Detroit Trust Co. v. Struggles, 58.

• Decision Date: 06 July 1939
• Docket Number: No. 58.,58.
• Citation: 286 N.W. 844,289 Mich. 595
• Parties: DETROIT TRUST CO. v. STRUGGLES et al.
• Court: Michigan Supreme Court

289 Mich. 595

286 N.W. 844

DETROIT TRUST CO.

v.STRUGGLES et al.

No. 58.

Supreme Court of Michigan.

July 6, 1939.

Suit by the Detroit Trust Company, executor of the estate of John L. Liggett, deceased, against Thorpe J. Struggles and another for a determination of the ownership of stock certificates and other relief. From a decree of dismissal, plaintiff appeals.

Reversed.

CHANDLER, POTTER, and McALLISTER, JJ., dissenting in part.Appeal from Circuit Court, Wayne County, in Chancery; Robert M. Toms, judge.

Argued before the Entire Bench.

Goodenough, Voorhies, Long & Ryan, of Detroit, for appellant.

John J. Sloan, of Detroit, for appellee Thorpe J. Struggles.

Lewis & Watkins, of Detroit (Milton F. Mallender and William F. Fratcher, both of Detroit, on the brief), for appellee E. A. Pierce & Co.

CHANDLER, Justice.

Subsequent to the disposition of the prior appeal in this cause, reported in 283 Mich. 471, 278 N.W. 385, defendants filed separate answers to plaintiff's bill, the answer of defendant Struggles alleging that the stock in question had, prior to October 29, 1936, been delivered to him endorsed in blank by the deceased, and that on the date mentioned was in his possession and was by him delivered to the defendant, E. A. Pierce & Company. The answer further alleged that the transaction constituted a gift of the stock to him, rather than a loan, and alleged the circumstances surrounding the delivery of the certificates which were relied upon in support of the theory of gift.

The trial court found that a gift of the stock had been made by plaintiff's decedent and entered a decree dismissing the bill of complaint.

It appears to be undisputed that on October 29, 1936, deceased and defendant Struggles appeared at the office of E. A. Pierce & Company, at which time the certificates of stock in question were delivered to the latter, endorsed in blank by Liggett, and that simultaneously with said delivery, deceased executed an instrument, known in the trial court as Exhibit ‘D’, and referred to in 283 Mich. 471, 278 N.W. 385, as a letter. This document reads as follows:

‘E. A. Pierce & Co.

File J. J. M

‘10/29/36

‘Gentlemen:

‘With respect to certificate No. 7905/9 representing 500 shares of Devoe & Reynolds A stock standing in my name and delivered to you through Mr. T. J. Struggles, I hereby authorize you to dispose of same or the proceeds thereof and any income therefrom in any manner he may direct, including a credit therefor to his personal account with you, and I hereby approve and confirm any accounting respecting same made to the said T. J. Struggles and accept the same to your full discharge.

‘Very truly yours,

‘(signed) John L. Liggett.'

Defendants sought to prove by the testimony of one Thompson, an auditor for E. A. Pierce & Company, facts, which if true and competent testimony, tended to establish that the transaction was a gift rather than a loan. The testimony so offered was taken by the trial court subject to plaintiff's objection, the court later ruling said testimony to be barred by the provisions of 3 Comp.Laws 1929, § 14219 (Stat.Ann. § 27.914), but concluding, nevertheless, that the facts established a gift. The pertinent statute provides in part as follows: ‘No person who shall have acted as an agent in the making or continuing of a contract with any person who may have died, shall be a competent witness in any suit involving such contract, as to matters occurring prior to the death of such decedent, on behalf of the principal to such contract against the legal representatives or heirs of such decedent, unless he shall be called by such heirs or legal representatives.'

Thompson testified that Liggett and Struggles, upon appearing at the office of E. A. Pierce & Company, asked for Mr. Hyslop, the office manager; that because of the absence of the manager, Struggles requested him to transact the business at hand; that Struggles removed the stock certificates from his pocket and said, ‘This is my uncle, Mr. John L. Liggett; he has just given me the stock.’; and that Liggett said nothing when this statement was made by Struggles. The witness then testified that he explained to Mr. Liggett that it would be necessary for him to sign Exhibit ‘D’ and that by so doing he was releasing all his right, title and interest in and to said stock. The witness further explained that the exhibit was required in all instances in which stock was deposited with the brokerage house by some one other than the registered holder thereof, for the purpose, as explained by the witness, of indicating that the registered holder had parted with all his interest in the stock.

It further appears that at the time the stock was delivered, a discussion occurred between Struggles and Liggett as to whom should receive the dividends, and that it was agreed that they should be paid to Liggett. Apparently, to accomplish this result, instructions were given that the stock was to be left registered in the name of Liggett for the time being.

If Thompson acted as agent of Pierce & Company in the making or continuing of a contract with deceased, and if said contract is involved in this suit, his testimony, given in behalf of his principal against plaintiff, is barred by the statute cited.

Although Thompson testified that he was not a ‘customers man’, and that he had no authority to open accounts for Pierce & Company, it appears that subsequent to the date of the transaction in question, and upon the return of manager Hyslop, the matter was explained to him in detail and the action taken by Thompson received his complete approval. It must be said, that assuming Thompson had no authority to act in the first instance, the transaction was subsequently ratified by his principal, and he, therefore, became the agent of E. A. Pierce & Company in the making of a contract with decedent, if a contract is found to exist.

Defendants contend that a contract did not result and, moreover, that the instant suit sounds in tort, not in contract, and that therefore the testimony is not within the prohibition of the statute.

The suit need not be upon the contract to render the statute applicable. The enactment becomes operative ‘in any suit involving such contract’. If a contract was consummated, it clearly is involved in this suit. All parties agree that when the stock certificates were received by E. A. Pierce & Company, it was to be held by them as security for the margin account of Struggles. Pierce & Company by acceptance of the stock accompanied by Exhibit ‘D’ impliedly, at least, agreed to...