Chase Nat. Bank of New York v. Sayles, 1882.

• Decision Date: 29 March 1926
• Docket Number: No. 1882.,1882.
• Citation: 11 F.2d 948
• Parties: CHASE NAT. BANK OF NEW YORK et al. v. SAYLES et al.
• Court: U.S. Court of Appeals — First Circuit

11 F.2d 948 (1926)

CHASE NAT. BANK OF NEW YORK et al. v. SAYLES et al.

No. 1882.

Circuit Court of Appeals, First Circuit.

March 29, 1926.

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COPYRIGHT MATERIAL OMITTED

Eldon Bisbee, of New York City, and Charles F. Choate, Jr., of Boston, Mass. (Herbert M. Sherwood, Arthur M. Allen, Sidney Clifford, Roger T. Clapp, Sherwood, Heltzen & Clifford and Hinckley, Allen, Tillinghast & Phillips, all of Providence, R. I., on the brief), for appellants.

Robert B. Dresser and Claude R. Branch, both of Providence, R. I. (Samuel Williston, of Cambridge, Mass., and Edwards & Angell, of Providence, R. I., on the brief), for appellees.

Before BINGHAM, JOHNSON, and ANDERSON, Circuit Judges.

BINGHAM, Circuit Judge (after stating the facts as above).

The defendants have not briefed or argued the first four objections assigned in their motion to dismiss, and we do not purpose to consider them at length.

The jurisdiction of the court as a federal court is adequately stated, for the bill alleges diversity of citizenship, and that the amount in controversy exceeds, exclusive of interest and costs, the sum of $3,000.

Then, again, if the validity of the assignment and the rights of the plaintiffs therein could be determined in the probate court of Rhode Island, that in no way affects the general chancery powers of this or of the District Court, the rights of citizens of different states being involved. Waterman v. Canal-Louisiana Bank Co., 30 S. Ct. 10, 215 U. S. 33, 54 L. Ed. 80; Atwood v. Rhode Island Hospital Trust Co. (C. C. A.) 275 F. 513, 24 A. L. R. 156. The proceeding being of the nature stated, it in no way interferes with the due administration of the estate in the probate court, and any decree which may be entered will operate, so far as the executors are concerned, against them personally. Allen v. United States (C. C. A.) 285 F. 678, 683, 684.

In support of the fifth and sixth grounds stated in the motion to dismiss, the defendants contend that, inasmuch as it appears in the bill of complaint that the executors did not promise to pay the assignee, Rupprecht, or his assignee, the bank, there was no novation, and, as no consideration was paid for the assignment, and the assignment was not of the whole, but a part, of the legacy, this proceeding cannot be maintained. The reason asserted for this contention is that the right of a pecuniary legatee is not an equitable chose in action or an equitable right in property, but is a legal chose and a right of the same nature as that of a creditor against his debtor; that the legal title to such a chose cannot be parted with, and no equitable right or interest in or to it passes by assignment without consideration, whether the assignment purports to be total or partial. In other words, their position is that the possessor of a legal title to property cannot part with an equitable title therein, except by way of a declaration of trust, or create therein an interest in the nature of an equitable lien, except by contract based upon consideration; that in this case there was no declaration of trust, so no equitable property interest passed to the assignee, and that, no consideration having been paid, no equitable lien arose; that, had the assignment purported to have been of a total interest, the law would imply a power to sue in the name of the assignor and, if for consideration, the power would be irrevocable although no interest in the subject-matter passed; and that, if the assignment was partial and for consideration, although in such case no authority at law would be implied to sue in the name of the assignor, equity would afford relief because of the consideration paid, but would not aid a volunteer. In its final analysis their contention amounts to this: That the interest of a pecuniary legatee is a legal chose in action; that it cannot be the subject of a gift by way of a total assignment, because no present interest in the subject-matter would pass and the power to sue would be revocable; that, if the gift was a partial assignment, no present interest in the subject-matter would pass, and, being without consideration, equity would not lend its aid.

The plaintiffs' contention is that the interest of a pecuniary legatee is an equitable interest in property; that the executors stand as trustees of the decedent's estate, at least as to the personalty, (1) to pay debts; (2) to carry out the specific legacies; (3) to pay the pecuniary legacies; and (4) to distribute the balance of the estate, if any, among the residuary legatees; or, if the relationship between an executor and a pecuniary legatee is not strictly that of trustee and cestui que trust, nevertheless the right is not a legal chose such as exists between debtor and creditor, but an equitable chose, which the legatee may part with, and that in either case he can pass a present equitable title or interest in the whole or in a part of such legacy by gift or by sale; that, inasmuch as the legatee may part with a present equitable interest, whether that interest be in property or in an equitable chose, if it is by way of gift, and the transaction is executed so far as the nature of the subject-matter permits, as it was by assignment under seal in this case, the gift cannot be revoked, any more than it could have been, had the subject of the gift been a mere chattel; that to establish a completed gift by way of assignment of a pecuniary legacy, whether of the whole or of a part, it is only necessary to show an intention on the part of the legatee to give the whole or a partial interest, and an execution of that intent by such delivery as the nature of the subject-matter permits; that as the delivery of a deed of gift by the owner of chattels in the possession of a third party under a lease would be an adequate delivery in execution of the donor's intention to make a completed gift (Corning v. Records, 46 A. 462, 69 N. H. 390, 76 Am. St. Rep. 178), so here a delivery of a deed of assignment would be an adequate execution of the donor's intent to constitute a completed gift of a part of the legatee's interest in the legacy; that the essential feature of a gift is that its subject-matter be such that a present interest, legal or equitable, may be parted with by actual or symbolical delivery to the donee in execution of the donor's intent to give; and that equity is not hampered as to remedy, as is the law, in the enforcement of a gift of a part any more than of a gift of the whole.

After an extended examination of the questions involved, we have reached the conclusion that the contention of the plaintiffs, as above stated, is correct. Without stating the early conception of the law as to the relationship of an executor to creditors and legatees, or wherein it differed from that of a strict trustee, we regard it now settled that it is substantially that of a trustee; that, while his powers in the management and disposition of the property of the estate in some respects, perhaps, may be broader than those of an ordinary trustee, and a person dealing with him in the disposition of its assets may safely assume that he is acting in the line of his duty, unless upon the face of the transaction the contrary appears or he has knowledge of the executor's purpose to be guilty of a breach of trust, nevertheless, in the main, the relationship is that of a trustee and cestui que trust, and the legatee has such an equitable interest in the property of the estate that he may transfer it.

In Jeremy, Eq. Jur. (1828) p. 103, it is said:

"The original and ordinary jurisdiction, in matters testamentary, belongs to the ecclesiastical courts, and it is by virtue of the probate, letters of administration, or letters of administration with the will annexed, that such appointee obtains complete power over the personal estate of the deceased person whom he thus represents. From the conscientious duty, however, which necessarily follows such appointments, this court construes a trust to arise in the executor or administrator for the persons who are entitled to the property or are beneficially interested therein, and, without infringing upon the jurisdiction of the ecclesiastical courts, it enforces execution thereof."

In 1 Pomeroy, Eq. Jur. § 156, it is said:

"The theory of trusts, express and implied, having been established, it was easily extended to certain other analogous subjects, which were thus brought within the equitable jurisdiction. One of the most important of these was the administration of the estates of deceased persons. The relation subsisting between executors and administrators, on the one hand, and legatees, distributes, and creditors, on the other, has so many features and incidents of an express active trust, that it has been completely embraced within the equitable jurisdiction in England, and also in the United States, where statutes have not interfered to take away or abridge the jurisdiction. * * * This jurisdiction at length became firmly established and practically exclusive on this ground of trusts: That the relation between the executor or administrator and the parties interested in the estate is virtually one of express trust, which equity has always the power to enforce."

In Adair v. Shaw, 1 Schoales & L. 243, 262, it is said:

"The only thing to be inquired in a court of equity is whether the property bound by the trust has come to the hands of the persons who were either bound to execute the trust, or to preserve the property for the persons entitled to it, and the whole jurisdiction of courts of equity in the administration of assets is founded on the principle that it is the duty of the court to enforce the execution of trusts, and that the executor or administrator, who has the property in his hands, is bound to apply that property in the payment of debts and legacies, and to apply the surplus according to the will, or, in the case of intestacy, according to the statute of...