Phalen v. . United States Trust Co.

78 N.E. 943, 186 N.Y. 178, 24 Bedell 178, 1906 N.Y. LEXIS 1099

• Court: New York Court of Appeals
• Decided: October 9, 1906
• Status: Published

Opinions

Webneb, J.

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.

Ante-nuptial 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 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 mould its decrees so as to measure out justice to all concerned, and the question whether specific performance will or will not be decreed in k 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 id. 191; Conger v. N. Y., W. S. & B. R. R. Co., 120 id. 29; Stokes v. Stokes, 155 id. 590.) 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 ante-nuptial 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 (p. 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 form 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, trustee to perform the contract. * * * Ho man shall deceive another to his prejudice. By engaging to do something that is in his power, 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) decisive of this whole controversy. In that case the husband by an ante-nuptial 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 Huger, Oh. J., said : “ It has been the constant practice of the courts of this country, as well as of England, to enforce ante-nuptial 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 of 1848, chap. 200, § 4; Laws of 1849, chap. 375, § 3.)” To the same effect aré 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 id. 192; Shakespeare v. Markham, 72 id. 400; Winne v. Winne, 166 id. 263; Gall v. Gall, 64 Hun, 600; Gates v. Gates, 34 App. Div. 608.)

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, hy 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) 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). IVIany more cases 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 v. Gall, 138 N. Y. 675 ; Mahaney v. Carr, 175 id. 454; Idle v. Brown, 178 id. 26.) 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.) “ 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 when 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 suggest no reason why a court of equity should not compel complete performance at the suit of the son. He was a party to the agreement and performed on his part by the marriage with his wife. He had a legal interest in the complete execution of the contract and, under principles now well settled, he can compel performance unless some good reason is made to appear why he should not be permitted to do so.

It is the rule, both in law and equity, as was held in Borland v. Welch (162 N. Y. 104), that such agreements cannot be enforced by mere volunteers or strangers to the consideration. In that case collateral relatives of the wife, sought to claim under a marriage settlement made between the husband and wife and trustees, and it was held that they were mere volunteers. But there Judge Cullen referred to the rule, subscribed to by this court, that even a person not a party to such a contract may compel performance if it has been made for his benefit, In one case it was held that the relation of parent and child (Todd v. Weber, 95 N. Y. 181), and in another husband and wife (Buchanan v. Tilden, 158 N. Y. 109), was sufficient consideration to support the action. It is not necessary to go so far in this case. Here the plaintiff was not only within the “ influence of the consideration,” as it was called, but was actually a party to the contract. In Borland v. Welch (supra) Judge Cullen quotes with approval the general rule laid down in Atherly on Marriage Settlements (p. 125): “ Equity will execute marriage and other family settlements at the instance of all persons who are within the influence of the marriage consideration, for all these rest their claims on the ground of a valuable consideration.” This statement of the rule was concurred in by all the members of this court then sitting, and we regard it as entirely sound in principle. The strict legal definition of consideration need not here be discussed, since marriage settlements have always been regarded as exceptions to the general rule upon this question. “ Articlés for settlements in most cases stipulate for benefits to persons other than parties to them. The frequent use of such stipulations during the past two centuries, and the number of cases in which benefits stipulated for have been secured by the courts to those for whom they were intended, show that both conveyancers and judges have relied on and assumed their validity generally. Yet they are obnoxious to a general rule of law and equity, and depend for their efficacy on exceptions from that rule made in favor of them, and upon a doctrine of equity the scope of which has hardly yet been accurately determined.” (Vaizey’s Law of Settlements, vol. 1, p. 140.)

The question as to what persons are within the consideration of the agreement in this class of cases has frequently arisen, but it has never been doubted that the parties whose marriage forms the occasion of the agreement are within the consideration and entitled to enforce the contract. Even the issue of such marriage may enforce such an agreement, although they may not be born at the time it is made. (Gale v. Gale, L. R. [6 Ch. D.] 144, 148.) “ The promise of a third party may be for the wife’s benefit, or it may be for the mutual benefit of the married parties, and enforceable accord-' ingly.” (Schouler’s Domestic Relations, § 178.) Actions at law have even been sustained upon mere letters to the party about to marry and at his suit, although the only consideration was the marriage. In Shadwell v. Shadwell (30 L. J. [C. P. 1860] 145; 9 C. B. [N. S.] 159) the defendant’s testator wrote to his nephew, the plaintiff, as follows : “ My dear Lancey.— 1 am glad to hear of your intended marriage with Ellen INicholl, and, as I promised to assist you at starting, I am happy to tell you that I will pay to you one hundred and fifty pounds yearly during my life, and until your annual income derived from your profession of a Chancery barrister shall amount to six hundred guineas, of which your own admission will be the only evidence that I shall receive or require.” In an action by the .nephew to recover, after his marriage with the lady named, the arrears of the annuity promised he was permitted to recover at law. In the case of Coverdale v. Eastwood (L. R. [15 Eq.] 121), after proposals of marriage had been accepted, the lady’s father wrote to the intended husband as follows: “ Y. being my only child, of course she will come into possession of what belongs to me at my decease.” In other letters he made statements evidencing the same intention. The father, being then a widower, subsequently remarried. Upon his death he left a will bequeathing part of his estate to his widow and creating certain annuities. Upon a bill filed by the daughter for the enforcement of this contract, it was held, notwithstanding the manifest equities of the widow, that the daughter was entitled to the whole estate. This, as Mr. Schouler says, is a harsh case. Similar informal agreements have been enforced many times in England. (Douglas v. Vincent, 2 Vernon, 201; Wankford v. Fotherley, Id. 322; Moore v. Hart, 1 id. 201.)

The foregoing principles and authorities seem to completely dispose of this case, and the discussion might well close at this point, but there are a few authorities which need only to be cited to show that covenants in marriage settlements, such as the one here in question, binding the parent to leave to a child all or an aliquot part of his property at death, are most usual in such settlements, and have always been sustained. Laver v. Fielder (32 Beav. 1) presented the same general features as those in the case at bar, except that the agreement was informal and the plaintiff was not a party thereto. It was contained in a letter by the father to the prospective son-in law in which he promised that “ at my decease she (the daughter) shall be entitled to her share of whatever property I may die seized.” The father, in making his will, failed to comply with this agreement, and after a suit by the widow and a son to settle the estate, the daughter was permitted to maintain an action for the enforcement of the agreement and judgment was decreed in her favor. In Jones v. Martin (3 Anstr. 822 ; more fully reported in 5 Ves. 266, note) the father covenanted on his daughter’s marriage to leave her at his death an equal share of personalty with his son. The father in his lifetime transferred certain property to his son which was more than the latter’s proportion as fixed by the marriage settlement. In an action brought after the parent’s death by the daughter and her husband for an accounting and an enforcement of the agreement, judgment was rendered for the relief asked. It was held in the House of Lords that “ The contract was stated by counsel for the respondent to be vague, and idle, unmeaning and insecure. It is not, however, an unusual covenant in settlements; many marriages are entered into on such covenants ; and they are not inexpedient. They are entitled to favourable consideration. * * * But then it does not confine or restrict the father’s powers. He may alter the nature of his property from personal to real; or he may give scope to projects; or indulge in a free and unlimited expense. But he must not be allowed to entertain more partial inclinations and dispositions towards one child than another.” In Bennett v. Houldsworth (L. R. [6 Ch. Div.] 671) the father, by a settlement prior to the marriage of his daughter, covenanted that he would, by his will, divide his estate into as many equal parts as he had children, one of such parts for .the benefit of his daughter and her husband, remainder to their issue. He failed to carry out the provision for this settlement. In an action by the trustees of the settlement, the agreement was held binding. In that case the vice-chancellor said: “ The settlement is, in m'y opinion, in very plain terms. It does entitle the parties under the settlement to. have one equal fourth part of the whole of the testator’s estate applied upon the terms of the settlement, but it is only upon the terms of the settlement. The representative of the trastees of the settlement, who asks by this suit to have the trusts of that deed carried into execution, does not ask for the payment of any debt, but asks that the fourth part may be ascertained, and that it may be paid to him in satisfaction of the obligation contained in the settlement. In my opinion, that is a claim which cannot be resisted.” To the same effect is McCarogher v. Whieldon (L. R. [3 Eq.] 236). Again, in Willis v. Black (4 Russ. 170), the father covenanted upon the marriage of his daughter to settle upon her and her husband, among other things, as great a share of his property as he should by his will or otherwise provide for any of his younger children. That agreement was enforced after the father’s death at the suit of the trustees of the settlement.. (Rom aine v. Onslow, 24 Wkly. Rep. 899.) In Keays v. Gilmore (Irish R. [8 Eq.] 296) the father, in a letter to a cousin, promised, upon the marriage of his son, to give to his son upon the father’s death a child’s portion of his -estate. An action was maintained bv the son’s wife as his executrix

tz for a construction of the agreement and its validity was sustained, and within the past year the Irish Court of Chancery (Doyle v. Crean, 1 Irish R. [1905] 252) gave effect to a contract almost exactly similar in its terms. The father, by a settlement made upon the marriage of his daughter, agreed to distribute his estate equally among his children. Ah action was maintained by the trustees of the settlement on behalf of the daughter without question as to the daughter’s right to insist upon the performance of the agreement. Other cases illustrating the general principle are Eardley v. Owen (10 Beav. 572) and In re Broohman's Trust (L. R. [5 Ch. App.] 182). These cases disclose how uniformly such agreements have been sustained by the courts.

Since the demurrer was not taken on the ground, that, the plaintiff’s wife was a necessary party, that' question is not now before us. It may be that if the case should come to trial, she ought to be brought in as a party so that the rights of all persons in interest may be properly presented and disposed of. Specific performance ought not to be decreed unless all proper parties are before the court. (Miller v. Bear, 3 Paige Ch. 466.)

The order of the Appellate Division sustaining the demurrer should be reversed, and the interlocutory judgment of the Special Term overruling the demurrer affirmed, with costs in all courts, with leave to defendant to withdraw demurrer and serve answer within twenty days upon payment of costs.