Cases in equity determined by the circuit judges at chambers are removable to the supreme court either by appeal or writ of error. The supreme court in reviewing decrees in equity upon appeal is not confined as in cases upon writ of error to errors in law. But the practice of the court, pursuant to its statutory powers,1 is to examine into the merits of the cause upon the evidence in the record, affirm or reverse the decree in part or in whole and either remit the record for further proceedings or render a final decree and enforce it in the ordinary mode. This was the practice in the House of Lords in England;2 was the method adopted by the Congress in the Judiciary Act of 18033 and "was taken over into appeal in the nature of error in equity cases under practice acts and codes of civil *Page 74 procedure" in many of the states.4 Some courts gave to a finding of fact by a judge or chancellor the force of a verdict while others, and they constitute the majority, held "that the reviewing court was not bound by the findings of fact below and must determine for itself whether they were sustained by the evidence, allowing much, however, for the advantage the trial judge had where he heard oral evidence."5 Under the early equity practice, however, cases were heard mostly upon deposition,6 and the trial judge being in no better position than the reviewing tribunal to judge of the credibility of witnesses whose evidence had been taken upon deposition, the former had no advantage over the latter. With the radical change, however, from "hearing equity cases on depositions to trial to the court on oral evidence," the findings of the chancellor upon conflicting oral evidence necessarily had its effect upon the approach of the reviewing tribunal. Appellate courts grouped for an appropriate formula. Professor Pound points out the resulting confusion.7 This court adopted the rule that the findings of the circuit judge at chambers upon conflicting oral evidence is entitled to "great weight." It would seem that this formula should be of easy application and that if the findings of the trial judge in equity cases upon conflicting oral evidence have for their support a fair preponderance, such findings should not be disturbed. Otherwise, no allowance is made "for the advantage the trial judge had where he heard [the] oral evidence."8
The cases in this court applying the formula adopted sustain the construction placed by me upon the rule.9 In *Page 75 the de Souza case the findings were based in part "on undisputed evidence and in part on evidence the truth of which, though disputed, we find no reason to doubt." The plaintiff's claim in that case was that she executed the deed, cancellation of which was sought, while mentally incompetent at the defendant's pressing solicitation and in consequence of undue influence exercised upon her by the defendant and his wife. The defendant denied the truth of these charges and claimed that the plaintiff executed the deed of her own free will and for reasons personal to herself. This court said: "The circuit judge, although basing his decree in part upon another ground, found `not only that the plaintiff had failed to establish fraud by a preponderance of the evidence but that the defendant's testimony of the absence of misrepresentation, though not absolutely convincing, carries with it more weight than the testimony of the plaintiff.' Such a finding made by one who saw and heard the witnesses and was in a position more favorable than ours to weigh the evidence, is entitled to great weight." The implication of this decision is that had the trial judge found that the plaintiff had established fraud by a preponderance of the evidence the findings would not have been disturbed.
In the Sumner case, also one for cancellation of a deed upon the lack of mental capacity and fraud, this court said: "Whether the evidence would have warranted a finding that the plaintiff lacked mental capacity sufficient to make a valid deed we need not say. On an appeal in an equity case the findings of fact made by a circuit judge are not binding on this court, but there is a presumption that the case was correctly decided, and where the findings rest upon the credibility of witnesses and the weight of oral *Page 76 testimony, and inferences to be drawn from such testimony, and involve the consideration of opinion evidence, the findings of the judge who saw and heard the witnesses are entitled to much weight." The use of the word "much" instead of the word "great" in the formula applied need not be dwelt upon. Whether there is any significance in the use of the word "much" is left for others to decide.
In the McCandless case we find this significant language: "On an appeal in an equity case the findings of fact by the circuit judge are not binding on the supreme court, but where the findings depend upon the credibility of witnesses and the weighing of conflicting testimony such findings are entitled to great weight" [citing the Sumner case]. "The finding of the circuit judge in this case upon the issue of fraud is upon conflicting testimony and will not be disturbed."
In the Jellings case the court held: "It has been repeatedly held by this court that when in an equity suit an issue of fact is decided upon conflicting testimony great weight will be given by this court to the finding of the trial court because the latter saw and heard the witnesses and was in a better position to pass upon their credibility and to weigh the evidence than this court is. Upon an examination of the transcript of the evidence in this case we find no reason for disturbing the finding of the trial judge."
In the Hookaia case, after repeating the rule, the court concluded with the observation that "ordinarily" the conclusions of the trial judge upon conflicting evidence "will not be disturbed." In the Pinheiro case the acceptance of findings supported by a preponderance of the evidence and in the DeMello case the application of the rule, which I contend is the logical sequence to the formula adopted, is expressed in the following language: "It was peculiarly the province of the chancellor, who heard and saw the *Page 77 witnesses testify in open court and who heard the evidence of the petitioner, which was perpetuated before the same chancellor prior to the trial, to determine the truth of the controversy. A chancellor's finding of fact from conflicting testimony heard by him will not be disturbed on review unless clearly against thepreponderance of the evidence." (Italics supplied.)
Upon the submission of the case the trial judge rendered the following oral opinion:
"There has been much offered in evidence that the Court does not believe has very much bearing on the ultimate issue in this case, and as far as the Court is concerned it can be reduced very simply. There is no question as to the execution of the agreement; the general circumstances attending its execution, and that is the agreement that is now being sought to be set aside.
"The first issue is as to whether or not that agreement included the provisions that Mrs. Soares intended to have included, and in order to make a ruling on that point it is necessary to go back to sometime before the agreement was actually drafted and executed, to see the background of the general plan of the intended transfer of title to the daughter by the mother. There is no question that in this picture here there was ample grounds for the mother to favor the daughter, who now appears as a respondent in this case, not only from the standpoint of possible mistreatment and indifference by other members of the family to her, but because of the close association of the daughter with her, but it stands out clearly in the Court's mind that even though there was an over-all intention of providing for the respondent daughter who had just married, and to favor them with a home, that it still was the intent of the petitioner to retain for the remainder of her life some security in that premises; almost all the witnesses testified directly to that; Mr. Whitlow and the other daughter, Cecelia Faria, and the respondents, in effect, that it was her intention to sell the back half to her daughter and son-in-law and to retain the front cottage and the front half of the lot. Then they ran into difficulties, and the evidence all dovetails in, — the City and County ordinances being an obstacle to making a direct division, and the subdividing of the lots, and this was explained or attempted to be explained to Mrs. Soares by Mr. Whitlow, and I recall his testimony to the effect that she did not comprehend it. So from there we come down to the date of the execution of the agreement of sale on December 20, 1944, which was in the office of Mr. Whitlow, after *Page 78 preliminary conferences with him, and it hardly seems material as to who is faulty in their memory on whether there were any prior individual conferences or not, although my memory is that Mrs. Soares stated that she had contacted Mr. Whitlow on the suggestion of her daughter, but on that occasion there is also much ground to believe that the mother, not comprehending fully the significance of the inability to subdivide the property as originally was intended, still had in mind that the disposition of the property be made on a basis that would retain in her an interest in the view of the law of a more tenuous nature than that of mere occupancy, which was the reservation in the agreement of sale. Counsel in argument referred to it. Counsel for the respondent referred to it as her desire to retain a fee simple, — the words are not exactly to that effect, but the meaning is obvious that she intended it for two purposes, not only for her own protection, during her lifetime, to have some security that she could call on for hospital or other expenses, but also for the purpose of permitting her to make a disposition of that property after death. The Court would find that her purpose and intent in that respect was not fully covered in the agreement.
"It is true that she conferred with and resorted to Mr. Whitlow, but I hardly believe that it could be contended here that he was acting or attempting to act in the capacity of an attorney or counsel to advise her in a matter which would require considerable legal study to accomplish, upon the desires of the grantor, and furthermore there is nothing in the evidence here to indicate that he was representing her any more than he was the respondents. The inference is that the original acquaintance was between Mrs. Freitas and Mr. Whitlow, and that Mr. Whitlow was originally known by Mrs. Freitas through her connection with his business school.
"On the other basis offered in the petition for annuling the agreement the Court feels a different result is in order. There is a difference in the testimony of the petitioner and the respondents as to whether or not any provision was to be made for the peitioner's support and maintenance as a consideration or inducement for the execution of this agreement. But even on the petitioner's testimony I don't believe that the evidence would warrant setting this agreement aside on the grounds that there had been a failure in that respect. There is no question that it probably was understood as Cecelia Faria testified, that her sister Agnes would maintain the mother in her household, but the only testimony before the Court is that of the petitioner; that is the only direct testimony, to the effect that her daughter Agnes Freitas and her husband had promised that they would take care of her during the remainder *Page 79 of her lifetime. There is no testimony to the effect that that provision should have been included in the agreement of sale. So that in that respect there has been no denial on the part of the respondents, the evidence clearly showing that for a considerable time after the execution of the agreement of sale that they, either pursuant to such an agreement or voluntarily, did undertake to maintain her, — that is, the petitioner, in their household, and that if there was any discontinuance of that practice it was only the natural result of the unhappy situation that followed from the disruption of the family relationship over this property.
"As the Court has stated, it finds that there was that provision intended by the grantor to be included in the deed that was not included, and the next question is: Was that responsibility hers or otherwise? And in that connection the Court will have to make another finding.
"MR. TSUKIYAMA: May I interrupt the Court? Has the Court examined the agreement of sale itself with particular reference to the reservation?
"THE COURT: The reservation of occupancy. As I say, that was not what she intended. The reservation of occupancy would mean, as it is framed, slightly more than her right to use the house, and my finding is that at the time this agreement was entered into, both on the testimony of the petitioner, as supported by the surrounding facts and circumstances, including the generally agreed original intention to divide this property in half, — that she expected to have reserved to her a right in the first half, which would in effect amount to her control over that portion of the premises as if it were hers in fee. In other words, in accordance with her direct testimony, not only the right to use that property to cover hospital expenses and the like, which might occur in her lifetime, but the right of disposal of it when she passed away.
"And as a finding in that connection, that is as to whether or not the petitioner can be held responsible under the circumstances for not being covered in the agreement of sale, the Court will have to disagree with the contention of counsel for the respondents that the petitioner was not mentally as well as physically ill. Dr. Gaspar, I think, directly testified to that, when he states that in effect that due to the physical condition, the high blood pressure and the arteriosclerosis, that she had a degeneration of the mind and of the brain; that her mind was not what it used to be. But aside from Dr. Gaspar's testimony the Court hardly needs the assistance of a medical expert to conclude the same; not only from the observation of the petitioner, but from what might be gathered from the testimony relative to her actions at times. The unfortunate incident following slightly after the disagreement, that of declining *Page 80 her daughter Cecelia Faria's request to be permitted to use the front cottage, giving distress to her family, then out in the street, and wherein she testified that the mother hollered out to the neighbors, making accusations that were wholly unfounded, and similar incidents reported by the brother-in-law, and testimony relative to the mother's conversing with the neighbors and making false accusations, and the like, over the 'phone, all clearly indicate an unstable mind, a mind that clearly is easily upset, so this Court cannot find that Mrs. Soares possessed a firm mind, the firm mind that the respondents contend she did, and by that the Court does not mean that she did not have the capacity to execute a will, or is not competent to enter into any other legal contract; it is not necessary to go that far, and the Court does not contend or hold that she was incompetent; if it thought she were, there would be no ground for setting aside this agreement. That factor, plus the fact that we are dealing here not with a case involving a person to a contract standing on equal footing, but only with inequity clearly recognized to create a confidential relationship, wherein the transactions involved are scrutinized and adjudged on an entirely different basis than transactions entered into by people standing on an equal footing. There is no necessity of referring at length to the authorities of this jurisdiction. There are many of them that point clearly to the principle involved. Maybe reference to Keanu v. Kamanoula, 20 Haw. 96, should be sufficient, that case being one in which the daughter was dealing with the parents and the language there, quoted by the Court, and some of the authorities, is pretty strong in indicating the approach to a decision of this case. In fact, it is stronger than necessary, in the Court's mind, for the decision in this case, and I quote at page 100, an extract from Bigelow on Fraud:
"`When a party, complaining of a particular transaction, such as a gift, sale or contract, has shown to the court the existence of a fiduciary or a confidential relation between himself and the defendant, and that the defendant occupied the position of trust or confidence therein, the law raises a suspicion, or, it is often said, a presumption of fraud.'
And again, on page 101, from Pomeroy:
"`Wherever two persons stand in such a relation that, while it continues, confidence is necessarily reposed by one, and the influence which naturally grows out of that confidence is possessed by the other, and this confidence is abused, or the influence is exerted to obtain an advantage at the expense of the confiding party, the person so availing himself of his position will not be permitted to retain the advantage, although the transaction could not have been impeached if no such *Page 81 confidential relation had existed.'
"So that, in accordance with the views heretofore expressed, this Court will have to hold that there existed a confidential relationship between the parties hereto, and that they did not stand on an equal footing, and the respondents both are intelligent people, of stable minds; the petitioner is quite the contrary, not only is she, the Court holds, of a weakened mind due to her physical condition, but she lacks also sufficient education or training to have sufficiently understood these transactions involved in this agreement of sale to have permitted her to perceive whether or not, as it was explained to her, she was obtaining what she intended to obtain by way of a reservation, and that, consequently, the execution of this agreement of sale constituted a fraud upon her, and the prayer to have it cancelled will be granted upon the return, — or the making available to the respondents the $3,650. paid in under the agreement and now on deposit with the Clerk of this Court."
The plaintiff took the stand on her own behalf. Twice during the course of her evidence she broke down and the court was required to recess. The trial judge was in a position to judge whether her distress was real or dissimulated. Her evidence is disconnected and far from satisfactory. Obviously, the personal observations of the circuit judge of the appearance, manner and conduct of this witness has not been perpetuated and is not contained in the record. She was the subject of the issue of mental capacity. The judge gave expression to his reactions and he took her appearance, manner and conduct as a witness into consideration in concluding that at and prior to the time of the execution of the agreement of sale she was weak-minded and incapable of appreciating the legal effect of what she was doing. Her mental capacity and her ability to appreciate that the document in question to the extent that it affected the front half of the premises were the two determining issues in the case. The evidence upon these issues was conflicting, especially in respect to her ability mentally to appreciate the extent to which the agreement of sale affected her rights in the property. This conflict was settled and resolved by the circuit judge in *Page 82 favor of the plaintiff. His decision has the support of a clear preponderance of the evidence and, to repeat and apply the language of this court in the De Mello case, his findings should "not be disturbed on review unless clearly against the preponderance of the evidence."
I do not want to enter into any controversy with my brothers of the majority upon the question of whether the evidence sustains their findings of fact, or whether the principles of law enunciated by them are applicable. I am content to abide by and not disturb the conclusions of the learned trial judge. They have my unqualified approval. To enlarge upon or discuss the testimony which in my opinion sustains the burden of proof, or to attempt to demonstrate by references to the testimony that the evidence upon the issues presented clearly preponderates in favor of the plaintiff would serve no useful purpose. The primary object of this opinion is to protest against the disregard by this court of the findings of the trial judge in an equity case upon conflicting oral evidence where those findings are amply supported by a preponderance of the evidence and its failure to apply thereto a rule of its own adoption. If, as I view the opinion of the majority, a finding of a chancellor upon conflicting oral evidence may be re-examined by this court with absolute disregard of the credibility of witnesses and the weight of evidence determined by the trier of the facts, favorable findings nisi in equity cases upon conflicting oral evidence have become valueless.
1 R.L.H. 1945, § 9505.
2 3 Bl. Comm. p. 454; 2 Daniell's Chancery, P. P. 6th Am. Ed., star paging 1499, 1504, 1505; Jones Ed. vol. III, § 598.
3 Act of Mar. 3, 1803, 2 Stat. c. XL, p. 244; The San Pedro, 2 Wheat. 132, 137; Conn v. Penn, 5 Wheat. 424.
4 Pound, App. Proc. in Civ. Cas., p. 300, cases cited at note 2.
5 Id. p. 300, note 5.
6 Linn v. Barkey, 7 Ind. 69.
7 Pound, App. Proc. in Civ. Cas., p. 301.
8 Id. p. 300, note 5.
9 De Souza v. Soares, 22 Haw. 17, 18; Sumner v. Jones,22 Haw. 391, 394; McCandless v. Castle, 25 Haw. 22, 33; Nawahie v. Goo Wan Hoy, 26 Haw. 137: Jellings v. Garcia, 29 Haw. 698; Hookaia v. Kealoha, 30 Haw. 446, 449: Pinheiro v. Pinheiro,32 Haw. 659, 664; De Mello v. De Mello, 34 Haw. 922, 933. *Page 83