Beaver v. Beaver — 41 N.Y. St. Rep. 607

Majority

p. 607

Minerva J. Beaver, Executrix, App'lt, v. Charles C. Beaver et al., Adm’rs, Resp’ts.

(Supreme Court, General Term, Third Department,

Filed November 30, 1891.)

Headnote

1. Gift—Money in sayings bank—Parent and child.

A father intended to give money to his minor child, and to that end deposited the money in a savings bank to the credit of said child. The child had no testamentary or statutory guardian. The father retained the pass book. Under the rules of said bank the money was thereafter payable to the child only.' Held, a complete gift.

2. Same—Retaining bank book.

The father, as natural guardian of the child, properly retained the custody of the bank book, and his failure to deliver it to the child did not invalidate the gift.

(Landon, J., dissents.)

Appeal from judgment in favor of the defendants entered upon the decision of the court upon the trial without a jury at the Ulster circuit in J une, 1890.

F. L. & F. A. Westbrook, for app’lt; Lawton & Stebbins (A. T. Clearwater, of counsel), for resp’ts.

The court of appeals, when this case was before it, seems to have taken judicial notice of a practice that persons deposit money in savings banks “ to the credit of real of fictitious persons, with no intention of divesting themselves of ownership.” If such a practice exists we find no proof of its existence in this case. So testimony was given showing such a practice, and no reason is shown why John 0. Beaver should have had any of the tricky objects in view which are mentioned by the court of appeals.

The charter of the bank permitted deposits to the amount of $5,000. Laws of 1851, chap. 152, § 6. And it does not appear that John O. Beaver’s deposits had previously approached that sum. And since there might have been the laudable motive of parental affection, we do not see why a less praiseworthy motive should be assumed. The application to the bank to receive the deposit was in the name of Asahel Gr. The request in the application was to receive the money from him and to open an

p. 608

account with him. It states his age, place of birth and residence. Testimony was given showing that it is the custom for the person who brings the money to sign the application. Hence John 0. signed the application, although it was made in behalf of Asahel Gr. The signature of John 0. would be properly made by him as natural guardian of his son. The additional proof given on the second trial clearly establishes that John 0. intended to give this money to Asahel Gr., as is found by the learned justice. We are relieved, therefore, from the necessity of attributing to him any of those evil intentions, such as evading rules of the bank or escaping taxation, which the court of appeals seem to suppose prevail “in the great majority of cases.” And the ground that there was no evidence of a gift, held by that court in the former trial, no longer exists. We know now by positive proof what was the intention of John 0. when he caused this money to be deposited to the credit and for the benefit of Asahel G. Starting, then, with the fact that John 0. intended to give this money to Asahel G., we must inquire whether any rules of law compel us to defeat this lawful intention. And we must observe that the intention was not to make a future gift, but to give at that time. It is found by the learned justice that the moneys were deposited by John 0. with intent to pass the title to Asahel. The words “payable to John 0. Beaver,” which had been in the account book and in the pass book, were erased béfore the pass book was delivered by the savings bank. As Asahel G. was the son of the donor, the intention ought to be carried into effect, if consistent with rules of law.

The only objection is that John 0. did not deliver to Asahel G. the pass-book.

In Martin v. Funk, 75 N. Y., 134 , the donor deposited money in a savings bank in her own name, adding the words, “In trust for L. W.” The donor retained the pass-book until her death, and the donee was not notified of the gift until after that event. In an action for the money by the donee (or cestui que trust) against the bank she recovered. That case settled, first, that notice of the gift was not necessary; second, that retention of the pass-book in that case and in similar cases did not prevent the gift from taking effect

It appears, too, by that case and by the similar cases of Willis v. Smyth, 91 N. Y., 297 ; Mabie v. Bailey, 95 id., 206; Scott v. Harbeck, 49 Hun, 292 ; 17 St. Rep., 690 , that the trust in such cases is treated as what is- sometimes called a passive trust. For the cestui que trust is allowed to recover the trust funds, so that the so-called cestui que trust is held to be, at least after the decease of the donor, the absolute legal owner. Of course, if there were an active trust, the cestui que trust would not have the legal title. And on the death of the trustee, under the present statute, the property would not go to his personal representatives, but to the court to be managed by a new trustee. Laws of 1882, chap. 185. But in these cases, where the language of the deposit was as above stated, it has been held that the person for whom the deposit was held in trust was entitled to recover it as legal owner. Therefore,

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■the original transaction has been considered by the courts to be practically a gift by the donor to the person named as cestui que .trust. And the transaction is described as a gift in Martin v. Funk This is important, because it shows that the transaction is practically the same whether money is deposited in the name of ¡the donee, or in the name of the donor in trust for the donee.

What then is the reason why this mode of giving has been held to be effectual, notwithstanding the donor retained the book? "Clearly this. The donor was, after the gift, the legal custodian of the voucher. Therefore, there was no person other than himself to whom the donor could deliver the book. Thus it is said in Martin v. Funk:‘ ‘She must be deemed to have retained it as trustee. The book ■was not the property, but only the voucher for the property which, after the deposit, consisted of the debt against the bank.” Ho tice this remark: “ The book was not the property.” The donor then had parted with her property by depositing it. The property after the deposit consisted of the debt against the bank. The bank book ■or voucher showed to whom the debt was payable, and possession -of the voucher did not make the debt payable to the possessor. 'To whom, then, should the donor in a case that of Martin v. Funk -deliver the voucher? The donor is himself trustee and as such as entitled to the custody of the voucher. If in such a case the ■donor “A.” had made a deposit in the name of “B.” in trust for “ C.,” then it might be said that a delivery of the voucher to B. would be necessary.

How the principle thus settled in these cases is applicable here. Asahel Gr. was a minor. John 0., as father, was natural guardian. He was entitled to the custody of this voucher for property belonging to his minor son. It is not meant by this that as such ■guardian he could dispose of the property of his son. But it is plain that, in the absence of proof that any one else had been appointed guardian, he was the proper person to have the custody of his voucher. Let us suppose that Asahel Gr. had been only a year old, what could JohnO. have done with the pass book when, for the purpose of a gift, he had deposited this money in Asahel’s name. Should he tie the book around the infant’s neck or fasten it to its apron string? Plainly he could make no delivery of the hook to a mere infant. Or if any other person had made the gift, would not such a person have delivered the book to the father of the infant? To deliver the book to a mere infant would be folly. And the same principle must apply to a minor who is older. When the donee is a minor, younger or older, in the absence of any appointed guardian, the father must be the natural custodian •of any such voucher.

There are cases in Massachusetts holding that an acceptance of a gift, or notice to the donee, is necessary to complete the gift. But in Gerrish v. New Bedford Ins. for Savings, 128 Mass., 159 , it is pointed out that the decision in Martin v. Funk, ut supra, differs from the view of the Massachusetts court and holds a deposit in trust to be valid though the donee know nothing of it.

It is sufficiently established in this case, and is so found, that

p. 610

John 0. at the time of the deposit made it “ with the purpose and/ intent that such money should thereafter be and remain the property of said Asahel Beaver.” It is proved, if proof were necessary,., that it is very general for parents to bring money and deposit it. in the name of their minor children. So that the only question is whether the continued possession by John 0. of the voucher defeats his intention, as a matter of law.

If he had had this money deposited in his own name, adding the words “ in trust for Asahel G-. Beaver,” and had retained the voucher, this would have been a valid gift to Asahel, thoughAsahel did not know of the transaction. Martin v. Funk. It would have been said: John 0. retained the voucher as trustee. How, when, with the same intent and purpose, he deposits the money absolutely in Asahel’s name, and retains the voucher, it is-' argued this is no gift. The distinction between the two cases is thin, very thin, when used to defeat the laudable intent of a father to give money to a minor child. And if the distinction is. sound, then a father cannot validly give money to his minor child by deposit in a savings bank except through the fiction of calling himself trustee. If the retention of the voucher in the Funk-case was held to be in the character of a trustee, why was not the retention by John 0. in this case held to be in his character of guardian by nature after his intention to give the money has been, proved as a fact ?

Of course the great object of requiring delivery is to mark the distinction between a mere intention to give at some future time,, and a present act of giving. That was marked by the deposit inAsahel’s name, with the intent, now established by other proof, of making a gift. The consideration is love and affection. The-transfer is made by putting the money in the bank payable toAsahel and to no one else. The bank by its rules agrees to endeavor to prevent frauds and impositions and yet declares that payments to a person presenting the book shall discharge the institution. But that rule does not authorize the bank negligently to pay to a person other than the one in whose name the account-stands. Appleby v. Erie Co. Sav. Bk., 62 N. Y., 12 . The courts have gone even further than this, and have said that payments-to a stranger without authority of the creditor are not valid. Smith v. Brooklyn Sav. Bank, 101 N. Y., 58 . And under the decision in this last case John O. Beaver could not, without the written order of Asahel, draw any of this money, although he did have possession of the pass-book.

The language of the rules of the bank construed in that case is. similar to that of the rules of this bank. And the court say, speaking of the pass book, “ its possession constitutes in itself no-evidence of a right to draw money thereon.” The mode of making payments is provided for by the rules, viz., personally, by order in writing and by letters of attorney. It was then only by Asahel personally or by his written order or his letters of attorney that this money could be drawn. If it is said that the donor must part with control over the gift, what control did John O. retain over this money? It was not payable to him. The pos

p. 611

.session of the bank book did not authorize him to draw the money without authority from Asahel. Crawford v. West Side Bank, 100 N.,Y., 50 .

The case of Schoenwald v. Metrop. Bank, 57 N. Y., 418 , is referred. to in the Smith case above cited, and it is said that in that 'Case the language of the contract was substantially different. Whether that case can stand against the decision of Smith v. Brooklyn Sav. Bank, we need not inquire. It is enough that the rules of the bank in the present case bring it within the later decision. And that under that decision John 0. could not, by virtue of possession of the pass book, draw out any of this money. If the possession of the pass book did not authorize him to draw the money, then such possession gave no control over the money, the thing given.

In Matter of Crawford, 113 N. Y., 560 ; 23 St. Rep., 722 , the -deposit of money in a bank to the credit of another person was held to be a gift. As to the bonds in that case, they were coupon bonds payable to bearer, and therefore passed by delivery. They had not been delivered, and the court say: “ Nothing appears in the case as to what was the effect of the so-called registry.” And the registration had certainly no effect on the coupons which remained still payable to bearer.

The pass book in the present case was not negotiable paper, :and the money entered on it was payable to no one but Asahel. And payment by the bank to Asahel (when of age) if not before ■ (see the charter of the bank), would have discharged the liability of the bank. He was the depositor, and the agreement of the bank was with him. It is immaterial from whom the consideration came. The promise was to Asahel. He could adopt it even '.though not a party. Lawrence v. Fox, 20 N. Y., 268 .

It seems to us that this subject of the delivery of the gift 'was not so decided in the court of appeals that the remarks in the opinion are controlling on the new and most important facts presented on the second trial, viz.: the intention of John O. to make a present gift, and bis intention that the money should become and remain the property of Asahel. Nothing was said as to the possibility of making an actual delivery of the voucher, and nothing as to the inability of John 0. thereafter to draw out the money legally.

We think, therefore, that the judgment should be reversed, and •a new trial granted, costs to abide event

I think, on this trial, the plaintiff has substantially overcome the objection of the court of appeals in this case reported 117 N. Y., 421 ; 27 St. Rep., 405 . The ground assumed for a reversal in that case was that the plaintiff had failed to prove the intention on the part of John O. Beaver to make a gift to his son at the time of making the deposit in the bank, and that the retention of the bank book by him was evidence of a want of delivery.

The court now, upon sufficient evidence, finds that it was the intention of John O. to make a gift of the money deposited at

Dissent

p. 612

the time of the deposit, and I think that my Brother Learned has established most successfully and completely, upon principle and authority, that the retention by the father of the bank book when the gift is made or intended to be made by him to his infant son, is as much an executed gift as if he had delivered the book to the son or to some other person for the use and benefit of the son. He being the natural guardian and custodian of the property of his infant son in the absence of any general guardian, could not defeat his own executed gift by retaining the bank book.

(dissenting).—Upon the facts as now found, we-think the trial court was obliged, by the opinion of the court of" appeals upon its review of the former trial, 117 N. Y., 421 ; 27 St. Rep., 405 , to find in favor of the defendants. The court of' appeals said, page 429 : “We are of opinion that there is lacking-in this case two of the essential elements to constitute a gift by John O. Beaver to his son of the money deposited July 5, 1866,. viz., an intent to give, and a delivery of the subject of the alleged gift.” The plaintiff upon this trial has supplied the evidence of' the intent to give, but no advance whatever has been made in supplying evidence of the delivery of the subject of the alleged gift. All the facts cited by the court of appeals in its opinion, page-432, to show that there was no proof of delivery are unchanged.

The learned;counsel for the plaintiff now earnestly contends-that because John O. Beaver intended by making the deposit to - the credit of Asahel, and did say that he had made a gift to him of the amount, that it should have been found as a fact that the-gift was complete. There are cases, of which the early case of' Grangiac v. Arden, 10 Johns., 293 , is one, in which the fact of" delivery has been found from the declarations of the donor, when the other evidence in the case failed to show delivery. But as we-interpret the opinion of the court of appeals, the established fact. of the non-delivery of the pass book, and the continued dominion of John 0. Beaver over the deposit, resulting from his form of making the deposit, his possession of the pass book, and the-rules of the bank, which formed part of the contract of deposit, require the finding that there was no delivery of the subject of' the gift. The effect of these facts is that the intent to deliver re- - mained unperformed. The judgment must, therefore, be affirmed,. unless some error to the prejudice of the plaintiff occurred upon - the trial. The burden rested upon the plaintiff to show the delivery of the subject of the gift. Clearly so, after the- particulars of the deposit had been shown by the cross-examination of her ■ witnesses. Under the circumstances of this case, it was needful to show the delivery by John to Asahel of the pass book, or some equivalent act. So the court of appeals held. This the plaintiff had not done and could not do. The defendants, however, called several witnesses whose testimony tended to show not only John 0. Beaver’s occasional custody of the pass book, but his continual custody of it.

In view" of the plaintiff’s failure to prove delivery of the pass

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book it can not be important whether the defendant’s witnesses who were unnecessarily called to establish the negative were competent or not But if we assume that delivery of the pass book might have been inferred from John 0. Beaver’s declarations, if there were no evidence except that extracted from the plaintiff’s witnesses, and this was probably the theory of the defendants, then it was material for them to show who had the pass book. Among other witnesses the widow of John 0. Beaver testified, under objection based upon § 829 of the Code, that on the day the deposit was made her husband and herself went together to Kingston, some seven or eight miles distant from their home; that her husband had the money in his pocket; that Asahel, then a lad of seventeen, remained at home; that she did not go with her husband to the bank, but that he brought the pass book home with him, and thereafter and until her husband’s death the book was kept in the bedroom which she and her husband occupied ; that she and her husband or both of them had the possession of the book. The substance of this testimony is that she saw her husband have the book on the day of the deposit and saw where be afterwards kept it, and that he did keep it until his death. Strictly speaking this was the unilateral act of the husband which the wife observed. There is no necessity to infer from it that the husband ever delivered the book to his wife or that she was in any way such a participant in its custody as to make his custody of it derivable from or through any transaction between the two. Her testimony therefore falls neither within the spirit of the prohibition nor within its letter. As the book was kept in the bed room of herself and husband, she doubtless often performed some acts of care respecting it, just as she may have done in respect of the furniture in the same room; but such acts on her part supply-no defect in the completeness of the husband’s custody of the book as shown by his placing it and keeping it in that room. His custody gains no support from any transaction between himself and wife touching the book, and if any such transaction may be inferred from the testimony of the wife it is incidental and collateral and is wholly inconsequent.

The widow testified that she rode to Kingston with her husband on the day of the deposit; that undoubtedly was a transaction between herself and husband, but it was testimony incidental to the material part of her testimony ; if the material part of her testimony was competent, it would be carrying the exclusion of § 829 beyond reason to condemn the material because it was incidentally connected with testimony which was justly regarded as merely incidental and preliminary.

Before the testimony of the widow of John 0. Beaver was received, she executed and delivered to Charles C. Beaver an assignment of all her interest in the subject matter of the action. She thereby ceased to be “ a person interested in the event,” and as that was the only disqualification under which she rested, its removal made her competent. This practice is open to abuse, but as it is authorized by authority we must recognize it. Matter of Wilson, 103 N. Y., 374 ; 3 St. Rep., 613 ; Loder v. Whelpley, 111

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N. Y., 239 ; 19 St. Rep., 631 . It disposes of the objection to the testimony of Alice J. Beaver.

The judgment should be affirmed, with costs, udgment reversed and new trial granted, costs to abide event.