Ernest F. Bradley, and Hector Lang and Rev. Edward T. Scragg,
Executors of the Will of George Moulton Goddard, Deceased (Plaintiffs)
Appellants;
and
Jennie Crittenden (Defendant) Respondent
1932: February 3, 4, 5; 1932: April 26.
Present:—Duff, Rinfret, Lamont, Smith and Cannon JJ.
ON APPEAL FROM THE APPELLATE DIVISION OF THE SUPREME COURT OF
ALBERTA
Gift—Alleged undue influence—Action to set aside gift of bank
shares made by person since deceased—Nature of relationship between donor and
donee—Presumption—Onus.
[Page 552]
The residuary legatee and testamentary executors of G.,
deceased, sued to set aside a transfer of bank shares made by G., by way of
gift, to defendant, about 8 months before G.'s death. At the time of the gift,
G. was a man of 85, and defendant a woman of about 50, years of age. For some
years they had been very friendly and intimate, and G. had several times
proposed marriage to her. They had undertaken together the purchase of some
property. About a month after the gift in ques-
[Page 553]
tion, G. gave her a general power of
attorney and signed blank cheques, but these were never used. About 9 days
before his death G. made his last will, the defendant not being present, which
made no mention of the shares. There was no finding of any fraudulent or
wrongful act or any deliberate exercise of undue influence on defendant's part;
and the questions for determination were: whether there existed between them a
relation of such a nature as would raise the presumption that defendant had
influence over G. of such a kind that the court, acting on such presumption,
would set aside the gift unless defendant established that in fact the gift was
G.'s spontaneous act, in circumstances which enabled him to exercise an
independent will, and which justified the court in holding that the gift was
the result of a free exercise of his will; and, if there was such a relation as
would raise the presumption, whether the presumption had been rebutted. The
trial judge, Ewing J. (5 Alta. L.R. 562), set aside the gift. His judgment was
reversed (two judges dissenting) by the Appellate Division, Alta. (ibid).
On appeal to this Court:
Held (Duff and Lamont JJ. dissenting), that the
judgment of the Appellate Division in defendant's favour should be affirmed.
The nature of the relationships giving rise to the presumption
against a donee; the discharging of the onus of rebutting the presumption; the
governing considerations; the materiality, weight and effect of certain
circumstances; acquiescence or ratification by subsequent conduct of the donor;
laches, etc., discussed.
Per Rinfret and Smith JJ.: It is not the law that any
relation of confidence between a donor and a donee is sufficient to raise the
presumption. The presumption does not extend to cases of relationship resulting
from pure friendship, even though the friendship were of such a character that
the donor reposed confidence and trust in the donee. In the present case, the
only relationship established was one of deep affection and of the high regard
in which G. held defendant. This affection in itself afforded a satisfactory
explanation of the motive which prompted the gift. But, assuming that the
relationship was such as to raise the presumption, it was rebutted by the facts
and circumstances in evidence.
Per Cannon J.: While the relationship, which was one
implying special confidence, was such as to raise the presumption, it had been
rebutted. Moreover, the lapse of time during which G., when free from any
influence of defendant, allowed the transaction to stand, and the other
circumstances in the case, proved his determination to abide by what he had
done.
Per Duff J. (dissenting): The relationship was such
that, by reason thereof, it must be inferred from the facts in evidence that,
in transactions with defendant, G. was not under the control of his own
judgment; and the onus rested on defendant to shew that, in the matter of the
gift in question, G. was entirely free from this influence; and that onus was
not discharged. There was not adequate evidence to warrant a finding that G.,
after he became free (if he was ever wholly free) from defendant's influence,
deliberately and spontaneously confirmed the gift.
Per Lamont J. (dissenting): The facts in evidence
shewed the existence of such a relationship as raised the presumption. The onus
was on defendant to establish that the transfer was made to her for her own
benefit and was the spontaneous act of G.'s independent will; and this onus was
not discharged. Without entirely disregarding defendant's
[Page 554]
testimony, effect should not be given
to it unless it was corroborated by independent evidence. The evidence was not
sufficient to establish, by G.'s subsequent conduct, any deliberate and
intentional affirmance of the transfer.
APPEAL by the plaintiffs from the judgment of the Appellate
Division of the Supreme Court of Alberta.
The action was brought by the residuary legatee, and by the
executors, named in the will of one Goddard, deceased, to set aside a transfer,
made by the deceased by way of gift, to the defendant of 44 shares of bank
stock, it being alleged that at the time of the transfer the defendant stood in
a confidential relationship to the deceased, that the deceased did not receive
any independent advice and that he was induced to make the gift by the undue
influence of defendant.
The trial judge, Ewing J., gave judgment
setting aside the transfer. His judgment was reversed by the Appellate Division
(1) (Clarke and Lunney, J.J.A.,
dissenting).
The material facts of the case are sufficiently stated in the
judgments now reported. The appeal to this Court was dismissed with costs, Duff
and Lamont JJ. dissenting.
A. Macleod Sinclair K.C. and A. B. Clow for the
appellants.
C. S. Blanchard K.C. for the respondent.
The judgment of Rinfret and Smith JJ. was delivered by
RINFRET, J.—The action is brought by the testamentary
executors of the late G. M. Goddard, of Medicine Hat, in the province of
Alberta, to have declared null and void and set aside a transfer by way of gift
to the respondent of certain shares of stock in the Bank of Nova Scotia. It was
admitted that there was no consideration passing from the respondent to
Goddard.
The trial judge found that the transfer "was in fact a
gift"; and the correctness of that finding cannot be seriously disputed.
There is no evidence to support the contention that the shares were given to
the respondent as trustee for the estate, or that an actual trust was created
under either an express or an implied contract.
[Page 555]
The attack made upon the gift was based on two grounds; mental
incapacity of the donor, and undue influence of the donee.
The ground of mental incapacity of the donor may be excluded at
once. It was not entertained by the trial judge nor by the Appellate Division
of the Supreme Court of Alberta, and it was not pressed by the appellants
before this court.
It remains to consider the ground of undue influence.
The evidence does not bring this case within the group of cases
mentioned by Lindley L.J., in Allcard v. Skinner,
"in which there has been some unfair and improper conduct, some coercion
from outside." We have here no finding of fraudulent or deliberate
exercise of undue influence. As a matter of fact, the trial judge negatived any
suggestion "that the defendant was guilty of any wrongful act." There
was no evidence whatever of undue influence leading to the gift; or, to borrow
the expression of Cotton L.J., in Allcard v. Skinner,
"that the gift was the result of influence expressly used by the donee for
the purpose."
Then, there is another class of cases "in which the position
of the donor to the donee has been such that it has been the duty of the donee
to advise the donor, or even to manage his property for him." Instances of
these would be the position of solicitor to client, trustee to cestui que
trust, guardian to ward; that of husband and wife, or of parent and child.
In those instances, where the donor relies on the donee for guidance and
advice, the doctrine of equity, as expounded in Huguenin v. Baseley
and such other cases, intervenes on the principle of presumed undue influence
and introduces the rule that, while fiduciary relations of that character exist
between donor and donee, it is, generally speaking, impossible to rebut the
presumption, unless the donor had competent and independent advice.
But that is not the present case. It was not found here that the
deceased relied on the respondent for advice of any kind or in relation to his
business.
Other relations from the existence of which the courts have
presumed the exercise of undue influence are those of
[Page 556]
spiritual adviser and devotee, medical
attendant and patient, principal and agent; and also, in special cases, that of
a man to a woman to whom he is engaged to be married. (See: Halsbury, Laws of
England, vol. 15, p. 107, no. 215).
In the present case, however, the learned trial judge appears to
have considered that any relation of confidence between a donor and a donee is
sufficient to raise a presumption of undue influence; to put it in his own
words: "that the relations between the deceased and the defendant
(respondent) * * * raised a presumption that the donee had influence over the
donor"; and, for that reason, he reached the conclusion that the action
should be maintained. We do not agree with that view of the law.
The doctrines of equity do not require that the principle and the
rule should be extended to relationship resulting from pure friendship, even
were the friendship of such a character that the donor reposed confidence and
trust in the donee. As said by Fletcher Moulton, L.J., in Coomber v. Coomber:
"The nature of the fiduciary relation must be such that it justifies the
interference."
In the case at bar, there was no proof of any fiduciary relation
so called, nor, in our view, proof of any confidential relationship such as is
necessary to raise the presumption of undue influence. The only relationship
established was one of deep affection and of the high regard in which the
deceased held the respondent. We agree with the majority of the Court of Appeal
that such affection, in itself, "provides a good reason" for the gift
and affords a satisfactory explanation of the motive which prompted the donor
to make it.
But, even if we should assume that the relationship in the
premises was such as to raise any presumption, we think the facts and
circumstances established in the case were sufficient completely to rebut the
presumption. As found by the trial judge, the respondent "placed before the
court frankly and, as far as (he) could judge, fully all the relevant facts in
her possession." The learned judge accepted her story, but thought
apparently that he was precluded from "taking her evidence into
account" and that "the gift must be established by separate and inde-
[Page 557]
pendent evidence," and so he
"felt bound" to set aside the transfer of the shares.
We do not think the proposition put thus absolutely may be stated
as a rule of law (See: Koop v. Smith;
Fowkes v. Pascoe);
nor does that result flow from the provision in the statute of Alberta (s. 12
of c. 87, R.S.A., 1922), invoked by the appellants' counsel, which reads as
follows:
In an action by or against the heirs, next of kin,
executors, administrators, or assigns of a deceased person, an opposite or
interested party shall not obtain a verdict, judgment or decision, on his own
evidence, in respect of any matter occurring before the death of the deceased
person, unless such evidence is corroborated by some other material evidence.
In Thompson v. Coulter,
this court had to apply the Ontario statute, which is substantially similar,
and Killam J., delivering the judgment of the court, remarked (p. 263):
The direct testimony of a second witness is unnecessary; the
corroboration may be afforded by circumstances. McDonald v. McDonald.
Throughout the record in the present case may be found abundant
corroboration of the evidence of the respondent. That corroboration
"confirms the credit not only of the statements which are expressly supported
but of all the statements made by her" (Minister of Stamps v. Town-end).
Even were the relationship existing between her and the deceased as
contemplated by the decided cases and of a character to raise the presumption
of undue influence, we would consider that, at all events, the evidence
overbalances the presumption and shows that the gift made to the respondent by
the deceased was a spontaneous and voluntary act on his part and "the
result of the free exercise of independent will."
The judgment of the Appellate Division should be affirmed and the
appeal should be dismissed with costs.
Under those circumstances, the application of the respondent for
leave to reopen the case and adduce further evidence becomes unnecessary; and
the costs of that application should be costs in the appeal.
[Page 558]
CANNON J.—In my opinion, undue influence might be presumed
in this case because the deceased and the respondent stood towards one another
in a relationship implying special confidence. The respondent therefore had to
prove the fairness of the transaction and she has done so to my satisfaction.
Moreover, the gift was made in May, 1930, by a man of good
business ability, not illiterate nor ignorant, who was not at a disadvantage in
relation to it. The donor had already done much for his nephew Bradley; and he
was entitled to do what he wished for the future welfare of the respondent, for
whom he had a deep regard.
Before he made his will in January, 1931, he could have revoked,
within a reasonable time, the intention which he had formed and declared in his
letter to the bank requesting the transfer of the shares to the respondent. He
confirmed his intention first by signing the necessary papers giving effect to
the transfer. The appellants admit that the deceased had the testamentary
capacity to make a will on the 14th of January, 1931, when he was entirely free
to act as he pleased and gave his instructions to the Reverend Mr. Scragg. He
then remarked that he had made "a great and grave mistake about Mrs. Crittenden"—from
whose "influence" he had been, and was then, removed during the last
few weeks of his life. In my view, the deceased was then content to let the
gift stand; he did not even mention the exact nature of the transaction to
Reverend Mr. Scragg, who was advising him, nor to the Bradleys with whom he was
living. An impeachable transaction may become unimpeachable by reason of
ratification after the influence of the "donee" has been removed. The
lapse of time during which the donor has allowed the transaction to stand, and
the other circumstances of the case prove a fixed, deliberate and unbiased
determination that the gift should not be impeached—and the persistent will to
take these shares out of the estate to avoid complications. Paraphrasing Lord
Selborne's words in Mitchell v. Homfray,
it must be held that whether he knew or not that he had power to retract the
gift, he was determined to abide by his acts; this is not a case of mere
acquiescence; he determined that he would not undo what he had done. This
[Page 559]
being the state of facts, I do not think
that any authority goes the length of saying that his representatives after his
death, can do that, which if he had lived he himself would not have done.
The appeal must be dismissed with costs.
DUFF J. (dissenting).—It is most important, I
think, that some aspects of the law should be emphasized. The first branch of
the legal rule can be put in this way: If A obtains property by contract or
gift, by exercising influence upon B which, in the opinion of the court,
prevents B from exercising an independent judgment, then the transaction is
bad. With that particular class of case we are not concerned here. The present
case belongs rather to those in which the court acts, not upon the proof of
actual exercise of undue influence in a particular case, but upon a presumption
of law and a rule of public policy. The rule and the presumption may be thus
stated: If it be proved that there exists a relation between two persons, A and
B, of such a nature as to give rise to a presumption that A possesses over B an
influence which may, in operation, deprive him of his independence of judgment,
then if, in any transaction B acquires from A property by gift or contract, the
court will presume that the transaction has been the result of that influence
and will set it aside, unless the donee (because in this case we are concerned
with the case of gift) establishes, to the satisfaction of the court
"that in fact the gift was the
spontaneous act of the donor acting under circumstances which enabled him to
exercise an independent will and which justifies the Court in holding that the
gift was the result of a free exercise of the donor's will. * * * In the second
class of cases the Court interferes, not on the ground that any wrongful act
has in fact been committed by the donee, but on the ground of public policy,
and to prevent the relations which existed between the parties and the
influence arising therefrom being abused."
The words in quotation marks are taken from the judgment of
Cotton, L.J., in Allcard v. Skinner,
and were explicitly approved by the House of Lords in Inche Noriah v. Shaik
Allie Bin Omar.
Two other things it is important also to note: first, that where
the case falls within the second of the classes mentioned, it is immaterial
that the donor makes the gift without pressure or solicitation upon the donee,
or that the
[Page 560]
donor perfectly understands the nature of
what he is doing, that is, that he is conferring a bounty. Wright v. Vanderplank;
Rhodes v. Bate.
Effect was given to this in Allcard v. Skinner, where it was
conceded that no pressure was exerted,
except the inevitable pressure of the vows and rules.
Then, as to the duty of giving advice, that is very far from
being the core of the matter. The substance is in the answer to the question,
was the gift the result of the act of a person having power to act
independently—who, in fact, is independent. The court sets aside the gift
unless the court sees that the gift was the result of the independent judgment
of the donor.
I have been quite unable to resist the conclusion, after an
examination of all the facts, that the state of influence contemplated by the
law in this branch of it did exist. We need not concern ourselves with the
greater or less degree of analogy to other cases. I need only mention the case
of Rhodes v. Bate,
in which that great master of equity, Lord Justice Turner, stated that such
cases as child and parent, solicitor and client, medical man and patient, were
merely instances of the application of the general principle. The primary
question that the court ought to ask itself is: should influence of the kind
contemplated be presumed? The mere fact that the motive on one side is that of
pure affection is immaterial. The principle has been applied to cases of
engaged young persons, and of mother and son, brother and sister, sister and
sister. As I have already said, it is immaterial that nothing in the nature of
solicitation or activity on the part of the beneficiary has been disclosed or
exists. It is not material that the whole transaction from beginning to end is
free from moral blemish on either side. Rhodes v. Bate (4).
As already observed, it cannot properly be laid down that
independent legal advice is the only way in which the presumption can be
rebutted; "nor are they prepared to affirm," said the Lords of the
Judicial Committee in Inche Noriah v. Shaik Allie Bin Omar,
that independent legal advice, when
given, does not rebut the presumption, unless it be shewn that the advice was
taken. It is necessary for
[Page 561]
the donee to prove that the gift was
the result of the free exercise of independent will. The most obvious way to
prove this is by establishing that the gift was made after the nature and
effect of the transaction had been fully explained to the donor by some
independent and qualified person so completely as to satisfy the court that the
donor was acting independently (of any influence from the donee and with the
full appreciation of what he was doing; and in cases where there are no other
circumstances this may be the only means by which the donee can rebut the
presumption. But the fact to be established is that stated in the judgment
already cited of Cotton L.J., and if evidence is given of circumstances sufficient
to establish this fact, their Lordships see no reason for disregarding them
merely because they do not include independent advice from a lawyer. Nor are
their Lordships prepared to lay down what advice must be received in order to
satisfy the rule in cases where independent legal advice is relied upon,
further than to say that it must be given with a knowledge of all relevant
circumstances and must be such as a competent and honest adviser would give if
acting solely in the interests of the donor.
It should, I think, in the present case, be emphasized that, as
their Lordships state, if independent advice is to be given, it must be given
with a knowledge of all relevant circumstances, and must be such as a competent
and honest adviser would have given if acting solely in the interests of the
donor.
My conclusion is that, in consequence of the relation between
Goddard and the respondent, it must be inferred from the facts in evidence
that, in transactions with Mrs. Crittenden, Goddard was not under the control
of his own judgment, and that the onus rests upon the respondent to shew that
in the matter of the gift in question he was entirely free from this influence.
I think she has failed to do that.
It seems necessary to say a word as to acquiescence and laches. I
am unable to agree that the few words uttered by Goddard during his last
illness, coupled with what he did concerning his testamentary dispositions, can
be accepted as adequate evidence that after he became free from the influence
(if he was ever wholly free from it) of the respondent, he deliberately and
spontaneously confirmed the gift. The term "acquiescence" is one
which is sometimes rather loosely employed. I shall not stop to go through the
authorities which illustrate the scope and proper application of the doctrine;
because the law, as it affects such cases as this, is stated with perfect
accuracy in the following passage from White & Tudor's Leading Cases in
Equity:
Delay in asserting rights cannot be in equity a defence
unless the plaintiff knows his rights. In Allcard v. Skinner,
more than six years
[Page 562]
had elapsed since the influence
had ceased, and the action was commenced, and following the analogy of the
Statute of Limitations in actions for money had and received, such delay would
be a very material element for consideration. And although delay is not a bar
in itself, it is a fact to be considered in determining whether there has been
an election on the part of the donor to confirm the gift.
In cases of this kind there can be no acquiescence until the
donor knows his rights and is free from the influence, but ignorance of his
rights which is the result of deliberate choice is no answer to a defence of
laches and acquiescence. It is enough for the donee to show that the donor knew
he might have rights, and being a free agent at the time, deliberately
determined not to inquire what they were or to act upon them.
I can find no evidence in this case upon which an inference can
be founded that Goddard either knew his right to recall the gift, or that he
had any suspicion of the existence of such a right, and deliberately chose to
remain in ignorance of it. I find nothing to indicate, on his part, a
deliberate abstention from enquiry. I should be disposed to ascribe his
inaction to the combined effect of lack of knowledge and growing weakness of
body and mind.
The appeal, in my opinion, should be allowed and the judgment of
the trial judge restored.
LAMONT J. (dissenting).—The appellants, who are the
residuary legatee and the executors of the last will of George Moulton Goddard
of Medicine Hat, brought this action to set aside a transfer of 44 shares of
the capital stock of the Bank of Nova Scotia made by the deceased Goddard to
the respondent on or about May 30, 1930. Goddard died on January 23, 1931.
The grounds upon which it is sought to set aside the transfer
are: that there was no consideration therefor; that the parties stood in a
confidential relation one to the other, and that the transfer was induced by
undue influence.
The principle upon which courts act in cases in this kind was
laid down by the Court of Appeal in Allcard v. Skinner;
and by the Privy Council in Inche Noriah v. Shaik Allie Bin Omar,
and, as set out in the head-note of the latter case, is as follows:—
Where the relations between a donor and donee raise a
presumption that the donee had influence over the donor, the court will set
aside the gift unless the donee establishes that it was the spontaneous act of
the donor acting in circumstances which enabled him to exercise an independent
will, and which justified the court in holding that it was the result of a free
exercise of the donor's will.
[Page 563]
In such a case the court interferes, not on the ground that any
wrongful act has in fact been committed by the donee, but on the ground of
public policy and to prevent the relation which exists between the parties and
the influence arising therefrom being abused. In fact, courts have gone so far
as to set aside gifts made to persons in a position to exercise undue influence
over the donors, although there was no proof of the actual exercise of such
influence.
In the present case the first and most important question is: Was
the relationship existing between the deceased Goddard and the respondent
sufficient to raise a presumption that the transfer of the shares was the
result of undue influence on the part of the respondent? On this question the
facts are all important.
The deceased with his wife came to Alberta from Newfoundland in
the fall of 1918. He had been a successful merchant and business man there and,
some forty years before he came west, he had adopted as a son his nephew who
grew up with him and married, but still continued to live with him. The nephew
(the plaintiff Bradley) also came to Medicine Hat in 1918, where the deceased
had bought a farm for him. He also bought him a house and later the Shamrock
Bottling Works. In fact, he made his nephew independent. The deceased, his wife
and the Bradleys all lived together. The deceased and the respondent became acquainted
as they were both active workers in the same church.
Mrs. Goddard died in 1923. In 1924 the deceased commenced to
visit the respondent at her home. She was a married woman living separate from
her husband and earning her living by dressmaking. Her husband had, in 1923,
commenced divorce proceedings against her, in the United States, but whether or
not he took out the final order the respondent did not know. The deceased
visited her two or three times each week; they kissed when they met and when they
parted. In 1925 he proposed marriage to her, but she said she did not know if
she was free to marry. On cross-examination she said she refused him. He,
however, continued his visits as before and, between 1925 and the early part of
1928, he had proposed marriage to her on six different occasions. She admits he
was very much in love with her and had offered to change his will and leave her
[Page 564]
everything he had if she would marry him.
She also admits that she had learned about his affairs and the property he had,
and said he was in the habit of bringing to her his papers as he knew she was
interested in him. In 1926 he brought to her his will in which the bank shares
in question in this action were bequeathed to the plaintiff Bradley. She
ascertained from a lawyer the meaning of a holograph will and what, under the
Alberta law, was necessary to its validity. This information she conveyed to
the deceased. In the fall of 1929 she says the deceased shewed her a holograph
will in which the 44 shares in the Bank of Nova Scotia were bequeathed to her
and she was made sole executrix of the will. This will was not produced nor was
there any evidence, except her own, that it had ever existed. In April, 1930,
she says the deceased told her he was going to take the shares in question out
of the will and give them to her. On May 9, 1930, the deceased had a fall and
it is common ground that he was badly shaken up as a result thereof. Mrs.
Bradley says that after his accident "his speech was much changed; that it
was quite thick and he could not say his words plain." It was for that
reason she thought he had had a stroke. After the accident he brought to the
respondent another holograph will, supposed to be a copy of the 1929 will
except as to the shares. This will bears date May 20, 1929, but she says she
called the deceased's attention to the year and he admitted that it should be
1930, and said he would rectify that. This will was produced. In it there is no
mention of the 44 Bank of Nova Scotia shares. After specifying a number of
bequests the will contains this clause:—
I appoint my friend Jennie Crittenden to he my Sole
Executrix of this my- last will for the purpose of settling all my affairs
stated herein and leave the sum of $300 for her services in connection with
same, all my personal and private effects together with the contents of my
office, I leave in her charge to be used at her discretion and with power to
collect any monies due to me all necessary documents are to be found in my safe
My Life Insurance Policies (Mutual Life No. 313777) and Confederation Life
19732 shall be used to provide for bequests above mentioned and to these shall
be added any other monies standing to my credit, after satisfying these claims,
together with all my just debts and funeral expenses, the residue shall
constitute a fund from which certain Church and Charitable contributions shall
be made annually in my name. My wishes in this respect I have conveyed to my
executrix.
The day before he wrote this will the deceased had sent his
certificates for the 44 shares in the Bank of Nova Scotia
[Page 565]
to the bank at Calgary, with instructions
to have the shares transferred to the respondent. The bank manager sent back
the necessary forms for signature, and, after they had been duly executed by
both, the respondent returned them to the bank on May 30, 1930, and
certificates in her name were issued; but she says it was understood that he
was to have the dividends while he lived and after his death the shares were to
be hers. At this time the deceased was still visiting her two or three times a
week and he had no independent advice as to the transfer. He was then
eighty-five years old, and she was around fifty.
At this point it is convenient to refer to their business
transactions: In July, 1928, they both went for a trip to Vancouver along with
his brother. While there the deceased purchased some property, and so did the
respondent. They also bought one piece of property jointly for $3,375, with a
cash payment of $844. The deceased made the entire cash payment but the
agreement was taken in her name alone, and she says she subsequently paid him
the moneys he had paid for her. From that time she took charge of these real
estate transactions, his as well as her own, paying the taxes, interest, etc.
On June 30, 1930, the deceased gave the respondent a general
power of attorney authorizing her (inter alia) to collect all
moneys due to him, to sell and dispose of all mortgages, stocks, bonds, and all
other personal property, and all lands of which he was possessed, at such
prices as to her might seem best. He also gave her seven cheques, signed by
him, but left blank as to date, payee and amount, on various banks in which he
had accounts, not only in Medicine Hat and Edmonton, Alberta, but also in St.
Johns, Newfoundland. After receiving these she was in complete control of all
his money and property. She, however, made no use of either the power of
attorney or the cheques.
In the early part of January, 1931, the deceased took sick and,
on January 14, made his last will in which the appellants, Lang and Scragg,
were made his executors, and Bradley the residuary legatee. No mention is made
of the shares, and the respondent is given a legacy of $100. The entire estate
of the deceased at that time, including the
[Page 566]
shares in question, amounted to $25,400,
and the shares were worth $14,080.
Do the above facts shew the existence of a relationship which
raises a presumption that the transfer of the shares to the respondent was due
to the influence she had over the deceased? In my opinion they do. One of the
fundamental principles of our law is that a person standing in a fiduciary
relation shall not be allowed to use the influence he derives from his position
for his own material advantage and to the prejudice of those whom he should
protect. No general rule can be laid down as to what shall constitute undue
influence. Each case must depend upon its own particular circumstances. In
determining the question it must not be forgotten that a man sui juris has
a right to do as he likes with his own property, and the fact that the
transaction may be improvident, extravagant or foolish on the part, of the
donor will not alone justify interference with it. It is for the court in each
ease to say if the influence exercised has been so pressing as to be undue
influence within the rules of equity.
Undue influence has been presumed where the relationship existing
between donor and donee was that of solicitor and client, doctor and
patient, confessor and penitent, guardian and ward, etc. The rule, however, is
not confined in its application to cases in which a fiduciary relationship
exists. As was said by Lord Cottenham in Dent v. Bennett,
and quoted with approval in Cavendish v. Strutt
:—
The relief stands upon a general principle, applying to all
the variety of relations in which dominion may be exercised by one person over
another.
The rule has also, been applied where the relationship existing
is that of a man and woman engaged to be married. In re Lloyds Bank, Bomze v.
Bomze.
In that case Mr. Justice Maugham said:—
A young woman engaged to be married, however, is in a
different position. In general she reposes the greatest confidence in her
future husband.
See also: Page v. Home;
Cobbett v. Brock; Howes
v. Bishop.
[Page 567]
Does the rule apply where the donor and donee are not formally
engaged but the donor is greatly in love with the donee and desires to make her
his wife?
Under the circumstances of this case I am of opinion that it
does. I am unable to conceive of the deceased having any greater confidence in
the respondent had there been a formal engagement between them than that which
the evidence shews actually existed. She says she refused his offer of marriage
when first made. If so it must have been a refusal which did not repel, for his
visits continued and, for over two years, his proposal was at intervals
renewed. She occupied a fiduciary relation towards him in respect of the
Vancouver property, and she admits that hers was the stronger mind and the
stronger personality.
The giving to the respondent of a general power of attorney and
the cheques one month after he made the transfer of the shares, shews the
special confidence he had in her, as does also his making her residuary legatee
under the holograph will, with a direction to distribute the fund in accordance
with his verbal instructions, and his giving to her the combination of his safe
which he gave to no other person. Further, although he was living with Mrs.
Bradley, his relations with the respondent were so intimate that, on his last
visit to her (January 6, 1931), he took her his coat to mend, and she admits
that she often pressed his clothes. All this indicates how intimate and
confidential was the relationship existing between them. In addition to these
confidential relations there is the admitted fact that she informed the
deceased as to what constituted a holograph will and the requirements necessary
for its validity. In doing so there may have been nothing whatever of
calculation in her action, but a holograph will appears in which she is
designated the residuary legatee. Both the will and the transfer of the shares
were kept secret. It is, as I read the authorities, just in cases of this kind
that the courts have insisted upon the application of the rule.
Then has that presumption been rebutted? That the deceased knew
what he was doing cannot, I think, be disputed. He gave the bank instructions
to make the transfer. That, however, in a case of this kind, proves nothing
more than that he was transferring the shares to her. It furnishes no evidence
of the terms upon which she was to hold
[Page 568]
the legal title thereto. And, even if it
did, it might only tend to shew more clearly the deep rooted influence which
the respondent had over him. The statement of claim alleges the transfer was
made by way of gift, but, at the trial, counsel for the appellants sought to
amend the prayer for relief by claiming in the alternative that the respondent
held the shares as trustee for the deceased. The amendment was refused. I think
it might well have been allowed. The facts were all before the court. The only
living person who knew the conditions upon which she received the shares, so
far as we know, was the respondent herself. If any one else had been present
when the conditions were decided upon she would be aware of it and would have
had that person at the trial if he could have corroborated her story. The onus
was on her to establish the gift as well as that it was the spontaneous act of
the donor's independent will. In Walker v. Smith,
Sir John Romilly, M.R., said:—
He (the donee) must prove every point of the case, not only
the transfer, but that the transfer was meant to be made to him beneficially.
And at page 396 he said:—
I am of opinion that, in all these cases, you must not take
into account the evidence of the recipient himself; the gift must be
established by separate and independent evidence.
Without entirely disregarding the donee's testimony I would say
that effect should not be given to it unless it is corroborated by independent
evidence. Upon the vital point that it was the intention of the deceased to
give to the respondent the beneficial interest in the shares conditioned upon
her paying the dividends to him during his lifetime, there is absolutely no
evidence but her own. It is consistent with all the evidence but that of the
respondent that the deceased may have transferred the shares to her to pay the
dividends to him during his lifetime, and then to apply the shares to a particular
purpose expressed verbally to her by him, and not put in writing, but which no
person knew but themselves.
As to the transfer of the shares being the spontaneous act of the
deceased in the exercise of an independent will, I am of opinion that the onus
resting on the respondent has not been discharged. That confidential relations
existed between them during the years he was seeking to
[Page 569]
make her his wife is not denied by the
respondent. Where a confidential relation is established the court will presume
its continuance unless there is distinct evidence of its determination. Rhodes
v. Bate.
That there was no termination of this relation prior to the transfer of the
shares and that he was more than ever dominated by his confidence in the
respondent is, I think, demonstrated by the fact that a month later he gave her
the power of attorney and the cheques, thus putting himself completely in her
power.
It was argued that as, on January 14, 1931, he made a new will,
when he was surrounded by influences other than hers, and made no disposition
of the shares, it might reasonably be inferred that he had determined to leave
them where they were. If it had been established that he then knew he could
revoke the gift (if it was a gift) and set aside the transfer, the argument
would have been much stronger, but, in the absence of evidence to establish
such knowledge on his part, his failure to mention the shares in his last will
does not, in my opinion, justify the inference that he deliberately and
intentionally affirmed the transfer. Until the commencement of his sickness
eight days before he made his last will, he was under the influence of the
respondent. Because he did not during these eight days seek to ascertain his
rights in respect to the revocation of the shares, he cannot be charged either
with laches or deliberately choosing to remain in ignorance thereof, as at the
time he was ill and very old. After carefully perusing the evidence I am unable
to find the slightest evidence of acquiescence or ratification of the transfer
by the deceased.
The rule of equity which places on the donee the burden of
proving both the gift and the independence of the donor's will in making it,
may be a harsh one and, in individual cases, may lead to hardship. The courts,
however, have found it necessary to maintain it in order to prevent those in a
position to exercise undue influence from taking advantage of their position
under circumstances in which proof thereof would be impossible.
In the Inche Noriah case their
Lordships of the Privy Council said:—
We regard it as most important from the point of view of
public policy to maintain the rule of law which has been laid down and to
insist
[Page 570]
that a gift made under
circumstances which give rise to the presumption must be set aside unless the
donee is able to satisfy the court of facts sufficient to rebut it.
I would allow the appeal and restore the judgment of the trial
judge.
Appeal dismissed with costs.
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