129 A. 805 | R.I. | 1925
This is a bill in equity brought by Charlotte R. Hatton, individually and as executrix of the will of Charles N. Howard, to compel restitution of shares of stock which were standing in the name of said Charles N. Howard at the time of his decease. The cause is before us on the complainant's appeal from a decree of the Superior Court *49 dismissing the bill and requiring the complainant to account to the respondent company, in accordance with the prayer of the cross bill, for dividends received on said stock by the complainant in her said capacity as executrix.
Charles N. Howard, in his lifetime, was the principal stockholder and directed the affairs of the Howard Braiding Company. He established the enterprise and for several years owned all of the stock in the corporation, except a few shares held by the complainant and a few other shares held by respondent Charles H. Remington. On September 27, 1910, said Howard deceased. He left a will by which he gave his estate in equal shares to his nephew and niece, said Remington and the complainant. The complainant was appointed executrix of the will and as executrix, after paying the testator's debts, divided between her brother, said Remington, and herself individually the remainder of the assets, including the stock in the Braiding Company, which came into her actual possession. Soon after her appointment as executrix she learned that five shares of stock in the Standard Oil Company of New Jersey stood on the books of said company in the name of said Howard, the testator. The certificate representing said five shares was held by a bank as collateral to secure a loan to the Howard Braiding Company. Before the loan was paid an order of dissolution was entered by a Federal court against said oil company and as a result of said order the bank which held said five shares as collateral received in lieu thereof a number of shares in the various companies which had formerly been merged into the Standard Oil trust. The new shares were issued to the estate of Charles N. Howard and indorsed in blank by the complainant as executrix and were held by said bank as collateral for succeeding loans until July, 1923, when the treasurer of the Braiding Company paid the final loan, received all of said shares of stock held as collateral and caused them to be transferred to the Howard Braiding Company upon the books of their respective companies. The complainant is seeking to recover said stock and the *50 cash and stocks dividends on the same which have been received by the Braiding Company.
From the death of the testator on September 27, 1910, until July, 1923, when the stock was transferred to the Howard Braiding Company, all dividends on said five shares and on the shares issued to said estate as a result of said order of dissolution were received by the complainant as executrix of the will of said Howard. Having no reason for suspecting that said stock was not a part of the testator's estate, she, as executrix, divided all of said dividends between herself and her brother. From September 17, 1906, until December 31, 1916, said five shares were carried on the books of the Braiding Company as assets of the corporation and included in each financial statement. On the latter date Mr. Johnson, the new treasurer of said company, having been told by the bookkeeper and also by Mrs. Pearl M.T. Remington, wife of said Charles H. Remington, who was at that time a stockholder and director in the Braiding Company, that said shares were not owned by the corporation but were a part of the estate of said Charles N. Howard, directed that said stock be written off of the books of the corporation, which was done, and the stock was no longer included as an item in the financial statements of the company. Sometime in the year 1922 the books of the Braiding Company were audited. As a result of the audit the new treasurer discovered evidence which convinced him that the stock in question was owned by the Braiding Company and not by the estate of said Howard, and he thereafter obtained possession of the stock by paying the loan for which the stock was collateral.
It appears that on September 17, 1906, said five shares were owned by said Charles H. Remington and that on said date he sold said shares for $3,020, the market value at that time; that the purchase price was paid to Remington by the Braiding Company and that the stock, instead of being transferred to said company, was transferred to said Charles N. Howard. To obtain a part of the purchase price of the *51 stock the Braiding Company's note, secured by said stock, was discounted at a bank. It appears from the books of the Braiding Company that all dividends on said five shares received by said Howard from September 17, 1906, the date of sale, until his death were by him turned over to the Braiding Company. The books of said company contain in the handwriting of said Charles H. Remington and said Howard entries showing that the Braiding Company paid to Remington the full purchase price for said stock and that the transaction was a sale to the Braiding Company.
The trial court found that the Braiding Company paid for said five shares of stock and became the equitable owner thereof at the time of the purchase, September 17, 1906, when the transfer was made to Charles N. Howard, and the evidence supports this finding.
The complainant contends that the respondent company is now barred by laches and estoppel from asserting ownership to the stock. Laches in legal significance is not mere delay, but delay that works a disadvantage to another. Chase v. Chase,
We will next consider the complainant's standing as an individual. If the complainant in her individual capacity is entitled to no relief she has suffered a very substantial loss by reason of relying upon the Braiding Company's representations that it did not own the stock. It was stated in argument and not contradicted that the value of said stock is approximately $18,000. Mrs. Hatton, the complainant, owned forty-three per cent of the stock of the Howard Braiding Company and on or about April 1, 1920, sold all of of said stock to the Howard Braiding Company for $10,000. In fixing a price for said stock, the seller and purchaser both acted on the assumption that the stock in question was not an asset of the Howard Braiding Company. If said stock was at the time of the sale an asset of the Howard Braiding Company the intrinsic value of Mrs. Hatton's stock in said company was greater, to the extent of forty-three per cent of the value of the stock in question, than the value of her stock in the Braiding Company would have been if the stock in question was not an asset of the Howard Braiding Company.
It is not contended that the officers of the Braiding Company were guilty of actual fraud in purchasing Mrs. Hatton's stock in said company but the result to her is the same as it would have been if the said officers had intended to practice deceit. Relief is not always dependent upon ability to prove deceit. Many of the various species of estoppel have been frequently applied where there was not only no intention to deceive but no intention to induce anyone to act. Judge STORRS in Preston v. Mann et al., 25 Conn. at 128, states as follows: "In Connecticut, and in fact in the courts of this country, and of England generally, the proposition of Lord Denman, (Pickard v. Sears, 6 Adol. El., 469,) seems to have met with approbation. `Where one by his words or conduct wilfully causes another to believe in the existence of a certain state of things, and induces him to act on that belief so as to alter his own previous position, the former is concluded from averring *53 against the latter a different state of things, as existing at the same time.' The word `wilfully', as used in this connection, is not to be taken in the limited sense of the termmaliciously, or of the term fraudulently; nor does it of necessity imply an active desire to produce a particular impression, or to induce a particular line of conduct Whatever the motive may be, if one so acts or speaks, that the natural consequence of his words and conduct will be to influence another to change his condition, he is legally chargeable with an intent, a wilfull design, to induce the other to believe him, and to act upon that belief, if such proves to be the actual result. It is enough that `a reasonable man in the situation of the other would believe that it was meant that he should act upon it.'"
It is contended by the Braiding Company that it acted in ignorance of the fact that the Company owned said five shares, and that said company ought not to be estopped because of representations or conduct based upon such mistake of fact. InCurtis v. Connly,
When the owner of money or other personal property pays, delivers or abandons the same to another under a mutual mistake of fact that the person to whom the payment, delivery or abandonment is made is the owner, there can be no recovery when the payment, delivery or abandonment has caused such a change in the position of the person receiving that it would be unjust to require him to make restitution. Equitable estoppel forbids the owner to set up his title because he has so conducted himself that an assertion of his title is contrary to equity and good conscience. 21 R.C.L. p. 170; Jones v. Subera et al., 25 So. Dak. 223; Pool v. Harrison,
Of course, if the complainant knew that the stock in question was the property of the Braiding Company relief should be denied. See Phetteplace v. Bucklin,
It appears that said company would have been barred by equitable estoppel from maintaining a suit to recover that which we have termed Mrs. Hatton's half of the stock in question. After wrongfully obtaining possession of the stock said company is in no better position to maintain its title.
Having found that the complainant as executrix cannot maintain the bill because the mistake has caused her no harm in her representative capacity and that the Braiding Company should be estopped from asserting its title against the complainant in her individual capacity, the question arises whether a legatee can, under these circumstances, maintain in her own name a bill to recover property which the executrix lost long after it should have been delivered to the legatee. 23 C.J. 1193 contains the following statement: "While the personal representative is the proper person to proceed for the recovery of assets of the estate, it is held that the beneficiary may prosecute claims where the personal representative cannot or will not act". See also 23 C.J. 1001 and cases cited under notes 54 and 55. Suit is frequently brought by and in the name of a legatee in cases where the executor has misapplied the funds of the estate. See Trull
v. Trull, 13 Allen 407. In some cases the suit has *57
been brought by the legatee in the name of the executor but where it appears that the executor has no standing to recover the property; that the debts have been paid; that the legatee is entitled to the whole of the property recovered and that it would be the duty of the executor if he had recovered the property to immediately turn it over to the legatee, there appears to be no reason why the suit should not be brought by the legatee in his own name. The complainant was appointed executrix November 24, 1910. It appears that she, within a reasonable time after her appointment, distributed all assets of the estate, not required for the payment of debts and the expenses of administration, except the dividends which she thereafter received on the stock in question and that for many years thereafter she continued to distribute as assets the dividends on said stock. Under these circumstances there being no proof of any debts outstanding against the estate it will be presumed that there are none. SeeMatter of Van Kleeck,
We hold that the bill may be maintained by the complainant individually and that she, in her individual capacity is entitled to a decree requiring the Howard Braiding Company to deliver up to her properly indorsed one-half of the stock in question and to account to her, in her said capacity, for one half of all cash and stock dividends — including rights sold or exercised — received on the stock in question.
We will now consider the cross bill. The state of facts which estopped the Braiding Company from asserting its title to Mrs. Hatton's half of the stock in question, also estoppes said company from asserting title to the dividends which she received on her half of said stock. Whether estoppes will prevent a recovery of the dividends which she as executrix distributed to Charles H. Remington depends upon the answer to the question whether the payment of the dividends to him has so altered her position that it will be inequitable to require her to account for said dividends to the Braiding Company. *58
The burden is upon a person, who has under a mistake of fact received money which was not due him, to prove that it will be inequitable to require restitution — see Phetteplace v.Bucklin,
We think that Mrs. Hatton's position has been inalterably changed for the worse and that the Braiding Company is estopped to assert title to the dividends which, in distribution, she paid to Charles H. Remington, the other legatee. See Boas v.Updegrove, 5 Pa. St. 516.
The appeal is sustained and the decree appealed from is reversed. The parties may on July 6, 1925, present for our approval a form of decree in accordance herewith to be entered in the Superior Court. *60