
    Von Hesse v. MacKaye et al.
    
    
      (Supreme Court, General Term, First Department.
    
    December 31, 1891.)
    Declaration of Trust—Reservation of Power to Dispose of Trust Property.
    A father deposited bonds owned by him with his son, and took from the son a receipt, expressing that they were to be held by the son in trust for a person named, but that they were, “for and during his life, to be subject to the order ” of the father. He stated, at the time, that his object was to enable the son to swear, in a certain contingency, that he had no property belonging to the father in his hands. The father, during his life, used the interest on the bonds. Seld, that a valid trust was created, and that on the death of the father the cestui que trust became entitled to such bonds as were then undisposed of. Ingraham, J., dissenting.
    Appeal from special term, Hew York county.
    Action of interpleader by Emily B. Von Hesse, as administratrix with the will annexed of William H. MacKaye, deceased, against Theodora Edith Mac-Kaye, an infant, and Christian Von Hesse, as executor of James MacKaye, deceased, to determine the right to certain bonds. Judgment for defendant MacKaye. Plaintiff appeals.
    Affirmed.
    See 8 H. Y. Sunp. 894, reversing 5 H. Y. Supp. 790.
    Argued before Van Brunt, P. J., and Ingraham and Daniels, JJ.
    
      Geo. H. Starr, for appellant. Oh. Francis Stone, for respondent. Noah Davis, Special Guardian.
   Daniels, J.

The testator, James MacKaye, in his life-time was the owner of 10 Kansas Pacific bonds, for the sum of $1,000 each. He resided in Paris, and his son William H. MacKaye resided in the city of Hew York; and on the 21st of January, 1887, at the instance of the testator, William H. Mac-Kaye executed and transmitted to him a receipt for these bonds, declaring that they were to be held in trust by him for the adopted daughter of James MacKaye, who was Theodora Edith MacKaye, and for her sole benefit and be-hoof, but which bonds, during the life of the testator, were subject to his order. After his decease and the decease of his son, which followed that of the father very closely, the plaintiff was appointed the administratrix with the will annexed of the estate of William H. MacKaye, deceased; and in that capacity she brought this action to settle the title to these bonds, which were claimed by Theodora Edith, the adopted daughter, and also by the executor of the estate, of James MacKaye. In support of the title of the adopted daughter, it was claimed that the receipt which was given for the bonds, then in the possession of William H. MacKaye, created a trust in her favor, subject to the right of the executor to use the bonds during his life, in case such use should become desirable or necessary. And in April, 1887, at the suggestion of William H. MacKaye, this receipt was returned by the testator, and a copy of it was also transmitted to William H. MacKaye, with a statement, subscribed by the testator, relative to the use of the bonds to obtain a loan of @2,000 upon their security for him. This receipt and direction are as follows:

“New York, Jany. 21, 1887.
“Bee’d of my father, James MacKaye, ten Kansas Pacific bonds, of one thousand dollars each, to be held by me in trust for his adopted daughter, Theodora Edith MacKaye, and for her sole benefit and behoof; said bonds for and during his life to be subject to the order of my father.
[Signed] “W. H. MacKaye.
“April 1st, 1887, I directed my son W. H. MacKaye to borrow for me @2,000, and to use as a security therefor two of the above-mentioned bends.
“J. MacKaye.”

In a letter written by the testator relating to these bonds, he stated to his son that the object of placing them in the hands of his son in trust for Edith was that he might swear, if necessary, that he had no property in his hands belonging to the testator, in case a blackmailer should again attack him. In this letter, which was written on the 18th of January, 1888, he added, further, that he never meant to part with the right to dispose of the bonds during his life; but, as his son seemed to be worried about the receipt given by him, he returned it to him. He then said, however: “But let the understanding between us be that at all times any portion of the bonds that may remain in your hands, undisposed of by my order or request, you hold for the benefit of Edith, and as her guardian and trustee, so that you can at all times swear that you have no property of mine in your hands.” And by a' postscript to the letter he suggested to his son that he should keep a copy of the receipt in his tin box, which he might show if such a thing should be found expedient. On the 27th of September, 1887, he also wrote a letter to his son, stating that he desired, about the middle of October, to draw on him for about $500, $300 of which he would be enabled to reimburse himself for with the coupons on the Kansas Pacific bonds, and the other $200 were expected to be obtained from another source. And in October he did draw upon his son for this sum of money, as he himself said, against the Kansas Pacific bonds, and the $200 expected to be obtained from a Mr. Burwell. In November of the same year, by a letter then written, he referred to a loan of $2,000, and then suggested that, if he concluded to borrow the money in London, he would allow the interest money due him to be applied to the payment of that loan, and then the 10 bonds would be free, and he could have them sent over to London if necessary. In the letter he further added that his only hesitation about having the bonds sent to London was that he might want them sent back to New York; and that he would write Mr. Lowrey by the next mail in regard to the trust, and ask his advice about having all the bonds returned to New York. In December of the same year, by another letter, he also reiterated what he terms to have been his principal object in putting these bonds in trust for Edith. And then, referring to these and other bonds, stated that his idea was to have all the bonds sent to New York to be held under the care of his son in the safe-deposit company. In January, 1888, he also wrote to his son that he expected to consult with Mr. Lowrey about a trust-deed of the bonds that were in London; and then added, as he had stated before: “As I have already written you, I put the ten bonds you hold in New York in trust for Edith, to enable you to swear at all times that you had no property of mine in your hands. I did not intend to put the bonds in such position as that I could not use them during my life, and I do not now believe in any such construction of the receipt.” After that he stated further: “I do not want you to feel uneasy about the matter. So, as soon as I see Lowrey, I will send you another form of receipt, so that you shall be relieved of all responsibility under the trust.” This was followed by a letter referring to the ability of the son to borrow for the testator the sum of $2,000 on the security of the bonds he had in his hands. He also wrote to Mr. Lowrey in October, 1887, a letter containing the inquiry as to other bonds: “How would it do if my wife were to redeliver to me these bonds, and then that I should put them with those now held by William, in trust for Edith, into the possession of three trustees, of which my wife should be one, together with yourself and my son William?”

It is not necessary to consider the admissibility of the statements of the testator subsequent to the time when the bonds were placed in the hands of his son, as they were stated to have been by the receipt subscribed by him and transmitted to the testator; for throughout the correspondence the trust is substantially acknowledged to have been created, as the receipt expressed that to have been the design of the testator; and when this receipt was to be returned the understanding was reiterated in the letter of the 18th of January, 1888, that the bonds were to be held and remain in the hands of the son for the benefit of Edith, as her guardian and trustee. These statements are unequivocal evidence of the intention of the testator to place the bonds in the hands of his son, there to remain for the benefit of this adopted daughter, unless during the life-time of the testator they should be used by him; and that, in judgment of law, did create a valid trust for her benefit. Jones v. Clifton, 101 U. S. 225-230. And to the same effect is the conclusion that was reached in Van Cott v. Prentice, 104 N. Y. 45, 10 N. E. Rep. 257. The trust was created for the benefit of this adopted daughter, subject only to the contingency, and the right of the testator creating it, to use the bonds, or the interest accruing upon them, during his life-time. And that circumstance, as these authorities settle the law to be, did not invalidate the trust. It is true that possession of the bonds by the trustee was essential to the creation of the trust, as that was substantially held in Martin v. Funk, 75 N. Y. 134; Phipard v. Phipard, (Sup.) 8 N. Y. Supp. 728; and in Re Crawford, 113 N. Y. 560, 21 N. E. Rep. 692; Jackson v. Railroad Co., 88 N. Y. 520; and Young v. Young, 80 N. Y. 430. But all that these authorities require to create a legal gift of the bonds in trust was established by the evidence; for they went into the possession of William H. MacICaye, the trustee, and remained subject to his control, and the declaration of trust contained in the receipt, up to the time of his own decease. They were at no time removed from that possession with a view of abrogating the trust, and at no time used for the benefit of the testator in such a manner as to be inconsistent with its existence. After the decease of thé testator, three of the bonds were used to provide the sum of $3,000, for the embalmment of his body, and its return to and burial in the state of ETew York. This evidence was objected to on behalf of the executor, but, inasmuch as it was no part of the design of the evidence to create a demand against him for the amount of the bonds which had been so used, the exception became entirely unimportant. What was claimed in behalf of the beneficiary, the adopted daughter of the testator, was that she should be assured the title to the seven bonds which afterwards remained; and as no. claim was made or included in the judgment for the three bonds, or any part of their proceeds, the executor was in no manner injured by the production of this evidence.

The uncontradicted evidence given upon the trial, as well as that contained in the letters of the testator, proved the fact to be that he not only intended but did create a trust for the benefit of his adopted daughter in these bonds. They were in the possession of his son, subject to that declaration and arrangement; and the motive he had for placing them subject to this trust was of no controlling importance in the case. Even if he did design by means, of the trust to place his son in a position where he could swear that he had no property of the testator in his hands, and that was a leading object he had. in view, still, as he did create a trust for the benefit of this adopted daughter,. it was legal and valid, notwithstanding the existence of this motive or inducement; and as the bonds, to the extent of seven, remained subject to the trust at the time of the decease of the testator, the title to them, as the beneficiary of the trust, vested in the adopted daughter, Theodora Edith. The judgment from which the appeal has been taken should be affirmed, with costs.

Van Brunt, P. J., concurs.

Ingraham, J.,

(dissenting.) I think the evidence in this case fails to show a delivery of the bonds to William H. MacICaye, as trustee, sufficient to sustain a gift. There is no evidence as to the circumstances under which the bonds were delivered to William H. MacICaye. All that appears is that, at the time of his death, they were in his possession, and there was also in his possession a receipt which he appears to have given to his father, but which had been subsequently delivered by his father to him, whereby he stated that he received from the father the bonds to be held in trust for the defendant, Theodora Edith MaeKaye, for her sole use and benefit and behoof, and which then contained the following provision; “Said bonds, for and during his life, to be subject to the order of my father.” It does appear that the testator used the interest on the bonds during his life, and never parted with the right to control their use. He appears to have exercised all acts of ownership, and to have treated the bonds as his own property. In Jackson v. Railroad Co., 88 N. Y. 526, the court says: “The delivery must be such as to vest the donee with the control and dominion over the property, and to absolutely divest the donor of his dominion and control, and the delivery must be made with the intent to vest the title of the property in the donee.” The terms of the receipt given would indicate that there was no intention of the testator to divest himself of the dominion and control of the bonds; and his statements, acts, and declarations, if they are admissible at all, as against the respondent, all tend to show that he never did intend to divest himself of the ownership of the bonds, or of the power to use and control them in any way he saw fit.

I am unable, therefore, to concur in the affirmance of this judgment.  