Bankers' Trust Co. v. Bank of Rockville Ctr. Trust Co.

• Decision Date: 27 September 1933
• Docket Number: No. 74.,74.
• Citation: 168 A. 733
• Parties: BANKERS' TRUST CO. v. BANK OF ROCKVILLE CENTER TRUST CO. et al.
• Court: New Jersey Supreme Court

168 A. 733

BANKERS' TRUST CO.

v. BANK OF ROCKVILLE CENTER TRUST CO. et al.

No. 74.

Court of Errors and Appeals of New Jersey.

Sept. 27, 1933.

Appeal from Court of Chancery.

Bill for interpleader by Bankers' Trust Company against Bank of Rockville Center Trust Company, administrator cum testamento annexo of John M. Phillips, deceased; Chase National Bank, administrator of estate of Francis Phillips, deceased, and guardian of Helen Phillips, a minor; James F. Mulcahy, guardian of Helen Frances Phillips, a minor, and others. From decree rendered (110 N. J. Eq. 203, 159 A. 505), the named defendants appeal.

Reversed and remanded.

Andrew J. Whinery, of Newark, for appellant Rockville Center Trust Co.

Joseph Altman and Daniel De Brier, both of Atlantic City, Francis A. Lewis, of Philadelphia, Pa., and Zechariah Chafee, Jr., of Cambridge, Mass., for appellants Chase Nat. Bank and James F. Mulcahy.

W. Lindley Jeffers, of Atlantic City, for complainant-respondent.

John C. Reed, of Atlantic City, for respondent Marian Phillips Cassidy.

HEHER, Justice.

This is an interpleader suit instituted to determine the title to funds on deposit, with complainant. The final decree adjudged that defendant Helen Phillips (daughter of John M. Phillips, deceased) was entitled to $20,114.74, the amount credited to her account with complainant, opened on Decennber 20, 1926; that appellant Chase National Bank, as administrator of the estate of her deceased brother, Francis Phillips, was entitled to $26,646.45, the balance credited to said decedent in an account opened with complainant on June 8, 1926; and that respondent Marian Phillips Cassidy (widow of John M. Phillips) was entitled to the sum of $195,000 (with accumulated interest), deposited with complainant on January 16, 1928, and evidenced by two certificates of deposit issued by complainant—one in the sum of $100,000 and the other in the sum of $95,000—each of which acknowledged the deposit of the sum therein stated by "Helen Francis," and provided that it shall be "payable to the order of bearer on the return of this certificate properly endorsed, with interest at 4% per annum if left one month."

Appellants challenge only that portion of the decree which awards the deposits exhibited by the certificates of deposit to respondent Marian Phillips Cassidy. The Bank of Rockville Center Trust Company, as administrator cum testamento annexo of the estate of the deceased John M. Phillips, asserts title in its testator during life, and claims the fund as his administrator. The Chase National Bank, as administrator of the estate of Francis Phillips, deceased, and guardian of his widow, Helen Phillips, a minor, and James F. Mulcahy, guardian of Helen Frances Phillips, his minor child, aver ownership of the fund in Francis, and claim title thereto through him.

Ownership of the fund represented by these certificates of deposit in Francis Phillips, at the time the moneys were deposited and the certificates issued, is established by the proofs. True, he was a minor, eighteen years of age, and was accompanied by his father when the deposit was made, but it is undisputed that he had physical possession of the moneys; that he actually made the deposit, and arranged for and received the certificates of deposit; and that his father informed officers of the bank that these moneys were the property of his son and daughter Helen. Francis suffered physical disability to a marked degree, and his father had the parent's solicitude for his son's future welfare. Senator Richards, the bank's president, destribed him as "terribly crippled, apparently from infantile paralysis," and he seemed to be 21 or 22 years old. He related the circumstances connected with the opening of the account by Francis on June 8, 1826, with an initial deposit of $:!S,000, provided by his father. The parent stated that he "wanted him (Francis) to learn business ways, and that he was giving him some money to start a bank account, and wanted to open up a bank account for the son." When the Senator asked, incredulously, if he intended to make a gift of this sum to his son, the father replied, "Yes, I do, and I am going to open up an account for my daughter and give her an even break." Francis bad complete and unquestioned dominion over this account, and from time to time made withdrawals therefrom. At the time of his death, on June 26, 1929, the balance to his credit in this account was $26,646.45. On December 20, 1926, the daughter Helen, also a minor, opened an account with an initial deposit of $27,635.01, furnished by her father.

John M. Phillips opened the negotiations which eventuated in the deposit of the disputed $195,000. He inquired of Senator Richards as to the rate of interest complainant would pay on a deposit. He was informed that the clearing house rules permitted the payment of 3 per cent. on accounts in excess of $25,000. When Phillips insisted on a higher rate, Mr. Richards advised him that a certificate of deposit would draw interest at the rate of 4 per cent., and suggested that the deposit take that form. Phillips seemed content, and said: "Well, Francis and I will be up to see you." Shortly thereafter Phillips and his son called at the bank. Senator Richards relates the conversation as follows: "Mr. Phillips then said to me, 'The boy is carrying around a lot of money here; I don't want him to have it on him and besides it ought to be earning interest; he has got to learn to take care of his money; I want you to fix this up so he will be getting interest.' Well, I said you mean—I think he then said to me, as I recall it, 'What is this certificate of deposit?' I said, 'It is merely a certificate; * * * a certificate of deposit simply is a statement that the bank holds for the holder of the certificate that much money and it draws four per cent. interest.' He said, 'Well, that is all right; come on, kid, give the Senator your money.'" Francis demurred, saying to his father, "You kn6w somebody else knows about this." The parent, expressing unconcern, continued, "You do what the Senator tells you; you give him your money," and Francis, signifying his consent, took from his overcoat pocket $195,000 in currency, and placed it on a table.

When Senator Richards directed the vice president of the bank to prepare a certificate of deposit for this sum, John M. Phillips requested that two certificates be made, one for $100,000 and one for $95,000, explaining that "half of this belongs to his (Francis's) sister (Helen)." In response to an inquiry as to "how they wanted the certificates made out," it was suggested that "they combine the names of the two children, Helen and Francis," and two certificates were then prepared, stating that "Helen Francis" deposited the sum specified therein. Francis received the certificates, and was preparing to place them in his pocket, when Senator Richards suggested that they be deposited in a safe deposit box. The Phillipses assented, and immediately repaired to the vault. Francis rented a box in his name. . One of the bank's officers saw him place papers therein, but he did not know whether the certificates were among them. There is no testimony that the box was thereafter opened by Francis. No one else had authority to open it.

On July 3, 1928, John M. Philiips died. His widow, Marian, and the named children, Francis and Helen (children of a deceased wife), survived. On June 26, 1929, Francis, at the age of 19 years, was killed as the result of an accidental fall of an airplane. His wife, Helen, and an infant child, Helen Frances, survived.

The administrator of John M. Phillips asserts that the fund represented by the certificates of deposit was the property of its testator; that the possessor of the certificates held the same in trust for him; and that his administrator is now entitled to the fund. Respondent Marian Phillips Cassidy claims that this fund, at the time of its deposit, was the property of her deceased husband; that prior to his death, her husband transferred title to the certificates to her for a valuable consideration; and that the moneys were properly awarded to her. Title was transferred, so she claims, by the delivery of the certificates, font she was unable to produce them. She explained that they had been accidentally lost or destroyed. It is admitted that they bore no indorsement. The widow contends that they were payable to "bearer," and that indorsement was not a requisite to the passing of title.

It is conceded that John M. Phillips was the source of the fund evidenced by the certificates of deposit, and the first question presented is whether he parted with the title when he delivered possession of the moneys to his son. That question must be resolved in the affirmative. The proofs lead irresistibly to the conclusion that there was a gift inter vivos of this fund. The requisites of a valid gift inter vivos are: First, a donative intent on the part of the donor; second, an actual delivery of the subject-matter of the gift unless it be a chose in action, like a certificate of shares of stock or evidence of indebtedness, in which case the delivery must be of that variety of which it is most capable; and, third, the donor must strip himself of all ownership and dominion over the subject-matter of the gift. Taylor v. Coriell, 66 N. J. Eq. 262, 57 A. 810; Swayze v. Huntington, 82 N. J. Eq. 127, 133, 87 A. 106, affirmed 88 N. J. Eq. 335, 91 A. 1071; Besson v. Stevens, 94 N. J. Eq. 549, 556, 120 A. 646; Stevenson v. Earl, 65 N. J. Eq. 721, 55 A. 1091, 103 Am. St, Rep. 790, 1 Ann. Cas. 49; Nicklas v. Parker, 69 N. J. Eq. 743, 61 A. 267, affirmed 71 N. J. Eq. 777, 61 A. 267, 71 A. 1135, 14 Ann. Cas. 921; Conners v. Murphy, 100 N. J. Eq. 280, 134 A. 681, 53 A. L. R. 1115.

The evidence clearly establishes a donative intent. The declarations of the donor to Senator Richards signify such an intention. This fund was a gift to his children, in whose judgment...