Levas v. Dewey

213 P.2d 933, 33 Wash. 2d 232, 1949 Wash. LEXIS 436

• Court: Washington Supreme Court
• Decided: April 19, 1949
• Docket: No. 30804.
• Status: Published

Opinions

Schwellenbach, J.

Plaintiffs, as executors of the estate of John Levas, deceased, commenced action against the defendants for the balance due on their promissory note executed July 7, 1945, to Levas, and for foreclosure of a real-estate mortgage given to secure the note.

Defendants answered, admitting the execution of the note and mortgage. By way of affirmative defense, defendants alleged that on November 26, 1947, it was orally agreed between Levas and the defendants that the defendants would execute their wills, which would provide that, upon the death of both defendants, Levas should be paid in cash any balance remaining due on the note out of the proceeds of defendants’ life insurance, and that, in return, Levas would make, execute, and deliver to Warren Hardy, attorney, a satisfaction of the mortgage acknowledging full payment of any indebtedness under the promissory note remaining unpaid at the death of Levas. It was further alleged that, pursuant to the agreement, Levas and Dewey went to Hardy’s office on November 26th, and Levas caused to be written and signed a letter (referred to later) and the satisfaction of mortgage.

Defendants alleged that, at said time and place, defendants instructed Hardy to prepare the wills, which he did, and which were executed December 2, 1947. It is further alleged that Levas died December 5, 1947.

Plaintiffs admitted the date of Levas’ death, but denied all of the remainder of the affirmative matter.

At the trial, the plaintiffs offered and had admitted in evidence the note and mortgage, and then rested. The note for $3,200, dated July 7, 1945, contained endorsements of monthly payments of $30 up to and including November 3, 1947, leaving a balance due of $2,360.

The letter, written on the stationery of Warren Hardy, attorney, follows:

“Mr. Warren Hardy November 26, 1947

1222 Northern Life Tower ‘

Seattle, Washington

Dear Sir:

“It is my intention and wish that if any money remains unpaid on the note dated July 7,1945 and signed by Edna E. Dewey and Walter H. Dewey, husband and wife, in the sum of $3,200.00 at the time of my death, that said indebtedness be cancelled.

“To carry this into effect, I have this day, executed a release of the real estate mortgage from Edna E. Dewey and Walter H. Dewey, husband and wife, to me dated July 7, 1945 and given to secure the payment of said note. Said mortgage having been filed for record August 3, 1945 under auditor’s file No. 3490808, recorded Volume 20, 28 of Mortgages, Page 667, covering the real property therein described.

“Upon satisfactory proof of my death, you are to deliver the satisfaction of mortgage to Walter H. Dewey and Edna E. Dewey, his wife, and the said installment note shall thereupon become fully paid and said mortgage released.

“Very truly yours,

John Levas [signed]”

The following is the satisfaction of mortgage:

“3768463 Satisfaction of Mortgage Vol. 2323 Page 211

“I, John Levas, of Seattle, Washington,- the mortgagee in that certain mortgage dated July 7th, 1945, in which Edna E. Dewey and Walter H. Dewey, are the mortgagors, recorded August 3rd, 1945, under Auditor’s File Number 3490808, and recorded in Volume 2028 of Mortgages Page 667, covering the following described real property situated in King County, Washington, to-wit:

“Lot Thirteen (13) and the South 15 feet of Lot Fourteen (14) Block Three (3) Southern Pacific Supplemental Addition to West Seattle, according to plat recorded in Volume 3 of Plats, page 37, records of said county,

to secure the payment of $3,200.00, do hereby certify that said mortgage indebtedness has been paid in full and do hereby release and satisfy said mortgage.

“Dated at Seattle, Washington, this 26th day of November,- 1947.

John Levas [signed]

State of Washington

County of King

\ )

ss.

“This is to Certify, that on this 26th day of November, 1947, before me, Warren Hardy, a Notary Public, personally appeared John Levas, to me known to be the individual described in and who executed the within instrument and acknowledged to me that he signed and executed the same as his own free and voluntary act and deed for the uses and purposes therein stated.

"WITNESS my hand and official seal this 26th day of November, 1947.

WARREN HARDY [signedj

SEAL

Notary Public in and for the State of Washington, residing at Seattle.”

This document was filed for record in the office of the county auditor of King county on January 29, 1948, at the request of Walter H. Dewey.

Mr. Hardy was sworn and testified as to the transaction which occurred in his office between Mr. Dewey, himself, and the deceased, on November 26th. He also testified as to preliminary events bearing on the transaction. Mr. Hardy was the only attorney representing the defendants in the entire proceedings, although he knew in advance of the trial that his testimony would be vital in establishing the matters set forth in the affirmative defense.

We held in In re Torstensens Estate, 28 Wn. (2d) 837, 184 P. (2d) 255, that an attorney violated the code of ethics in acting as attorney in a will contest where it appears that he had acted as her attorney for a long time, that he drew the will, signed it as a witness, accepted the position of executor, and then testified as a witness in the trial of the case; and because of such violation, his evidence cannot be given much credit. See, also, Interior Woodwork Co. v. Buhler-Larsen, 207 Wis. 1, 238 N. W. 822. In the case at bar, we feel unable to give much credit to the testimony of Mr. Hardy. We believe that such practice should be discouraged by the trial courts.

For the guidance of the bench and bar, we wish to reiterate our strict adherence to Canon XIX of the Canons of Ethics as adopted by the bar of this state.

The trial court was of the opinion that Mr. Levas intended that, at the moment of his death, the debt should be extinguished, and entered a judgment dismissing plaintiffs’ action.

We are confronted with two problems in this appeal. Was there a valid, enforcible contract under which Levas agreed to waive payment of the balance of the promissory note upon his death, in return for defendants executing wills providing for acceleration of the note payments in the event both defendants predeceased Levas? Or, did the delivery of the satisfaction of the mortgage, together with the letter of instructions, constitute a valid gift to defendants of any balance due upon the death of the mortgagee (Levas) ?

Appellants assign error to the admission of the testimony of Warren Hardy on the ground that such testimony concerns transactions with a deceased person and is barred under Rem. Rev. Stat., § 1211 [P.P.C. § 38-3].

In order to determine whether or not Hardy was an interested party, it is necessary to know what agreement, if any, he had with the Deweys as to the compensation he should receive for the case. If his fee was contingent upon the success of the litigation, he was an interested party and his testimony inadmissible. However, if the agreement was that he should charge a reasonable fee, even though it might be greater if successful than if not, he would not be an interested party. In re Hilbert’s Estate, 14 Wn. (2d) 475, 128 P. (2d) 647. Because there is no testimony regarding the compensation Hardy was to receive, we will assume it was not barred by § 1211, although for reasons stated elsewhere in this opinion we are giving it little weight.

The first question we shall consider is the contract alleged in the answer. The only testimony introduced in support of the contract is that of attorney Hardy. While it is true that the satisfaction of mortgage and the letter of instructions conform to the agreement as testified to by Hardy, there is nothing in either exhibit reciting that either of them was drawn pursuant to any agreement. Nor is any reference made to the execution of any wills by the respondents. The wills merely recite that, in the event the testator dies subsequently to or at the same time as the other spouse, the note and mortgage are to be satisfied out of a particular fund. In passing, it might be noted that the answer recites that the wills were executed on December 2nd, while the date on the wills is December 3rd, two days before decedent’s death.

We are satisfied from a reading of the record that there is no evidence to sustain a finding that decedent and the Deweys entered into the contract set forth in the answer, there also being a serious doubt in our minds that the alleged contract could stand the test of mutuality.

The affirmative defense in the answer rests upon an alleged contract. However, at the trial, evidence was introduced without objection that decedent intended the satisfaction of mortgage to operate as a gift. We will deem the pleadings amended to conform to the proof. The next question then is whether there was a gift or not. If a gift, was it a gift inter vivos or a testamentary disposition?

A gift inter vivos is a gift between living persons. To operate, it must become effective during the donor’s lifetime, immediately and irrevocably, and must divest the donor of all present control over it. It is a gift executed, and no further act of the parties and no other contingency, such as death, is necessary to give it effect. 24 Am. Jur. 732, Gifts, § 4. The rule is stated in Basket v. Hassell, 107 U. S. 602, 27 L. Ed. 500, 2 S. Ct. 415:

“The point, which is made clear by this review of the decisions on the subject, as to the nature and effect of a delivery of a chose in action, is, as we think, that the instrument or document must be the evidence of a subsisting obligation and be delivered to the donee, so as to vest him with an equitable title to the fund it represents, and to divest the donor of all present control and dominion over it, absolutely and irrevocably, in case of a gift inter vivos, but upon the recognized conditions subsequent, in case of a gift mortis causa; and that a delivery which does not confer upon the donee the present right to reduce the fund into possession by enforcing the obligation, according to its terms, will not suffice. A delivery, in terms, which confers upon the donee power to control the fund only after the death of the donor, when by the instrument itself it is presently payable, is testamentary in character, and not good as a gift.”

Respondents cite and rely strongly upon In re Kirkpatrick’s Estate, 140 Wash. 452, 249 Pac. 980, to sustain their theory of a present gift inter vivos. There, the donor ex ecuted deeds to his sister and delivered them to a third person to control until his death and then deliver to the grantee. It will be noted that in the cited case there was a present gift of something of value. The donor gave his sister the entire reversionary interest in the property, and placed it beyond his control.

In the case at bar, the decedent attempted to give respondents any debt remaining at his death (there being only a possibility of respondents receiving anything), while retaining full control of the debt. The cited case does not sustain the trial court’s holding. Here, the note and mortgage were retained by Mr. Levas. There was no immediate and irrevocable gift of the debt. It was therefore not a gift inter vivos.

Neither was it a gift causa mortis, which can only arise in contemplation of death from present illness or some impending peril. 24 Am. Jur. 733, Gifts, § 5. This transaction was intended to give the Deweys any balance remaining due on the note at Mr. Levas’ death.

It was not a gift, but an attempt to make a testamentary disposition of the unpaid balance of the debt. To make a testamentary disposition in this state, there must be a compliance with the provisions of Rem. Rev. Stat, § 1394 [P.P.C. § 219-1], et seq. The transaction was therefore not a valid testamentary disposition of the debt.

The judgment is reversed, and remanded with directions to grant judgment to appellants as prayed for in their complaint.

It is noted that appellants asked in their complaint for a five-hundred-dollar attorneys’ fee. No testimony was introduced as to the reasonable value of the services of the attorneys. The trial court shall adjudge the amount of attorneys’ fees and may take additional testimony, if it desires, to determine such amount.

Jeffers, C. J., Robinson, Simpson, and Grady, JJ., concur.