might be carried
Trust Company of New York, trustee under to the extent of a detailed inventory and valuation of innumerable pieces of property.
the will of James Phalen, and others. From
an order of the Appellate Division (91 N. Y. Upon the other hand, an apportionment bas
Supp. 537), sustaining a demurrer to the comed upon trackage or figures drawn from the
plaint, which had been overruled at Special books or balance sheets of the company may
Term (89 N. Y. Supp. 699), plaintiff appeals. doubtless be easily reached which will be
Reversed, with leave to defendant to withsubstantially correct and any inaccuracies
draw demurrer and file answer. of which when reflected in a tax of 1 per cent. upon 426 shares of stock will be in
This action was brought by the plaintiff, consequential.
Charles James Phalen, to enforce specific per
formance of formal marriage articles enterThe order of the Appellate Division and
ed into in the city of Paris, France, of the Surrogate's Court of the county of
August 7, 1873, in contemplation of the plainNew York should be reversed, with costs,
tiff's marriage to Julia de Zakrevsky, the and the proceedings remitted to said Sur
daughter of a Russian nobleman. The parrogate's Court for a reappraisal of the stock
ties to such articles were the plaintiff, his in question in accordance with the views
father and mother, his intended bride, and herein expressed.
her father. His father, the testator, James
Phalen, covenanted and agreed in such arCULLEN, C. J., and GRAY, O'BRIEN, and
ticles, so far as material to the questions EDWARD T. BARTLETT, JJ., concur. presented on this appeal, to make no disWERNER and CHASE, JJ., dissent.
tinction between his children in the distribu
tion of his estate by will. The marriage Order reversed, etc.
contemplated by the articles took place a few
days after their execution. The plaintiff's father died in 1887. He left a will, dated May 15, 1882, whereby he carried out his agreements contained in the marriage articles. He subsequently executed various codicils thereto, none of which conflicted with the provisions of the articles, except the seventh and last. By that codicil the testator directed that the portion of his residuary estate which he had bequeathed to the plaintiff absolutely should be held in trust, the incoine thereof to be paid to him during his life, and upon his death the principal was to go to his heirs at law. The testator had, however, given corresponding portions of his residuary estate to his other children absolutely. The will and codicil were thereafter admitted to probate. An accounting
. was had by the executors, upon which the plaintiff duly appeared and interposed objections, but subsequently withdrew them. A final decree was thereafter entered distributing the estate in accordance with the directions contained in the will and codicils and not according to the marriage articles. The foregoing are, substantially, the material facts set forth in the complaint. The defendant trust company, as trustee under the will of the testator, interposed a demurrer to the complaint upon the ground, among others, that it did not set forth facts sufficient to constitute a cause of action. The demurrer was overruled at the Special Term, but sustained by the Appellate Division.
Alexander R. Gulick and Frederick S. Woodruff, for appellant. Edward W. Sheldon, for respondent.
claims, and that its transmission to him might deprive his wife and children of proper means of support, or if for any other good reason a court of equity might deem it unfair, inequitable, or unjust that specific performance of the contract in suit should be decreed, a wise judicial discretion would, of course, be interposed to withhold a decree, the effect of which would be to defeat the very object for which the contract was made. A court of equity can always mold its decrees so as to measure out justice to all concerned, and the question whether specific performance will or will not be decreed in a given case is always addressed, in the first instance, to the sound judicial discretion of the court whose aid is invoked.
Seymour v. De Lancey, 6 Johns. Ch. 222; Margraf v. Muir, 57 N. Y. 155; Day v. Hunt, 112 N. Y. 191, 19 N. E. 414; Conger v. N. Y., W. S. & B. R. R. Co., 120 N. Y. 29, 23 N. E. 983; Stokes v Stokes, 155 N. Y. 590, 50 N. E. 342. And it is usually a question that must be decided in the light of the facts and circumstances existing at the time of the trial, so that it can rarely be disposed of upon a demurrer to a complaint.
It is suggested that, if we should give effect to the antenuptial contract formally drawn up and signed by the plaintiff and all other parties in interest, we would be treating it as a testamentary instrument which the plaintiff is, in some unexplained way, precluded from enforcing because he interposed no objections to the probate of his father's will. We think there is no force in this contention. Such agreements have been upheld for hundreds of years, although their ultimate effect is usually to change the current of attempted testamentary disposition of estates. The direct, and, indeed, the only, purpose of this agreement, plainly expressed, was to secure to the plaintiff an equal share with his sisters in the distribution of his father's estate. That was the end in view, and equity, if no good reason intervenes, will give effect to the expressed intention. The principle upon which such agreements are sustained was stated by Lord Camden as early as the year 1769, in Durfour v. Ferraro, Hargrave's Jurid. Arg. 304, and it was not then new. That was a case of mutual wills, in which the learned jurist said (page 309): "Though a will is always revocable, and the last must always be the testator's will, yet a man may so bind his assets by agreement that his will shall be a trustee for performance of his agreement. A covenant to leave so much to his wife or daughter, etc.
These cases are common; and there is no difference between promising to make a will in such a forin and making his will with a promise not to revoke. This court does not set aside the will, but makes the devisee, heir, or executor a trustee to perform the contract.
No man shall deceive another to his prejudice. By enga- . ging to do something that is in his power, he
WERNER, J. (after stating the facts). We think the complaint sets forth a good cause of action in equity. To hold otherwise we would have to overturn principles of law and equity that have been recognized and established for centuries. Antenuptial contracts, whereby the parents of the parties about to marry have agreed to settle property upon one or both of the spouses, either upon the performance of the marriage ceremony or by testamentary devise or bequest, are of such frequent occurrence, especially in England, that they form a distinct class in the body of our law. For the purposes of this discussion we may assume that this action could not be maintained at law, although there is very respectable authority to the contrary in England, where actions at law have been maintained even upon informal agreements of this nature. Shadwell v. Shadwell, 30 L. J. C. P. 145; 9 C. B. (N. S) 159; Douglas v. Vincent, 2 Vernon, 201. One of the very purposes of equity is to aid where the law fails. In the determination of this appeal it should be borne in mind that a court of equity will take into consideration the facts and circumstances appearing when the case is tried. If it should then appear that the plaintiff's habits are such as to endanger the safety of the fund which he
is made a trustee for the performance, and transmits that trust to those that claim under him. This court is never deceived by the form of instruments. The actions of men here are stripped of their legal clothing, and appear in their first naked simplicity. Good faith and conscience are the rules by which every transaction is judged in this court; and there is not an instance to be found since the jurisdiction was established where one man has ever been released from his engagement after the other has performed his part."
We deem it unnecessary to discuss the intermediate cases which have fully and firmly established the principle that a man's representatives shall be trustees of a resulting trust for the benefit of those to whom he has bound his estate by such a contract as is here involved, for we consider the comparatively modern case of Johnston v. Spicer, 107 N. Y. 185, 13 N. E. 753, decisive of this whole controversy. In that case the husband by an antenuptial contract had provided that in case of his death without issue all his property should belong to the lady whom he was about to marry. The parties intermarried, and the husband predeceased the wife, intestate and without issue. This court held that by virtue of the contract the husband's estate went to the heirs of the wife, and, speaking through Ruger, C. J., said: “It has been the constant practice of the courts of this country, as well as of England, to enforce antenuptial agreements according to their terms, whether they relate to existing or after-acquired property, and to decree a specific or substituted performance of them according to the nature of the case [citing authorities). *
* * The suggestion that such contracts may be invalid, as being of a testamentary character and as contravening the statute regulating the execution of wills, is of no force in view of the fact that for many centuries they have been sanctioned and protected by the courts, and their validity in this state has been expressly ratified and approved by statutory provisions. Laws 1848, p. 308, c. 200, $ 4; Laws 1819, p. 529, C. 375, § 3.” To the same effect are numerous other cases in this state, and they are all based upon the principle that, although a contract may contain covenants to leave property by will, that is no reason why it should not be performed. The facts of those cases are too voluminous and various for repetition here, and a few of them are cited merely to show how firmly the principle is established. Parsell v. Stryker, 41 N. Y. 480; Stanton v. Miller, 58 N. Y. 192; Shakespeare v. Markham, 72 N. Y. 400; Winne v. Winne, 166 N. Y. 263, 59 N. E. 832, 82 Am. St. Rep. 647; Gall v. Gall, 64 Hun, 600, 19 N. Y. Supp. 332; Gates v. Gates, 31 App. Div. 608, 54 N. Y. Supp. 454.
Neither do we subscribe to the proposition that this complaint does not state a good cause of action, because the contract
which it sets forth may be one which would not support an action at law. There are many contracts upon which an action at law cannot be maintained that are enforceable in equity. "There are agreements which the common law, by virtue of its own doctrines, irrespective of statutory regulation, treats as invalid, as not contracts, and for which it furnishes no remedy, but which equity, in the application of its conscientious principles, considers as binding, and enforces by awarding its relief of a specific performance." Pomeroy on Specific Performance, & 31. In Sprague v. Cochran, 144 N. Y. 104, 38 N. E. 1,000, this principle was applied to take a case out of the operation of the statute of frauds, and to the same effect is Smith v. Smith, 125 N. Y. 224, 26 N. E. 259. Many more čases might be cited to illustrate the rule that equity decrees performance of just contracts which are not enforceable at law, but this axiomatic fact needs no further demonstration.
We now pass to that phase of the discussion in which it is argued that there was no consideration as between father and son which enables the latter to maintain an action to enforce the agreement. In support of this position there are cited some recent cases in this court, founded upon oral agreements to devise or convey estates in consideration of services rendered to, or benefits actually received by, the promisors, who died without having carried out their respective parts of the several agreements. Such contracts have been held at least open to suspicion, and courts are very reluctant to enforce them. Gall y. Gall, 138 N. Y. 675, 34 N. E. 515; Mahaney v. Carr, 175 N. Y. 454, 67 N. E. 903; Ide v. Brown, 178 N. Y. 26, 70 N. E. 101. But there is a very wide distinction between those cases and the case at bar. This action is founded upon what are known as formal marriage articles, whereby certain property is settled or agreed to be settled upon either one or both of the spouses about to be married. Instead of being frowned upon, such agreements are favored by the courts and have been upheld and enforced in equity whenever the contingency provided by the contract arose. Johnston v. Spicer, 107 N. Y. 185, 13 N. E. 753. "They usually proceed from the prudence and foresight of friends or the warm and anxious affection of parents; and, if fairly made, they ought to be supported according to the true intent and meaning of the instrument by which they are created. A court of equity will carry the intention of these settlements into effect, and not permit the intention to be defeated." 2 Kent's Comm. 165. It may be conceded that whien the elder Phalen made his will he complied with the terms of the contract, in so far as it related to a testamentary provision for the wife and children of the plaintiff; but he did not perform his agreement to give to the plaintiff the same share as his two sisters, and the facts thus far disclosed
not a party to such a contract may compel wi
suggest no reason why a court of equity class of cases has frequently arisen, but it should not compel complete performance at has never been doubted that the parties the suit of the son. He was a party to the whose marriage forms the occasion of the agreement and performed his part by the agreement are within the consideration and marriage with his wife. He had a legal entitled to enforce the contract. Even the interest in the complete execution of the issue of such marriage may enforce such an contract, and under principles now well set- agreement, although they may not be born tled he can compel performance unless some at the time it is made. Gale v. Gale, L. R. good reason is made to appear why he should 6 Ch. D. 144, 148. "The promise of a third not be permitted to do so.
party may be for the wife's benefit, or it It is the rule, both in law and equity, as may be for the mutual benefit of the married was held in Borland v. Welch, 162 N. Y. 104, parties, and enforceable accordingly.” Schoul56 N. E. 556, that such agreements cannot be er's Domestic Relations, $ 178. Actions at law enforced by mere volunteers or strangers to have even been sustained upon mere letters the consideration. In that case collateral to the party about to marry and at his suit, relatives of the wife sought to claim under although the only consideration was the mara marriage settlement made between the riage. In Shadwell v. Shadwell, 30 L. J. C. husband and wife and trustees, and it was P. (1860) 145, 9 C. B. (N. S.) 159, the deheld that they were mere volunteers. But fendant's testator wrote to his nephew, the there Judge Cullen referred to the rule, sub- plaintiff, as follows: “My dear Lancey: I scribed to by this court, that even a person am glad to hear of your intended marriage
with Ellen Nicholl, and, as I promised to as
sist you at starting, I am happy to tell you benefit. In one case it was held that the that I will pay to you one hundred and relation of parent and child (Todd v. Weber, fifty pounds yearly during my life, and until 95 N. Y. 181, 47 Am. Rep. 20), and in another your annual income derived from your prohusband and wife (Buchanan v. Tilden, 158 fession of a chancery barrister shall amount N. Y. 109, 52 N. E. 724, 44 L. R. A. 170, 70 to six hundred guineas, of which your own Am. St. Rep. 454), was sufficient consideration admission will be the only evidence that I to support the action. It is not necessary to shall receive or require.” In an action by go so far in this case. Here the plaintiff the nephew to recover, after his marriage was not only within the “influence of the with the lady named, the arrears of the anconsideration," as it was called, but was ac- nuity promised, he was permitted to recover tually a party to the contract. In Borland v. at law. In the case of Coverdale V. EastWelch, supra, Judge Cullen quotes with ap- wood, L. R. 15 Eq. 121, after proposals of proval the general rule laid down in Atherly marriage had been accepted, the lady's father on Marriage Settlements (page 125 of 162 wrote to the intended husband as follows: N. Y., page 557 of 56 N. E.): "Equity will "V. being my only child, of course she will execute marriage and other family settle- come into possession of what belongs to me at ments at the instance of all persons who are my decease." In other letters he made state
” within the influence of the marriage con- ments evidencing the same intention. The sideration, for all these rest their claims on father, being then a widower, subsequently the ground of a valuable consideration." remarried. Upon his death he left a will beThis statement of the rule was concurred in queathing part of his estate to his widow by all the members of this court then sitting, and creating certain annuities. Upon a bill and we regard it as entirely sound in princi- filed by the daughter for the enforcement of ple. The strict legal definition of considera- this contract, it was held, notwithstanding tion need not here be discussed, since mar- the manifest equities of the widow, that the riage settlements have always been regarded daughter was entitled to the whole estate. as exceptions to the general rule upon this This, as Mr. Schouler says, is a harsh case. question. "Articles for settlement in most Similar informal agreements have been encases stipulate for benefits to persons other forced many times in England. Douglas v. than parties to them. The frequent use of Vincent, 2 Vernon, 201 ; Wankford v. Fotherly, such stipulations during the past two cen- Id. 322; Moore v. Hart, 1 Id. 201. turies, and the number of cases in which The foregoing principles and authorities benefits stipulated for have been secured by seem to completely dispose of this case, and the courts to those for whom they were in- the discussion might well close at this point; tended, show that both conveyancers and but there are a few authorities which need judges have relied on and assumed their only to be cited to show that covenants in validity generally. Yet they are obnoxious marriage settlements, such as the one here in to a general rule of law and equity, and de- question, binding the parent to leave to a pend for their efficacy on exceptions from child all or an aliquot part of his property that rule made in favor of them, and upon a at death, are most usual in such settlements, doctrine of equity the scope of which has and have always been sustained. Laver v. hardly yet been accurately determined.” Fielder, 32 Beav. 1, presented the same genVaizey's Law of Settlements, vol. 1, p. 140. eral features as those in the case at bar,
The question as to what persons are within except that the agreement was informal and the consideration of the agreement in this the plaintiff was not a party thereto. It was
contained in a letter by the father to the of his property as he should by his will or prospective son-in-law in which he promised otherwise provide for any of his younger that "at my decease she (the daughter) shall children. That agreement was enforced after be entitled to her share of whatever property the father's death at the suit of the trustees I may die seised.” The father, in making of the settlement. Romaine v. Onslow, 24 his will, failed to comply with this agree- Wkly. Rep. 899. In Keays v. Gilmore, Irish ment, and after a suit by the widow and a R. 8 Eg. 296, the father, in a letter to a son to settle the estate the daughter was per- cousin, promised, upon the marriage of his mitted to maintain an action for the enforce- son, to give to his son upon the father's ment of the agreement and judgment was death a child's portion of his estate. An decreed in her favor. In Jones v. Martin, 3 action was maintained by the son's wife as Anstr. 822, more fully reported in 5 Ves. 266, his executrix for a construction of the agreenote, the father covenanted, on his daughter's ment and its validity was sustained, and marriage, to leave her at 1': death an equal within the past year the Irish Court of Chanshare of personalty with his son. The father cery (Doyle v. Crean  1 Irish R. 252) in his lifetime transferred certain property gave effect to a contract almost exactly simito his son, which was more than the latter's lar in its terms, The father, by a settlement proportion as fixed by the marriage settle- made upon the marriage of his daughter, ment. In an action brought after the par- agreed to distribute his estate equally among ent's death by the daughter and her husband his children. An action was maintained by for an accounting and an enforcement of the the trustees of the settlement on behalf of agreement, judgment was rendered for the the daughter, without question as to the relief asked. It was held in the House of daughter's right to insist upon the performLords that "the contract was stated by coun- ance of the agreement. Other cases illustratsel for the respondent to be vague, and idle, ing the general principle are Eardley v. Owen, unmeaning, and insecure. It is not, however, 10 Beav. 572, and In re Brookman's Trust, an unusual covenant in settlements. Many L. R. 5 Ch. App. 182. These cases disclose marriages are entered into on such covenants, how uniformly such agreements have been and they are not inexpedient. They are sustained by the courts. entitled to favorable consideration.
Since the demurrer was not taken on the But then it does not confine or restrict the
ground that the plaintiff's wife was a necesfather's powers. He may alter the nature of sary party, that question is not now before us. his property from personal to real, or he may It may be that, if the case should come to give scope to projects, or indulge in a free and trial, she ought to be brought in as a party, unlimited expense. But he must not be al- so that the rights of all persons in interest lowed to entertain more partial inclinations may be properly presented and disposed of. and dispositions towards one child than an- Specific performance ought not to be decreed other.” In Bennett v. Houldsworth, L. R. 6 unless all proper parties are before the court. Ch. Div. 671, the father, by a settlement prior Miller v. Baer, 3 Paige Ch. 466. to the marriage of his daughter, covenanted The order of the Appellate Division susthat he would, by his will, divide his estate taining the demurrer should be reversed, and into as many equal parts as he had children, the interlocutory judgment of the Special one of such parts for the benefit of his Term overruling the demurrer affirmed, with daughter and her husband, remainder to their costs in all courts, with leave to defendant to issue. He failed to carry out the provision withdraw demurrer and serve answer within for this settlement. In an action by the trus- 20 days upon payment of costs. tees of the settlement, the agreement was held binding. In that case the Vice Chancel- O'BRIEN, J. (dissenting). This is an aclor said: “The settlement is, in my opinion, tion for specific performance of an alleged in very pląin terms. It does entitle the par- contract claimed to have been made between ties under the settlement to have one equal the plaintiff and his father. The father was fourth part of the whole of the testator's es- a citizen of New York, but for many years tate applied upon the terms of the settle- prior to his death he resided with his family ment; but it is only upon the terms of the in Paris. He died in that city on the 20th settlement. The representative of the trus- of January, 1887, leaving a will executed tees of the settlement, who asks by this suit there, to which was attached seven codicils; to have the trusts of that deed carried into the last or seventh of the codicils having been execution, does not ask for the payment of executed on the 17th of January, 1887, a few any debt, but asks that the fourth part may days prior to his death. By this will and be ascertained, and that it may be paid to him the codicils attached the testator disposed of in satisfaction of the obligation contained in a large estate, both real and personal, to the settlement. In my opinion, that is a his widow and children. The will and codiclaim which cannot be resisted.” To the cils were admitted to probate in this state; same effect is McCaragher v. Wieldon, L. R. the plaintiff being a party to the proceedings 3 Eq. 236. Again, in Willis v. Black, 4 Russ. for that purpose before the surrogate. By 170, the father covenanted upon the marriage the last codicil the testator disposed of that of his daughter to settle upon her and her portion of his property which had been left husband, among other things, as great a share by the prior provisions of the will to the