Smith v. Smith

• Decision Date: 27 April 1943
• Citation: 48 N.E.2d 920,313 Mass. 687
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: FLORENCE G. SMITH v. HERMAN R. SMITH & another.

313 Mass. 687

48 N.E.2d 920

FLORENCE G. SMITH v. HERMAN R. SMITH & another.

Supreme Judicial Court of Massachusetts, Middlesex.

April 27, 1943

December 10, 1942.

Present: FIELD, C.

J., DONAHUE, QUA DOLAN, & RONAN, JJ.

Agency, What constitutes, Agent's duty of fidelity, Agent's liability to principal. Joint Enterprise. Husband and Wife. Equity Jurisdiction, Husband and wife, Reformation. Deed Reformation. Real Property, Tenancy by the entirety, Joint tenancy. Tenants by the Entirety. Joint Tenants.

Findings by a master showed that an arrangement between a husband and his wife, whereby the husband traded in the stock market through a brokerage account of the wife after having established a credit by signing a note to a bank secured by a pledge of stock belonging to her, was not a joint enterprise for their mutual profit, but was merely an agency of the husband for the wife to carry on the transactions without acquiring ownership of any of the property involved; and he was accountable to her in equity respecting stock so bought and taken in his name or the proceeds thereof.

A deed of real estate from a straw, to whom a wife had conveyed it, to her and her husband as tenants by the entirety accomplished their intention to "create a joint tenancy" in order to have the title in such form that upon the death of one the property would "automatically" pass to the other without the necessity of probate respecting it, and the wife was not entitled to have the deed reformed so that the property would stand in their names "as joint tenants and not as tenants by the entirety."

BILL IN EQUITY filed in the Superior Court on June 25, 1941. The suit was heard by Good, J., upon a master's report and in this court was submitted on briefs.

C. D. Driscoll & R.

S. Driscoll, for the defendant Smith.

W. A. E.

Anderson, for the plaintiff.

DOLAN, J. This is a bill in equity brought by the plaintiff against her husband the defendant Smith (hereinafter referred to as the defendant), for an accounting and to establish her title to certain shares of stock, and against the defendant Specht to reach and apply a debt alleged to be owed by him to the defendant, and also for the reformation of a deed conveying certain real estate to the plaintiff and the defendant as tenants by the entirety.

The case was referred to a master who filed his report, and appended thereto the written objections brought in by the defendant. An interlocutory decree was entered by the judge overruling the defendant's exceptions to and confirming the report. A final decree was entered ordering the defendant to transfer and deliver to the plaintiff one hundred shares of stock of Swift International Company Ltd. and to pay to the plaintiff $300, the amount of dividends that he had received on account thereof, and that he pay to the plaintiff $1,302.97, the sum received by him from the sale of one hundred shares of stock of New York Central Railroad Company which had been purchased with the proceeds of the sale of forty shares of stock of National City Bank, of which the plaintiff "was the owner." Directions in the decree for the application of the amount found due to the defendant from Specht in the event of the failure of the defendant to comply with the foregoing terms of the decree need not be recited.

The decree further ordered the defendant to join with the plaintiff in conveying title to the real estate at No. 2202 Commonwealth Avenue (in Newton), so that the record title "shall be" in the names of the plaintiff and defendant "as joint tenants and not as tenants by the entirety." The defendant appealed from the interlocutory decree and from the final decree.

The report of the master does not state nor show on its face that his ultimate findings are based solely on the subsidiary facts found by him. See Dodge v. Anna Jaques Hospital, 301 Mass. 431 , 435. The defendant orally waived his request for a summary of the evidence upon which the master's findings were based. His objections to the master's report were all to findings of fact of the master, and he made no motion to recommit the report for further findings. His objections, which became exceptions by implication of law, Chopelas v. Chopelas, 303 Mass. 33 , 35, were properly overruled.

Material facts found by the master follow: The plaintiff and the defendant were married in July, 1935. At that time the plaintiff was the owner of certain shares of stock which stood in her own name. She was also the owner of the dwelling house at No. 2202 Commonwealth Avenue in Newton in which she and the defendant lived following their marriage. The defendant contributed $10 a week for "the table" while they lived together in this house. In all other respects they "were and have been self-supporting." In May, 1938, the defendant suffered a heart attack and was ill for "quite some time." After his recovery he was unable to conduct his business and at various times he discussed with the plaintiff "trading in the stock market as a means of increasing their income." On December 20, 1939, he signed a promissory note payable to the National Bank of Chelsea for $4,400, thus establishing a credit in that amount. Stocks owned by the plaintiff were pledged as collateral security for the payment of this note, and thereafter the defendant bought and sold stocks through J. S. Bache & Co., hereinafter referred to as the brokers, the title to all of the stocks purchased except as hereinafter stated being taken in the name of the plaintiff. The transactions were executed through the plaintiff's account with the brokers. It "was the intention of the parties that the stock pledged as collateral . . . should remain the personal property of the plaintiff and that all new stocks purchased during the course of the trading should be bought in the name of the plaintiff and should remain her personal property." The plaintiff never intended to make a gift to the defendant of any of the stock owned by her or that the defendant "should acquire any ownership in the stock purchased by the defendant while trading in the market." The plaintiff executed a power of attorney on January 29, 1940, giving the defendant authority to act for her, and authorizing stocks to be placed in either her name or that of the defendant, and payments for stock sold to be made to either. This document was delivered to the brokers. "The giving of this power of attorney was solely for trading purposes and was not intended to vary or change the arrangement between the parties as hereinabove stated."

The loan from the National Bank of Chelsea was increased on March 8, 1940, to $10,000, and on June 21, 1940, that loan was taken over by the First National Bank in Medford, and, as collateral security, the stocks of the plaintiff were again pledged. The note was signed by the defendant alone. In 1941, this loan was reduced from time to time by the sale of certain of the collateral, "part of the plaintiff's stock."

In January, 1941, the plaintiff owned forty shares of the stock of the National City Bank, which had been purchased by the defendant. He sold the stock through the brokers for $1,152.01, and with these funds bought one hundred shares of stock of the New York Central Railroad Company on or about February 18, 1941. "Then for the first time since the commencement of the stock market trading, the defendant had this stock issued in his own name, this fact being unknown to the plaintiff."

In 1941 the defendant sold twelve shares of stock of the Allied Chemical & Dye Corporation, which were owned by the plaintiff prior to her marriage, and purchased with the proceeds of the sale one hundred shares of stock of Swift International Company Ltd. He requested the First National Bank in Medford to have these shares issued in his name. The plaintiff became aware of this and wrote the bank, stating that it was her assumption that she was responsible on the note and requesting that the stock be issued in her name. The stock was issued in the name of the defendant, who has refused to transfer it to the plaintiff. The master found that in so far as it was a question of fact these shares of stock are the property of the plaintiff. On June 17, 1941, she cancelled the power of attorney before referred to, and on June 23, 1941, when the note to the Medford bank became due, it was cancelled and the plaintiff signed a new note for $6,163.10, the balance due on the cancelled note, pledging shares of stock as collateral security for this loan. The findings of the master with relation to the real estate will be recited hereinafter.

The defendant has argued that the plaintiff and the defendant "arranged to trade `in the stock market as a means of increasing their income'"; that this "was an agreement between them which contemplated, and in its performance effected, the placing of credit, personal obligation, labor and skill of the defendant, on the one hand, and the shares of stock of the plaintiff, on...