Allen v. Hendrick

• Decision Date: 25 April 1922
• Parties: ALLEN v. HENDRICK ET AL.
• Court: Oregon Supreme Court

206 P. 733

104 Or. 202

ALLEN v. HENDRICK ET AL.

Supreme Court of Oregon

April 25, 1922

Rehearing denied May 23, 1922.

Department 1.

Appeal from Circuit Court, Washington County; Geo. H. Bagley, Judge.

Action by George S. Allen, administrator of the estate of G. R Hendrick, deceased, against George E. Hendrick and another. From judgment for plaintiff, defendant named appeals. Reversed.

The plaintiff, George S. Allen, administrator of the estate of Geo. R. Hendrick, deceased, brought this suit against George E. Hendrick and the Forest Grove National Bank of Forest Grove, Or.; and, alleging that he was entitled to the funds represented94 by two time certificates of deposit, issued by the bank to Geo. R. Hendrick, but in the possession of the defendant George E. Hendrick, the plaintiff prayed for a decree adjudging the ownership of the certificates to be in the estate of Geo. R. Hendrick, deceased, and restraining the bank from recognizing or paying the certificates until the ownership of them could be determined. A trial resulted in a decree for the plaintiff. The defendant George E. Hendrick appealed.

Upon the commencement of this suit the bank was enjoined from paying the certificates until the court adjudicated the ownership. The bank occupies the position of a stakeholder for the bank has been able and willing, since the maturity of the certificates, to pay the amount due on the certificates to whomsoever the court may decide to be the owner of them. Since George E. Hendrick is the only contesting defendant he will be referred to, for the sake of brevity, as the defendant.

Geo. R Hendrick moved to Forest Grove, Or., in 1910; but he left that place and went to Smith Center, Kan., in about 1916. At some time, presumably prior to his departure for Kansas, Geo R. Hendrick deposited moneys in the Forest Grove National Bank and received therefor time certificates of deposit. From the time of his departure from Oregon, in 1916, until the date of his death, Geo. R. Hendrick had moneys on deposit with the Forest Grove National Bank, and these moneys were represented by time certificates of deposit issued to him. In 1917 he held several time certificates of deposit, including three certificates for $1,000 each. According to a letter written on April 2, 1917, by the decedent to the Forest Grove National Bank, he sold three certificates, and the First National Bank of Smith Center "has got" three specified certificates "to collect." Certificates not sold or collected were renewed as they matured. The process of renewal involved the surrender and cancellation of the old certificates for the principal sums and the payment of interest due on the matured certificates.

The last renewals made by the bank were on October 8, 1919. The decedent had mailed from Smith Center, Kan., two $1,000 certificates, with directions to the bank to send him a draft for the interest due on the matured certificates and to issue new certificates for the principal sums. The bank complied with the directions, and, under date of October 8, 1919 issued two time certificates of deposit for $1,000 each, payable six months after date to Geo. R. Hendrick or order, with interest at the rate of 3 per cent. per annum. The bank mailed these two certificates to the decedent at Smith Center, Kan. The decedent, on October 13, 1919, sent by registered mail to the defendant George E. Hendrick at Boardman, Or., where the latter then resided, a letter reading as follows:

"Smith Center Kansas.

"Dear Son will send you two Deposit checks you will keep safely for me in case I come to need any part or all of them and if I never need them they are all yours when I am done with them.

"Your Pa

Geo. R. Hendrick."

This letter was written with pen and ink. In the upper right-hand corner of the letter, appears the word "three" written with pen and ink. Above the word "three" appears the word "two" written with a lead pencil. Within the area covered by the word "three" is also the word "two" written with a lead pencil. However, as we understand the record, it is admitted that only two certificates accompanied the letter. The letter itself is not dated, but the envelope is postmarked October 13, 1919. The defendant received the letter, and inclosed with it were the two certificates of deposit which, on October 8, 1919, the Forest Grove National Bank had issued and mailed to the decedent. When received by the defendant, each certificate bore the indorsement: "Geo. R. Hendrick," in the handwriting of the decedent. According to the pleadings, Geo. R. Hendrick died intestate at Smith Center, on December 21, 1919, leaving as his only heirs at law the defendant George E. Hendrick, a son, and William F. Hendrick, a son and a resident of Smith Center, Kan., and Clarie M. Tobias, a daughter.

The complaint is framed on the theory that the defendant received the certificates "under the conditions set forth in the letter * * * and not otherwise," and that the transaction constituted at the most a mere bailment; and that, therefore, the plaintiff, as the representative of the estate of the decedent, is entitled to the possession of the certificates and to the moneys due on them. The amended answer was drawn upon the theory that the decedent sent the certificates to the defendant--

"with instructions to said Geo. E. Hendrick to hold and keep said certificates, and the fund of money represented thereby, in trust for said G. R. Hendrick for and during his natural life, and that, at the termination thereof, the legal title to said certificates and the funds represented thereby, or balance thereof, should be and become vested absolute in said Geo. E. Hendrick: * * * That it was the intent, purpose, will, and desire of said G. R. Hendrick to make a gift in trust during his life, or a voluntary settlement, of the said certificates and the funds represented thereby in favor of the defendant Geo. E. Hendrick, and that, by delivery of said certificates, indorsed in blank, as aforesaid he did so."

John W. Reynolds, of Portland (Flegel, Reynolds, Flegel & Smith, of Portland, on the brief), for appellant.

Manshe I. Langley, of Forest Grove, Lotus L. Langley, of Portland, and E. B. Tongue, of Hillsboro, for respondent.

HARRIS, J. (after stating the facts as above).

We understand, from the plaintiff's printed brief, that the trial court concluded that the letter of October 13th effected nothing more than a bailment. The plaintiff contends that the transaction, at the most, amounted to a bailment, and that therefore, upon the death of Geo. R. Hendrick, the owner, the certificates passed to the administrator of his estate, with the result that the moneys due on the certificates must be paid to the administrator and by him be distributed as property of the estate. The defendant asserts in his printed brief, although he does not attempt to support the assertion with argument, that there is sufficient evidence in the record to warrant the conclusion that the transaction constituted a gift causa mortis. However, the defendant does argue that the transaction was one where the decedent transferred the certificates to the defendant as trustee, reserving to the decedent a life estate, under terms which entitled him to use a part or all of the funds in case he needed a part or all during his life, with remainder over to the defendant. The printed brief submitted by the defendant is confined to arguments advanced in support of this contention; and, if this position taken by the defendant is correct, the legal and equitable estates were merged in him, and he became the absolute owner of the certificates immediately upon the death of his father.

Discussion of the legal rights of the parties will be made clearer if we first direct attention to the evidence; but, before considering any of the evidence, we must dispose of an objection made by the plaintiff. In addition to the letter of October 13, 1919, the defendant, over the objection of the plaintiff, offered other evidence, consisting principally of letters and evidence of their contents, which the defendant claims tends to show that it was the intent of the decedent "to make a gift in trust during his life, or a voluntary settlement, * * * in favor of the defendant." The plaintiff, in his printed brief, contends that, by reason of the form of the allegations in the amended answer, the letter of October 13, 1919, is the only evidence "to be considered by the court in adjudicating the legal rights of the parties," although the plaintiff concedes that--

"if defendant had alleged what he claimed as establishing the gift in trust, he could doubtlessly introduce in evidence anything that would tend to establish the allegation."

The plaintiff directed attention to the form of the allegation in the amended answer, for, when objecting, he stated:

"The point that I make is that * * * the answer specifically states that those instructions were given us on October 13, 1920 (1919)"

--and that evidence of any other instructions was incompetent and not pertinent to the issues.

The owner of personal property can, when dealing with it, create a trust either by spoken words or by a writing. Cooper v Thomason, 30 Or. 161, 171, 45 P. 296; Martin v. Martin, 43 Or. 119, 123, 72 P. 639. The decedent, therefore, could have orally declared a lawful trust, or he could have done so in writing. Of course, if a writing is employed, its terms cannot be varied by parol testimony. However, in the instant case it is not claimed that evidence of oral and written declarations, made prior to October 13, 1919, varies or contradicts the letter of October 13th; but the contention is that, because of the form of the allegation in the amended answer, no evidence of...