Reed v. Copeland

Loomis, J.

Our view of the facts renders unnecessary a discussion of several interesting questions presented by the arguments of counsel. We think the plaintiff’s case may well rest upon the contract relations which the finding shows existed between her and the late Mr. Tyler in his life time. The plaintiff evidently made a great personal sacrifice and rendered most valuable services, relying upon the testator’s promise to compensate her amply. It will be seen that the original contract contained no reference to a will. The plaintiff did not agree to wait till the testator’s death. She ■ accepted the proposal and commenced rendering services under the inducements held out of full compensation, without any mention of the timé and mode of payment.

*487 More than five years elapsed, during which services were performed under this agreement before the testator suggested the making of his will, and then, after informing the plaintiff of certain specific bequests in her favor, he added that “ he should do more for her from time to time ”; and the assent of the plaintiff,. which he then sought and obtained to this mode of compensation, had reference not only to the proposed bequests, but to the additional promise as well, and the latter clearly had reference to further compensation in the life time of the promiser, otherwise it could not be “from time to time.” The transaction in question therefore was not void, as claimed by the defendants, because it was in the nature of a testamentary disposition.

In recognition of and in part fulfilment of his promise, the testator, about a year after the execution of his will, took the certificate for ten shares of the .¡Etna Life Insurance Company’s stock, and handed it to the plaintiff, saying, “ I give this to you,” and when she tried to thank him he interrupted her by saying, “ Show your thanks by doing for me.” The plaintiff took the certificate and deposited it in the drawer of the safe, where she kept her own valuables.

Afterwards, in November, 1878, forty additional shares having been assigned to Mr. Tyler as the proportion of the surplus funds of the insurance company belonging to the ten original shares, he took the certificate for these forty shares and delivered it to the plaintiff, saying: “This .¿Etna Life Insurance stock of yours is good stock; it is all right; they give forty shares for ten; it is all the same, all the same as the ten shares; it is only a change in form and that is all; they have watered the stock; I paid nothing for it.” The plaintiff took the certificate and deposited it in the drawer with the other. The court then, after finding the facts relative to the plaintiff’s custody of the key to the safe, in the drawer of which these certificates were kept, adds, “that the said Tyler intended to vest in the plaintiff the ownership of the said ten shares and of the said forty *488 shares of JEtna Life Insurance stock, and that both said Tyler and the plaintiff understood and from and after that time supposed that the plaintiff was the owner thereof, and the plaintiff received and retained possession of the certificates. And both parties supposed the said certificates of stock were in the plaintiff’s possession while in the drawer of the safe. And I find that they were in fact. The plaintiff was ignorant of the details of business, and did not know that any steps were necessary to be taken to vest the legal title to the stock in her.”

Now, is there any good reason why the plaintiff should he deprived of that which both parties intended she should have and for which she rendered an equivalent ? It must of course be conceded that the legal title could not pass without a formal transfer on the books of the company, but we see no good reason why the equitable title as between the parties could not vest in the plaintiff under the circumstances referred to. The fact that one of the parties has deceased is no objection to the remedy sought, for it is a settled rule that equitable remedies exist to the same extent against executors and administrators as they did against the decedent. 2 Redfield on Wills, chap. 10, § 40.

The defendants claim that, under the law that obtains in this state, where the charter and by-laws of the corporation as in this case provide for a transfer only at the office of the company by the person named or his attorney on surrender of the certificate, no assignment can be valid, or have any effect for any purpose, unless made as prescribed; and in support of this proposition they cite Marlborough Manf. Co. v. Smith, 2 Conn., 579 ; Northrop v. Newtown, 3 id., 544; Northrop v. Curtis, 5 id., 246; and Oxford v. Bunnell, 6 id., 552.

In some of these cases statements may be found that furnish some support for the claim. But- the scope and effect of these earlier decisions are explained and limited in the later case of Colt v. Ives, 31 Conn., 25 , where Hinmaít, C. J., in giving the opinion, says: “ The attaching creditors, who are the real parties in interest in this cause, *489 assume that, by a course of decisions in Connecticut, stock in a corporation is held to be so peculiar in its nature and character that no transfer can be made of it, or even any equitable interest acquired in it, as against attaching creditors, unless by an actual transfer made upon the corporation books, or recorded in them, in the mode prescribed by the charter or by-laws of the institution.” Then, after citing the above cases, he adds: “These cases, and others to the same effect, being actions at law, conversant only with what at the time was considered the strict legal title to corporate stock, have necessarily no controlling force in a case depending upon equitable instead of legal principles.”

If the equitable title could prevail, as it did in the case cited, as against the rights of attaching creditors, with much stronger reason, as it seems to us, should it prevail as between the immediate parties to the transaction and their representatives. We submit therefore that there is nothing in the present state of our law that prevents the adoption of the principles that obtain in other jurisdictions relative to the matter in question. These principles are-well stated in Morawetz on Private Corporations, § 826, as follows: “ While the consent of both parties to a contract is necessary in order to effect a novation, yet either party may bind himself by assigning to a stranger the right of enjoying his claims under the contract; and the interest of the assignees will be protected in equity as a trust, and may be enforced through the assignor. This principle has been applied in case of an assignment of shares in a corporation. A novation of the contract of the shareholders can be effected only in the manner prescribed by the charter; and an assignment of shares not executed in the manner required does not alter the relations existing between the assignor and the other members of the company. But the beneficial interest of a member may be transferred by any agreement which is binding between the parties to the assignment. A trust is thus created, and the equitable rights of the beneficiary will be protected and enforced by a court of equity.”

*490 The following are some of the cases cited by the author, and they well sustain the above proposition: Quiner v. Marblehead Ins. Co., 10 Mass., 476 ; United States v. Cutts, 1 Sumner, 133; Stebbins v. Phœnix Ins. Co., 3 Paige, 350 ; Gilbert v. Manchester Iron Co., 11 Wend., 627 ; Nesmith v. Washington Bank, 6 Pick., 324 ; Sabin v. Bank of Woodstock, 21 Verm., 353 ; Conant v. Reed, 1 Ohio St., 298 ; Baltimore &c. R. R. Co. v. Sewell, 35 Maryl., 252; Perpetual Ins. Co. v. Goodfellow, 9 Misso., 149.

In Morgan v. Malleson, L. Reps., 10 Equity Cases, 475, the testator gave to his medical attendant the following memorandum: “I hereby give and make over to Dr. Morris an India bond, No. 506, value ¿61,000, as some token for all his very kind attention to me during my illness. Witness my hand this 1st day of August, 1868. John Saunders.” Now, although the legal title to this bond could be transferred only by delivery, and although it remained in the possession of Saunders and there was no consideration, yet the court, through Lord Romilly, M. R., said: “ I am of opinion that the writing signed by Saunders is equivalent to a declaration of trust in favor of Dr. Morris. If he had said, ‘ I undertake to hold the bond for you,’ or if he had said, ‘I hereby give and make over the bond in the hands of A,’ that would have been a declaration of trust, though there had been no delivery. This amounts to the same thing; and Dr. Morris is entitled to the bond, and to all interest accrued thereon.”

If such instances are sufficient to constitute valid declarations of trust, it is difficult to see why the testator’s expression—“ This IEtna stock of yours is good stock; it is all right ”—is not equally effective for that purpose.

But in the case at bar, in addition to declarations of trust we have an actual delivery of the certificates of stock with intention to pass the title and for a valuable consideration. In 3 Wait’s Actions & Defenses, p. 491, it is said:—“The delivery of a note, bond, or certificate of stock, to a third person, with the intention to vest the right of property in the donee, (see Dunbar v. Woodcock, 10 Leigh, (Va.,) 628; *491 McNulty v. Cooper, 3 Gill & J., 214; Grover v. Grover, 24 Pick., 261 ; Stewart v. Hidden, 13 Minn., 43 ;) or the execution of an instrument declaring an intention to make a present gift to him, or a declaration of trust in his favor, is enough to constitute a gift which a court of equity will uphold and enforce.”

Our own court recognized the same principles in Camp’s Appeal from Prolate, 36 Conn., 88 , by holding that the delivery of a savings bank book under the circumstances of that case constituted a complete gift of the deposits of the money therein referred to.

But it may be suggested that the principles invoked in favor of the plaintiff can only apply where there is a valid agreement between the parties established by competent evidence, and that the agreement relied upon in this case rests entirely on parol evidence, which was objected to and ought not to have been received.

Under the authority of North v. Forest, 15 Conn., 404 , we concede that the statute may apply to a contract for the sale of shares of stock in a corporation, although the contrary is now the established doctrine of the English courts, where it is placed on the ground that the shares, being choses in action, are incapable of delivery. But, while adhering to our former decision, we may well recognize the peculiar nature of the property, and hold with courts of other jurisdictions, that the delivery of the certificate is a symbolical- delivery of the stock, whereby the contract becomes executed, so as to vest the equitable title. Ang. & Ames on Corporations, § 564; Howe v. Starkweather, 17 Mass., 244 ; Sargeant v. Franklin Ins. Co., 8 Pick., 98 ; Wilson v. Little, 2 Comstock, 443.

But there is an additional answer to the objection in this case arising out of the equitable grounds on which it rests. It is the accepted construction of. the statute in courts of equity that, inasmuch as its design was to furnish protection against fraud, a party cannot take shelter behind its provisions, and thereby perpetrate a fraud on the other party, either actual or constructive.

*492 In this case not only did the testator vest the equitable title in the plaintiff, but he must be held to have agreed to give her the legal title as well. While he held it it was in trust for the plaintiff, and at his death the same trust was cast upon his personal representatives now before this court. Any attempt on the part of the testator in life to deprive the plaintiff of this stock would have been in fraud of her rights, and it is equally so on the part of his personal representatives.

But it is said that the plaintiff having accepted the provisions of Mr. Tyler’s will so far as beneficial, the doctrine of election applies, and she is estopped from claiming anything inconsistent with the will. The principle that underlies this proposition is well settled, but we do not think it applies to the case under consideration.

The true test is, whether the provisions in the will are plainly inconsistent with the claims in this suit. This stock is not specifically devised to any other person. The view we have taken shows that it is no part of the estate of the deceased. The beneficial interest was wholly in the plaintiff before the will took effect. It does not therefore? as claimed, sink into the residuum of the estate, to enhance the portion of the testator’s brothers. The plaintiff does not diminish the estate by taking back her own, and so this suit is not inconsistent with that provision in the will that makes certain legacies a bar to all claims upon the estate.

For these reasons the Superior Court is advised to render judgment that the defendants execute a transfer of the fifty shares of stock to the plaintiff.

In this opinion the other judges concurred.