Burt v. Second Nat. Bank of Saginaw

• Decision Date: 03 January 1928
• Docket Number: No. 10.,10.
• Citation: 217 N.W. 71,241 Mich. 216
• Parties: BURT v. SECOND NAT. BANK OF SAGINAW.
• Court: Michigan Supreme Court

241 Mich. 216

217 N.W. 71

BURT

v.SECOND NAT. BANK OF SAGINAW.

No. 10.

Supreme Court of Michigan.

Jan. 3, 1928.

Appeal from Circuit Court, Cahoun County; Walter H. North, Judge.

Suit by George R. Burt against the Second National Bank of Saginaw, trustee of the estate of Wellington R. Burt, deceased. From the judgment, both parties appeal. Modified and affirmed.

Argued before the Entire Bench. Leland H. Sabin and Bernard J. Onen, both of Battle Creek, for plaintiff.

Thomas G. Long and William L. Carpenter, both of Detroit, and Humphrey, Grant & Henry, of Saginaw, for defendant.

BIRD, J.

This equity suit involves dealings between Wellington R. Burt, of Saginaw, and his son, George R. Burt. Wellington R. Burt passed away in March, 1919. By will he appointed defendant as trustee of his estate. He also designated William T. Otis, many years his private secretary, to assist the trustee.

In the year 1903 Wellington, R. Burt purchased land in the vicinity of Bellevue, suitable for the manufacture of cement, and in 1904 he commenced the construction of a cement manufacturing plant. Early in 1906 he had it in operation. He gave the management of it to his son George. He told members of his family he was building the cement plant for George.

George continued to manage the plant, and in February, 1911, Mr. Burt executed a deed to him of all the real estate owned by him in connection with the cement plant for a consideration of $200,000, and other considerations, and gave it to his secretary, Mr. Otis, and he placed it among the title papers of the cement plant in Mr. Burt's vault, where it remained until some time in 1914.

On March 20, 1914, Mr. Burt executed a bill of sale to George of all the personal property belonging to the cement plant, for a stated consideration of $93,150. On that date Mr. Burt's books showed his investment in the cement plant to be $1,093,150. The bill of sale provided that the $93,150 should be paid ‘out of the personal property sold from the premises.’ On the bill of sale appears the following indorsement signed by Mr. Burt:

‘November 27, 1914.

‘Amount due on the within bill of sale, $4,000. Balance paid in full.

W. R. Burt.'

Also, the following indorsement:

‘December 2, 1915.

‘Paid in full.

W. R. Burt.'

After the execution of the bill of sale Mr. Burt delivered it to Otis, his secretary, and he placed it with the deed and title papers of the cement plant in Mr. Burt's vault. The papers remained there until the foregoing indorsements were made thereon on December 2, 1915, when Otis placed the deed and bill of sale in a tin box belonging to himself and George jointly, and in which they both had some bonds. The box was kept locked, Otis had one key and George had the other. Mr. Burt had no key to the box, but he knew of it.

On December 31, 1914, the following entry was made upon Mr. Burt's books:

‘The amount charged against the plant has cost now totaling over $1,000,000 charged against profit and loss, to an amount of $1,000,000 per order of W. R. Burt. Property has already been deeded to G. R. Burt. Balance of account is charged to G. R. Burt's account.'

On the same date this entry was made upon his books G. R. Burt was debited $4,000 and the Burt Portland Cement Company credited $4,000, with this memoranda in connection:

‘Balance cement company account as ordered by W. R. Burt, account of personal property.'

On this date, namely, the 31st day of December, 1914, Mr. Burt's books showed his investment in the plant to be $1,004,000. These entries closed the cement company's account, and the unpaid balance of $4,000 on the $93,150 was charged to George's personal account.

The plant was located in a small village where the banking facilities were very limited. So, from the beginning, George used his father as his banker. When he received remittances for his product he mailed them to his father, and when he needed cash he would draw on him. This practice continued up to the time of Mr. Burt's death.

It is George's claim that the title to the plant passed to him on December 31, 1914. His claim is that his father intended to make him a present of an investment of $1,000,000; that when his investment got to that point the title should pass to him. On that date he owed his father a balance of $4,000, which had been credited to the cement plant and charged to him personally.

On August 14, 1915, his father's books showed that he had paid this balance. After this date he deposited with his father $125,000 more than he withdrew, and his claim is that the estate should now reimburse him in that amount.

The defendant insists: The the title did not pass to George until January 9, 1918, when Mr. Burt wrote George, as follows:

‘I am inclosing you deed for all the land at Bellevue, including the plant, which I wish you would put on record at once. I have concluded this is the best way, and then for you to make the income tax return for the present year as to you and so report it. Instead of reporting the employees at the plant who have received $800 or more, as required by the law by him, you will report them direct. I want to see this report before you send it in.'

That inasmuch as George did not get title to the plant until January 9, 1918, all the remittances that went forward to the father prior to that date belonged to his father, and not to him.

1. In most cases involving the question of gifts, the crucial question is, ‘Was there a legal gift?’ That question is not involved here. The question here is ‘When was the gift made?’ It seems to be conceded that Wellington R. Burt built the plant for his son George. He so advised members of his family, and stated to them that when his investment in the cement plant was reduced to a million dollars he was going to give it to George. It is conceded that he did give it to George, but just when is the main question discussed.

Plaintiff claims title passed to him on March 31, 1914, when the consideration of the bill of sale was paid. Defendant claims it did not pass until January 9, 1918.

If this were an action at law and the question was to be disposed of on purely legal grounds, it is quite possible we might not agree with either of the contentions. This, however, is an equitable proceeding, and we think we should try to ascertain, if possible, the time when the donor intended the title to pass, and then carry it out as he intended it.

That Wellington R. Burt built the plant for George and intended to pass title to him when his investment reached the point of a million dollars appears to admit of no doubt. He took the first step towards transferring it in 1911. He executed a deed of the plant and filed it away among the title papers of the cement plant. Early in 1914 his investment had been reduced to $1,093,150. He then made a bill of sale of the personalty connected with the plant, for a consideration of $93,150, and filed it away with the deed. On March 31, 1914, the $93,150 had been reduced to $4,000. When the balance had reached this point, Mr. Burt was evidently anxious to close the matter up because his books show that on that day he credited the cement plant with the $4,000 that was due on the bill of sale, and charged it to George personally. On the same day he charged off to profit and loss $1,000,000, and caused the following entries to be made on his books:

‘Dec. 31, 1914. W. R. Burt, stock a/c amount charged against plant as cost now totaling over $1,000,000 charged profit and loss to the amount of $1,000,000, per order W. R. Burt. Property has already been deeded to G. R. Burt. The balance of the a/c is charged to G. R. Burt's a/c 4,000.

‘G. R. Burt. To balance Cement Company a/c as ordered by W. R. Burt a/c personal property 4,000.

‘Burt Portland Cement Company 1,004,000.

‘Dec. 31. Burt Portland Cement Company given G. R. Burt, $1,000,000.'

December 31, 1914, appears to us as the date Mr. Burt intended the title to pass, or not later than August 13, 1915, when the balance of the $4,000 was paid by George in full. Some of the items of proof which have influenced us to this conclusion are:

(a) The entry on Mr. Burt's books under date of December 31, 1914, that the property had been deeded to George.

(b) On December 31, 1914, Mr. Burt's investment in the plant was reduced to a million dollars.

(c) On August 26, 1915, two weeks after George had paid the $4,000, he and his wife visited Mr. Burt on the event of his birthday. Mr. Burt greeted Nellie (George's wife) as follows:

‘Well, Nell, I suppose you are feeling pretty rich, now that your husband owns the cement plant?'

(d) Mrs. Marion Burt Beck, a daughter of Wellington R. Burt, visited him the latter part of 1915, or early in 1916, and she testified that:

‘He told me-he told me a great many times that he intended to give it to my brother, and later told me that he had done so.'

(e) His niece, Mrs. Martha Colby, testified that while visiting at his home Mr. Burt said, in speaking of the cement plant:

“It has cost me a million dollars to make it a paying proposition, and I have given it to George. He realizes the responsibility, the business responsibility. It is for him to manage, and I am most happy to say'-and he certainly expressed it very feelingly-‘that George is making a perfect success of it, a fine business man.’ It was a great joy to him.'

This conversation occurred in July, 1915.

(f) Mrs. Martha...