Supreme Court of Canada
Schwartz v. Schwartz, [1972] S.C.R. 150
Date: 1971-06-28
Jack Schwartz (Plaintiff) Appellant;
and
Morris Schwartz and Abraham Schwartz, Executors of the Last Will and Testament of Harry Schwartz (Defendant) Respondents.
1971: May 6, 7, 10; 1971: June 28.
Present: Judson, Ritchie, Hall, Spence and Pigeon JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.
Wills—Validity—Testator blaming one of three sons for break-up in family control of company—Decision to change will so as to disinherit said son—Change of solicitor—Finding of testamentary capacity and absence of undue influence affirmed—
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Whether circumstances such as could lead to inference testator did not know and approve of contents of will.
The last will of the testator showed a very significant departure from four previous wills, all of which had left the residue of the estate to be divided equally among the testator’s five children—three sons and two daughters. The last will left the appellant son $1 and divided the residue equally among the other four children. Both the trial judge and the Court of Appeal by a majority decision upheld the will.
The occasion for the making of the new will was the existence of a bitter quarrel among the three brothers concerning the control and management of a family company, which had been founded by the testator along with his brother. Before the trouble began, the three brothers held 60 per cent of the 300 issued shares and a cousin held the remaining 40 per cent. Subsequently, the appellant and his cousin made common cause, which gave them 180 shares; the other two brothers only had 120 shares. These two brothers later left the company.
The testator knew about this dissension, which he deplored, and he blamed the appellant for the breakup in the family control of the business. When he determined to change his will, he spoke to his solicitor, who had prepared the four prior wills, and told him he wanted to cut the appellant out of his will. The solicitor, who was aware of the dissension, did not wish to act because of the relations he had with the family. The testator then retained another solicitor to redraw his will. The new solicitor also knew the family situation and the reasons for the change in the will.
Held: The appeal should be dismissed.
The change of solicitor was not a matter for suspicion and the will was not a capricious one, made on the spur of the moment. From the beginning the testator deplored the quarrel, wanted a reconciliation and wanted the family preponderance in the company kept intact. This was the obvious reason for the change in the will. It may have been the work of a bitter, angry and disappointed man but it was not the work of a man lacking testamentary capacity or subject to undue influence, or lacking in knowledge and approval of the contents of the will.
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APPEAL from a judgment of the Court of Appeal for Ontario[1], dismissing an appeal from a judgment of Morand J. Appeal dismissed.
D.K. Laidlaw, Q.C., and A.J. Lenczner, for the appellant.
W.B. Williston, Q.C., and T.E. Brooks, for the respondents.
L.W. Perry, Q.C., for the Official Guardian.
The judgment of the Court was delivered by
JUDSON J.—The parties to these proceedings are three brothers, sons of the testator Harry Schwartz. The issue is the validity of the will of their father made on May 1, 1964. This will showed a very significant departure from four previous wills, all of which had left the residue of the estate to be divided equally among the testator’s five children—these three sons and two daughters. The last will in issue here left the appellant Jack Schwartz $1 and divided the residue equally among the other four children. Both the trial judge and the Court of Appeal by a majority decision have upheld the will.
The occasion for the making of the new will was the existence of a bitter family quarrel among the three brothers. This had to do with the control and management of a family company called “Motor Accessory and Supply Company, Limited” which the testator had founded along with his brother Abraham. This business began as a partnership and was incorporated in 1929. Three hundred common shares were issued. The testator, Harry Schwartz, was president and received 120 shares, or 40 per cent; his oldest son Morris received 60 shares, or 20 per cent, and his brother Abraham Schwartz, received 120 shares, or 40 per cent. At this stage the testator and his oldest son Morris controlled the company.
In 1952, the testator’s brother Abraham died and by his will made a division of his shares among his family. On December 23, 1963, Abraham’s son Murray Schwartz acquired all the shares on this side of the family and thus owned the 40 per cent of the issued shares which had formerly been owned by the father.
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Between 1935 and 1957, the testator transferred his remaining shares to his sons with the result that at the end of 1963, the shareholdings were as follows:
|
|
Shares |
Per cent |
| Morris Schwartz..................................................... |
75 |
25% |
| Jack Schwartz........................................................ |
60 |
20% |
| Abraham Schwartz................................................ |
45 |
15% |
| TOTAL.................................................................. |
180 |
60% |
| Murray Schwartz.................................................... |
120 |
40% |
In other words, the percentage ownership of the original founders of the company was preserved, the three sons of Harry Schwartz holding 60 per cent and Murray, son of the founder Abraham, 40 per cent.
In 1963, trouble began among these shareholders. These matters were serious and had to do with the management of the company. They are fully described in the judgments at trial and in the Court of Appeal and it is unnecessary to repeat them here. They resulted in a cleavage between the shareholders. Jack and his cousin Murray made common cause, which gave them 180 shares; the other two brothers, Morris and Abraham, only had 120 shares. Finally, in February 1964, these two brothers left the company.
The testator knew about this dissension and he deplored it. His idea in transferring the shares to his sons was that they would work in harmony and preserve the 60 per cent control on his side of the family. He was obviously blaming his son Jack for the break-up in the family control of the business. He tried to bring about a reconciliation in the autumn of 1963. Jack and Morris were not speaking to each other by this time. At one time he demanded of Jack that he return the 60 shares which over the years had been given to him. Jack refused to do this and about April 1964, the testator decided to make another will.
On April 13, 1964, the shareholders entered into what is referred to as a “buy-sell agreement”. Jack and his cousin Murray were on one side, Morris and Abraham on the other. The agreement required Morris and Abraham to set a price on their shares. Jack and his cousin Murray were then to have the opportunity of either selling their
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own shares for the price set or purchasing at that price. On May 6, Jack and Murray exercised their option and purchased at the stated price. This agreement was outstanding but not fully executed at the date when the will was prepared. There is no evidence that anyone told the testator about the existence of this agreement but there is ample evidence that he knew all about the quarrel and had taken a very definite stand.
Between December 22, 1955, and October 27, 1961, the testator executed four wills. In all of these the residuary clause was in the same terms:
To divide the entire balance of my estate between Morris Schwartz, Jack Schwartz, Gertrude Donenfield, Tillie Schacter and Abraham Schwartz in equal shares.
These were his five children.
The last will, dated May 1, 1964, which is the subject-matter of this litigation, left Jack Schwartz the sum of $1; it left to each grandchild $5,000 with the exception of the two children of Jack Schwartz, each of whom was left $1. The residue of the estate was divided equally among four children, Morris Schwartz, Abraham Schwartz, Gertrude Donenfield and Tillie Schacter.
In April of 1964, when the testator had determined to change his will, he spoke to his solicitor Samuel D. Borins, who had prepared the four prior wills. He told Mr. Borins that he wanted to change his will and that he wanted to cut Jack out of his will. Mr. Borins was a personal friend of some members of the family and had acted for them professionally, and, on occasion, for the family company. He was well aware of the friction and dissension in the family. He did not wish to act and suggested to the testator that he retain some other solicitor. He refrained from suggesting any particular person. The new solicitor was Mr. M.S. Lewis, whom the testator had known for some years as a casual acquaintance. The testator summoned him in person. Mr. Lewis obtained a copy of the latest will from the former solicitor and then went to the testator’s house to
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take instructions. This is the solicitor’s account of the reasons given by the testator for his change in the will:
Q. All right, then, you had this general conversation, I think you said, for about fifteen minutes, and then did you get around to the will?
A. Oh, yes.
Q. All right, what did he tell you?
A. Well, he told me he wanted to change the will, and he told me he wanted to take his son Jack out of the will.
Q. Now…
A. Now, at that time we had… when he said that, I said, “That is a very serious thing, why are you doing that?” “Well,” he said, “you know the troubles”, he said, “I just don’t want to leave him anything, I don’t want to have anything more to do with him.” I again impressed upon him the seriousness of anything of that nature, and he told me that he had worked with his brother to build this business up for many years, and they had always been careful to retain a sixty per cent interest in that business so that he and his children could continue to sell it. I am not using his language, this is in so many words. And, he was very bitter against Jack because he was voting his shares the other way so that Abe and Murray—Abe and Moe would be minority partners, and created this difficulty. Well, I said to him, “You know, things happen in business, and there’s no sense having a big family fight over it, it will work out some way or another”, the general way I would talk to anyone that I would know. But, no, that is not what he wanted, he said he wanted that business for his children and for their children, and he was very, very bitter here over it because he said he put his life into his business. This is the way he spoke to me.
Mr. Lewis made a note of the testator’s instructions and embodied them in a memorandum to one of his partners in the following terms:
Memo to Mr. Marrus—
Please draw a Will for Harry Schwartz, who will have to sign by a cross with his right hand.
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Executors to be Morris Schwartz and Abraham Schwartz.
Leave $5,000.00 to each grandchild living at the time of his death, to be paid to them as each reaches the age of 21.
Eliminate bequest to Fannie Schwartz and Leah Grossfield.
Leave other bequests as in Will attached and divide the balance of the estate between Morris Schwartz, Abraham Schwartz, Tillie Schacter and Gertrude Donenfield, Gertrude Donenfield lives in Los Angeles, Calif. Tillie and Gertrude are daughters.
M.S.L.
I note that the instructions as transcribed by Mr. Lewis were to leave $5,000 to each grandchild. The will, as executed, excluded the children of Jack Schwartz from this bequest except to the extent of $1 each. This change was made on the insistence of the testator when the will was being read and in the presence of the witnesses. There is no doubt that this amendment was the testator’s own act.
The evidence at trial traced in the greatest detail the physical and mental condition of the testator from 1961 to the date of his death on January 2, 1966; his mode of life during this period; the family dissension; the instructions for the will and its execution. The trial judge and the majority in the Court of Appeal, after a full review of this evidence, found in favour of testamentary capacity and rejected undue influence. It was again reviewed in detail in this Court and I do not propose to repeat the review. I am satisfied that the trial judge and the majority in the Court of Appeal were right.
The main argument addressed to this Court was that notwithstanding the finding of testamentary capacity and the absence of undue influence, there were suspicious circumstances in this case which could lead to the inference that the testator might not have known and approved of the contents of the will. In my opinion, such an inference cannot be drawn from the record before us. I say at once that I do not look upon the change of
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solicitor as a matter for suspicion. Mr. Borins made it very clear that his refusal to act in this matter was because of his relations with the family and had nothing to do with the testator’s mental capacity.
Mr. Lewis, who was next summoned by the testator, was acting for the sons Morris and Abraham in their company quarrel with Jack. On all this evidence it is reasonable to assume that the testator knew of his position. There is nothing in the preparation and execution of this will to suggest that Mr. Lewis’s relations with the two sons in any way affected his duty to the testator. He knew the family situation. He learned from the testator, if he did not already know, the reasons for the change in the will. In view of the family quarrel and the position that the testator had taken from the beginning, this was not a capricious will, made on the spur of the moment.
When Mr. Lewis returned with the draft will two or three days after he had taken his instructions, one of the witnesses was the doctor, a cardiologist, who had been in attendance on the testator at least once a week for several years. The solicitor had asked him to be present as a witness.
In 1961 the testator had a stroke. He made a good recovery but was left with some paralysis on his right side and in his right hand. This accounts for the memorandum drawn by Mr. Lewis as to the mode of signature of the will.
The doctor’s oral evidence was lengthy and detailed. It is well summarized in a letter from him to Mr. Lewis written on May 11, 1964, ten days after the execution of the will:
Re: Mr. Harry Schwartz
Dear Mr. Lewis:
At your request, I am sending you a letter as to the mental capacity of your client, Mr. Harry Schwartz. This man has been under my care for the last three years. As you are aware, he suffered a cerebral vascular accident approximately three years ago, from which he has had almost 90% recovery. Although he is subject at times to attacks of depression, I have never at any time found any
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impairment of his mental ability. He is certainly orientated as to time, place, and circumstances. As to the recent events associated with his changing of his will, he was fully cognizant of all that had occurred and volunteered unto myself all this information, fully aware of all that was occurring. You are aware, however, of my feelings, that I would be pleased if a psychiatric evaluation was done by an independent observer to confirm my findings. I mention this at this time for your consideration. Thank you in advance, I am
Yours very truly,
“M.M. Abbott”
M.M. Abbott, M.D., F.A.C.P.
Mr. Lewis, when asked whether he retained a psychiatrist and why he had not asked for one, answered:
A. I didn’t think it was necessary. I talked it over with Dr. Abbott after. I was surprised to see this letter, by the way, because I had talked to Dr. Abbott previously, told him he would probably be called in sometime or another to prove that he had witnessed this will and, naturally, to evidence about the testamentary capacity, and when I got this letter I called him up and asked him why.
…
A. I felt that having spoken to the man on two occasions, including the day I signed the will, and having satisfied myself from the nurse and the doctor, I didn’t want to subject the man with having a psychiatrist walk in on him all of a sudden for no apparent reason, I felt we were better off this way.
I have aready mentioned that the change made immediately prior to the execution involving the exclusion of the children of Jack from the class of grandchildren beneficiaries, came from the testator. If the solicitor had correctly taken his instructions, this was something that the testator had thought of between the date of the instructions and the execution of the will. I cannot take this change, if it was a change, as evidence of caprice. It is enough to say, at this point, that there was a real connection between the exclusion of one of these children, who had been brought into the business by Jack, and the company quarrel.
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It was urged against the will that the testator had a complete misapprehension of the family situation at the time of the will, including the buy-sell agreement, which accounts for or could suggest a reason for the exclusion of Jack and his children. There is, in my opinion, no basis in the evidence for any such suggestion. In fact, the evidence of the solicitor and the doctor is directly opposed to this.
I do not think that we are concerned with the problem whether the testator made a wise choice in supporting Morris and Abraham in the company quarrel with Jack and his cousin Murray, or whether he knew of the buy-sell agreement. Throughout this record we find that he was deploring the quarrel, wanted a reconciliation and wanted the family preponderance in the company kept intact. This is the obvious reason for the change in the will. It may have been the work of a bitter, angry and disappointed man but it was not the work of a man lacking testamentary capacity or subject to undue influence, or lacking in knowledge and approval of the contents of the will.
I would dismiss the appeal with costs.
Appeal dismissed with costs.
Solicitors for the appellant: McCarthy & McCarthy, Toronto.
Solicitors for the respondents: Fasken & Calvin, Toronto.
Deputy Official Guardian: L.W. Perry, Toronto.