MCFARLAND et al. v. BISHOP et al. (No. 21141.) (Supreme Court of Missouri, Division No. April 10, 1920. Motion for Rehearing Denied June 2, 1920.) (222 S.W.) 6. Deeds 7-Parent can deed children a contingent remainder. A parent can by deed give his children a contingent remainder; such conveyance not 1. being void or for grantor's use.. I. Appeal and error 1009 (4)-Findings not disturbed in equity cases unless clearly against weight of evidence. In equity cases, the Supreme Court will not disturb lower court's findings of facts unless clearly satisfied they are against the weight of the evidence, especially, where there is a volume of conflicting testimony by oral witnesses on each side of every issue. 2. Trusts 48-That one trustee shared in cash commission with another trustee held not to invalidate deed of trust. That one trustee shared with the other in a cash commission in addition to regular commission provided for by deed of trust, pursuant to letter prepared by former trustee and signed by trustor after former trustee had told trustor that latter trustee demanded the cash commission, did not impair validity of deed of trust, even though trustor did not read, or read carefully, such letter, where former trustee did nothing to prevent him from so doing. 3. Evidence 271(7), 317(4)—Trustor's declarations as to contents of deed held inadmissible as hearsay and self-serving. In action to cancel deed of trust on ground that trustees misled trustor as to contents thereof, evidence offered by plaintiffs as to trustor's declarations to witnesses as to contents of deed of trust held inadmissible to show that trustor made a mistake, or did not know contents thereof, being hearsay and self-serving. 4. Fraudulent conveyances 110(6)-Deed of trust held not void in so far as to use of grantor's children. Father's deed of trust providing for monthly payment by trustees of specified amount to him during his lifetime and thereafter to his children, and providing for payment of principal to children upon their reaching specified age, was void, under Rev. St. 1909, § 2880, making conveyances to use of grantor void as to creditors and purchasers, as to father's subsequent purchasers or creditors who could reach such specified amount in a proper proceeding, but was not void as to children's remainder, being a valid conveyance, so far as it was for use of the children, even as to creditors and purchasers. 5. Fraudulent conveyances 172(2) — Deed of trust to grantor's use will not be canceled in action for grantor's benefit. Deed of trust will not be canceled in action therefor brought for grantor's benefit under Rev. St. 1909, § 2880, making conveyance to use of grantor void as to creditors and purchasers; such statute not being for benefit of grantor, but for purchasers and creditors. 7. Remainders I-Contingent remainder an "interest in real estate." A contingent remainder is an "interest in real estate." [Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, Interest.] 8. Trusts 140 (3)-Deed of trust held to create vested remainder in trustor's children. Father's deed of trust, providing for monthly payment to him of specified amount out of income or principal during his lifetime and thereafter to his children born or to be born, and providing for payment of principal to children upon their reaching specified age, created a vested, and not merely a contingent, remainder in the children, notwithstanding after-born children were to share in remainder, and notwithstanding that amount annually payable to father was payable out of principal. 9. Fraudulent conveyances 172(1) -Deed of trust not void as a conveyance to grantor's use. Father's deed of trust, providing for monthly payment of $500 to him, with such further sum as in trustees' discretion became necessary for medical and other extraordinary expenses, with remainder over to children, held not void as a conveyance to father's use on theory that entire estate might be appropriated for such extraordinary expenses, where income was $5,000 per month, since if the contingency of father being entitled to anything for medical expenses, etc., in addition to regular allowance to the detriment of creditors or purchasers ever happened, equity would determine the amount to which he would be so entitled, and award it to creditors or purchasers. 10. Equity 65(2)—He who comes into equity must come with clean hands. Equity will not cancel deed of trust on ground that by fraud or mistake certain clauses had been omitted therefrom, when purpose of omitted clauses had been to enable grantor, a married man, to carry out an illegal agreement with a married woman, whereby they were each to procure divorces and marry each other, though in fact grantor, when divorced, married a third person, since he who comes into equity must come with clean hands. Appeal from St. Louis Circuit Court; Wm. T. Jones, Judge. Action by Bates H. McFarland and another, trustees for Henry B. Graham and Georgine M. Graham, against John E. Bishop and another, trustees for Henry B. Graham, Dorothy M. Graham, Marjorie P. Graham, and Henry B. Graham, III, and others. Judgment for defendants and plaintiffs appeal. Affirmed. For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes Koerner, Fahey & Young and Jourdan, Ras- (under the provisions and powers hereof, the sieur & Pierce, all of St. Louis, for appellants. said trustees shall pay or provide for the Wilfley, McIntyre, Nardin & Nelson, of St. payment of the fixed charges," etc. And also Louis, for respondents Bishop and American by paragraph 4 it was provided thatTrust Co. T. J. Rowe, of St. Louis, guardian ad litem of infant respondents Marjorie P. Graham and Henry B. Graham, III. * "From said estate, or from the income or lifetime of the party of the first part (said Graproceeds thereof, said trustees shall during the ham), and the continuance of this trust, pay to the party of the first part, the sum of $500.00 per month and in addition thereto, such further sums, as in the sole discretion of the said trustees, may be necessary and proper to provide for medical and hospital care and treatment, and such extraordinary care and expenses as may arise from bodily injury, sickness or ill health of the party of the first part." "The trust hereby created shall be a continuing one, and the trust estate shall be held invided, during the life of the party of the first tact subject to the payments hereinabove propart, and after his death, the same shall be held for his children in equal parts, and as they severally arrive at the age of twenty-five (25) years the proportionate part of the estate then held by the trustees hereunder shall be paid to said children, except that no child shall receive his or her proportionate part of said estate until one year after the death of the parAnd providing further ty of the first part. that the trustees are authorized after the death SMALL, C. I. On May 24, 1916, Henry B. Graham of that city, then about 41 years of age, signed and delivered an agreement dated May 23, 1916, which is sought to be set aside by this proceeding. By said agreement Graham conveyed to the defendants John E. Bishop, his attorney, and the American Trust Company, as joint trustees, all of his estate, Then follows a provision that after all the consisting of both real and personal property, debts of said Graham have been paid, togethall located in St. Louis. The real estate was er with all expenses and indebtedness inincumbered and the equities were of the esti- curred by the trustees, the said Graham shall mated value of $87,200. The personal prop- receive "all of the income from said estate." erty, consisting mostly of stocks and bonds, It was also then provided as follows in said was of the value of about $513,351.81. The agreement: yearly gross income from the personal estate was about $32,420. Not including the deeds of trust on the real estate, the amount of his indebtedness was $168,000, and the total yearly fixed charges, including interest, amounted to $23,246.22. In addition, he owed sundry current bills, amounting to $2,772. The larger part of this indebtedness was held by W. K. Bixby, all of which was secured by stock in the Graham Paper Company, a very prosperous concern, the common stock of which was then paying 27 per cent. annual dividends. Afterwards, such dividends were greatly increased, so that from the time the deed of trust was made, until the trial, a period of less than 2 years, the aggregate dividends on such common stock, of which the trustees held 700 shares, was $220 on each share. His net income at the time the first deed of trust was made, over interest and other charges, was about $9,000 per annum, and at the time the petition was filed it alleges the gross income from the estate was $5,000 per month. The deed of trust by which the property was conveyed to the defendants Bishop and the American Trust Company, as trustees, after reciting that it was made "to make provision for the party of the first part and his children, Dorothy, Marjorie, and Henry B., month. III, and any child or children that may here- On March 12, 1917, Graham and his then after be born to the party of the first part," wife made another deed of trust, revoking the and with the power and obligation on the part deed of trust of May 23, 1916, made to the of the trustees to hold, sell, manage, invest, defendants Bishop and American Trust Comand reinvest said property, and to that end to pany, and conveying to the plaintiffs McFarundertake to provide for the payment of the land and Janis, as trustees, all of his propthen existing debts and obligations of the erty, real and personal, including that in possaid Graham, and of all liens and incum- session of the defendants, and authorizing brances upon said property from either sale them to take possession thereof, and, if necor by pledging said property, provided that essary, to resort to the courts for that pur"from the property hereby conveyed to said pose. Plaintiffs thereupon, on March 14, trustees, or from the income or proceeds of 1917, demanded of said defendants, trustees, sale of said property, or from any property the possession of all the property conveyed to or proceeds thereof, acquired by the trustees, them, and then in their hands, with which de of the party of the first part from said estate to pay to or on behalf of each of said children such amount as in the judgment of said trustees may be necessary and proper for the support, maintenance, education and comforts of said children." At the time said agreement was executed and delivered, the trust company agreed to and did advance some $15,000 or $16,000 to pay off pressing debts secured thereby, and at the time of the trial, had paid off about onehalf of the total indebtedness, leaving about one-half thereof unpaid, and had also, in the meantime, paid the said Graham $500 per (222 S.W.) mand they refused to comply. Thereupon, on | That it was also void because said Graham March 17, 1917, this suit was brought. The deed of trust executed to the plaintiffs on March 12, 1917, after conveying all said property, provided that the much larger part thereof in value should be held by said trustees for the joint use and benefit of the said Henry B. Graham and Georgine Graham, his wife, and to the survivor of them, and also contained the following clause: "In case of the death or divorcement of my wife, prior to my decease, said estate shall vest automatically in said trustees and be thereafter held and administered by them as part of my general estate, under paragraph second hereof, subject to the order, as to alimony, of the court granting such divorce and said joint estate may be changed or revoked at any time prior to such death or divorcement by joint action of myself and my wife, Georgine Graham." The balance of the property, not included in the joint estate in case he died before his wife, was to be held in trust and paid to his children then living and afterwards born in practically the same manner as in the deed of trust of May 23, 1916. As to this part of the trust estate, a power of revocation was vested in Graham alone. There was also a similar provision for the payment of all existing creditors by the trustees, and like powers of management, control, sale, investment, and reinvestment, as in the conveyance of May 23, 1916. Also a provision for a payment of $1,000 per month to said Graham, until all debts were paid, and then the whole income from the joint estate was to be paid to his wife and himself jointly, and the income on the balance of his estate to himself. The instrument further provided that in consideration of the creation of the joint estate in the wife and the husband, the wife relinquished all her rights of dower to her husband in said estate. It was signed by Graham and his wife, Georgine Graham. was intoxicated at the time he executed it, and was mentally incapacitated on account of his indulgence in strong drink, and by reason of worry over his daughter's illness, his own bad health, and the trouble with his then wife. The prayer of the petition is that the agreement of May 23, 1916, be canceled, and an order be made, compelling defendants Bishop and the American Trust Company, trustees, to deliver possession of the estate to the plaintiffs. The answer of the defendants put the allegations of the petition in issue. It appeared from the evidence that said Graham, at the time the suit was commenced, had been married four times. His first wife had died, leaving two children, Dorothy and Marjorie. In 1912 his second wife was divorced; she had one child, Henry B. Graham, and in February, 1916, his third wife left him, III. He afterwards married a third time, and went to New York City, where she lived in adultery with another man. By her Gra ham had no children. In March, 1916, he became engaged to marry Mrs. Snowden, who was then living with her husband in St. Louis, as soon as he should be divorced from his wife and she from her husband. Both of them employed the same lawyer in St. Louis to bring their divorce suits for them. Graham's divorce suit was brought in the county of St. Louis, his wife coming on from New York City and being served with process in that county. She failed to appear at the trial. A divorce was granted to him on the 3d of June, 1916. The wife received $2,500 in money, for which she released her rights in his homestead, and made no defense to his suit. Mrs. Snowden brought her suit in the city of St. Louis, and her divorce was granted on the 30th day of June, 1916. On the 1st of July, Graham eloped with Mrs. Snowden's sister. They The petition, after setting up the execution went to Decatur, Ill. They tarried there a of these two deeds of trust, charged that the day or so, and then went to Indianapolis, deed of trust of May 23, 1916, made to the de- where they remained a few days. They then fendants Bishop and American Trust Com- proceeded to Pearl Beach, Mich., where pany, as trustees, was void under section Graham had a summer home, and the next 2880, R. S. 1909, which provides that all con- day they were married. They returned to veyances for the use of the grantor shall be St. Louis about the 26th of July, in order void as to existing creditors and subsequent that Graham might attend a meeting of the creditors and purchasers. The petition fur- Graham Paper Company, in which he was a ther alleged that the plaintiffs, as trustees, director. Mrs. Snowden then sued him for were purchasers, in that they were trustees breach of promise for $100,000 which he for the wife, and also represented the cred- compromised for $4,000. itors of said Graham. That it was also void because it was procured by the fraud of the defendant Bishop, in inducing said Graham by false representations as to its contents to execute it. Also, because it was procured by accident and mistake, in that the said Graham, at the time he executed it, supposed that it contained a clause authorizing him to revoke it and change it, and for the return of his property to him, when his debts were paid. 222 S.W.-10 The evidence showed that Graham was a hard drinker, but it was conflicting as to whether or not it incapacitated him from business. Much testimony was introduced pro and con on this issue. The same is true as to whether or not he was drunk at the time he executed the instrument of May 23, 1916. There was evidence on the part of the plaintiffs tending to support the allegations of the petition that Graham supposed that said in strument of May 23, 1916, contained a clause | learned chancellor below. On the other hand, giving him the right to revoke it, and pro- we entirely agree with him that the weight of viding that his property should be returned to him, when his debts were paid, for the reason, among other things, that he was engaged to marry Mrs. Snowden, when he should be divorced from his then wife, and Mrs. Snowden should be divorced from her husband, and he desired to make a provision for her of greater value than he would be able to do from the $500 per month and the income of his property, after his debts were paid, reserved to him by said agreement. On the other hand, there was evidence to show that while Graham wanted this reservation in said deed of trust, he was notified a day or so before it was executed by defendant Bishop that the trust company would not consent to any such reservation, and would not act as trustee except on condition that the said deed of trust was irrevocable; that Mr. Bishop fully explained the deed of trust, as it was made, to Graham before he executed it, and that he fully understood its contents, and was sober and in his right mind when he executed and delivered it. Likewise, on all other issues in the case, there was much evidence, and it was conflicting. The evidence was all practically oral, and delivered in open court before the judge below, who decided all the issues of fact in favor of the defendants, and rendered judg ment against the plaintiffs and for the defendants. After unsuccessfully moving for a new trial, the plaintiffs appealed to this court. In the view we take of this case, it is not necessary for us to set out the proceedings at the trial, or refer to the very voluminous testimony to any greater extent than we have done, or shall do in the course of this opin ion. [1] II. The record is very voluminous. It would be wholly impracticable to attempt to set out even the substance of the evidence of the various witnesses. The testimony was practically all oral. It was heard by the learned chancellor below, who had a better opportunity to observe the witnesses and judge of the weight of their testimony than we have from the cold type of the record. He found all the issues of fact for the respondents and against the appellants. Even had we some doubt as to the correctness of his conclusion on the facts, we should not be inclined to disturb his rulings, because our rule in equity cases is to defer somewhat to the findings of the lower court as to the facts, and not to disturb such findings unless we are clearly satisfied that they are against the weight of the evidence. This rule is especially applicable when there is such volume of conflicting testimony by oral witnesses on each side of every issue as is the case here. But in this case the evidence has not awakened any doubt in our minds as to the sound the evidence is clearly in favor of the respondents on the issues in the case. That there was no fraud or misrepresentation practiced by any one to induce Graham to execute the instrument of May 23, 1916, mentioned in the petition; that he was a hard drinker, but was not drunk when he executed said instrument; that he was not incapacitated by drink or otherwise so that he did not understand it; and that he was fully informed as to its contents and made no mistake, when he signed and delivered it. We are also satisfied that it was a wise, timely, and provident disposition for him to make of his property, under all the circumstances of the case. His affairs, owing to his dissipated habits, were drifting towards bankruptcy, and he wisely determined to turn his property over to competent and responsible trustees to manage and control it and hold it, so that he could not further waste or dissipate it, and thereby his existing creditors would be paid and he would be assured a sufficient support This shows that for life, and the children of his blood and [2] III. But, independent of all other considerations, it is said by appellants that the evidence shows that defendant Bishop misled Graham, as to his receiving one-third of the $3,000 cash commission paid by Graham to the trustees, in addition to the regular commission provided for in the deed of trust. The evidence shows that Bishop told Graham that the American Trust Company wanted a cash commission of $3,000, besides the regular commission, and did not inform him that he (Bishop) was to get any part of it. The regular commission was to be 5 per cent., of which Bishop was to receive 2 per cent. and vided for in the deed of trust. (222 S.W.) Both were larations are inadmissible. Gibson v. Gibson, 24 Mo. 227; Bush v. Bush, 87 Mo. 485; Hammond v. Beeson, 112 Mo. 201, 20 S. W. 474; Teckenbreck v. McLaughlin, 209 Mo. loc. cit. 546-549, 108 S. W. 46; Weber v.. Strobel, 236 Mo. loc. cit. 663, 139 S. W. 188. trustees. It is not claimed that Bishop told Graham that he was not to receive any part of the $3,000 cash commission, but that he told him (Graham) that the trust company wanted the $3,000 extra commission. This was true. Bishop did not ask for it. It was the trust company which demanded it. But, as there were two trustees, and the commis-null and void. That section is as follows: sion provided for in the deed of trust was to be divided between them, Graham was, at least, put upon inquiry by Bishop as to whether he would receive a part of the $3,000 commission, when he told Graham that the trust company demanded such commission. The presumption was natural, it seems to us, that this commission would also be divided between the trustees. Furthermore, Bishop prepared and Graham signed the following letter, directed to both the trust company and himself, with reference thereto: V. But, it is claimed that section 2880, R. S. 1909, makes the trust deed to defendants "St. Louis, Missouri. American Trust Co., and John E. Bishop. St. Louis, Mo.-Gentlemen: In view of the proposed contract contemplated to be entered into between you and myself for the purpose of handling my property and disposing of it in accordance with that contract, and, as an inducement and additional compensation for handling the matter, I hereby authorize you to pay to yourselves the sum of three thousand dollars ($3,000.00) in addition to the compensation provided for in said contract, the same to be paid out of the property transferred to you by said contract. It may be that Graham did not read, or read carefully, this letter, but Bishop did nothing to prevent him from so doing, and it shows he intended to do nothing to mislead him. We hold, there was nothing improper in the conduct of Mr. Bishop in this regard, and that the deed of trust assailed is in no way impaired thereby. [3] IV. It is also asserted that the lower court erroneously excluded certain declarations alleged to have been made by Graham to third parties, in the absence of defendants, before and after the deed of trust to them was executed and delivered, as to the contents of said instrument; that he told said parties he had made, or was going to make, an instrument which placed his property in the hands of trustees until his debts were paid and the property was returned to him. The evidence was offered on the theory that it tended to show that Graham made a mistake or did not know the contents of the instrument he made. It was therefore to prove the truth of the plaintiffs' assertions. The court rejected this testimony, as hearsay and self-serving. We know of no authority holding that a party can make declarations to third parties in his own favor, and then have such parties testify to such declarations to sustain the truth of his allegations in the case. The rule is elementary that such dec "Every deed of gift and conveyance of goods and chattels, in trust, to the use of the person so making such deed of gift or conveyance, is declared to be void as against creditors, existing and subsequent, and purchasers." [4] It may be admitted that this section makes the conveyance, so far as it is to the use of Graham, null and void as to creditors and purchasers. But the statute does not make it null and void, even as to creditors and purchasers, so far as it is for the use and benefit of Graham's children. This deed provided for the payment of his then existing debts, and there is nothing in the statute preventing Graham from giving or conveying the remainder of his property to his children or others as against subsequent creditors and purchasers. [5] Furthermore, this statute does not provide that a conveyance to one's own use shall be void as to him, but only void as to purchasers and creditors. This proceeding is more for the benefit of Graham than for either creditors or his wife, even conceding she is a purchaser. The plaintiffs are not purchasers nor creditors, but simply agents or trustees. This case is therefore not bottomed upon the statute relied on, because said statute is not for the benefit of the party making the conveyance. Sauter v. Leveridge, 103 Mo. loc. cit. top page 624, 15 S. W. 981. [6, 7] VI. We hold said deed of trust to defendants is valid as to the defendant trustees and Graham's children. It is said the remainder to Graham's children is a contingent remainder, void and ineffectual, and that the conveyance to them was, in effect, but for the use and benefit of Graham. We know of no reason why a man cannot by deed give a contingent remainder in his property to his children, or why such conveyance should be deemed void or for the grantor's use. A contingent remainder is an interest in real estate. Godman v. Simmons, 113 Mo. 123, 20 S. W. 972; Sikemeier v. Galvin, 124 Mo. 367, 27 S. W. 551. [8] But, it is plain enough that the remainder to Graham's children created by the deed of trust assailed is a vested remainder. The children to whom the remainder is given were living and are named, and the fact that the remainder opens to let in after-born children does not make it a contingent remainder. All the children, not simply those living at his death, are to take upon Graham's death, which is sure to occur. The vesting of the ti |
