1. A certificate of deposit in these terms:
"EVANSVILLE NATIONAL BANK"
"EVANSVILLE, Ind, Sept. 8, 1875"
"H. M. Chaney has deposited in this bank twenty-three thousand
five hundred and fourteen 70/100 dollars, payable in current funds,
to the order of himself on surrender of this certificate properly
endorsed, with interest at the rate of six percent per annum, if
left for six months."
"$23.514.70 HENRY REIS,
Cashier"
may, as a subsisting chose in action, be the subject of a valid
gift if the person therein named endorse and deliver it to the
donee and thus vest in him the whole title and interest therein or
so deliver it without endorsement as to divest the donor of all
present control and dominion over it and make an equitable
assignment of the fund which it represents and describes.
2. A
donatio mortis causa must, during the life of the
donor, take effect as an executed and complete transfer of his
possession of the thing and his title thereto, although the right
of the donee is subject to be divested by the actual revocation of
the donor or by his surviving the apprehended peril, or by his
outliving the donee, or by the insufficiency of his estate to pay
his debts. If by the terms and condition of the gift it is to take
effect only upon the death of the donor, it is not such a
donatio, but is available, if at all, as a testamentary
disposition. Where, therefore, during his last illness, and when he
was in apprehension of death, the person named in the above
certificate made thereon the following endorsement:
"Pay to Martin Basket, of Henderson, Ky.; no one else; then not
till my death. My life seems to be uncertain. I may live through
this spell. Then I will attend to it myself."
"H. M. CHANEY"
and then delivered it to Basket, and died at his home in
Tennessee.
Held that Basket by such endorsement and delivery
acquired no title to or interest in the fund.
3. An appeal will not be dismissed by reason of the omission of
certain persons who were parties to the suit in the court below if
they have no interest in maintaining or reversing the decree.
This is a bill in equity filed by the appellee, a citizen of
Tennessee, to which, besides the appellant, a citizen of Kentucky,
the Evansville National Bank of Evansville, Indiana, Samuel Bayard,
its President, and Henry Reis, its cashier, and James W.
Shackelford and Robert D. Richardson, attorneys for Basket,
citizens of Indiana, were made parties defendant.
Page 107 U. S. 603
The single question in the case was whether a certain fund,
represented by a certificate of deposit issued by the bank to
Chaney in his lifetime, belonged to Basket, who claimed it as a
gift from Chaney, having possession of the certificate, or to the
appellee as Chaney's administrator. Basket asserted his title not
only by answer, but by a cross-bill. The final decree ordered the
certificate of deposit to be surrendered to the complainant, and
that the bank pay to the complainant, as its holder, the amount due
thereon. The money was then tendered by the bank in open court, and
the certificate was deposited with the clerk. It was thereupon
ordered, Basket having prayed an appeal, that until the expiration
of the time allowed for filing a bond on appeal, the bank should
hold the money as a deposit at four percent interest, but if a bond
be given, that the same be paid to the clerk, and by him loaned to
the bank on the same terms. Basket failed to give the bond required
for a supersedeas, but afterwards prayed another appeal, which he
perfected by giving bond for costs alone. To this appeal Basket and
the appellee are the parties respectively, the codefendants not
having appealed or been cited after severance. And, on the ground
that they are necessary parties, the appellee has moved to dismiss
the appeal.
The fund in respect to which the controversy has arisen was
represented by a certificate of deposit, as follows:
"EVANSVILLE NATIONAL BANK"
"EVANSVILLE, IND., Sept. 8, 1875"
"H. M. Chaney has deposited in this bank twenty-three thousand
five hundred and fourteen 70-100 dollars, payable in current funds,
to the order of himself, on surrender of this certificate properly
endorsed, with interest at the rate of six percent per annum, if
left for six months."
"$23,514.70 HENRY REIS,
Cashier"
Chaney, being in possession of this certificate at his home in
the County of Sumner, State of Tennessee, during his last sickness
and in apprehension of death, wrote on the back thereof the
following endorsement:
"Pay to Martin Basket, of Henderson, Ky.; no one else; then, not
till my death. My life seems to be uncertain. I may live through
this spell. Then I will attend to it myself."
"H. M. CHANEY"
Page 107 U. S. 604
Chaney then delivered the certificate to Basket and died without
recovering from that sickness in January, 1876.
Page 107 U. S. 608
MR. JUSTICE MATTHEWS delivered the opinion of the Court.
It is apparent that the sole controversy is between Basket and
Hassell, the present parties to the appeal. By the delivery of the
certificate of deposit to the clerk, the attorneys of Basket are
exonerated from all responsibility, and the payment of the money by
the bank to Hassell equally relieves it and its officers, for, not
being parties to the appeal, and the execution of the decree not
having been superseded, the decree will always furnish them
protection, whether affirmed or reversed, because if reversed, it
would only be so as between the parties to the appeal. So that the
omitted parties have no legal interest either in maintaining or
reversing the decree, and consequently are not necessary parties to
the appeal.
Forgay v.
Conrad, 6 How. 203;
Cox v.
United States, 6 Pet. 182;
Germain v.
Mason, 12 Wall. 261;
Simpson v.
Greely, 20 Wall. 152. The motion to dismiss the
appeal is accordingly overruled.
It is claimed on behalf of the appellant that this constitutes a
valid
donatio mortis causa, which entitles him to the
fund, and whether it be so is the sole question for our
determination.
The general doctrine of the common law as to gifts of this
character is fully recognized by the Supreme Court of Tennessee as
part of the law of that state.
Richardson v. Adams, 10
Yerg. 273;
Sims v. Walker, 8 Humph. 503;
Gass v.
Simpson, 4 Cold. 288.
In the case last mentioned, that court had occasion to consider
the nature of such a disposition of property, and the several
elements that enter into its proper definition.
Among other things, it said:
"A question seems to have arisen at an early day, over which
there was much contest, as to the real nature of gifts
causa
mortis. Were they gifts
inter vivos, to take effect
before the death of the donor, or were they in the nature of a
legacy,
Page 107 U. S. 609
taking effect only at the death of the donor. At the termination
of this contest, it seems to have been settled that a gift
causa mortis is ambulatory and incomplete during the
donor's life, and is therefore revocable by him and subject to his
debts, upon a deficiency of assets, not because the gift is
testamentary or in the nature of a legacy, but because such is the
condition annexed to it, and because it would otherwise be
fraudulent as to creditors, for no man may give his property who is
unable to pay his debts, and all now agree that it has no other
property in common with a legacy. The property must pass at the
time and not be intended to pass at the giver's death; yet the
party making the gift does not part with the whole interest, save
only in a certain event, and until the event occurs which is to
divest him, the title remains in the donor. The donee is vested
with an inchoate title, and the intermediate ownership is in him;
but his title is defeasible until the happening of the event
necessary to render it absolute. It differs from a legacy in this,
that it does not require probate, does not pass to the executor or
administrator, but is taken against, not from, him. Upon the
happening of the event upon which the gift is dependent, the title
of the donee becomes by relation complete and absolute from the
time of the delivery, and that without any consent or other act on
the part of the executor or administrator; consequently, the gift
is
inter vivos."
In another part of the opinion (p. 297) it is said:
"All the authorities agree that delivery is essential to the
validity of the gift, and that, it is said, is a wise principle of
our laws, because delivery strengthens the evidence of the gift and
is certainly a very powerful fact for the prevention of frauds and
perjury."
In the first of these extracts there is an inaccuracy of
expression, which seems to have introduced some confusion, if not
an apparent contradiction, when, after having stated that "the
property must pass at the time and not be intended to pass at the
giver's death," it is added that "until the event occurs which is
to divest him, the title remains in the donor." But a view of the
entire passage leaves no room to doubt its meaning: that a
donatio mortis causa must be completely executed,
precisely as required in the case of gifts
inter vivos,
subject to be divested by the happening of any of the
conditions
Page 107 U. S. 610
subsequent -- that is, upon actual revocation by the donor, or
by the donor's surviving the apprehended peril, or outliving the
donee, or by the occurrence of a deficiency of assets necessary to
pay the debts of the deceased donor. These conditions are the only
qualifications that distinguish gifts
mortis causa and
inter vivos. On the other hand, if the gift does not take
effect as an executed and complete transfer to the donee of
possession and title, either legal or equitable, during the life of
the donor, it is a testamentary disposition, good only if made and
proved as a will.
This statement of the law we think to be correctly deduced from
the judgments of the highest courts in England and in this country,
although, as might well have been expected, since the early
introduction of the doctrine into the common law from the Roman
civil law, it has developed, by new and successive applications,
not without fluctuating and inconsistent decisions.
"As to the character of the thing given," says Chief Justice
Shaw, in
Chase v. Redding, 13 Gray 418, 420,
"the law has undergone some changes. Originally it was limited
with some exactness to chattels -- to some object of value
deliverable by the hand; then extended to securities transferable
solely by delivery, as banknotes, lottery tickets, notes payable to
bearer or to order, and endorsed in blank; subsequently it has been
extended to bonds and other choses in action in writing or
represented by a certificate, when the entire equitable interest is
assigned, and in the very latest cases on the subject of this
commonwealth it has been held that a note not negotiable, or if
negotiable, not actually endorsed, but delivered, passes, with a
right to use the name of the administrator of the promisee, to
collect it for the donee's own use,"
citing
Sessions v. Moseley, 4 Cush. 87;
Bates v.
Kempton, 7 Gray 382;
Parish v. Stone, 14 Pick.
203.
In the case last mentioned --
Parish v. Stone -- the
same distinguished judge, speaking of the cases which had extended
the doctrine of gifts
mortis causa to include choses in
action delivered so as to operate only as a transfer by equitable
assignment or a declaration of trust, says further that
"These cases all go on the assumption that a bond, note, or
other
Page 107 U. S. 611
security is a valid subsisting obligation for the payment of a
sum of money, and the gift is in effect a gift of the money by a
gift and delivery of the instrument that shows its existence and
affords the means of reducing it to possession."
He had, in a previous part of the same opinion, stated that "the
necessity of an actual delivery has been uniformly insisted upon in
the application of the rules of the English law to this species of
gift." P. 204.
In
Camp's Appeal, 36 Conn. 88, the
Supreme Court of
Errors of Connecticut held that a delivery to a donee of a
savings bank book containing entries of deposits to the credit of
the donor, with the intention to give to the donee the deposits
represented by the book, is a good delivery to constitute a
complete gift of such deposits on the general ground that a
delivery of a chose in action that would be sufficient to vest an
equitable title in a purchaser is a sufficient delivery to
constitute a valid gift of such chose in action, without a transfer
of the legal title. That was the case of a gift
inter
vivos. But the court said, referring to the case of
Brown
v. Brown, 18 Conn. 410, as having virtually determined the
point:
"It is true that was a donation
causa mortis, but the
principle involved is the same in both cases, as there is no
difference in respect to the requisites of a delivery between the
two classes of gifts."
And so Justice Wilde, delivering the opinion of the court in
Grover v. Grover, 24 Pick. 261, 264, expressly declared
that "a gift of a chose in action, provided no claims of creditors
interfere to affect its validity, ought to stand on the same
footing as a sale;" that the title passed, and the gift became
perfected by delivery and acceptance; that there was therefore "no
good reason why property thus acquired should not be protected as
fully and effectually as property acquired by purchase," and
showed, by a reference to the cases, that there was no difference
in this respect between gifts
inter vivos and
mortis
causa.
In respect to the opinion in this case, it is to be observed
that it cites with approval the case of
Wright v. Wright,
1 Cowen 598, in which it was decided that the promissory note, of
which the donor himself was maker, might be the subject of a valid
gift
mortis causa, though the concurrence was not
Page 107 U. S. 612
upon that point. That case, however, has never been followed. It
was expressly disapproved and disregarded by the Supreme Court of
Errors of Connecticut in
Raymond v. Sellick, 10 Conn. 480,
Judge Waite delivering the opinion of the court; had been expressly
questioned and disapproved in
Parish v. Stone, 14 Pick.
198, 206, by Chief Justice Shaw, and was distinctly overruled by
the Court of Appeals of New York in
Harris v. Clark, 3
N.Y. 93. In that case, it was said:
"Gifts, however, are valid without consideration or actual value
paid in return. But there must be delivery of possession. The
contract must have been executed. The thing given must be put into
the hands of the donee or placed within his power by delivery of
the means of obtaining it. The gift of the maker's own note is the
delivery of a promise only, and not of the thing promised, and the
gift therefore fails. Without delivery, the transaction is not
valid as an executed gift, and without consideration it is not
valid as a contract to be executed. The decision in
Wright v.
Wright was founded on a supposed distinction between a gift
inter vivos and a
donatio mortis causa. But there
appears to be no such distinction. A delivery of possession is
indispensable in either case."
The case from which this extract is taken was very thoroughly
argued by Mr. John C. Spencer for the plaintiff and Mr. Charles
O'Connor for the defendant, and the judgment of the court states
and reviews the doctrine on the subject with much learning and
ability. It was held that a written order upon a third person for
the payment of money, made by the donor, was not the subject of a
valid gift, either
inter vivos or
mortis causa,
and the rule applicable in such cases, as conceded by Mr. O'Connor,
was stated by him, as follows:
"Delivery to the donee of such an instrument as will enable him,
by force of the instrument itself, to reduce the fund into
possession will suffice, is the plaintiff's doctrine. This might
safely be conceded. It might even be conceded that a delivery out
of the donor's control of an instrument without which he could not
recover the fund from his debtor or agent would also suffice."
The same view, in substance, was taken in deciding
Hewitt v.
Kaye, L.R. 6 Eq. 198, which was the case of a check
Page 107 U. S. 613
on a banker, given by the drawer
mortis causa, who died
before it was possible to present it, and which was held not to be
valid. Lord Romilly, M.R., said:
"When a man on his deathbed gives to another an instrument, such
as a bond, or a promissory note, or an I.O.U., he gives a chose in
action, and the delivery of the instrument confers upon the donee
all the rights to the chose in action arising out of the
instrument. That is the principle upon which
Amis v. Witt,
33 Beavan 619, was decided, where the donor gave the donee a
document by which the bankers acknowledged that they held so much
money belonging to the donor at his disposal, and it was held that
the delivery of that document conferred upon the donee the right to
receive the money. But a cheque is nothing more than an order to
obtain a certain sum of money, and it makes no difference whether
the money is at a banker's or anywhere else. It is an order to
deliver the money, and if the order is not acted upon in the
lifetime of the person who gives it, it is worth nothing."
Accordingly, the Vice-Chancellor,
In re Beak's Estate,
L.R. 13 Eq. 489, refused to sustain as a valid gift a check upon a
banker even although its delivery was accompanied by that of the
donor's passbook.
The same rule as to an unpaid and unaccepted check was followed
in
Second National Bank of Detroit v. Williams, 13 Mich.
282. The principle is that a check upon a bank account is not of
itself an equitable assignment of the fund.
Bank of
the Republic v. Millard, 10 Wall. 152, but if the
banker accepts the check or otherwise subjects himself to liability
as a trustee prior to the death of the donor, the gift is complete
and valid.
Bromley v. Brunton, L.R. 6 Eq. 275.
Contrary decisions have been made in respect to donations
mortis causa of savings bank books, some courts holding
that the book itself is a document of title, the delivery of which,
with that intent, is an equitable assignment of the fund.
Pierce v. Boston Savings Bank, 129 Mass. 425;
Hill v.
Stevenson, 63 Me. 364;
Tillinghast v. Wheaton, 8 R.I.
536. The contrary was held in
Ashbrook v. Ryan, 2 Bush
228, and in
McGonnell v. Murray, Irish Rep. 3 Eq. 460.
That a delivery of a certificate of deposit such as that
described
Page 107 U. S. 614
in the record in this case might constitute a valid
donatio
mortis causa does not admit of doubt. It was so decided in
Amis v. Witt, 33 Beavan 619; in
Moore v. Moore,
L.R. 18 Eq. 474;
Hewitt v. Kaye, L.R. 6 Eq. 198;
Westerlo v. DeWitt, 36 N.Y. 340. A certificate of deposit
is a subsisting chose in action, and represents the fund it
describes, as in cases of notes, bonds, and other securities, so
that a delivery of it as a gift constitutes an equitable assignment
of the money for which it calls.
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 donor of all present control and
dominion over it absolutely and irrevocably, in case of a gift
inter vivos, but upon the recognized conditions subsequent
in case 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. A delivery in terms which confers upon the donee
power to control the fund only after the death of the donor, when
by the instrument itself it is presently payable, is testamentary
in character, and not good as a gift. Further illustrations and
applications of the principle may be found in the following cases:
Powell v. Hellicar, 26 Beavan 261;
Reddell v.
Dobree, 10 Sim. 244;
Farquharson v. Cave, 2
Colly.C.C. 356;
Hatch v. Atkinson, 56 Me. 324;
Bunn v.
Markham, 7 Taunt. 224;
Coleman v. Parker, 114 Mass.
30;
Wing v. Merchant, 57 Me. 383;
McWillie v. Van
Vacter, 35 Miss. 428;
Egerton v. Egerton, 17 N.J.Eq.
420;
Michener v. Dale, 23 Penn.St. 59.
The application of these principles to the circumstances of the
present case requires the conclusion that the appellant acquired no
title to the fund in controversy by the endorsement and delivery of
the certificate of deposit. The certificate was payable on demand,
and it is unquestionable that a delivery of it to the donee, with
an endorsement in blank or a special endorsement to the donee or
without endorsement would have transferred the whole title and
interest of the donor in the fund
Page 107 U. S. 615
represented by it, and might have been valid as a
donatio
mortis causa. That transaction would have enabled the donee to
reduce the fund into actual possession by enforcing payment
according to the terms of the certificate. The donee might have
forborne to do so, but that would not have affected his right. It
cannot be said that obtaining payment in the lifetime of the donor
would have been an unauthorized use of the instrument inconsistent
with the nature of the gift, for the gift is of the money, and of
the certificate of deposit merely as a means of obtaining it. And
if the donee had drawn the money, upon the surrender of the
certificate, and the gift had been subsequently revoked, either by
act of the donor or by operation of law, the donee would be only
under the same obligation to return the money that would have
existed to return the certificate if he had continued to hold it
uncollected.
But the actual transaction was entirely different. The
endorsement, which accompanied the delivery, qualified it and
limited and restrained the authority of the donee in the collection
of the money so as to forbid its payment until the donor's death.
The property in the fund did not presently pass, but remained in
the donor, and the donee was excluded from its possession and
control during the life of the donor. That qualification of the
right, which would have belonged to him if he had become the
present owner of the fund, establishes that there was no delivery
of possession according to the terms of the instrument, and that as
the gift was to take effect only upon the death of the donor, it
was not a present executed gift
mortis causa, but a
testamentary disposition, void for want of compliance with the
statute of wills. The right conferred upon the donee was that
expressed in the endorsement, and that, instead of being a transfer
of the donor's title and interest in the fund, as established by
the terms of the certificate of deposit, was merely an order upon
the bank to pay to the donee the money called for by the
certificate, upon the death of the donor. It was in substance not
an assignment of the fund on deposit, but a check upon the bank
against a deposit, which, as is shown by all the authorities and
upon the nature of the case, cannot be valid as a
donatio
mortis causa, even where it is payable
in praesenti
unless paid or accepted
Page 107 U. S. 616
while the donor is alive; how much less so when, as in the
present case, it is made payable only upon his death.
The case is not distinguishable from
Mitchell v. Smith,
4 De G., J. & S. 422, where the endorsement upon promissory
notes claimed as a gift was, "I bequeath -- pay the within contents
to Simon Smith, or his order at my death." Lord Justice Turner
said:
"In order to render the endorsement and delivery of a promissory
note effectual they must be such as to enable the endorsee himself
to endorse and negotiate the note. That the respondent Simon Smith
could not have done here during the testator's life."
It was accordingly held that the disposition of the notes was
testamentary and invalid.
It cannot be said that the condition in the endorsement which
forbade payment until the donor's death was merely the condition
attached by the law to every such gift. Because the condition which
inheres in the gift
mortis causa is a subsequent condition
that the subject of the gift shall be returned if the gift fails by
revocation; in the meantime, the gift is executed the title has
vested, the dominion and control of the donor has passed to the
donee. While here the condition annexed by the donor to his gift is
a condition precedent which must happen before it becomes a gift,
and, as the contingency contemplated is the donor's death, the gift
cannot be executed in his lifetime, and consequently can never take
effect.
This view of the law was the one taken by the circuit court as
the basis of its decree, in which we accordingly find no error. It
is accordingly
Affirmed.
MR. JUSTICE MILLER did not sit in this cause nor take any part
in deciding it.