Estate of Marshall

• Decision Date: 10 November 1890
• Docket Number: 56-59
• Citation: 22 A. 24,138 Pa. 285
• Parties: ESTATE OF JAMES MARSHALL, DECEASED. (2)
• Court: Pennsylvania Supreme Court

22 A. 24

138 Pa. 285

ESTATE OF JAMES MARSHALL, DECEASED. (2)

Nos. 56-59

Supreme Court of Pennsylvania

November 10, 1890

Argued October 28, 1890 [Copyrighted Material Omitted] [Copyrighted Material Omitted]

APPEAL BY SECOND N. BANK FROM THE ORPHANS' COURT OF ALLEGHENY COUNTY.

Nos. 56-59 October Term 1890, Sup. Ct.; court below, Nos. 363-366 December Term 1888, O.C.

On February 16, 1889, to No. 363 December Term 1888, of the court below, Anna Frances Marshall, a legatee under the will of James Marshall, deceased, filed her petition averring that James Marshall, Jr., who was one of the executors of said testator, being engaged in business individually under the name of James Marshall & Co., procured the discount of a certain note at the Second National Bank of Allegheny, for his own benefit and in connection with his said business, and unlawfully pledged to said bank, as collateral security for said note, 75 shares of the Farmers Deposit National Bank, belonging to the estate of said testator and held in trust by the executors for uses and purposes set forth in said will; that said James Marshall, Jr., having become insolvent, was afterwards discharged from his executorship; that Thomas M. Marshall, Mark W. Watson and Matilda Marshall, the remaining executors, being notified by the petitioner to take proper legal steps for the recovery of said stock, neglected and refused so to do; praying, in substance:

1. That said remaining executors be required to institute proceedings for the recovery of said stocks and moneys, and that said bank be restrained in the meantime from otherwise disposing of the same; or

2. That the court, by order or decree, compel said bank to re-transfer said stocks, and pay over the dividends collected by it thereon to said executors.

At Nos. 364, 365, 366 of the same term, similar petitions were filed on the same day by Anna F. Marshall, as to similar pledges of other stocks belonging to said estate made by James Marshall, Jr., to the Second National Bank of Allegheny. The petitions at Nos. 364 and 365 related to certain shares of the stock of the Allegheny Gas Company, and that at No. 366 to certain shares of the stock of said Second National Bank.

Upon the filing of the petitions, citations were awarded by the court against all parties in interest. Thomas M. Marshall, executor, and Mrs. Watson, Mrs. Talbot and James Marshall, Jr., children and legatees of James Marshall, deceased, made no answer, and the petition was taken pro confesso as to them. M. W. Watson and Mrs. M. Marshall, executors, filed separate answers, substantially admitting the averments of the bill, and asking to intervene as parties petitioning. The Farmers Deposit National Bank and the Allegheny Gas Company disclaimed interest in the subject-matter of the controversy, and submitted themselves to the judgment of the court. The Second National Bank filed answers in which it substantially set forth:

1. That said loans were made to the firm of James Marshall & Co., on the representations of James Marshall, Jr., that the said firm was composed of the estate of James Marshall, deceased, and himself, who were associated in the business of said firm, and that he, the said James Marshall, Jr., was the acting and managing partner of said firm; that all said loans were made on the credit of said firm so constituted and composed, and the money was paid to said James Marshall, Jr., as the active business partner of said firm of James Marshall & Co.; that it was informed and believed and expected to be able to prove, that the business of James Marshall & Co. was carried on by James Marshall, Jr., for the benefit of himself and the three other legatees and devisees named in the will of James Marshall, deceased, and that said legatees received, enjoyed, participated in, and used their respective shares of the profits of said firm.

2. That respondent had actually held said stocks more than six years, and had acquired title thereto by virtue of the statute of limitations.

3. That the court had no jurisdiction in the premises.

After a hearing upon testimony, the four cases being by consent heard together, the court, HAWKINS, P.J., filed the following decision:

FINDINGS OF FACT.

James Marshall died in 1869, leaving a will in which he appointed Thomas M. Marshall, Mark W. Watson, James Marshall, Jr., and Matilda Marshall, executors and trustees, and gave his estate to said trustees for an indefinite term, for the benefit of his widow and children. Anna F. Marshall, the present petitioner, who was the youngest child, attained her majority in August, 1886. All the executors and trustees qualified; but James Marshall, Jr., became the acting executor and trustee, and so continued until April 16, 1883, when, having become insolvent, he ceased to act, and the surviving executors and trustees assumed the duties of the trust. James Marshall, Jr., was discharged as executor and trustee in 1887. While acting executor and trustee, James Marshall, Jr., trading as James Marshall & Co., procured certain notes to be discounted by the Second National Bank of Allegheny, upon the security of stocks belonging to the estate of James Marshall, deceased, as follows:

1. March 26, 1883, note signed by Oliver Wylie, payable thirty days after date, for $14,000, for which was pledged as collateral a certificate for 75 shares of the capital stock of the Farmers Deposit National Bank of Pittsburgh, showing on its face that it belonged to the estate of James Marshall, deceased. This note was the last renewal of a series of notes beginning May 11, 1881. The first pledge of the stock was made May 1, 1882; and renewed pledges were made with the successive renewals of the notes aforesaid. Dividends have accrued and are in the hands of the Farmers Deposit National Bank amounting to $7,200.

2. April 7, 1883, note signed by John D. McCune, payable thirty days after date, for $12,000, for which was pledged as collateral, by James Marshall, Jr.'s transfer on the books as acting executor, 300 shares of the capital stock of the Allegheny Gas Company belonging to the estate of James Marshall, deceased. ^[*] This note was the last renewal of a series of notes beginning May 11, 1881. The first pledge of this stock was made May 10, 1882, and renewed pledges were made with the successive renewals of the notes aforesaid. Dividends on these stocks have been received by the pledgees.

3. March 30, 1883, note signed by C. H. Hetzel payable 30 days after date for $15,000, for which was pledged as collateral, by James Marshall, Jr.'s transfer on the books as acting executor, 390 shares of the capital stock of the Allegheny Gas Company belonging to the estate of James Marshall, deceased. This note also was the last renewal of a series of notes beginning February 28, 1882. The first pledge of this stock was made March 25, 1882, and renewed pledges were made with the successive renewals of the notes aforesaid. The Second National Bank has received in dividends on 690 shares of gas stock, $12,660.

4. March 27, 1883, note signed by J. N. Davidson payable 30 days after date, for $2,500, for which was pledged to said J. N. Davidson (who was cashier of said bank), by James Marshall, Jr.'s transfer as acting executor, 20 shares of the capital stock of said Second National Bank, belonging to the estate of James Marshall, deceased. ^[*] This note was the last renewal of a series of notes beginning November 15, 1881. The first pledge of this stock was made November 15, 1881, and renewed pledges were made with the successive renewals of the said notes. Fifteen of these shares were sold by Mr. Davidson, under power contained in the note for which they had been pledged as collateral; and the remaining 5 shares are held by him subject to the order of the executors. The bank received dividends on this stock.

All the notes prior to the last were surrendered by the Second National Bank upon renewals.

These discounts were made by said bank for, and the proceeds were used by James Marshall & Co. James Marshall, Jr., represented to the discounting bank, and it believed, that the estate of James Marshall, deceased, was in the firm. James Marshall was in his lifetime a partner, but the firm was dissolved by his death, and James Marshall, Jr., had no authority whatever to bind the estate. The estate had no need of these discounts, and received no benefit, directly or indirectly, from them. They were made without the consent or knowledge of either the co-executors or co-legatees of James Marshall, Jr.

As already stated, James Marshall, Jr., having become insolvent, ceased to act as executor and trustee in 1883, was discharged from his trust in 1887, and thereupon the surviving executors and trustees assumed the duties of the trust, and have so continued since. James Marshall, Jr., filed no account of his administration. He was very largely indebted to the estate. . . .

These pledgees do not claim absolute title to the stock held by them respectively. The position taken by their counsel, in argument, was that because the original pledge was illegal as against the estate, their holding thereby became adverse, and the statute of limitation, running from that date, perfected their title as pledgees as against the estate.

CONCLUSIONS OF LAW.

1. It was not denied in argument, that, assuming this court had jurisdiction over the controversy here, Anna F. Marshall had a right, as party petitioner, to institute these proceedings. The reasons for her action were the same as those which were recognized as being sufficient in the Odd Fellows Bank's App., 123 Pa. 356. She was beneficially interested; the stocks were needed for the due administration of the estate and the surviving executors had refused or neglected to...