Opinion
03-02-1893
WRIGHT v. WRIGHT et al.
J. W. Westcott and Mr. Wain, for complainant. S. H. Grey and M. P. Grey, for defendants.
Bill by William L. Wright against Jane M. Wright, administratrix of George M. Wright, deceased; Henry B. Vaughan; Lucy M. Vaughan, his wife; Mary J. Hedges, and Edward Hedges, her husband; Ray S. Wright; George W. A. Wright; and William W. Gibbs,—to set aside certain assignments by complainant to Gibbs and by Gibbs to Henry B. Vaughan, and for an account. Decree for complainant.
J. W. Westcott and Mr. Wain, for complainant.
S. H. Grey and M. P. Grey, for defendants.
PITNEY, V. C. The complainant is one of the children of George M. Wright, late of Bordentown, in the county of Burlington. He died on the 7th day of January, 1885, intestate, leaving his widow and five children him surviving. The five children are the complainant, the defendants Lucy M. Vaughan, Mary J. Hedges, Ray S. Wright, and George W. A. Wright, and his widow is Jane M. Wright, who took out letters of administration upon his estate. On the 17th of December, 1886, nearly two years after his father's death, and before any settlement of his estate, the complainant conveyed and assigned to the defendant William W. Gibbs, by deed of that date, all his right, title, and interest in the estate, real and personal, of which his father died seised or possessed, in consideration of the sum of $250, and by deed dated 22d of July, 1887, Gibbs conveyed the same to the defendant Henry B. Vaughan. The object of the bill is to set aside those conveyances, and to invest the complainant with his original right in his share of the estate, and for an account of the personal estate of the decedent, and payment to the complainant of his share thereof. Other matters of relief are specially prayed for, not necessary now to be stated.
The admitted facts with regard to the conveyance by the complainant to Gibbs and by Gibbs to Vaughan are that, complainant some time before the 17th of December had an interview with Gibbs, who lived and had his office in Philadelphia, in which he expressed a willingness to sell his interest in the estate; that Gibbs reported that interview to Vaughan, and that Vaughan told Gibbs he (Vaughan,) was willing to purchase it if he could get it at a price not exceeding $500; that afterwards Gibbs had another interview with the complainant, when he made the purchase for $250, which he paid him in cash; that he (Gibbs) immediately drew upon Vaughan for that amount, with $100 added for his services, and Vaughan honored the draft, and that the complainant was not aware at the time of the sale that Vaughan was the real purchaser. The ground on which complainant founded his claim in his bill is therein set out substantially as follows: That the complainant, at and before the date of the transfer, was in indigent and straitened circumstances, not on good terms with his family, and was living separate from them; and that they, the defendants, knew that he was in needy circumstances, and conspired together to defraud him of his interest in his father's estate, and that they fraudulently concealed from the complainant the property and assets of the estate, and falsely represented to him that said estate was insolvent, and that his interest therein was worthless, and that he would never realize anything therefrom; and that on the 17th day of December, the date of the transfer, he, relying upon these false and fraudulent representations, and verily believing them to be true, and being assured by the defendants that his interest in the estate could in no event exceed in value the sum of $250, and that an assignment of his interest in the estate would greatly facilitate the settlement thereof, executed the assignment to Gibbs, who was acting for the defendants. The billfurther alleges that the defendants when they made the representations to the complainant knew that his share and interest in the estate was worth $25,000. The bill alleges that Vaughan, the husband of the complainant's sister, was the real purchaser of the complainant's interset. The bill then alleges the suppression of the assets of the estate by the administratrix, with the aid of the other defendants, mentioning 197 shares of stock of the Star Rubber Company, of the value of $15,000; 30 shares of the stock of the United Railroad Companies of New Jersey, of the value of $6,840, and that these shares were transferred by virtue of a power of attorney obtained from decedent on his deathbed to a third party, without consideration, and kept from the inventory, but afterwards distributed among the defendants. That the inventory was fraudulent and defective, in that it did not include the shares of stock of the Star Rubber Company, before mentioned, and the stock of the United Companies of New Jersey, before mentioned, and, in addition thereto, 79 shares of the stock of the Bordentown Banking Company, of the value of $16,000, a note of William Bradly, of the value of $600, and a note of one Flanigan, of the value of $9,500, and other property not mentioned; and there is a general allegation that the estate was not insolvent, but solvent, and worth a large sum of money.
All of the defendants except Gibbs have joined in an answer, in which they admit that they knew of the complainant's indigent and needy circumstances, but say that they were brought on by his dissipation and irregular habits. They deny that they conspired to defraud him, or concealed from him the property and assets of the estate, or that they falsely represented to him that the estate was insolvent, and his interest worthless; allege that he was fully aware of the amount and situation of the estate, and that he knew that G. M. Wright, at the time of his death, was in debt to the amount of over $265,000, and that his estate of every kind and character, which, as appraised, amounted to $39,000, was entirely inadequate to the payment of his debts; and they charge that complainant was aware of all that was done in the way of making the inventory and in suppressing the assets; and they allege that the complainant himself sought out William W. Gibbs, who was a large creditor of the estate of George M. Wright, and urged him to buy out his share at the sum mentioned, and in so doing he was not influenced or induced thereto by any assurances or representations made by any of the defendants. The defendant Henry B. Vaughan, answering for himself, as a part of the joint answer says "that the purchase of the so-called 'interest' of said complainant in said estate of said George M. Wright was made by said William W Gibbs without the procurement of this defendant, or his previous knowledge of his purpose so to do. And said interest so purchased was afterwards assigned by said Gibbs to this defendant at the price or value of $350, as one of the claims against said estate, of which said Gibbs had become the owner, and which he sold and transferred to this defendant on the ——— day of ———. The defendants last named, further answering jointly, allege that the transfer of the shares of the Star Rubber Company was made by virtue of a valid power of attorney executed by George M. Wright on the 6th day of January,—the day before he died,—and that the 197 shares of stock were, by virtue thereof, sold and transferred to one J Warren Coulston, and such transfer was known to the complainant. They say that of the shares of the United Companies 19 were pledged for the payment of a debt, and the other 11 were duly inventoried. They say that the shares of Star Rubber stock were properly excluded from the inventory, because it was sold in good faith; and that the same is true of the 79 shares of the Bordentown Banking Company, having been transferred to Henry B. Vaughan for a full consideration paid by him; and that, as to the Flanigan note, it was not inventoried, because it was supposed to have been fully paid till it was subsequently discovered that a small balance was due by Flanigan on said note. They allege that the estate of George M. Wright was largely insolvent, and that condition was well known to the complainant, and they say that at the time of the transfer by complainant to Gibbs said interest of complainant had no intrinsic value whatever, because of the utter insolvency of his father's estate; and they set up a final account for Mrs. Wright as administratrix in the orphans' court of Burlington county, passed May 23, 1888, in which she has fully accounted for the estate. Gibbs, by his separate answer, denies that in taking the assignment he was acting for said other defendants, and that the sum of $250, paid by him for said complainant's share, was an unconscionable price, and he "avers the truth to be that at the time of the death of said George M. Wright he was a large creditor of his estate, and interested in obtaining a prompt settlement thereof. That he was approached by said complainant, and solicited to purchase his interest as one of the heirs and next of kin of said George M. Wright, and was told by said complainant that there had been a fraudulent concealment by said other defendants, or some of them, of the assets of said George M. Wright, and that complainant's principal object in making the statement proposing to sell his interest, so far as the defendant could understand, was to excite the defendant's suspicions, and arouse his anger, and so induce the defendant to pay him something for his information; and that the defendant was then interested in carrying through to completion the Pennsylvania, Slatington & New England Railroad, a large amount of whose bonds, the property of said railroad company, were pledged as collateral for notes of said George M. Wright, and the release and possession of which bonds it was very important, at that time, for defendant to secure; and to enable him to do so, as well as to obtain an adjustment of his own claims, and of a large number of otherclaims against said estate, then owned by defendant, it was important for this defendant to have a speedy settlement of said estate. That the hostility then displayed by complainant to any settlement, and his threats of legal proceedings to hinder and delay it, prompted this defendant to buy him off, and take a transfer of his interest at the price of two hundred and fifty dollars, a sum named by said complainant, and then entirely satisfactory to him, although more than the intrinsic value of any interest which he then had in said estate, so far as this defendant was able to ascertain." And he then proceeds to say "that said purchase was made by this defendant for himself, and not for said Henry B. Vaughan, to whom this defendant afterwards sold said interest for the sum of $350, together with the other claims against said estate owned by this defendant.
It will be observed that the admitted facts as above stated with regard to the conveyance by the complainant to Gibbs and by Gibbs to Vaughan directly contradicts a part of the allegations of the answers, but is insufficient, standing by itself, to establish the complainant's case. That depends upon several matters of fact, which may be stated thus: First. What was the actual situation of the estate as to solvency or insolvency at the date of the transfer? Second. What was complainant's understanding and knowledge in that behalf? Third. What was the understanding and knowledge of Gibbs and Vaughan upon that subject? And, fourth, what representations, if any, were made by Gibbs to complainant at and before the execution of the transfer? I will consider these in their order.
First. The decedent was a man of considerable means, and at the time of his death was possessed of a considerable amount of property. He owned several houses and lots in Bordentown, the value of which was not given; but one of them, his homestead, the title of which stood in Vaughan, was of considerable value. The inventory of his personal estate amounted to $39,000. In addition to that were the several items of what may be called the "suppressed assets" which are mentioned in the complainant's bill, and, if they had been added to the inventory, would have swelled it to nearly $80,000, without counting $73,000 of railroad bonds, presently to be mentioned. To this should be added the value of the real estate; and in point of fact the allegations of the bill with regard to the suppression of the Star Rubber stock and other assets are true, and the allegations of the answer in that behalf are false. The rubber stock was actually transferred to Mr. Coulston to keep it away from the creditors, and was afterwards distributed among the next of kin, excepting the complainant. So with 79 shares of the stock of the Bordentown Banking Company, transferred to Mr. Vaughan by virtue of a power of attorney executed by Mr. Wright on his deathbed. Those shares were afterwards distributed among the next of kin. The assets which should be added to the inventory, which foots up $39,000, are as follows:
| Flanigan note | $ 9,500 |
| Bradly note | 600 |
| 197 shares of stock of Star Rubber Co., par value $50, taken at the appraisement of 103 other shares on the inventory | 9,850 |
| 79 shares of the Bordentown Banking Co., taken at the appraisement of other shares, valued in the inventory at $150 | 11,850 |
| 19 shares of railroad stock pledged with bank in Jersey City, the margin on which produced | 1,837 |
| Note of Gibbs | 3,471 |
| Total of assets (not including railroad bonds) to be added to inventory | $37,108 |
The decedent, however, at the time of his death, was very heavily involved by reason of pecuniary engagements arising out of his attempt to build the Pennsylvania, Slatington & New England Railroad across the northern part of the state of New Jersey in that enterprise he had apparently at the start three associates, Messrs. Rue, Schenck, and Applegate, and at the time of his death about $250,000 of commercial paper was held by various individuals and banks upon which his name appeared either as maker or indorser, in most instances jointly with Rue, Schenck, and Applegate; and upon about half of it defendant Gibbs was jointly liable with him. As collateral for the larger portion of this commercial paper there was pledged a large number of the first mortgage bonds of the railroad, then unfinished. These bonds had apparently been regularly issued and delivered to Wright and his three associates. They had considerable value, representing as they did a large amount of money actually spent in the construction of the road. Rue, Schenck, and Applegate were men possessed of a moderate amount of property. Gibbs was rich, and seemed to have come into the enterprise with Wright in its later stage. He says that he was drawn into it by a purchase of two blocks of the bonds, amounting in the aggregate to $175,000, and subsequently attempted to help finish it for the purpose of giving his bonds value. The largest single debt on which Mr. Wright was liable was one of $100,000 to John I. Blair, which was in the shape of two promissory notes of $50,000 each, made by J. C. Stanton and J. T. Campbell, (who seem to have been contractors or subcontractors for the building of the road,) W. W. Gibbs, George M. Wright, E. T. R. Applegate, S. M. Schenck, N. S. Rue; and as security for the payment of that claim 112 $1,000 bonds of the railroad were pledged. The next largest claim was one of $35,000, being a promissory note of George M. Wright, S. M. Schenck, William W. Gibbs, and N. S. Rue for $35,000, indorsed by Gibbs and Applegate, but by whom held does not appear. No sworn claim was ever presented against the estate upon it, and there is no evidence that any money was ever advanced upon it by any bank or individual. It seems to have come into the possession and control of Gibbs, and the indications in the evidence are that it was not a valid claim against the estate. Another obligation was a joint note ofGeorge M. Wright and Gibbs to the order of and indorsed by Gibbs for $15,000, held by the Hightstown National Bank. There were pledged as collateral for this note at one time over 70 of the same bonds. In addition to the foregoing, there was about $105,000 of promissory notes distributed among about a dozen different banks and individuals in this state, (who afterwards executed a compromise agreement as hereinafter stated,) upon all of which the four associates, Schenck, Rue, Applegate, and Wright, were liable, but upon only one of which, viz. one for $5,000, Gibbs was liable, and his indorsement on it was after Wright's. I fix this amount of $105,000 from the amount of the sworn claims presented upon them. Notes for a greater amount were produced and delivered, but some of them were mere renewals of others. The First National Bank of Trenton, which held $8,000 of the paper of Wright and his associates, held $23,000 of the railroad bonds as collateral; and the First National Bank of Jersey City, which held $12,000 of that paper, held $12,000 of the same bonds as collateral. The claim may be summarized thus: John I. Blair, $100,000; Hightstown Bank, $15,000; note in Gibbs' hands, $35,000; divers banks and individuals as above, $105,000; and there were three sworn claims of Schenck, Rue, and Applegate, respectively, against the estate, of about $2,100 each,—against one of which was a set-off,—$6,300; and a claim for $7,700 of the Bordentown Banking Company, consisting in part of notes of third parties, $7,700, (this claim is mentioned in the inventory as $6,100;) in all, at face value, without interest, over $265,000, or, deducting the$35,000 note, $230,000.
In this state of affairs the creditors, whose claims amounted to $105,000, as above mentioned, including the defendant Vaughan, met early in April, and on April 5th entered into an agreement with Schenck, Applegate, and Rue by which the last-named debtors agreed to convey and assign, and afterwards did convey and assign, to Messrs. Whitehead, Loomis, and Richards, as trustees, certain real and personal estate, which they were to hold in trust for two years, with intermediate power of sale and conversion. The three debtors also agreed to deliver to the trustees bonds of the railroad sufficient in number, with those held by the two banks, —Trenton and Jersey City,—as above stated, both of whom were parties to the agreement, to amount at 90 cents on the dollar to the principal of the notes held by the creditors, amounting, as above stated, to about $105,000, with a provision that if, at the end of two years, the railroad was completed to the satisfaction of the trustees the bonds should be delivered to the creditors, and accepted by them in full payment. If, however, at the end of six months the trustees were satisfied that the railroad would not be completed in two years, they should be at liberty to return to the two banks the railroad bonds originally pledged to them, and should have power to sell the other assets conveyed and assigned to them by the debtors, and divide the proceeds among the creditors. There was a clause in the agreement providing for a stay of suits on the notes; also a provision that the agreement should not take effect unless the administratrix of George M. Wright should consent thereto, and that the agreement should not prevent the holders of the notes from proceeding thereon against the estate of Wright; and it, also contained a consent on the part of the parties to the agreement that any of the railroad bonds belonging to the estate of Wright might be used either for the carrying out of the agreement or for the completion of the railroad. This agreement was signed by the administratrix of George M. Wright, and by all the creditors, including Vaughan, and was made with the knowledge and assent of Mr Gibbs. The claims with which the trustees dealt may be classified thus: Those upon which sworn claims were presented to the administratrix foot up at their face, without interest, $93,345. Included therein are three notes, amounting to a little over $16,000, held by Loomis & Gould, upon which they presented a sworn claim to the estate. Added to these are $6,000 of the Bank of New Jersey of New Brunswick, and $5,000 of the Bordentown Banking Company, which last was taken up by Vaughan, and a claim upon it presented by him to the trustees. Upon neither of these was any sworn claim presented to the estate. Add these $11,000 to $93,345 upon which sworn claims were presented, and we have $104,345. Loomis & Gould, however, presented to the trustees a claim for over $21,000, and received a dividend upon it, but that claim was erroneous, in that it included a note of $5,193; and the Deckertown Bank presented a claim upon the same promissory note, and received a dividend upon that, so that Loomis & Gould received a dividend upon upwards of $5,000 more than they were entitled to. Under this agreement, Messrs. Rue, Schenck, and Applegate conveyed and assigned to the trustees real and personal property, afterwards valued at $58,500 which was their own individual property. Besides this, they assigned a note of Gibbs for $3,271, which really belonged to the estate of Wright, and three several claims against that estate in favor of the three debtors for about $2,100 each. Besides these matters, Mr. Rue delivered to the trustees $25,000 of the railroad bonds, Applegate delivered $83,000, and Schenck $52,000, so that the trustees held in actual possession, including those originally held by the two banks, $195,000 of the railroad bonds,—nearly twice as really as were required to pay the claims at 90 cents on the dollar. Schenck, Applegate, and Rue also assigned to the trustees their interest in $90,000 of the railroad bonds held in pledge by the Metropolitan Trust Company of New York, $15,000 held in pledge by Gibbs, and $25,000 held, as was alleged, by John I. Blair, over and above, as 1 infer, those pledged as collateral to the two notes of $50,000 each, which he held. Vaughan signed this agreement as a creditor for $5,000 on a note which had been discounted by the Bordentown Banking Company. This note he had paid to the bank, and took it away as a part of the transaction by which he procured the transfer to himselfof 79 shares of the stock. No sworn claim against the estate was ever presented on it.
The work on the railroad appears not to have proceeded, and foreclosure proceedings were instituted upon the mortgage given to secure all these bonds. This was done with the view of reorganizing the railroad, and Mr. Gibbs became anxious to obtain control of all the bonds. On May 15-17, 1886,—a little over a year after the signing of the combination agreement,—the three trustees, Messrs. Whitehead, Richards, and Loomis, sold all the assets so in their hands to Gibbs for $59,870.22, which appears to have been the estimated value of the personal assets transferred to them by Rue, Schenck, and Applegate as above stated, without counting their several claims against the estate of Wright, of about $2,100 each, or the note of $3,271 against Gibbs. This was done in pursuance of a written agreement which declared that these assets were sold and assigned in consideration of such payment. The same instrument further declared that in consideration of one dollar the trustees sold and assigned to Gibbs the several promissory notes held by the creditors, parties to the agreement of April 5, 1885, and which that agreement was made to secure, but upon the express understanding that the amount due for principal and interest had been reduced to about 53 per cent. of the amount due thereon for principal and interest by a payment of about 47 per cent. of the amount due, except those due to the Trenton and Jersey City banks, respectively, upon which had been paid 87 per cent. and 61 per cent., respectively, which excess over 47 per cent. represented 15 cents on the dollar on the railroad bonds which they had severally held as collateral; and it was distinctly stated that the transfer of those claims was made separate and apart from the transfer of the assets received from Rue, Applegate, and Schenck at the same time the$195,000 of railroad bonds were handed to Gibbs. This transfer to Gibbs of the claims of the several creditors against the estate of Wright indicates that they had all been deposited with and put under the control of the trustees by the voluntary act of the several creditors, as no authority to the trustees to so deal with them is found in the agreement of April 5, 1885. The sum of $59,870.22 was paid by Gibbs as follows. May 15, 1886, $10,000; July 27th, $46,870.22, August 31st, $3,000; before which payment the actual transfer would seem not to have been completed. In the mean time no suit was commenced against the administratrix of George M. Wright by any creditor, and no proceedings taken to declare the estate insolvent. The claim of over $7,000 held by the Bordentown Bank against the estate,—in addition to that paid by Vaughan,—for which it held its own stock, standing in George M. Wright's name, also 103 shares of the rubber stock, as collateral, was paid off by Mrs. Wright with funds of the estate, and all the small claims for family and other ordinary debts were paid in full, and the estate treated as solvent. $73,000 of the bonds of the unfinished railroad belonging to the estate were lodged with Mr Dayton, the master in the foreclosure proceedings.
On the 9th of December, 1886, Mr. Grey, counsel for the estate, wrote to Mrs. Wright a letter as follows:
"Camden, Dec. 9. 1886. My Dear Mrs. Wright: Mr. W. W. Gibbs is now here with Mr. C. E. Morgan, his counsel. He proposes to settle all bank claims and other claims against Mr. Wright's estate, amounting in round numbers of proved claims to $213,448.13. This amount includes John I, Blair, $102,000. Two notes indorsed by Gibbs at Mr. Wright's request, one for $5,000 and one for $15,000. Both of these notes Mr. Gibbs has paid. The $213,448.13 does not include $35,000 note, date July 29, 1884, at 4 months, to order of W. W. Gibbs, made by G. M. Wright, S. N. Schenck, W. W. Gibbs, [erased,] N. S. Rue. Mr. Gibbs, in settlement of all these matters, proposes that you shall pay him $20,000, the sum of [the] two indorsed notes, and surrender all the R. R. bonds pledged as collateral. He will cancel all evidences of debt proved against estate as above stated except Blair's, which he will assume and indemnify estate against. He will deliver the $35,000 note canceled. As to the Ward claim, Mr. Gibbs will indemnify the estate against it. Mr. Gibbs is desirous of having your reply to this proposal at the earliest practicable moment, and I therefore request your instructions as soon as you can conveniently give them to me. The following are the securities intended to be covered by Mr. Gibbs' proposition, and surrendered to him:
| 1 lot of 9 bonds of Pa., S. & N. E. R. R. | 9 |
| 1 " 64 " " " " | 64 |
| In all | 73 |
| 50 shares Pa. of N. E. R. R. Co. (N. J. Div.) | 50 |
| 500 shares Pa. S. of N. E. R. R. Co | 500 |
"Memo. Note for $3,271, given by Gibbs to Wright when McFaque judgt. was taken up, with which the $35,000 note above mentioned was used. Very truly, S. H. Grey.
"Mrs. Jane M. Wright, Admx. Geo. M. Wright, deed."
This reference to the $35,000 note indicates that it was not a valid claim, and Mr. Grey swears he had an impression to that effect. The note for $5,000, mentioned in the first part of this letter, was the one of that amount indorsed by Mr. Wright, held by one of the bank creditors,—the Frenchtown Bank,—upon which Gibbs was liable as an indorser with Wright, and which was paid down to 53 percent, of the amount due by the terms of the agreement of the previous May; and the note of $3,271 was the note of that amount, held by the trustees, and both transferred to Gibbs. It was the property of the estate. This proposition was accepted and carried out, with the exception that Gibbs accepted $15,000 instead of $20,000, as demanded. The tenor of this letter of Mr. Grey, taken in connection with a variety of circumstances in the case, indicates that the proposed settlement was not a new thing, but had been under negotiation, ifnot expressly or tacitly understood, for a considerable time. One of those circumstances is the significant one that during the two years, nearly, that had elapsed since Mr. Wright's death, nobody had pressed the administratrix into taking insolvency proceedings, so that the estate was dealt with as a solvent estate. Then there is the fact that Gibbs confined his claim to actual cash paid, or claimed to have been paid, by him on the two notes, one for $15,000 and one for $5,000, when he knew, as clearly appears, that the estate was able to pay much more, and that he was, in addition, willing to take care of the large Blair claim, and also that of Ward. Then we have the evidence of Mrs. Wright. It is plain from her evidence that she knew and understood nothing of these transactions except what she learned from her son Ray and her son-in-law, Vaughan, who was an able business man, and was doubtless conversant with it all. She was called as a witness by the complainant, and was the first one sworn. She was hostile to the complainant, and there was, of course, no preliminary conference or examination. After a few ordinary preliminary questions she was asked as follows: "Question. You took out letters of administration upon your husband's estate, did you not? Answer. Yes. Q. Who assisted you, or acted for you, in settling the claims of the creditors against your husband's estate? A. W. W. Gibbs. Q. Who is H. B. Vaughan? A. He is my son-in-law. Q. Did he also act? A. Yes, he helped. Q. Anybody else? A. No. Q. Do you know a man by the name of McDonald and [or] McDowall? A. No, I do not. Q. When were the creditors settled with, Mrs. Wright? A. Do you know what year? I do not, (addressing Mr. H. B. Vaughan.)" This reference to Gibbs was evidently a surprise to the counsel for the complainant, who were at that time quite in the dark as to the mass of the facts afterwards developed. Further on, the examination was: "Q. Did Ray Wright, your son, assist you in the settlement of this estate? A. No. Q. Can you, if you please, tell me approximately when the creditors of this estate were paid or settled with? A. It must have been two years after my husband's death. I have no memory to recollect now. I was very sick for a long while. Q. They were settled by Mr. Gibbs and Mr. Vaughan, were they not? A. Yes, sir. Q. And do you remember who acted for the creditors? A. No, 1 do not. Q. Was it not Mr. Charles E. Whitehead? A. I don't recollect Mr. Whitehead. Q. Is it not a fact that the creditors were all paid and settled with at a date prior to August, 1886? A. 1 don't think they were all settled up by that time. Q. Will you produce, in obedience to that subpoena; the receipts of the creditors to show the date? A. Mr. Gibbs has got receipts of the creditors in the railroad. I don't believe I have got any. Mr. Gibbs settled the estate up. * * * Q. How many bonds did your husband hold? A. Seventy-five thousand. Q. And he held stock, Mrs. Wright; how much? A. He had these bonds, and that is all I know. I don't know anything more about it. Q. What became of those bonds, Mrs. Wright? A. They were given to Mr. Gibbs. Q. What agreement was made between Mr. Gibbs and the bondholders and the stockholders with reference to that road? A. I can't answer those questions now. I don't know anything about it. Q. Mr. Gibbs acted— A., (interrupting.) He acted as my attorney. He was my lawyer. I took no interest in anything whatever. Q. Mr. Gibbs acted for you in reference to the Pennsylvania and Slatington Road, did he not? A. Yes. Q. Who purchased that road under the agreement? A. He purchased that road. Q. Under the agreement with the bondholders? A. Yes, sir. Q. How much money did you realize under that agreement, from those bonds? A. Not one cent. Q. What value did you or your children receive for those bonds under that agreement? A. Nothing. Q. Were not you or your children interested in the purchase made by Mr. Gibbs under that agreement? A. Yes. Q. Is that right? A. I don't know. You are asking me things I cannot answer. I don't know anything about them." Now, Gibbs swears that he never saw Mrs. Wright, and the evidence shows that Vaughan and Ray Wright transacted most of the business of the estate, but it is impossible to account for Mrs. Wright's evidence about Gibbs except upon the basis that she was told by those persons that in the various negotiations which Gibbs was carrying on for the settlement of all these claims he was acting as the friend of the estate, and in its interest, and not antagonistic to it.
Then Gibbs, called by the defendants, swears that the railroad was sold under foreclosure in April, 1887,—about four months after the date of Mr. Grey's letter, —and that his understanding with Vaughan as to the settlement was arrived at about a year before the sale. It is not probable that, he made a mistake as to this date; and the date of the sale was palpably so important that I must assume that a mistake in it would have been corrected. After stating that his agreement with Vaughan, acting for the Wright estate, was that he was to have whatever interest—bonds or stocks—the estate had in the railroad, he was asked whether this agreement was made prior to the sale, and he answered that he did not recollect whether the actual settlement took place prior to the sale, but that his impression was that it did. This he repeated more than once, and added, "If it had not been, then it would have been no use in delivering it," meaning the stock and bonds. "Question. Because you were the purchaser at the sale? Answer. Yes, sir. [Of course he desired to control all the bonds before the sale.] Q. Can you recollect how long before the sale you had this understanding with Mr. Vaughan? A. My impression is it was something like a year." This would carry it back to the date of the agreement of sale between Gibbs and the trustees in May, 1886. Now, Gibbs must have acquired control of all the bonds before the sale, and such is the tenor of his evidence, and his agreement with Vaughan on behalf of the estate must have been so far executed before the saleas to put him in control of the $73,000 of bonds of the estate; and this is not inconsistent with the formal transfer to Vaughan, and the payment of the $15,000 having taken place, as they did, in the July following. Then it is plain that Gibbs made no claim against the estate for any money payment beyond what he had actually paid, viz.: First, on the note of $5,000, held by the Frenchtown Bank, upon which, prima facie, he was liable only as indorser before Wright, and which was delivered to him by the trustees without any payment, and thus the claim fell; and, second, the note of $15,000, held by the Hightstown Bank, (which was not put in the agreement of April, 1886,) upon which he was sued in Philadelphia as joint maker, and which he paid, and was repaid by Vaughan the even sum of $15,000 for principal, and, a day or two afterwards, by Mrs. Wright, a check for $250 for interest, as appears by the stub. In addition to what is contained in Mr. Grey's letter of December 9th, we have the testimony of Gibbs himself on that point. He testified on his direct examination by the defendants thus: "Question. What disposition did you make of the debts of the Wright estate which you had acquired? Answer. Having obtained the bonds that were with the notes as collateral, I proposed to the Wright estate that if they would pay to me the sum of $15,000,—the sum of $20,000, I think, my first proposition was,—which covered two several indorsements or joint makership of notes that I had made for Mr. Wright at his personal request, and with an agreement from him to protect me personally in the making or indorsing of the notes,—that if they would pay that amount to me I would turn over the obligations I had." On cross-examination he was asked with regard to the suit brought against him on the $15,000 note: "Q. Do you remember of a suit brought against you upon a certain note by the Hightstown Bank, here in the city of Philadelphia? A. Yes, sir. * * * Q. Was judgment recovered in that case? A. No, sir. Q. Was the claim paid? A. Yes, sir. Q. How much was paid? A. $15,000, or whatever it was. I think it was about $15,000. Q. You paid that, did you? A. Yes, sir. Q. Did the Wright estate pay you that $15,000? A. That was the $15,000 that I have testified to; yes, sir. Mr. Vaughan paid it to me. * * * Q. There was not any other $15,000 paid you? A. No, sir. Q. No other except this one $15,000? A. No, sir. * * * Q. Was W. W. Gibbs liable on any of them? [Referring to claims against the estate]. A. On two notes—$15,000 and $5,000, $20,000 in all—which I indorsed at Mr. Wright's instance, and under agreement with him to protect and make me whole. Q. Mr. Wright then made an agreement with you to make you whole, you say? A. Yes, sir. Q. Was that agreement in writing? A. It was. Q. That was in reference to the note sued on by the Hightstown Bank? A. That is one, yes; and a note in the Union Bank at Frenchtown. Those were the only two that I was on, and that I indorsed at his request, and under an agreement that he would indemnify me." He was evidently either oblivious at that moment of the two notes of $50,000 each, held by John I. Blair, or he distinguished the two smaller notes from the Blair notes on the ground that as to the Blair notes he did not occupy the position of a surety, but signed them with the understanding that he was to bear his share of the responsibility, because he was then one of the promoters of the enterprise, while the smaller notes were renewals of previous ones, and he had signed them upon the express understanding that he was surely. Then, again, when asked whether he had made any claim against the other parties liable upon the notes delivered to him by the trustees for the creditors under the agreement of May, 1886, he stated that he had not, and proceeded as follows: "The other creditors [debtors] to this arrangement had made an assignment prior to that, and they delivered all the property they had— at least so stated on oath—to the trustees; not only these railroad securities, but other securities which were delivered to me with the railroad assets. The Wright estate, owing to the death of Mr. Wright, had not made any delivery of the property, or any assignment to the trustees. Having indorsed or made the notes for Mr. Wright,—the one for $15,000 and one for $5,000, $20,000, nearly,—with Mr. Wright's specific request, which he had agreed to indemnify me for, my relations with the Wright estate were a little different from the other parties to the obligations, and it was only upon that particular ground that I asked the Wright estate to pay me what I felt I was justly entitled to get from them." There are other expressions in his evidence which tend in the same direction, viz. to show that he made no claim against the Wright estate except for money actually paid upon notes which he had signed or indorsed as surety for Wright. Then Mr. Gibbs knew that the settlement which he proposed left the estate entirely solvent. He had been informed, as he swears, prior to the 9th of December, 1886, by the complainant, of the character and amount of what were called the "suppressed assets,"—the rubber company stock, the Flanigan and Bradly notes, and the real estate standing in Vaughan's name, etc.,—and, in the absence of any original understanding between him and Vaughan upon the subject, there was no reason, upon the defendants' theory of the case, why he should not have pressed the estate, and recovered payment for all these claims.
All these matters, and others which cropped out in the evidence, lead me to the conclusion that as soon as it appeared that nothing could be done in the way of finishing the railroad and carrying out the original idea of the agreement of April 5, 1885, an agreement was made between Vaughan and Gibbs to the effect that if a favorable settlement could be made with the creditors named in that agreement, and he, Vaughan, could be put in possession and control of all the bonds which were pledged as collateral, he would make and carry out the arrangement as it was finally made and carried out; and nodoubt in the mean time Vaughan was able, being a man of means, to keep Mr. Blair, with his large claim, quiet, and prevent him from pressing the estate. I have not overlooked Gibbs' assertion, under oath, that he took the transfer of these notes on his own account, and without any agreement or understanding with the Wright estate; but the logic of the actual facts is against this view, and the palpable inaccuracy of his gloss of the purchase of complainant's interest of the estate, hereafter to be noticed, deprives his testimony in this behalf of all weight. But suppose Mr. Gibbs was, as he swears, the actual owner, with the right to press and collect the various promissory notes held by the several creditors, parties to the agreement of April 7, 1885, so that he could press the estate of Wright for their payment, let us see what the situation was. And, in the first place, notwithstanding the very express language of the agreement of May, 1886, it seems doubtful, at least, whether or not a court of equity would not treat the $195,000 of railroad bonds which Gibbs received from the trustees as a collateral in his hands for the payment of the balance due on those notes. He so treats them in his answer and throughout his evidence, speaking of them as "collateral" in several places. The notes themselves were paid to the extent of about $60,000, leaving not more than $50,000 due upon them. The note originally held by the Bordentown Bank for $5,000, and taken up from it by Vaughan, was really never in the hands of the trustees, and, although Vaughan received the dividend upon it, it was not transferred to Mr. Gibbs. He had received, then, from the trustees, claims for less than $50,000 against the estate. Then there was the claim for $15,000 on the note held by the Hightstown Bank, which Gibbs afterwards paid, and there were the John I. Blair notes for $100,000 besides interest, upon which Gibbs was jointly liable with Mr. Wright; and, as before remarked, the presumption is that he joined in that note not as surety for Wright, but as a part, of a joint enterprise for the purpose of carrying through the finishing of the railroad and thereby advancing the value of the $175,000 of bonds which he had bought two or three years before as an investment. Upon the Blair notes, after he paid them, he could only claim against the estate of Wright $50,000, and in so doing he must give credit for half the value of the $112,000 of bonds which Mr. Blair held as collateral. The evidence, as already stated, fails to show any value in the note of $35,000, and no sworn claim was ever made upon it against the estate. So that Gibbs' claim against the estate, including the Blair note, may be said in round numbers to have been about $110,000 or $115,000 at the outside, and towards the payment of that he held about $200,000 of bonds received from the trustees, and $56,000, or one half, of those pledged to John I. Blair, provided Gibbs furnished any of those bonds so pledged, about which there is no evidence. Now, these bonds had value. Gibbs paid for some of his 80 cents, and for some 90 cents, on the dollar. A large amount of work had been done upon the road, and it had value, for upon its reorganization Mr. Gibbs came out whole, to say the least. In an affidavit, sworn to May 23, 1885, which he made in defense to the suit brought against him by the Hightstown Bank on the $15,000 note, he stated that that bank held certain of these bonds as collateral, and that they were worth at least 50 cents on the dollar. The application of these bonds to the payment of his claim would probably have greatly reduced it. Then to the assets of the Wright estate, first above mentioned, must be added the $75,000 of these railroad bonds, owned by it, besides its interest in other bonds pledged as collateral, and especially mentioned in the agreement of May 17, 1886. So that it is by no means clear that, in the very worst aspect of the case, the estate was insolvent. At any rate, on the 9th of December, 1886, Mr. Gibbs voluntarily made an offer, (as stated in Mr. Grey's letter of that date,) which he must have known would leave in the estate a large margin of assets. The transfer was finally made nominally to Vaughan, because he advanced, temporarily, the money; but it was really made for the estate, and the $15,000 paid on that account was afterwards repaid to Vaughan by the estate, and Mrs. Wright, in her account, claims credit for such payment.
Here it should be observed that the case discloses no motive which Mr. Gibbs could have had for making a present of $50,000 or $100,000 to the next of kin of Mr. Wright. He was neither a sentimentalist nor a philanthropist, but a cool-headed man of the world, earnestly engaged in making money. He does not scruple, as will appear further on, to demand and receive the comparatively small sum of $100 for his trouble in bargaining with complainant, and procuring from him a conveyance of his interest in his father's estate. This consideration, in connection with the logic of the facts, drives me to the conclusion that there is no escape from one of two alternatives: either there was from the start an understanding between Gibbs and Vaughan to the effect above stated, so that Gibbs was acting in effect as the agent of, or in the interest of, the Wright estate, as Mrs. Wright supposed he was, or Gibbs was satisfied, after his settlement with the trustees, Messrs. Whitehead, Richards, and Loomis, that the interest of the Wright estate in the unfinished railroad, consisting, as it did, of stock and bonds,— some of the latter free, some held in pledge, —was quite equal to the claims against the estate other than the $15,000 due the Hightstown Banking Company, after crediting on these claims the value of the bonds held as collateral. The evidence and circumstances compel me to the belief that he got a full equivalent for what he surrendered, and that the estate at the period in question was in no sense or view insolvent. Well may the complainant put the question to the defendants: If the estate was then insolvent, when, how, and by what means, and by the operation of what causes, did it become solvent? Solvent it certainly did become. What change took place after the period of thetransfer from Wright to Gibbs? The fact is that no change in the estate occurred, and that the settlement was actually made on the very state of things then existing.
Second. The next question is, what was complainant's knowledge and information as to the situation of the estate? It is plain that he knew all, or nearly all, about what are called the "suppressed assets," excepting, of course, the $73,000 of railroad bonds, as to which there is no proof. His letters to his mother prove this; and he told Gibbs, as he swears, all about them at the first interview. There is, however, not the least proof or reason to believe or suspect that he had any information whatever as to the then true condition of the estate, with all its complications, as it is now developed. He certainly was entirely ignorant of the fact that Gibbs, who controlled a majority of the claims against the estate, was willing to deliver up his batch of them, and guaranty the estate against the remainder, upon being paid the comparatively trifling sum of $20,000. The evidence is clear that complainant believed the estate was insolvent, and he was willing for a small sum to sell to a creditor information by which the latter could increase his dividend in the estate.
Third. On the other hand, Gibbs and Vaughan, as early, at least, as December 9, 1886, (the date of Mr. Grey's letter,) knew the estate was not insolvent, but could be settled, and leave a handsome surplus to be divided among the next of kin. I come to this conclusion in the face of the evidence of Mr. Vaughan that at the date of the transaction in question he believed the estate to be insolvent. But it is impossible not to believe that he knew that the syndicate of banks and individual creditors, of whom Vaughan was one, got payment of 47 per cent. on account of their claims. Whitehead's checks to Vaughan for the dividend of that amount on his claim are produced, and he must have inquired into it, and learned the terms of the contract between the trustees and Gibbs, which showed that the amount was to be credited on the notes. The sworn claim of John I. Blair against the estate contained copies of the two notes, showing Gibbs as one of the joint makers, and that the $56,000 of railroad bonds was pledged with each of them as collateral. And, above all, Mr. Vaughan had before him Mr. Gibbs' voluntary offer to settle the whole thing for $20,000 and the $73,000 of railroad bonds, which would leave the estate largely solvent. In this connection I find it is quite impossible to believe that Mr. Vaughan had not, in the interest of his wife, looked into the probable outcome of the foreclosure of the mortgage and reorganization of the railroad, and the resulting value of the railroad bonds. Some stress was laid on the fact that the agreement for settlement was not actually consummated by the execution of the necessary deeds and the payment of the $15,000 until the following July, 1887. But the circumstances explain this. Gibbs desired control of all the railroad bonds before the sale, which actually took place, as before stated, in April, 1887; and no doubt he obtained it, including the $73,000 controlled directly by the Wright estate. The affidavit of defense made by Gibbs to the suit on the $15,000 note was held by the Philadelphia court to be good, and the suit was obliged to take its place on the calendar for trial, and was probably not yet reached. Gibbs finally settled it, as he says, for even $15,000, and received that sum July 22, 1887, from Vaughan, and $250 for interest, from Mrs. Wright, a day or two later, which, at 6 percent. would cover a little over three months. The inference from these circumstances is that control was given to Gibbs of the $73,000 of bonds soon after the formal offer of December 9, 1886, and the payment of the $15,000 was deferred until he was called upon to pay it to the bank and saw his way clear to indemnify the estate against the Blair claim.
Lastly. What representations were made by Gibbs and Vaughan, or either of them, to Wright on this subject? Let Gibbs speak for himself. He was called by the defendants. After stating that he had acquired Wright's interest in December, 1886, the direct examination proceeded as follows: "Question. How did negotiations open between you and him relative to your acquiring that interest? Answer. Mr. Wright called at my office, and requested the privilege of seeing me. I had never seen him before, or heard of him. And he presented the situation. Q. What did he state with relation to the situation? A. He stated to me he had understood that I held large obligations against the estate, and that it had been represented to me that the estate was insolvent; that he had positive information to the contrary; that there had been a great deal of property that belonged to the estate concealed, and that the estate was of very much larger value than it had been represented to me, or had been shown by the inventory, of which I had a copy; that he had had more or less of trouble with them at home, and they were disposed to ignore his relationship, or something to that effect, and that he had made up his mind to offer me the purchase of his interest in the estate, which he thought would help me to get a very much larger sum out of the claims I held against the estate than I would otherwise be able to get. I asked Mr. Wright then for a specific statement as to what property had been concealed, or what additional value there was to the estate beyond what was shown by the inventory of which I had a copy, and he named certain things, which, added to what was on the inventory, still left the estate very largely insolvent, and I so stated to him. He finally stated to me that he needed some money, and he would be willing to sell me his interest in it. which he thought would help me anyhow to some extent in the matter, and offered it to me for $500. I told Mr. Wright I would think of the matter, and see what I could do that would be to my interest, and that if I concluded to make a purchase of his interest I would let him know, if he would leave me his address, which he did as an employe in the Pennsylvania Railroad office on South Fourth street. The matter stoodin that shape for some considerable length of time. I subsequently met Mr. Vaughan in the negotiations I had with him looking to the settlement of the estate, and I recounted to Mr. Vaughan what had occurred between William L. Wright and myself,—the proposition he had made,— and Mr. Vaughan then told me, in a confidential way, what he knew of the character of this man Wright, which I heard; and I subsequently asked him (Vaughan) about the value of his (Wright's) interest in the estate, and he then simply recounted to me what he had theretofore done; that the estate was insolvent, and there was no material value in it, and that he did not think it would aid in any respect in getting any larger sum out of the estate than was contemplated in the negotiations with him. I subsequently had a talk with Wright, sent word for him to come to my office, and I told him that I did not think, from all the information I could get, there was any material value in his interest, but at the same time I was anxious to get what I could, and I had thought the matter over, and I would be willing to give him $250 for what interest he had, and take an assignment of it; my object at the time in making that proposition being to have that with me when it came to the final settlement with Mr. Vaughan. I learned from him that Wright had been annoying his mother a great deal and was likely to continue to do so, and it occurred to me that if I could also present it along with the obligations it might possibly induce settlement to propose to transfer to him at the same time the interest of William L. Wright in the estate. With that object in view, I offered Wright $250, which he accepted." Further on he swears as follows: "Q. Had you ever had any communication or arrangement with Mr. Vaughan whereby you purchased this share for Mr. Vaughan? A. No, sir. Q. When you made the purchase, was it at your own risk and instance solely? A. Absolutely and wholly. Q. And when it was effected, did you hold it for your own right solely? A. I did; and, as I now remember, had it for a considerable length of time; I think some several months or more; six months possibly. Q. Did you subsequently make a settlement whereby you transferred your interest in the claims against the Wright estate? A. I did. Q. With whom did you make it? A. With Mr. Vaughan. Q. What was done in that settlement, and what consideration did you receive for it? A. I received at that settlement $15,000, and a subsequent or further sum of $350, representing the interest in the Wright estate. Q. Whose interest in the Wright estate? A. William L. Wright's." The desire of this witness to aid the defendants is shown in the latter part of the above question, which is false, for it is a proven and admitted fact in the case that he made the purchase after he had suggested to Vaughan that he should buy it, and after being told by Vaughan that he, Vaughan, was desirous to purchase at any price not greater than $500, and that on the same day that he paid Wright the $250 and took the deed he drew on Vaughan for $350, and that his draft was honored without question. On cross-examination he swore as follows: "Question. When Wright saw you, you did have an inventory? Answer. Yes, sir. Q. And exhibited it to him? A. Yes, sir. Q. I suppose you also, at the same time, had a list of these claims which you got of the trustees? A. Yes, sir. Q. (Exhibit C 12 shown witness.) Is that a copy of the notes which you showed Wright? A. So far as I can remember it. I do not now recollect just what the amount of the notes was. Q. Did you have a copy of that agreement at the time, which you now hold in your hand? A. I think I had. I take this to be a copy of the agreement between the trustees and myself. No. I did not have a copy of this. These notes were all rescheduled in the agreement made with me. Q. But you had a copy of the claims? A. Yes, that were rescheduled in the agreement between the trustees and myself. Q. You have said that you showed them to Wright also? A. My impression is that I did, though I am not positive. Q. Was that to convince him or to show him that, so far as you knew, the estate was insolvent? A. I do not think that was the object. It was rather an incident to the conversation between us, and the amount of indebtedness that I held." On April 7.1891, he made a statement to Mr. Wain, counsel for the complainant, which Mr. Wain reduced to writing on the spot, as follows: "George M. Wright and others were interested in the Pennsylvania, New England & Slatington Railroad Company, and borrowed money from various parties in New Jersey on their notes. I purchased of the trustees, for their creditors, assets in their hands, and the notes amounting to about $150,000. I had from the trustees an inventory of the property of the Wright estate, supposed to show the value of the estate. W. L. Wright called on me, and stated the estate was worth a great deal more money than contained in the inventory. I made inquiry about this young man, and found he was not to be believed. He gave me all the information set out in his statement. I knew that W. L. Wright was deviling his mother, and I thought it would be an act of kindness to get him out of the way. Before I purchased his interest, I met Mr. Vaughan, and Mr. Vaughan told me to buy W. L. Wright's interest in his father's estate. I agreed with Vaughan to sell it to him, if I got it, for the same figure I gave. The Hightstown Bank got a judgment against me for $15,000. The estate of Wright paid me that. It was on a note indorsed by me for Wright."
Vaughan, in his evidence, does not deny Gibbs'. account of his interview with Vaughan, in which, according to Gibbs, Vaughan declared the estate was insolvent. On direct examination he says: "Question. Mr. Vaughan, will you please tell us how, and when, in what year, the negotiations between yourself and Mr. Gibbs with relation to the purchase of the William L. Wright share in the estate of George M. Wright were made? A. My impression is that we never had but one interview, and at that Mr. Gibbs stated that Mr. William L. Wright had offered to sell him his interest. I don't know whenhe bought it, or don't know whether he owned it at that time or not; but I told Mr. Gibbs I would buy it. Q. But you told Mr. Gibbs you would buy it? A. I told Mr. Gibbs I would buy it. Q. What subsequently took place with relation to the purchase? A. He drew on me for the amount of the money. Q. What amount of money did he draw on you for? A. $350. Q. by the Court: That was before the transfer of the big claim? A. Before I had settled the thing. Q. Before you had bought Gibbs' claim? A. Yes, sir; before I had bought them; before the thing was settled. Q. by Mr. Grey: Did Mr. Gibbs purchase that at your instance or request in any way? A. No, sir. My impression is that Mr. William L. Wright had offered to sell it to him. Q. When did you first hear of the possibility of his parting with his interest? A. From Mr. Grey, before going over to see Mr. Gibbs. As I stated before, I had the impression that there was a possible defense against these big claims, and Mr. Grey told me that there was not; and then my impression is he had, and produced at that time, a note from William L. Wright, intimating that he wished to sell his interest. Q. by the Court: Who? Mr. Grey? A. Mr. Grey had such a note, and Mr. Grey suggested that I should buy it. At that time—before that—or some time about that time, William L. Wright had written a letter to Mr. Gibbs, stating that there had been a suppression of assets, and Mr. Gibbs had written to me about it, and that had the effect of making Mr. Gibbs demand more money. He said there was more in the estate than what the inventory showed, and Mr. Grey suggested that, as long as William L. Wright wished to sell his interest, I should buy it. Afterwards Mr. Gibbs told me that William L. Wright had offered to sell it to him, and I don't know whether he had agreed to buy it then, or whether Gibbs was the actual owner of it at that time. But I told Mr. Gibbs that I would buy it. Q. by Mr. Grey: What was the next that you heard from Mr. Gibbs with relation to that transaction? A. He drew on me for the money. Q. He drew on you for the money? A. Yes, sir." Then, on cross-examination: "Q. When did you have a conversation with Gibbs in reference to purchasing complainant's interest, and where was it? A. At his office, or at the office of the United Gas Company, 333 Walnut street. Q. Can you give us the date? A. About the time that he drew the draft; shortly before that; how long before I don't know. Q. And this was the only conversation you had with Gibbs in reference to that matter? A. The only one I recall. Q. And then you knew nothing further until Gibbs drew the draft? A. Yes, sir. Q. What did you tell Gibbs at that conversation referred to? What did you tell him to do? A. I think, in reply to Gibbs' statement to me that William L Wright had offered him his interest, I told him I would like to purchase it." And, again, on cross examination: "Q. by the Court: You did mention a figure that you would be willing to pay? A. Yes, The Court. That don't follow that he mentioned the figure of $350. Q. by Mr. Wain: What figure did you mention? A. My recollection is that I would be willing to pay up to $500."
Taking these two accounts together, and the other evidence of Vaughan and Gibbs, it is plain that Gibbs had an interview with Wright some time before December 9, 1886, (he swears not earlier than October 1st,) which is the date of the letter from Grey to Mrs. Wright; that he wrote the result of the interview to Vaughan; that the letter of Grey to Mrs. Wright of December 9th brought Vaughan to Camden; that on the advice of Grey he authorized Gibbs to buy complainant's share at not more than $500, and that it was bought by Gibbs accordingly, and that the purchase was made upon the representation to Wright by Gibbs, acting for Vaughan, that the estate was insolvent, and that his object in buying it was to assist him in settling with the estate, and that his statement to complainant was false in that respect. It is quite clear that this representation of insolvency was not only made at the first interview, but reiterated at the date of the actual transfer.
William L. Wright was sworn, and gave his account of the transaction before either Gibbs or Vaughan was sworn. The effect of his evidence is that about four months after his father's death he was driven away from the house at Bordentown, went to Philadelphia, and had little or no communication with his family from that time on, except to ask his mother for money. In the early part of 1886 he employed a man by the name of Richardson, a lawyer in Philadelphia, to see if he could get anything out of the estate for him, and Richardson wrote a letter to Ray Wright, in answer to which Mr. Grey wrote Richardson a letter, dated February 11, 1886, in these words: "Feb. 11-86. Geo. B. Richardson, Esq., 530 Walnut St.—Dr. Sir: Your note addressed to Mr. R. S. Wright, alleging that assets of the estate of Capt. Geo. M. Wright, dec'd, are not accounted for, and that you intend to take immediate steps to enforce, in behalf of Mr. W. L. Wright, such accounting, has been handed to me by Mr. R. S. Wright for answer. If you are correctly advised by yr. client, you knew that Capt. Wright was hopelessly insolvent, and that his estate is quite insufficient to pay his debts, unless a block of R. R. bonds, the validity of which is challenged in a suit now pending, shall prove to have some value. Whatever property Capt. Wright was possessed of at his death will be fully accounted for by his admx., and properly distributed under order of the court. I am quite unable to see any prospect whatever to get anything for the widow and children. If you can, under the guidance of your client, show me how it can be done, I shall be glad to avail myself of yr. suggestions. Very truly, S. H. Grey." He says he also employed a man by the name of Johnson to investigate the affairs of the estate, and could obtain no information which led him to suppose that there was any chance for him to get anything from the estate except by threateningto expose the suppression of the assets, of which he was fully aware. These threats he did make from time to time, without effect; and it is plain from his evidence, as before stated, that he believed the estate to be insolvent. He swears that his first interview with Mr. Gibbs was in September, 1885,—a year and more before the transfer,—when he called upon him at his office in Walnut street. He does not state the object of the visit, nor what occurred. A year later, in the fall of 1886, and previous to the transactions with Gibbs, he was at work as a clerk in the office of the Pennsylvania Railroad, and the effect of his evidence is that he did not himself seek Mr. Gibbs in the first instance, but was sent for by Mr. Gibbs to come and see him. In that he is in conflict with Mr. Gibbs, who swears that the first interview he had with Wright, which was not earlier than October 1, 1886, was sought by Wright, and that it was for the second interview that he sent a messenger for him. Wright, on the other hand, in effect, swears that he was first sent for by Gibbs relative to this affair, and that Mr. Gibbs began to talk to him about the affairs of the estate, showed him a copy of the inventory, and also a number of promissory notes which his father had indorsed, amounting to about $183,000, and told him that he (Gibbs) was involved personally in the obligations arising out of the building of the railroad, and that he could get no settlement of the estate. He says that Gibbs told him that the family did not show any interest to settle with him, and that there would be nothing left of the estate, and that if he (Gibbs) had the complainant's interest he could close the thing; that the ownership of that interest would help him to accomplish that result; and he swears that the tone of his conversation was that he was not friendly with the family, but that his feelings were adverse to them. He said the estate was insolvent after adding to the inventory the assets which were not shown on it,—the suppressed assets. The complainant further swears that Gibbs stated to him that he had a knowledge, derived from other sources, that there was property belonging to his father's estate which was not on the inventory, but, after adding those assets not on the inventory, there was not enough to meet the liabilities, and that he stated to him distinctly that the estate was insolvent, and that his (the complainant's) interest was valueless, and that he would never be able to get anything, but that if he (Gibbs) had the complainant's interest it would help him to close the estate, and get him out of trouble in his business relations. He said that the ownership of the complainant's share would help him to force a settlement of the estate, and that he would like to own the complainant's interest, and the complainant told him he would sell it to him for $500; and that he went away, and, after thinking it over, went back to Gibbs, and told him that he would take $250; and says that Gibbs shortly afterwards sent for him, and had the assignment already prepared to execute; and that he went before a notary to sign it, and at that very time Gibbs assured him that the estate was perfectly worthless, and that he bought it for the purpose of helping himself out; and the complainant disavows any knowledge of the real condition of the estate as it was afterwards developed, and declared that in selling he relied partly on Mr. Grey's letter, and partly on what Gibbs assured him as to the condition of the estate. He says that after that he had an interview with his brother-in-law, Vaughan, and that he reviled him, and told him that it was his money that had bought his interest, and that he had given money to Gibbs to purchase it.
Mr. Grey's explanation of the statement in his letter of February 11, 1886, that the validity of the block of railroad bonds was questioned, is that the corporation that issued the bonds in question took title to the railroad bed from a previous corporation which had also executed a mortgage upon the road, which had been canceled upon the supposed surrender of all the bonds, but that $30,000 of them were outstanding, and claimed priority.
The question whether Gibbs opened the negotiation for the purchase of the complainant's interest by sending for him to come and see him, or whether the complainant went of his own accord, in the first instance, to Gibbs, and offered to sell, was discussed by counsel on both sides. Its importance lies wholly in aiding to determine the question whether or not the project of buying complainant's interest was originally set on foot by Vaughan, or whether it was taken up by him after the complainant had first intimated a disposition to sell; for I see no reason to suppose that Gibbs himself would have sent for the complainant and attempted to buy his interest, unless he had first been requested to do it by Vaughan; and if it were necessary to decide the question, I should be quite as much inclined to believe the complainant as Gibbs in that behalf. But I do not deem it necessary to determine that question, for, if it be admitted that the complainant first went to Gibbs, the fact remains that Gibbs, acting in the interest of Vaughan, took advantage of the complainant's necessities, and of his ignorance of the true condition of the estate, and also himself asserted what he knew to be untrue, viz. that the estate was hopelessly insolvent, by showing, first, the inventory, and then the notes to the amount of about $180,000, which he claimed to hold against the estate; and that he made a false pretense of wishing to buy it to aid himself in settling with the administratrix. And it seems to me if it were admitted that Vaughan did not authorize Gibbs to make any untrue representations to complainant, yet, as Gibbs was, on the facts, in effect, acting as the agent for Vaughan, the latter cannot take advantage of his agent's fraud, and his title is subject to the same vice as was that of Gibbs.
No authority is necessary for the position that complainant, upon this view of the case, is entitled to relief: and I am of the opinion that his unfilial and outrageous treatment of his mother, shown by a greatnumber of insulting letters and postals which he sent her from time to time, do not deprive him of his rights. The question is not, at this time, between the complainant and his mother or next of kin,— though, if it were, it would make no difference,—but between him and his brother-in-law, Vaughan; and his low and degraded character, and general unworthiness and worthlessness, do not put him beyond the protection of the law of the land, and do not give a license to any one to practice a fraud upon him. His conduct may be immoral, it may be unworthy, it may be unfilial, but it is not inequitable in such a sense as to debar him of his right to lay hold of the horns of the altar of justice, and thus demand his right.
At the hearing it was urged on behalf of the defendant Vaughan that as to what has been called the "suppressed assets" complainant stands in pari delicto with Vaughan, and cannot ask aid from this court. I am unable to adopt that view for several reasons. One is that it was not set up in the answer. That pleading alleges that there was no suppression; that the shares of rubber stock and of bank stock were transferred for a valuable consideration. The proof shows that they have all been distributed as a part of the estate, the bank shares having been first transferred by Vaughan to Mrs. Wright as administratrix, and by her distributed; and the defendant Vaughan, claiming as assignee of the complainant, received the share which would otherwise have come to the complainant. It seems to me that Vaughan, having received the share by reason of standing in complainant's shoes, which position he occupied as the result of a fraud practiced on the complainant, cannot now be heard to say that complainant was never entitled to receive it. Whatever defect was in complainant's title was waived, by the administratrix when she recognized Vaughan as complainant's substitute, and paid and distributed to him a share of the estate. The complainant was deprived, by Vaughan's fraud, of the opportunity to assert his right to it, and cannot now be told by the person who succeeded in receiving it that he could not have succeeded if he had not parted with his right to try.
With regard to the distribution of cash, that seems to have come from various sources, and it does not appear that any special distribution was made of the proceeds of the suppressed notes, etc. Then I am not satisfied by the evidence that complainant does stand in pari delicto in the suppression of these assets. The brains of that part of the transaction were undoubtedly furnished by Vaughan, and the complainant merely acquiesced.
The bill was filed upon the theory that this interest of the complainant in his father's estate was held by Vaughan for the benefit of the next of kin. This may be so in point of fact, but it does not appear so in the evidence. That shows that there has been, from time to time, a distribution, or rather several distributions, of the estate,—some of it in specie, some of it in cash; and in that distribution it was divided into the original shares, precisely as if the complainant had not assigned his share, and the share which would have come to him was transferred to and paid to Vaughan. The complainant is at present, therefore, entitled to a decree setting aside the several transfers from himself to Gibbs and from Gibbs to Vaughan, and for a reconveyance by Vaughan to him in such manner as to pass title to real estate, and to an account against Vaughan of what he has received under the several distributions referred to.
The bill also prays for an accounting by the administratrix of her dealings with the estate, and that he may have the share in the estate which he conveyed to Gibbs. Mrs. Wright answers and sets up an accounting in the orphans' court. Complainant, in that situation, prayed for leave to amend his bill and attack that account. I will hear counsel as to the propriety of such an amendment.
The bill also prays that Vaughan may be decreed to convey certain premises, not described or identified, situate in Bordentown, to the heirs of George M. Wright, deceased. The allegations on which that prayer is founded, and which are sustained by the proofs, are that in the lifetime of George M. Wright he purchased and paid for certain real estate in Bordentown, (not described,) and had the title conveyed to Mr. Vaughan, and the conveyance recorded; that Vaughan thereupon made a conveyance to George M. Wright of the same premises, and delivered it to him, but that it never was recorded, and that on his deathbed that deed was produced and destroyed. I will hear counsel also as to whether any relief can or should be granted in that respect in this cause, or whether the complainant, when there shall have been a reconveyance to him by Vaughan, should not raise the whole question by bill for partition of that and other real estate of which Wright died seised.
The complainant is entitled to costs against Vaughan. The defendants who joined in the answer with Vaughan, and made common cause with him, are not entitled to costs. The complainant proved gross errors in the inventory and account in the orphans' court, and failed to obtain a decree in that behalf simply because he had failed to set up and attack it in advance. The indications are that the distribution of the estate has been made quite irrespective of that accounting, and that the accounting to be had against Vaughan in this cause will give complainant all he is entitled to in that respect. Gibbs appeared by the same solicitor as the other defendants, and his answer was framed in their interest, and was untruthful. He is not entitled to costs.