establish the contract, with the person so trusting him.' This doctrine was applied by Lord Chancellor Chelmsford in Tate v. Williamson, a case which well illustrates the extent and nature of the general principle. There Tate, a young man of twentythree, who was the owner of a moiety of a freehold estate, and who was largely indebted, wrote to his great uncle for advice and assistance in regard to the payment of his debts. His great uncle sent a nephew, Williamson, to see Tate upon the subject, and Williamson made an offer to purchase Tate's moiety of the estate for £7000, which was verbally accepted. Before any agreement was signed, Williamson obtained a valuation by a surveyor estimating the value of the mines under the whole tract at £20,000. The sale was completed without this information having been communicated to Tate. A bill was subsequently filed by Tate to set the sale aside, and a decree in his favor was made by Vice Chancellor Wood, which was affirmed by Lord Chelmsford.3 It will be observed that in this case there was no well-defined confidential relation (such as that of attorney and client, guardian and ward, and so forth) existing between the parties; but that the circumstances of the transaction were such that one man necessarily was trusted by the other, and when that confidence arose, no matter how, the duty of full disclosure immediately arose with it. It shows the truth of the remark made by Lord Cranworth in Smith v. Kay, that the familiar cases of the influence of a parent over his child, of a guardian over his ward, of an attorney over his client, are but instances of a broad and widely applicable principle." 233. Starting, therefore, with the general principle that all transactions, whether of gift or contract, made under undue 1 Note to Fox v. Mackreth, 1 Lead. Cas. Eq 171 (4th Eng. ed.). See, also, Norris v. Tayloe, 49 Ill. 17. 2 Afterwards Lord Chancellor Hatherley. The case, when before the Vice-Chancellor's court, is reported in L. R. 1 Eq. 528. 3 L. R. 2 Ch. App. 55. See, also, Grosvenor v. Sherratt, 28 Beav. 659; Cary v. Cary, 2 Sch. & Lef. 173; Gibson v. Jeyes, 6 Ves. 266; Gresley v. Mousley, 3 De G. F. & J. 433. 47 H. L. Cas. 771. 5 See, also, Turner v. Turner, 44 Mis. 535; Harkness v. Fraser, 12 Florida, 341; Rockafellow . Newcomb, 57 Ill 186; McCormick v. Malin, 5 Blackf. 507. In this last case it was said with succinctness and accuracy that the rule under consideration applies "to all cases where confidence on the one hand, and influence on the other, exist, from whatever causes they may spring;" citing Griffiths v. Robins, 3 Mad. 191; Revett v. Harvey, 1 Sim. & S. 502. influence growing out of the relations of the parties, may, if they are injurious to the confiding party, be set aside solely on the ground of the confidential relation, and without more; let us see how this principle has been applied to the numerous cases in which such confidential relations ordinarily arise. There are many such relations. In some of them the contract is absolutely voidable at the option of the party who is presumed to be imposed upon; while in others, the confidential relation is prima facie evidence of fraud, which may, however, be rebutted by showing that the transaction is a fair and honest one, and that no improper advantage has been taken of the influence arising out of the confidential relation. The question always is, to what extent may undue influence be presumed from the relation of the parties. 234. This presumption of undue influence is more or less strong according to the peculiar relations which the parties occupy towards each other. The relation of guardian and ward is one in which the presumption exists, perhaps, in the highest degree; and a transaction between persons thus situated during the continuance of the relationship, and, especially, if it takes the form of a gift, can never stand.1 The same rule applies, though not with the same stringency, to contracts between guardian and ward, and to gifts from the latter to the former, immediately after the ward has attained his majority; the reason being that the influence acquired during the continuance of the relation is still supposed to exist; and all settlements or dispositions of property are presumed to be made under undue influence.2 If such transactions, therefore, are ever sustained, they are only so when the utmost good faith is displayed by the guardian, and when the ward is put fully in possession of all the information in regard to the property, which is necessary in order that he may make an advantageous and intelligent disposition of it. Hence, although a gift from a ward to his guardian may be sustained if it is shown to have Dawson v. Massey, 1 B. & B. 226; Blackmore v. Sheby, 8 Humph. 439; Bostwick v. Atkins, 3 Comst. 53; Gallaton v. Cunningham, 8 Cow. 361. 2 Eberts v. Eberts, 5 P. F. Sm. 119; Wills's App., 10 Harris (Pa.), 332; Womack v. Austin, 1 S. Carolina (N. S.), 421. been made upon a fair, serious, and well-informed consideration, it will not, as a general rule, be suffered to stand, although there may not be any evidence of actual unfairness. In other words, the presumption is against the bargain or the bounty; and the onus of showing its entire fairness is thrown upon the guardian. It may be valid; but inherently, and of itself, it is presumptively fraudulent. On the same principles a covenant by a man about to marry, to release his intended wife's mother from all account of mesne profits, was set aside.2 235. Transactions between parent and child, while not viewed with the same degree of suspicion as those between guardian and ward, are, nevertheless, always closely investigated in equity, and will be set aside if there is the slightest evidence of imposition or unfairness. The mere existence of the relation of parent and child (it has been said) is not, perhaps, enough to vitiate an act which, as between strangers, would have been valid; but the modern English authorities seem to favor a stricter rule. Of course, if there is any evidence of pressure or influence unduly exercised, the transaction can never stand. A leading case on this subject is Taylor v. Taylor, where the improper manner in which parental influence may be exercised is strikingly exemplified." Dispositions of property, however, which amount to reasonable and convenient family arrangements, will be upheld as between parent and child." 236. The rule in regard to solicitor and client is more stringent than in either of the two cases already considered. A 1 See Hylton v Hylton, 2 Ves. Sr. 547; Hatch v. Hatch, 9 Ves 292; Richardson v. Linney, 7 B. Mon. 571; Andrews v. Jones, 10 Alab. 400; Garvin v. Williams, 50 Mis. 206. 2 Hamilton (Duke of) v. Lord Mohun, 1 P. Wms. 118. 3 Jenkins v. Pye, 12 Pet. 241. The rule, however, is more strictly stated in Archer v. Hudson, 7 Beav. 551, by Lord Langdale, M. R. (the transaction, however, was not in that case one between parent and child); and see ante, p. 229, note 3. 4 Ante, p. 229. See, also, Baker v. 6 Jenner v. Jenner, 2 Giff. 232; 2 De G. 7 See Tyrrell v. The Bank of London, 10 II. L. Cas. 26. solicitor may purchase from his client, although the bargain will be subjected to the most rigid scrutiny, and the onus of showing its fairness lies on the former; but a gift from client to counsel is absolutely void.' Indeed, even in cases of contract, where the property is the subject matter of the litigation in which the attorney is acting, it is with great difficulty that the purchase can, under any circumstances, be sustained. The utmost good faith (uberrima fides) is required on the part of the legal adviser; and the general rule of public policy, which discountenances transactions between persons who are situated in a confidential relation towards each other, applies with particular force to the case of attorneys at law who are officers of the court, and are, on that ground as well as on account of the powerful influence which they exercise over the minds of their clients, restrained from dealing with those whose interests they have in charge. The question is not whether there was any actual imposition in the particular case. Lord Loughborough, in Newman v. Payne, when speaking of Lord Hardwicke's decision on this point, in Walmesley v. Booth, says that "it was the case of Japhet Crook, who was more likely to impose than be imposed on, yet he might be imposed on;" and this is the ground upon which courts of equity have always gone, viz., the fear lest the client "might be imposed on." This rule as to attorneys will apply as long as the relation continues, and even after it has ceased, if the transaction takes place under the still subsisting influence of that relation." It will not, however, apply when the relation has ceased, and the influence growing out of the same has terminated;5 and when the attorney has assumed the hostile attitude of a pressing creditor, he may deal with his client as with a stranger. A client may make a gift to his counsel in his will." 237. The relation of trustee and cestui qui trust is also one of peculiar confidence. The trustee necessarily has ample opportunities for a thorough knowledge of the value, both present and prospective, of the trust estate, of which the cestui qui trust, not having the management of affairs in his hands, must, to a great extent, be ignorant; while at the same time the influence which the former exercises over the mind of the latter is generally very considerable. The general rule, therefore, is, that the trustee cannot take beneficially by purchase or gift from the cestui qui trust. The transaction is ordinarily voidable at the option of the latter.1 But the gift or purchase may be deprived of its aspect of presumptive fraud, by the absence of those elements by which fraud is made up. These are, as has just been stated, knowledge on the part of the trustee, ignorance on the part of the cestui qui trust, and influence unduly used by the former over the mind of the latter. If, therefore, the information which the trustee has is in no way superior to that of the cestui qui trust; if the latter is fully informed of all the facts of the case, and their probable bearings upon the value of the property; and if he is acting upon independent advice, and his mind is entirely free from any control of the trustee, and the transaction be in itself a reasonable one, it may, under these circumstances, be upheld.2 The rule under consideration grows out of the general principle explained in a former chapter, that a trustee can make no profit out of the trust estate.3 The rule does not apply to the case of a mere dry trustee. The position of such a trustee gives him no vantage ground, either of superior information or of undue influence, over the cestui qui trust, and the parties, therefore, deal as strangers, and are subject to the ordinary rules of buyer and seller.* The same rule as that which exists between trustee and cestui qui trust, applies to all persons who occupy a fiduciary, or quasi fiduciary relation-such as executors or administrators, direc 1 Coles v. Trecothick, 9 Ves. 234; Smith v. Townshend, 27 Maryl. 368; Clarke v. Deveaux, 1 S. Carolina (N. S.), 184; notes to Fox v. Mackreth, 1 Lead. Cas. Eq. 92; Perry on Trusts, ? 195. 2 See Perry on Trusts, 195; Hill on Trustees, 158. 3 See ante, page 147. 4 Parkes v. White, 11 Ves. 226. |