Opinion
No. 21258
Decided February 27, 1929.
Contracts — Heir's assignment of expectancy in estate, void and unenforceable in law — Contract contrary to policy of law and not favored by courts — Specific performance lies after ancestor's death and inheritance absolute, when.
1. An assignment by an heir apparent or presumptive of his expectancy in the estate of an ancestor is invalid and unenforceable in an action at law, because such a contract lacks one of the essential elements of a valid contract, to wit, a lawful subject-matter.
2. Such a contract is contrary to the policy of our laws and not favored by our courts, because of the danger that one party is defenseless and exposed to the demands of the other under the pressure of necessity.
3. After the death of the ancestor and the inheritance has become absolute and definable a court of equity will entertain jurisdiction of a suit to enforce performance of the contract and will decree performance if it is shown that no fraud or imposition has been practiced and that the contract was not made under pressure of necessity and that it is supported by an adequate consideration.
ERROR to the Court of Appeals of Clinton county.
This is an error proceeding from the Court of Appeals of Clinton county, Ohio. The cause originated in the court of common pleas of that county as a suit by the executors of the estate of Sarah L. Hite, deceased, asking the court's direction as to the payment of the ascertained distributive share of Oscar S. Hite in said estate, he being a beneficiary under her will. The amount due to him on such distribution was $1,224.91. The petition further alleged that the administrator of Maud Mussetter, a sister of Oscar S. Hite, was making claim to said distributive share by virtue of an agreement in the words and figures, to wit:
"Xenia, Ohio, April 27, 1914.
"For value received I hereby sell, assign and transfer, all my right, title and interest in the dower estate of my mother, Sarah L. Hite, to Maud Mussetter. And I hereby direct that upon final settlement of the estate of the said Sarah L. Hite, all my interest of whatever nature and kind be paid to the said Maud Mussetter and I hereby empower the said Maud Mussetter to receipt to the said administrator of said estate for such interest, such receipt when so signed by her, shall have the same effect as if I had signed the same personally.
"In witness whereof I have hereunto set my hand this 27th day of April, A.D. 1914. "Oscar S. Hite.
"Attest: C.W. Whitmer."
The administrator of Maud Mussetter was made party defendant, and filed an answer and cross-petition in the suit, alleging, in substance, that Oscar represented to his sister Maud that he was the owner of a certain interest in certain property then held by his mother, Sarah L. Hite, and which would pass to him on her death, and that he persuaded her to purchase all "interest of whatever nature and kind" in the estate of his mother, receiving from her the sum of $800, and by said written assignment conveyed said interest to her, and directed that, upon final settlement of the estate of his mother, such interest be paid to said Maud Mussetter, authorizing and empowering her to receipt for same to the administrator of said estate. It was further alleged in the answer and cross-petition that Oscar S. Hite intended at all times to cheat and defraud her, and that he never intended to repay said sum, and that he never in fact repaid to her said sum or any part of it. The administrator therefore prays that in justice and in equity the court find that the amount in the hands of the executors of Sarah L. Hite, belonging to said Oscar S. Hite, either as heir at law or as devisee or legatee under her will, be declared to belong to and to be vested in said Maud Mussetter by virtue of said written assignment of April 27, 1914, and that the same be ordered paid to him as such administrator. Issue being joined, the cause was tried before the court sitting in equity, and judgment was entered in favor of the estate of Maud Mussetter. Thereupon the cause was appealed to the Court of Appeals ( 31 Ohio App. 199, 165 N.E. 542), and again heard upon the evidence, and that court found:
"That Oscar S. Hite executed and delivered the written asssignment" of April 27, 1914, set forth in the answer of Mary Richardson et al., and Homer H. Richardson, administrator; that said assignment was "made for a full and adequate consideration and in good faith; that the intention of the instrument was to assign all the interest of said Oscar S. Hite in the estate of his mother" to Maud Mussetter; that said "assignment is enforceable; and that Homer H. Richardson, as administrator of the estate of Maud Mussetter, deceased, is entitled to receive from * * * plaintiffs, executors of the estate of Sarah L. Hite, deceased, the distributive interest of * * * said Oscar S. Hite in said estate."
The Court of Appeals thereupon rendered judgment in favor of the administrator of Maud Mussetter.
The testimony discloses that Maud Mussetter paid $800 to Oscar S. Hite on April 27, 1914, and the principal and interest thereon from 1914 would more than consume the distributive share of Oscar S. Hite. A motion to certify the record has been allowed by this court.
Mr. Joseph W. Sharts, for plaintiff in error.
Mr. I.Q. Jordan and Messrs. Hayes Barns, for defendants in error.
Sarah L. Hite, a widow, was the mother of Oscar S. Hite and Maud Mussetter, and she was living on April 27, 1914, at the time the agreement was made. Since no one can be heir to a living person, Oscar's status was that of heir apparent or presumptive, with the hope of succeeding to a portion of his mother's estate, either by will or descent. He had no present existing right, either vested or contingent, and that which he attempted to convey was at most a bare or mere possibility, sometimes referred to as an expectancy.
Fortunately for both parties to the agreement, the mother did make him a beneficiary in her will. We are not troubled in this case with questions of fact. The Court of Appeals having heard the case de novo on appeal, has found that the written assignment was executed and delivered, and that it was supported by a full and adequate consideration, with the intention in good faith to assign all of the interest of Oscar in his mother's estate. The suit was brought by the executors of Sarah L. Hite praying the direction of the court in the distribution of the estate, and Oscar S. Hite and the estate of Maud Mussetter were made parties defendant. While neither of said defendants was praying relief against the other, the estate of Maud Mussetter is in the position of resisting the payment of the distributive share to Oscar S. Hite. By the pleadings the court was called upon to make inquiries into the contract to determine its bona fides, fairness, adequacy of consideration, freedom from duress or imposition, and whether in equity and good conscience Oscar S. Hite could retain the consideration paid to him thirteen years earlier, without obligation to account for the money had and received by him and the interest thereon during the period the same was so retained. He insists that the agreement is utterly void and of no effect, and that it does not even create an estoppel against him.
It is conceded by counsel, and this court unanimously concurs in holding, that it is contrary to the policy of our laws to give legal recognition to an attempted assignment by an heir apparent of the possibility of a succession to the estate of an ancestor. Out of the multitude of decisions upon this subject rendered by the courts of last resort in this country, this rule may be regarded as established by the decided weight of authority. The rule has not, however, been declared in any former decision of this court in which that question has been directly involved.
It is insisted by counsel for Oscar S. Hite that the case of Needles, Exr., v. Needles, 7 Ohio St. 432, 70 Am. Dec., 85, has decided this principle favorably to his contentions. In that case the ancestor Philemon Needles paid certain sums of money as advancements to certain of his children, taking receipts for the same, in which it was stated by the children, respectively:
"Which I acknowledge to be in full of all claims I could have against the estate of said Philemon Needles after his death, as one of his heirs, hereby binding myself and my heirs not to set up any further claim."
The court held that that receipt was not good as an advancement, because Philemon Needles thereafter made a will. The court further held that it was not good as an agreement, because it lacked both mutuality and consideration. The reasoning of the court, at page 444 of the opinion, was that such an agreement, if recognized, would permit an ancestor to make division and distribution of his property after his decease by agreement, rather than by the formalities of a will, as provided by law. The discussion of the court related to those matters and the rights of a husband by his contract to bind a feme covert during coverture, but the court did of necessity discuss the question whether a mere possibility of succession can be released, and reached the conclusion that such an expectancy, or chance of succession, is not the subject-matter of release or assignment at common law. Though the question was not either nearly or remotely involved, the court discussed the assignability in equity of an expectancy, at page 446 of the opinion:
"Reference has been made to a class of cases, where one of the heirs presumptive has purchased and paid a valuable consideration for the expectancy of another of the heirs in the ancestor's estate; and where two of the children have contracted with each other, to divide equally whatever may come to them from an ancestor by devise or descent, in which such contracts have been sustained. Such is the effect of several of the cases, English and American, referred to by counsel in this case. Trull v. Eastman and Wife, 3 Met. [Mass.], 121 [37 Am.Dec., 126]; Fitch v. Fitch, 8 Pick. [Mass.], 480; Beckley v. Newland, 2 P. Wms., 182. These cases, however, turn upon a wholly different principle from that of the case before us, and bear no analogy whatever to it. Where two of the children contract with each other in regard to their expectancy from their ancestor, they stand upon equal footing, and although such contract cannot operate by way of assignment or release, yet where a valuable consideration has been paid, it may operate by way of estoppel, or be enforced in equity."
This declaration was not based upon any fact in the case, and was therefore obiter. It is, however, useful as indicating what the court did not decide, and it is further useful because it indicates that the particular controversy involved in the instant case was not decided in that case.
The claim that the agreement in this case was not entirely void is supported by the reasoning of the court in Firestone v. Firestone, 2 Ohio St. 415. In that case the ancestor, Nicholas Firestone, executed a deed of certain property to his son Henry. Henry made out and acknowledged in due form a release and acquittance to his father of all claim that he might have on his estate. These deeds were reciprocally delivered and placed on record. At page 418 of the opinion, in discussing the claim that the release was not binding upon the son, it is stated:
"But, if this contract of release could not have been specifically enforced, still the money consideration was paid by the defendant, and everything contracted for by him had been performed to the satisfaction of the father, who made the conveyance, and if the defendant could have claimed a distributive share of his father's estate, and had done so, this property, in that case, would have been held to be an advancement of so much, for which, although he would have had to account, yet it would not have affected his title."
Plaintiff in error has cited Hart v. Gregg, 32 Ohio St. 502. We do not think the principles declared in that case throw any light upon the instant case, and it is apparent from the third paragraph of the syllabus that it was grounded upon the fact that there were no acts of the grantor amounting to an equitable estoppel, and that he was not therefore estopped from asserting an after-acquired title. Facts creating an estoppel are clearly existent in the instant case.
Turning to the decisions of other jurisdictions, we find a very large number of authorities dealing with the subject of assignability of a mere expectancy, and authority can be found supporting almost every conceivable angle of the subject. The courts of Kentucky stand alone in holding such contracts to be void and not enforceable either in law or equity. McCall's Admx. v. Hampton, 98 Ky. 166, 32 S.W. 406, 33 L.R.A., 266, 56 Am. St. Rep., 335; Wheeler's Exrs. v. Wheeler, 2 Metc. (Ky.), 474, 74 Am. Dec., 421; Alves v. Schlesinger, 81 Ky. 290. We are of the opinion that upon no sound principle can such a contract be declared to be wholly void and of no effect. A simple illustration will suffice to show that such a contract at most is only unenforceable in an action at law. Let us suppose that an ancestor is the owner of certain real estate and has two sons, A and B. During his lifetime one of the sons, A, conveys to the other, B, by deed of bargain and sale, without warranty, his expectancy in a half interest in the real estate, describing it accurately, and the deed of conveyance recites that it is in consideration of the conveyance to him by B of other real estate conveyed by deed of bargain and sale without warranty, which real estate is owned absolutely and in fee simple by B. B concurrently executes to A a deed of bargain and sale without warranty, conveying to A the fee-simple title to the real estate actually owned by him, and in that deed recites as consideration the conveyance of A's expectancy in the real estate of their father. By such transactions A acquires the legal title to B's real estate and cannot be divested of that title except by reconveyance or by the decree of a court of equity. If the deed of A is wholly void, necessarily the deed of B must likewise be void. If the deed of B is only voidable, the deed of A must likewise be only voidable. If the father dies intestate, and B brings an action to compel the execution of a deed by A after the father's death, and A should resist the action, he would be in exactly the same situation as Oscar S. Hite in the instant case; the only difference being that Maud Mussetter paid money instead of executing a deed to real estate. In a court of equity, A would not be permitted to hold the title to B's real estate and withhold a conveyance of his interest in the estate of the father. A court of equity which would hold that B's conveyance to A could not be disturbed, while at the same time permitting A to withhold a valid conveyance, would be in the peculiar situation of holding B's deed valid, while holding the consideration named in it to be void.
In Searcy v. Gwaltney Bros., 36 Tex. Civ. App., 158, 81 S.W. 576, it was held that a contract assigning an expectancy is enforceable in an action at law. The courts of sixteen other jurisdictions have enforced such contracts in equity on a variety of grounds. In some of these cases there is no suggestion that such contracts are against the policy of the law. By other authorities such contracts are held to be contrary to the policy of the law, because grounded in maintenance and multiplicity of suits and contentions, and, further, because they assume that one party is defenseless and exposed to the demands of the other under the pressure of necessity. By the decided weight of all the authorities, such a contract is held to be not enforceable at law, because it lacks one of the essential elements of a valid contract, viz., valid subject-matter, and that it therefore transfers no right in A sale of an expectancy does not relate to property or rights in esse, though it does have a potential existence, because the property concerning which the contract is made does exist, and in the ordinary course of events the grantor hopes and expects to acquire complete title. The difficulty is that he has no present interest, and the contract has therefore no present validity or enforceability. If and when the hopes and expectations of the presumptive heir are realized, and his inheritance becomes absolute and definable, it would be inequitable to permit him to hold the interest in the estate and at the same time re tain the consideration received from the other party to the contract.
A court of equity should therefore enforce it as a contract to sell and convey, but, before decreeing such performance, should inquire into the circumstances from which the contract evolved, not merely to determine whether grantor had made a wise bargain, and whether it could afterwards be shown to have been improvident, but to ascertain whether fraud or imposition was practiced, whether made under the pressure of necessity, and whether supported by an adequate consideration. In addition to such inquiries, a court of equity should apply the same tests as are applied to any ordinary suit where specific performance of a contract is sought. The court of common pleas and the Court of Appeals subjected this transaction to a searching inquiry, and found that it was free from fraud and imposition, that it was supported by a full and adequate consideration, and was executed in good faith and with intention to assign all of the interest of Oscar S. Hite in the estate of his mother. The judgment of the Court of Appeals which decreed that the administrator of the estate of Maud Mussetter is entitled to receive the distributive interest of the said Oscar S. Hite in said estate must be affirmed.
Judgment affirmed.
KINKADE, JONES, DAY and ALLEN, JJ., concur.
I dissent from the judgment in this case for the reason that it unsettles in Ohio a legal principle that heretofore has been exact, and has been so recognized.
I dissent for the further reason that if it be, as stated in the majority opinion, against the public policy of the state to enforce contracts such as the one here under consideration, then the majority of this court, sitting as a court of equity reviewing a court sitting as a court of equity, are in the position of circumventing and defeating the state's public policy.
Before discussing the legal principle here involved, I desire to supplement the statement of facts. Sarah L. Hite, deceased, was the widow of Oscar L. Hite, deceased. No real estate of the estate of Oscar L. Hite, deceased, was ever assigned to her as dower, nor was there any family arrangement whereby she ever received any assignment of dower in real estate. The estate of Sarah L. Hite consisted both of real estate, of which she was the owner in fee, and personal property. The subject-matter of this litigation is not and never was any part of the dower estate of Sarah L. Hite, deceased, but is that portion of her estate which she in her lifetime time owned absolutely and had a legal right to convey; property which she did dispose of by will to Oscar S. Hite and others; and this action, while instituted by the executors of Sarah L. Hite in the form of an interpleader, by reason of the pleadings of Oscar S. Hite and the administrator of Maud Musettter, deceased, resolved itself into an issue between Oscar S. Hite and such administrator as to the validity or invalidity of the instrument copied in the statement to the majority opinion.
I think it may fairly be inferred from the majority opinion that the majority of this court concede that at common law assignments of purely expectant estates, not coupled with an interest, are void; but, whether so conceded or not, any research will so disclose. The majority opinion, however, asserts that the question in Ohio is novel; that, while this court on various occasions has indulged in expressions of opinion upon the subject, such expressions are unauthoritative, because the question was not before the court. The opinion then concentrates its attack upon the case of Needles, Exr., v. Needles, 7 Ohio St. 432. Of its aspersions upon that case I shall not comment.
The majority opinion wholly ignores the case of Hart v. Gregg, 32 Ohio St. 502. In that case Archibald Gordon, Sr., a revolutionary soldier, was the owner of a Virginia military land warrant for 200 acres of land, issued to him by the state of Virginia, which he had located and properly entered. Archibald Gordon, Jr., was the son and only child of Archibald Gordon, Sr. During the lifetime of Archibald Gordon, Sr., while Archibald Gordon, Sr., was the owner of such land, Archibald Gordon, Jr., conveyed such land to Stephen F. Hart by deed in fee simple. Archibald Gordon, Sr., did not alienate the land during his lifetime and died intestate. After the death of Archibald Gordon, Sr., Daniel Gregg, with knowledge of the land entry of Archibald Gordon, Sr., and knowledge of the deed that Archibald Gordon, Jr., had executed to Hart, wrongfully obtained possession of the senior deceased Gordon's warranty, survey, and plat, and procured the word "Withdrawn" to be written on the margin of the record of entry and across the plat, without the authority of either Archibald Gordon, Sr., or Archibald Gordon, Jr., or any one claiming under them, with intent to defraud them, and for that purpose located another warrant on the same land and carried the same into patent, under which patent Gregg and his grantees took possession. The action was one in equity by Hart against Gregg to have Gregg's patent and title declared void and the possession wrongful. This court held:
This citation was inserted in the majority opinion after it had been read and the case announced.
"1. The conveyance by a son of his expectancy in land, owned by his father, which would descend to him if he survived his father and the latter should die intestate owning the same, is the conveyance of a mere naked possibility not coupled with an interest, and passes no estate or interest in the land.
"2. Such a conveyance cannot operate to defeat the grantor's title, afterward acquired by descent, except by way of legal or equitable estoppel.
"3. If such conveyance contains no covenants of warranty, or recitals, and there are no acts of the grantor amounting to an equitable estoppel, he is not estopped from asserting an after-acquired title.
"4. The grantees under such conveyance, never in possession thereunder, cannot, as such, or by way of estoppel, assert a title or interest in the land against one in actual possession under a legal title, though such title is, as against the grantor, his heirs, and assigns, fraudulent and void."
In the opinion, Johnson, C.J., said at page 511:
"No one is an heir to the living. During the father's life, all that the son had was a mere naked possibility, not coupled with an interest, which could not be released, assigned, or devised. Neither would it descend to his heirs. * * * As Gordon, Jr., the grantor, had no such interest in the estate, owned by his father, as could be conveyed, this deed, if it operate at all, must do so by way of estoppel, by reason of the covenants of warranty or recitals in it." Further, at page 513: "Would Archibald Gordon, the son, or his heirs or assignees, if defending in this action, be estopped by reason of any recitals in this deed of June 27, 1827? We think not; for it is well settled, that where no estoppel arises from warranty, recital, or otherwise, a release or conveyance operates only on existing rights. * * * The title acquired by Archibald Gordon, the son, by descent, is outstanding in him or his heirs or assignees. They are not parties to this action, and, as plaintiff's title is defective, because the conveyance under which they claim does not cover the after-acquired title of their grantor, they have no such equitable estate as authorizes the relief sought."
The defendant Gregg in that case, in possession, was defending under color of a title which the court in that case held to be absolutely void. Nevertheless, void as his title was, his possession was held to be superior to the title of Hart, acquired from Gordon, Jr., during the lifetime of Gordon, Sr., although Gordon, Sr., had died prior to the institution of the action, and prior to the possession of Gregg, and the estate of Gordon, Sr., including the land in controversy, had descended to Gordon, Jr., under whom Hart claimed title by deed in fee simple. Gregg then had no right or title to the land save that of naked possession, yet that naked possession was held to be superior to the title of Hart who had a deed in fee simple from Gordon, Jr., to whom the title in the property had afterwards descended, and who was not a party to the action, and was not therefore asserting any title thereto. The character of Hart's title was directly involved in that decision and no amount of sophistry that can be employed can make the decision of this court in that case obiter; nor can the decision be so interpreted as to have held the deed executed before the acquisition of the property to have been other than absolutely void; for, if only voidable, it could not have been avoided by Gregg, since there was no privity between Gregg and either Gordon, and no one in behalf of either Gordon was seeking to avoid it.
Estoppel is not claimed in the instant case.
That no different rule of law arises out of an assignment of an expectancy by one expectant heir to another expectant heir was decided by this court in the case of Ferenbaugh v. Ferenbaugh, 104 Ohio St. 556, 136 N.E. 213.
The "simple illustration" in the majority opinion of the ancestor and the sons A and B, and the exchange of B's land for A's expectancy, like the assumption that at common law such contracts are only voidable instead of void, is based upon a false premise, and, of course, leads to a false conclusion, for it assumes that B would be remediless. The failure or total absence of consideration for the conveyance of B to A would afford the avenue in a court of equity for the restoration to B of that which was his.
In the instant case, the estate of Maud Mussetter may sue and have judgment for the amount of the consideration paid to Oscar S. Hite.
MATTHIAS, J., concurs in the dissenting opinion.