Abruzzese v. Oestrich

• Decision Date: 22 March 1946
• Docket Number: 148/526.
• Citation: 47 A.2d 883
• Parties: ABRUZZESE et al. v. OESTRICH et al.
• Court: New Jersey Court of Chancery

47 A.2d 883

ABRUZZESE et al.

v.OESTRICH et al.

148/526.

Court of Chancery of New Jersey.

March 22, 1946.

Action by Carl Abruzzese and another, executors, etc., against Mathilde Oestrich and others concerning two savings accounts standing in the name of decedent in trust for her two daughters.

Decree in accordance with opinion.

Syllabus by the Court.

1. Where, in the course of settlement of a decedent's estate, the executor and a third person contest the ownership of a savings account, Chancery has jurisdiction to adjudicate the matter on a bill filed by the executor or by the other claimant.

2. Since the decree determining the title to the account may affect the inheritance tax on the decedent's estate, an agent of the State is a proper although not a necessary party.

3. While the general principle is well settled that the State is not suable without its consent, yet in certain cases where the interests of the State are incidentally concerned, an agent of the State may be made a defendant.

4. Where a person deposits money in a savings account in his name as trustee for another, the style of the account is not, of itself, sufficient proof of intention to create a trust, in the absence of statute. Other circumstances are looked to.

5. Phrases in an amendatory act which are taken unaltered from the original act, are generally give the same effect as before the amendment.

6. While a legislative enactment may be inoperative and void for uncertainty, yet a statute is discarded for uncertainty only as a last resort. The judiciary should give effect to the intention of the legislature if the intention can be found with reasonable assurance and if the language of the statute at all permits.

7. By force of R.S. 17:9-4, N.J.S.A., when one (donor) opens an account in a savings bank in his name in trust for a named beneficiary (donee), so much of the fund deposited as remains in the account at the donor's death belongs to the donee, free from any claim on the part of the donor's representatives.

8. The donee has no right to the possession or enjoyment of the fund in the donor's lifetime.

9. Where an account stands in the name of B in trust for O and S, O and S are tenants in common. Upon the death of S in the lifetime of B, O's interest still extends to only one-half the fund.

Carl Abruzzese, of Newark, for complainants.

Hood, Lafferty & Emerson, and William G. Hart, all of Newark, for defendant Mathilde Oestrich.

Riker, Marsh & Scherer and F. Hobart Higgins, all of Newark, for defendant Franklin Savings Institution of Newark.

Walter D. Van Riper, of Newark, and William A. Moore, of Trenton, for State.

BIGELOW, Vice Chancellor.

This is a controversy over two savings accounts standing in the name of Mathilde G. Bear in trust for her two daughters, Mathilde Oestrich and Louise Smith. One of the accounts, in the Franklin Savings Institution, was opened in 1930 and for some undisclosed reason was closed three years later, and the balance therein, $7,267, was transferred to a new account in the same bank and with the same title as the old. In 1937, Mrs. Bear signed the agreement relative to this account, which is discussed below. The other account was opened by Mrs. Bear in the United States Trust Company in 1935. On July 23, 1943, Mrs. Smith died, but no change was made in the title of the accounts. Mrs. Bear passed away January 3, 1945, at which time the balance in one bank was $592, and in the other, $6,520. Mrs. Bear's executors claim title to both funds and so does Miss Oestrich.

The bill shows that the Supervisor of the Inheritance Tax Division of New Jersey asserts that both accounts were the property of Mrs. Bear at her death, and are part of her estate. The complainants join him as one of the defendants. He objects to the joinder and asks that the bill be dismissed as to him. Where, in the course of settlement of a decedent's estate, the executor and a third person contest the ownership of a savings account, the jurisdiction of Chancery to adjudicate the matter on a bill filed by the executor or by the other claimant is well established by a long line of precedents. New Jersey Title G. & T. Co. v. Archibald, 90 N.J.Eq. 384, 107 A. 472; Commercial Trust Co. v. White, 99 N.J.Eq. 119, 132 A. 761; Id., 100 N.J.Eq. 561, 135 A. 916; Johnson v. Sav. Inv. & Tr. Co., 107 N.J.Eq. 547, 153 A. 382; Hudson Trust Co. v. Holt, 115 N.J.Eq. 34, 169 A. 516; Thatcher v. Trenton Trust Co., 119 N.J.Eq. 408, 182 A. 912; Hickey v. Kahl, 129 N.J.Eq. 233, 19 A.2d 33; Lester v. Guenther, 132 N.J.Eq. 496, 28 A.2d 777; Id., 134 N.J.Eq. 53, 33 A.2d 815; Wolf v. Wolf, 136 N.J.Eq. 403, 42 A.2d 300. This procedure avoids circuity of action and multifarious suits. Travers v. Reid, 119 N.J.Eq. 416, 182 A. 908. In such a suit, the decree determining the title to a bank deposit may affect substantially the tax on the decedent's estate. In the absence of fraud, it is quite likely that the adjudication is conclusive when the tax comes to be assessed, even though the taxing authority was not a party to the cause. Restatement-Judge. secs. 83 and 110; 34 C.J. 526 and 1039; 33 C.J.S., Executors and Administrators, § 142, p. 1099. In an action by the executor to recover assets which may be part of the estate, or in an action against the executor to establish a debt alleged to have been owed by decedent, the executor represents creditors to the extent that they are bound by the judgment. Does he likewise represent the State? I need not attempt to answer the question, since in the present cause, the Supervisor of the Inheritance Tax Division is named as a defendant in order that the State may be concluded beyond question, and also that the Supervisor may have opportunity to protect the interests of the State by presenting to the court such facts and arguments as he may deem proper. The joinder is not without precedent. Shippee v. Shippee, 122 N.J.Eq. 570, 195 A. 728; Carter v. Martin, 124 N.J.Eq. 106, 199 A. 589. On general principles, the Supervisor appears to be a proper, although not a necessary party. Chancery Rule 6, N.J.S.A. Tit. 2. As the agent of the State, he has a substantial interest in the controversy, that is, the question of title to the bank accounts. The Director of the Division of Taxation, rather than the Supervisor, might better have been named to represent the State, but no objection has been made on this ground.

The Attorney General contends that the joinder of the State Supervisor converts the cause into an action against the State, in disregard of the principle that the State is not suable without its consent. The general principle is well settled. Not only are those suits barred in which the judgment sought would subject the State to a liability, but the rule has a much wider scope and has been held to apply, for instance, to an action to foreclose a tax sale certificate, Town of Irvington v. Ollemar, 128 N.J.Eq. 402, 16 A.2d 563; Irvington v. Geiger, 131 N.J.Eq. 189, 24 A.2d 368; a suit to quiet title, Karp v. High Point Park Comm., 131 N.J.Eq. 249, 24 A.2d 860; Id., 132 N.J.Eq. 351, 28 A.2d 118; and a suit for a declaratory judgment, Empire Trust Co. v. Board of Commerce, 124 N.J.Law 406, 11 A.2d 752. But there are limitations to the rule. In our leading case, American Dock, etc., Co. v. Trustees of Public Schools, 35 N.J.Eq. 181, 252, Justice Depue said, ‘In certain cases where the interests of the crown are incidentally concerned, the attorney general may be made a defendant in equity.’ He gave as instances, suits to subject goods of a debtor to payment of his debts, or to recover a legacy, or to collect dividends on stock shares, in which the attorney general was made a party for the purpose of determining whether the subject matter, that is, the creditor's assets, the legacy, or the stock shares, had passed to the crown by forfeiture in the first two actions, or as property derelict in the last. The American Dock case was primarily a suit to quiet title brought by one railroad company against another. The Trustees of Public Schools, an agency of the State, held a mortgage which had been created by the defendant company, and which was worthless, if that defendant had no title. The court held: ‘In a suit such as the complainants have brought, a mortgagee of the owner of the adverse title is a proper but not a necessary party. Though the complainants may not be able, as against the trustees, to present some of their grounds for relief, for the reason that the trustees are not the proper parties to litigate them, the trustees were properly made parties to this bill, and the relief prayed may, if the grounds of it are otherwise sufficient, be decreed against them.’ The prayer with respect to the trustees was that their title be decreed to be invalid and that they be restrained from proceeding to sell the premises under a decree of foreclosure which they had obtained.

Comparing the cases mentioned, we may observe that in the Karp and Empire Trust Co. suits, the agencies of the State were the sole defendants, the bills attacked nothing except the title of the State; while the American Dock case was essentially a contest between the two railroad companies wherein the interests of the State, though substantial, were only incidentally concerned. The Ollemar case at first glance seems closer to the American Dock case, but may readily be distinguished. The Town, holding a tax sale certificate, brought foreclosure against the landowner and encumbrancers, including the State which had a lien for inheritance taxes. If the Town had been permitted to proceed against the State and established the priority of its lien, the State would have been compelled to pay the Town's lien, or else abandon its own. In practical effect, the decree would have subjected the State to a liability for which the legislature had made no provision. As part of the same litigation, the holder of a mortgage on part of the land filed a bill praying,...