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(92 N. J. Eq. 554)

KAUFFMAN v. EDWARDS.
STOKES v. EDWARDS et al.
(Nos. 47/712, 48/639.)

1921.)

(Syllabus by the Court.)

30 (4) — Deposit of money payable to depositor or another, or survivor, transfers an interest to such other, if so intended.

Where moneys belonging to A. are by A. deposited in bank in an account in the name of "A. action is sufficient to accomplish a transfer to or B., payable to either or the survivor," such B. of an interest in such bank credit, if it appear that A. intended thereby to effectuate a then present transfer of such interest. 2. Gifts 49(5) Intent and existence of transfer of interest in bank account determinable from evidence.

mistake of fact; and, third, because to permit the bank to repudiate the payment would destroy the certainty that must pertain to commercial transactions of this sort and give way to the uncertainty, delay, and annoyance which would result if the bank could at (Court of Chancery of New Jersey. March 28. some future time call on the payee for the return of money paid him on a check (National Bank of New Jersey v. Berrall, supra; | 1. Gifts Citizens' Bank of Norfolk v. Schwarzschild, 109 Va. 539, 64 S. E. 954, 23 L. R. A. (N. S.) 1092; Spokane & Eastern Trust Co. v. Huff, 63 Wash. 225, 115 Pac. 80, 33 L. R. A. (N. S.) 1023, Ann. Cas. 1912D, 491. So it has been held that the certification of a check by a bank upon the mistaken belief that the drawer had sufficient funds to his credit, when in fact the apparent credit was the result of the deposit of a forged check to the credit of the drawer's account, will not excuse the bank from paying the certified check (Fidelity Trust Co. v. Baker, 60 N. J. Eq. 170, 47 Atl. 6), and it has also been held that where a bank official having authority to certify checks certified one for an amount which he knew to be in excess of the drawer's account, the effect of the certification is payment, precisely as if the bank had paid the money on it instead of making a certificate of its being good, and the bank is estopped from denying that it has sufficient funds with which to pay the check. State v. Scarlett, 91 N. J. Law, 200, 102 Atl. 160, 2 A. L. R.

86.

[4] And it is the rule that a person receiving stolen money innocently in due course of business, in payment of a pre-existing debt, is a holder for value as against the former owner. Fidelity Trust Co. v. Baker, 60 N. J. Eq. 170, 173, 47 Atl. 6; Village of Mineral City v. Gilbow, 81 Ohio St. 263, 90 N. E. 800, 25 L. R. A. (N. S.) 631; Benjamin v. Welda State Bank, 98 Kan. 361, 158 Pac. 65, L. R. A. 1917A, 704, 707.

In such a case, whether or not A. had such transfer to B. of an interest in the bank credintent thereby to accomplish a then present

it, and, if so, the nature and extent of the interest so intended to be transferred, is to be determined from all the evidence.

3. Gifts 30(4), 66(3) Where transfer of bank account presently effective, as dependent on donor's intent, stated.

In such a case, if A.'s intent was to accomplish a then presently effective transfer of an interest in remainder at A.'s death in such

bank credit, though conditioned upon B. sur-
viving A., and subject to A.'s right to diminish
the bank credit during his lifetime, the transfer
is valid; but, if A.'s intent be that no transfer
of interest take place until A.'s death, no valid
transfer results either at the time of the open-
ing of the account, the depositing of the moneys,
or the death of A. leaving B. surviving.
4. Gifts 30(4) — Question presented where
A. and B. opened deposit account payable to
either or survivor, and each deposited money,
stated.

Where both A. and B. open a deposit account in the name of "A. or B., payable to either or the survivor," and each deposits moneys of his own in said account, it merely presents the same question in a double form; i. e., whether A. intended a present transfer to B. of an interest in the bank credit represented by the moneys deposited by A. (and, if so, what interest), and whether B. intended a present transfer to A. of an interest in the bank credit represented by the moneys deposited by B. (and, if so, what interest). Gift of interest in bank 5. Gifts 30(4) account in remainder at donor's death, conditional on B. surviving him, held created.

All the checks given by Haggerty to Mayhew, save one, were deposited by Mayhew in his bank under a general indorsement, and were paid by complainant to Mayhew's bank. It might be argued that when May new deposited the checks in his bank, the amount thereof was credited to him; that the money so credited was the money of his bank; that the transaction was, in effect, a sale of negotiable paper by Mayhew to his bank; that the money complainant afterward paid was paid to Mayhew's bank, and not to Mayhew, and that the right to recover money paid by A. and B. opened a bank account in the mistake exists only as against the party to survivor," and both from time to time made name of "A. or B., payable to either or the whom the payment was made. But this ques-deposits therein of their own respective montion of privity between the parties to this action was not raised, and has not been considered.

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eys. Occasional withdrawals were made by A. or for A.'s benefit, but at A.'s death, leaving B. surviving, the bank credit was still in ex

I shall advise a decree that complainant's cess of the sums (and interest) deposited by bill be dismissed.

B. Held, that B. is entitled to the entire bank

(113 A.)

credit as against A.'s administrator; that as In the bill filed by William C. Kauffman to the portion thereof represented by A.'s de- against his sister, Mrs. Edwards, claim was posits it appeared from all the evidence that made by him to one-fourth of the deposit, A.'s intent in the opening of the account and under an alleged trust for Mrs. Kauffman to making the deposits had been to effectuate a Mrs. Edwards for the benefit of four chilthen present transfer to B. of an interest in dren. The bill subsequently filed by Mr. the credit resulting from such deposits, which interest was at least an interest in remainder Stokes as special administrator against Mrs. at A.'s death therein, conditional upon B.'s sur- Edwards Joined the other three children as viving A. and subject to A.'s right of withdraw-defendants (as well as the bank), and they al in the meantime, and that such transfer was filed answers setting up the same claim as valid and effectual; that as to the portion rep-made by William in his bill. The two causresented by B.'s deposits, even if B. had had es were then consolidated, and the whole a similar converse intent, nevertheless the matter came on for hearing at one time. transfer to A. was rendered nugatory, because A. did not survive B.

(Additional Syllabus by Editorial Staff.) 6. Trusts 34(2)-Money deposited payable to mother or daughter, or survivor, held not a trust for mother to daughter for benefit of all the children.

Decedent and her daughter deposited money in a joint account, payable to either or the survivor. Subsequently the daughter, who testified that she assented to anything her mother wanted, even to the extent of giving her savings to her brothers and sisters, assented to decedent's suggestion that the account be divided upon her death among the daughter and three other children, but later, in response to the daughter's query as to whether she wanted her to take hers out before the distribution, decedent assented. Held, there was no trust for the mother to the daughter for the benefit of the four children; there being no consideration for the daughter's contributions, and no completed trust as to decedent's contributions to the account.

Separate bills by William C. Kauffman against Mary R. Edwards and by Edward C. Stokes, special administrator of the estate of Mary Kauffman, against Mary R. Edwards and others, consolidated for hearing. Decree for defendant, and both bills dismissed.

Scammell & Besore, of Trenton, for complainant Stokes.

Cases involving the ownership of so-called "joint" bank accounts of this kind—that is, where the passbook or deposit book shows the account as of the bank "in account with A. or B., or the survivor," or to similar effect-have frequently come before the courts of this state and other states. In almost every instance, however, these cases have

been cases where the moneys deposited in the account have all been deposited by one of the two persons interested, and that person (who may be, and frequently is, termed the "donor") has died, and the other of the two persons, or "donee," has claimed the account as against the executors or administrators of the "donor." The present case is therefore unique, in that moneys were deposited in the account by both parties, and of the amount on deposit in the account at the "donor's" death (exclusive of interest) the major part thereof had been deposited therein by the "donee."

In cases of this kind, as, indeed, in all cases of attempted transfer of bank credits, there are two matters which are the subject of inquiry; one being the intent of the "donor," and the other being the act by which such intent has been sought to be effectuated. As to intent, the inquiry is: Was there at the time of the act an intent to make a then presently operating transfer of the "donor's" right against the bank or other depositary? (In many of the cases this in

Maxwell A. Kraemer, of Trenton, for complainant Kauffman and another. Harvey T. Satterthwaite, of Trenton, for tent is called a "donative purpose," but it is, defendant Velder.

of course, obvious that the inquiry is equally Edwin C. Long, of Trenton, for defendant pertinent and necessary where there may Edwards.

have been consideration for the transfer as

Walter F. Hayhurst, of Lambertville, for where the case is one of pure gift.) As to defendant Lambertville Nat. Bank.

BUCHANAN, V. C. These two cases require the determination of the ownership of a certain bank credit of upwards of $5,700, standing in the name of "Mary Kauffman or Mary R. Kauffman, payable to either or the survivor." Mary R. Kauffman married subsequent to the opening of the account, and is now Mary R. Edwards. Mary Kauffman is dead, dying domiciled in Pennsylvania, and Edward C. Stokes is special administrator for the collection of assets of her estate in New Jersey.

the act, the inquiry is as to whether the method employed for the attempted transfer is legally sufficient to accomplish such transfer, assuming the existence of the requisite intent.

In these cases of accounts to the credit of A. or B., payable to either or the survivor, the act of alleged attempted transfer is the making of the contract between the depositor and the bank; the transferee may or may not be also a party to this contract. That contract-at any rate where the transferee is not an actual party to it-in its expressed terms is a contract whereby A, loans

the debt due from the bank, be of any controlling materiality. If A., being in partnership with B., takes some of his own money to the bank and opens an account in the name of “A. and B., partners" (assuming, of course, the requisite intent), no one will contend that the "money in bank”-i. e., the chose in action, of the bank's indebtednessis not partnership property; that the act was not sufficient to accomplish a transfer mere

right to draw on the account.

That the conclusion reached is not only logical, but settled law in this state, is clear from a consideration of the adjudicated casSuch is the decision in Dunn v. Houghton, 51 Atl. 71, and in Schippers v. Kempkes, 67 Atl. 1042, affirmed 72 N. J. Eq. 948, 73 Atl. 1118. Both of these cases are, I take it, expressly approved on this point in the recent opinion of N. J. Title, etc., Co. v. Archibald, 108 Atl. 434. In the last-mentioned case, at the time the account was opened by the "donor," the "donee" was also present, and both signed a written statement, delivered to the bank, that "this account and all moneys to be credited to it belongs to us as joint tenants and will be the absolute property of the survivor of us; either and the

money to the bank and the bank promises to pay to either A. or B., according to their respective demand or order, or to the survivor of them. This provision as to payment by the bank is both an obligation and a right. The bank may be compelled to make such payments, and, on the other hand, moneys paid by it to B. or on B.'s order will discharge it pro tanto of liability to A. But clearly there is nothing expressed or implied in that contract which necessarily accom-ly because the transaction leaves A. with a plishes a transfer of ownership in the chose in action. On its face it may deal only with transfer of possession instead of ownership. A. may go to B., a merchant, purchase and pay for an article, with an agreement as partes. of the contract of purchase and sale, that B. shall keep the article, to be delivered to C. upon his calling for it. C. may be a mere agent of A., to receive possession for A. of the article which A. has purchased for himself and therefore owns, or A. may have purchased the article for C., either as a gift or pursuant to contract between A. and C., and in that case the delivery to C. would be a transfer of ownership as well as possession. Assuming, therefore, for the moment, that the means employed by Mrs. Kauffman in the present case-i. e., the making of this contract of "joint account" with the bank-survivor to draw." It is held that there was was sufficient to accomplish a transfer of the chose in action or some interest therein, as effectively as a formal written instrument of assignment the necessity of ascertaining her intent is plain. Did she intend it to operate merely in the nature of a power of attorney death. I am unable to perceive how the to Mrs. Edwards, or did she intend thereby then presently to transfer to Mrs. Edwards the actual ownership of some interest in that chose in action (whether or not the actual enjoyment thereof by Mrs. Edwards should be immediate or deferred), and, if the latter, what interest therein did she intend to convey?

[1] Dealing first with the sufficiency of the alleged act of transfer, I conclude that the means employed by Mrs. Kauffman was sufficient to effectuate her purpose and intent, if she had the purpose of transferring an interest in the account. This conclusion is based upon both reason and authority. The act of making such a contract with the bank is as much a completed act as the execution of a formal instrument of direct assignment or assignment in trust, or as a manual de livery.

That it is in itself ambiguous cannot matter, for the mere act alone of manual tradition is equally ambiguous as to whether it constitutes transfer of mere possession or of ownership; yet no one would contend that the manual delivery was an insufficient act to effectuate transfer of ownership, if the requisite intent be present. Nor can the fact that the contract leaves Mrs. Kauffman with the power, or some power, of disposition of

a then present gift and delivery; the objections based on the right of the "donor" to draw, and on the right of survivorship, are expressly refuted, and the "donee" is held entitled to the account on the "donor's"

presence and participation of the "donee" at the time of the making of the contract with the bank can be of any materiality. They might merit consideration in the endeavor to ascertain the intent of the "donor," but not as to the legal sufficiency of the act of transfer the contract between the "donor" and the bank. Neither is the explicit character of the written statement, which they both signed and delivered to the bank, material on that point. That written statement is merely proof that the "donor's" intent was that the opening of the account was an act of present transfer of interest, instead of a "power of attorney." It supplies the proof necessary to resolve the ambiguity of the mere opening of the account alone, the proof which otherwise must needs have been sought from other sources. There is assuredly no indication in the opinion that any of these things in any wise contributed to the decision reached; rather does the contrary appear from the express approval of the opinions in Dunn v. Houghton and Schippers v. Kempkes, in neither of which were any of these factors present.

I take it to be the settled law of this state, therefore, that where a depositor opens a bank account in the names of "A. or B., or the survivor," or the equivalent thereof, the "do

(113 A.)

nee" takes an interest in the chose in action The principal witness was Mrs. Edwards. and will take the entire chose by survivor- Complainants not only did not invoke the bar ship at the death of the "donor"-if the de- of the statute against her testifying as to positor had the intent then to transfer such conversations and dealings with the decedent, interest. The many cases denying the "do- but the administrator himself called her for nee's" right are those where such intent was that purpose. Her testimony shows that the lacking, or insufficiently proven. Such was confidence was amply justified, for much of the situation in Morristown Trust Co. v. Cap- her testimony was against her own interest, stick, 90 N. J. Eq. 22, 106 Atl. 391, affirmed although no one could have contradicted her. sub nom. Morristown Trust Co. v. Safford, It is evident that a somewhat unusual rela108 Atl. 926, where there was no explicit con- tionship of perfect trust, confidence, and tract, such as in the Archibald Case, and the mutual interest existed between mother and evidence as to the depositor's intent showed daughter, as beautiful as it is rare. She was clearly that he had opened the account only living with her mother, and although of age for his convenience, for a "power of attor- and earning her own living, she turned over ney" purpose, and had no intention of a then to her mother practically her entire earnings, present transfer of interest to the "donee." which her mother deposited in an account in the Lambertville Bank in her (the mother's) own name. On November 9, 1903, this account comprised $500, made up in whole or in large part of the daughter's moneys. This $500 was transferred to the new "joint" account as the opening deposit.

I have hereinbefore referred to the circumstance, unusual in these cases, that both parties to the account made deposits therein of large amounts. This, however, while it ought by no means to be overlooked in the consideration of the facts and circumstances evidential as to intent, in no wise adds to, or substracts from, the principles governing the determination of the suit. The result thereof is merely that we have to deal with a combination of two alleged or attempted transfers the transfer by Mrs. Kauffman to Mrs. Edwards in respect to the moneys de posited by Mrs. Kauffman, and the transfer by Mrs. Edwards to Mrs. Kauffman in respect to the moneys deposited by Mrs. Edwards. Whether or not a transfer was effectuated by Mrs. Edwards does not concern us in the present case; if it was, it was nevertheless subject to the condition of survivorship, and Mrs. Edwards gets it back as sur

vivor; if it was not, then the moneys deposited by Mrs. Edwards inure to her credit alone.

[6] Let us now turn to evidence from which is to be ascertained the intent of Mrs. Kauffman. The account was opened November 9, 1903. The passbook and two cards constitute the only contract with the bank. The book is headed "Lambertville National

The intent of the mother and daughter with regard to the moneys turned over and deposited in the first account was not only unexpressed, but extremely vague and indefinite. Vide the following testimony:

"Q. Well, why did you give your mother these moneys that you earned in New Hope-did you give them to her? A. I would take them home and just hand them to her; what I needed then I kept.

"Q. For what purpose did you hand them to her? A. Nothing was ever said.

"Q. What did you mean that she should do with them? A. Just as she chose.

"Q. Did you mean to make a gift of those moneys to her? A. No; I gave everything to

mamma, anyhow.

"Q. Were you giving these moneys to her, so that, from and after the time you gave them to her, they should be her moneys, to do as she chose with them, or did you give them to her for you? A. I knew she was keeping them for me.'

Mrs. Edwards was not present when the new account was opened (she went daily to Bank, Savings Department, in Account with work in Philadelphia), but signed the signaMary Kauffman or Mary R. Kauffman, Pay-ture card a little later. She says she knew able to Either or the Survivor," and then her mother was going to open the joint acfollows the entries of deposit and withdraw-count. At or shortly after the joint account al. The two "signature cards" each bore was opened, Mrs. Kauffman said to Mrs. Edthe number of the passbook and contained the following:

"Agreement.-I do hereby assent to the rules and regulations of the bank governing savings deposits as printed in my passbook."

Mrs. Kauffman signed one of these and Mrs. Edwards the other. The only portions of those rules and regulations which can be at all relevant are that the entries in the passbook shall constitute the depositors' vouchers, and that all payments made to any person producing the passbook shall be good and valid payment (not that the passbook

wards that

"She was putting it in both our names, so that I could get it after she was gone, or she could get it if anything happened to me; I think that was at Mr. Phillips' suggestion."

The president of the Lambertville Bank (Mr. Phillips) testified that he could not recall whether or not he was present at the actual opening of the account, but Mrs. Kauffman spoke to him several times about it subsequently.

"Mrs. Kauffman always said that that [the money in the account] was for Mrs. Edwards.

the funds.

(Mrs. Kauffman) was gone. • She wasn't until after she was gone, anyway." The naversed much in banking accounts, and she wish-ture and extent of her right and interest in ed us to make sure that her daughter received the deposit account as between herself and * She wanted it put in that her mother was obviously very vague and inway, so she could make sure her daughter definite in her mind; nothing like an exwould get it when she died." pression thereof was ever had between them. The only other evidence of any particular significance is that when Mrs. Kauffman was seriously ill, and both feared she would not recover, she suggested to Mrs. Edwards that the "joint account" should be divided (apparently upon her death) between Mrs. Edwards, Mrs. Velder, John Kauffman, and William Kauffman-to which Mrs. Edwards said, "All right." The next day Mrs. Kauffman was somewhat better and Mrs. Edwards said to her mother, "Did you want me to take mine out?" meaning to take from the account, be fore the suggested distribution, the amounts which Mrs. Edwards had contributed thereto of her own moneys, to which Mrs. Kauffman Mrs. Edwards, being asked why she agreed to such a propsition, testified: "A. I assented to anything my mother wanted.

It is perfectly obvious that the account was not opened in this way for the convenience of Mrs. Kauffman (as frequently appears in suits of this kind), for Mrs. Kauffman was in good health and active practically all the time until her death in 1915, and on the other hand, when the account was opened, and for some years thereafter, Mrs. Edwards spent the daytime at employment in Philadelphia. Later, when she secured employment near at home, either one would go to the bank, as happened to suit their mutual convenience. Both took money to the bank to deposit, and the moneys so taken by Mrs. Edwards might be her mother's, or her own, or partly both,

and vice versa.

drawals.

The production of the passbook for withdrawals was not requisite, and indeed the intrinsic evidence of the entries of withdrawal shows that it was by no means always presented at withdrawals; but, even if it had been required, it was kept at the home, accessible to both or either, and for a time in a safe deposit box accessible to either. No account or record was kept by either of the two as to the respective moneys of each which went into the account,-nor of withAside from the first deposit, the moneys contributed to the account by Mrs. Edwards (exclusive of interest) aggregated, as nearly as she could fix or estimate it, the sum of $2,600. Mrs. Kauffman then (not taking into account a deposit of $2,000 in her hands as administratrix of her husband, inadvertently put into this account and then withdrawn) must have deposited about $2,700. She withdrew about $2,200, leaving only $500 of her deposits at the time of her death. There were only ten withdrawals from the account, eight by checks signed by Mrs. Kauffman, and two by checks signed by Mrs. Edwards at Mrs. Kauffman's request, but all for the use, benefit, or account of Mrs. Kauffman. An examination of the entries and balances in the passbook, in the light of the testimony, shows that apparently at no time did the withdrawals by or for Mrs. Kauffman encroach upon the moneys which had been contributed by Mrs. Edwards, although this may perfectly well be mere accident and not design, since the withdrawals are so few, and since no record was kept of their respective contributions. Some $1,400 or $1,500 of the withdrawals were given by Mrs. Kauffman to her other children. Mrs. Edwards made no withdrawals for her own use or benefit. No occasion ever arose to require such a withdrawal. She said (on being pressed by me) that she felt she had a right to draw for her own use, if she had wanted it; yet again she said, "I felt it wasn't mine

assented.

"Q. Even to the extent of giving your savings to your brothers and sisters? A. If my mother asked it."

Considering this incident in relation to the trust claimed by the brothers and sister (and there is no other evidence to support such claim), I think it is clear that no such trust As to the contributions of Mrs. Edarose.

wards to the account, there was no consideration; as to the contributions of Mrs. Kauffman there was no completed trust as in Hoboken Bank v. Schwoon, 62 N. J. Eq. 503, 50 Atl. 490. Such claim of trust is therefore disposed of adversely to the claimants.

I have no difficulty in determining that the intent of Mrs. Kauffman was not merely to accomplish a "power of attorney"; it was clearly an intent that Mrs. Edwards should be vested, at some time, with the beneficial interest in at least the unsatisfied balance of the chose in action which should remain at Mrs. Kauffman's death, conditioned upon Mrs. Edwards then surviving. The evidence, as has been seen, disproves the idea that the account was opened in the dual form for any reason of convenience to Mrs. Kauffman, and the testimony as to Mrs. Kauffman's statements clearly proves her desire that Mrs. Edwards should have the "funds" at her death.

This determination, however, does not, I take it, carry us quite far enough to be dispositive of the suit. I do not understand the Court of Errors to have overruled its decision in Stevenson v. Earl, 65 N. J. Eq. 721, 55 Atl. 1091, 193 Am. St. Rep. 790, 1 Ann. Cas. 49, by the opinion in N. J. Title Guaranty & Trust Co. v. Archibald, supra. On the contrary, the opinion of that court in Morristown Trust Co. v. Safford, supra, was handed down on the same day as the opinion in the Archibald Case, and affirms the decree in this

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