267 Mass. 28 | Mass. | 1929
These are two bills in equity brought by the administrator of the insolvent estate of George Burroughs, deceased, against the defendant trust companies, for an accounting of certain securities, or of the proceeds from a sale thereof, which Burroughs had pledged with them as collateral in substitution for other securities held by them as collateral, and to have them, or the proceeds of them, applied to the payment of loans made by the trust companies to the deceased, and the surplus turned over to the estate. All parties claiming any interest in the collateral were joined as parties defendant. All the defendants filed answers, and several filed cross bills making claim to portions of the collateral or to the proceeds thereof. All but the Bradley claimants admit priority rights in the trust companies, but they all deny any right in the administrator of the Burroughs estate or in other personal defendants to receive the surplus of the collateral. The Bradley claimants seek to recover the proceeds of the sale of certain specific securities from the State Street Trust Company. By stipulation all the securities have been sold and the proceeds held in the form of treasurer’s checks. The cases were consolidated and referred to a master who filed a single report. No objections were filed to the report and an interlocutory decree was entered confirming it. A final decree in the case of the State Street Trust Company dismissed all cross bills except that of Augustus P. Boring, Jr. and Moses Williams, executors, and provided for the payment fco them of the surplus after the satisfaction of the claim of the company against Burroughs. A final decree, in the case of the Old Colony Trust Company, dismissed all cross bills
The facts taken from the master’s report in substance are as follows: George Burroughs, the plaintiff’s intestate, was killed on July 23, 1925. The administrator was appointed and duly qualified on August 11, 1925. The estate is insolvent and has been so represented in the Probate Court. For some years before his death Burroughs carried on business under the name of Burroughs & Company. He had no partner and his business consisted for the most part in dealing in the stocks of trusts and corporations organized to hold real estate. His dealings took this form: he would find a customer who wished to buy or sell a particular real estate stock at a given price; he would then hunt for one who was ready to buy at a higher price or sell at a lower, as the case might be, making his profit from the difference and receiving no commission. He conducted almost all the business of buying and selling real estate stocks that was done in the city of Boston. In all the transactions hereinafter referred to he was represented by a man named Hastings, who worked on a commission basis, receiving a percentage of the profits. Burroughs’s financial standing was such that prudent persons who sold him stocks would deliver to him transferable certificates and wait patiently for their, money, and those who bought stocks from him would pay" him the purchase price and wait patiently for the delivery of their certificates.
In the meantime Burroughs borrowed money from the State Street Trust Company and from the Old Colony Trust Company, and pledged with each as security various real estate shares and stocks which he had obtained from cuSt
Six shares of Chicago Real Estate Trust pledged by Burroughs with the State Street Trust Company were claimed by Roland Gray, executor, and Richards M. Bradley, who says he- bought all six of these shares acting as undisclosed agent for Amy Suter and others who are named as plaintiffs in the cross bill filed in the suit numbered 47,857 Eq. Gray filed a cross bill claiming the shares; his bill was dismissed. He has not appealed from the final decree and his claim is not now considered. Regarding these shares of stock the master, in substance, finds that on June 10,1925, Gray agreed with Hastings upon the price per share for which Gray would sell the five shares he had. Gray delivered the certificate of these shares indorsed by him in blank to Hastings who gave a receipt therefor “To be accounted for.” On June 11, 1925, Burroughs sent Gray a statement of the transaction and bought another share from Parkinson & Burr. On June 12, 1925, Burroughs sent the certificates and a certified copy of the will of Susan Greene Dexter and a certificate of Gray’s appointment as executor thereunder, to the Chicago Title and Trust Company with directions to the transfer office to transfer the shares into the name of Burroughs & Company. This Burroughs did without the knowledge or authority of Bradley or of Bradley’s undisclosed principals. On June 22, 1925, the shares were transferred in accordance with Burroughs’s directions and on June 26 he received from Chicago two new certificates, one for five shares, the other for one share, and both in the name of Burroughs & Company. On June 30, 1925, Burroughs pledged these certificates with the State Street Trust Company. He never paid Gray for the five shares obtained from him.
It appears by the declaration of trust of the Chicago Real Estate Trust, a copy of which is appended to the master’s report, that the interest of the beneficiaries shall be represented by transferable receipts, called by the master certificates, and that all property held by the trustees at the termination of the trust shall be sold and the proceeds divided among the “receipt-holders”; it further appears that the trustees may create a contingent fund or sinking fund in interest-bearing securities. The master finds that the greater part of the property in the trust was real estate but the trust owned about $500,000 in personal property. Under the agreement, the trust included real and personal property in
In case the entries in the book do not show an intent to pass title to the unascertained shares at some time after their receipt by Burroughs on June 11, and before they were sent to Chicago on June 12, the Bradley claimants contend that there was an appropriation and passing of title on June 20, by reason of the declaration that they were in the possession of Burroughs ready for delivery. As a fact the certificates on June 20 were in Chicago with instructions to put them in Burroughs’s name. The master finds that what Hastings told Bradley’s agent, Gifford, on June 20 about having the certificates ready for transfer was true in the sense that Burroughs had obtained transferable certificates, but that physically the certificates were in Chicago. The conversation on June 20, 1925, did not show a present intent on the part of Burroughs to appropriate the particular stock when received from Chicago to the order of Bradley; indeed the whole evidence shows an intent not to appropriate the stock to the order of Bradley, which is not overcome by the fact that Bradley paid Burroughs in the belief that the title to the stock was to be immediately transferred to him. Coolidge v. Old Colony Trust Company, supra.
Assuming a finding by this court that there was no appropriation of shares to the order of the Bradley claimants, they contend that title by estoppel passed to Bradley or to his undisclosed principals, óiting Williston on Sales (2d ed.) § 131. There is no doubt that such a contention would have force if the controversy were between Burroughs and Bradley. The rule applicable to sales of personal property in the circumstances here disclosed is stated in Lanfear v. Sumner, 17 Mass. 110, 113, as follows: '' The general rule is perfectly well established, that the delivery of possession is necessary in a conveyance of personal chattels, as against every one but the vendor. When the same goods are sold to two different persons, by conveyances equally valid, he who first lawfully acquires the possession, will hold them against the other.” The “delivery required by the rule ... is delivery in its natural sense, that is, a change of possession.” Hallgarten v. Oldham,
None of the other personal defendants claim priority over either trust company. They do claim priority over the Burroughs estate and over each other. The final decree in each case directed the defendant trust company to pay to Boring and Williams, executors, an amount not exceeding the proceeds of five shares of the Boston Real Estate Trust out of the proceeds of collateral remaining after satisfying Burroughs’s debt and the trust company’s expenses in litigation to protect the collateral. Boring and Williams owned thirty shares of the Boston Real Estate Trust in the form of a single certificate in the name of their testatrix, Ellen S. Bacon. They wanted to sell these shares and, having named a price they would take for the whole or part, on June 10,1925, delivered the certificate to Burroughs’s agent, Hastings, with a signed power to transfer and the necessary probate certificates to show their authority so to do. Burroughs & Company merely receipted for the same. The master found that Burroughs in the transaction acted as a dealer, not as a broker, and that “It was understood that if he found a buyer or buyers at prices which would yield him a satisfactory profit, then he, personally, would buy from the executors at the price named by them and would notify them to that effect. Until such notice was given no sale to Burroughs was intended. He was simply entrusted with the transferable certificate in order that he might split it up into
On June 8, 1925, Burroughs agreed with one Brewster, acting as agent for Elizabeth W. Emmons, one of the defendants, to sell twenty shares of the Boston Real Estate stock and the purchase price was paid by Brewster on June 11, 1925. On June 8 Burroughs had no Boston Real Estate Trust shares. He “got the transferable certificate from Boring without making any absolute agreement to buy the whole or any part of the thirty shares and without saying anything about his having already sold twenty shares to Miss Emmons. Burroughs immediately got the stock transferred into the name of Burroughs & Company, taking six new certificates for five shares each.” On June 13 he pledged ten shares represented by two certificates with the State Street Trust Company and five shares (one certificate) with the Old Colony Trust Company. On June 15 Burroughs pledged five shares (one certificate) with the State Street Trust Company and ten shares (two certificates) with the Old Colony Trust Company. On June 19 he bought twenty shares of the executors of Ellen S. Bacon and paid them $18,844.78 or a little over $940 a share. Burroughs never bought of the executors or paid them for any more shares and never delivered any shares to Mr. Brewster for Miss Emmons, or to Miss Emmons. On these facts the executors contend that no title to the thirty shares which they delivered to Burroughs passed to him at the time of delivery; and that if he got a good legal title when he had them transferred into his own name he held them on an implied trust. They admit he got a good title, legal and equitable, to twenty of the shares when he bought and paid for them on June 19, but contend, as between Burroughs and themselves, that they continued to be and are now the owners of the remaining ten shares.
Miss Emmons claims twenty shares of the thirty pledged as her property, in law and in equity, subject only to the prior claims of the two banks on their respective notes. She contends that legal title to twenty of these shares passed to her forthwith upon their acquisition by Burroughs from Lor
The only further collateral in the hands and possession of the State Street Trust Company now in dispute is thirty shares of The Commercial Wharf Company, a Massachusetts corporation, whose shares are seldom dealt in and whose stock cannot readily be obtained by one who wants to buy, or be disposed of by one who wants to sell. This stock or the proceeds thereof is claimed by E. Sohier Welch. The facts in respect thereto, as found by the master, are in substance as follows: On June 11, 1925, Burroughs bought of Loring and Williams, executors, one hundred shares of the stock and paid them therefor. He had the shares transferred immediately into the name of Burroughs & Company, getting three certificates for fifty shares, thirty shares, and twenty shares, respectively. On June 13 he pledged the fifty shares with the Old Colony Trust Company, and the thirty shares with the State Street Trust Company. On June 4, before he had made any actual purchase of this stock, he agreed to sell eighty shares to Welch and twenty shares to one Smith, and sent each a “Sold” note. Smith paid for his twenty shares on June 5 and got them on June 16, after they had been transferred into the names of five appointees. Welch paid for his eighty shares the whole purchase price of $17,440 on June 10. “Shortly before this Welch had given Burroughs directions, which Burroughs entered in his book, in respect to the persons in whose names the certificates were to be issued and the number of shares each was to receive . . . and Burroughs sent Welch a memorandum of these directions to show that he (Burroughs) had received and understood them. Burroughs did not have sufficient funds on deposit to pay-for the eighty shares which he bought from the Bacon estate in order to satisfy his contract with Welch until he got the $17,440 from Welch.” Burroughs’s office made false statements to inquiries of Welch in respect to the whereabouts of the shares which Welch had bought and paid for, and Burroughs died
Welch also claims seventy-five shares of Factory Building Trust as against the administrator, but admits the priority of the lien of the Old Colony Trust Company, which held them as collateral for notes of Burroughs at the time of his death. The master finds that “This case is on all fours with the Commercial Wharf shares case except that the Factory Building Trust is not a corporation.” The contentions of Welch are that the contract in each of these transactions was one for the sale of future goods, G. L. c. 106, § 65 (1), Willis-ton on Sales (2d ed.), § 137; that future goods must be appropriated to the contract in order to pass title to the buyer, G. L. c. 106, § 21, Rule 4 (1); that there was an appropriation and that Welch assented to it. He also contends that he is entitled to specific performance of his contracts for these shares, if no actual sales are found. It is sufficient to say that what has been said in connection with the Bradley claimants respecting the acquisition of title to the shares claimed by them applies with equal force here. There was no appropriation of the stock to the contracts in question and the legal title remained in' Burroughs. Whatever Welch’s right to specific performance may be he cannot prevail over Loring and Williams in respect to the balance remaining in the hands of the State Street Trust Company, they having retained legal title to the shares claimed by them.
The defendant Joseph Morrill and other trustees under the will of George S. Baldwin claim four shares of Boylston Market Association. These shares were pledged by Burroughs with the Old Colony Trust Company. Burroughs, on June 8, 1925, bought of the Old Colony Trust Company four shares of The Boylston Market Association, standing in the name of one Scofield, for the purpose of transferring them to these defendants in fulfilment of a contract which he had made with them three days before. He received payment for them on June 8 or 9, and entered in his book the names of the defendants as the persons to whom “these four shares
After the claims of the Old Colony Trust Company and of Loring and Williams are paid, there remains a balance which the single justice of this court ordered to be paid to Burroughs’s administrator. Miss Emmons, Morrill and Welch contend to be entitled in priority to Burroughs’s administrator. It is clear that no trust relation existed between those claimants and Burroughs. Coolidge v. Old Colony Trust Co., supra, at page 522. The master found in substance as to each kind of stock which was bought and paid for by these claimants that it was not readily obtainable in the market and that it was rarely that it was sold. Had Burroughs not died the claimants would have been entitled to specific performance of their contracts, subject to his pledge to the Old Colony Trust Company. Adams v. Messinger, 147
The master states that the trust companies hold the proceeds of sales of the shares in lieu of the shares themselves, with the consent of the claimants and on the understanding that “it should be without prejudice, the proceeds to be held by the trust company in lieu of the shares themselves.” This being so, all parties having been heard, it follows that the decree in the case of Goodhue v. Old Colony Trust Company should be modified and the balance which was ordered to be distributed to Burroughs’s administrator should be distributed pro rata to the claimants Elizabeth W. Emmons, Joseph Morrill and others, trustees, and E. Sohier Welch, in the proportion in which the shares claimed by them or the proceeds thereof are in the hands of the Old Colony Trust Company. As thus modified the interlocutory and final decrees are affirmed. In the case entitled Goodhue v. State Street Trust Company, the interlocutory and final decrees are affirmed with costs, subject to such changes in the amounts to be retained by the State Street Trust Company and to be paid to Augustus P. Loring, Jr. and Moses Williams, executors under the will of Ellen S. Bacon as may be determined by a single justice of this court in the allowance
Decrees accordingly.