The opinion of the court was delivered by
Dixon, J.
Early in January, 1877, John Eyle, the complainant, was the owner of the stock of the Passaic Water Company, consisting of sixteen thousand eight, hundred and fifty shares. About January 12th, 1877, he transferred to William Eyle six thousand seven hundred and six of these shares, and delivered to him a written order for four thousand shares besides, directed to Ammidown, Lane & Co., who held them in pledge as creditors of the firm of John Eyle & Sons. The character of this transaction is the matter to be settled by the court. The complainant contends that the stock was assigned in trust for himself, upon an understanding that William Eyle, being thus invested with the control of the corporation, would endeavor to improve its financial condition, which was then ruinous, so that it might pay its creditors, of whom William himself was one, and so that John might reap the benefit of the increase of value in its stock. The defendant, who is the sole legatee of William, insists that although the consideration of the transfer was the promise of William that he would try to enhance the value of the company’s stock, yet the transfer was absolute for the use and benefit of William himself, and, as such, forms the main inducement for him to assume the management of the concern.
The defendant urges that the controversy must be decided upon the terms of a writing, dated January 31st, 1877, signed, sealed and acknowledged by the complainant February 1st, 1877, by which [601]*601it is declared that the latter had offered to transfer to William. Eyle ten thousand seven hundred and six shares of the stock of the company, in consideration of William’s assuming the management of the company’s affairs, the complainant believing that thereby the residue of his stock would become more valuable than the whole then was, and that the complainant, for that consideration and $1 to him paid, did. thereby sell, assign, transfer and set over the said ten thousand seven hundred and six shares to said William, for his own proper use, benefit and behoof, absolutely and forever. But we think the inquiry is not to be thus concluded. For, if the complainant’s claim be true, then at the time this instrument was executed, William was trustee for John and possessed of the trust property, and between parties thus situated the disposition of the trust property is not conclusively settled in courts of equity by the bargains which they make, however solemn the form wherein those bargains are attested. The trustee is practically incapable of purchasing the property from the cestui que trust, if the latter, under conditions of substantial equity, choses to avoid the attempted sale. Perry on Trusts § 195; Pom. Eq. § 958; Condit v. Blackwell, 7 C. E. Gr. 481; Stewart v. Lehigh Valley R. R. Co., 9 Vr. 505. If, at the time of signing this instrument, the parties had been in position to bind themselves by whatever arrangement they entered into, and the court were merely inquiring what their then arrangement was, this writing would no doubt, in the absence of fraud or mistake, be the sole evidence to be considered; but since we are investigating a transaction which was complete twenty days before the existence of the writing, and which may render the stipulations of the writing of no effect, the writing, though evidence by reason of its retrospective force, is not indisputable proof.
The question, then, being an open one, to be decided on the probative strength of testimony, we have come to the conclusion that the complainant’s claim is well founded. The writing just mentioned is, on its face, strongly indicative of the contrary, but, looked at in connection with the circumstances attending its execution, its force is, we think, overcome. The transfer of Jan[602]*602uary 12th, 1877, was consequent upon a personal and amicable-interview between John and William Ryle on the evening of January 10th, and there are shown no other dealings between them until January 31st. Then we find that William Ryle brought this writing to his cousin, John C. Ryle, and stated that from the position he was taking in the affairs of the water company he should have to appear before the public as the principal owner of its stock, and he was not going to stand in that position without being legally entitled to occupy it; thereupon he requested John C. to take the writing to their uncle John, the complainant, with a message that he wanted it signed in order to give him a legal claim to the stock; that it must be signed; and that if John would not sign it he would withdraw from the Passaic Water Company all his aid and countenance, and would also make such a representation to Leissler & Somerhoff, with whom the complainant was then negotiating for some business engagement, as would interfere with the pending negotiations. John C. delivered the writing, with this message, to the complainant, who at first was angry and declared to John C. that he would not sign it, but after a day or so signed it and returned it to the messenger. These circumstances render it highly probable that the writing is not an embodiment of the understanding arrived at by John and William on January 10th. If it had been, its preparation would hardly have been so long delayed; it would not have been prepared by William alone without consulting John; William would not have anticipated a refusal on the part of John to sign it, and have thought threats necessary to enforce its execution, and John would not at first have angrily refused his signature, and at last have put his name to it when the threats had exerted their full influence upon his mind. This writing does not express the real nature of the transaction of January 10th.
The substantial truth of the complainant’s version of that transaction is, we think, made out by the following circumstances:
John was William’s uncle. Both were Englishmen, and after the former had been in this country some years, and had established himself in business, he brought here the latter, then a boy, [603]*603and made him a member of his household. When William grew to man’s estate he became prosperous, and in 1877 was a person of large wealth and widely recognized commercial ability. The complainant, on the contrary, was much embarrassed, and likely to lose all he had been struggling to secure. It would therefore not be strange that William should consent to assist his uncle to repair his shattered fortunes, without exacting from him, as the price of his aid, more than half of what he should try to save.
William’s statement to John G. of the reasons that led him to require the signing of the writing of January 31st, gives strong color to the idea that under the arrangement theretofore made between John and William, the latter was to appear before the public as the principal owner of the stock without being actually entitled to it. Such was indeed the substantial tenor of his language; and if William was not the actual owner of the stock, then the only alternative is that John remained the real, though not the apparent owner.
This is further indicated by a letter which soon after January 31st, William dictated for John to sign and send to Ammidown, Lane & Co., in regard to the four thousand shares held by them, and for which William had John’s order.
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The opinion of the court was delivered by
Dixon, J.
Early in January, 1877, John Eyle, the complainant, was the owner of the stock of the Passaic Water Company, consisting of sixteen thousand eight, hundred and fifty shares. About January 12th, 1877, he transferred to William Eyle six thousand seven hundred and six of these shares, and delivered to him a written order for four thousand shares besides, directed to Ammidown, Lane & Co., who held them in pledge as creditors of the firm of John Eyle & Sons. The character of this transaction is the matter to be settled by the court. The complainant contends that the stock was assigned in trust for himself, upon an understanding that William Eyle, being thus invested with the control of the corporation, would endeavor to improve its financial condition, which was then ruinous, so that it might pay its creditors, of whom William himself was one, and so that John might reap the benefit of the increase of value in its stock. The defendant, who is the sole legatee of William, insists that although the consideration of the transfer was the promise of William that he would try to enhance the value of the company’s stock, yet the transfer was absolute for the use and benefit of William himself, and, as such, forms the main inducement for him to assume the management of the concern.
The defendant urges that the controversy must be decided upon the terms of a writing, dated January 31st, 1877, signed, sealed and acknowledged by the complainant February 1st, 1877, by which [601]*601it is declared that the latter had offered to transfer to William. Eyle ten thousand seven hundred and six shares of the stock of the company, in consideration of William’s assuming the management of the company’s affairs, the complainant believing that thereby the residue of his stock would become more valuable than the whole then was, and that the complainant, for that consideration and $1 to him paid, did. thereby sell, assign, transfer and set over the said ten thousand seven hundred and six shares to said William, for his own proper use, benefit and behoof, absolutely and forever. But we think the inquiry is not to be thus concluded. For, if the complainant’s claim be true, then at the time this instrument was executed, William was trustee for John and possessed of the trust property, and between parties thus situated the disposition of the trust property is not conclusively settled in courts of equity by the bargains which they make, however solemn the form wherein those bargains are attested. The trustee is practically incapable of purchasing the property from the cestui que trust, if the latter, under conditions of substantial equity, choses to avoid the attempted sale. Perry on Trusts § 195; Pom. Eq. § 958; Condit v. Blackwell, 7 C. E. Gr. 481; Stewart v. Lehigh Valley R. R. Co., 9 Vr. 505. If, at the time of signing this instrument, the parties had been in position to bind themselves by whatever arrangement they entered into, and the court were merely inquiring what their then arrangement was, this writing would no doubt, in the absence of fraud or mistake, be the sole evidence to be considered; but since we are investigating a transaction which was complete twenty days before the existence of the writing, and which may render the stipulations of the writing of no effect, the writing, though evidence by reason of its retrospective force, is not indisputable proof.
The question, then, being an open one, to be decided on the probative strength of testimony, we have come to the conclusion that the complainant’s claim is well founded. The writing just mentioned is, on its face, strongly indicative of the contrary, but, looked at in connection with the circumstances attending its execution, its force is, we think, overcome. The transfer of Jan[602]*602uary 12th, 1877, was consequent upon a personal and amicable-interview between John and William Ryle on the evening of January 10th, and there are shown no other dealings between them until January 31st. Then we find that William Ryle brought this writing to his cousin, John C. Ryle, and stated that from the position he was taking in the affairs of the water company he should have to appear before the public as the principal owner of its stock, and he was not going to stand in that position without being legally entitled to occupy it; thereupon he requested John C. to take the writing to their uncle John, the complainant, with a message that he wanted it signed in order to give him a legal claim to the stock; that it must be signed; and that if John would not sign it he would withdraw from the Passaic Water Company all his aid and countenance, and would also make such a representation to Leissler & Somerhoff, with whom the complainant was then negotiating for some business engagement, as would interfere with the pending negotiations. John C. delivered the writing, with this message, to the complainant, who at first was angry and declared to John C. that he would not sign it, but after a day or so signed it and returned it to the messenger. These circumstances render it highly probable that the writing is not an embodiment of the understanding arrived at by John and William on January 10th. If it had been, its preparation would hardly have been so long delayed; it would not have been prepared by William alone without consulting John; William would not have anticipated a refusal on the part of John to sign it, and have thought threats necessary to enforce its execution, and John would not at first have angrily refused his signature, and at last have put his name to it when the threats had exerted their full influence upon his mind. This writing does not express the real nature of the transaction of January 10th.
The substantial truth of the complainant’s version of that transaction is, we think, made out by the following circumstances:
John was William’s uncle. Both were Englishmen, and after the former had been in this country some years, and had established himself in business, he brought here the latter, then a boy, [603]*603and made him a member of his household. When William grew to man’s estate he became prosperous, and in 1877 was a person of large wealth and widely recognized commercial ability. The complainant, on the contrary, was much embarrassed, and likely to lose all he had been struggling to secure. It would therefore not be strange that William should consent to assist his uncle to repair his shattered fortunes, without exacting from him, as the price of his aid, more than half of what he should try to save.
William’s statement to John G. of the reasons that led him to require the signing of the writing of January 31st, gives strong color to the idea that under the arrangement theretofore made between John and William, the latter was to appear before the public as the principal owner of the stock without being actually entitled to it. Such was indeed the substantial tenor of his language; and if William was not the actual owner of the stock, then the only alternative is that John remained the real, though not the apparent owner.
This is further indicated by a letter which soon after January 31st, William dictated for John to sign and send to Ammidown, Lane & Co., in regard to the four thousand shares held by them, and for which William had John’s order. In this letter the stock is spoken of as being still John’s property, and its transfer to William and the consequent change in the management of the water company are mentioned as being conducive to John’s financial responsibility, without any intimation that he was stripping himself of the ownership of so large a proportion of his assets.
So, also, in June, 1880, at a meeting of the stockholders of the water company, William, being somewhat excited and irritated at the absence of John, which occasioned inconvenience in the transaction of business, declared that it was outrageous that John should not attend, while he, William, was sacrificing his time and giving his energies to the advancement of the company, which- was not at all for his interests, but solely for the interests of John, or (as another witness narrates it) in which he himself had not a penny’s worth of interest, but which he was doing for John.
[604]*604On July 5th, 1880, William wrote to John about the settlement of a mortgage for $100,000, which William, as one of the executors of his father, held upon some property of John. On July 10th, 1880, John responded:
“ Dear Nephew — Yours of the 5th instant received, and its contents have given me great anxiety. I hardly know what proposition I can make. If I could obtain the real value of the ten thousand seven hundred and six shares of the capital stock of the Passaic Water Company you hold in trust for me, from any one, I could pay the mortgage off. What amount do you think I could obtain from you or any one else for them ? ” &c., &c.
To which William replied:
>
“Paterson, July 14th, 1880.
“Dear Unoee — Tours, dated 10th (postmarked 12th), is at hand. I hasten to correct an erroneous expression in the first portion of your letter; will reply to the second portion this evening. I do not, to my knowledge, hold a single share of the capital stock of the Passaic Water Company ira- trust for you or any other person.”
John’s letter seems to us the natural utterance of what he supposed to be an undisputed fact, while William’s response, containing a bare denial, without any suggestion of surprise or desire for explanation, indicates that he was conscious that John’s statement was not unfounded, but that he himself had determined to assume a position which he believed his evidence would enable him legally to maintain. It is true that notwithstanding this denial John took no steps to enforce his claim to the stock until the institution of this suit in 1883, but his financial relations with William account for his quiescence during William’s life.
The matters thus far adduced are established by evidence outside of the complainant’s own testimony, and they satisfy us of the substantial justice of his case. He, however, has been sworn, and his testimony on all points is competent. For although the defendant, who is both the executrix and the legatee of William Ryle, became possessed of the stock in controversy, as executrix, on his death in November, 1881, yet, early in 1883, she had it transferred to herself individually, and is now sued [605]*605personally, and not in a representative capacity. Hodge v. Coriell, 15 Vr. 456; S. C. 17 Vr. 354.
The complainant’s testimony directly supports the allegations of his bill, but inasmuch as there is reason to suspect that the delay to sue after William’s death was in part owing to a desire to evade the statute, which would have prevented him from testifying to the transactions between himself and William in a suit against the executrix, we prefer to rest our decree upon proofs which would have been competent had the bill been more promptly filed.
Having thus reached the conclusion that at the time the writing of January 31st was executed, William was trustee for John, in possession and control of the trust property, we must decide that that writing, obtained as it was by threats, and without other consideration than the trustee’s promise to do what he had already assumed to do in performance of his trust, cannot be permitted to relieve William of his fiduciary obligations. John is at liberty to rescind the absolute assignment on equitable terms.
To this effect is the decree below.
But a majority of the court are of opinion that the decree should more definitely indicate what terms are equitable, and that the defendant, as sole legatee of William, and owner of all his interest in the stock, should have secured to her whatever would have been due to him as compensation for his care, skill and responsibility in the matter. The contract of January 31st makes it plain that his services were not to be rendered gratuitously, or merely for the advantage he would gain as a creditor by the improved condition of the company. In view of the very unusual character of the trust, of the success which has attended the trustee’s efforts, and the great profits which it appears will accrue therefrom to the eestui que trust, the court decrees one-third of the stock held by the defendant, a just allowance therefor.
Let the decree below be reversed, and a decree be entered to the effect that the defendant holds ten thousand seven hundred and six shares of stock of the Passaic Water Company in trust [606]*606for the complainant, with the right of retaining one-third of the same for the services rendered by William Ryle, the trustee, in executing his trust.
Decree unanimously reversed.