MELBA FRANK v. MORRIS A. HEIMANN, Appellant.
SUPREME COURT OF MISSOURI.
February 11, 1924.
302 Mo. 334
The judgment is affirmed.
PER CURIAM: ---This cause coming on In Banc on transfer from Division, the divisional opinion is adopted. David E. Blair, Walker, White and Ragland, JJ., concur; Woodson, C. J., concurs, except he thinks judgment should be reduced to $17,000; Graves, J., dissents.
Headnote 1: Appeal and Error, 4 C. J. secs. 2834, 2840; Headnotes 2, 3, 5 and 8, Master and Servant, 26 Cyc. 1415, 1445, 1444, 1491, 1495; Headnote 4: Witnesses, 40 Cyc. 2742; Headnotes 6, 7 and 10: Death, 17 C. J. secs. 183, 235; Headnote 9: Evidence, 22 C. J. 1129.
In Banc, February 11, 1924.
- VOLUNTARY TRUST. A completely executed voluntary trust will be enforced, and is irrevocable unless the power of revocation is reserved.
- ____ : Deposit in Bank: Intention. Where defendant deposited money in a bank, week by week, in his own name “as trustee” for his only child, a little daughter, the essential question, in a suit by her for the fund thus created, is his intention in making
the deposits, and whether he intended thereby to clothe her with the full beneficial ownership of the funds and to divest himself of all right to participate therein; and in ascertaining his intention, it is necessary to consider what he did, as well as what he said. - ____ : ____ : ____ : Handling and Using Fund. Although by the entries in the bank‘s books defendant was weekly declaring himself trustee for his daughter in the deposits in the bank made by him, the fact that he continuously handled and treated the funds so deposited as though they were his exclusive private property, and used them for other purposes, even in his manufacturing business, whenever occasion called for them, without a thought of replacing them, negatives the idea that by depositing moneys in the bank in his own name as trustee for her he intended that they should become her property, and not continue to be his own. And the fact that his earnings above the costs of operating his business and the living expenses of himself and daughter were not sufficient to pay over to her the weekly deposit, and that to have divested himself of the title to the deposits would have deprived him of all income above a bare living and would have irretrievably crippled his business, helps to make manifest his intention; and notwithstanding a personal account, maintained in his own name, would have served every purpose he mentions as his reason for carrying the account in his name as trustee for her, these facts demonstrate that he did not intend to part with the ownership of the funds.
- ____ : Executory: Revocation. Where defendant, at the time he made the first deposit in the bank in his name as trustee for his infant daughter, told the cashier that he wanted to build up a fund for her, and afterwards told the manager of his factory that he wanted to give her something in later years as a nest egg, and another that he opened the account that she might have an account for the future, and the daughter that he was putting the money away for her as a nest egg ---all said statements having reference, not to single or specific deposits, but to a fund to be accumulated, and wholly in futuro or in process of accumulation ---there was no executed trust, but at most an executory and revocable trust; and the appropriation by him to his individual use of the moneys he had thus placed in the tentative trust fund, before it had become a finality, operated as a revocation.
Appeal from St. Louis City Circuit Court.---Hon. William H. Killoran, Judge.
Morris Tucker and Clifford B. Allen for appellant.
(1) The mere deposit in a bank of his own money in the depositor‘s name as trustee for another does not create an irrevocable trust, but one revocable at will.
Watts, Gentry & Lee for respondent.
Appellant created and executed a valid, irrevocable trust in favor of respondent, constituting himself her trustee. Mize v. Bank, 60 Mo. App. 364; Watson v. Payne, 143 Mo. App. 721; Taylor v. Welch, 168 Mo. App. 223; Bank v. McKenna, 168 Mo. App. 254; In re Estate of Soulard, 141 Mo. 660; Harris Banking Co. v. Miller, 190 Mo. 640; Northrip v. Burge, 255 Mo. 641; Harding v. Union Trust Co., 276 Mo. 136. The cases cited under 1 of appellant‘s “Points and Authorities” have no application to the facts in this case, because no unequivocal act was shown in any of them.
RAGLAND, J.---This is a suit in equity to enforce what is claimed to be an executed voluntary trust in personal property. The petition alleges:
“Plaintiff further states that in entire disregard and in breach and violation of his duties as trustee as aforesaid of said executed and irrevocable trust, of which
The prayer is for an accounting and for judgment for the total amount deposited to the credit of the alleged trust fund. It is further alleged that certain real estate described in the petition “was purchased and paid for in part by defendant with money wrongfully converted by him out of said trust fund,” and it is sought to impress such real estate with a lien to the extent of the funds so used.
The answer is a general denial and a plea of the five-year Statute of Limitation.
With respect to the general situation of the parties and the principal facts out of which the controversy grows, there is but little, if any, dispute. In 1905 and prior thereto, the defendant, under the name of the M. A. Heimann Manufacturing Company, was engaged in the manufacture of show window fixtures, in the city of St. Louis. His wife, Lilly Heimann, was actively assisting him in his business, giving especial attention to the financial end of it. He kept an account with the State National Bank in the name of M. A. Heimann Manufacturing Company in which he deposited the funds employed in the operation of the factory. But such funds as could be withdrawn from the business from time to time, as earnings or savings, were deposited in the same bank in the name of Lilly Heimann.
Mrs. Heimann died in 1905. At the time of her death the balance in the bank to the credit of “Lilly Heimann” was $392.49. Shortly afterward the defendant opened an account in the same bank in the name of “Morris A. Heimann, Trustee for Melba Heimann,” and transferred to it the balance standing in the name of Lilly
After the death of his wife defendant continued his manufacturing business as theretofore, and as theretofore kept his factory account with the State National Bank in the name of the M. A. Heimann Manufacturing Company. An employee named Judlin was the manager and bookkeeper in charge of the factory. As such he handled the funds of the business, made the deposits in bank and drew checks against the account of the M. A. Heimann Manufacturing Company. When defendant, in 1905, started the account at the bank in the name of Morris A. Heimann, Trustee for Melba Heimann, he instructed Judlin to thereafter deposit $25 a week in that account. These deposits continued to be made until the defendant sold his factory in 1914. Upon the death of her mother, defendant placed his daughter in Forest Park University, where she remained for three terms. In 1908 she went to live with his sister. During the time she was in school he expended between $1100 and $1200 for her tuition and maintenance; afterward and until she was married, in 1913, he gave her an allowance of $75 a month. In addition to the allowance he paid from time to time debts incurred by her for clothing on charge accounts at various stores. He drew for his own use $35 a week. All of their living expenses, both for himself and his daughter, seem to have been paid from the funds of the M. A. Heimann Manufacturing Company as distinguished from those deposited to the credit of “Morris A. Heimann, Trustee,” etc.
Defendant did not permit his employees to draw checks against the account of Morris A. Heimann, Trustee for Melba Heimann. If collections were slow, or for other reasons the factory was short of funds with which to meet its obligations, defendant himself drew a check against this account for whatever sum was needed and turned it over to Judlin, with instruction to replace it when sufficient funds came in. Some of the moneys so
The total amount that was deposited to the credit of Morris A. Heimann, Trustee for Melba Heimann, from the date of the first entry, in June, 1905, until the last, in March, 1914, was $24,094.15. The weekly deposits of $25 made up approximately one-half of this total. The deposits going to make up the remainder were for the most part the proceeds of loans, all personal, except one for $25,000 on defendant‘s home. The account, however, never at any time showed a credited balance of anything like $24,000. The largest balance appearing at any time on that side of the ledger was $2665.75, on March 16, 1907. At times it was nil. A year and a half after it was opened the account became an active checking account. Defendant drew against it not only for the use of his factory, but for other purposes wholly disconnected with its operations. He expended $8000 of the fund in improving two pieces of real estate. On April 16, 1914, the balance remaining to the credit of the fund was $1.44. No further deposits were made after that date, the defendant having sold his factory at about that time.
Defendant sold his manufacturing plant to five of his employees, among others, Judlin, Frank (plaintiff‘s husband), Frieda Frank, a sister of the latter, and A. Q. Merz. The sale price was $15,000. They paid $1000 in cash and were given five years in which to pay the remainder. They at once incorporated as the M. A. Heimann Manufacturing Company and continued the business. When the purchase money notes became due they did not pay them, claiming that it was the understanding with the defendant that they were to be paid out of the earnings of the business and that there had been no earnings. Upon threats of foreclosure by defendant, however, they obtained the money from some source and settled with him. In this final transaction considerable hostility and bitterness of feeling was engendered on the part of all concerned.
Plaintiff testified that while she was a little girl going to school her father, at different times, said to her, “I have deposited $25 in the bank for you today. You don‘t ever have to worry, I will always take care of you. You will always, when you are big, when you are a lady, you will have something. I am putting this money away for you as a nest egg.” She further testified that she never knew that her father was using the money until just before the suit was brought.
Judlin testified that within two or three days after Mrs. Heimann died the defendant said to him that he wanted to open up an account for Melba, that he wanted to protect her as well as he could and give her something in later years as a nest egg. He further testified:
“Q. After that time did you ever hear him make any statements concerning this fund, as to what it was, what it was there for, its purpose? A. Many times.
“Q. Well, what would he say? A. Many times if he would have to make any drawing on the fund he would holler about taking the baby‘s money and money that belonged to the child there.”
C. E. Franze, a witness for plaintiff, testified that he was in the employ of the defendant at his factory from 1902 to 1914, as his stenographer first, and then as his bookkeeper; that he had frequently heard the defendant say that his purpose in opening the account in question was to set aside a fund for Melba; that subsequently when money would have to be drawn from the fund for
Merz testified for plaintiff with respect to what defendant had told him, stating: “He told me that he wanted, since the mother was dead, that he wanted to open an account for Melba that she would have something when she grew older. . . . For a future fund when she grew older. . . . That was not only once but it was told innumerable times.”
Frieda Frank, in defendant‘s employ at the same time, testified to similar statements made by him with respect to the account kept for Melba.
Henry L. Stadler, cashier of the State National Bank, testified for plaintiff in part as follows:
“Q. Do you recall the occasion of Mr. Heimann coming to you and talking concerning the opening up of a trust account with your bank? A. I do ---I think I do. Shortly before the opening of this account Mr. Heimann came to see me and stated that he wanted to lay aside a certain amount each week for his little girl, and asked me how I would suggest that it be opened up with the bank, and I suggested that he open an account as trustee for Melba Heimann. She was then an infant, and he stated then that he would have his cashier deposit twenty-five dollars a week for that account, and shortly after that the account was opened.
“Q. Did he say what was his purpose in opening up this account, Mr. Stadler? A. Well, my recollection of it is that he wanted to build up a fund for his daughter.
“Q. Did he say anything about a fund for her education or maintenance, or as a fund when she grew up? A. Well, I don‘t recollect that he mentioned what specific purpose it was for, except that he wanted to build up a fund for his daughter.”
Defendant denied the statements attributed to him by plaintiff‘s witnesses with respect to his purpose in opening the account in his name as trustee for his daughter. As to such purpose he testified as follows:
“Q. How did you handle this account, Mr. Heimann? A. I handled that account just like I handled the M. A. Heimann Manufacturing Company account. I gave Mr. Judlin instructions to draw any money from my child and I would replace it back from the private account to the Manufacturing Company account, and there was other large moneys drawn out of this account, for payrolls, for loans, for wages, for real estate loans, insurance, taxes, was paid out of this checking account.
“Q. Now, then, what other reason did you have? A. Well, I have reasons; so that I would have money enough in that account book to take care of my business.
“Q. Yes? A. To take care of my girl‘s education and her maintenance, so I could have money if I borrowed on real estate; if I could spare any money out of the M. A. Heimann Manufacturing Company I wanted it to go into that account.
“Q. Well, now, will you tell me whether you know of any reason why you couldn‘t have done all of that without using the word ‘trustee’ and without using the girl‘s name, if you simply put the account in your in-
“Q. That was your reason now, because she was your only friend? A. Yes.
“Q. So you thought you could use her name? A. Yes, I didn‘t expect she would bring suit against me now, and Mr. Judlin.”
Other evidentiary matters will be referred to in the course of the opinion.
The trial court found the issues for plaintiff and rendered judgment in accordance with such finding. The case comes here on defendant‘s appeal.
I. It is not open to question but that a completely executed voluntary trust will be enforced. [Rollestone v. National Bank of Commerce, 299 Mo. 57; Harding v. St. Louis Union Trust Co., 276 Mo. 136; Northrip v. Burge, 255 Mo. 641; Harris Banking Co. v. Miller, 190 Mo. 640; In re Estate of Soulard, 141 Mo. 642.] It is likewise well settled that such a trust is irrevocable, unless the power of revocation be reserved. [Stephens v. Moore, 249 S. W. 601, 603.] The essential question in this case, however, is with respect to the intention of defendant in voluntarily making deposits of his own money in bank to the credit of himself as trustee for plaintiff. Did he intend thereby to clothe her with the full beneficial ownership of the funds and divest himself of all right to participate therein? Unless he did so intend, he did not create an irrevocable trust. In order to determine what defendant‘s intention was it is necessary to consider what he did as well as what he said. [Hemmerich v. Union Dime Savings Inst., 205 N. Y. 366; In Matter of Barefield, 177 N. Y. 387; Rambo v. Pile, 220 Pa. St. 235; Tygard v. McComb, 54 Mo. App. 85; Ambrosius v. Ambrosius, 239 Fed. 473.] It will thus appear that while through the entries on the bank‘s books he was declaring himself trustee for his daughter as to the deposits he was making, he was at the same time handling, using and in all respects treating the funds deposited just as though they
There are certain general considerations that have a bearing on defendant‘s intention. At the time he opened the account at the bank in the name of himself as trustee for his daughter his income and possessions were by no means large. Apparently he owned but one piece of real estate, his home, and that was mortgaged for $3500, which he afterward increased to $6000, depositing the proceeds of the increase of the loan in the trustee‘s account; he owned the factory which he subsequently sold for $15,000 on time payments; but neither at that time nor afterward were its earnings sufficient to pay $25 a week over and above operating costs and the living expenses of himself and daughter; and he was in debt to the State National Bank to the extent of from $6000 to $8000. Under these circumstances it is extremely improbable that he meant to divest himself of the title to the bank deposits of $25 a week; by so doing he would not only have deprived himself of all income above a bare living, but he would have irretrievably crippled his business.
II. Viewed from another angle it is clear that the evidence did not warrant the decree nisi. If the statements attributed to defendant by plaintiff‘s witnesses be given full effect according to their import, they do not evidence an executed trust. At the time defendant opened the account he told Stadler, the cashier of the bank, that he wanted to build up a fund for his infant daughter; he said to Judlin that he wanted to give her something in later years as a nest egg; he told plaintiff, “I am putting this money away for you as a nest egg.” He said to Merz that he opened the account so that Melba would have a fund for the future. These and many other declarations of a similar character were made with reference, not to single or specific deposits, but to a fund to be accumulated. At the times such declarations were made the proposed fund was either wholly in futuro, or else in the mere process of accumula-
The judgment of the trial court is reversed.
All concur, except Woodson, J., who dissents.
PER CURIAM: ---The foregoing opinion by Ragland, J., in Division One is hereby adopted as the opinion of Court in Banc. All concur, except Woodson, C. J., who dissents.
Headnotes 1 to 4: Trusts, 39 Cyc. 92, 68, 70, 69.