Witthoft v. Commercial Development & Investment Co.

• Decision Date: 24 May 1928
• Docket Number: 4806
• Citation: 46 Idaho 313,268 P. 31
• Court: Idaho Supreme Court
• Parties: SOPHIA BARBARA MARGARETHA WITTHOFT, as Administratrix of the Estate of HENRY A. WITTHOFT, Deceased, Respondent, v. COMMERCIAL DEVELOPMENT AND INVESTMENT COMPANY, a Corporation, THEODORE H. GATHE, Sr., MARTHA GATHE, CITIZENS' BANK & TRUST COMPANY, a Corporation, Formerly CITIZENS' BANK, LTD., AGNES MYRTS, RICHARD WITTHOFT, MARIE WALDHEIM, SEBASTIAN FRAUGOTT WITTHOFT and ELIZABETH WITTHOFT, Appellants

268 P. 31

46 Idaho 313

SOPHIA BARBARA MARGARETHA WITTHOFT, as Administratrix of the Estate of HENRY A. WITTHOFT, Deceased, Respondent, v. COMMERCIAL DEVELOPMENT AND INVESTMENT COMPANY, a Corporation, THEODORE H. GATHE, Sr., MARTHA GATHE, CITIZENS' BANK & TRUST COMPANY, a Corporation, Formerly CITIZENS' BANK, LTD., AGNES MYRTS, RICHARD WITTHOFT, MARIE WALDHEIM, SEBASTIAN FRAUGOTT WITTHOFT and ELIZABETH WITTHOFT, Appellants

No. 4806

Supreme Court of Idaho

May 24, 1928

CORPORATIONS-TRANSFER OF STOCK-DELIVERY ESSENTIAL-GIFTS CAUSA MORTIS-CHANGE OF POSSESSION BEFORE DEATH NECESSARY.

1. In suit by administratrix of stockholder to cancel stock certificates, evidence held sufficient to sustain court's finding that original agreement of stockholders for giving certain certificates to survivor was not followed by settlement whereby surviving stockholder received certificates absolutely.

2. Contract by which stockholders mutually agreed that certain blank stock certificates should go together to the survivor on the death of either would be completely extinguished by alleged subsequent settlement whereby one of stockholder's certificates was given to other absolutely.

3. Stockholder who, in violation of mutual agreement with another stockholder whereby certain certificates in blank were to go to survivor on death of one of them, appropriated other's certificate and rendered contract impossible of enforcement against his estate was not entitled to seek enforcement of the agreement in his favor in suit by administratrix of the other stockholder to cancel the certificates so taken, in view of equitable maxim that "he who comes into equity must come with clean hands."

4. Maxim that "he who comes into equity must come with clean hands" applied alike to one who defends and one who prosecutes suit in equity.

5. Mere transfer of stock on corporation's books, cannot effect delivery under C. S., sec. 4730.

6. Where stockholder had certificates issued in names of relatives and designated another stockholder as his trustee to de- liver certificates to parties to whom they were made out in case of his death, the person appointed was not a trustee for the alleged donees of the stock, but at most, was agent of the alleged donor to deliver the stock and agency was terminated by donor's death.

7. To constitute "gift" of personal property, there must be actual and complete delivery of property made in execution of gift and for express purpose of consummating it.

8. A gift to take effect after donor's death, donor retaining control during his life, cannot be sustained.

9. Transaction by which stockholder procured issuance of certificates in names of relatives, and designated another stockholder as his trustee to deliver certificates to parties to whom they were made out in case of his death, held, not to constitute a gift of the certificates, where there was never any delivery to the alleged donees, and alleged donor never intended to part with dominion over them during his lifetime.

10. Fact that person had been adjudged to be of unsound mind in another proceeding merely furnished presumption that condition continued to date three months subsequent.

11. Adjudication in will contest that testator was of unsound mind held not res judicata as to defendant of issues raised in suit by administratrix to cancel certificates of stock claimed by defendant under transactions with testator subsequent to date of making will, and defendant was not barred from asserting claim by election of remedies.

APPEAL from the District Court of the Fifth Judicial District, for Bannock County. Hon. Dana E. Brinck, Judge.

Action to cancel stock certificates of corporation, and praying reissuance to plaintiff as administratrix. Judgment for plaintiff. Affirmed.

Judgment affirmed. Costs, on main appeal, to respondent; on cross-appeal, to appellants. Petition for rehearing denied.

Peterson, Baum & Clark, for Appellants.

It is not necessary to the valid delivery of a chattel that access thereto be completely relinquished. It is sufficient that there is an intent to deliver and some act or acts showing that this intent has been effectuated as far as is possible under the circumstances. (Leitch v. Diamond Nat. Bank, 234 Pa. 557, 83 A. 416; Zollicoffer v. Zollicoffer, 168 N.C. 349, 84 S.E. 349; Gilkinson v. Third Avenue Ry. Co., 47 A.D. 472, 63 N.Y.S. 792; Hynes v. White, 47 Cal.App. 549, 190 P. 836; Waite v. Grubbe, 43 Ore. 406, 99 Am. St. 764, 73 P. 206; Beaumont v. Beaumont, 152 F. 55, 81 C. C. A. 251; Muir v. Gregory, 168 F. 641, 94 C. C. A. 105; Barnhouse v. Dewey, 83 Kan. 12, 109 P. 1081, 29 L. R. A., N. S., 166.)

Delivery may be complete in praesenti even though the enjoyment of the benefits of thing delivered is postponed until after the death of the transferor. (Worley v. Taylor, 45 Utah 227, 144 P. 1094; Calkins v. Equitable Bldg. & Loan, etc., 126 Cal. 531, 59 P. 30; Boyle v. Dinsdale, 45 Utah 112, Ann. Cas. 1917E, 363, 143 P. 136.)

A gift or other transfer of shares of corporate stock may be made by a transfer on the books of the company without delivery of the certificates. (14 C. J. 673; Francis v. New York & Brooklyn Elevated Ry. Co., 17 Abb. N.C. (N. Y.) 1; affirmed, 108 N.Y. 93, 15 N.E. 192; Richardson v. Emmett, 61 A.D. 205, 70 N.Y.S. 546; Collins v. Collins, 11 Misc. 28, 31 N.Y.S. 1017; In re Roberts Appeal, 85 Pa. 84; In re Babcock's Estate, 85 Misc. 256, 147 N.Y.S. 168; Barnhouse v. Dewey, supra; Thomas v. Thomas, 70 Colo. 29, 197 P. 243.)

An executory bilateral agreement between two persons providing that the property of the first who dies shall pass to the survivor is a valid contract, enforcible in law and equity, speaking as of the date of its execution, and is not an attempted testamentary disposition. (Fawcett v. Fawcett, 191 N.C. 679, 132 S.E. 796; Green v. Whaley, 271 Mo. 636, 197 S.W. 355; Thompson v. J. D. Thompson Carnation Co., 279 Ill. 54, 116 N.E. 648; In re Mildrum's Estate, 108 Misc. 114, 177 N.Y.S. 563.)

McDougall & McDougall, Jones, Pomeroy & Jones and C. O. Benting, for Respondent.

There are certain essential elements to constitute a valid gift either inter vivos or causa mortis, namely: First, a donor mentally competent to make it; second, freedom of will on the part of the donor to make the gift; third, an intention on his part to make it; fourth, a donee capable of taking a gift; fifth, the gift must be complete and nothing left undone; sixth, the property must be delivered by the donor and accepted by the donee; seventh, the gift must go into immediate and absolute effect; eighth, the gift must be gratuitous; ninth, the donor must surrender all dominion and control over the subject of the gift. (Lewis County v. State Bank of Peck, 31 Idaho 244, 170 P. 98; Basket v. Hassell, 107 U.S. 602, 2 S.Ct. 415, 27 L.Ed. 500; Castelhun v. San Francisco Savings & Loan Society, 56 Cal.App. 220, 205 P. 65; Noble v. Garden, 146 Cal. 225, 79 P. 883; Noble v. Learned, 7 Cal. Unrep. 297, 87 P. 402; Noble v. Learned, 153 Cal. 245, 94 P. 1047; Allen-West Commission Co. v. Grumbles, 129 F. 287; 28 C. J. 626, par. 15, 648, 670, sec. 43; Mahan v. Plank, 289 F. 722; Stewart v. Stokes, 177 Mo.App. 390, 164 S.W. 156; Taylor v. Harmison, 179 Ill. 137, 53 N.E. 584; Danzinger v. Seamen's Bank for Savings, 86 Misc. 316, 149 N.Y.S. 207; Smith v. Smith, 84 Kan. 242, 114 P. 245, 35 L. R. A., N. S., 944; Nobles v. Hutton, 7 Cal.App. 14, 93 P. 289; Smith v. Schopper, 86 N.J. Eq. 107, 97 A. 52; Grignon v. Shope, 100 Ore. 611, 197 P. 317, 198 P. 520.)

Delivery by a donor to third person, as agent or trustee of the donor, to be delivered upon the death of the donor is not a valid delivery. (Grant Trust & Savings Co. v. Tucker, 49 Ind.App. 345, 96 N.E. 487; Wright v. Bragg, 106 F. 25, 45 C. C. A. 204; Duryea v. Harvey, 183 Mass. 429, 67 N.E. 351; Taylor v. Harmison, supra; Keyl v. Westerhaus, 42 Mo.App. 49; 28 C. J. 695, par. 110.)

An attempted disposition of property, testamentary in character, which is not executed in compliance with the statutory requirements concerning testamentary disposition of property is invalid for any purpose. (28 C. J., p. 648, sec. 43; Mahan v. Plank, supra; Stewart v. Stokes, supra; Gomez v. Higgins, 130 Ala. 493, 30 So. 417; Ferrara v. Russo, 40 R. I. 533, 102 A. 86.)

An agreement between partners that the survivor shall have the partnership property upon the decease of one of them is unenforceable unless executed as a will. (Ferrara v. Russo, supra; Gomez v. Higgins, supra.)

T. BAILEY LEE, J. Budge and Taylor, JJ., concur. WM. E. LEE, C. J., and GIVENS, J., Concurring in Part and Dissenting in Part.

OPINION

T. BAILEY LEE, J.

--This is a suit brought by plaintiff and respondent, administratrix of the estate of Henry A. Witthoft, deceased, to cancel 125 shares of the capital stock of the defendant, Commercial Development and Investment Company, issued to defendant, Theodore H. Gathe, Sr., and others, and to require said company to issue in lieu thereof 125 shares to said administratrix.

It appears that Witthoft and Gathe, having for years been equal partners, incorporated the Commercial Development and Investment Company for the purpose of taking over the partnership assets. After the company had acquired said assets its entire capital stock of 250 shares was divided and issued as follows: On September 15, 1915, to Witthoft certificate No. O, 125 shares, to Gathe certificate No. O 1/2, 124 shares, and on September 16, 1915, to Mrs. Gathe certificate No. 1, 1 share. Subsequently and on the last day mentioned Witthoft surrendered his certificate for cancelation, and had issued in lieu thereof certificates 6 to 13, inclusive, 6 to 12 being issued in the names of relatives, and 13, for 25 shares, being in blank. At...