Andrews v. Wells-Dickey Trust Co.

1 Reported in 203 N.W. 439, 205 N.W. 65. Appeal from an order of the district court of Hennepin county, sustaining a demurrer to the complaint, upon the ground that it fails to state a cause of action. James C. Andrews, now deceased, and the plaintiff were married, each to the other, in 1894. They were divorced in October, 1919, at the suit of the husband. In the decree and judgment, it was provided and directed that the plaintiff convey to the defendant *Page 36 their homestead, known as No. 1125 Dupont Avenue South in the city of Minneapolis, also pay off the encumbrances thereon, relinquish and turn over to her the furniture and household goods then in his possession, and also that he pay to her, on the first day of November, 1919, and on the first day of each month thereafter, during the remainder of her lifetime, the sum of $250 in currency, and also assign and deposit in trust with the Minneapolis Trust Company certain collateral securities in the form of stocks or bonds, or both, held by him, of the actual value of $50,000, the same to be approved by her counsel, and to be so held, in trust, pending full performance of the obligations therein imposed upon him, with the right to substitute other collateral under the conditions to be specified in an appropriate trust agreement, to be prepared and signed by all the parties. The decree further provided and directed that such securities be impressed with a first lien, in favor of the defendant, for the payment of all such sums of money, but that, so long as the plaintiff shall make such payments, he shall have the right to receive the dividends or returns upon such collateral; that, if he keep and perform such obligations up to the time of the death of the defendant, the collateral then held in trust shall be released to the plaintiff, but, should the husband die before the wife, then such collateral, upon her election, to become her absolute property; that, in case such collateral be deemed of less value than $50,000, or if the actual net dividends or earnings from such collateral, for the past preceding three years, shall have been insufficient to pay an income of $3,000 per year, then the defendant shall have the option to reject any portion of the collateral and to claim and receive, from the estate, other collateral, to be selected by her, in lieu thereof, sufficient to constitute $50,000 in value, or to reject all such collateral and to claim and receive, in lieu thereof, the sum of $50,000 in cash; that, in case she be unable to agree, without litigation, with the representatives of the estate, as to the value of any or all of such collateral, then the representatives shall have the right to pay her, in cash, the sum of $50,000 and have the collateral released and surrendered to the estate. *Page 37 Contemporaneous with the entry of the decree above referred to, an agreement was made and signed by all of the parties thereto, including the trustee. At the same time 514 shares of the Brunswick Investment Company stock, of the face value of $100 each, were agreed upon as the collateral security required, which were deposited with the trust company in accordance with the decree of the court. The determination of this appeal does not involve the homestead, the encumbrances thereon, nor the payment of the monthly allowance to the plaintiff, but only the security referred to in the decree, and some insurance on the life of Mr. Andrews to which the plaintiff lays claim in connection with the security. In April, 1923, a dividend of $352,000 was declared by the Brunswick Investment Company, which was paid by the issuance of shares of stock of the face value of $100, of which 445 shares were delivered to Mr. Andrews on account of the 514 shares which he owned and which were with the trust company as collateral under the decree above referred to. Andrews did not deposit the 445 shares with the 514 shares which the trust company held, but retained the same as his own until the time of his death, which occurred on February 8, 1924, when the 445 shares were received and included in the assets of his estate by the representatives thereof. Prior to May 15, 1924, the plaintiff demanded of the defendants and of the trust company, and elected to become the owner of the 514 shares of stock, then in the hands of the trust company. The 514 shares of stock were delivered to her and she has since retained the same and in her complaint claims to be the owner thereof. The controversy arises over the 445 shares which were issued and delivered to Mr. Andrews, it being insisted, on behalf of appellant, that the stock represented by those shares was and is component part of the 514 shares deposited with the trust company, and cannot be separated therefrom by the mere declaration of a dividend and the issuance of certificate of stock in payment thereof; in other words, that the value represented by such shares belongs to the 514 shares of stock and became appellant's absolute property when she elected to take and received the 514 shares, and that therefore *Page 38 she is entitled to recover the same in this action as prayed for in the complaint. We do not so view the situation. In disposing of the matter, the decree in the divorce proceeding and the provisions of the contract, based thereon, must be kept in mind. The 445 shares of stock were issued April 10, 1923. The appellant demanded and received the 514 shares of stock on June 10, 1924. It appears from the pleading that, at the time of the commencement of this action in September, 1924, the 445 shares were of the value of approximately $36,400, or $80 per share. It does not appear what the value of such stock was at the time it was issued in April, 1923. It is manifest, from a reading of the decree and trust agreement, that Mr. Andrews was required and directed to keep satisfactory collateral of the actual value of $50,000 in the hands of the trustee, with the right of substitution, and in the event of the depreciation thereof in value below $50,000, other or additional securities, to be approved by appellant, shall be deposited to maintain the required amount, and, in case of any misunderstanding or controversy as to the value of such securities so deposited, the same might be withdrawn and United States government bonds or cash money, to the amount of $50,000, be deposited in lieu thereof. Mr. Andrews was required to do no more so far as the amount or character of the securities go. Under the decree, appellant was to be paid $250 per month, and so long as these payments were made, Mr. Andrews was entitled to have and receive the dividends or returns upon the securities deposited. To this end the trust agreement provided as follows: "The first party hereto shall have the right to collect and enjoy for his own use any and all dividends and earnings payable on said stock or collateral (the 514) shares which can be paid without impairing the value thereof, and shall have all the rights and privileges of the owner of said stock, not inconsistent with the provisions of this agreement." But it is said Mr. Andrews was only to have the dividends which can be paid without impairing the value of the stock. That *Page 39 statement cannot be accepted literally as no dividend can be paid on stock without reducing to some extent its value. But, such statement was undoubtedly intended to mean, and we think does mean, that the value of the stock deposited should not be reduced thereby to an amount less than $50,000, without giving to the appellant the right to require additional securities to keep the actual cash value thereof up to $50,000. More than this the appellant was not entitled to under the decree and trust agreement. Shortly after the death of Mr. Andrews, appellant elected to accept the 514 shares and accordingly demanded and received the same, not however in full settlement of her rights under the decree and trust agreement, because she alleges, in effect, that the stock in the Brunswick Investment Company is of the value of $80 per share. If such allegation should prove to be well founded as to the value of such stock, she may be entitled to recover from the estate the difference between the actual value of such stock and the maximum amount of collateral, which should have been kept with the trustee, viz. $50,000, but clearly she is not entitled to collateral, of the conceded value of some $36,400, in addition to the 514 shares of the value of over $41,000, under the circumstances disclosed. Further discussion of the pleading is deemed unnecessary. The demurrer was properly sustained. Affirmed.