"Complainants, as executors of the last will and testament of Richard Stevens, deceased, filed two bills, one to determine the ownership of 600 shares of stock of the Hoboken Land & Improvement Company and 410 shares of common and 1,161 of preferred stock of Hoboken Paper Mill Company, standing of record in the name of Elizabeth C. Stevens, Jr., and the other a like bill, but relating to 700 shares of stock of the Hoboken Land & Improvement Company, standing of record in the name of Dorothy P. Stevens. Elizabeth C. Stevens, Jr., died intestate shortly after the bill was filed
and the suit was revived as against her administrator. Both suits were tried together. There is no dispute over the principles of law involved, nor over the facts susceptible of direct proof; the controversy is as to inferences of fact and as to the application of the legal principles to the facts.
"It appears from the evidence and the adminsions in the pleadings that the testator, Richard Stevens, was a man of high standing and of large means. His wealth (including the securities in question in this litigation) amounted to about $1,500,000, of which about $1,000,000 was in securities. He died May 18, 1919, at the age of 51 years, after an illness of four days with pneumonia. He left him surviving a widow and four children—Elizabeth, aged 24 (at his death); Caroline, 21; Dorothy, 16, and Richard, 14—of whom Elizabeth and Dorothy are the respective principal defendants in the two suits.
"He was a lawyer, a member of the bar of this state, and engaged to some extent at least in active practice. He was also active in business and financial pursuits, being the president of the Hoboken Paper Mill Company, and also of the Hoboken Land & Improvement Company, both 'close corporations' of the Stevens family, in which he had large stockholdings.
"It further appears that the 600 shares of land company stock and the 410 shares of paper company stock above mentioned were, prior to the transfers to Elizabeth C. Stevens, the property of the testator; that some time prior to October 1, 1918, this stock was transferred by the testator to his sister Caroline B. Wittpenn, in trust for certain purposes, one of which was to transfer the stock upon the demand of testator to any person named by him; that Mrs. Wittpenn had no interest whatever in the stock; that on October 1, 1918, the testator caused the 600 shares of the land company stock above mentioned to be transferred on the books of the company from the name of Caroline B. Wittpenn to the name of Elizabeth C. Stevens, Jr. Either at this time or later a certificate was issued by the company for said 600 shares of stock in the name of Elizabeth C. Stevens, Jr. This certificate was placed by the secretary of the company, at the direction of the testator, in the private compartment of the testator in the safe of the company, where it was found at his death.
"On the 2d day of October a similar transfer was made from Mrs. Wittpenn to Elizabeth C. Stevens, Jr., of 410 shares of the common stock of the paper company, and certificate No. 36 for said shares was issued in the name of Elizabeth C. Stevens, Jr., and was placed by the secretary of the land company at the direction of the testator in the abovementioned private compartment in the safe of the land company, and was found there at his death. Both of these transfers were made without consideration, and in neither case was the certificate of stock physically delivered to Elizabeth C. Stevens, either at the time of the transfer or at any other time.
"On November 1, 1918, the paper company, of which the testator was then president, passed a resolution authorizing its president and secretary to issue to Elsie C. Stevens (the name by which said Elizabeth C. Stevens, Jr., was commonly known) a certificate for 1,161 shares of the new preferred stock of the company in exchange for $90,000 par value of bonds of the company and a nine-tenths interest in a bond and mortgage of the company, amounting to $29,728.23, which bonds and mortgage, the resolution states, were then owned by said Elsie C. Stevens, but which were in fact owned by Richard Stevens. The preferred stock was duly issued to Elizabeth C. Stevens, Jr., but the certificate was delivered by the paper company to Richard Stevens, who in turn delivered it to Mr. Brown, secretary of the land company, directing him to put it in the land company's safe in the office of that company. Mr. Brown placed the certificate in that safe in the file marked 'Elsie Stevens, Jr.'
"About January 29, 1919, Elizabeth C. Stevens, Jr., acting at the request of the testator, executed and delivered an assignment of said 600 shares of stock of the land company unto said Richard Stevens, and also an irrevocable power of attorney authorizing the transfer of said stock on the books of the company to said Richard Stevens or his nominee. This assignment was fastened by Richard Stevens to the certificate of stock issued in the name of Elizabeth C. Stevens, Jr., above referred to, and was found with such certificate after his death. At the same time, and at her father's request, a similar assignment and power of attorney was executed by Elizabeth C. Stevens, Jr., on the reverse side of the certificate for 410 shares of the common stock of the paper company; also an assignment and irrevocable power of attorney of the 1,161 shares of preferred stock of the paper company, which was delivered to him and attached by him to the certificate of preferred stock, and so found at his death.
"The financial dealings of the members of the Stevens family were carried on largely, if not entirely, through the land company, which collected the dividends and interest for the several members of the family, depositing them to its own account, crediting them respectively on their several accounts in its books, and from time to time paying out moneys on their respective orders or instructions and debiting their accounts with the moneys so paid out. So, also, their securities, or some of them, were kept in the land company's safe, in separate files or envelopes. Elizabeth came into possession of some securities from her grandmother's estate when she became 21, and a file in the safe was set apart for her securities and an account opened in her name, Elsie Stevens, Jr., on the books of the land company. To her credit in that account were entered the income from the securities just mentioned (collected by the land company), and checks for one-twelfth the annual income were made and sent her by the company monthly and charged against that account. This account and the moneys derived therefrom was used by her solely as a 'dress' or clothing account. Her other expenses were paid by her father, as well after her majority as before. (A similar file and account were instituted for Caroline when she became of age.)
"The dividends accruing in October and November, 1918, on the three blocks of stock issued in the name of Elizabeth, were collected by the
land company (if it can be said to collect dividends which it pays) and credited to this account of 'Elsie Stevens, Jr.' This was not by any instructions from Elizabeth, but following the usual custom or routine of the office and the family. On December 6, 1918, however, the testator gave the company written instructions to open a new account in the name of 'Elsie Stevens, Jr., Special'; to transfer to it from the 'Elsie Stevens, Jr.,' account the dividends of the preceding three months on the stock in question, and to credit it thereafter with all future dividends on the stock in question. These instructions were carried out, and all subsequent dividends were credited to the new or 'special' account, and nothing else was credited therein. No moneys were withdrawn from this account by the order of any one other than the testator, up until his death. During that period the 'deposits' or credits totaled $16,347.55, and there was charged against it only $3,245.95—$2,638.20 in February, 1919, and $607.75 in March. The February charge of $2,638.20 and $578 of the March charge were for wines and liquors (mostly whisky), bought by testator in the name of Elsie; the remaining $29.75 of the March charge was the quarterly installment of Elsie's 1918 income tax, due March 15th. The income tax report for 1918 was not made up by her but by the land company's office force; it included in the return the October, November, and December dividends above mentioned. (It may be noted here that there is no evidence that the October, 1918, monthly dividend on the land company stock was in any wise paid to Elsie; neither, however, does it appear that any such dividend was paid by the land company except by mere presumption from the fact that such dividends we're paid each subsequent month.)
"The testator's will was executed March 7, 1917. By it (aside from sundry bequests to persons outside his family) he gave $28,000 to his youngest two children to equalize them with what the other two had received from their grandmother, gave to each of the four children $50,000 at age of 24, and left the residue of his estate in trust for the four in equal shares, all except Elsie to get the principal of their shares at age 40, Elsie's share being kept in trust during her life and at her death going to testator's then living issue. At the time this will...
