Second Department, December, 1920.

[Vol. 194 trustee? A. From January, 1918." She was asked if Miss Flanagan ever spoke of making a will. She said she might have done so but "not with reference to this trust that I had. Well, you see, I am under oath here, and I can swear to the fact that she gave me that as a trust, the securities, but I cannot swear positively about the will, that she positively told me that she made a will."

After Miss Flanagan's death, it appears that Mr. Norris made some claim to Miss Tannenbaum that decedent had executed a will, in which the securities in question were distributed in accordance with her conversation of January, 1918, but of which will he, Norris, was named as executor. Miss Tannenbaum refused to countenance the suggestion because, as she said, she "had been for many years a close personal friend and financial adviser of the said Elizabeth Flanagan, and was and is thoroughly conversant with all her business affairs and transactions." This appears to have resulted in a disagreement, and Miss Tannenbaum alleges in her answer that thereupon Norris refused to act as the distributing agent under the trust, and in retaliation notified the public administrator that she had these securities in her possession as the property of the decedent who died intestate leaving no heirs or next of kin. That official thereupon secured letters of administration upon the estate of the decedent. Miss Tannenbaum, desiring to avoid any personal liability, consulted counsel, and this action was commenced to obtain a decree which would protect her in making the distribution directed by her deceased friend. The plaintiffs ask that the trust be established, that a decree be made directing the delivery of the securities in accordance therewith and that the public administrator be directed to indorse for transfer any securities in the trust standing in the name of decedent. Miss Tannenbaum answers admitting the facts alleged in the complaint, and joins in the plaintiffs' prayer for relief. The defendant Attorney-General answers that he is a stranger to the matters and things alleged in the complaint and asks that a just and proper decree be made settling and determining the title to the securities in question. The defendant public administrator answers denying knowledge or information as to the allegations of the plaintiffs and prays for judgment

App. Div.]

Second Department, December, 1920.

dismissing the complaint. Lauretta Norris, infant defendant, by Charles Norris, her guardian ad litem, filed the usual infant's answer.

The defendants called no witnesses at the trial. The only defendant appearing was the public administrator, who contended that the legal title to the shares of stock in question was never divested from the decedent and, therefore, no trust was created.

The learned justice at Special Term dismissed the complaint upon the merits for the reason stated by him in his opinion, that he found no evidence of any intent on the part of the decedent to pass the title to the shares to Miss Tannenbaum either at the interview in January, 1918, or at any other time. He says Miss Tannenbaum was merely a bailee, and that decedent's intention as disclosed by the evidence was to make a testamentary disposition of the property in question, retaining full control and power of disposition thereof during her lifetime, and as her intention was not evidenced by an instrument executed with testamentary formalities, the attempted disposition was ineffectual. He decided that no trust was created for the plaintiffs and the two Norris girls, and said: "Although this seems to result in frustrating the wishes of decedent and in hardship to the intended beneficiaries, because, as decedent left no next of kin, all property as to which she died intestate will go to the State, the court cannot overrule the statutes which require that testamentary dispositions of property shall be made in the manner therein prescribed. It is a case in which the Legislature might well, it would seem to me, effectuate the decedent's intention by releasing the property to the intended beneficiaries, but this court can afford them no relief." (110 Misc. Rep. 128.)

If the disposition of the property was a testamentary disposition as found by the learned justice, his conclusion is undoubtedly correct because the dead woman made no will. If, on the other hand, she established a valid trust in her lifetime under which the property was actually transferred and delivered to a trustee to hold during her life, and to distribute to her beneficiaries on her death, then such trust was valid, and it is one of the most important duties devolved upon the courts to see that her intention is carried out.

Second Department, December, 1920.

[Vol. 194.

The case turns on the contention of the public administrator that there was no evidence of a delivery of these stocks by the deceased to Miss Tannenbaum with an intent to vest the title in Miss Tannenbaum in trust. This is the ground upon which the judgment went against plaintiff. The learned justice says: "I find no evidence of any intent on the part of decedent to pass title to said shares of stock to Miss Tannenbaum, either at the interview in January, 1918, or at any other time."

On the correctness of the decision on this question of fact the case depends. There is no dispute about the law. Plaintiffs concede that they must show the actual delivery of the fund or other property, or of a legal assignment thereof, with the intention of passing the legal title thereto to Miss Tannenbaum as trustee. (Brown v. Spohr, 180 N. Y. 201.)

I cannot agree with the learned trial justice that there is no evidence of an intent on the part of the decedent to pass title to the shares of stock to Miss Tannenbaum at the interview in January, 1918, or at any other time. It is true that the gift must be established by satisfactory proof, and if the matter is left in doubt it must fail. (Bray v. O'Rourke, 89 App. Div. 400.) There is no dispute in this case about the facts as related by Miss Tannenbaum. She is entirely disinterested, actuated solely by motives of loyalty to her dead friend and going so far as to waive any commissions or compensation as trustee. No one contradicts her. The intention to make the gift is very clear. The learned justice at Special Term does not question it. He says there was no evidence of intention to pass title and possession to Miss Tannenbaum at the time; that the decedent did not part with her power of control over the securities and that the gift was testamentary in character.

I cannot find any evidence in the record here that Miss Flanagan ever intended to dispose of the securities by will. She made no will. On the contrary, there was evidence that when a neighbor in the apartment in which she lived suggested the desirability of a will, she declined to make one, and said that if anything happened to her, "rest everything with Miss Tannenbaum. Miss Tannenbaum would take care of it." "Anything she had she wished would be delivered to

App. Div.]

Second Department, December, 1920.

those four persons." While this might not be effectual as evidence of a trust of her bank account, her furniture and personal belongings, and her securities in the hands of her employers which were never delivered to Miss Tannenbaum, I feel that, coupled with the transaction in January, 1918, and the decedent's conduct thereafter, the evidence negatives any intention to make a testamentary disposition of these particular securities in the hands of her friend. She never attempted to regain possession of these securities, she never exercised any control or supervision of them. Delivery of the trust property is essential, and Judge EARL said in Jackson v. Twentythird Street R. Co. (88 N. Y. 526): “The delivery must be such as to vest the donee with the control and dominion over the property, and to absolutely divest the donor of his dominion and control, and the delivery must be made with the intent to vest the title of the property in the donee. The intent is a necessary element of the transaction: Delivery, without intent to vest the title in the donee, could pass no title to him." It seems to me that in the case at bar the intent, a necessary element of the transaction," is abundantly proved. That was her intention at the interview in January, 1918, when she constituted the trust, and the evidence is that she reiterated and reaffirmed it. Miss Tannenbaum testified: "We spoke about it nearly up to the time of her death, the distribution and everything relating to this matter."

In Chaplin on Trusts the author says (§ 83, p. 42): " If the donee, at the time of the gift, already has the custody of the property in question, no physical transfer to him of that property itself is possible or requisite," citing Mercantile Deposit Co. v. Huntington (89 Hun, 465), where Presiding Justice VAN BRUNT, writing for the General Term, said that where the donee was already in possession of securities it was reasonably strong evidence of delivery in the absence of other proof. In that case the parties, donor and donee, were dead. In the case at bar we are not obliged to depend upon inferences. There is direct proof of the facts. It would have been an idle ceremony for Miss Flanagan to take the securities from Miss Tannenbaum for the purpose of immediately redelivering them. (See, also, Hamer v. Sidway, 124 N. Y. 538; Day v. Roth, 18 id. 448, 453; Allen v. Cowan, 23 id. 502; Penfield v. Thayer,

Second Department, December, 1920.

[Vol. 194. 2 E. D. Smith, 305.) The Court of Appeals says in Hoffman House v. Foote (172 N. Y. 348, 355): "It is not necessary to use any particular formula of words in order to create a trust of personal property, and it is not even necessary that such a trust should be evidenced by any writing. Trust relations will be implied when it appears that such was the intention of the parties and when the nature of the transaction is such as to justify or require it. (Morse v. Morse, 85 N. Y. 53; Gilman v. McArdle, 99 N. Y. 451; Day v. Roth, 18 N. Y. 448; Matter of Carpenter, 131 N. Y. 86; Woodward v. James, 115 N. Y. 346; Gillet v. Bank of America, 160 N. Y. 549.)"

The fact that the stock certificates in the possession of Miss Tannenbaum were issued in the name of decedent and were unindorsed does not militate against the plaintiff's contention. The learned justice at Special Term did not say so, and he cited cases which hold that delivery of an unindorsed certificate is sufficient if made with intent to transfer the title. (Gilkinson v. Third Avenue R. R. Co., 47 App. Div. 472; Pers. Prop. Law, § 170; Talbot v. Talbot, 32 R. I. 72. See, also, Ridden v. Thrall, 125 N. Y. 572, 577; Hall v. O'Brien, 218 id. 50, 54; Chemical Nat. Bank v. Colwell, 132 id. 250; Johnson v. Underhill, 52 id. 203; Mc Neil v. Tenth Nat. Bank, 46 id. 325; Cushman v. Thayer Manufacturing Jewelry Co., 76 id. 365, 370; Allerton v. Lang, 10 Bosw. 362; Walsh v. Sexton, 55 Barb. 251; Bond v. Bean, 72 N. H. 444.)

It is stated in the head note in Herbert v. Simson (220 Mass. 480; L. R. A. 1915 D. 733): "A valid gift so as to pass the equitable title is effected by the delivery and acceptance of a certificate of stock in a corporation with intent to pass title, but without any written assignment or indorsement, although the certificate is made transferable only on the books of the corporation." In that case the testatrix had delivered an unindorsed certificate of stock to Mrs. Simson, who thereafter kept it. The executor asserting ownership, the Probate Court in answer to his request for instructions was of opinion that the failure of the testatrix to indorse the certificate invalidated the gift. But the Supreme Court of Massachusetts reversed the probate judge and held that while the failure to indorse the certificate for transfer was important evidence