Petition for Writ of Certiorari — Dreis v. Bishop

Supreme Court brief1959

Ask Donna

What actually matters in this document.

Text

- a | ; aad y Paes . - 3 ,

FILE COPY wa ie Gite Supreme cag UST

‘a uealea | FILED

Poe eae ee ¢ NOV 7 1956 |

me | | JAMES R_BROWNING, Clerk

| bigeeme Court of the Hnited States

: October Term, ; _ , a

we. . 501 ao

HARRY DREIS, apne under the last Will and Testa-

_ ment of MILDRED ' T. BISHOP, deceased,

‘Petitioner,

against ‘

ETHEL MAY BISHOP, bales id as Administratrix

oo _C. T.A. of the Estate of — ~~ deceased.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE :

4°’ THIRD CIRCUIT >

)

a nies K. Frazyken, *;

Counsel for Petitioner. sa

iain K. FRAENKEL, |

Haney .

of Counsel.

5 | | NDEX ae Cae: Pi

(a) The Opinfons ee er ee 1

(b) Statement of Grounds of justniactina euns 3 1

(a) Statutes Relied On .....5.....00. ie as 48

fe) Statement ‘of the,Case.............. = Reins

0 Jurisdiction of the Court Below ...:.. gene 6

Reasons for Granting the Writ ... ace ee 6

‘APPENDIX: Places r

Opinion-of District‘Court ......... . \ ante ee ee:

Opinion of Court of Appeals ...............6. "99

.Opinion’ of Court of Appeals on ‘Petition for ‘

PTI ak nin koe den san kansens vanncaseus 41

Judgment of ‘Affirmanee TS ae ope Oe ae gon 48

‘Order of Substitution ...*... oe wee eeeees --f ~ 49

Cases Cited ;

on v. Berniker (Cal. Firs P. 2d 668" ahem, S eae 8

Brady v. Ellison, 3 N. C. 348......... tN hgh ory er, Se

Buchanan,v. Wilson, 254 F. 2d 849 ............0.. s

» Callwood v. Virgin Islands-Nat’l Bank, 221 F.2d 7707

Daniel Vv. United States, 234 F. 2d. 102 (5th Cir.) ©. d.

‘A. eRe ek Sree 2.

ee, v. Little Rock Trust Co., 99 Ark. 45, 187 | :

ae SE dc ea ks Wchnts Gee ee nu Laecas 8.

Frank Adam El. Co. v. ‘Wertaghneie ¢ Co., (146 F, 2d AAP

WO he ee eee 10

Gilpatrick v. Hatter (Okl.), 258 P. 2d 1200.22... 04.

Gluck v, Rynda Development Co., 99 N. J. Eq. 788,

Se Oe Oe I OO ba cds kd dee dcecscsnacres

a Gunderman v. Guniison, 39 Mich. 313 SO ee

Hanscom y. Hanseom; 186 Or. 541, SOS P od 330°:

Higgins y. Kitterman, 257 F. Jd 861.......... ye

& Son, Inc., 184 F. 2d 980 ..... Mier cetaiees:

Johnson v. Yalow Cab Ce. 221. B. OBB 2. ccc ecess

_> Mentzner v. Mentatier, 325 Mo. 941, 30 §, W. 2d - |

Moths v. United States, 179 F. 2d-824 (7th Cir.) .

Imperial Assur. Co. of Newark v. Joseph “po

___: Paramount Pest Control Sew. v. Brewer, 177 F. 2d

564 (9th Cir:) ..... Da ene TM me ey kee

Perfect-form Corporation v. Perfect Brassiere Co.,

5 ere PO PrrET Teer Pee Nae

Precision Co. v. Automotive C0., 324 U. S. 806 ....

Rivera v. White; 94. Tex. 538, 63 S. W..125 .........

Rossow v. Peters, 277 Ill. 436; 115 N. E. 524 .......

Sears Roebuck v. Blade} 139 Cal. App. 2d 580, 294

UI Ne he ee eas

, Sears Roebuek & Cg. v. Johnson, 219 F. 2d 590 <<

United States v. Abel; 258 F. 2d 485 (2d Cir.) ..... :

United States v. duPont & Co., 351 U. S. 377 ......

. United States v. Fotopulos, 180 F. 2d 631..........

United States v. Ingalls, 114 F: 2d 839 (D. €. Cir.) .

United States v..Oregon Medical Society, 343 U.. S..

Wantulok v. W antulok, 67 W yo.. 22, id. 45, 214 P.

2d 477, re eas ae

Wa arner Vv. Tullis, 206 Towa 680, 218 N. W. S78 14145 ;

iii

_ PAGE,

Weinhart v. Weinhart, 193 Mise. (N. Y,) 424, 84

N. Y. S.'2d 375, aff’d 275 App. Div. 994, 90 N. Y.S.

(i EEE peer ne eer Oe ert er rrr er 8

. United — 178 F, 2d 880 (10th Cir. ). -

Statutes —

—$5U, S.C, Seotion 1254 .....ccccccelewteeeeeee

ee i Te os ie ss, Siew

- 1Seott on Trusts, Section 63, p. 399................ |

ian 2 Soot pp Trusts, Section SRA Re Soe, iowa:

Code of Laws for St. Thonias & St. John Title II,

Chapter 8, Sec. 4, p. 9 (now 28 VI Code 171). re |

; Code of Laws for-8t. Thomas. & St.-John Title my |

_ Chapter 37, p. 196 . oe A dey Oy are 6.

Code of Laws for St. Thomas & St. John Title III,

_Chapter 42, > Becks osaat one Jaekemtie aS

Restatement, Temste—Gostien @ 5.x. ccs... 0050s

V. J. Code, Vol. I, Title 1, Section 4 .... Secabietens 7

Supreme Court of the United States

{October Term 1958

}

fe No. chagedeandsaeapaecinn Ry | e e

e 7 0

Harry Dreis, as executor’ under the last Will,and Testa-

ment ofoMmprep T. BisHop, deceased,

.* Petitioner, -

against arn, Ge

ETHEL May Bisror, indy idually and -as “‘Admninistratrix

C, a. A. of ‘the Estate of Cory Bishop, deceased.

fax

PETITION FOR A WRIT OF CERTIORARI TO THE

, UNRFED STATES COURT OF APPEALS FOR THE

oe THIRD CIRCUIT

To the Chief Justice of the United States and the. Associate’

Justices of the United States Supreme Court:

Petitioner respectfully asks this Court to issue a writ

Of certiorari to.review the judgment of the United States,

Court of Appeals for the Third Circuit which reversed

a judgment of the District Court for the Virgin Islands

. in favor of petitioner’s testatrix and dismissed her com- |

plaint.

(a) The Opinions Below

eThe opinion of the District Court is reported at 152

F.Supp. 4. The opinions of the Court of Appeals are

reported at 257 F.2d =. Copies » are annexed -_ PP.

17- 47 infra).

(b) Statement of unds of. Jurisdiction :

(i) The judgment of the| Court of Appeals was ren-

dered and entered on May 1, 1958.

7 ; . \

- (ii) Timely application. for rehearing was esaglice 7

' denied on Augus@TS 1958.

(iii) The jurisdiction of this Court i is invoked purstatt

to 28 U.S. C. $ 1254. {0 ;

“

(iv) The original plaintiff died on ’ July 6, 1958; peti-

tioner was appointed her executor by the District Court

of the Virgin Islands on July 11, 1958 and substituted as

party plaintiff herein by order of said Court entered ‘on

October: 10; 1958, a copy of which is hereto annexed (see

P. 49, diel

° >

(6) Questions Presented for Review

1. Is a plaintiff-owner in common of an undivided

half interest in a parcel of real estate precluded from in-

voking equitable relief to have a deed set aside on the

ground of fraud because she was persuaded by one of the

persons who defrauded her to sign the deed so as to assist _

that person in prev enting his wife from obtaining the real

estate where there is no-eclaim that the wife had any in-

terest in, plaintiff-owner’s half? - °

2, May the Coart of Appeals: raise. an issue with re-

_ . Spect. to clean hands when,no such issue had been tendered

in the District Court, thus replacing its own discretion

and conscience for that of the District Court?

3° May a complaint be dismissed by the Court of .

Appeals where one of the alternative gtounds for relief

found in plaintiff’s. favor. by the District Court was neyer -

passed upon by. the Court of Appeals?

“4, — a deed to one as trustee which does not name

or describe a beneficiary. or the terms of the frust create

any title as against a resulting trust in the ori Mal grantor!

ent finding of fact that the intent of the plaintiff-owner

was to assist in the ission of a fraud: where there is

-no evidence of such i and the trial court found other-

wise? ; ; ae ee

* 6

- May the Court- of Appeals set aside a finding that

bid was committed by one of the defendants where there

was evidence which, viewed in the light most favorable to

plaintiff- -ownger sustained the trial court’s’ finding?

(d) Statutes Relied On

Rule 52. Findings by the Court: “N

(a) Effeet. In all actions tried upon the facts ‘eliteet

>. May the: Court of Appeals make its own independ-*

a jury of with an advisory juty, the court shall gnd the -

fgcts specially and state separately its conclusions of law.

- thereon and direct the entry of the appropriate judgment;

‘and in granting or refusing interlocutory injunctions the

court shall similarly set forth the findings of fact and con-

clusions of law which constitute the groundy’of its action.

Requests for findings, are not necessary fQr purposes of

_ review. ‘ Findings. of fact shall not be sef\ aside unless

clearly. erroneous,.and due regard shall’ bé given to the

opportunity of the trial eourt to Judge of the credibility

of the witnesses. * * *

Code of Laws for St. Thomas é St. John Title IT, Chap-

ter Eight, Sec. 4, p. 19 (now 28 VI ahs .

The question of fraudalent intent in all 4ases. arising

unler the provisions of the Code shall be deemed a ques- ,

tion of Fact, and not of Law.

i e) Statement of the Case

~ PetitiMher’ ’s testatrix (whom, for convenience, we shall

hereafter refer to as Mildred) brought suit in the District

Court for the Virgin Islands te set aside a trust deed of an ~.

ch, *

-Saequired this: half interest bya purchase made in th

bad . . . = .

; ‘of it this suit was comménced.

2 result, upon learning that she had located him, Cory

: her behalf (43b). 20 ‘

; . ee 2: ep S

undivided. half interest held) by her in common ‘in a 55

parcel acre of Jand and for partition (14a). Mildred hyd

names of herself and Cory Bishop, to whom she helfé-ed her-

self married. . In.1955.Cory indyged her by representations *

found by the District Court( so, Uave been frtaddnlent to

join with him in a conveyance Wf this: property\fo one

Kelly as trustee. The deed w&med no beneficiary snd

_ stated no terms of trust. Kelly was the ‘attorney for

‘Bishop’s real wife, the defendant Ethel May. The trust

was revoked (without Mildred’s consent) and the property

conveyed to Ethel May..,After Ethel May took possession

Cory (whose real name was. Below) zs Ethel May

_had been married,in 1925. In 1938 Cory deserted ‘her

(29a). He met Mildred in New York in 1938,’went through

a marriage eeremony in 1939 and took her with him to the .

Virgin Islands in 1940. Thereafter they acquired various

nroperties, including the 55 acres here in question. Most »

' the funds used were contributed by Mildred (32b, 33b). |

-Title was held as tenants #i common (30a).° In 1954 they,

separated. -In 1955 Ethel May retained George T. Kelly, of

Orlando, Florida, to try to Jocate Cory, having obtained in-

formation that he was in the Virgm Islands... As a

went to see her in Florida azid offered to convey his prop-

erty to her (42b). She then sent -her lawyer Kelly to the.

Virgin Islands and gave him a power of attorney fo act on

Kelty came to St. Thomas nd Gyre with ‘Cory's

attorney, Bailey. The latter prepared a) deed whiclr pur-

ported to convey the interest of both Cory and Mildred to

‘Kelly ‘a8 trustee (25b-28b). The deed did not declare the

terms. of the trust or name.any beneficiary (1b). Cory

obtained Mildred signature’ by playing on her emotions. -

He told ker that she had nevér been really married to him,

“that his teal wife had’ turned up and was pursuing him.

‘He‘said that to protect him from ‘‘blackmail’’ by his wife

and to protect Mildred’s interest in the property, it. should

_ be conveyed in trust. She. agreed as she ‘trusted him and

was sorry for him (36b- -39b).

_- Thereafter Kelly executed a declaration (which is not

* ins evidence) that he held the praperty for ae May for ,

life, w wet r¢mainder to her cane 9 Ethel May

then exechted a release of her dower. Mkts in all the land

which Cory had previously sold. She,.Cory and the daugh-

ter purported to rev oke the trust:and to convey the entire —

property, including Mildred’s: half, to Ethel May free of

“the trust (4b-6b). Cory, died in September 1956 (13a):

ithel May had come ta the Virgin Islands shortly before

that and oceupied the ignd in question. Then this suit |

' was instituted. . f

®@

“At the trial both Ethel May and Mildred testified, but

‘Kelly defaulted and did not testify (30a).

~ The District Court found that Mildred ‘hed ‘been de-

», * frauded by: Cory and also by Ethel May through Kelly,

her lawyer, (32a-34a). It ruled that: the deed was also void

for uncertainty (34a-35a). “Judgment was entered i in fav or’

of Mildred-annulling ‘the deed, as: ‘to-her one-half i cee

and directing partition (26a, 27a). rd

The Court, of Appeals ns reversed and dis-

missed the complaint on the sole ground (not raised below)

, that Mildred had not come into court «with ckean* hands

and made. its'own .indepéydent finding sue sponte that Mil-

dred had participated ates apparent intention to de-

- fraud Ethel May.: The Coart also reversed the Distriet —

Court finding that Ethel May and her lawyer had partici-

pated in Cory’s fraud. ae ae . “

On application for reargument the case was considered

and two additional judges brought in (Biggs, C.J: and .

Hastie, J.)..-These-dissented from ‘the denial of the appli-

Renee x.

“s

cation. They held that the clean hands doctrine had no

application to Mildred ‘sinee Ethel May never had an)

claim te Mildred‘s interest in the property. Judge Bigys

concluded that the court had: abused its diseretion in over

ruling the conclusions of the Distriet Court. Chief Judge

Biggs also held that the deed was void beeause no’ valid

‘trust had been created. The majority had not dealt, with

that issue at all. ‘

' Mildred, and now her estate, has thus, without any con-

sideration, lost her property to,some one who never had

any right’ or claim to it whatever. ;

e | (f) Jurisdiction of the Court Below

The District Court had jurisdiction of this case under

§ 1406 of Title 48 of the United States Code and under Cod:

of Laws for St. Thomas and St. John, Title II, Chap

Thirty-seven, page 196 and Chap. Forty-two, page. 204.

Reasons for Granting the Writ

* The court below has decided an jonporias question of

Virgin Islands @pal property and equity law in conflict w ith .

the applicable territorial aw. And it has departed from the,

accepted and, usual course of judicial proceedings pre-

seribed ‘by Federal Rule d2la) and in conflict with the views -

announced by this Court. and followed in most Circuits.

“-~Phus, it has usurped: the oiiity: powers of the District

Court in making its own findings of. fact, i reversing a

finding of fraud nrade by the District Court, and in apply-

ing the ‘‘clean hands’’ doctrine, especially sinee no iss

of clean hands had been tendered to the Distriet Court..

- Moreover, the Court of Appeals dismissed the partition

suit brought by Maldred without at all passing upon en:

of the alternative grounds of that suit, namely, the in-

validity .of her deed in trust because no beneficiary had

been named or terms of trust stated.

As Chief Judge Biggs said in his diysent (see tmfra,

p. 46): SAS

. The rulings of the court would seem to err in

three major areas and dislocate general legal prin-

' om ~~ > ‘. ee R ° e

ciples and’also the law of: the Virgin Islands as

heretofore carefully established by this very court.”’

1. As pointed out in the dissenting opinion, Virgin

Islands law is that embodied in the. Restatements of the

American Law Institute (Callwood v. Virgin Islands Nat’l

Bank, 221 F. 2d 770; .774-773; V, 1. Code, Vol. 1, Title 1,

Section 4). - ; ,

Section 63 of the Restatement, Trusts, provides. that a

- trust'is invalid when made for the purpose of defrauding

anyone. But in-discussing this the comments make clear’.

that when in fact no valid claim existed then the-settlor

can require the trustee to reconvey : vi

“Ty the transfer was made for the purpose’ of

preventing a particular person from enforeing a

claim against the property, and the claim could not

have been enforeed against the property, although

fhe transferv: believed that it coukd be so enforced,

the transferor can compel the transferee to per-

form the trust. This is true whether the particular

‘claim was unfounded: or although enforceable it

could not have been enforeed against the particular

property. Thus, if a person, believing that he is

liable in tort to.a third pérson for an act of his em-

Vlovee, transfers his property to another whe agrees

to: hold it in trust for him and the purpose toe

transferor in making the transfer: was to pfevent

the third person from attaching the property, the

transferor car compel the transferee to, reconvey

the property a ¢ fact he was not liable to the third

person, although he believed that he was liable. So

also, if the owner of a piece of land transfers. it to

another .who agrees to hold it in trust for the trans-’

feror, and the purpose of the transferor in making

the transfer was to prevent a judgment creditor

from levying execution upon the land, the transferor

oe | | i:

can compel the transferee to reconvey the land if it

+} was a homestead of the transferor’s upon which the

creditor could not have ley ied execution’’ (pp. 209,

_ )

That statement reflects the well settled law on’ the |

subject : : |

“Ferguson v. Little Rock Trust Co., 99 Ark. 45,

137 S.. W. 555;

Berniker v. Berniker (Cal.), 174 P. 2d 668, aff’ 30

"Cal. 2d 439, 182 P. 2d 557;

Rossow v. Peters, 277 Ill. 436, 115 N. BE. 524: |

Warner v. Tullis, 206 Iowa 680, 218 N. W 2575; -

Gunderman v. Gunnison, 39 Mich. 313;

Mentzner v. Mentzner, 328 Mo. 941, 30 8. W. 2d -

146;

Weinhart v. Weinhart, 193 “Mise. (N. Y.) 424, 84

N. Y. S. 2d 375, aff’d 275 App. Div. 994, 90

N. ¥. &. 2d 918.

Brady v. Ellison, 3 N. C. 348;

Gilpatrick v. Hatter (Okl.), 258 P. 2d 1200:

> oe Hanscom v. Hanscom, 186 Or. 541, 208 P. 2d: 330: ‘

. Rivera v. White, 94 Tex. 538, 63 S. W. 125 ‘

Wantulok v. Wantulok, 67 Wyo. 22, id. - 214 -

“Pp, 2d 477, 223 id. 1030.

_ es was saidein the Berniker case at 174 P. 2d 761:

‘“Tn-order that a transferor of penperty be pre-

aie vented from recov ering it from the person. to whom

it has been transferred in trust not only must there be

an intent to avoid claimS‘of ereditors ‘but there must

be enforcible claims. A mere, intent without the

presence of something on which the intent may

operate is/not sufficient.”’ )

In 1 Scott on Trusts § 63, Pp. 399, the rule is thus stated:

‘Where the owner of property transfers it in

trust,for himself for the purpose: of avoiding a cldim

against him &v aii he: believes to be arid which is in

fact not an enforceable claim, the trust is not illegal.

. By the weight of authority. it is held that the trust

is not illegal if the claim is not in fact enforceable

even though the settlor believes that it is. In such

‘ a. case his state of mind is as bad as though the claim

were enforceable, but the courts hesitate to impose

upon him the penalty of forfeiting his interest in the

property. The result is the same where, even though

the claim is enforceable, it is not enforceable-against

the property. which he transfers is trust.’’

' No one of the eases cited, in the opinion of the Court .of

Appeals justifies the conclusion reached by it.“ In all of

them that have any bearing here, suit was brought by

‘persons who were heavily indebted and sought to hide their

. property. ‘The statement by this ‘Court i in Precision Co. v.

Automotive Co., 324 U. S806, 814, has no application what-

ever to this case. That*déait with patents and, therefore,

concerned the public interest (id. 815), a

It “thus appears that the Court of Appeals has dis-

regarded well settled principles of law and created uncer-

tainty in the law of property affecting not only the Virgin

Islands but all vm 8 states within its. jurisdiction, to. the

-extent that litigatiOn involving such questions might reach

the federal courts.

The Court of Appeals/has, indeed, applied the ‘‘unclean

hands’? doctrine in a rigid, arbitrary manner to, punish

Mildréd. That disregards this Court’s — in J ohn-

son.v. Yellow Cab Co., 321 U. S. 383, at 3

‘“‘The maxim that he who comes into equity must

esme with clean hands is not ‘applied by way of

‘ punishment for an unclean: litigant but ‘upon con-

sflerations that make for the advancement for right

and justice.’ Keystone Driller Co. v. General Exca-

vator Co., 290 U. S. 240, 245. It is not a rigid formula

which ‘trammels the free and just exercise of dis-

cretion’ ibid 245, 246. Therefore before deciding the

applicability of the maxim to the case at hand, .we

must examine the particular transactions and ecircwi-

stances involved together with the federal laws which

are alleged to taint these transactions with ille-

gality.’’ oo

2. Moreover, the Court of Appeals had no power

substitute its discretion for that-ef-the- District Court In

_taising-theunclean hands”’ issue sua sponte.

No’such issue was raised by Ethel May in the uhatdings

(see 16a,17a, P8a), nor at. the trial (see 28a, 23b). It Wal

not proper for the Court of Appeals to consider it for the

first time on its own motion:

InSears Roebuck v. Blade, 139 Cal, App. 2d 580, 204

P. 2d 140, +148, the Court said:

“This: defense (unclean hands) must or@inasily

be raised in the trial court to be available, and cannot, \-

as here, be raised for the first time on appeal (citi: &

numerous cases). It has been held in one case, Katz

v. Carleson, 84 Cal. App. 2d 469, 191 P. 2d 541, that

in a clear case -involving flagrantly unconscionable:

conduct, a court may sua sponte apply ks elvan

hands doctrine’. or

No such flagrant case existed here.: .

-The cases relied’ on by the court below (see infra. -p

ef do not support its position. In Frank Adam El. Co.”

| Westinghouse Co., 146 F. 2d°165, the issue of: unclean-

Nea was raised in the District Court. Moreover, the

Court of Appeals did not purport to decide it but remanded’

the case to the Distriet Court to decide it. And-that case.

unlike this, involved, a 2 ae interest.’ In Gluck we Ryle

~ Development ‘Co:, 99 N. J. Eq. 788, aff'd’ 100 N. J. Ex.

554, the issue was decided by: the trial eourt, and had, in-

effect, been raised in the pleadings. .In the Autometic:

Precision case, supra, also a case involving the public

interest, the issue’ of unclean hands had been .pleaded and

decided adversely to plaintiff in the District Court. Thus

> Oey

no one of these cases supports the view of the court below

tltat it had power to dismiss a complaint of its own motion

where no public ‘interest, was invgjved and’ no claim of:

unclean hands had been presented to the District Court. .

agrees eee |

3. The Court of Appeals should not have dismissed the

partition suit without passing on -the alternative ground »

for relief relied on by Mildred--that the ‘‘trust’’ deed to

Kelly was void for uncertainty because no beneficiary: was

named or terms of trust ‘stated (12a). .The District Court

had sustained this ground of relief (34a, 35a)@hd directed

partition.(27a). It was cleaMy_a_suffivicat-basis for relief

even if the deed by Mildred to Kelly was not subject to

attack.on the ground of fraud. = *

‘The law is clear and was stated by Chief Judge Bigg»

in his dissent. See 2'Seott Trusts § 112 and cases cited by

meer ° “ ; A / : ;

the Distriet Court (infra, pp. 26, 27). | |

4. In so far as the Court. of Appeals may have rested’

its decision on a finding (which, under the local Code, is

one of fact——see p. 3,. supra )-that Mildred had an intent to

defrayd Ethel May that went beyond the protection of

Milde own interest (to which Ethel May coneededly

had no claim), it violated, as we shall show’ hereafter,.the

plain command of the Rules of Civil Procedure as these

have been interpreted by this Court and almost all the other

' Courts of Appeals. A . :

The Rules of Procedure provide [No."52(a)],that, where

- 2 ease is, as here, tried without a jury. the ‘facets found

‘ ‘shall not be set aside unless clearly erroneous, and due |

regard. shail be given-to the opportunity of the trial court:

to ‘jndge of the eredibility of the witnesses’’.

As this Court said in United States v. Yellow Cab Co.,

328 U.S. 338, at 341: ;

‘‘Findings as to the design, motive and intent

with which men act depend peculiarly upon the credit

° ‘ ;

given to witnesses by those who see and. hear them.

Tf defendants” witnesses spoke the truth, the findinss .

are admittedly justified. The-.trial court-listened to

and observed the officers’ who had made the records

from which the Government would draw am inference

of guilt and concluded that they bear @ different

meaning from that for which the Government con-

‘tends. si (Emphasis: ours.) =,

To like effect ate-U nited. States v. Oreqon Medical

. Society, 343 U. S. 326, and C nited States Vv. duPont & Co.

351.U. S. 377

We submit : this ville was violated by<«the —

below in two respects: by: its own. finding with respect io

the intems,of Mildred ; by its rejection of the express finding

. of the trial court that Ethel, Mayand Kelly had participate “dl

in Cory’s fraud..

In almost all the other ‘Circuits Rule’ 52(a) has-been

interpreted to mean that the Court of Appeals has no power

to review the ev idence except to deterniine whether the

findings below were supported by substhntial evidence and

‘whether the inferences made by. the trial court had agiv

~ rationa! basis. die is often said, all Favorable inferences

must.be made in favor of the successful party.

> Thus, : in Daniel ¥. United States, 234 7. “Od 102 (5th

Cir.) ed. 352 U.S. 971, the Court said at p.. 106 that it

had the duty.'‘to. view the testimony and inferences there-

from in the light most: favorable -to the prevailing party

below’, °

In Buchanan v. w ilson, 234 -F. 2d 849, the. Sixth Cireuit

expressed the same view of the limits on ite power of

review. .

In Moths v. United States, iz9 F. 2d S24. (7th Cis), | the

Court said at page 827; .“ We have repeatedly held ‘that

we will not disturb the findings of a trial judge umless they

~ cannot be sustained upon any rational view of all the evi-

. ‘

dence including. all :easonable inferences. of which the testi-

“mony: is susceptible”.

The Eighth Circuit has also wisateasy adhered to ‘this.

view: United Stdtes v. Fotopulos, 180. F. 2d 631; Imperial

Assur. Co. of New York vy. Joseph Supornick & Son, Inc,

184 F. 2d 930; Higgins v. Kitterman, 257 F. 2d 861. In the

first of these cases the Court said at page 635: ‘' * * * any:

attempt on the part of the appellate court to ‘draw an

inference of fact constitutes a usurpation of the province

of the trial court’ ’’. : e

To like -effect are. Paramount Pest Control ‘Sew. V.

Brew er, 177 F..2d 564 (9th Cir.), Widney Vv \Dnited States,

178 F.,2d'880 (10th Cir.); and United States v. Ingalls, 114

F. 2d 839 (D.C. Cir.). See also. — States v. Abel, 258

F. MM 485, 494 (2d Cir.).

Only the Third Circuit appears to n a contrary

_view of the law. Even before the deciibn-at bar it had

held that*it could draw. its own inferences from the facts:*

Sears, Roebuck &: Co, v. Johnson, ¥19 F. here Perfect-

form Corporation v. Perfect Brassiere Co., 256 F. 2d 736.

Here that Court has gone even further. In rejecting

the trial court’s express finding that Kelly and, through

_ him, Ethel May were implicated*in Cory’s fraud, it acted

« gs though free to: make. its own appraisal of the evidence.

$i it said only that the-evidence was ‘‘entirely consistent”’

with an effort on.the part.of Ethel May and her lawyer to

secure redress from Cory. Of course they were seeking

redress fromy Cery in attempt ingeto obtain Kis own property,

but the trial court had a perfect right to find, as it did, that.

-in the process of doing this they deliberately assisted Cory

in defrauding Mildred of her property. . For the Court of |

‘Appeals completely ignores the significant fact, of the care-

ful omission from the deed of trust of any reference to

_ Ethel May or of any mention of a beneficiary. 9 .. | \

Kelly Bas, of course, aware of this omission. He was

present in the office of Bailey, the local lawyer who drew

it, and,.as Bailey testified: ‘‘Mr. Kelly read it and ap-

proved of it:(sic) on behalf of himself and his client for

(sic) whom he was representing’’ (27b). Kelly did not

ayrear at the trial (30a).. Since it had previously been

sere between Cory and Ethel May that the property

should be placed ‘in trust for her (44b), it was’ perfectly

obvious that by failing to mention her name in the deed a.

. fraud could be perpetrated on Mildred The inference that

“this was intended was a proper one for f&e Disfrict Court

t6 heen And. it did make it, saying (infra, pp. 23-24):

<* * * George T.,Kelly III- was Ethel May

Bishop’s attorney and agent ‘with full power of --

attorney from her to act fully in hex,behalf in; ob-

‘aining the deed, and so acted. C&sequently, al-

though he may not have personally male any: of the

false representations to Mildred T. Bishop, hg aided

in them and made them possible by keeping Mthel May

Bishop’s name- out of the original trust deed, and

by. handling the transajtion so that her name need

not be known until he Made his declaration of trust

ten days later. He fcted as Ethel, May Bishop's |

agent with full powek of attorney to act for her.

\ ' Therefore, his acts became her ,own acts. She is -

: here attempting to disavow these fraudulent acts of

‘-~ her. agent, but to keekgg!! benefits therefrom.’’

For the Court of Appeals to have re jected this Heung

and make a contrary one was aes of \ the function

of the District Court. - \

“\

Equally beyond its function was \the implication that

Mildred had an ‘‘intent’’ to defraud Ethel May. The only

evidence is. that Mildred sought to protect her own interest.

To that interest Ethel May had no claim whatever. As

noted by Chief Judge Biggs in his dissent, the eo re-

liance of the Court of Appeals was on two-isolated pits of

testimony by Mildred: that ‘‘a trust is something that

keeps things from people * * * ’’; ‘‘to protect our interest”.

_ But in the light of the entire testimony this does not compel

hs. .

erence of fraad on Mildred’s part.- Only if no other

rence was reasonable could the Court “of Appeals sub-

stitute its judgment for that of the court below. Under the ~

settled rule it was the trial court’s ‘function to draw infer-

ences from the whole testimony. It was, therefore, fully )

justified in concluding, as it necessarily did, that Mildred

was concerned only to protect het own half interest in the

property and had. no intent to defraud Ethel May of any —

dower right she might in Cory’s half. It should be

observed that, since the deed to and Mildred was on

record, nothing that happened afterw ards could affect any

dower right to which Ethel ee might be entifled i in Cory's

half.

The’ views of the: court below, therefore, conflict with

those expressed by this Court and almost all the other

- Cireuits. That conflict should be resolved by this Court in

the interest of uniformity in the administration of justice

in, the federal courts.

For the foregoing reasons, it i

that a writ issue to review the decision below.

Respectfully. s fnitted,

Osmonp K. FRAENKEL,

Harry Drets, (

rs Counsel.

respectfully er

Counsel for Petitioner: —

Wey

APPENDIX

"Opinion of District Court

~The complaint bret was ‘filed on J une 25, 1956, Harry .

Dreis, Esquire, as attorney for. plaintiff. Named in the

complaint. are the followi ing defendants : |

> (a) Corey ‘Bishop, who filed an appearance and

- answer, dated September 11, 1956, which states that

‘he {¢Waives all further. malta and as and for his

answeét to the complaint alleges as follows: That

he ‘‘Admits the allegations contained in the com-

plaint, numbered 1, 2, 13 and 17,”’ and states that

he ‘‘Neither admits nor denies'th¢ allegatiens con-

|| tained in the other allegations. of the complaint. +

(b) George =: Kelly IH, who was” personally

served. in range County, Florida, and who has not «.°

appeared answ ered i in the pase. se

Ethel May Bishop, who appeared and answered, and

who was represented by her attorney Croxton Wil-—

liams, Esquire, and participated in: the trial of the

case.

(d) Corey Bishop died on September 17, 1956,

and his estate was substituted as a party defendant

with thé aforesaid Ethel May Bishop as administra-

trix. . its

The subject matter of ‘this litigation is real pitied

. located in the Virgin Islands.* rs

The facts of the ease are as follows: Priof to 1938, the

defendants, Ethel May Pressey Below and Corey Bishop,

were husband and wife in thé State’ of New York, and: the

correct surname of both was ‘‘Below.’’ Qn or about April,

1938, the hushand, Below, deserted his wife and daughter.

and came to the Virgin Islands with the plaintiff whose |

— ~ a

ayn”

Seto wl 18 oak

: ; |

_name was Mildred T. Bishop. He assumed the name of

Corey Bishop, and he and the plaintiff lived. together ‘in

the Virgin Islands as husband and wife wnder the name: of

Mr. and Mrs. Corey Bishop from April, 1938 to December,

1954. .His’ wife, Ethel. May Below (who nov: has also as-

‘sumed the name of Ethel May Bishop) made unsuceessful

éfforts to find him and ¢onsidering him dead, married as gain,

_ was later divorced and.later married again. 4

During this per lod, from 1938 to 1954, Mildred

Bishop : and Corey Bishop, in St. Thomas, worked Loamtuer,

and frénr their joint efforts, acquired together, as tenants

in common, certain lands on the Island of St. John, some

of which: they subsequently sold, ‘but of which on April 16,

1955, they still owned approximately dd) acres, On that

date, they owned, atid held title to, the said 55 acres jointly’

as tenants in common. Some time prior to April 16, 1955,

the wife, Ethel May Bishop, discovered her hushand’s

whereabouts, and a few days before April 16, 1955, her

attorney, the defendant; George T. Kelly T,!came to the

‘Virgin Islands and contacted the defendant, Corey Bishop.

Thereupon, on April 16, 1955, Carey Bishop came to Mil-

' dred T. Bishop with the trust deed in question herein

(Corey Bishop and Mildred T. Bishop were then separated)

and tmduced her to sign the same, which instrument names ,

George T. Kelly III as trustee, but contains. no cestui que

‘trust or beneficiary... The only evidence in the case of what

inducement was made to the plaintiff to get her to sign is

the testimony of the plaintiff, who states that Corey ea

told her that his wife had found him and that the onl way

to keep. his and her names from being dragged through

the mud and save their property . was to transfer it to. a

’ trustee ‘to. hold for,them; that at .the time she,signed the

trust deed of April 16, 1955, she had no knowledge that

‘the George T. _Kelly IIT, named therein, was his wife's

lawyer, but was. told that he was a friend whe would hold

the property for them. This is not denied by George (4

Kelly III, defendatt herein, who neither appeared, nor

answered, nor - testified herein. It is also not denied by

4 a

Corey Bishop in his answer. It is also not deated by Ethel

May Bishop in her testimony. &.

- The following instruments have plaved a part in Ps

arguments inthis case, so it would be well to enumerate

them in. order:

l. Exhibit Number 5 5, trust deed, dated April 16, 1955,

‘in which Corey Bishop and Mildred T. Bishop transferred

the fand in question, to George T. Kelly TT'as trustee.: This

trust deéd names no cestul que trust or beneficiary, and no

terms or conditions -of the trust. . .

9, (Not in evidence.) A certain declaration of trust,

made-by George T. Kelly TIT, and dated April 26, 1959, in.

which he declares that he is holding’ the said property in’

trust for Ethel May Bishop for her lifetime, with remainder .

to her. daughter, Rosemary ‘Fallonstein, This was not

signed by Mildred T. Bishop. It was the sole act of George

_. Kelly IIT, signed and proclaimed only by George +

Kelly III: ‘Plaintiff alleges this instrument in her com-

‘plaint, but did not put: the,same.in evidence. The defend-

* ants’ attorney was’asked if he wished to put it in evidence

and penmes to.do so. .

3. Exhibit L dated April 29, 1955, is a settlement

agreement -between defendants Ethel May Bishop and

Corey Bishop, made in New York State, the pertinent part’

of which is: quoted -as follows: ‘‘That the said husband, in, °

addition to the lands and stocks heretofore conv eyed to the

said George T. Kelly III, Trustees, does hereby’ sell, as--

sign, convey, set over, transfer, deed, dev ise and demise

unto the said wife one- half (14) of. all property, real, prr-

sonal or mixed, tangible or intangible, ‘of whatsoever kind

or nature and wheresoever located, of which he is now pos-

sessed, to be hers absolutely. Stock held by the said hus-

band in Antilles Enterprises, Inc., shall ‘be. excluded from

' this agreement. It is the intention of the parties hereto by

virtue of. this paragraph of this agreement, that all. the

w aiiad possessions of the said husband, as of the day a

date of this agreement, shall be equally divided between *

these parties, each to own one-half (14) as his or her sole

-- or separate property and each of the said parties forever

releases and discharges the other from any further or ot!

claim or demand against all property of the other.’’

This settlement agreement provides that it is ‘in eon. <

sideration of this agreement.’’ As stated in the paragraph

above that, the wife, Ethel May Bishop, releases any dower

‘rights which she may have had in property sold by Corey

Bishop previously, and provides that ‘‘It is the essence of

this agreement that the parties hereto are about to effect

a reconciliation and enter into a resumption of normal

marital relationships.)

4. Exhibit Number 6, Mined July 27, 1955. This j is an in-

Pe be ele by Corey Bishop, Ethel] May Pressey Below

(sometimes known jis Ethel May Bishép), Rosemary Fal-

lonstein (sometimes known as Rosemary Fallon), and Leo

, Fallonstein, (sometimes known as Leo Fallon), her hus-

band, and is a very interesting dacument. ‘It purports to:

now revoke the trust deed of Aprt 16, 1955, and Corey

Bishop as the party of the first part’ noW-eonveys the prop-

erty in question in this litigation to the Ethel May Bishep

named above as one of the parties of the second part. It

does not.mention Mildred T. Bishop at all, but states that

whereas ‘‘Corey Bishop executed anid delivered a deed to

- George T. Kelly III, Trustee,’? and whereas ‘‘The said

deed and assignment were executed and delivered to said

grantee as trustee and not otherwise, and where the par-

ties Named above ‘‘now. desire’ to revoke,. terminate and

cancel the said trust, and to convey, assign' and transfer .. -

all of the said properties. involved in the said trust unto

the said Ethel May Bishop, in fee simple and absolutely.

free of the said trust and free of all claims, right, title and °

interests of-all of the other parties mentioned iit the said’

trust,’’ and that ‘‘Corey Bishop, now in consideration of

love and affection and $10 in hand paid herein, grants, bar- *

gains, sells and conveys the aittincaey: to Ethel May Bishop.”

It further states ‘‘That the said George T. Kelly THI, who

—

was formerly the alleged (italic mine) trustee of the afore--

said trust was not made a ‘party to this instrument benduse

he claimed no interest, and had no interest in the properties

involved.’’ Leo and Rosemary Fallonstein were also desig-

nated as parties of the second: part, but signed as wit-

nesses. Rosemary Fallonstein is. the daughter of Ethel

May Bishop, who was designated by the George T. Kelly

III in his declaration of trust as the remainderman after

her mother, Ethel May Bighop, but this instrument pur-

ports to cancel that declaration of trust, and. conveys the

fee to Ethel May Bishop. .

It must be. noted that in all of these instruments Mildred

T. Bishop was a party té-none of them, except the first trust

deed to George T. Kelly III, and that the declaration of

trust followed ten-days later, the settlement agreement

three days'later, and the cancellation of trust three months

A ago ‘

Plaintiff has asked for cancellation of all of these in-

struments. We need. here to give attention only to the

_ trust deed of April 16, 1955,. for if that instrument is void,

as far as Mildred T. Bishop is concerned, all subsequent

instruments are also invalid as far as Mildred T. Bishop is

rs concerned, since they stem from the original trust deed of

April 16/1955.

Plaintiff has argued that the trust pr of April 16,

1955 should be cancelled as to Mildred T. Bishop for two

- -reasons.. First, that her execution of the same was ob-

ained by Corey Bishop by fraud and misrepresentation.

Second, that the said trust deed is invalid, since it con:

tained ‘no cestui que trust or beneficiary named by: the

~ settlers. .

As to the first, we have it in evidenge the testimony of the —

. plaintiff,"and the Court finds upon that testimony that the

reason she was induced to convey her interest in the prop- —

erty to George T. Kelly Lil as trustee by the instrument in’

which no beneficiary or cestui que trust was named, ‘was

because of the fraudulent, or false representations madv

to her, Further evidence supporting her testimony shows

that, at the time she was induced to ‘sien this instrument,

¢she and Core¥ Bishop were estranged. She was also try-

ing to get Corey Bishop to make over a settlement to her

as well as was the other wife. It is thereforp net reason:

able that while she was trying to get him to make over a

settlement to her that’ she would give up the property,

‘which she already had, forghim to give to the other. Fur-

_ thermore, Corey Bishop’s actions throughout show that

‘he never intended to be fair with either of these two women.

and that he betrayed either of them where it suited his

purppses. ‘And when he died on September 17, 1956; he

left both of them stranded. .

Further evidence of the truth of plaintiff’s claim js the,

fact that no beneficiary was named in the instrument which

jgned. . Defendant Ethel. May Bishop’s attorney, °

that the reason for that omission was: that Ethel

v Below, or. Bishop, had not decided what name she

would use.. This is weak, howtvér, since the cestui que

trust could easily have been described sufficiently to in-

dentify her. Furthermore, when her: attorney made ‘the

‘declaration of trust soon thereafter, “she was named, and

she was named in every other instrument not signed by the .

plaintiff: It is therefore significant-,that the only ins}ru-

ment in which Ethel May Bishop, or Ethel May Below, is

not’mentioned by name, is the one plaintiff signed. In all

of the others, she is designated as Ethel May, Below, or’

Ethel May Bishop, indiseriminatg¢ly, or both. . In addition,

in his answer of September 11th, Corey Bishop does not

deny this allegation in the complaint of his misrepresenta-

tion and fraud of the plaintiff herein.

Nefendants’ attorney argues that this defendant was a

bona fide’ purchaser for value in that she waived her dower

rights in property previously sold by Corey P ‘shop in-con-

sideration of this trust deed, and that therei any Feiss

on the part of Corey Bishop cannot affect this deed to, Ethel

*May Bishop. This is not borne out by the evidence. Ex- “~

‘hibit’ K, above, which. is a settlément agreement between

Corey Bishop and’ Ethel May Bishop, expresses between -

them the precise consideration for that waiver of dower

to be the transfer by the said Corey Bishop of one-half (14)

interest in all of his property. It, however, states that the

- above consideration was’ ‘‘in addition’’ to this transfer.

But Ethel May Bishop - ‘knew at the time and ‘had netice

that one-half (14) of this property in question belonged to

Mildred T. Bishop, cand that no part of the consideration _

Tele -een herself and her-husband went to the said: Mildred”

T. Bishop. Her agent and attorney, George T. Kelly III,

_ well knew that-no consideration had been paid to Mildred

7. Bishop. He was in St. Thomas at the time this trust

_deéd was obtained from Mildred T. Bishop, and from its

. language it seems to have been drawn by an attorney, and

George T.'Kelly III was the only attorney involved. This

Court has noted the difference in the tone of this trust deed

_ from the. tone of Exhibit 6, which latter instrument was

probably not drawn by any attorney. George T. Kelly HI

. was here to see to it that- Corey Bishop obtained this deed

from Mildred T. Bishop. He and Corey Bishop went to”

great lengths not to make a simple quit claim deed to —

Ethe] May Bishop, for Mildred T. Bishop would then

have + en that it was*to go to Ethel May Bishop, and they

were careful not to put Ethel May Bishop’s name into a

deed for Mildred T. Bishop to’ see. George -T. Kelly III

was Ethel May Bishop’s attorney and agent with full

power of attorney from her to-act fully in her behalf in ob-

taining the deed, and so “acted. Consequently, although he

may not have personally made any of the false representa-

‘tions to.Mildred T. Bishop, he aided in them and made

them possible by ‘keeping Ethel May Bishop’s name out

of the original trust deed, and by handling the transaction.

so that her riame need not, be known until he made his

declaration of trust ten days later. - acted as Ethel May

, 3 24

Bishop's agent with full power of attorney to act for her.

Therefore, his acts heeame her own acts. She is here

attempting to disavow these fraudulent acts of her agents,

but to keep all benefits therefrom. . .

“Furthermore, Ethel May Bishop’s testimony shows

that there were several conferences jn Floridacbetween her

self, Corey Bishop and her attorney, George, T. Kelly ITI,

concerning this matter amd what they should do about it.

Therefore, she also had actual knowledge of what was

being considered and done in the matter by her agent and

Corey Bishop, and when he eame to St. Thomas, she gave

George T. Kelly III full authority to act for her, and he

came to St. Thomas for the purpose of obtaining this

property. .

It seems to have been discussed in-Miami, Florida, and.

_ decided that, instead of drawing a simple quit claim deed

from Corey and Mildred T. Bishop to Ethel Mav Bishop.

to which Mildred T. Bishop would have. objected, that it

be handled-in this round about manner, to wit: To first

obtain Mildred T. Bishop's signature to the instrument

of April 16, 19535, by some means without Abe name of

Ethel Way Bishop appearing thereon, which would have

beengfoticed by Mildred T. Bishop, but to put in‘a trustee,

the@ after the trustee obtained it, the property could then .

be transterted to Ethel May Bishop. Tt therefore seems |

almost*impossible to.see how Ethel May Bishop's attorney

and agent could come to St. Thomas and participate in this

‘trust deed with no beneficiary, then later make a deelara-

tion of trust, naming Ethel May Bishop, without haviny

full kuowledge of what was being done, to say the least.

even if it were not the plan of all three as a result of the

Florida conferéhee. It seems to this Court that this man-

ner of handling this transaction, instead of obtaining a

simple and straightforward quit claim deed from Corey

Bishop and Mildred T. Bishop to’Ethel May Bishop, after

“the ¢onferences in Florida concerning the matter on.the

part of ail three of them, and George T. Kelly TI, her

agent and attormey’ s subsequent presence in the Virgin

Islands, sounds of fraud on the part of all concerned. It

certainly seems to have been a round about plan to abtain

Mildred T: Bishop's fignature without disclosing the name

of Ethel May Bishop, and thereby obtaining Mildred .T.

Bishop's half, since she was not a le ‘gal wife. :

Next, with mespect to plaintiff's second argument, to

wit : That the trust deed of April 16, 1955, was.of no foree |

and effect in that it named no conditions of the trust and

named no cestui que-trast:this Court, ig in agreement:

Counsel for the defendant argues (without any cited

authority) ‘that “all the requirements of a trust were sup-

plied and are present in the declaration of trust made by

George T: Kelly II], and that since the trustee has stated

all of this in his declaration of ‘trust, that this fulfills the

requirements in behalf of the settlers, and that it makes

no difference that the settlers did not do so in the instru-

‘ment of April 16, 1955. Also, that these-conditions need

not be put into the deed of trust; that it is sufficient that

they were pat in the declaration of trust by the trustee.

- First. it must be remembered that the declaration,of trust,

made by the trustee, is not in evidence. However, if we .

consider the declaration of. trust made bythe trustpe as

being in evidence and considering the cireumstances of

this ease outlined above, deféndant’s-argument is tanta-

mount to saying that the settlers: need not express either

the conditions of the trust or name the cestui que trust or °

heneficiaries, -but that such diseretion may be left to a

tristee, Tn this connection, also, it must be, noted that the

trustee declared a trust in favor of Ethel May Bishop only: °

for life: with a remainder to Rosemar® Fallonstein, while

in the coenment of July 25th: (Exhibit 6) Corey Bishop. Zs

one of ‘the settlers, canceled that and transferred if to

Ethel May Bishop in fee, whereas, Mildred T. Bishop the

other one of the settlers, testified that 4t was intended -

none of, these, but for herself and Corey Bishop. Also, i

must he noted that the-trust deed ‘of April 16, 1955, iB

hibit 5) did not express ahy of the conditions, of a trust,

“a

or give to George T. Kelly ITI the discretion of namjng. the

beneficiaries thereunder. Nor did it give to Corey Bishor

and Ethel May Bishop the power to cancel it and take thie

fee as they attempted to do in the instrument. of July 25th

(Exhibit 6), and that neither of the settlers signed: thi

declaration of trust as made by George T. Kelly TIT. and

neither of them agreed with his dispdsition of same, to wit:

A life interest to Ethel May Bishop, with a remainder to

Rosemary Fallonstein. in the instant case, no conditions

whatever were set up by the settlers at the time of exeen-

tion of the deed of trust, and no beneficiary named. Mil.

dred T. Bishop, one of the settlers, never at anytime maile |

or signed any other perio re,

It seems clear to this Court that to create a valid trust.

the beneficiaries of the same must he named by the settlers

of the trust. This was not done by the settlers in the in.

. strument of April 16, 1955, the only instrument executed

~ by them.

In Levy v. Levy, 33 N. Y. ‘%, 107, the principle is ¢

stated. There the court said,.‘If there be a single po

of the common law established by an unbroken line

sion, it is that\a trust without a certain benef; fary who |

can claim \its enforcement is void, whether gc

wise-or unwise.’’ \ Seé also U. S. v. Oregon, 1

porter, 863. And ix Newhall, et al: v. MeGil

Reporter 764, the court. held, ‘‘A valid trust must haye

subject matter that is certain, and beneficiarieX specifically

_designated.’’ Thompsan on Wills: 2d. Ed., see 419, Page 36.

_ This failure to state. the purpose of the trust and to

ndame the beneficiaries hy the setders in the instrument of

April 16, 1955, cannot -be cured shy the trustee later making

6 Fed. Re-

212 Pacific

a declaration of trust hintself’ aud himself therein namic: |

beneficiaries. | Fractically all the authorities hold that the

trustee does not. have that power or diseretion to do so.

The beneficiaries must be named by the settlers and not the

trustee otherwise uncertainty exists in the instrument eon —

veying the property to the trustee. This rule of-uneertiiiity

is clearly stated in 54 Am, Jur. 136 as follows: ©‘ Uiicer-

tainty eXIStS within, the rule and prevents the creation of a

valid trust’ where the trustee can seleet or change bene-

ficiaries at his absolute diseretion.”’| 54 Am. Jur. 136, Wilee

ey, Van Anden, 248 HL. 858; Nichols v. Allen/ 130 Maas (sic)

211: Kramer v.-Sommers, 95 SW. 2d 466; Re Long, 100

Wash. 196. See also Re Ralston, 96 A. L. Ro Page 954,

which states the same rule as follows: ‘*A trust is not

impressed ypon the testator’s property by provisions in the

‘will stating that the testator gives and bequeaths ‘in trust’

to a eertain person, who is named executor, his entire

“property, real and personal, and that he gives such person

absolute power to-edispose of thé estate as he may. see fit,

there being a failure of the trust or the persous to benefit

- therebp.”’

This Court is therefore of the opinion that Geor ge T.

_KellvQTIT, trustee, had ne power or authority to designate. -

the hepfefietaries thereunder, but that the trust attempted to

be“ereated-on April 16, 1955, fatled for the reason that the

settlers thereof designated! no conditions and no hene-

-fielaries and that the deed of April 16, 1955, ds void.

This conveyance by Mildred T, Bishop was. intended to

bea trustjof some kind and not an absolute deed. This is

conceded by both parties. to this ea®, and confirmed by the ,

action of “ean . 2 ‘Kelly, Ill, trustee, by his purported

-declgFation of April 26; 195%.

| Thefefore, this Court ix of the opinion that the saint iff

hereiny Mildred T. Bishop, did not set up a trust of her

one-half (1) interest in the. property -involved herein in

favor of Ethel May Bishop or Rosemary Fallonstein or

anyone else; that the deed of April t6, 1955, is invalid and

does not convey her half interest in the same to George T.,

Kelly, IIT as trustee or otherwise, or to anyone else; and

therefore none of the subsequent instruments in any manner -

conveyed her one-half (1.).interest, to which said one-half

(1.,) interest she is still possessed and entitled.

“Defendant Wa allowed to amend her complaigs after

tria! lo Include, the defense of laches, upon her counsel’s

9 28

t r - rs

argument that he wanted that defense only for the purpose

of showing the length of time having elapsed (sic) #& ween

the time plaintiff had notice of the deélaration of trust and

the time of filing suit as an argunfest that plaintiff accepted

and resigned herself to the transfer? However, the, rule

supported by the weight of authority. is that delay in assert-

ing a right does not of itself constitute laches, 30 (J. S: |

531, Sec. 116. This delay will not bar relief when it has .

not worked i injury, prejudice or disadv antage to defendant

or gathers adversély interested, ibid. 534.. Time is not the

only element of laches. As long as the parties are in-the

same condition, it matters little whether one-presses a right

‘promptly or slowly, 30 C: J. S. 536. “

In view of the above, this Court is of the opinion that

plaintiff is entitled to a decree of the followi ing:

. 1. That ‘the deed of April 16, 1955, signed by Corey

_! .Bishop‘and Mildred T. Bishop is null and void

far as it purports to convey the one- half (14) inter RS

of Mildred T. Bishop.in the property involved.

2. That none of the other instruments above had the

‘" effect of conveying her said one (1) interest in

‘the property involveds ae

3. That: Mildred T. Bishop is apsvpcEp ‘ind DECREED to

be the owner of an undivided one-half (14) interest

in the “property involved in this litigation.

Order may be drawn in accordance with this opinion, ;

Ix Testimony W HEREOF, | have hereunto subsertbed mv

name and caused the Seal of the. Court to be affixed this

28th day of June, 1957. —

“dies Herman E. Moose.

: aa “Herman. E. Moore

| District Juda

. ATTEST:

/s/ Grorce A. Mena

_ Georce A. MENa

Clerk of the Court:

Opinion of Court of Appeals | =]

(Filed May 1,-1958)

Before Maris, Macruper and StaLey, Circut Judges.

. a : . E , ;

By Maris, @ireuit Judge.

The defendant, Ethel May Bishop, bse of Cory .~

\, Bishop and the administratrix ¢.t.a. of his esfate, appeals

en the judgment of the Distrief t‘ourt of the Virgin.

Islands. cancelling a deed executed by Cory Bishop and the — sy ‘

plairtiff, Mitdred T. Bishop, which conveyed to George T.

Kelly. I, Trustee, their interests in 55 aeres of real prop-

erty located on the island of St. John and known as Cath-

-erineberg or Hammerfarm. To understand the nature of

the questions which “the appeal presents an account of ‘the

relutions between the parties and the circumstances ‘under Q

which th@¢controversy aroge is necessary. From the un-

contradicted evidence and the admissions in. the pleadings -

the following facts appear: ae ee. A ;

~ , Cornelius, rage Below, who later called himself

‘Cory Bishop, in 1925 married Ethel May Pressey, some-

times. later me us Ethel -May Bishop. A daughter . Rose-

mary, was born of the marriage. Cory deserted his wike and

child in 19% 39.° "The latter were in’ Florida at the time and it

appears that Cory sent them a letter, from New York saying .

that he had failed them, that hé was sorry, and enclosing a

receipt for paid-up insuranee, Thereafter Ethel May trfed

UnsUcce: » sfully to locate him al vd later was. told that'he was

dead. \

The < plaintiff, Mildred T. oe met Cory in. New. ow \

York City in 198°, She knew that he was a married man.

* Later he told her that his wife had left for Flerida and , :

that they were divorced, » Cory. then, assumed the name

Cory Bishop’ . and Mile lred testified that they were mar- °.

ried by a justice Af the peace in New York State in Oct@ber, 3»,

A839. On July 1, 19s 9, they velba in’ “Sigs somas : and:

”

opened:a joint checking account under the names of Cory °

Bishop and Mildred T. Bishop in the Virgin Islands Na-

tional Bank. Into their joint account were deposited their

earnings, together with $1200 which Mildred received each

_ year from her divorced husband, Wallace Bishop. On May

_ 18, 1945, they purchased the property on the island of St.

John known as Catherineberg or Hammerfarm. Four

parcels of this property were sold by them during the en-

suing years and fbout 55 acres were r tained. They im-

proved this Jand, purchased equipment and: farmed it.

Mii@red took care of. the gathering and marketing of the

_ farm produce and the income therefrom was deposited into

their joint account.

In 1953 Cory organized a corporation, ' Antilles Enter-

prises, Inc., and Mildred during this period worked in th¢

office with him at 8'Crysfal Gade in St. Thomas. 800 to 90)

acres of land belonging to them were conveyed to the cor-

poration by deeds in which Milijeed waived any dower

rights. ‘In 1954 and 1955 it appears that negotiations were

in progress from the results of which Cory and. his associ-.

ates in the corporation hoped to realize very large sumy

of money.

In the fall of 1954 Cory and Mildred had personal

difficulties and became estranged. They separated on De- -

cember 20, 1954. Negotiations were then started by their

counsel to effect an agreement for separation and support

‘for. Mildred. During the months of January and‘February.

1955, Cory pad , Mildred $300 a month-for her support. No

‘formal ‘agreement was:arrived at, however.

In the meantime Ethel May had. remarried in 1949, had --

“ene divorced three months later, and in 1952 had remarried

gain. After Cory’s father died, his family in 1954 started

\ a search for Cory and it was discovered that Me was alive -

~ and residing in the Virgin Islands. Ethel Way learned of

- this and gave the information to her att ney, GeorgNf.

-. Kelly HI, Esq., of Orlando, ‘Florida. Mr. Kelly, u¥der |

date of March 2, 1955, wrote to William W. Bailey, Esq.. an

)

Pie 2 , ; 4s . : |

attorney in St. Thomas, inquir ing about Cornelius ¢ ‘omstock .

Below. Mr. Bailey answered,. under date of March ‘11th,

saying that he was, unable to locate Cornelius, that the

building at 8 Crystal Gude, the address given in Mr. Kelly’s

letter at ‘which Cornelius was thought to reside, was 0c-

eupied by a client of Mr: Bailey’s*law firm, ‘and he ayked

for more helpful information. .On March 14th Mr. Kelly

advised Mr. Bailey that Cornelius-was ‘using the name Cory

Bishop, to which Mr. Bailey -replied on March 17th stating \ :

‘in part: *

‘ “Mr. Corey Bishop has ieee known to this firm

> for many years and is presently. ‘a valued client of

this office. As h miatter’of fact, the day that F was

investigating thé-whereabouts of Cornélius C omstock

Below, prior to my"lefter ‘of March 11th, had ocea-

sion to talk with Mr. C orey Bishop who has’ an office “

and lives at No. 8 Crystal Gade and asked him if he

knew a Cornelius Comstock Below,’ w ‘hich®he denied.

Yesterday, Mre@orey Bishop left for the States on

a ten-day busjacss trip, but.it may be that my “inno-

cent conversation with him, which ‘I have. related

above, may cause, him to contact Mrs. June}. Relow, e

and we would appr eciate being advised of this fact.”

Cory did contact Ethel May in’ Florida on Aprit 8,

1955. She testified that at this time he professed his love | .

for her, asked for an opportunity to make up for the past’

sixteen ®ears, and hoped that she would come to lve with

him. Shortly thereafter she diyoreed the man whom she .

had married in 1952. Cory sald-he would cite her the 55.

acres of land he- owned w ‘ith Mild ed in the Virgin Islands, * {

which Mildred would convey with, i‘ . that he held stock

in Antilies Enterprises on witie , expected to realize

half a: million dollars. of which a WoukLive Ethel May

—_—,_.

' It appears from the eda that Ethel May’s nickname was

“June”. a

wehet “nd that he had settled $5,000 on Mildred who had

left St. Thomas for the States. He explained that he and -

‘\ Mildred had conveyed land prior to March 1, 1955 in the

Bers Islands and that Ethel May’s waiver of her dower

rights i in that land was required” and he asked her to sign

certatn documents which he had brought with him, using the

name ‘‘Kthel May Bishop’’. She did not sign any waivers

- at that time, however, but requested hef attorney, Mr. Kelly,

to go to the ‘Virgin Islands to investigate the. situation. Or

‘April 14th, when, Mr. Kelly was leaving Orlando for the

Virgin Ilan, Bil May executed a power of attorney to

‘him in which gave iim full power to act on her behalf, to

transact every kind of business for her, to release any claim

of dower or other claims of aity.kind she might have, to

enter into agreements of any kind With her husband, Cory |

Bishop, and she granted Mr. Kelly full power and ‘authority -°

~.. to ‘‘hold stock, real property or other propertyin_ his own

name’’, -To this document she affixed the signatures “Eth: ].

May Below”’ and ‘‘Ethel May Bishop’’. |

Mr. Kelly, Cory and Mr. Bailey, Cory’s sitottiy, had

- arranged to meet in St. Thomas on April 15th and they con-.

ferred on that day and on the 16th. . In the course of these

’ conferences- Mr. Bailey prepared the deed which Mildred .

now seeks to have set aside as invalid. That deed purported

to convey the. remaining 55 acres of the property known.as

Catherineberg or Hammerfarm, which Cory and Mildred

owned in'St. John, te Mr. Kelly as Trustee but did iiot de-«

.’ clare the be: of trust or name the beneficiaries of the

trust. Cory took this deed to Mildred in order to obtain her

signature to it. As to whiat took place at = be- =

tween Cory and herself Mildred testified: eo hae ae

° _‘*He came to my apartment on the day of April

- 16th ina very terrible’state. He was erying ; he was’

2 Under ‘Seuetone 15, Chapter 15, Title II, of, .the Code. of St.

Thomas and St. John, then in force, an‘instrument executed without .

the signature of the spouse conveyed only the interest of the’ one’

executing jt and the grantee took subject to the dower. or curtesy

_ tight we one who did not join in \ ¢xeputing the i instrument.

”

terrible careless: he hit his head against the wall; he.

told me that I-hdd apparently never beert martied to —

him. . His wite had turned up. He was going to be

in a terrible difficulty. . He-referred to the word |

’ ‘blackmail’. He told me the only way to help him

and to protect. my interest would be for me to plac¢

it in trust—froni what I understand, a trust is some-

thing that keeps thing's from’ people. I had no. reason

at that time to distrust Corey. He was in distress,

and I felt that it was a terrible. thing to have two’

wives, and I trusted him. *-* **

** #

* * * he said that it was te only possible way to

_ place’ this in trust so that his wife-couldn’t take my

part-of it. *.*-* ‘ ; eo

* * * Corey came to me in a very, very upset. state.

“He cried. His eyes were already red. He was most

hysterical and he told me that he had—you know, not

teld me. the truth; that’ the ‘defendant’ had not -di-

voreed him, and that apparently I was never his wife.

He said—you know—most awful things could be done

to him, and so forth. Naturally, my interest was to

help Corey. It always has been. He explained to me

it was a trust in which Catherineberg, Ke farm was

put. My interest, which I always had with him, my

share of the interest which we had together in

Catherineberg would then be protected, and that the

defendant .could not secure my property, and that

was a trust that sounded logical to me. I saw a man

whom I never met or heard the name of before/ Mr:

George Kelly, listed as: Trustee, I’m not an attorney.

I took it for granted: I always trusted Coréy= I°,

saw ye reason not to—-that this awful thing had be-

. fallen him. The’ first thing that he would protect

_ me, and, for my aes I would sign it. * * *°

* * @. !

° ‘

es 34

** * Tt just merely says that Mr: Kelly—it seems to:

me, would hold in tewat this farm: for Corey and my-

self. * * *

T hadn't -any pram who Mr. Kelly was. I found

out the next day that Mr. Kelly was the defendant's

attorney at the time—

He had already told me that this was a depend.

able person, and in which we would put Catherine-

berg in trust, so that my share of it could be pro-

<® tected for me and would be out of reach of the de-—

fendant ‘to touch. '

om our farm for us—for both of us—that he i ay

| putting in trust.

0 .

***T don’t say that he used exactly those words

. —to- protect our interest. ait

-@e28

_ Corey was about to have a very large business

organization and it ign’t considered proper to have -

e time, and all of this was to

d make it, possible for him to remain—

retain hi¢ position and to pay the defendant. He

said she was demanding: money.’’ |

| At the ane which she thus described Mildred signed

the deed and it was duly acknowledged, delivered and re

' eorded. Cory left the Virgin Islands shor{ly thereafter and

. never returned. Several letters from Mildred to Cory and

one from Cory to Mildred subsequent to April 16th, which

. Were offered in evidence, indicate that their —_— were

| ; Renal at the time he departed.

i ‘On April 26th Kelly executed a declaration of trust

formally declaring that he held the property in St. John -

and 10 shares of stock of Antilles Enterprises: which Cory

had also assigned to him,.in trust for Ethel May for life

with remainder to her daughter, Rosemary.

On April 29th a reconciliation ‘agreement was entered

into between Cory,and Ethel May by which he conveyed to

her a one-half interest in all his property with the excep-

tion of the steek he held in Antille& Enterprises, this con-

veyance to be in addition to the lanY in St. Jolm which he

had prev iously conveyed, and the'10 Nyares of Antilles En-

terprises Which he had previfusly assigyed, to.Mr. Kelly as

‘trustee. Ethel May thereby agreed to release all her dower

rights in the property of her husband. On the same date .

‘Ethel May Bishop executed a release of her dower rights in

any land situated in’the Virgin Islands or elsewhere which

had been conveyed by her hushand, either individually or

jointly, prior to March 1, 1955. This release was subée-

quently recorded in the Virgin Islands.

In July, 1955, Cory, Ethel May, their daughter, Rose-

“many Fallonsiein, and her husband, Leo-Fallonstein, joined

in executing an instrument entitled ‘Revocation of Trust,

Conveyance and Assignment to Ethel May Bishop”’, which.

terminated the trust. which Mr. Kelly had deelared in favor

- of Ethel May for Jife with femainder to her daughter, dis- .

charged the trustee and conveyed _the entire title to the trust

property to Ethel May in fee simple, free of said trust...

Ethel May arrived: in the Virgin Islands sometime in

1956, claimed the land in St. Jehn, and oceupied it. On June

25, 1956, Mildred instituted the present suit against Cory,

Mr. Kelly and Ethel May.alleging, inter alia, that Cory on

April 16, 1955 told her he was in great diffieulty and repre-

« sented that she Was in great danger of losing her interest

' in the property and that he intended to protect her and save

himself from great financial harm by puttity the property in

trust for her, afid that she had the utmost trust cand condi-

dence in him and was thereby ifduced to sign the deed in

~ which Mr. Kelly was designated to hold the property as.

trustee. She claimed that the representations-made by Cory

“were false and were made with intent,te defraud her. She

accordingly asked the districf\court to cancel the deed of

April 16, 1955, as_well as two other instruments, the decla-

‘ration of trust made by Mr. Kelly on April 26, 1955, and

the revocation of the trust executed in July,-1955. In an

amended complaint she also sought pe: tition -of the prop

erty.

Ethel: May «filed~ an answer alleging that the wets

-- failed-to state a cause of action against her. Cory filed an

. answer’on September 13, 1956 admitting that Mildred had

acquired the land in question with him and that he had‘.

terminated the‘trust. ‘All other allegations he neither ad- -

mitted nor denied. Cory died by his own hand four days

later and Ethel May, as the administratrix c.t.a. of his

estate, was substituted as party defendant. The Virgin

Islands National Bank, holder of a mortgage on the prop-

erty here involved, was added as a party defendant.

‘Following the trial of the case at which the foregoing

facts appeared the district court found that Cory, Mr. Kelly

and Ethel May were al guilty of a fraud upon Mildred

‘in inducing her to sign the deed-in question. A judgment

_ was entered declaring, inter alia, the deed of April 16, 1955

null and void insofar as it purpgtted, to convey Mildred’s

- undiyided one-half interest.in the land in question and de-

* ereeing that Mildred was. éntitled to partition of the prop-

erty. The court further declared the Revocation of Trust.’

Conveyance and Assignment to Ethel May Bishop to be

null axd void insofar as it purported to convey to her Mil-

dred’s one-half interest in the land. 152 F. Supp. 4. This

* appeal by Ethel May, indiv idually, and as Administratrix |

e.t.a. of the Estate of Cory Bishop, followed. —

In considering this appeal we aré met at the outset with

the um whether under the facts of this case Mildred

3 On March 28, 1957 the district court granted Mildred leave to

amend her complaint and add thereto a claim to her interest in certain

property purchased by Cory and herself to equip the farm. No relief:

was granted by the judgment with respeet to this property, however,

and no question is raised on- appeal as to it:

, may invoke the aid of the courts to. secure the equitable

‘relief which she seeks. .

-It is an ancient and established maxim of equity juris-

prudence® that-he who comes into équity must come with

clean hands. If a party seeks. relief in equity, he.must be

able to show that on his part there has been honesty. and.fair

-dealing. Wheelgr v. Sage, 1863, 68°U. S. 518, 529. Equity

will not ordinarily aid a person to secure relief from a situa-

tion which results .from the conveyance $f his property

in fraud of creditors o - other persons claiming it. Dent v.

Ferguson, 1889, 132 U. S. 50, 64-66; De Matteo v. Flanigan,

1943, 134 N. J. Ey. 498,34 A. 2d 744; 19 Am. Jur., Equity

§§ 469, 472. Moreover, the unconscionable character of a

transaction need not be pleaded or -set up as a defense.

Whenever it is disclosed the court will of its own motion

apply the maxim. Frank Adam Electric Co. v. Westing-

‘house Elec. Mfe. Co., 8 Cir., 1945, 146 F.2d 165; Gluck v.

Rynda Development Co., 1926, 99 N. J. Kq. 788, 134 A. 363,

affirmed 100 N.J. Ka. Sd, 435 A.917; 30 C. J. S. Equity § 97.

In Precision Co. v. Automotive Co., 1945, B24 U.S. 806, the

. Supreme Court said (pp. S14- 815):

“The guiding doctrine in this case is the equitable

maxim that ‘he who comes into equity must come

with clean’ hands.’ This maxim is far more than a

mere banality. It is a. self-imposed ordinance that

closes the doors of a court of equity to ane tainted

with inequitab jleness or bad faith relative to the mat-

ter in Which he.seeks relief, however, improper may .

trine is rooted in the historical concept. of court of

‘equity as a vehicle for affirmatively enforcing the

requirements: of conscience and good faith. This

presupposes a refusal on its part to be ‘the abettor

of iniquity.’ Bein v. Heath, 6 How. 228, 247. Thus

while ‘equity does not demam that its suitors shall

have led blameless lives,’ Loughran v. Loughran,

° ‘ °

e : . 38

292 U. S. 216, 229, as to other matters, it does re

quire that thev shall have acted fairly and without

fraud or diesels -aalle the controversy in issue. Avy.

stone Driller Co. v. General Excavator Co., 290 U. 8."

240, 245; Johnson v. Yellow Cab-Co., 321 U. §. 383,

387; 2 Pomeroy, Equity Surieprudence (5th Kd.) :

$§ 379-399.

«This maxim necessarily gives wide range to the

equity court’s use of discretion in refusing to aid the

un¢lean litjgant. It-is ‘not bound by formula or re-

strained by any limitation that tends to tramme! the

free and just exercise of discretion.’ Keystone Driller

Co. v. General Excavator Co., supra, 245, 246. Aé-

cordingly one’s misconduct need not necessarily have

been of such a nature as to be punishable as a érime or

as to justify legal proceedings of any character. Any

willful act concerning the. cause of action which right.

fully can be said to transzress equitable~ standards

of conduct is sufficient cause-for the invocation of the

maxim by the chancellor.”’

— to the facts of this case it will be seen from

Mildred’s own testimony as to what took: place between

Cory and herself that she signed the deed in question with

thewtatention of putting title to the property in a secret

trust in order to prevent Ethel May from obtaining the

property. She testified: ‘‘He told me the only way to help

him‘and to proteet my interest would be for me to plae™

in trust—from what I understand, a trust is something that

keeps things from people.’’? Thug the deed was signe: by

her in circumstances which were far from honest and for

the express purpose, as she thought, of defrauding Eth! |

_May of property in which she was entitled to claim an .in-

to help Cory was to defeat the claims of his wife, Ethel

May, by conveying his property to. a.trustee to hold upon

an undisclosed trust. And it is equally clear from her testi:

| mony that she thought that Ethel May might have some

sort of a claim to her own share of the property and that

this also could be frustrated by the conveyance to. the trus-

tee: Otherwise Mildred, admittedly an experienced busi-

hesswoman, certainly would not have thought it necessary

to carry through’ the devious procedure of attempting to

copeeal the ownership of herself and Cory by a conveyance

of the property to a trustee upon an Undiselosed trust.

The fact that: Cory misrepresented to Mildred the pur-

pose og the conveyance did not lessen her intent to defrand

Ethel Mav of property to: which she may have been entitled,

Sait merely frustrated the snecesstul eensummation of her

intended ohjeet.. And it is the moral intent of a person

in such a case as this, rather than any aetofal injury done,

which determines whether he has come into court with clean

. hands. Hildebrand ¥. Williz, 1903, 64 NX. J. Eq. 249, 53 A.

1035: Coleman v. Coleman, 1936, 48 Ariz. 337, 61 P. 2d 441,

6 ALL. R. 1309; 79 Am. Jur, Kyuity < 476. Here Mildred's

“intent to defrand Ethel Mayiis plain, if her own testimeny

isto be believed. And if it is ngt to be believed and the faet

is that she knee that the deed which she signed wa to 1

_ for the benefit of Ethel May and she signed it at Cory’s

request in order.to help-him out of his desperate prediea-

ment, the result is the same. In either ease she is not

entiled to the assistance of a court of equity to strike down

the conveyance.

This result: would follow even if Ethel May had her-

self also been guilty of fraud as the dist rieg ¢ is hl ‘found.

For in such a’ case equity will leave the paleo where if

“ them. Blystone ¥. Blystone, 1865, 51 Pa..373, 876; Gill

*. Henry, 1880,.95 Pa. 3888; Simon's Estate, 1902, 20 Pa.

oo 450; Brown ¥. Rowland 1946, 137 N..J. Eq. 462, 45.4. ®

Ha O92, affirmed 111 N..-Rq. 308, o¢ A. 2d 246; 19 Am. Jur.

Equity § 478; 30.0.8. Equity 694. But we do not have

such a ease here, On the contrary there is no evidence in

the reeord fo support the finding of the district court that .

| | 40

F : ¢

Ethel May.or her lawyer, Mr..Kelly, participated in any

way in the fraud which Mildred\gsserts was practiced upon

her by Cory in inducing her to signNthe deed in question 1

-the strength of misrepresentations as to its purpose. Thase

to say that we do not fully agree with the finding of. the dis.

trict court that ‘‘Corey Bishop’s actions throughout show —

that he never intended to be fair with either of these two

‘women, and that he betrayed either of them when it-sSuited

‘his purposes.’’ All the relevant evidence sunports that

finding. But as to Ethel May the evidence is entirely con-_

sistent with the fact that she, a wife, deserted and unsup-

ported for 16: years, and her lawyer, Mr. Kelly, were seck-

ing to secure redress from Cory for his long continues! de-

sertion and nonsupport as well as some tangible considera.

tion for the release of her dower rights which he was press:

ing her to sign in order to clear the title to the Jand which

he had prev any conveyed to Antilles Enterprises, Ine. and

others. ;

We conclude for the reasons stated. that the district

court erred in not dismissing the complaint. We, therefore,

do not reach the other questions which the district court

considered and which the parties have discussed on ‘this

appeal.

The judgment of the district ‘court will be reversed and

the cause will be remanded to that court with directions th

¢ dismiss the complaint.

‘A True Copy:

Teste: 7

“Clery of the ee an s Cord a Appe als

for the Third Circuit.

Opinion of Court of Appeals” on Petition

. , for Rehearing

(Filed — 19, 1958)

’ Before Biagas, ¢ ‘hief Soeg ion Manas, Macruper, STaLeY

and Hastie, Cireu t Judges.

Per CURIAM: a :

A petition for rehearing has been €

assails the opinion of the court. We have given careful

consideration to the petition but are sa\isfied that it pre-

sents nothing which was pot fi lv consi ered and, in the

view of the judges’ whe heafd and dgeided the appeal,

correctly decided hy the court. Foy this reason-and because

four circuit judges “have not Pb rehearing in bane

‘the petition for rehearing will be denied.

Biaus,

hie f Judge, dissenting.

my volleagues :

(1) As to Fraud: There is ample evidence in the record

to sustain the conclusion of the court below: that Corey

Bishop (Cornelius Below) induced Mildred@Bishop. by

‘fraud to si@f the deed naming Kelly, Ethel Bashop’s at-

torney, as ‘trustee’’, and that Kelly was a party thereto,

Mildred Bishop not knowing that Kelly was Ethel Bishop's

lawyer, 152 F. Supp. 4, 7-8 (D.AV.E. 1997). The fraud

of an agent or attorney is,imputable ao his principal. The’

obvious reason, as the court below found, for net inelnding |

-the cestui’s name in the trust’’ deed was that Mildred

Bishop would not have signed the deed had she known that °

it was for. the hengfipgot Ethel Bishop. .

Mildred) Bishop “owned | Hammerfarm with Corey:

Bishop as a tenant-in-common. She had paid a substantial

part of the pnrehase price. The court beloy, so found and

_ there is no Substantial evidence to the eontrary. Mildred

~ Bislfop believed that her interest in the property: was in

“?

1 which vigorously .

views in this ease differ substantially from those -

Me)

jeopardy and thd if the preperty were .put in Kelly's

hands as ‘‘trustce’ both her interest and that of Corey

Mildred Bishop’s testimon: quoted in the opinion of this

court bear out this view and I think the emphasis laid in the

“opinion on but two‘of the many phrases used by Mildred

Bishop, viz., ‘‘a trust 1s something that keep§ things from.

- people’’, and ‘‘to protect our interest’’, cannot adequately

‘support the conclusion drawn by ‘this court that Mildred

Bishop executed the deed to deprive Ethel Ne of her

dower right.

There is né ev. idenee that Mildred Bishog executed the

deed to Kelly to deprive EtheP Bishop of her dower right.’ -

There i is no substantial evidence of fraudulent intent on

Mildred Bishop’s part. Mildred Bishop's testimony con-

sidered as.a whole, indicates that. she was endeavoring to

protect her own interest in the real estate.

The court below had both Mildred Bishop and Ethel

Bishop before it. It had the opportunity to weigh their

credibility. The questién of Mildred Bishop’s intent in

executing the deed is. a question of fact and this court has

made its own finding in derogation of Rule 52(a), Fed. R.

Civ. Proc. 28 U. S.C. ‘A court of appeals is not a fact

finding body. : ~

-Conceding that, an siadiiaie cidiuial of legal fraud.

presents a mixed issue of-lay and fact, here the finding of

fact on which an ultimate egnclusion of legal fraud would

have hiad to be bottomed was not made by the court below.

But even if this were not so I think it is clear. that this

court has abused legal discretion in overruling the con-

clusions of the District Court. These canclusions find over-

- would be protected from Ethel Bishop. The portions of .

whelming support’ in the evidence. That Mildred Bishop.

_ under all the circumstances would knowingly have conveyed

her interest i Hammerfarm to. Ethel Bishop strains

credulity. if :

Tf, as i Sor the fact. Ethel Bishop was as Corey Bishop’ s wife.”

_ the deed could not have deprived her of her dower right. x

43 Y

(2) As to the Cle an Hands Doctrine. Assuming arqu-

‘endo that this court is correct in its conelusions.in respect

to the issue of frawd referred to at “(4),°? supra, nonethe-

less this court has ineorreetly ‘applied the clean hands

doctrine. That’ doctrine is, of course, that where a con-

veyance of property has been executed with the purpose

of defrauding creditors/or others the grantor cannot attack

the conveyance or ‘oWain relief against it in a court of

eqnity. But it infifso” the law that where a property owner

¢ conv eys land to pr ‘otect it against’ an alleged claim, wheré

there is neither claimant nor legal claim, the doctrine does

“not‘appiy. Phe record. shows that no claim was made by

Ethel Bishop as to Mildred Bishop’s property. and it is

astonishing that in the complete absence of this operative

fact this court 1fonetheless obliterates. Mildred Bishop’s ow n

interest .as a tenant-in-common in Hammerfarm. Ethel

Bishop’ s dower right did not attach and could not have

attacked to Mildred Bishop’s interest in the feal estate

WS by her-as a tenfnt in common with Corey. . 7

Most-important $f all. the Virgin Islands Code spevifi-

cally provides, Vol. I, Title 1, Section 4, ‘‘The rules of the

Common Law, -as expressed in the restatemeiits of the law

approved by the American Law Instituie, and to the extent

not so expressed, as generally understood and applied in

the United States, shall be the rules of decision in the-coutts ;

~ 7 It should be rioted again that the property jimi edi in this litiga-

tion- was held by Mildred Bishop and Corey Bishop as. tenants in

common, W hile the characteristic attribute of a tenancy in: commen

is a unity_ef possession, each share still constitutes a distinct estate.

Thus while a claimant against a tenant in common can reach the

particular debtor's interest in the co-tenancy, and thus may. becomé a -

tenant in common with-the débtor’s co-tenants, or may cause afpar-

tition of the estate he cannot deprive the co-tenants. of their ppAsperty

rights. Hay v. Crawford, 159: Kan. 723, 158 P. 2d 463 (1945);

Ahovelli v. ee 200 Mass. 396, 15.N. FE. 2d 463 (1938) ; Roston ;

» v. Huggins; 216 N.C, 386, 5S. E. 2d 162.( 1939) ;-Koubek v. Tenos: |

- 343 Pa, 409, 22 A. - 740 (1941). | : |

of the Virgin Islands in cases to which they apply, in the

absence of local laws to.the contrary.’’ While the Virgin

Islands Code of 1957 was not in effect at\the-time of the

happening of ‘the events complained of in \the case at bar.

nonetheless this court in Callwood v. Virgin Islands Nat'l

Bk., 221 F. 2d 770 (3 Cir. 1953), had already ruled that the-

_ ‘decisional law of the Virgin Islands in case.t{here was no

.applicable statute or ordinance was ‘that calpaied in the

‘ommon law as expressed by the Restatements. There is no

substantial | difference between the commpn law as incorpo-

rated i in the Restatements and the common law of Eng! land

as adopted and understood in the United States. Sve

Davies vy. Otty, 35 Beav. 208 (Eng. 1865) ; 1 Scott, Trusts

§ 63, pp. 569-570 (2d ed. 1956).* .

The Restatemént, Trusts; commenting on Section 63,

pp. 200-201 » provides: ‘‘{I]f the owner of a piece of land

transfers it tp another who agrees to hold it in trust for the

transferor, and the purpose of the transferor in making the

transfer was to prevent a- sacament creditor from levying.

8 See also — v. tainiiie, 4 Ala. 521 (1842) : Berniker, v

Berniker, $74 P. 2d 668 (Cal. App. 1946), affirmed, 30 Cal. ‘2d 439,

182 P. 2d 557 (1947% . Vollaro v. Gargano, 97.Conn.'275, 116 A. 179

(1922) ; Rossow v. Peters, 277 Ill. 436, 115 N. E. 524 (1917):

Warner, v. Tullis, 206 Iowa 680, 218 N. W. 575 (1928) ; Hoff v.. .

Hoff, 106 Kan: 542,°189 P. 613.(1920) ; Griffin v. Lopez, 5 Mart. 145.

‘ (La: 1817); Zak v. Zak, 305 Mass. 194, 25 N..E. 2d 169 (1940);

Bloomingdaie v. Chittenden, 74 Mich. 698, 42 N. AW. 166 (1889)

Burns v. Burns, 124‘Minn. 176, 144 N. W. 76! (1913) ; Cook v.

Mason, 353:Mo. 993, 185 S. W. 2d 793 (1945); Kidd v. Kidd, 210

Mis& 405, 49 So. 2d 824 (1951) ; Thompson v. Steinkamp, ‘120 Mont.

nig 187 P. 2d 1018 (1947); Cowles. v. Cowles, 89 Neb. 327, 131

N. W. 738 (1911); Collins v. Schump, 16 N. Mex. 537, 120 P. 331

(1911); Tiedemann v. Tiedemann, 201 Apprhiv. 614, 194 N.Y 8

782 (1922), aff'd without opinion, 236 N. Y/ 534, 142 N. E. 273

(1923); Brady v. Bllison.3.N. C.-348 (1804) ; Hickey v. Ross, 197

Okla ‘543, 172 P. 2d 771 41946) : Hanscom v. Hanscom, 18 Ore. -

541, 208 P. 2d 330 (1949); Rivera v. White, 94 Tex. 538, 63S. \\-

125 (1901); Abslag v. Bock, 139 Wash. 198, 246 P..300 (1926): .*

Wilcoxon v. ‘Carrier, 132 W. Va. 637, 53 S. E. 2d 620 (1949).

of authority is to the same effect... i :

. - a.

- ~ - . = a

execution upon the land, the transferor’ can compel the

trausferce to recouvey, the land if it was a homestead of

the transferor’s upon which the creditor could not fhave

levied execution.”* The Restatement aside, the great Ww

Professor Austin Scott points out that while ’

state of mind “in a case “Mm ‘which he attempts to defeat:

a creditor’ s claim is as bad as though the claim’ were

‘settlor under such circumstances operates to cause a for-

_teiture of property disproportionaf® to thé degree of his

‘wickedness and the extent of harmbdone by him. 1 tis

Trusts § 63, pp. 569-570 (2d ed. 1956). *

Professor Scott also shows that courts have aia too.

feadyy to deny retief to the settlor — consideration

of the injustice “which’ results. lie stat@s, ‘There is no

doubt thai as between the parties it is more just to require

the trustee to’ surrender the property to the settlor than

to permit the trustee to keep it.”? 3. Scott Frusts ¢ 422,

Pe 2196 (1939 ed.). See also W antulok v, Wantulok, 67 Wyo.

. 22,214 P. 2d 447% (1950), reh. den., 395 P. 2d 1030; TRomp- |

son v. Steinkamp, 120 Mont. 475, 187 P. 2d 1018 (1947):

Note, 44 Yale La J. 173. . . é :

1 think it is clear that when the Restatements of Trusts

and Restitution were cofipiled, the American Law Institute

adopted the principle of those decisions which precluded the

forfeiture of the property of a transferor who attempted to

prevent a person from enforcing a claim against the trans-

ferred property’ when the claim-was non-existent or could

not have heen enforced against the property. In such cases

the Restatement either alléws the settlor to enforce the

trust, Restatement, Trusts )§ 63, comment b to subsection

(1), or, if the trust fails, % compel the trustee to. reconvey

the. property to him. Restatement, Trusts $422, comment

. enforce cable, nonetheless the refusal | ‘of a remedy;-40 the.’

c. See also, aiheliniesiad: Restitution. 140 and 4 Scott

_ Trusts — (2d ed. 1956). 15 e :

(3) Na. valid. Trust: The so- -called “trust?” deed did

not state the terms of the trust or name or describe a bene-

ficiary. Ethel Bishop. contended that the reason the ce .tui

. “was not named was because she could not decide to use the ~

name ‘‘Below’’ or the name ‘sBishop’. A more obvious

reason, as has been ‘pointed out, suggests itself... But it is

k letter law that a trust, other than one which ‘s.

faritable: or honorary, cannot be created in favor’ of a -

_ person: -who. is not named in the trust deed, and that in -

‘+ such a case the express trust will fail and a resulting trust

will arise +inimediately in favor of the settlor. 2 Scott,

Trusts § 1127 (2d ed. 1956).

* . The court’s opinion therefore presents the anomaly. of

a court of equity employing the clean hands doctrine to

_preclude ‘an attack on a fatally defective trust’ deed, one’

completely lacking in equity. Thi: court permits an invalid

. trust to subsist and to werk a forfeiture of the settlor’s

= and a windfall to a third party.

(4) ‘Conchizions. The ie of the court. would seem

to err in three er areas and dislocate general legal prin-

3 Corbin refers to the spectacle of sisialaai Ss unjust enrichment+as

perverting the unclean hands doctrine. 6 Corbin, Contracts § ‘1463,

p. 828 (1951). r. Justice Black in Johnson v. Yellow Cab Co.. 32! |.

U. S. 383, 387 943 ) said : “The maxim that he who comes into

equity must.come. with clean. hands is not: applied by way of punish-

ment for an uncfean litigant Dut * upon considerations that make for

the advancement of right’and justice.” Keystone Driller Co. v. Genaral

Excavator Co., 290-U: S. 240, 245: It is not a rigid formula whi

.‘trammels the free and just exercise of discretion.’ ” ote

5 In con clusion upon this phase of the case I point out that but

‘small emphasis was placed on the clean hands doctrine i: the court

- parties 0 on er

47 : oi a

ciples aa also the law of. the Virgin Islands ds heretofore *

carefully established by this..very court. “—In my opinion. -

there are special: gnd important reasons why the decision

of the court should not stand. sical I dissent from

the order. denying rehearing. .

. Judge Hastie also dissents and joins in so much of this”

Thidulon ‘as: concerns the a of the doctrine of clean

hands.”

oe ee aoe

este:

Clerk of the United States Court of Appeals

7 the Third Cércutt. cit sae

re) :

. 48

Judgment “a | Afimanc

_ «Usrrep. Srates Cover or APPEALS

For tHe Txuirp Crmcvuir

v No. 17,431 ‘

Vo.

Muprep T. BisHop

e ae x ‘@

vs.

Crrey BisHop, Grorce T. KEL.y, 3p, Ermey May. Pressry

Bevow, also. known as #THEL May Bisnop; Vircrn Isiaxin

NatronaL Bank, and Ernet May:BisHop, as Administra-

trix, c.t.a. of the Estate of Corey Bishop, deceased

Erne May Bisuop, individually and as Administratri:

of the Estate of Corgy Bisnop, deceased. .

AppEaL FRom THE D)isrrict’Covurt oF THE VirGtn’Isianps

- ~ Division or St. THomas anb St. JoHN

ray i

Present: Maris, Macruper and Starey, Circuit Judavs.

; + , 4 ?

Y 4

ae JUDGMENT

nae

This cguse came on ‘to ‘be heard on the’ record om the”

District Court of the Virgin Islands, Division of. St.

Thomas, and St. John, and was argued by eounsel.

“On consideration whereof, it is now here orflered and.

adjudged by this Courf that the judgment of the said Dis-

_ trict Court in this case be, and the same is hereby reversed.

with costs, and fhe canse remanded with. directions to dis. .

miss the complaint. ees

_ Attest: ea.

; ey Ipa O. CRESKOFF..

" . Cler’.

May 1, 1958. :

Order of: Substitution -

IN THE

DISTRICT COURT OF THE VIRGIN ISLANDS

Division OF St. Tuomas & Sr. Jous at CHaRLorte AMALIE

Civil No. 119-1956 °

—

. #

Munprep, T. Bisuop, wa

: Plaintiff,

vs. .

Corey Brsxop, et, al., PR cas

. ° Defendant.

a =

' ORDER ©

. On the annexed motion of Harry Dreis it is hereby

Orperep that Harry Drevis executor of the Estate of

Mildred T. Bishop, deceased by. and hereby is substituted

in place of Mildred T. Bishop plaintiff,’ in the above en-

titled action. ~~ *—

. Dated: Oct. 10,1958 = ss

im Nanny Watrer A. Gorpox,

; Judge of the District Court of

=, the Virgin Islands.

° «

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.