Smith v. Eshelman , 235 Ala. 588 ( 1938 )

This is a bill in equity, and the opinion of the trial judge shows that its sufficiency is challenged on the ground that the facts averred do not constitute a gift causa mortis.

The facts averred which seem to control the questions are succinctly stated as follows:

"James Daniel Caddell, in expectation of death then imminent, and a patient at the Baptist Hospital at Selma, Alabama, preparing to undergo an operation, delivers to Doctor T. C. Cameron a letter Exhibit A to the Bill of Complaint, requesting Doctor Cameron to open same in case of his (J. D. Caddell's) death, said Exhibit A being as follows:

"Exhibit A.

"10/30/31 "Dr. Cameron

"Dear Sir:

"If I die today or soon I want you to collect what claims I have in your hands and pay my debts as follows:

"H. C. Collins, $50.00, Jno. Walter Collins, $150.00, Jas. Compton, $150.00, and Mosby $175.00, Marengo Hardware Co. $3.10. Pay Dr. Harper and expenses of burial, Pay yourself, Faunsdale Drug Co. The balance pay to Sue children Henry Smith. Make Henry guardian of (this portion unreadable) * * * for her children. Settle with I. F. Lewis at the end of the year. He owes me 500 and the interest upon the 4100 that you have for this year, whatever will be enough to furnish my burial expenses.

"[Signed] D. J. Caddell."

"D. J. Caddell, delivered said letter to Dr. T. C. Cameron, in this paragraph already mentioned, he requested said Dr. T. C. Cameron not to open said letter until after his death, and said decedent also delivered to said Dr. T. C. Cameron, at the same time, separate and apart from said letter and not contained therein, a certain note for $3500.00 made by Ivey F. Lewis to said decedent and endorsed on the back thereof as follows: '10/23/31. In the event of my death pay to the order of Dr. T. C. Cameron. D. J. Caddell;' that said note constituted the entire estate of said decedent except a few open accounts of small value."

Caddell died from the effects of the operation on the next day following the acts just stated.

The court held that those facts did not constitute a delivery of the personal property to Dr. Cameron so as to comply with the requirements necessary to constitute a gift causa mortis, and on that ground sustained a demurrer to the bill.

That, therefore, is the question for review in this court.

The qualities of a gift causa mortis have been so often expressed, further repetition would serve no useful purpose. Barnes v. Barnes, 174 Ala. 166, 56 So. 958; Robertson v. Robertson, 147 Ala. 311, 40 So. 104, 3 L.R.A., N.S., 774, 10 Ann.Cas. 1051; Jones v. Weakley, 99 Ala. 441, 12 So. 420, 19 L.R.A. 700, 42 Am.St.Rep. 84; and Herring v. Elliott, 218 Ala. 203,118 So. 391.

There is no variance in the authorities as to what is necessary to constitute such a gift.

Among other things, a delivery is necessary, and constitutes an important distinguishing factor between such a gift and a testamentary act. 28 Corpus Juris 686, § 94.

The delivery may be made to a third party for the donee. 12 R.C.L. 934, § 5; 28 Corpus Juris 694; 3 A.L.R. 926; 60 A.L.R. 1059; and Jones v. Deyer, 16 Ala. 221, 225.

There is no disagreement about those principles. But the third person into whose hands the article is placed must be found from the facts to be a trustee for the donee, rather than the mere agent of the donor, whose agency is revoked by the death of the donor. Does the third person hold the possession for the donor or the possession and title for the donee, is the question usually necessary to be answered in such cases.

If the third person holds the possession for the donee, there is by that circumstance a delivery to the donee. If he holds for the donor, there is no such delivery.

There is likewise no difference among the authorities as to that statement.

The only difficulty is to find whether the facts and circumstances should be held to show the one or the other legal status.

A principle of importance, and which we think is controlling in this case, is that, if the title does not pass and was not intended to pass out of the donor until his death, the manual delivery of the property to another is not such delivery as is necessary.

True, such a gift is always subject to revocation by the express act of the donor, and is revoked by law, if he gets well of the sickness with which he was then afflicted. But the revocable nature of the gift may as well be expressed as implied. In either event it is a condition subsequent.

The donor must make the same sort of delivery as is necessary to a gift inter vivos. The only difference is that in the latter there is no defeasance expressed or implied, whereas such defeasance exists as a part of a gift causa mortis.

So that the fact that a gift is made expressly to depend for its complete effectiveness upon such a failure to revoke expressly or by implication of law not only does not detract from it as such a gift, but that is only an expression of the existence of a quality of a gift causa mortis as defined by law. 3 A.L.R. 902.

So we revert to the inquiry which exists here as in all such cases of whether the donor did such act as would be sufficient to pass the possession and title out of him, subject to the defeasance without the necessity of anything else being done for that purpose.

If so, the gift was complete though the donee or the third person for him had no right to the use and enjoyment of the property until the death of the donor. Barnes v. Barnes, supra.

There is no conflict in the authorities in this respect, indeed if there is a conflict in any respect. 28 Corpus Juris 691, § 104.

It is said in 12 R.C.L. 935, § 12: "The delivery must be actual so far as the subject is capable of delivery, or otherwise it must be such delivery as the nature and situation of the subject sought to be given reasonably admits of and must clearly manifest an intention on the part of the donor to divest himself of title and possession. It has been held to be sufficient if the donor has put it in the power of the donee to take possession, and if the donee can take possession without committing a trespass."

An account for money due by one to another is not delivered under this rule by an order made by the creditor on the debtor not accepted by him, such as a check on a bank account; but a savings account may be delivered by a delivery of the passbook, or the contents of a locked box by a delivery of the key which unlocks it. Jones v. Weakley, supra, and Herring v. Elliott, supra.

Upon the basis of that principle, the Supreme Court of the United States in Basket v. Hassell, 107 U.S. 602, 2 S.Ct. 415,423, 27 L.Ed. 500, construed a certificate of deposit in a bank and its indorsement and delivery as being "in substance, not an assignment of the fund on deposit, but a check upon the bank against a deposit, which, as is shown by all the authorities and upon the nature of the case, cannot be valid as a donatio mortis causa, even where it is payable in præsenti, unless paid or accepted while the donor is alive."

There is nothing in that case said to the effect that the valid assignment of a note is not effectual for a purpose such as here contemplated. The case was predicated on rules applicable to an assignment of a fund or a debt due by another, not an instrument which is a recognized item of property.

The court in that case did not treat the certificate of deposit as an item of property apart from the fund represented by it.

To show clearly that the court did not mean to include promissory notes as being in the same situation as that with which he was dealing, we quote as follows from that opinion: " 'As to the character of the thing given,' says Chief Justice Shaw, in Chase v. Redding, 13 Gray (Mass.) 418, 420, 'the law has undergone some changes. Originally it was limited, with some exactness, to chattels, to some object of value deliverable by the hand; then extended to securities transferable solely by delivery, as bank-notes, lottery tickets, notes payable to bearer or to order, and indorsed in blank; subsequently it has been extended to bonds and other choses in action in writing or represented by a certificate, when the entire equitable interest is assigned; and in the very latest cases on the subject in this commonwealth, it has been held that a note not negotiable, or if negotiable, not actually indorsed, but delivered, passes, with a right to use the name of the administrator of the promisee, to collect it for the donee's own use;' citing Sessions v. Moseley, 4 Cush. (Mass.) 87; Bates v. Kempton, 7 Gray (Mass.), 382; Parish v. Stone, 14 Pick. (Mass.) [198] 203 [25 Am.Dec. 378]."

There can be no question but that a promissory note, as such, is an item of property, subject to gift, separate from the money represented by it. Jones v. Deyer, supra.

The general rule is said in 12 R.C.L. 941, 942, § 18, to be that the delivery of a note, though without a written assignment, will constitute such a valid gift if made with the intention to transfer title. This was so held in Jones v. Deyer, 16 Ala. 221, where it was also held that the note could be given causa mortis and delivered to a third person for the donee, if the latter retained the possession up to the time of the donor's death. 28 Corpus Juris 699, 700.

It is perfectly clear that the conclusion in Basket v. Hassell, supra, could not under those authorities be extended to a promissory note, and was not so intended. Its argument and reasoning make it applicable only where the donor did no act sufficient to pass title and possession of the article sought to be donated, there said to be a fund in bank.

Of bank deposits, it is said that they are the subject of such gifts when delivery is sufficient to confer on the donee the present right to the fund. Jones v. Weakley, supra; 29 Corpus Juris 701. This means, of course, subject to the revocation which is incident to such a gift.

The indorsement and delivery of the note to Dr. Cameron passed the title and possession to him. The terms of the indorsement and the letter which went with it merely show that the transaction was causa mortis, and that he was to act as trustee for certain named donees, of which he, himself, was one, though such acts were not to be done until the donor died.

The courts ordinarily indulge a presumption that the person to whom delivery is made takes as a trustee for the donee. In re White's Estate, 129 Wn. 544, 225 P. 415; see the note in 60 A.L.R. 1060, referring to that case.

The donor was under the circumstances required to do nothing after he made the indorsement and delivered the note to Dr. Cameron to make complete a transfer of the title in the note to him, the actual possession of which was also passed to him.

We have mentioned the beneficiaries of the trust as donees. This is true to a large extent, but not wholly so. Some of them are creditors: in fact, the trustee himself is named as one of them.

As pointed out in 12 R.C.L. 930, if there is a consideration, it is not a gift, but a consideration subjects it to construction as another form of transaction than a gift; and that though a gift must be presently effective to pass title, not so when there is a valuable consideration. Moreover, an agency in which the agent has a personal financial interest, 2 Corpus Juris Secundum, Agency, pp. 1160, 1161, § 75 C and D, note 40, is not terminated by the death of the principal, if there has been such a transfer that the agent can exercise the power in his own name, 2 Corpus Juris Secundum, Agency, p. 1175, § 86 (2), as when given to secure or pay a debt, 2 Am.Jur. p. 65, § 80; Reedy v. Kelley, 206 Ala. 132, 89 So. 275.

Whether the transaction be controlled by the principles applicable to gifts causa mortis, or to contracts creating a trust upon a valuable consideration, or an agency coupled with an interest, it was not revoked by the death of the grantor.

It follows that the demurrer to the bill should not have been sustained on the ground which we have discussed, and which was the predicate of the decree of the trial court.

Reversed and remanded.

ANDERSON, C. J., and THOMAS, BOULDIN, and BROWN, JJ., concur.

GARDNER and KNIGHT, JJ., dissent.