Groff v. Stitzer

• Decision Date: 29 April 1909
• Citation: 72 A. 970,75 N.J.E. 452
• Parties: GROFF et al. v. STITZER et al.
• Court: New Jersey Court of Chancery

72 A. 970

75 N.J.E. 452

GROFF et al.

v. STITZER et al.

Court of Chancery of New Jersey.

April 29, 1909.

Suit by William H. Groff and others against Margaret B. Stitzer and others to set aside a transfer of the stock of a corporation. Decree for complainants.

The bill in this case is filed by the executors of the will of Caroline Bowers, deceased, to set aside a transfer made by Mrs. Bowers in her lifetime of 32 shares of the capital stock of the Essex County National Bank of Newark, evidenced by two certificates of 16 shares each standing in her name on the books of the bank. The transferees are James H. Stitzer, Jr., and his mother, Margaret B. Stitzer.

In the month of March, 1906, Mrs. Bowers was living with her husband in Haekettstown. She was his second wife. Mrs. Margaret B. Stitzer, one of the defendants, was the daughter of his first wife, and James H. Stitzer, Jr., another defendant, is the son of the said Margaret B. Stitzer. There was therefore no blood relationship between Mrs. Stitzer and her son, on the one hand, and Mrs. Bowers, on the other; Mrs. Bowers being Mrs. Stitzer's stepmother. On March 19, 1906, Mrs. Bowers was stricken with paralysis, and it is claimed on the part of the complainant that she was thereby deprived of her reason and understanding to such an extent that she was incapacitated from transacting any business. Later in the year her husband died. She was thereby left without any one upon whom she could rely for business advice. On June 10, 1907, she indorsed the two stock certificates with her name. These signatures were witnessed by Mrs. Stitzer, and the certificates so indorsed were delivered to James H. Stitzer, Jr., who took them with him to Philadelphia, where he resides. A short time after he offered them to the Quaker City National Bank as collateral security for a loan. The shares then stood in the name of Mrs. Bowers on the books of the Essex County National Bank. Before making the loan, and on June 25, 1907, the cashier of the Quaker City Bank wrote a letter to Mrs. Bowers at Hackettstown, of which the following is a copy: "Mr. James Herbert Stitzer, Jr., has left with us thirty-two (32) shares of the Essex County National Bank, standing in your name and indorsed by you with the signature of Margaret B. Stitzer as witness. As is customary in such cases I wish to confirm the genuineness of your signature to the certificates, there being two of sixteen shares each. Mr. Stitzer advises me that you are quite an invalid. You can therefore have some one else write the letter simply slating the signature is correct, if such is the case, then you sign it. Yours very truly, W. D. Brelsford, Cashier." On June 27th Mrs. Stitzer wrote with her own hand a reply thereto, which was signed by Mrs. Bowers and herself, of which the following is a copy: "Hackettstown, June 27, 97 ('07). Dear Sir: Your letter is received. Mrs. Bowers is quite an invalid, but I will have her sign this letter same as the certificates which she signed. I hope it will prove satisfactory. Yours, Caroline Bowers. M. B. Stitzer." Thereupon the certificates were retained by the bank, and it began to make loans to Stitzer on the security thereof. The following loans were made to him: July 1, 1907, $l,000; July 6, 1907, $1,000; August 3, 1907, $1,000; October 12, 1907, $1,300—making a total of $4,300. On October 14, 1907, while the shares were still under pledge to the Quaker City National Bank, Mrs. Bowers executed a power of attorney to transfer them to Mrs. Stitzer. The transfer was actually made on the books of the Essex County National Bank on November 13, 1907. Mrs. Bowers died two days later, on November 15th. The defendant James H. Stitzer, Jr., claims that the shares were loaned to him by Mrs. Bowers for the purpose of enabling him to use them as collateral security for a loan or loans which he might negotiate, and Mrs. Margaret B. Stitzer claims that the transfer to her was made in consideration that she should remain with and take care of Mrs. Bowers during the rest of her life. The two transactions are thus claimed to have been entirely independent of each other.

James Fisher and Joseph M. Roseberry, for complainants. F. Morse Archer, for defendants.

HOWELL, V. C. (after stating the facts as above). It is claimed on the part of the complainant that both the above-described transactions are void and should be set aside upon the ground that Mrs. Bowers was of unsound mind when she indorsed the certificates in June, 1907, and when she executed the final power of attorney to transfer the shares in October, 1907, and that if she should be found to have been of unsound mind, or incapacitated mentally for the transaction of business, the Quaker City National Bank cannot retain the shares upon the ground that it is a bona fide holder for value, for the reason that it had notice that the shares belonged to Mrs. Bowers, and that it was put upon inquiry as to her mental capacity by the correspondence of June, 1907, herein above copied, and the other facts within its knowledge. It will be observed that on neither of the occasions above referred to was there any writing executed between the parties evidencing the purpose for which the transfers were made, or the consideration which induced them. The transaction, so far as it related to James H. Stitzer, Jr., is put by him upon the sole ground that it was a loan of the stock for the purpose of procuring credit for himself; and on the part of his mother it was put upon the ground that she had agreed to live with her stepmother and take care of her during the term of her life.

The first inquiry will be directed to the mental condition of Mrs. Bowers on June 10 and October 14, 1907; the former being the day on which she indorsed the stock certificates over to James H. Stitzer, Jr., and the latter the day on which she made the final transfer of the shares to Mrs. Stitzer. The most impressive testimony on this subject is that of the two physicians who were sworn on behalf of the complainant. Dr. Woodruff was called to attend Mrs. Bowers on the day on which she was stricken. He attended her until the following month of September and became very familiar with her physical and mental condition. He testifies: That he saw her within an hour after her stroke. That she was then lying on a couch in a stuporous condition; her left side, face, arm, and leg being paralyzed. That her face was drawn to one side. That she could not talk, and did not know where she was or what had happened to her. During the time Dr. Woodruff attended her, her condition remained about the same, except that her face righted itself more or less; but her tongue continued to deviate to the paralyzed side, and her speech was thick, and she was not mentally bright. Dr. Woodruff again saw her two to four weeks before she died. She had then, he says, failed very much both physically and mentally, and could not carry on an intelligent conversation. An attendant was always necessary. Dr. Van Syckel was first called to treat Mrs. Bowers professionally on September 25, 1907, 19 days prior to the October transaction. He saw her again several times during the last 10 days of her life. He testified that her intellect was impaired, that she could not carry on a conversation intelligently, sometimes manifesting her weakness by crying and laughing suddenly and abruptly without ability to control her emotions. He says: "She was fair, not bright. She was paralyzed, entirely helpless"—and that her condition did not improve during his attendance.

Many unprofessional witnesses were called by the complainant, who testified to similar instances of weakness on the part of Mrs. Bowers, and, although perhaps nearly as many witnesses on the other side testified to her uniform intelligence and mental capacity, I am driven to the conclusion by a careful perusal of all the evidence that the statements of the two physicians reflect the true condition of Mrs. Bowers' mind. It is hardly possible that Mrs. Stitzer could have remained long in the same house with a person afflicted as these physicians say that Mrs. Bowers was without having a conviction of her incapacity forced upon her, and indeed such appears to have been the case, for, according to the testimony of Mrs. Baldwin, a witness for the complainants, Mrs. Stitzer while in charge of the Bowers house wrote her that Mrs. Bowers was not any better, that she did not consider her any better, and that her mind was as bad as her body. She made a similar statement to Mrs. Dr. Van Syckel.

Among the witnesses called to support the June transaction was the wife of James H. Stitzer, Jr., who was at the Bowers homestead at the time that...