Opinion
05-25-1891
MATTHEWS v. HOAGLAND et al.
M. L. Trimmer and C. A. Skillman, for complainant. J. N. Voorhees, for defendants Mary E. Hoagland and Asa P. Hoagland. A. D. Anderson, for defendants Helen C. Matthews and George H. Matthews.
(Syllabus by the Court.)
On bill, answers, and proofs in open court.
M. L. Trimmer and C. A. Skillman, for complainant.
J. N. Voorhees, for defendants Mary E. Hoagland and Asa P. Hoagland.
A. D. Anderson, for defendants Helen C. Matthews and George H. Matthews.
GREEN, V. C. Henry Matthews died January 22, 1886, at Lambertville, in this state, leaving Almira S. Matthews, his widow, and Mary E. Hoagland and John H. Matthews, children by a former wife, his only heirs at law. He was possessed of considerable personal property, and, after a protracted contest in the orphans' court of the county of Hunterdon, administration of his estate was granted March 24, 1886, to his widow, Almira S., his son, John H., and his brother, George H. Matthews, who took upon themselves the administration of the said estate, filed an inventory of such property as they admitted came into their hands, and in time settled up all claims against the estate, and filed their final account in the orphans' court of said county, fully accounting for all the personal estate they reported as received by them. All of the debts of the decedent were paid, and the persons entitled to any estate remaining in the hands of the administrators, and unadministered, by the statute of distribution, being the widow and the two children, the balance remaining was by the decree of the said court distributed to the complainant, to John H. Matthews, and Mary E. Hoagland in equal parts. John H. Matthews, since the settlement of the estate, has died, leaving Helen C. Matthews, his widow, who by his will was made sole legatee and devisee of his estate, and sole executrix of his will. The complainant, claiming to have discovered that her co-administrator John H. Matthews, with his sister, Mrs. Hoagland, had taken possession of certain personal property belonging to the intestate, which was not included in the inventory or administered upon, commenced this action on the theory that she, as widow, being entitled to one-third of the balance of the personal estate after the payments of debts, could, under the circumstances stated, proceed directly, in a suit in her own behalf in this court, to recover such portion. On the first day of the trial, however, it was determined by her counsel to prosecute the suit by her, as administratrix of her husband's estate, to subject personal property, charged to have been improperly diverted or retained, to administration as assets of said estate. Strictly speaking, the suit was not brought by complainant as administratrix, nor against the representative of John H. Matthews as administrator, neither he nor she being styled as such in the process or in the commencement of the bill, or in the prayer for process; yet the bill correctly described the character and station of the parties, set forth fully facts which would give complainant a right as administratrix, and make defendants personally, or as executrix or administrator, liable as such, so that the court, upon the allegations of the bill, could give the proper relief. Under these conditions, the course determined upon was one recognized as allowable in this court. Evans v. Evans, 23 N. J. Eq. 71; Ransom v. Geer, 30 N. J. Eq. 249; Plaut v. Plaut, 44 N. J. Eq. 18, 13 Atl. Rep. 849. George H. Matthews, who was also an administrator of the estate of Henry Matthews, was not a party to the suit originally, and, as he was a necessary party to a suit to be prosecuted on the theory adopted, the case was ordered to stand over to make him a party defendant, in case he declined to act with her as a party complainant. The bill was amended, bringing in George H. Matthews, as administrator of Henry Matthews, deceased, as a party defendant, and he appeared and answered as such, and the cause proceeded. Henry Matthews, the intestate, at the time and for many years prior to his death had resided in Lambertville. Previous to his marriage with the complainant, he had occupied one part of a double house, his son John and family living in the other. It was one house, but they lived as two families; Henry Matthews, after the death of his first wife, having a housekeeper and an unmarried daughter as members of his immediate household. He was the owner of considerable real and personal estate. So much of his personal property as consisted of bonds, mortgages, promissory notes, certificates of stock, and such securities he kept in a tin box, usually placed in a secretary in a room on the second floor of the part of the house where helived. The box appears to have been locked most of the time, and the key in his possession. He was married to the complainant on the 10th day of November, A. D. 1883, and then went to live with his wife, at her residence, in a different part of the town of Lambertville, and continued to reside there until he died. He did not, however, take his tin box, containing his securities, with him, but left that in the secretary in the second-story room of his former home, where it remained until after his death; the key being, however, in his personal possession. The whole house, after the old gentleman's marriage, was taken possession of by his son, John H. Matthews, and family.
The complainant alleges that after the death of Henry Matthews the box was opened by some one of the parties, and certain securities taken from it. There is no dispute in the answer or evidence that this is substantially true. It is admitted, or proved, the box was opened by George W. Dunham with a key of his own procuring, in the presence of John H. Matthews and Mrs. Hoagland, and that certain securities, viz., 2 bonds of the Burlington & Cedar Rapids Railroad, one for $500 and one for $300, a bond of the Lehigh Coal & Navigation Company of $1,000, a certificate for 10 shares of the stock of the Camden & Amboy Railroad & Transportation Company of the alleged value of $2,200, and a certain sum of money in United States currency, together with a promissory note made by one Vincent R. Matthews to the order of Henry Matthews for the sum of $175, were taken from the box by George W. Dunham, and by him given to and retained by John H. Matthews, except the 2 bonds of the Burlington & Cedar Rapids Railroad Company, which were taken to Newark by Dunham, sold, and $800 of the proceeds given by him to John H. Matthews. It is not pretended that any of these securities were included in the inventory by John H. Matthews, one of the administrators. Besides bonds, mortgages, and notes, the inventory filed includes only the following securities:
| 49 shares Lehigh Valley Railroad stock | $2,843 00 |
| 20 shares Lambertville Water-Power stock, at 30 | 600 00 |
| 100 shares Lambertville National Bank stock, at 33 | 3,300 00 |
—Which were also in the box at the time those in question were taken therefrom.
The defendants Mary E. Hoagland and Helen C. Matthews, by their answers, claim that these securities, other than the note of Vincent K. Matthews, did not belong to the estate of the intestate, but were the property of Mrs. Hoagland and John H. Matthews; that these securities represented a portion of the estate of the deceased mother of these parties, and that the ownership of the same had been vested in them by their father during his lifetime, in order that they should have the property which had come to him through their mother. If it had not been stated with seeming sincerity that the defendants based their right to these securities on the ground that they were the property of the mother of John H. Matthews and Mrs. Hoagland, it would seem unnecessary to consider such a suggestion. The only evidence bearing on this point is that the first Mrs. Matthews brought her husband a considerable estate, stated by one witness as $12,000; but this is not inconsistent with the fact that he had become legally entitled to it, and that he had actually done so is only made the more certain from the promise Mrs. Hart says he made his first wife on her death-bed that he would give her children the property she brought him. As to these identical securities ever having belonged to the first wife, the evidence and presumptions are all the other way. The certificate of stock of the Joint Companies was in the name of Henry Matthews, and the Burlington & Cedar Rapids Railroad bonds were in a large envelope, evidently the one used originally when the bonds were issued, and on which the name of Henry Mat thews was written as the owner. As to the Lehigh Coal & Navigation Company bond, that is in the possession of one of the defendants, and is not produced, as it is fair to assume it would have been if it had borne any evidence of ownership by the mother. If it is true that the securities in question represented the estate which he had received by his first wife, there is no evidence that it came to him charged with any trust which can be recognized in a court of law or equity, or that it was not as absolutely his own, subject to his disposal and control, as any property which he might have individualy acquired. This being the case, the contention of the defendants that these securities did not belong to Henry Matthews at the time of his death can only be maintained on the ground that he had, during his life-time, parted with the ownership of them.
By allowing his tin box to remain in the secretary in the house where he formerly resided, he did not abandon the possession of its contents. The house was in the occupation of his son and family. He was a frequent visitor there. The box was locked, and the key in his own possession. When occasion required, he went himself for anything in the box which he wished, or sent for it by some trusted agent. The securities being in the box, in his possession, constructively, at the time of his death, are presumed to have been his property unless they themselves bore evidence of ownership in some other person. The bonds were such as are known as "negotiable securities," payable probably to bearer. Those of the Burlington & Cedar Rapids Railroad were sold in Newark to the North Ward National Bank, as in the market. The Lehigh Coal & Navigation bond is in the possession of Mrs. Helen C. Matthews, and it is not even suggested that it appears on its face to have belonged to any person other than the deceased. The currency, of course, bore no ear-marks of ownership. The note of Vincent R. Matthews has been destroyed, and it is disputed whether or not it was ever indorsed by Henry Matthews, to whose order it was payable. The certificate of the shares of the joint stock of the Delaware & Raritan Canal and the Camden & Amboy Railroad and the New Jersey Railroad & Transportation Companies wasproduced on the trial by the transfer officers of the companies. It is dated October 31, 1870, and certifies that Henry Matthews is the proprietor of 10 shares of the Camden & Amboy Railroad & Transportation Company, subject to the agreements between the companies. It now has indorsed upon it an assignment to John H. Matthews, dated May 19, 1884, purporting to be signed by Henry Matthews, whose signature appears to have been witnessed by William H. Hart. Mr. Leroy H. Anderson, the officer of the companies, testifies that the paper in its present condition was presented to him April 1, 1886, by John H. Matthews, accompanied by George W. Dunham, and surrendered, and a new certificate for 10 shares was issued to John H. Matthews. It is insisted by the complainant that the name Henry Matthews, signed to the transfer, is not the handwriting of the intestate, and that the same was written thereon after his death. William H. Hart, the subscribing witness, was sworn, and testified he was a brother-in-law of John H. Matthews; that the signature, as subscribing witness, is his, but he could not say when it was written; that he put his name there at the request of John H. Matthews; that he did not look at the paper, and cannot remember if Henry Matthews signed it at the same time or not; he does not know if there was any one else there, or if he signed it before or after Henry Matthews' death. He says he made an affidavit in this case, but did not read it relying on the statement of complainant's counsel as to its contents. On his cross-examination, he said he had witnessed Henry Matthews' signature a number of times, and would suppose that he would remember, if he had witnessed a signature purporting to be his, after his death. This is the subscribing witness, and there is an entire failure on his part to prove that the transfer, was signed by Henry Matthews in his presence. All that, he does say positively is to identify his own signature, and that he signed it at John H. Matthews' request. Defendant called no witnesses to establish the genuineness of the signature of Henry Matthews to the transfer of the stock. George W. Dunham was called as a witness by the complainant. His testimony, if competent and. reliable, would remove any doubt on this and other points. It was, however, objected by defendants' counsel that any knowledge Dunham possessed had been acquired by him in his professional capacity as counsel for Mrs. Hoagland and John H. Matthews, and was incompetent. It appeared in evidence that Dunham was a practicing attorney, and had acted professionally both for Mrs. Hoagland and John H. Matthews. On January 11, 1884, shortly after Henry Matthews' marriage to complainant, Mrs. Hoagland gave him $100, to be used by him for expenses necessary in the settlement and arranging the affairs of Henry Matthews, and in the interest of herself and her brother, John H. Matthews, as expressed in his receipt therefor. He says himself that when he was first called upon with reference to this matter it was by Mrs. Hoagland coming for him from Lambertville to Flemington, and taking him to John H. Matthews' house, in the former place, He fixes the first time of his going there on this business as Janaury 1, 1886, prior to Henry Matthews' death. This date is important for several reasons, as will afterwards appear He fixed this and other dates by reference to entries made in a diary, as he says, at the time. He leaves no loop-hole for mistake. If he did not go with Mrs Hoagland to John H. Matthews' house in Flemington, and there open the tin box on New Year's day, 1886, he has not told the truth upon the witness stand. He says John H. Matthews, Helen C. Matthews, and Mrs. Hoagland were all present on the occasion. He is contradicted by Mrs. Helen C. Matthews and her mother, Mrs. Hart, who both swear that on that New Year's day both Mr. and Mrs. Matthews were, as they always were on New Year's, at Mrs. Hart's house, in Phillipsburg, and positively by Mrs. Hoagland, who swears that she did not go for him until after her father's death, which was January 22d. Mrs. Hoagland went but once for him, and Mrs. Hart testifies she was at John H. Matthews' house on that occasion; that it was after Henry H. Matthews' death, and that she (Mrs. Hart) was at home in Phillipsburg on the 1st of January. I regret to say that the weight of evidence is so strongly against the date given by Dunham that it must be taken as not true. He says himself, while he did not consider himself as counsel for John H. Matthews, he recognized the fact that he was Mrs. Hoagland's counsel at the time he went with her, and presumes he went as a lawyer. The very character of the business, as it appears from the evidence, leaves no doubt that he was brought there as such. Mrs. Hoagland, when she came to testify, says she went for Dunham to take his advice what to do; that he had been acting as her counsel, doing business for her, for some years; that she was unwilling to do anything with reference to the securities she claimed without advice of counsel, and having him present; and Dunham and she both say that whatever was done was done in pursuance of his advice. Mrs. Hart also says that Mrs. Hoagland, prior to going for Dunham, said she would have nothing done until she had counsel, and proposed George Dunham.
We have the ease of a practicing attorney, who had acted as such for these two parties, called on by them to consult with and advise with reference to their rights in certain property, and what course they should pursue in enforcing the same, asked as a witness to testify as to what took place, and facts which came to his knowledge while in consultation and acting in such capacity. The mere statement of such case to a lawyer is to invoke the application of the rule which places the seal of secrecy on the lips of counsel. It is claimed, however, that the rule of privileged communication does not apply in this case. First, to Durham's testifying whether the certificate of railroad stock was indorsed or not at the time he first saw it; that his knowledge of it was not derived from any communication made tohim by the clients, but came to him from the simple operation of his eye-sight. He was, however, only enabled to see it on this first occasion, in consequence of his employment as counsel, and when engaged as such. The certificate was taken from the box by himself, he being there as the professional adviser of these parties. The privilege of professional secrecy is not confined to the knowledge derived by counsel from communications made to him, by or in conference with the client, but extends to information obtained from documents submitted for his inspection or custody. Wheatley v. Williams, 1 Mees. & W. 5113; Robson v. Kemp, 5 Esp. 53; Brard v. Ackerman, Id. 119; Coveney v. Tannahill, 1 Hill, 36; Brandt v. Klein, 17 Johns. 338; Brown v. Payson, 6 N. H. 443; Gray v. Fox, 43 Mo. 570; Crawford v. McKissack, 1 Port. (Ala.) 433; Dietrich v. Mitchell, 43 Ill. 40. It was next insisted that the rule did not apply in this case, because the consultation between the parties was in furtherance of the commission of a crime or the perpetration of a fraud. I held on the trial that the privilege did extend to communications from the client to counsel of what the client had already done with reference to the subject-matter of the consultation; but that, if the communication or conference was to devise means by which a crime was to be committed, in which the attorney took an active part, either by advice or co-operation, his position as counsel ceased, and he became particeps criminis, and that no privilege extended to what transpired between them at the concoction of such conspiracy. The witness manifested no disposition to testify on this basis, and he was not pressed to do so under the ruling. Serious uncertainty has undoubtedly existed as to whether a fraudulent purpose in the subject-matter of the employment deprives the client of the right to close the lips of counsel, or whether the rule of privilege extends to communications the object of which may have been in furtherance of fraud. It has arisen from a conflict of decision, in England and in this country, even between courts in the same state. On the trial I followed the decision of Chancellor Walworth in Bank v. Mersereau, 3 Barb. Ch. 528, as later than that in Coveney v. Tannahill, 1 Hill, 36. Chief Justice Bronson in the latter case had said: "Now, if the plaintiff consulted counsel beforehand as to the means, the expediency, or consequences of committing such a fraud, his communications may, perhaps, be privileged; and they are clearly so, as to what he may have said to counsel since the wrong was done. But the attorney may, I think, be required to disclose whatever act was done in his presence towards the perpetration of the fraud. One who is charged with having done an injury to another, either in his person, his fame, or his property, may freely communicate with his counsel, without danger of having his confidence betrayed through any legal agency. But when he is not disclosing what has already happened, but is actually engaged in committing the wrong, he can have no privileged witness." Chancellor Walworth in Bank v. Mersereau, 3 Barb. Ch. 528, 598, says: "The seal of professional confidence, I believe, has never been held to cover a communication made to an attorney to obtain professional advice or assistance as to the commission of a felony or other crime which was malum in se. The opinion of Chief Baron Gilbert certainly was that the privilege of attorney and counsel did not extend to such cases, (1 Gilb. Ev. 277;) and as no one is entitled to the advice or assistance of counsel, or of an attorney, to enable him to do an illegal act, if the question had arisen for the first time in this case, I should have no hesitation in deciding that the communications made by Hoffman and Mersereau to their attorney were not privileged, because they were made for the purpose of getting his professional assistance in the perpetration of a fraud upon their creditors. It is as contrary to the duty of an attorney or a counselor to aid his client, by professional services, in the perpetration of a fraud, or in the violation of any law of the state, as it is to aid him in the commission of a felony, although the moral turpitude of the act may be much greater in the one case than in the other. I can therefore see no good reason for extending the principle of privileged communications to the first class of cases, and not to the last. The practice, however, appears to have been otherwise for more than a century and a half, and I do not now feel authorized to adopt a new rule on the subject." After citing various authorities that the existence or disclosure of a fraudulent purpose did not remove the obligation to treat the communication as privileged, he continues at page 600: "With the exception of what was said by Mr. Justice Bronson in Coveney v. Tannahill, 1 Hill, 36, my researches have not enabled me to find anything in conflict with the decisions to which I have referred. I therefore do not feel authorized to say that the fact that Cotton was employed by Hoffman and Mersereau to assist them in a transaction which, from what was said in his presence, he must have known to be a fraud upon their creditors, deprived their communication of the seal of professional confidence. I admit, however, that I should have been much better satisfied if I had found this question an open one; or, rather, if 1 had found the decisions of the courts the other way; for I think, with the late chief justice of our supreme court, that the privileged relations of attorney and client ought to be permitted to exist only for honest purposes, and not to enable the client to perpetrate a fraud, or to violate the laws, under the advice of counsel, or through any other professional aid." The learned chancellor, therefore, felt compelled, by the weight of the authorities which he cited, to hold as he did, although he thought principle and morals could have been better sustained had the court laid down the rule differently.
Of the cases cited by the chancellor as controlling his action, Foster v. Hall, 12 Pick. 89, was the most recent. It is a decision by Chief Justice Shaw. So much of the opinion as holds the point in question
Is based on an extract from Cromack v. Henthcote, 2 Brod. & B. 4, and Doe v. Harris, 5 Car. & P. 592. Chancellor Walworth, at 599, also refers to them, stating the point as decided in each. So far as they hold that professional privilege extends to a transaction for an illegal or fraudulent purpose, Cromack v. Heathcote and Doe v. Harris are expressly overruled in Queen v. Cox, 14 Q. B. Div. 153, while the other two cases cited by him (Anon., Skin. 404; Anon., Holt, 76; Anon., 1 Ld. Raym. 733; Holt v. Tyrrell. Bull. N. P. 284; and Hyde v. M., 1 Moll. 450) must be regarded as disapproved. This recent case has thus so undermined the authorities which Chancellor Walworth felt constrained to follow, we are forced to the conclusion that, had the decisions stood at that time as they do now, he would have held as he thought principle and the character of the profession demanded.
The case of Queen v. Cox was this: In February, 1882, one Munster brought an action against Railton & Co., publishers of the Brightonian, for libel. Bailton alone entered an appearance. Judgment was rendered for the plaintiff, and execution issued. The sheriff was met by a bill of sale, dated and registered prior to the execution, from Bailton to Cox. An interpleader issue was directed to be tried with reference to the bill of sale, and on the trial a deed between Bailton and Cox, dated April 9, 1881, was produced by which they agreed to become partners. It had indorsed on it a memorandum of dissolution purporting to have been signed January 3, 1882. Subsequently, Cox and Railton were indicted upon a charge of conspiring to defraud Munster, and upon that trial the case for the prosecution was that the bill of sale was fraudulent, and made for the purpose of depriving Munster of the fruits of his judgment, and, as evidence thereof, that the memorandum dated January 3, 1882, was in fact not indorsed until after the judgment, and to establish this they called Mr. Goodman a solicitor. His testimony was objected to, but the objection was overruled. He testified substantially that both defendants called on him after the judgment, and consulted him with reference to a transfer of property. He advised them none was good but to a bona fide purchaser; that there must be a change of possession; and that Railton could not convey to Cox on account of the partnership. They asked the amount, and paid him his fee, and left. The defendants being found guilty, the recorder of London, before whom the case was tried, considering that the evidence of Mr. Goodman had a marked effect in inducing the jury to arrive at that verdict, reserved judgment, and presented the question whether the evidence was properly received, to the court of queen's bench. The argument was commenced before five judges, when, as stated by Chief Justice Coleridge, recognizing all legitimate communications between clients and their legal advisers, and that the cases were not altogether consistent, the argument was directed to be had before a full court, so that an authoritative rule might be laid down. Subsequently it was argued before ten judges. The conviction was unanimously confirmed, Mr. Justice Stephen subsequently delivering the judgment of the court. In an exhaustive opinion, he reviews all the decisons bearing on the point in question, and directly overrules Cromack v. Heathcote, 2 Brod. & B. 4; Bex v. Smith, 1 Phil. & A. Ev. 118; and Doe v. Harris, 5 Car. & P. 502. In the course of his opinion, Mr. Justice Stephen quotes with approval the following remarks by Lord Cranworth in Follett v. Jefferyes, 1 Sim. (N. S.) 3: "It is not accurate to speak of cases of fraud contrived by the client and solicitor, in concert together, as cases of exception to the general rule. They are cases not coming within the rule itself; for the rule does not apply to all which passes between a client and his solicitor, but only to what passes between them in professional confidence; and no court can permit it to be said that the contriving of a fraud can form part of the professional occupation of an attorney or solicitor." He also quotes from Sir GEORGE JAMES Turner in Russell v. Jackson, 9 Hare, 387; Sir W. PAGE WOOD in Gartside v. Outram, 26 Law J.Ch. 113; Chief Justice COCKBURN in Orton v. Reg., L. R. 6 App. Cas. 229; and Chief Justice BOVILL in Tichborne v. Mostyn, L. B. 8 C. P. 29; and thus states the principle to be applied to cases involving the question under consideration: "In order that the rule may apply, there must be both professional confidence and professional employment; but, if the client has a criminal object in view in his communications with his solicitor, one of these elements must necessarily be absent. The client must either conspire with his solicitor or deceive him. If his criminal object is avowed, the client does not consult his adviser professionally, because it cannot be the solicitor's business to further any criminal object, if the client does not avow his object, he reposes no confidence, for the state of facts which is the foundation of the supposed confidence does not exist. The solicitor's advice is obtained by a fraud."
As I understand the case, the rule in its different phases and the reasons may be thus stated: If the client consults the lawyer with reference to the perpetration of a crime, and they co-operate in effecting it, there is no privilege; for it is no part of an attorney's duty to assist in crime,—he ceases to be counsel and becomes a criminal. If he refuses to be a party to the act, still there is no privilege, because he cannot properly be consulted professionally for advice to aid in the perpetration of a crime. In the case of a fraud, if it is effected by the co-operation of the attorney, it falls within the rule as to crime, for their consultation to carry it out is a conspiracy, which on its accomplishment, by the commission of the overt act, becomes criminal, and an indictable offense. If the client discloses his fraudulent purpose, and the attorney does not join in the scheme, but repudiates all connection with it, there cannot be, properly speaking, professional employment to effect such purpose, and consequently there is no privilege. If the client does not frankly andfreely disclose his object and intention as well as facts, there is not professional confidence, and consequently no privilege. It proceeds on the ground that the privilege is that of the client, and bases his right to claim it, or liability to lose it, on his own conduct. If it has been such that its criminal and fraudulent object and purpose puts him beyond the pale of the law's protection, or if to conceal it he has not reposed full confidence in his counsel, he cannot invoke a rule which the law has created, as Lord Brougham said, (in Greenough v. Gaskell, 1 Mylne & K. 98,) "out of regard to the interests and the administration of justice." The question has never been decided in any reported case in this state, and, in my judgment, the rule, as laid down by the court of queen's bench, should be adopted, not only on account of the great weight of such an authority, but because it puts the question of privileged communications on high ground of honesty and integrity, worthy of the dignity and honor of the profession of the law. The principal case was on indictment, but the rule is as imperative in civil causes; the only difference being in the method of its application. It would seem that, in a civil cause to set aside a fraudulent conveyance or instrument, or to avoid the effect of a fraudulent act, in case the attorney has been, so to speak, a particeps criminis, he should be made a party defendant, especially if discovery is sought. Follett v. Jefferyes, 13 Jur. pt. 1, pp. 465, 972; Charlton v. Coombes, 32 Law. J. Ch. 284; Lewis v. Pennington, 29 Law J. Ch. 670; Reynell v. Sprye, 10 Beav. 51, 11 Beav. 618. Whatever difficulty there may be in applying the rule in criminal cases, so as not to violate the privilege, where it should properly be recognized, there is but little danger of impairing professional confidence in its application in civil cases. Under the authorities, when the question arises on proceedings for discovery, the practice is to take the issue, as made by the pleadings, as the first test whether the communication involved a purpose which was or was not tainted with fraud. Follett v. Jefferyes, 13 Jur. pt. 1, p. 972. Lord Cottenham discharged a former order made by the vice-chancellor, on the ground that the pleadings were not so framed as to make a special case, connecting the discovery sought with the fraudulent act complained of, so as to take the case out of the ordinary rule, and the allegations in the answers brought the case within the ordinary rule. Plaintiffs then amended their bill, making further charges, and the defendants answered, and declined to disclose the contents of papers or letters sought, on the ground of privilege. Id. 1 Sim. (N. S.) 3. Lord Cranworth, then vice-chancellor, after stating the case as made by the pleadings, says, (page 16:) "This is the account of the transaction, as stated both by the bill and the answer; and, in my opinion, this was not a fraud, according to any definition of fraud which can be recognized in this court." In Mornington v. Mornington, 2 Johns. & H. 697, on motion for production of documents, Vice-Chancellor Sir W. Page Wood says: "In this case there is nothing whatever to bring these documents within the rule that, when a fraud is concocted between a solicitor and his client, the doctrine of privilege does not extend to protect the communications by which it is effected. The statement (in the answer) is a perfectly good defense against the production of any document so demanded, unless it can be shown that there was such fraud as could take the case out of the reach of privilege."
Do the pleadings in this cause make a case which the court must say involved the perpetration of a crime or fraud? There is really no controversy as to the acts alleged in the bill to have been done by the persons named. The answers do not deny that, after Henry Matthews' death, his tin box was opened by Dunham in the presence of his son and daughter, and that certain papers were taken-therefrom under the claim that they belonged to those who took them. If Mrs. Hoagland is to be believed they had a strong claim of right to the possession of the papers. There was nothing wrong in the heirs at law opening the box alter the death of their father. To ascertain what they had a right to do was a purpose, not only lawful, but eminently proper, for client to consult counsel upon, and for counsel to properly ad vise the clients with reference to. The evidence, as taken, does not materially change this phase of the case, and I do not think it presents one which requires me to say that it was so tainted with fraud that the rule of professional confidence should not be applied. I do not lose sight of questionable, if not criminal, transactions, between Dunham and Matthews subsequently, but I ruled, as before stated, that such were not privileged. The present consideration is as to Dunham's knowledge acquired in his employment by Mrs. Hoagland and Matthews, and at bis early interviews, and as to those I think the rule of professional confidence should be applied. He had made certain statements as to the condition of the certificate before objection was interposed to his testimony, but this comes within the class referred to in Rowland v. Rowland, 40 N. J. Eq. 281, as being testimony which is excluded on the grounds of public policy, and will be disregarded by the court, although taken without or before objection.
Other evidence was, however, given of the condition of the certificate of railroad stock. Complainant called Mrs. and Miss Dunham, the wife and daughter of George W. Dunham, to testify to conversations between John H. Matthews and the said Dunham in the house of the latter. They both testify that John H. Matthews was frequently at the house, (Dunham transacting there any law business he had,) in consultation with Dunham. Each testifies that she overheard, in those conversations, that there was no signature to the transfer on the back of the certificate at the time it was first taken out of the box; that more than once John H. Matthews said he had traced the signature, holding the certificate up to a window; that on one occasion particularly was this said when Matthews called to get Dunham togo with him to Trenton to have the stock transferred. These ladies were subjected to a severe and searching cross-examination, but were not in the least shaken in their testimony, which tended to establish that the transfer of the certificate of railroad stock had not been signed by Henry Matthews. Their testimony; the failure of the subscribing witness to testify that he was a witness to the signing of the instrument by Henry Matthews in his presence; the suspicious circumstance that he can recollect he signed his name at John H. Matthews' request, and yet not whether Henry Matthews did sign it then; the fact that no witnesses are called to the genuineness of the signature,—are sufficient, in my judgment, to establish this contention of the complainant. Besides this, we have the fact that, after the date on this alleged transfer, and when he was sick. Henry Matthews sent his brother Jordan Matthews to his son John's house for his box, and that Henry unlocked it, and took out certain papers, which he gave him to take to the bank. That he took them to the bank, and made collections on them. His testimony is slightly confused, because he speaks of coupons, but he several times swore to bis best recollection that the money was paid on Camden & Amboy Railroad stock. It does appear by the testimony of David P. Smith, cashier of the Lambertville Bank, that the dividends on the United Railroad Companies stock were collected by the bank, and passed to the credit of Henry Matthews, in July, 1884, and July, 1885; and by Mr. Anderson's testimony that the dividends at that time could only have been collected by Henry Matthews, or by his order, as the stock stood in his name. It is therefore established that, after May 19, 1884, the date of alleged transfer, Henry Matthews not only had possession of the certificate, but drew the dividend on the stock. There is nothing, therefore, connected with the securities themselves, or their custody, control, or use, which rebuts the presumption of their ownership by Henry Matthews, in whose possession they were at the time of his death.
It is claimed, however, that these securities had been given by Henry Matthews in his life-time to his son and daughter, John H. Matthews and Mrs. Hoagland; that they were at that time delivered by him to them; and afterwards handed to him to keep in the box, simply as custodian for them, whenever they should be asked for or required. The evidence upon this point would indicate that the second marriage of Henry Matthews was distasteful to his children, none of whom appear to have been present at the ceremony. On his return from his wedding trip he went to his old home, and took dinner, going afterwards to the residence of the complainant, his wife. His son John and the persons who had composed his household before his marriage, were still residing at his old place of residence; the whole house, as hereinbefore stated, being after the marriage occupied by the son John. On this occasion he made inquiry for his daughter, Mrs. Hoagland, and expressed a desire to see her. She was at that time at her own home, in the city of Newark. Her father wrote to her asking her to come to Lambertville, and in response to that letter she went there, going to John's house on Saturday, and staying over Sunday. As Henry was married on the 10th of November, 1883, this must have been some time about the middle of that month. On Monday afternoon the old gentleman came to the residence of John, and there, in the presence of Miss Sarah Williamson, said to his daughter, Mrs. Hoagland, and his son John, that he wished them to come up-stairs; that he had something for them; that he wanted to make them a present. They went upstairs to the room in which the secretary was, in which he kept his tin box. As to what took place there between them, we have only the testimony of Mrs. Hoagland; she is the only survivor of those who were present. It is not denied that at some time Henry Matthews did make a gift to Mrs. Hoagland of two bonds and mortgages, which she had executed and delivered to her father for money which she had borrowed from him; nor is it denied that at some time Henry Matthews did make a gift to his son John H. Matthews or a piece of property in Lambertville. Mrs Hoagland insists that the securities in controversy were given by her father to herself and brother at the same time he gave these papers, and with such formalities as to make it a valid gift inter vivos. Her testimony was objected to as incompetent.
Is Mrs. Hoagland a competent witness to prove the transaction by which it is alleged her father made a gift of these securities to her brother and herself? If the action had been prosecuted as originally intended, as one by the complainant individually, in her own right, to recover her distributive share in the amount of the estate in controversy, Mrs. Hoagland would have been a competent witness to an interview with the deceased. Hodge v. Coriell, 44 N. J. Law, 456, affirmed, 46 N. J. Law. 354. But the suit was prosecuted as one by the complainant as administratrix of her husband's estate, against her co-administrators or her representatives and their coadjutors, to bring, into administration of said estate, property alleged to have been improperly taken therefrom by her co-administrators and Mrs. Hoagland. This course has been permitted because the allegations of the bill are sufficient to sustain the suit as one brought by the complainant in such representative capacity. In such an action Mrs. Hoagland is not a competent witness as to a transaction between herself and her father, nor as to any statements by him. The proviso of the law of 1880 expressly forbids it. But can she testify, either in behalf of herself or a co-defendant, adversely to the representative, as to a transaction between her father and a person other than herself, in which transaction she and her co-defend ant are interested, although their interests may be divisible? The proviso reads: "That this supplement shall not extend so as to permit testimony to be given asto any transaction with or statement by any testator or intestate represented in said action. Supp. Revision, p. 289. Mr. Justice Reed in Smith v. Burnet, 35 N. J. Eq. 314, 321, says: "The object of the restrictive clause in all the statutes is mutuality. Their purpose is, in the language of Dr. Wharton, to provide that, when one of the parties to a litigated obligation is silenced by death, the other shall be silenced by law." No construction should be given to these words which will defeat this purpose, unless imperatively demanded by the phraseology of the statute. A casual reading might give the impression that it refers to a transaction between the witness and deceased, and to any statement by deceased to witness or any one else. But why confine the restriction to transactions with the witness, and make it embrace statements to all? The interdicted subjects are classed together, with no apparent intention to apply one rule to acts and another to words. Nor is it necessary to give such confined signification to the provision with reference to transactions; it can properly and grammatically be made to refer to transactions with others as well as the witness, and a construction limiting the restriction of the proviso to transactions with the witness only is destructive of the object named. It would present the anomaly, in this case, of rendering Mrs. Hoagland incompetent as a witness as to a transaction between her father and herself, but competent as a witness to a transaction between her father and brother, in which she and the brother are alike interested. If he were alive, she would be competent to testify in his behalf, and he in hers, each as to the transactions of the other with the father. I think the reasoning of Vice Chancellor Bird in Larison v. Polhemus, 36 N. J. Eq. 506, conclusive that parties are not competent to testify adversely to one suing in a representative capacity, interchangeably in each other's behalf, each as to a transaction of the other with the deceased, both being interested in the transaction, although such interests are divisible. I am of opinion that the restriction of the proviso of the act of 1880 applies to testimony by a party of transactions of others as well as of those of the witness with the testator or intestate represented in the action, and that Mrs. Hoagland cannot, under that act, testify as to a transaction, involving these securities, between her father and brother, either in her own behalf or that of Mrs. Matthews, any more that she could to a transaction with herself. Has she been made competent by the complainant, suing, as she does, as an administratrix, giving evidence which puts her in the position of a witness under the earlier law of 1874? Mr. Justice Van Syckel, in stating the opinion of the majority of the court of errors and appeals in the case of McCartin v. McCartin, 45 N. J. Eq. 265, 17 Atl. Rep. 809, has fixed the construction to be given to the two acts of 1874 and 1880. On page 267,45 N. J. Eq., and page 810, 17 Atl. Rep., hr says, of the act of 1880, it was intended to give each party an equal privilege without subjecting the one (to-wit, the administrator) to the disadvantage of letting in the other to testify to matters of which the administrator could know nothing personally. To this extent the act of 1880 modified the earlier law, the alteration being to partially qualify each party without reference to the action of the other. Thus, if the representative offers himself as a witness for this limited purpose, it does not enable the adversary to gain the position of vantage. But if the representative offers himself under the earlier law, and is examined as a witness for all purposes, the other party has the same right to testify without restriction. Again, no necessary conflict arises between this (act of 1880) and the prior enactment on the subject upon which a repeal by implication can arise. The representative may still avail himself of the right to testify generally under the law of 1874, and thereby render his adversary competent to a like extent. In that case it is not the act of 1880 which permits the wider range of evidence, but the express language of the earlier law. The proviso in the act of 1880, the court (page 267,45 N. J. Eq., and page 810, 17 Atl. Rep.) says, is a limitation only upon the operation of the act of 1880; it simply circumscribes the extent to which testimony may be given under that act. Mr. Justice Van Syckel, at the foot of page 268, 45 N. J. Eq., and page 810, 17 Atl. Rep., says: "My conclusion is that, if the representative offers himself as a witness, and testifies to any transaction with or statement by the testator or intestate, the other party may be a witness on his own behalf as to all transactions with or statement by such testator or intestate which are pertinent to his case." McCartin v. McCartin, supra. Obviously, the only test which can be applied to ascertain if the representative offers himself as a witness, under the act of 1874, is that in testifying he oversteps the boundary fixed in the act of 1880. Under the lastmentioned act, he is a competent witness to all purposes, except to testify to any transaction with or statement by the testator or intestate. So that, if his testimony does not extend beyond that prescribed limit, the law will assume he is testifying under the act of 1380. If, however, he goes one step further, the act of 1880 ceases to be enabling, and the representative must then be assumed to have elected to testify under the act of 1874.
The complainant, the representative in this case, was called by her counsel, as a witness in her own behalf, and among other things testified as follows: "Question. You are the complainant in this case? Answer. Yes, sir. Q. And the widow of the late Henry Matthews? A. Yes, sir. And later on. Q. When were you married? A. November 10, 1883." Also as follows: "Q. Do you know of his (Henry Matthews) sending for a box? A. Yes, sir. Q. What box was that? A. A small tin box. Q. Whose was it? A. Mr. Henry Matthews'. Q. What did the box contain? A. I didn't see anything but papers; I didn't see what they were. Q. Did you or not see Mr. Matthews take any papers out of the box? A. Yes, sir. Q. What did he dowith them? A. Gave one to his brother. Q. Which brother was that? A. Jordan. Q. Did Jordan Matthews go away with the papers in his hand? A, Yes, sir. Q. Did he bring back any money? A. Yes, sir. Q. What did he do with it? A. Gave it to my husband. Q. Who kept the key of that box? A. Mr. Matthews." Jordan Matthews had already testified to the transaction with reference to the box and the incident was introduced to show that, after the alleged gift of the securities by the father, he was collecting the interest coupons and dividends on the bonds and stock. The fact of complainant's marriage with the deceased, as averred in the bill, was met in the answer of the defendants with an admission "that the complainant and said Henry Matthews lived together as husband and wife at the time of the death of said Henry Matthews;" but as to the fact, date, or place of marriage, etc. the defendants deny any knowledge or information, other than derived from the complainant's bill and newspaper notices. The incident of the box was a material point in the case, and the fact of the marriage, in the event of complainant's establishing her position, would become essential, if it should be determined that the case should be finally disposed of in this court. Complainant was not competent, under the act of 1880, to testify to the marriage, a transaction by herself with the intestate, nor to the incident of the box, a transaction with Jordan Matthews, even if her account of it does not involve testimony of statements by the deceased; but it was competent for her to so testify under the act of 1874, and, having done so, she made her election to testify under that act which carried with it all of its consequences. Under that law, an administrator or executor cannot offer himself on his own behalf to prove the most formal matter without making the other party a witness for all purposes, so that the complainant, by overstepping the line drawn in the act of 1880, opened the door wide to all testimony of the defendants or either of them. Mrs. Hoagland's statement of the transaction is that, she being at her home in Newark, her father, shortly after his return from his wedding trip, sent by letter for her to come to see him; that she went to Lambertville, and met him at his old home; that he told John and herself to come upstairs, he had something for them. They went up stairs with him, and into his bedroom. He took his box out, and took these papers out of the box, and handed them to them. He handed her brother a deed, and gave her the bonds and mortgages he held against her. He handed these papers to them, and said: "Here take these; life is uncertain, and they are yours. This is part of your mother's estate, and I want you to have them whilst I am living." That this was said with reference to papers other than the bonds, mortgages, and deed, is shown by its substantial repetition in answer to a question as to what her father said when he handed her or John the securities in the bedroom, and afterwards that the Lehigh Navigation & Camden & Amboy Railroad and the Cedar Rapids bonds, which Dunham took out of the box, and which were claimed by her brother and herself, were the same stocks and bonds which her father had talked about to her, and handed her in the bedroom. On her cross-examination, she repeats the statement, and says her father, besides the deed, then delivered to John the railroad stocks; that she did not have them in her hands, but that John had the deed, and the other papers, the stock, the Lehigh Navigation bond, and the Camden & Amboy and the Burlington & Cedar Rapids bond; that she saw them in his hands; that John read them over as his father handed them to him.
In her account of the subsequent part of the transaction, something was said about the securities being undivided. She does say that her father intended to deal equally with her brother and herself, and I understand that the statement as to the securities being undivided meant that they were in such amounts they were not susceptible of being equally divided, so that each could take a moiety. She said she did not want to use hers then, and John said he did not want his, and they both said they did not want them then, and asked him to keep them, and gave them back to their father, and said that whichever of them wanted them afterwards could call for them, and get them when so wanted; that he put them back in the box, and put the box in the secretary. His collecting the interest and dividends after this interview is evidence of control over them, which, unexplained, would tend to prove the exercise of assumed ownership; but it is not inconsistent with the idea that he held these securities for his son and daughter and especially is this so if, as Mrs. Hoagland says, he sent her the same whenever she wanted it. They were father and daughter, and it is not strange that neither kept accurate, or any, account of the payments. Mrs. Hoagland, as to the fact of the interview between her father and herself and brother, and that it was brought about by her father, and was for the express purpose of his giving something to his children, is corroborated by the testimony of Mrs. Hart and Mrs. Williamson. It was admitted on the argument that the evidence established such an interview and purpose, and that on that occasion the bonds and mortgages and deed were given by old Mr. Matthews to his daughter and son. Her statement of giving the papers to her father for safe custody, to be given up to them when wanted, is in a measure corroborated by the fact that her mortgages were canceled of record Januaury 15, 1884, two months after the alleged gift, and two years prior to her father's death; and that John's deed, which was dated August 13, 1883, and acknowledged September 24, 1883, was recorded March 17, 1885, 10 months before his father's death. It is said, however, with force, that, while all this may be true, it is also consistent with the theory that a gift was made which embraced only the deed and bonds and mortgages. To accede to this proposition, it must be assumed that Mrs.
Hoagland has willfully and deliberately committed perjury in her statement as to the gift, if such it was, of the other securities. There can be no mistake invoked to explain the testimony of the transaction. It must be founded on fact, or is pure fiction, concocted for the purpose of personal gain, and told under the solemnity of her oath. I cannot give my assent to this charge. Mrs. Hoagland's testimony on the stand impressed me with its truthfulness. It was given with an air of sincerity and candor, which indicated that it was the statement of a lady who is truthful, and who had no desire to add to or take from the exact occurrence.
The circumstances surrounding the taking of these securities do not indicate, to my mind, an intent on Mrs. Hoagland's part to take what was not her own, or intentionally what she was not legally entitled to. The contention of complainant is that she has taken her father's securities illegally, and committed perjury to justify her act. Does the case call for such a conclusion? These securities were in the box of Henry Matthews at the time of his death. That box was opened in the presence of these defendants by George W. Dunham, and they were separated from the other property of the intestate, and converted to their own use under a plea of ownership. If the defendants were not given these securities as they claim by their father, it was an illegal and improper taking of the property of the estate. It is proved that Mrs. Hoagland would not take any action until the advice of counsel could be had. It is undisputed that she brought George W. Dunham to the house. He was a counselor at law, regularly admitted and practicing in this state, who had frequently been employed by her as her legal adviser. Now, if it had been the intention of Mrs. Hoagland to pilfer the securities of her father, to take those which she had no shadow of claim to, there seems to be no reason why she would go or send, all the way from Lambertville to Flemington, for her former and trusted counsel, to counsel with him is to what course she should pursue in order to steal property belonging to her father's estate. It appears that when Dunham got there, and brought the box into the room, it was unlocked by Dunham by a key which he had in his possession. If she was stealing, there was no reason for her to confine the operation to the stock of the Camden & Amboy Railroad, as there were certificates of stock of other corporations which she did not claim. The testimony is that Dunham opened the box; that he told those present not to touch the contents; that as he took out the papers one by one, they were either claimed or disclaimed by Mrs. Hoagland, and by John H. Matthews; that all she did was in accordance with Dunham's advice The transaction, its publicity, the employment of counsel, her acting on his advice, the selection of a part only of the securities, all tend to relieve these parties of a charge of criminality. The act was unwise and reprehensible, but it was the result of their misfortune in selecting counsel who would advise that the strong-box of the dead man, before administration, should be opened by himself with his own key, and that the securities therein found should be distributed among the heirs at law, without any other evidence of ownership than their claim. I do not find in the transaction with reference to taking the securities, nor in seeming discrepancies in her evidence as to collateral matters with that of other witnesses, sufficient to justify the conclusion that she has not told the truth as to the interview with her father.
It is true there are contradictions between Mrs. and Miss Dunham and herself, as to alleged remarks made at the dinner table, and in conversations at their home; but such differences continually appear on a trial, and may be reconciled or explained in many ways, without the imputation of perjury. There is flat contradiction between George W. Dunham and herself on a point as to which his testimony is competent, viz., the time she went from Lambertville to Flemington for him. If she was not corroborated by Mrs. Hart and Miss Williamson and Mrs. John Matthews, I would have no hesitation in believing her statement and disbelieving his. There is some evidence which would indicate that her statement that George W. Dunham was not at her brother John's house on Sunday, January 24th, is not correct. Mrs. Dunham testifies to her husband's coming home, late on a Sunday night, having an envelope containing Burlington & Cedar Rapids bonds, and recognizes the envelope, and says that he went away with it the next day, ostensibly to Newark; and there is evidence that this bond was cashed at the North Ward Bank, in Newark, for A. P. Hoagland. Dunham swears it was on Monday, January 25th. He is contradicted by the evidence of the bank officer, which makes it probable it was on January 26th, the day of Henry Matthews' funeral. Opportunity was given complainant to take testimony to make this clear, but it was not taken advantage of. As the testimony stands, there is no clear, competent, or reliable evidence that the deposit of that date to A. P. Hoagland's credit was the proceeds of these bonds. Again, Dunham may have been there before, without Mrs. Hoagland's knowledge. He swears he was, and that she knew it, and was present. Her denial can go only to her knowledge and presence. When the box was opened, and the securities taken, it was unlocked by Dunham with a key lie seemed to know would fit the lock. It is possible John and Dunham may have previously taken these Cedar Rapids bonds when Mrs. Hoagland was not there. If so, the inconsistencies disappear. It is, however, a discrepancy with reference to a date, intimately connected, it is true, with an event calculated to fix it on the mind, yet I cannot say it is not one about which one might not be honestly mistaken. There is much in the manner of a witness on the stand which carries conviction of his or her credibility, which it is impossible to adequately describe. Mrs. Hoagland gave her testimony in a frank and apparently candid manner, with enough of hesitationto show she was not reciting a well-prepared story, and passed through a cross-examination calculated to perplex her, without confusion or apparent contradiction, leaving the impression stated before that she had spoken the truth. Assuming that her account of the transaction between her father and her brother and herself is reliable, what was its legal effect, as to the ownership of the securities in question? The development of the law with reference to the subject-matter of gifts, and what is necessary to effectuate their purpose under changed conditions of the incidents of property rights, and the procedure of courts to enforce them, has been such that it now embraces almost every kind of personal property, whether of a corporeal or incorporeal nature, and has rendered obsolete many formalities which were formerly required. The evolution, from its ancient operation, only on chattels passing by manual delivery, to its present comprehensive scope, is traced in notes to Ward v. Turner, 1 White & T. Lead. Cas. 1219; to Ellison v. Ellison, Id. (Text-Book Ser.) 292 et seq.; to Austin v. Mead, Brett, Lead. Cas. 122; to Bradley v. Hunt, 23 Amer. Dec. 597; to Flanders v. Blandy, 26 Amer. Law Reg. (N. S.) p. 581; 2 Spence, Eq. Jur. 895 et. seq. To constitute a valid gift inter vivos, there must be such a transfer of the subject-matter as will pass the donor's title at once to the donee, absolutely and irrevocably divesting the former of, and investing the latter with, all of the donor's right or title therein, and control and dominion thereof. 2 Bl. Comm. 441; 2 Kent, Comm. 438, 439; May, Fraud. Conv. (Text-Book Ser.) 403; Jackson v. Railway Co., 88 N. Y. 520, 526; Young v. Young, 80 N.Y. 422. The actual delivery of bonds known in the market as transferable by delivery, made by one holder to another, for value, under all the authorities, pusses the title, or, if delivered with words or acts indicating a present absolute gift, constitutes a valid gift inter vivos. Canal, etc., Co. v. Fisher, 9 N. J. Eq. 667; Canal, etc., Co. v. Lewis, 12 N. J. Eq. 323; Boyd v. Kennedy, 38 N. J. Law, 146; notes to Miller v. Race, 1 Smith, Lead. Cas. 756; London, etc., Banking Co. v. London, etc., Bank, 21 Q. B. Div. 535. The bonds known as Burlington & Cedar Rapids Railroad and Lehigh Navigation Company were of that character, and their actual delivery by Henry Matthews to John H. Matthews, for himself and his sister, who was present assenting thereto, accompanied by the declarations testified to by Mrs. Hoagland, passed the title from him to them, and constituted the transaction a completed gift. If the gift is complete, the whole title of the donor has passed from him to the donee, and the subsequent redelivery of the subject-matter of the gift to the donor, to keep for the donee, will not disturb the title of the latter in the thing given. Grover v. Grover, 24 Pick. 261: Whitford v. Horn, 18 Kan. 455; Ector v. Welsh, 29 Ga. 443; Danley v. Rector, 10 Ark. 211; Ivey v. Owens, 28 Ala. 641; Easly v. Dye, 14 Ala. 158
With reference to the formalities necessary to effectuate the gift of non-negotiable securities, the law is in a less satisfactory and settled conditon. The question as to the alleged gift of the shares in the Camden & Amboy Railroad Company is therefore not so easy of solution. These shares are, on the face of the certificate, in the name of Henry Matthews, and declared to be "transferable only by him, or by his legal representatives, on the books of the company, on the surrender of this certificate." The certificate has on its back a printed blank assignment and power of attorney for the transfer of the stock by the record owner. The provisions of charters, or of by-laws, under the statute (Revision, p. 181, § 26,) that stock of the corporation shall be transferable only on the books of the company, are held to be intended merely for the protection of the company. It is settled that one in possession of a certificate of stock in an incorporated company, accompanied by an assignment in blank, executed by the record owner, with an irrevocable power of attorney, authorizing the transfer of the stock, is presumptively the equitable owner of the shares, whose title thereto cannot be impeached if he has given value for them without notice of any intervening equity. Rogers v. Insurance Co., 8 N. J. Eq. 167; Bank v. McElrath, 13 N. J. Eq. 24, affirmed in Hunterdon Co. Bank v. Nassau Bank, 17 N. J. Eq. 496; Mount Holly Co. v. Ferree, Id. 117; Prall v. Tilt, 28 N. J. Eq. 479; Railroad Co. v. Irick, 23 N. J. Law, 321; State v. Machine Co. 32 N. J. Law, 439. The reason of the rule is that the record owner has done everything in his power to effect the transfer, and by such act has assigned all interest he may have had, and surrendered all indicia of ownership. As to third parties, holders for value, he is estopped from asserting ownership. McNeil v. Bank, 46 N. Y. 325; Williams v. Bank, 38 Ch. Div. 388, affirmed, L. B. 15 App. Cas. 267. As to volunteers, the gift is complete and irrevocable, if inter vivos. In England, stocks, shares, bonds, debentures, and other securities, which are not assignable at law, unless duly transferred, must be duly transferred, and not merely assigned or covenanted to be transferred, to constitute a valid gift. May, Fraud. Conv. 413; Antrobus v. Smith, 12 Ves. 39; Dillon v. Coppin, 4 Mylne & C. 647; Searle v. Law, 15 Sim. 95. The companies clauses act of 1845 requires such assignments to be by deed, and to be delivered to the officer of the company, without which formalities the legal title will not pass. Nanney v. Morgan, 37 Ch. Div. 346. The English cases proceed on the ground that, the title not having passed by a legal assignment, equity will not interfere to enforce an equitable title of a volunteer. The same is the effect of the decisions in Maryland, unless the transfer is made complete in the life-time of the donor, on the ground that the power of attorney does not survive him, (Pennington v. Gittings, 2 Gill. & J. 209; Fire-Brick Co. v. Mali, 65 Md. 93, 3 Atl. Rep. 286;) while in other states the mere delivery, without indorsement or written assignment of the certificate of stock with words of gift, are held sufficient, (Com. v. Crompton,
Pa., 20 Atl. Rep. 417; Ridden v. Thrall, N. Y., 26 N. E. Rep. 627; Hopkins v. Manchester, R. I., 19 Atl. Rep. 243.) Smith v. Burnet, 34 N. J. Eq. 219, in the court of errors and appeals, on the question of gift, turned on the point that there was no such delivery of the stock as implied an intention, on the part of the donor, to give it absolutely, or to abandon control of its proceeds. The ordinary, in Dilts v. Stevenson, 17 N. J. Eq. 407, at 413, says: "To constitute a perfect gift, the donor must part with the possession and dominion of the property; and, if the thing given be a chose in action, the law requires an assignment, or some equivalent instrument, and the transfer must be actually executed." Citing 2 Kent, Comm. 439. The rule, thus broadly given in the last sentence, has undoubtedly, since Chancellor Kent so stated it in his commentaries, been greatly relaxed in many jurisdictions with reference to money obligations, and in others to all choses inaction; while Judge Grover, in Gray v. Barton, 55 N. Y. 73, quotes the same extract with approval. In many cases in that state the principle seems to be disregarded. There is great diversity of opinion evinced by the decisions in other jurisdictions, but I am unable to find any authority in this state which would indicate a departure from the principle stated. The relaxation of the rule elsewhere seems to have resulted from the ruling as to money obligations and donationes causa mortis. There seems, however, to be every reason why it should be adhered to in a case of an alleged gift inter vivos of stock, both from the nature of the subject-matter and from the incidents of such gifts. There is a wide difference in the character of property in shares of stock and that in money obligations.
Chief Justice Shaw in Fisher v. Bank, 5 Gray, 373, 377, speaking of the character of property in shares of stock, and wherein it differs from a money obligation, says: "A nearer analogy, perhaps, is that of a chose in action, capable, like this, of being assigned in equity, by a delivery over of the certificate, which is the assignor's muniment of title, with an assignment duly executed, transferring to the assignee all the assignor's right, title, and interest; and yet it is not like the assignment of a chose in action, which is the transfer of the assignor's interest in a debt, and vests in the assignee an equitable right to collect the debt in the name of the assignor. The right is, strictly speaking, a right to participate, in a certain proportion, in the immunities and benefits of the corporation; to vote in the choice of their officers, and the management of their concerns; to share in the dividends of profits, and to receive an aliquot part of the proceeds of the capital, on winding up and terminating the active existence and operations of the corporation. Again, when a transfer is rightfully made and complete, it vests a right in the transferee, not merely to act in the place of the vendor and in his name, but substitutes him, in all respects, as the legal and only holder of the shares transferred to the same extent to which they were before held by the vendor. The title, therefore, by which such interest is held, is strictly a legal title; it is created and defined by law; its benefits are secured by law; it is transferable by operation of law; and may be attached on mesne process, and seized on execution, and sold by legal authority, to satisfy the debts of the owner." The incidents of gifts inter vivos call for the observance of the rule as laid down by Chancellor Kent. Cogent reasons are given by Mr. Justice Gilbert in Johnson v. Spies, 5 Hun, 468, why the law might well overlook an informality or incompleteness in a gift causa mortis which it would not tolerate in respect to a gift inter vivos. A gift inter vivos must be eomplete in prsesenti. It has no reference to the future. There must be a delivery, and it must be an actual one, "so far as the subject is capable of delivery. It must be secundum subject am materiam, and be the true and effectual way of obtaining the command and dominion of the subject." 2 Kent, Comm. 439. In Basket v. Hassell, 107 U. S. 602, 2 Sup. Ct. Rep. 415, Mr. Justice Matthews, at page 614, says: "The point which is made clear by this review of the decisions on the subject, as to the nature and effect of a delivery of a chose in action, is, as we think, that the instrument or document must be the evidence of a subsisting obligation, and be delivered to the donee, so as to vest him with an equitable title to the fund it represents, and to divest the owner of all personal control and dominion over it, absolutely and irrevocably, in case of a gift inter vivos, but upon the recognized conditions subsequent, in cases of a gift mortis causa; and that a delivery which does not confer upon the donee the present right to reduce the fund into possession, by enforcing the obligation according to its terms, will not suffice." As delivery is necessary to the validity of a gift inter vivos, and as the certificate of stock is the only thing connected with its ownership that is capable of manual tradition, it would seem that an assignment and power to transfer, which are necessary to make the certificate at once available, inheres in its effectual delivery. There appears to be a controlling distinction between a transfer involving the delivery of a certificate of stock with an assignment and power to transfer the shares with words of gift, and a delivery of the certificate unassigned and unaccompanied by an act or writing empowering its transfer; for a gift inter vivos, being incomplete so long as any act of the donor remains undone which is necessary to confer on the donee the power of the present control and enjoyment of the subject of the gift, the failure of the record owner of the stock to clothe the donee with the means of at once acquiring the benefits of the stock leaves unperformed an act which prevents the gift from taking effect in pr?i>senti, which is vital to it as a gift inter vivos. Again, it is necessary to the validity of a gift inter vivos that all of the title of the donor, whatever it may be, should be transferred at once to the donee. He cannot retain any interest therein without destroying its character as a gift. Young v. Young, 80 N. Y. 422.
The handing over of a certificate of stockwithout a written assignment or power certainly does not transfer the legal title. If we admit it confers an equitable title, the legal has remained in the donor, and cannot be enforced, for equity recognizes and makes effective only assignments founded on a valuable consideration, and does not aid a volunteer. May, Fraud. Conv. 406; Weale v. Ollive, 17 Beav. 252. Nor under the decisions will equity build up a trust with the fragments of an incomplete gift. Antrobus v. Smith, 12 Ves. 39; Richards v. Delbridge, L. B. 18 Eq. 11; Moore v. Moore, Id. 474; Milroy v. Lord, 4 De Gex, F. & J., 274; Heartley v. Nicholson, L. B. 19 Eq. 233; Young v. Young, supra. In my judgment, the character of the property in shares of a corporation, as well as the distinctive qualities of a gift inter vivos, forbid a departure from the rule that a valid gift of such property cannot be made by the delivery of the certificate of stock, without formal transfer, or an assignment and power in writing to transfer the shares. But, independent of the legal question, the rule that the possession of the certificate, assigned or accompanied by authority to transfer, is evidence of ownership, is now the recognized law of all mercantile communities in this country, and under it all transactions in the sale or pledge of stocks are carried on. The usage is so universal that the transfers are printed on the certificates as on the one in question. If the decisions in this state did not seem to require an assignment in writing, I would be satisfied that the failure of Henry Matthews to execute the transfer and power of attorney on the back of the certificate, as conclusive evidence that he did not intend to make a present gift of the stock, and to divest himself of all control and dominion over it or its proceeds. There was no haste in the matter. He had taken the time to execute the deed to John Matthews with all formality. He must be assumed to have known that the company would require his assignment in writing to transfer the stock, and, notwithstanding anything he may have said indicating an intention to give it, his not making the paper effective shows that he intended to retain some dominion over the property. If so, it is fatal to the transaction as a gift inter vivos. The stock of the Camden & Atlantic Railroad I am of opinion was not effectually given by the intestate, and belonged at his death to his estate. There is no competent evidence whatever that the note of Vincent R. Matthews and the currency in the box were not the property of the intestate. They, with the Camden & Amboy Railroad stock, must beheld to have belonged to the estate of Henry Matthews, and to have been improperly diverted by John H. Matthews, and it is undisputed that the defendants Mary E. Hoagland and Helen Matthews have each come into the possession of part of the proceeds. The jurisdiction of this court over the accounts of administrators, and to enforce rights of parties in the estates of decedents, is well settled. Frey v. Demarest, 16 N. J. Eq. 236; Dorsheimer v. Rorback, 23 N. J. Eq. 46; Suyuam v. Bastelo, 40 N. J. Eq. 433, 2 Atl. Rep. 808; Coddington v. Bispham, 36 N. J. Eq. 574. So, also, is the jurisdiction of the court to entertain a suit by an administrator against a co-administrator, and to decide questions as to fact of indebtedness. Bansom v. Geer, 30 N. J. Eq. 249; Petty v. Young, 43 N. J. Eq. 654, 12 Atl. Bep. 392. Such an action may also be maintained when the defendant administrator has been guilty of misconduct which jeopardizes the rights of those interested in the estate. Wood v. Brown, 34 N. Y. 337, as explained in Burt v. Burt, 41 N. Y. 52. This case is that John H. Matthews, an administrator of his father's estate, took securities and money belonging to the estate, and converted them to his own and his sister's use, making no return of them to his co-administrators, either in the inventory or the final accounting. His sister was not an administratrix, and he is deceased, leaving his widow his sole devisee, legatee, and executrix. It is peculiarly a case for the exercise of the jurisdiction of this court over administration of estates. The estate is entitled to have an accounting with respect of the shares of stock, the note of Vincent B. Matthews, and the currency. The debts of the intestate have all been paid. The balance found in the hands of the administrators by their accounting in the orphans court has been distributed. There is no other disposition to be made of the property by this suit declared to belong to the estate, and heretofore unadministered, but to distribute it according to law. All parties entitled thereto, and chargeable therewith, are parties to this suit, and, as the decree can adjust the respective rights of all interested therein, it should so provide. Mallory v. Craige, 15 N. J. Eq. 73; Youmans v. Youmans, 26 N. J. Eq. 149. The evidence tended to show that the note of Vincent B. Matthews was used partly to settle a debt of John H. Matthews, and partly one of the intestate. So far as it was properly used, allowance should be made; but, if the representative is notable to show the exact amount so appropriated, she should be charged with the whole amount, on the principle that, where one confuses trust assets with his own, so that they cannot be distinguished, he will lose that which otherwise he could retain as his individual property. Cases cited in note to Jewett v. Dringer, 30 N. J. Eq. 304. The weight of evidence is that the currency amounted to $ 100. The value of the Camden & Amboy Railroad Stock was to be agreed upon, but, if the parties cannot do so, I will take testimony to determine the amount.