APPEAL FROM THE CIRCUIT COURT OF THE UNITED STATES FOR THE DISTRICT OF NEW JERSEY.
MR. JUSTICE BROWN, after stating the case as above reported, delivered the opinion of the court.
This case turns solely upon the question whether the settlement or compromise of May 2, 1887, between the sisters Julia and Josephine and Mr. Chandler, the representative of their brother's estate, was executed under such circumstances as to call upon a court of equity to enforce its specific performance. This involves the subordinate question whether the sisters were imposed upon in giving their assent to this settlement.
Some years before its execution a quarrel had arisen between Edward and his sisters, which had culminated in a suit brought by the latter, in which they had charged their brother with speculating in stocks with the funds derived from their father's estate, and with having made large profits in which they ought to share, and suffering losses with which they ought not to be charged. This suit had intensified the bitterness felt by Edward to such a degree that, in making his will, which was executed October 23, 1886, he left his entire estate, less a few legacies amounting to $6500, to his brother George, making him also his sole executor. This will only served to complicate matters still more, as Edward had never settled with his sisters for their share of his father's estate, and was also thought by some to have made a large fortune in speculations in which his sisters would have been entitled to share, in the absence of a will. Their brother George had received under the will of their father only the income of $30,000, with a proviso that, at his death, the principal should go, not to his children or heirs, but to his younger brother and his sisters -- an inheritance far less than he would have received had no will been made. Thus Edward, in bequeathing to his brother
George his interest in his father's estate, gave him but little more than he would have received under the natural laws of inheritance, but in giving him his own estate, which was thought to be very large, he ignored his sisters altogether. Under this state of facts there was nothing unnatural in the suggestion that the estates of the father and Edward should be added together and divided equally among the three surviving children. If it had turned out that Edward had made a large fortune it might have been an advantage to his sisters to share in it; if not, Julia and Josephine would at least have obtained a settlement of their suit with the estate, and have admitted their brother George to his natural inheritable share of his father's estate. From a fraternal point of view it was not an unwise proceeding, although from a pecuniary standpoint it was, as characterized by one of the witnesses, "a leap in the dark."
Edward died March 6, 1887. His brother was in Europe, and his sisters in New York. The first suggestion of a settlement came immediately after Edward's death, from a Mr. Chapman, who had been a neighbor of George Pomeroy in Morristown, and acquainted with the sisters for twenty-five years. He went to their hotel the very day of Edward's death, and met the two ladies, Mr. Morrison and Mr. Cowles, and made a proposition to divide the securities, making no mention in his conversation of the trust funds created by the father's will. His own statement of the proposition is as follows: "Now, says I, I will make a proposition: 'Let bygones be bygones; let's take the thing as it stands to-day; put the securities all into a hat and shake them up and divide them into three parts -- George one-third, and the girls each one-third; that would settle the whole difficulty. Whatever Ed. has lost, let it come out of the girls' share, if he had lost any, if he had lost more than he had made; but to settle it up and divide it into three parts, but to start as it stood to-day.' That was the proposition -- all I had to say about it. . . . Not a word" was said in regard to trust fund or back charges. "There couldn't have been anything said about back charges, for my proposition was to take the things as they stood then;
let all that Edward lost and all that go, and just start in and take the securities and things as they stood then and divide it, so there couldn't have been anything said in regard to any back accounts that they had, and as to the trust fund there was no question or nothing. . . . My understanding was that they" (the sisters) "approved of it, and so did Mr. Cowles." In narrating a subsequent conversation with Mr. Chandler in regard to this, he testifies: "I merely said 'I said nothing when I made the proposition about the trust funds, from the fact that I didn't suppose the girls had any right to the trust funds.'" He again testifies: "Every one agreed to it, and, as I say, I thought the girls would be the loser by a small amount, but then I looked upon it that they had better lose a few thousand apiece than to be running after lawyers any longer. They had been hampered with lawyers a good while and worried to death, and I felt it was better for them."
It seems that Mr. Cowles, who was the father-in-law of George P. Pomeroy, also advised an ending of the litigation, and a division of whatever was left equally among the three. Mr. Morrison, Julia's husband, testifies: "'Whatever was left' we understood as what was left by the father of the father's estate; also in the sense of what was left from the speculations that Edward had made, perhaps the wreck of the estate; whatever there was, large or small, as matters then stood. . . . Mr. Cowles said that he was going right over to Paris, to London at least; that he would see George and urge this upon him." Very soon after that Mr. Cowles left for Europe. Shortly after the death of Edward, and on March 12, Julia wrote to her brother, who was abroad, urging him to return home at once and attend to the probating of the will, and watch his own interests. Regarding the proposed settlement, she wrote as follows: "Now, I have a proposal to make to you. Suppose we do away with all lawyers in the settlement of our affairs, for they expect $50 or $100 every time they look at you. You appoint Frank Chandler, who is unquestionably your friend; we appoint Mr. Morrison, who is undeniably a friend to both parties. Let nothing be binding. Frank and my husband are both capable and honest men. Let
them look over the securities together in our presence and try and settle between yourselves. We will avoid expense by so doing; but this we can discuss when you return. I only speak of it now so that you can reflect upon it at your leisure. You have, of course, seen and talked with Mr. Cowles by this time, and you know you inherit all of Edward's personal and real estate, excepting a few legacies. My advice is to get your property and enjoy it while you live, and to let all wrangling cease, which diminishes the capital, puts every one in hell," etc.
The next day Mr. and Mrs. Morrison went to Newport, leaving their sister Josephine in New York. While at Newport a correspondence was opened between Chandler and Mrs. Morrison, which is not all produced, although Mr. Chandler states the substance of his own letters to have been that the three children, Julia, Josephine and George, were to receive, past, present and future, exactly the same, and in the adjustment as to the time of receiving to be equalized on a six per cent basis for money.
On April 6, however, Julia writes to the plaintiff from Newport as follows: "I am willing to agree to your plan of settlement, and promise you now to do so. But how about the trust fund? Do you mean to cancel that and George's thirty thousand trust fund, too, and lump all together? This we would prefer, as our trust fund will only yield each $1500 or $1800 a year. George gets more on his $30,000 than we would on $50,000. I am afraid that Mr. Mills will not let us relinquish this in behalf of the estate. He wants his commission. What are we to do about this?" A few days afterwards, on April 13, she writes him as follows: "Josephine and I are willing to settle this matter as you propose unless we find there is but a small estate left In that case I think we should be allowed to keep the trust fund in excess, in order to make up in a measure for Edward's speculative transactions with our money. This, I am sure, you will consider fair. If the estate is large, as it ought to be, we can lump all together and share alike." About the same date Josephine writes a letter to her aunt, Mrs. Van Aulen, which contains the following: "I am awfully
afraid Edward was poor; but if we are willing to sign this agreement, so as to stop all litigation, we will not go back on it. Why should George wish to be richer than we, or we wish to be richer than him?" The plaintiff also had some correspondence with Josephine. Before going to New York, and in pursuance of this correspondence, Mr. Chandler had the proposed settlement drawn up in the form in which it was afterwards signed, by one Gill, a lawyer of Chicago. It was drawn up in triplicate on the 7th or 8th of April, and dated the 13th, though it was not actually signed until May 2. Upon his arrival in New York, which was on April 11, he called upon the sisters at a house upon Madison avenue, and testifies as follows regarding the interview: "I requested that they should take that agreement to their counsel who was conducting the litigation against their brother Edward. They consented to do so. The next day, after our first interview, they were to go with me to see Hill, Wing & Shoudy, their attorneys in William street, and consult with them. I told them they should not under any circumstances settle the suit against Edward without consulting with their counsel in regard thereto, or to sign this agreement that I proposed." He further swears that the ladies being ill, he went to Mr. Shoudy's alone, and showed him the document; that he read it over, and said he would like to retain it over night, and the next day he would be able to tell Mrs. Morrison what she had better do; that Mrs. Morrison went down with him the next day and found Mr. Shoudy in the office; leaving Mrs. Morrison there he went out for a short time, and soon returned and asked what the result of the consultation was. To use his own language: "Mrs. Morrison spoke up and said: 'Mr. Shoudy says we are taking a great leap in the dark, but nevertheless we will settle. We will carry it out. We will make the settlement.' At that time Mrs. Morrison gave her acquiescence in my plan of settlement, and Josephine, whom we saw afterwards, approved of it also. The difficulty then was to get their brother George to give his consent. Although I had authority to act generally for him, I did not feel that I could sign such an important settlement, which involved a very large sum of money, without positive
and direct instructions." Josephine says of the interview on Madison avenue, before the visit to Shoudy's office: "Mr. Chandler called one morning with my aunt, Mrs. Van Aulen. . . . After that Mr. Chandler took out a paper from his pocker -- I think about two sheets -- and said he wanted to read us a few lines of what he had jotted down on his way from Chicago -- his plan of settlement or proposal. I told him I was too ill to listen to him; I could scarcely sit up -- hold my head up -- but he insisted on my staying; so we listened to him reading it through, and it was very ambiguous; and when he finished, I said, 'Frank, I don't understand that.' It was very ambiguous. Then my sister said, 'Does it mean to divide up what is left?' He said, 'Yes; it means that.' That was all that was said on the subject of business at that interview."
Chandler remained in New York for a week, seeing the sisters almost daily, and, in order to obtain the consent of George, who was then in Europe, made use of the cable, and the following telegrams passed between the parties. As these telegrams constitute an important part of the correspondence they are reproduced in full:
"New York, April 15, 1887.
"To Chandler, sixty-three Pierre Charron, Paris.
"Power received. Doubtful value. Have George sign cablegram himself, authorizing settlement equal division father's, brother's estate, including the trusts, and renouncing executorship, if necessary. Mary and I advise settlement before Edward's condition known. None seeking ...