Channon v. Ludlam

16 F.2d 746, 1927 U.S. App. LEXIS 3631
CourtCourt of Appeals for the Seventh Circuit
DecidedJanuary 12, 1927
DocketNo. 3699
StatusPublished
Cited by3 cases

This text of 16 F.2d 746 (Channon v. Ludlam) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Channon v. Ludlam, 16 F.2d 746, 1927 U.S. App. LEXIS 3631 (7th Cir. 1927).

Opinions

EVAN A. EVANS, Circuit Judge.

This appeal is from a decree awarding appellee the sum of $235,076.16 against James H. Channon, her former guardian. Appellee brought the suit against James Channon, her brother-in-law and former guardian of her estate, and also against Leigh Arey Chan-non, her half-sister and a former guardian of her person, for an accounting. The litigation was most protracted, but finally resulted in the aforementioned decree against James Channon. The bill was dismissed as to Leigh Arey Channon. Pending this appeal, James Channon died, and Leigh Arey Channon, his widow, as executrix of the estate, was substituted, and is the present appellant.

The defense relied on is a settlement accompanied by a release executed by appellee, and the issue on this appeal is narrowed to a question of the validity of the release. There were three settlements made, and three different releases executed by appellee. [747]*747Mention of the first two is made only as they throw light on the third or final settlement, the real defense in this suit.

The first release was made a few days after appellee became 18 years of age. The proceedings in the probate court disclosed no irregularity, either in investments or accounting, on the part of the guardian. Chan-non filed his financial report as guardian, together with a release and receipt in full from his ward. As a matter of fact, however, the property was not actually turned over to the ward, but all of it was retained by Channon. Appellee had lived for 10 years in the home of her sister-in-law and her guardian, and was only 18 years of age, and in no equal position to deal with her guardian. It may be added that appellant does not rely upon this release. Certainly the court properly held it for naught.

Appellee lived with the Channons for. some time thereafter, but about 3 years later entered school at Bryn Mawr. Between the two dates, when appellee was about 21 years of age, Channon bought a home on Dearborn street, paying some $40,000 for it. The deed ran to his wife. Payment therefor was made from appellee’s funds. Channon made substantial improvements thereon, to the knowledge of appellee, and furnished it elaborately, all from appellee’s estate. While at Bryn Mawr, appellee became engaged to and in April, 1906, married, Mr. Ludlam. A few days before her marriage, Channon went to Philadelphia, where he was to attend the wedding, and made a settlemeút with appellee. An attorney, Mr. Wilkinson, who was familiar with the affairs of the estate of her father, advised her.

The details of this settlement need not be recited. Channon did not turn over all of the property he had received, and did not account to his ward as an honest, faithful trustee or guardian should have done. The chief item omitted (later in difference) was the Chicago home, the cash expended on its improvements, and the cash that went into its furnishings, some $70,000 in all. A small item (a check for $1,350) occasioned much subsequent dispute. Appellee said Channon was to give her this cheek, and she receipted for it on this promise. Channon took various inconsistent positions in respect to it, and it was finally omitted in the third settlement. About 15 months later, a third settlement was made, and a third release executed by appellee. • The refusal of the court to sustain its validity constitutes appellant’s ehief reliance for reversal of the decree."

In making this settlement, both parties employed attorneys, appellee being represented by two reputable counsel, one residing in Philadelphia, and one in Chicago. The exact amount of Channon’s liability was first ascertained by reference to the records of the probate court, where the inventory and reports of Channon as guardian were on file. The record of payments made by Channon was in appellee’s possession and the balance was readily ascertained. A demand for its payment followed. For the purpose of this opinion, it can be and is assumed that appellee is correct in saying that the release of 1902 was a paper release merely, and did not change the relation of the parties, or release Channon from any liability that arose by reason of the guardianship; that the second release was tainted with fraud, and made without Channon’s filing a full and detailed statement which was forthcoming from one in his position. It may likewise be ' assumed that appellee’s story in respect to the house on Dearborn street is true. In other words, appellee never gave the Dearborn street house to her sister, and never sanctioned the investment of her money in its improvement or furnishings. With these concessions made, appellee is still confronted by' her third release, that of July, 1907.

Appellee insists such release was fraudulently secured, and was executed without valid or legal consideration. That the release was made when the parties were dealing at arm’s length, when hostility had replaced the in loco parentis status that once existed, when both parties were of full age, and both were represented by counsel, conclusively appears from the record. It is established by documentary evidence, parts of which are here reproduced. Appellee’s letters disclose her maturity and her intelligence, as well as the nature of the advice she received.

She consulted her attorney, Mr. Beed, of Chicago, in July, 1906, having previously consulted counsel in Philadelphia. Mr. Beed promptly investigated the records of the probate court, and ascertained the gross amount of Channon’s liability. He then “cheeked off” the amount turned over, and in January, 1907, made demand on Channon for the difference, roughly stated as $100,-000. On March 2d, appellee wrote to Beed:

“My Dear Mr. Beed: Mr. Wilkinson has just sent me your wire. Thirty-five to forty thousand seems a small matter when a hundred thousand and over is due me. Cannot understand how the deed of the house alonewili recompense me in any way. They would* expect to live there, and as far as giving Mrs[748]*748Channon the house in any way I consider that a very bad proposition, I wish the house without any (illegible word) whatsoever.
“I wish you would write me just what the figures are in your bill. Mr. Wilkinson seems to consider the house would repay sufficiently. I cannot see it in that light. Whatever investments Mr. C. has made in his name were made with my money, as I presume you are aware. * * « There must be some of my money safely hidden somewhere, and I believe that he should be made to turn it over. Possibly it may be in his wife’s name, but, even if so, I believe they will turn it over, rather than face the notoriety. * * * The house would have to either be sold or rented. There is no reason why I. should not have the benefit of the income on the thirty or forty thousand, which is very little in lieu of what has been taken from me.”

On March 11, Reed replied at great length:

“Dear Madam: I have your favor. You are, I think, under some misapprehensions. The offer made was not that the house be conveyed to you for your .life, but that it be conveyed subject to a life estate on the part of Mrs. Channon, which means that the house would belong to you, or your heirs, upon her death. You are also under misapprehension in supposing that the money invested in the house is not included in Mr. Channon’s shortage. As a matter of fact, these payments are a part of his shortage, and he can undoubtedly reduce this shortage by showing the amounts paid for the house improvements and furniture with your approval. There is no doubt that you did approve of the payment for the house.

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16 F.2d 746, 1927 U.S. App. LEXIS 3631, Counsel Stack Legal Research, https://law.counselstack.com/opinion/channon-v-ludlam-ca7-1927.