Biersdorf v. Putnam , 181 Or. 522 ( 1947 )

I dissent.

This suit was commenced by appellant against respondents for the purpose of cancelling an agreement entered into between the parties, dated June 4, 1945. A copy of the agreement is as follows:

"In consideration of the sum of One Dollar and other valuable consideration paid by Phoebe D. Biersdorf, widow of Herman R. Biersdorf, deceased, to children of said Herman R. Biersdorf, deceased, namely, Lillian D. Putnam, Edgar R. Biersdorf, Mabel L. Biersdorf and Verna E. Ludtke and Inez E. Rice, and in consideration of the sum of One Dollar and other valuable consideration, paid by all of the said children to the said Phoebe D. Biersdorf, the said Phoebe D. Biersdorf hereby assigns all of her right, title and interest in and to all of the personal property belonging to the estate of said Herman R. Biersdorf, deceased, to the said children, including all stocks, bonds, bank accounts and other evidences of indebtedness, defense bonds, etc., except the household furniture now located at 2716 S.E. 35th Avenue in the City of Portland, Oregon, and also the Ford automobile, the house and lot located at said address being held in the joint names of said Herman R. Biersdorf, deceased, and said Phoebe D. Biersdorf, is an estate by the entirety and under the law goes to the survivor, Phoebe D. Biersdorf.

"It is further agreed that the said children of said Herman R. Biersdorf, deceased, will pay the expense of administration of said deceased out of their funds of said estate, including funeral expenses and expense of last illness.

"Dated June 4, 1945.

"Phoebe D. Biersdorf Lillian B. Putnam Mabel L. Biersdorf and Inez E. Rice By Lillian B. Putnam Edgar A. Biersdorf Verna E. Ludtke"

Appellant is the widow of Dr. Biersdorf. Respondents are his children by a former marriage.

Dr. Biersdorf died June 1, 1945, intestate, leaving an estate consisting of personal property inventoried in excess of $30,000. He was buried on June 4, 1945; and, either in the afternoon or in the evening of the day of the funeral (the time is in dispute), Lillian Putnam, Edgar A. Biersdorf and Verna E. Ludtke, with their attorney, Henry Hartje, called upon appellant at her home in the City of Portland. After some conversation regarding the funeral and the affairs of Dr. Biersdorf's estate, the contract in suit was drawn up by Mr. Hartje in longhand and signed by appellant, by Lillian B. Putnam, Edgar A. Biersdorf, Verna E. Ludtke, and in addition thereto Lillian B. Putnam signed the names of Mabel L. Biersdorf and Inez E. Rice by herself.

There is a sharp conflict in the evidence as to the circumstances of this call at the home of appellant as well as to the conversation which took place at the time. It is impossible to reconcile the testimony of the parties. There is the testimony of appellant giving her version of what took place, and there is arrayed against her, giving an entirely different version, the testimony of Mrs. Putnam, Mrs. Ludtke, Mr. Biersdorf and Mr. Hartje. If it were necessary to determine from this record the truth of what actually took place at this meeting, the problem would be most difficult. I believe, however, that the issues involved herein can be disposed of without the necessity of analyzing all of this testimony and of deciding who told the truth and who falsified as to the happenings at this meeting.

There are certain matters about which there is no dispute. It is admitted that the funeral of Dr. Biersdorf took place in one of the mortuaries in the City of Portland, commencing about 11:30 and concluding about 1:30 or 2:00 o'clock on the 4th of June. It is admitted that either during the afternoon or that evening, the three respondents referred to above and their attorney, Mr. Hartje, called upon appellant at her home, and that there was a discussion there about the affairs of Dr. Biersdorf. It is admitted that from appellant's standpoint she was alone and from respondents' standpoint that three of them were present represented by an attorney. It is admitted that the attorney, Mr. Hartje, in explaining the matter to appellant did say that it was necessary to conclude the matter in something of a hurry for the reason that one of the respondents was leaving the next day. It is admitted that Mr. Hartje drew up the contract in longhand and that he was at that time and continued to act as attorney for respondents. It is thoroughly established that the parties went to the appellant's place to get an agreement.

According to the testimony of respondents who were present and Mr. Hartje, appellant had a very erroneous notion as to what were her rights in Dr. Biersdorf's estate, they contending that she stated she was entitled to a third thereof. While she denied this, it is admitted that Mr. Hartje did not disabuse her mind of this erroneous notion and did not explain to her that she would be entitled to half of the personal property rather than a third thereof. It is admitted that the monetary consideration recited in the contract was not paid. There is no contention made by respondents that Mr. Hartje advised appellant of her rights to a widow's allowance or as to exempt property. Regardless of who was telling the true story as to the events which took place at this meeting, it is conclusively established by all the testimony that appellant did not understand her rights as the widow of Dr. Biersdorf. She did not even understand what were her rights as a tenant by the entirety in the home, and at her request that provision was inserted in the contract by Mr. Hartje.

One other observation should be made at this point. If the conversation at the time of this meeting was as narrated by respondents who were present and Mr. Hartje, then it must be admitted that Mr. Hartje failed considerably in drawing the contract. According to their version, the reason for the contract was that there had been a pre-marriage contract between appellant and Dr. Biersdorf, which had not been reduced to writing, and that this contract was an embodiment or confirmation of this agreement. Yet there is not a suggestion in the contract that such was the fact. According to this version, appellant was to get the personal property and the car. The contract does not provide for this. By the contract itself, appellant does not relinquish her right to act as administratrix, yet it is admitted that on the following day Mr. Hartje had Mrs. Putnam appointed as administratrix without further consulting appellant.

The evidence further fully establishes the fact that appellant was relying entirely upon the good faith and belief of friendliness on the part of respondents and Mr. Hartje, and the evidence shows that before they left she went to Dr. Biersdorf's safe and got his private papers and, without examining them to ascertain what they were, turned them over to Mr. Hartje.

It is admitted that there was a discussion regarding a will which gave the property to the children. There is a sharp dispute as to what was said regarding the legal effect of this will. It is further admitted that Dr. Biersdorf discussed with Mr. Hartje, his attorney, his intended marriage to appellant and was fully advised as to his rights and what he should do with reference to a disposition of his property should the marriage be solemnized. The record further shows that after the marriage he again consulted his attorney regarding the making of a will.

Now with this much of the record before us, let us consider the contract and appellant's challenges thereto. Appellant challenges this contract and attempts to have it set aside and cancelled upon the ground that the same was obtained by respondents and their attorney by fraud, duress, undue influence and without giving any consideration to appellant therefor.

What were appellant's rights in this estate? Under § 19-603, O.C.L.A., she was entitled to a widow's allowance for one year, which, under the circumstances of this case, would equal at least $1,800. She was entitled to all exempt property. The homestead is not involved because the home was held by the entirety. But, as to personal property, under §§ 6-1201 and 19-602, O.C.L.A., she was entitled to books, pictures and musical instruments to the value of $75, wearing apparel to the value of $100, automobile to the value of $400, household goods to the extent of $300. Thus it will appear from these various items that she would have been entitled to receive $2,675. Then, under § 16-102, O.C.L.A., subdivision (4), she would have been entitled to one-half of the remainder. In order to arrive at the amount of this item, the items above must be deducted, together with other expenses of administration, funeral expenses, etc. After these deductions, her interest in the remainder of the estate would have been about $12,500, or, in round numbers, she was entitled to approximately $15,000 from this estate as the widow of Dr. Biersdorf.

Respondents contend that in this case it would be inequitable for the widow to receive what we have outlined above, because she had only been married to Dr. Biersdorf since April 11th. We have been cited no case, and, after a rather careful investigation, we have found none holding that the rights of a widow in her deceased husband's estate are to be measured by the time of the marriage relationship. The statutes to which we have referred above, giving to appellant the rights referred to, do not provide that the rights there defined depend upon the length of time of the marriage relationship. Those statutes provide that if there is a widow she shall have those rights. It is admitted that appellant is Dr. Biersdorf's widow. The argument that the length of time of the marriage relationship should influence the amount of the widow's right in her deceased husband's estate is an argument that must be addressed to the legislature. It is an argument that the courts cannot entertain in view of these positive statutory provisions.

Now, the contract is challenged for lack of consideration. What was the consideration for this contract? The agreement itself provides that the respondents will pay the expenses of administration out of their funds of said estate, including funeral expenses and expenses of last illness. Of course, all these items are preferred claims against the estate. § 19-1102, O.C.L.A. This was in no sense a benefit to appellant nor a detriment to respondents. The contract does not give appellant the furniture nor the automobile, but the record shows that it was agreed at the time of this meeting that she should have both. The value of these items is approximately $1,600. Four hundred thirty dollars worth of the furniture was bought and paid for by appellant. Three hundred dollars worth of the furniture is exempt. Four hundred dollars of the automobile is exempt. This would leave $470, half of which appellant would have received under the law. Thus it may be said that she would have received, by virtue of the arrangement agreed upon by the parties at her home, $235. This, of course, would depend upon the enforcibility of the arrangement. It will be remembered that there was a written agreement which did not give to her either of these items. Two of the heirs were not present at the time of this arrangement, and no authority to represent them is shown. Nevertheless, we shall assume without deciding that there was some consideration for the contract.

Let us now inquire into the question of whether or not that consideration was adequate under all of the circumstances of this case.

Kerr on Fraud and Mistake (1910) 184, states this rule:

"Mere inadequacy of consideration or inequality in a bargain is not a ground to set aside a transaction, if the parties were on equal terms and in a situation to judge for themselves, and performed the act wittingly and willingly. * * * But inadequacy of consideration, if it be of so gross a nature as to amount in itself to evidence of fraud, is a ground for cancelling a transaction. In such cases the relief is granted, not on the ground of the inadequacy of consideration, but on the ground of fraud as evidenced thereby. * * *"

3 Pomeroy's Equity Jurisprudence (5th ed. 1941) § 927 treats the same subject in this language:

"Although the actual cases in which a contract or conveyance has been canceled on account of gross inadequacy merely, without other inequitable incidents, are very few, yet the doctrine is settled, by a consensus of decisions and dicta, that even in the absence of all other circumstances, when the inadequacy of price is so gross that it shocks the conscience, and furnishes satisfactory and decisive evidence of fraud, it will be a sufficient ground for canceling a conveyance or contract, whether executed or executory. Even then fraud, and not inadequacy of price, is the true and only cause for the interposition of equity and the granting of relief. * * *

"The rule is sometimes stated that the inadequacy must be so gross that it is conclusive evidence of fraud. Fraud is, however, a fact, inferred, like other conclusions of fact, from the evidence. No rule of law can therefore be laid down as to the amount of inadequacy necessary to produce the resulting fraud. Inadequacy of consideration may be evidence of fraud, slight or powerful, according to its amount, and other circumstances.

"The following seems to be the true rationale of the doctrines concerning inadequacy of price: Whenever it appears that the parties have knowingly and deliberately fixed upon any price, however great or however small, there is no occasion or reason for interference by courts, for owners have a right to sell property for what they please, and buyers have a right to pay what they please. But where there is no evidence of such knowledge, intention, or deliberation by the parties, the disproportion between the value of the subject-matter and the price may be so great as to warrant the court in inferring therefrom the fact of fraud. Such a gross inadequacy or disproportion will call for explanation, and will shift the burden of proof upon the party seeking to enforce the contract, and will require him to show affirmatively that the price was the result of a deliberate and intentional action by the parties * * *."

This court has had occasion to refer to this subject, in the case of Sherman v. Glick, 71 Or. 451, 461, 142 P. 606, where we said:

"Inadequacy of price paid for real property is not sufficient alone to authorize a court of equity to set aside a deed of conveyance, unless it is so gross as to shock a conscientious person; but, if the inadequacy is so great as to shock a conscientious person, it alone may furnish sufficient ground for annulling the conveyance. When the price paid is inadequate, but not grossly so, such inadequacy, with other inequitable incidents, may afford proper grounds for relief."

To the same effect is Toney v. Toney, 84 Or. 310, 318,165 P. 221, and Archer v. Lapp, 12 Or. 196, 202.

The court in its opinion quotes from 1 Williston on Contracts (rev. ed.) 285, § 115, to the effect that "the law will not enter into an inquiry as to the adequacy of the consideration." Equity will. This is a suit in equity. If the quotation is intended to prescribe a rule applicable to this case, it is out of harmony with the above cases from this court and should not be followed.

In this case the inadequacy of consideration is accompanied by the admitted facts referred to above. That the parties were not dealing on equal terms is demonstrated by the fact that respondents, three in number, were present represented by their attorney, and that appellant was alone without counsel. That there was haste in closing the transaction is admitted. That she requested further consideration of the matter until the following morning is not denied. That she was ignorant of her rights in and to her deceased husband's estate is clear. That the erroneous notions she had regarding the matter were not corrected by the attorney present is admitted. The fact that on the following morning when she was advised of her legal rights she immediately repudiated the contract is admitted. While there is an effort upon the part of three respondents and Mr. Hartje to say that appellant was not distressed in mind as the result of the sudden death of her husband, yet all nature arises to contradict this testimony and to corroborate the statements of appellant that she was "deeply depressed." Under the circumstances, this court ought not place its stamp of approval upon a contract procured in the manner in which this contract was procured.

Such a disposition of this case would be an invitation to other heirs and other lawyers to congregate en masse and take advantage of distressed widows. The transaction was so one-sided as to numbers present, legal representation, knowledge and legal effect of what was being done, as well as to consideration, as not only to shock, but literally to stun, the conscience of a court of equity. Equality is equity. 21 C.J. 206, § 207. These circumstances portray the opposite of equality. They give a fraudulent color to the entire transaction.

Let us apply a common sense test to the validity of this contract. Would the parties have made this contract had all these inequalities been removed? In other words, had the parties met on some neutral ground not in the home from which Dr. Biersdorf had so recently been carried to his grave; had appellant been accompanied by two of her relatives and her attorney; had she been advised of her exact status as such widow and as to her rights in connection with the estate by the entirety; and, if there were anything said about an oral antenuptial agreement, then had she been told that such an agreement was not binding upon her and that she was entitled to disregard it and take what the law gave her as such surviving widow, would she have made this contract? The answer is obvious. The very next morning when she had an opportunity to shake off the influence of what she had before believed was friendship, sympathy and sound legal advice, she immediately repudiated the contract.

If there were an oral antenuptial agreement and if Dr. Biersdorf had such confidence in appellant that he did not execute a new will on account thereof, and if at this meeting after the funeral appellant did say, as Lillian B. Putnam, Edgar A. Biersdorf and Verna D. Ludtke and Henry Hartje testified she said, and as she testified she did not say, namely, that she would respect this agreement, then why in the name of fair dealing and common decency was it necessary to get appellant's signature to this or any other contract? If she could be trusted that far, why could she not be trusted further? If people want valid enforcible contracts, they should be obtained under far different circumstances.

Even the trial court's conscience was shocked. He stated: "Certainly for three adult persons accompanied by their attorney to call upon a widow the day of the burial of her husband to secure an advantageous contract, coupled with the inadequacy of consideration, under ordinary circumstances would be sufficient in the eyes of a court of equity to set aside a contract such as this." And again: "With respect to the matter of consideration, if she was legally entitled to the house and a half of the personal property belonging to the estate of course the consideration is not adequate."

Notwithstanding these impressions, the trial court sustained the contract on this reasoning: "Had this been a widow who had been married to this man a great many years and participated in the creation of this estate it would appear entirely different to the Court, but in this case what she did receive which she wouldn't have been entitled to under the law is substantial in view of the short time she was married to the deceased * * *." Not even the opinion of the court attempts to justify any such fallacious reasoning.

Again, let us look at this transaction from the standpoint of a few fundamental principles. So often we venture out into the realm of adjudicated cases and almost lose sight of the fundamentals of the law. "A contract, to be a contract, must be binding upon both parties. There must be mutuality. This is an axiom of law." Shea v. Graves, 142 Or. 503, 517,19 P.2d 406, 17 C.J.S. 358.

At the time the contract was made and signed, only three out of five heirs of Dr. Biersdorf were present and participated in the proceedings. The names of two of the heirs are signed by Lillian B. Putnam, to-wit, Mabel L. Biersdorf and Inez E. Rice. Under the record in this case, it was wholly impossible for Mrs. Putnam to have authority to make such a contract for these other heirs, nor does she claim any such authority. The nature of the negotiations, as related by all the witnesses, was such that Mabel L. Biersdorf and Inez E. Rice could not have known thereof in advance and authorized any such action. Therefore, the contract lacked mutuality.

Let us suppose, to illustrate, that the contract had been very advantageous to appellant rather than respondents, could she have compelled Mabel L. Biersdorf and Inez E. Rice to comply with the terms thereof on the record made in this case? There isn't a scintilla of evidence in this record to show authority to sign the names of these heirs or to show that these heirs ever ratified or concurred in this agreement. They never even appeared as witnesses to sustain the contract.

Now, under these circumstances, the contract could not have risen above a mere offer, an offer which could have been withdrawn at any time before it was accepted. 17 C.J.S. 395, and cases cited in note 31. Such an offer may be revoked at any time before it is accepted by all of the parties thereto. Burton v.Shotwell, (13 Bush) 76 Ky. 271; 17 C.J.S. 396; 13 C.J. 293. This record shows no more than negotiations resulting in an offer upon the part of appellant to make the kind of a deal outlined in this proposition. This offer never became binding until it was accepted by all the parties. It was repudiated before it was ever accepted or ratified by two of the heirs.

For these reasons I cannot concur in the opinion of the court. I feel that the decree should be reversed and one entered herein cancelling, setting aside and holding for naught the document in suit.