Onondaga Trust Deposit Co. v. . Price

Rapallo, J. The shares of stock in question were, by the" codicil to the will of James Lynch, specifically bequeathed to his granddaughter, Lilla L. White, to draw the income arising therefrom during her life-time, and at her death to dispose of the same as she should see fit; and although by the same clause the executors were' directed to. pay over to her the dividends, and were thus impliedly authorized to collect them.during her life, no power of disposition of the shares themselves was given to the executors, and whatever trust was created related only to the dividends. The testator’s declaration at the end of the clause, that this bequest was in' place of the provision made in his will, added nothing to the power of the executors over the shares. The bequest in the codicil was a substitute for that provision, and deprived the executors of the power which they would have had thereunder of controlling the principal of the legacy. It afforded greater security to the legatee by changing the legacy of money to be invested into a bequest of a" specific thing, and vesting the legatee with the title to the specific property bequeathed, and the power of making any disposition thereof, from the time of her death, which she might see fit, intrusting to the executors the power only of .collecting and paying over the dividends during her life. The testator did not give to the legatee a mere testamentary power, vesting the title in the trustees during her life, but he in terms *547 gave the title directly to her. Subject to the power given to the executors the property in the shares was vested in her and she could dispose of them in any manner she might desire, from the time of her death, either by will or by transfer in her life-time, and in case of her dying without having made any such disposition, the title to the shares would vest in her legal representatives. (Floyd v. Fitcher, 38 Barb. 409.) Whether she could also dispose of her right to the income, or by joining with the executors give a good title to the shares, free from any trust, is a question not yet fully determined and which it is not necessary now to decide. But it is very certain that he gave no power to the executors to dispose of the shares without her concurrence. The cases relating to real estate, in which a title in trustees has been implied from a trust to lease and receive rents and profits, have no application. In cases of that description an estate in the, trustees, though not expressly given, has been implied from its necessity for the purpose of enabling them to execute the tru.st expressly created. (Brewster v. Striker, 2 N. Y. 19.) And where the trust could be executed without such an estate it has been held to be a mere power of management from which no intention to give the legal title to the trustee would be implied. (Post v. Hover, 33 N. Y. 593.) In the present case no necessity exists of implying any title in the trustees or of disregarding the express words of the testator by which he bequeaths the shares in question directly to the legatee. A power to collect dividends on shares of stock in "an incorporated company may well be lodged with one person while the title to the stock is in another. It cannot be claimed that .the title to the stock was in the executors for the purposes of administration, payment of debts, etc., for they had assented to the specific legacy by setting apart, for the benefit of the legatee, the evidence of the testator’s title to the stock, viz., the certificate, which still stood in the name of the testator; and as said by Lord Ellenborough, in Doe v. Guy (3 East, 123), and concurred in by all the other members of the court, it never could be doubted that at law the interest *548 in any specific thing bequeathed vests in the legatee upon the assent of the executor.- If it should afterward appear that there is a deficiency of assets to pay creditors, the Court of Chancery will interfere and make the legatee refund in the proportion required. The assent of the executor once given to a specific legacy vests the interest at law irrevocably, and an action at law will lie against the executor to recover the thing bequeathed. (Bastard v. Stukely, 2 Lev. 209; Chamberlaine v. Chamberlaine, 2 Eq. Cas. Abr. 465; Freeman Ch. 141; 2 Redfield on Wills, 153, 156.) And the executor has no right to apply it in payment of debts, except from some special necessity. (Clarke v. Ormonde, Jacob, 108.) In the present case, the executors had no right or power of disposition over the shares in question, and no title thereto at the time the receiver was appointed, and his right certainly could not exceed theirs. For the purpose of protecting their power to collect the dividends, the receiver, as their successor in their trust, might have maintained an action to set aside the unlawful transfer from Ó. S. Lynch, because it clothed the defendant Price with an apparent title to the shares, which would enable him to possess himself of those -dividends, and obstruct the trustees in the exercise of their power to collect them and pay them over. That kind of action the receiver was, by the order of December 15, 1873, authorized to bring. But the present action goes farther. In it the receiver asks to recover and has recovered of the defendants the full value of the shares, as upon a conversion thereof by them.' They took the ground in their answer and on the trial, that Lilla L. White was the owner of the shares, and was living, and should be a party to the action. We think that this defense should have been sustained. The plaintiff .claims that the executors represented the rights of Lilla L. White, and that a recovery by him of the full value of the shares and satisfaction thereof will vest a good title to the shares in the defendants, and that the title of Lilla L. White will be extinguished. But her title cannot be thus extinguished by a proceeding to which she is not a party. Neither the executors nor the receiver represent her title to the stock or her right to dispose of *549 it. These are vested in her personally, and are not subject to any trust, and the executors, after they had assented to the legacy, had no property in them, general or special, but only a naked power to collect and pay over the dividends during her life, as has before been shown. They or the receiver in them right cannot claim even a possessory title to the shares, for they were incapable of manual possession. The executors at one time had the certificate, but that was not the stock; it was simply the evidence of the testator’s title, and the action is not brought and could not be maintained for the conversion of the certificate, for the reason among others that it never came to the possession of the defendants and was not converted by them. It was surrendered by Lynch to the company to enable him to make tire transfer to Price. The shares are a description of the property of which the possession must be deemed to follow the title, and cannot exist separately. The executors had the authority given them by the will to collect the dividends for Lilla L. White. This power they might protect, but the shares themselves were hers, and the executors had no power to represent her in disposing of them by transfer, or by recovering the value thereof in trover. Whether property in the plaintiff was necessary to sustain the action of trover it is not necessary to discuss. It is certain that without either property or possession it never could be maintained, and in this case the executors had neither. An action for conversion does not seem to us the proper remedy in a case like this, where all that the plaintiff has is a power in trust without having title to the property, or ever having had possession thereof. It would be unjust to compel the defendants to pay the full value of the shares to the receiver and leave them exposed to respond a second time to the claim of Lilla L. White or any person claiming under her after her death, as they clearly would be if this recovery were sustained. It seems to us that the proper remedy of the executors or the receiver, if he can be regarded as representing their rights and powers under the will, was to proceed in equity to protect them in the execution of their trust, by setting aside the unlawful *550 transfer made by Lynch, and restoring the title to the shares to its original condition. This certainly is the extent to which they could represent Lilla L. White, and there is nothing in the case to show that this remedy would not be effectual. So far as the evidence goes it leaves the title to the shares on the books of the company still in Milton M. Price. If the transfer to him should be annulled the shares would remain in the name of the testator as before. The dividends accruing since the transfer to Price have not been collected by him, payment thereof having been stopped by notice to the company of the illegality of the transfer. Whether or not these dividends have been paid to the executors or any one representing them does not appear. It was quite practicable to restrain any farther transfer, and there is nothing in the case to show that the annulment of the transfer to Price and of the certificate issued to him would not afford a complete remedy. What the rights of a Iona fide holder under a transfer from Price might be, it is not necessary to discuss, for it does not appear that there is any such holder. But if any circumstances should be developed which should render it necessary to convert the shares into money by compelling the defendants to pay their value, Lilia L. White should be a party, and have a voice in the disposition to be made of the fund, and the defendants should be protected against a subsequent claim on her part or on that of her assigns or representatives. The judgment should be reversed and a new trial ordered, costs to abide the event. All concur. Judgment reversed.