Opinion
04-20-1894
FAY et al. v. FAY.
David J. Pancoast, for complainants. John J. Crandall, for defendant.
Action by Louise Fay, widow, and Gladys M. Fay and Roy Alton Fay, heirs at law, of George W. Fay, deceased, against Thornton W. Fay, to establish a trust. Judgment for plaintiffs.
David J. Pancoast, for complainants. John J. Crandall, for defendant.
PITNEY, V. C. The bill is filed by the widow and two children, heirs at law, of George W. Fay, deceased, against the defendant, Thornton W. Fay, who was the brother of the deceased, for the purpose of establishing a trust in favor of the complainants, representing the deceased, in an undivided one-seventh part of certain real estate situate at Hammonton, in the county of Atlantic, of which Cyrus J. Fay, father of George W. and the defendant, died seised. The cause was first brought before the court on a demurrer to the bill, which was overruled for the reason stated in the report thereof in Fay v. Fay, 50 N. J. Eq. 260, 24 Atl. 1036. The grounds on which the complainants set up the trust are there stated at length. After the demurrer was overruled, the defendant answered, and denied the facts set up in the bill, and alleged that the share of George W. Fay in the proceeds of the sale of his father's real estate was paid to him by the defendant, Thornton W. Fay, upon the delivery of the release. At the hearing the following facts appeared: Cyrus J. Fay, the ancestor, died in 1881, possessed of considerable personal estate, which netted over $20,000, and seised of considerable real estate, part of which was situate in the city of Camden, and part in the city of Hammonton, county of Atlantic. He left nine children, including George W. Fay, the ancestor of the complainants, and the defendant, Thornton W. Fay. The defendant, Thornton, and his brothers George W. and William H, administered upon his estate, and also took charge of and managed the real estate and collected the rents from the death of their father up to November, 1886. One of the nine children—Benjamin F. Fay—died some time prior to the 1st of August, 1885, leaving a widow and one infant child. On the 18th of August, 1885, William H. Fay filed a bill against his surviving brothers and sisters and the infant heir of Benjamin, praying the partition of the real estate of which their father died seised, and alleging that the defendant Thornton W. Fay had received a large amount of rents, and praying for an account of those. On the 17th of May, 1886, a decree for the sale of the premises was made, and also a reference to a master to take an account of the rents which had been received, not only by Thornton W. Fay, but also by William H. Fay, the complainant in the partition suit, and by George W. Fay, the ancestor of the complainants herein. The property was brought to a sale in October, 1886, and was purchased by the defendant, Thornton W. Fay, for the gross sum of $11,056. That sale was confirmed, and about the time—to wit, in December, 1886—that the master's deed was ready to be delivered the master made his report upon the reference as to the amount of rents received by the three brothers above named up to November 6, 1886, and he found that William, the complainant in the partition, had received $781.48 more than he had paid out for repairs, taxes, etc.; that Thornton W. Fay, one of the defendants and the defendant herein, had received $340.95 more than he had paid out; and that George W. Fay, the ancestor of the complainants, had received $151.12,—the total sum being $1,279.55, or $142.17 for each tenant in common. There was subsequently a decree of distribution, and the share awarded to each, for the proceeds of the real estate, after deducting the costs, was $1, 194.51, and, adding the shape of the rents, $142.17, made $1,336.68 each; so that the share of George W. Fay was the, sum of $1,336.68, less rents in his hands, $151.12, leaving $1, 185.56. For this George W. Fay executed a release to the master, which was produced.
The allegation of the bill is that Thornton W. Fay bought in the real estate in trust for his brothers and sisters other than the complainant in partition, and that he held it in trust in eight shares, of which one was his own. The proofs showed (and the bill was amended accordingly) that he did bid for and buy it in trust for himself and six of his brothers and sisters,—seven in all,— the complainant in the partition suit, William H. Fay, and the infant heir at law of Benjamin F. Fay, deceased, not being parties to the arrangement. This was abundantly proven, and was freely admitted by himself on the stand, and by his counsel. The master who sold knew nothing of this arrangement, and reported the sale as made to Thornton W. Fay individually, and it was so confirmed. After such confirmation, Thornton gave notice to the master, as he swears, to make out the deed to himself and his six brothers and sisters, including George W. Fay, as purchasers as tenants in common, and was informed by the master, or by the solicitor who conducted the proceedings, that that could not be done; that, in order to have a conveyance made in that way, there must be an application to the court of chancery, and, possibly, a resale; that he then, in order to carry out the original arrangement by which he bought the property in for himself and his six brothers and sisters, applied to each of them for a release to the masterof their share in the proceeds of the sale, to be used for the purpose of carrying out that arrangement, he agreeing to hold the property in trust for them; that five of his brothers and sisters executed such releases, and that he has since held the property in trust for them and himself; he representing, as he claims, two shares; that when he applied to his brother George W. Pay (the ancestor of the complainants) to execute his release, he declined, and said that he did not wish to have the title made to himself, because he was not living with his wife (one of the complainants), and did not wish to be hampered by her inchoate right of dower in conveying or disposing of the property; and he was not willing (so Thornton swears) to allow Thornton to hold the title in trust for him, and therefore he insisted upon having his share paid to him in cash, precisely as the brother William H. would have, and as the infant heir and widow of Benjamin, deceased, would have, their shares paid to them, and on the same basis. Thereupon (so Thornton swears) he agreed to that, and proceeded to settle with George for his share, and produced certain promissory notes of George for money loaned, amounting to a little over $900, besides interest; that, with the interest added, the notes amounted to one or two hundred dollars short of the amount due George, and that sum he paid him and received his release. His solicitor swears that he paid him a much larger sum,—some $400,—considerably more than he was entitled to under the decree of distribution. Thornton paid to the master enough money to pay the costs and the shares of William and Benjamin's heir, delivered to him the releases of himself and six brothers and sisters, including George, and got his deed; and he swears that from that time on he claimed two-sevenths of the property so purchased, and recognized his five brothers and sisters, other than William H. and George W., as the owners of one-seventh each.
It further appears that Thornton continued to collect the rents of all these properties, and some time before the month of October, 1888, he sold out all the Camden property for about $9,000, and made a settlement with his brothers and sisters of the proceeds of the sale and the rents up to that date. One of his sisters, then a Mrs. Wicks, who afterwards intermarried with a Mr. White, was sworn as a witness. She produced a statement of account made up between her and her brother Thornton, all in his handwriting, in which he credits her with $9.54, a share of certain rents collected prior to November, 1886; with a one-ninth share of the estate of their mother; a one-ninth share of a final division of the estate of their father, Cyrus; with one-seventh of the amount of the rents "on all the properties from Nov. 6, 1886, to Oct. 1, 1888;" and one-seventh of the proceeds of the sales of the Camden property. He then charges her with divers advances of cash, etc., and with $739,—one-seventh of the amount ($5,173) paid for two ninth shares in the real estate, viz. William H. Fay's and the heir of Benjamin, deceased,—and one-seventh of all the costs, taxes, water rents, insurance, alterations, and repairs from October, 1886, to October, 1888; one-seventh of a fund retained in his hands to pay for putting the properties in repair; and charges her with a sum of money paid to her to balance. She swears that this settlement took place at Hammonton, and that her brother George W. Fay was present, and that Thornton made out a similar statement for George, but that, owing to certain arrears of rent (about $1,000) which George owed him, as he claimed, for occupation of a portion of the premises, and to $400 of borrowed money which George owed him, there was nothing due to George; but that Thornton waived the payment at that time of the borrowed money, and offered to pay him the balance (a little over $100) which would appear to be due him by leaving out the borrowed money; and that George was dissatisfied with the statement, and refused to accept the money. A statement on the same basis as that of Mrs. White (excluding items of the personal estate of the mother, and other items anterior to November, 1886), made up between Thornton and George, would result thus:
| George W. Fay. | Cr. | |
| By V, of $2,038.00, rents of property | ||
| from Nov. 6, 1886, to | Oct. 1, | |
| 1888 | $ 291 27 | |
| "1/7 of $1,400, proceeds of sale of | ||
| two lots in Camden. | 200 00 | |
| "1/7 of $7,500, proceeds of sale of | ||
| other property in Camden | 1,071 43 | |
| $1,562 70 | ||
| Dr. | ||
| To balance due for rent by | ||
| master's report of 1886 $151 12 | ||
| "1/7, of $5,173, being the | ||
| amount paid for V, | ||
| interests in real estate, | ||
| '1/7? of costs, taxes, | ||
| water rents, insurance, | ||
| alterations, repairs | ||
| from Oct. 18, 1886, | ||
| to Oct. 1, 1888...... | 739 00 | |
| " 1/7, of $700, reserved to | ||
| pay for repairs on property | ||
| 100 00 | ||
| Due from George, as shown | ||
| by rent book, for rent of | ||
| premises at Hammonton.. | 228 00 | |
| $1,218 12 | ||
| Balance due George | $ 344 58 |
As to this transaction, testified to by Mrs. White, Thornton and his solicitor swear that George did claim a share in the estate at that time, and that Thornton, to satisfy him, made up a statement in rough, showing that there was due him in the neighborhood of $100, and offered to pay him that sum of money as a gift, and not admitting he had any such right, provided he would release all right to the property in consideration of it; and that he declined to do it.
So much of the testimony of Thornton W. Fay as related to transactions with hisbrother was objected to on the ground that the complainants are suing in a representative capacity; and the recent case of Joss v. Mohn, 55 N. J. Law, 407, 26 Atl. 987, seems to support the objection. The testimony of his solicitor was objected to on the ground that the communications made by George to him were confidential. It does appear in the proceedings in the partition case, which were all offered in evidence, that the solicitor, who was sworn as a witness herein, formally appeared for all the defendants in that case, and acted as their counsel on the reference before the master; but I am not clear that the communications sworn to were confidential. But I have not excluded the evidence of either of these witnesses in the consideration of this case, because there are other facts which seem to me to be conclusive in connection with the evidence of Mrs. White. The defendant, Thornton W. Fay, is an accomplished business man, and an expert bookkeeper and accountant. From the death of his father in 1881, he kept an accurate and complete book account of the affairs of the estate, both real and personal, continuing the old books—cash book, day book, and ledger—which his father had kept. In them are entered all the transactions with the estate, real and personal, with the greatest minuteness, and according to the very best methods of bookkeeping, including an account with each of the heirs and the widow, down to the date of the sale and the master's report upon the matter of rents, namely, about November, 1886. The accounts included rents, repairs, taxes, insurance, and the usual items which enter into an account of real estate. The entries in those books all stop abruptly at that time,—November, 1886. He continued to collect the rents after that time, as I have said, precisely as he did before, accounting to seven persons, instead of nine. The only book which he produces containing entiles after 1886 is a small ledgerwise book of rents, indorsed, "Rents from September 20, 1880." In it are kept the rent account with each individual tenant, and nothing more. All the entries are in his own handwriting, and there is no other entry in it except charges of rents and credits for cash paid for rent. The method pursued was to charge each tenant with the rent each month, and credit him with each payment; and the credit of rent paid generally states exactly the time for which the payment applied, and also whether paid in cash or by check. Among the tenants were his brother Edwin J. Fay, one of the seven for whom he held the title. His account is balanced about every six months, and the rent is carried forward; and on the 31st of December, 1887, the amount of the charge for rent, as footed, is $50, and on the opposite or credit side this entry occurs: "1887. Dec. 31. By rent charged to your account with Fay properties, $56." Now, that entry shows that he had another book in which accounts were kept with the cestuis que trustent of the Fay properties. Another one of his tenants was George W. Fay, the complainants' ancestor. He is charged with the rent of a "drug store and addition" in Hammonton, and the first entry is: "1886. Nov. 30. To rent drug store and addition from Nov. 6, 1886, to Nov. 30, 1886, $8." The next charge is: "Dec. 31. To rent drug store and addition from November 30, 1886, to December 30, 1886, $10." Then follow charges of $10 each month, until they amount to $68, and then the debit side is footed up, and George W. Fay is credited on the opposite or credit side thus: "1887. May 31. By rent charged to your account with Fay properties, $68,"— using precisely the same language as is used in the case of Edwin J. Fay. This entry balanced the account. Then follow seven other monthly charges of rent at $10 each, amounting to $70. Then the debit side is again footed, and this entry is made on the opposite or credit side: "1887. Dec. 31. By rent charged to your account with Fay properties, $70,"—again balancing the account. The account commences again with "January 31, 1888," and charges rent for one month for the same property at $10 a month. Then follow eight other charges, amounting to $90 in all. The debit side is again footed, and then on the opposite or credit side is this entry: "1888. Sept. 30. By rent charged to your account from Jan. 1st to Sept. 30, 1888, $90." These entries, as well as that in the case of Edwin J. Fay, clearly indicate that there was another book in which entries were made, and to which these credits were carried as debits. In the absence of such a book and account, the result of these entries is to give George outright $228 of rent. When asked to explain those entries, Thornton was unable to do so satisfactorily. He declared that he had no other books of account relating to the real estate, and persisted in that declaration in the face of the entries which I have just recited. Now, I am unable to believe him. I believe that he has other books of account. It is impossible to believe that, after having kept books of account, in the most complete and orderly manner, of all the repairs, insurance, taxes, and rents of these properties up to November or December, 1883, and having, in the same books, distributed the rents among each of his eight brothers and sisters, and credited them with their shares, and charged them with payments on account of it, that he would immediately change his mode of doing business, and abandon the keeping of the same style of books, after he had purchased the property for himself and his six brothers and sisters. I have not the least doubt but that he kept other books of account and that he kept a ledger account with his brother George, and charged him with the amount of those rents, precisely as he says he has here. In that account he has undoubtedly credited him with a proportionatepart of the proceeds of sale of the Camden lots and of the rents.
Now, these credits which I have above recited end in October, 1888,—the very time when he had the settlement with his sister Mrs. Wicks, to which she has testified. Prom that time forward he charges his brother George with rent of the drug store, precisely as before, and also with rents of other parts of the property collected by George, but gives him no credit whatever, except for some trifling disbursements for repairs, and shows a balance against him at his death of between $400 and $500, not including the three items amounting to $228, which had been credited him, in the manner I have stated, prior to October, 1888. It is hardly necessary to state that these entries, in his own handwriting, furnish satisfactory evidence of the real state of affairs between himself and his brother. And, further, by the books produced, if we eliminate the three credits amounting to $228, George will appear to be indebted to Thornton in nearly $700 for rent of the drug store and other parts of the property collected by him. In fact, he paid him nothing from November, 1886, until his death, in November, 1890. Now, it is difficult to believe that Thornton would have permitted George to become so deep in bis debt, unless he had some security for it, or offset against it, or both. But the case does not stop there. In May, 1890,—six months before the death of George,—the defendant, Thornton, wrote him this letter: "Penna. Hospital, Philada., May 20/90. Bro. George: Just as soon as I get well enough to return to the store, where I hope to find account of things, will make a settlement. So keep up good heart, for you can rely upon this. Thornton." It is a conceded fact in the case that George always did continue to claim that his brother Thornton held this property in trust for him to the extent of one-seventh, and that he had no other claim against him; so that it is quite certain that this letter which I have just quoted referred to his share in this property. It is said, and it is true, that the defendant was for a few months in the year 1890 somewhat disturbed in his mind, and that the Pennsylvania Hospital is a hospital for the insane; but the composition of the letter discloses no mental disturbance, and, comparing the handwriting of it with other handwriting of the defendant written at a time when his mind was not disturbed, I can see but little, if any, difference; and the proof is that the character of the mental disturbance was not serious. He had had the grippe, and had nervous prostration as the result of it. The management of his business was not taken out of his hands. His store in Philadelphia was managed, while he was confined, by his wife; and when he came out he resumed charge of his business, and made entries in the rent book of the rents collected during his seclusion. Thornton was unable to explain this letter. Mrs. White was put on the stand by the complainants to prove, simply, that she understood that Thornton bought in the property for his brothers and sisters, including George. Complainants do not reside in this state, were not present at the hearing, and, so far as appears, have no acquaintance or intercourse with Mrs. White. Her testimony, above referred to, came out on cross-examination by defendant, and was a surprise to the counsel of the complainants. She swore that the amount of the borrowed money which George owed Thornton at the settlement of 1888 was $400, or a little more. She seemed quite familiar with the state of affairs between the brothers, and made no mention of the larger sum of $900, which Thornton swears that George owed him for borrowed money. Now, $400 is the sum which the solicitor swears that Thornton paid to George at the delivery of the release, and this identity of amounts suggests a possible, if not a probable, solution of a portion of the apparent conflict of evidence. It is possible to believe that Thornton did pay George $400 on that occasion; not, however, in satisfaction of his share in the proceeds of the sale of the land, but as a loan. This does not, however, account for the claim of $900 for money loaned prior to the delivery of the release, for which Thornton swears he held George's notes. Now, it is here to be observed that Thornton fixes the amount at $900, and says it was in notes,—number not mentioned. In his answer, however, he says the debt was $800, and was evidenced by a duebill, and this, with the sum of $400 paid in cash,—so the answer says,—made up the amount mentioned in the release. The solicitor swears that he made up a statement of the transaction in duplicate, and gave each party a copy. None is produced. That George's copy, if he had one, is not produced, is not strange, considering the separation between him and his family, and the nonresidence of his wife and children. But the non-production by Thornton of his copy is rather remarkable, and his explanation of it is not satisfactory.
Turning to Mrs. White's evidence, in connection with the hypothetical statement I have given above of the condition of the account between George and Thornton in October, 1888, it is apparent that Mrs. White is mistaken in saying that the rent in arrear from George to Thornton was $1,000, unless George had collected rents for Thornton from other tenants, and had not paid them over. This is quite possible, since Thornton lived in Philadelphia, and George at Hammonton. But Thornton does not take that ground, nor does his rent book show it. Again, the $400, so-called "borrowed money," with two years' interest added, exceeds the balance—$344.58 —shown to be due George by the statement I have made, and this corresponds with Mrs. White's evidence.
With regard to George's dissatisfaction with Thornton's statement, there is roomenough for that in the item of $5,173 charged for paying for two shares in the land and costs of taxes, water rents, insurance, and alterations, and also in the reservation of $700 to pay for future repairs. Thornton does not produce the vouchers, or show how this item was made up. An examination of Thornton's books of account shows me that it would be quite easy for him to have made up an account with George in which disputed items would be found, and which would require extensive examination to verify. But it is not worth while to speculate as to just what was the difference between the brothers, in the absence of the other accounts, which I am satisfied do actually exist, and which, if produced, will show the true state of the accounts between them.
Suffice it to say that the evidence satisfies me that Thornton purchased the property at the master's sale in trust for himself and his six brothers and sisters, including George, and that this arrangement was never changed; that George did not, by the delivery to Thornton of the release to the master, intend to convey to him his interest in the proceeds of the sale of the land, or in the land itself, and that any money then paid by Thornton to George was by way of loan to George; that Thornton held the land so purchased in trust as to one-seventh for George, and kept an account with him as such; and that complainants are entitled to have that trust established in their favor as to all lands still held by Thornton, and to have an account of the rents accrued since November 6, 1886, and the proceeds of any lands sold by him since the death of George. Thornton is entitled to hold the title as security for anything which may be found due to him from George upon a full statement of accounts between them, to include rents and proceeds of sales of all lands sold before George's death. If, upon a statement of the accounts up to the death of George, any balance is found due to him from Thornton, I do not see how complainants can recover it in this or any action. Such balance will go to the personal representatives of George. The existence of the alleged debt of $800 or $900 is not established to my satisfaction, but it is open to the defendant to establish it, if he can, upon the reference which must be made. The $400 debt, I think, is established.