Opinion
14237.
SEPTEMBER 21, 1942. ADHERED TO ON REHEARING, NOVEMBER 10, 1942.
Interpleader. Before Judge Upson. Clarke superior court. May 9, 1942.
Erwin Nix and Thad L. Bynum, for plaintiff in error.
James W. Arnold, Rupert A. Brown, and Preston Almand, contra.
1. A petition for interpleader, by a holder of funds or property, will lie when there are two or more conflicting claims thereto of such a character as to render it doubtful or dangerous for the holder to act, under close disputed questions of fact or debatable questions of law which have not been adjudicated by the courts. As against general demurrer, the averments showed a proper petition. The overruling of such a demurrer of one claimant merely determines the right of the stakeholder to maintain his petition, and does not establish the superiority of the other claim as the law of the case.
2. To constitute a valid gift, there must be: (a) an intention by the donor to transfer to the donee an immediate present interest, and not a mere future interest, or to make a testamentary gift; (b) an acceptance by the donee, which, if the gift is of substantial benefit, will be presumed; (c) either an actual or constructive delivery of the article or chose in action by a transfer of its dominion to the donee, or by a writing, based upon a good consideration, delivered to the donee or to a trustee to hold for him; and (d) in an alleged gift by a writing founded on a good consideration, such consideration must either be based on love and affection toward a near relative by consanguinity or affinity or one to whom a natural duty exists, or be based on a strong moral obligation arising from some antecedent legal obligation, although then unenforceable, or from some present equitable duty.
3. A gift causa mortis is one made during a last illness or in peril of death, and carries an immediate though revocable contingent interest in the property, as distinguished from absolute title. The full title is intended to pass only in case of death. As a consequence of this condition affixed by law, the gift is automatically revoked by the recovery or escape of the donor from the illness or peril, and is revocable at the option of the donor during his lifetime. Otherwise gifts causa mortis are subject to the rules governing gifts inter vivos.
( a) The technical rule governing gifts by check, draft, or a written assignment of funds held by a third person, which may in some cases differ from the rule governing ordinary personalty, and which generally requires payment or acceptance of the instrument by the holder of the fund before the gift attaches, is met, in a case of assignment, by a delivery of the writing to and its retention by the holder of the fund, thus recognizing his liability to the donee under the assignment.
( b) Such a delivery of a gift causa mortis to a third person as trustee for the donee not only complies with the rule governing gifts by check, draft, or written assignment of funds in the hands of a third person, but dispenses with a receipt of the gift by the donee himself before the donor's death. In the absence of controverting circumstances, the person to whom such a delivery is made will be presumed to take as trustee for the donee, and not as mere agent for the donor.
4. Although the representative of the donor's estate may hold the donee of a gift causa mortis liable for such portion of the gift as may be necessary to pay debts, if other assets are insufficient, the burden of proving such a deficiency rests on the representative of the estate, since at the death of the donor title to the gift vests in the donee, rather than in the executor or administrator, and the representative has no right to possess or administer the gift unless such a contingency is shown to exist.
5. Applying the preceding rules to the undisputed evidence relating to the alleged gift causa mortis, the court erred in directing the verdict, against the validity of the gift, in favor of the claimant administratrix, and in refusing a new trial to the donee.
No. 14237. SEPTEMBER 21, 1942. ADHERED TO ON REHEARING, NOVEMBER 10, 1942.
H. P. Williams, a brother of John M. Williams, who died on March 26, 1941, filed a petition for interpleader against the widow, Mrs. Annie Camp Williams, as administratrix of the estate, and R. E. Cannon, husband of a daughter of decedent by a former marriage. It was alleged that decedent had "on deposit [with petitioner] prior to" and at the death of decedent "a sum of money in the amount of $3091.93, which said money was left there by" decedent; that on March 19, 1941, decedent left with petitioner a letter, instructing him to turn said money over to Cannon after decedent's death; that Cannon claimed this money as a gift, and had notified petitioner to pay it to no one else; that the administratrix also had notified him that she was entitled to the fund for administration; that petitioner holds it in trust simply as a stakeholder, can not safely pay it to either party, as it is dangerous for him to act "until the respective rights of said parties have been determined;" and he prays for such a determination.
The letter, addressed to petitioner, signed by decedent, and witnessed by a notary public with a seal, was as follows:
"Dear Paul: In case of death this letter is to instruct you to turn over any balance I may have with you to R. E. Cannon for disposal, except profit in 33 B/C of which I have sold to you as delivered, being farm cotton of Mrs. J. M. Williams Ex., and profit of 33 B/C of which I have placed in July N. O., which you have placed in N. O., and is same profit mentioned first above. Any open business to be closed out on first market day after my death."
Mrs. Williams, the widow, as administratrix, demurred generally to this petition, on the grounds, that it stated no cause for equitable relief; that the allegations did not show the nature, character, and foundation of the claims sufficiently to determine whether an interpleader was necessary; and that the allegations did not show "the conflicting claims of the defendants [to be] of such character as to render it doubtful or dangerous for the plaintiff to act." There was a special demurrer to particular paragraphs. No exception was taken to an order overruling the demurrers. The administratrix filed an answer, setting up that the letter was "a mere direction to petitioner," which "was revoked" by decedent's death; that the letter gave to Cannon no right to the fund; and that she is the owner. Cannon filed an answer, setting forth that he, as a mortician, had furnished all funeral supplies at the death of decedent's first wife, on March 3, 1935, amounting to $600, for which he had never been paid; that, as all parties contemplated, he was requested to furnish and actually furnished the funeral supplies at the death of decedent, amounting to $662; and that he had paid additional doctors' and nurses' bills after decedent's death, in the sum of $99.42, as decedent "comtemplated he would do and expected this respondent to do."
The judge directed a verdict for the administratrix, and entered a decree that petitioner pay to her the $3091.93 in question, and that Cannon, the son-in-law, had no title therein. The court denied a new trial on motion based on the general grounds, and the special ground that it was error to direct a verdict for the administratrix, because there was no exception to the overruling of her demurrer to the petition, and that judgment became the law of the case; and because the averments of the petition and Cannon's answer were proved by uncontroverted evidence, which showed a valid gift in contemplation of death.
H. P. Williams, decedent's brother, a cotton merchant in Athens, testified: that on the morning of March 19, 1941, just before decedent went to a hospital for an operation (after which he died on March 26), and just as the brother was about to leave the city, the decedent came down to see the brother, and told him: "You know I have always told you to turn any balance here over to R. E. Cannon" (decedent's son-in-law, a resident of Rabun County), as decedent had previously requested; that decedent stated as "the reason why he wanted me to give this money to . . Cannon was that he buried his first wife, and he said, "I guess he will bury me,'" which in fact Cannon had done and had paid other bills after decedent's death, "a few days after the operation;" that Cannon had also previously helped decedent financially; that decedent said he could not live like he was, and was going to the hospital to have an operation, and left the quoted letter with the brother; that the $3091.93 was all that decedent left with the witness; that the money for the 33 bales, mentioned in the letter, belonged to Mrs. Williams, the widow, for which the brother's check for $165 had been given to her, but had not been cashed; and that "this has nothing to do with this amount involved here — it is not a part of this $3091 under that letter instructing me to pay it to Cannon."
A. M. Wilson, a nephew of the decedent and of his brother, testified that he worked for the brother, and heard the conversation between him and decedent the morning before decedent went to the hospital, and heard decedent speak of the operation and say, "Turn over the balance I have over to R. E. Cannon . . I will write you a letter;" that decedent then dictated and signed the quoted letter, and, after it was witnessed, delivered it immediately to the brother.
R. E. Cannon testified that he had previously buried decedent's first wife and decedent, paid their funeral expenses and other bills for decedent, in the amounts stated in his answer, and had not been reimbursed therefor.
1. "Whenever a person shall be possessed of property or funds, or owe a debt or duty, to which more than one person shall lay claim of such a character as to render it doubtful or dangerous for the holder to act, he may apply to equity to compel the claimants to interplead." Code, § 37-1503. If the holder knows all the facts, and the questions of law, under repeated decisions of the courts, are not intricate or debatable, such a petition will not lie ( Lassiter v. Bank of Dawson, 191 Ga. 208, 11 S.E.2d 910); but it is not incumbent upon the holder "to decide at his peril either close questions of fact, or nice questions of law;" and in such a case he may require the parties at interest to set up their claims for determination. Knight v. Jackson, 156 Ga. 165, 168 ( 118 S.E. 661); Franklin v. Southern Ry. Co., 119 Ga. 855 ( 47 S.E. 344). This petition by a decedent's brother, to require the widow as administratrix of the estate and the decedent's son-in-law to set up their claims to a fund which was held by the petitioner for the decedent, and which the son-in-law claimed under an alleged gift causa mortis, but the validity of which alleged gift was disputed by the administratrix, showed conflicting claims of such doubt as to render proper the petition for interpleader; and the court did not err in overruling the demurrer by the administratrix. The overruling of this demurrer, which was to the effect that the petition did not show conflicting claims of such character as to render it doubtful or dangerous for the petitioner to act, did not establish the law of the case in favor of the son-in-law's claim, so as to render erroneous for that reason the direction of a verdict in favor of the administratrix; but the effect of such ruling was merely to adjudicate the right of the stakeholder to maintain his petition for interpleader.
2. "To constitute a valid gift, there shall be the intention to give by the donor, acceptance by the donee, and delivery of the article given or some act accepted by the law in lieu thereof." Code, § 48-101.
( a) The necessary "intention to give by the donor" means his intention to make a present gift of the property, that is to transfer some present immediate interest, as distinguished from a mere intention to give in the future, or from a gift testamentary in character. Bowen v. Holland, 182 Ga. 430 (2) ( 185 S.E. 720); Mims v. Ross, 12 Ga. 121; Culpepper v. Culpepper, 18 Ga. App. 182 (5) ( 89 S.E. 161); Moore v. Tiller (5th C. C. A.), 61 F.2d 478; 24 Am. Jur. 736, 738-740, §§ 13, 14, 21, and cit.
( b) "Acceptance by the donee" imports an actual acquiescence on his part, except that "if the donation shall be of substantial benefit, the law will presume the acceptance, unless the contrary shall be shown." Code, § 48-102.
( c) Except where the gift shall be evidenced by a written instrument which is itself delivered, the delivery required as to the article given may be either actual or constructive; and "Any act which shall indicate a renunciation of dominion by the donor, and the transfer of dominion to the donee, shall be a constructive delivery." Code, § 48-103. Where, however, the gift is evidenced in writing, an actual delivery of the property itself is not required, since the delivery of the writing dispenses with the delivery of the property, provided the writing is based upon a good consideration. Wyche v. Greene, 11 Ga. 159 (14), 177; Burney v. Ball, 24 Ga. 505 (3), 514; Jackson v. Gallagher, 128 Ga. 321, 329 ( 57 S.E. 750); Burt v. Andrews, 112 Ga. 465, 467 ( 37 S.E. 726); Trustees of Jesse Parker Williams Hospital v. Nisbet, 189 Ga. 807 ( c), 814 ( 7 S.E.2d 737); Young v. Locknit, 64 Ga. App. 438 ( 13 S.E.2d 525); Code, § 48-104; note in 63 A.L.R. 537, 558-560. If the gift in writing be not based upon a good consideration, it is a nudum pactum, and, in the absence of actual delivery of the property itself, remains ineffective.
( d) A good consideration is one founded either on love and affection toward one to whom a natural duty exists, such as near relatives by either consanguinity or affinity; or it may be based on a strong moral obligation supported either by some antecedent legal obligation, though unenforceable at the time, or by some present equitable duty. Davis v. Morgan, 117 Ga. 504, 506, 507 ( 43 S.E. 732, 61 L.R.A. 148, 97 Am. St. R. 171); Gray v. Hamil, 82 Ga. 375, 385 ( 10 S.E. 205, 6 L.R.A. 72); Monroe v. Martin, 137 Ga. 262, 263 ( 73 S.E. 341); McElven v. Sloan, 56 Ga. 208; Worth v. Daniel, 1 Ga. App. 15 (2), 17 ( 57 S.E. 898); McCowen v. McCord, 49 Ga. App. 358 (2) ( 175 S.E. 593); Code, § 20-303; Berry v. Berry, 83 W. Va. 763 ( 99 S.E. 79); Sapp v. Lifrand, 44 Ariz. 321 ( 36 P.2d 794, 796); 17 C. J. S. 438, § 91; 16 Am. Jur. 475, 476, § 61, and cit.; 18 Words Phrases, 472.
3. "A gift in contemplation of death (donatio causa mortis) must be made by a person during his last illness or in peril of death, must be intended to be absolute only in the event of death, and must be perfected by either actual or symbolical delivery. Such a gift, so evidenced, may be made of any personal property and proved by one or more witnesses." Code, § 48-201. The chief distinction between a gift inter vivos and a gift causa mortis is that a gift causa mortis, while immediately passing a revocable, contingent interest, must be intended to pass the absolute title only in the event of death. As a consequence, it is the general rule that a gift causa mortis may be revoked at any time during life at the option of the donor; and his recovery from the particular illness or escape from the peril, in contemplation of which the gift was made, will of itself operate as a revocation. 24 Am. Jur. 761, § 61, and cit.
( a) The rules governing intention by the donor to give, acceptance by the donee, and requiring or dispensing with delivery of a writing passing title in lieu of delivery of the property, apply alike to either class of gift. Burt v. Andrews, 112 Ga. 466 (supra); Southern Industrial Institute v. Marsh (5th C.C.A.), 15 F.2d 347, 349 (4, 5); Moore v. Tiller (5th C.C.A.), 61 F.2d 478, 479; 24 Am. Jur. 738, 742, 748, 753, §§ 21, 24, 30, 31, 40.
( b) In Basket v. Haskell, 107 U.S. 602, 615 ( 2 Sup. Ct. 415, 27 L. ed. 500), on which the administratrix especially relies, the owner of a certificate of deposit in a bank delivered to the alleged donee himself the certificate accompanied by a signed writing, "Pay to [the donee] not until my death." However, there was no acceptance by the bank of this assignment before the death of the donor; and since the technical rule governing checks, drafts, and assignments of funds on deposit with third persons is in some cases different from that governing the transfer of ordinary personalty, the United States Supreme Court held that the transaction was in effect no more than "a check upon the bank against the deposit, which, as is shown by all the authorities, . . can not be valid as a donatio causa mortis, even where it is payable in praesenti, unless paid or accepted while the donor is alive." But it was there expressly recognized that "if the banker accepts the check, or otherwise subjects himself to liability as trustee, prior to the death of the donor, the gift is complete and valid." This distinction, in case of an acceptance by the holder of the fund, was noted and discussed in Smith v. Eshelman, 235 Ala. 588 ( 180 So. 313, 316). In the instant case, the assignment can not be taken as invalid under the rule stated, since the writing was not delivered to the donee, as in the Basket decision, but to the holder of the fund himself, who by his receipt and retention of the writing accepted such assignment.
( c) In either a gift inter vivos or a gift causa mortis, although "a delivery . . to a third person as the agent of the donor is not sufficient," yet "a delivery to a third person in trust and for the benefit of the donee" will suffice; and in a gift causa mortis, "such delivery will be sufficient though the donor dies before the donee actually receives" the gift from the trustee. Sorrells v. Collins, 110 Ga. 518, 521 ( 36 S.E. 74); 24 Am.Jur. 747, 748, § 30, and cit. "The person to whom delivery is thus made will be presumed, in the absence of controverting circumstances, to take the property as the trustee of the intended donee, and not merely as the agent of the donor." Devol v. Dye, 123 Ind. 321 ( 24 N.E. 246, 7 L.R.A. 439, 441); Smith v. Eshelman, supra; In re White's Estate (Wash.), 225 P. 415, 417; Varley v. Sims, 100 Minn. 331 ( 111 N.W. 269, 8 L.R.A. (N.S.) 828, 830, 117 Am. St. R. 694); notes in 60 A.L.R. 1059, 3 A.L.R. 922, 926, and cit.; 28 C. J. 694, § 109.
4. There appears to be considerable conflict of authority as to whether the title in a gift causa mortis or merely a contingent revocable interest vests immediately upon delivery, subject to be defeated by a recovery from the illness or by a revocation of the gift; but the decisions with unanimity agree, that, even though the donee's title may remain inchoate without even conditionally vesting until the death of the donor, title vests in the donee upon the donor's death, subject only to defeat by reason of a deficiency of assets necessary to pay the debts of the deceased donor. Basket v. Haskell, 107 U.S. 609, 610, 616 (supra); Mitchell v. Pease, 61 Mass. (7 Cush.) 350, 353; 24 Am.Jur. 755, 756 §§ 46, 47). Although a gift causa mortis has been likened to a legacy, in that it is also "ambulatory and conditional," revocable until death, and contingently subject to the decedent's debts (Kiff v. Weaver, 94 N.C. 274, 55 Am. R. 601, 606), it nevertheless differs from a legacy, not only because such a gift must transfer some present title or interest, as distinguished from a gift testamentary in character, but because "no title whatever in [the] chattel descends to the executor or administrator" merely because of the decedent's death. The administrator "has no right to the possession of it" for the purpose of administration, and it is "not subject to any of the incidents of administration," save that the administrator may upon a proper showing cause the donee to account for the value of the chattel, provided there is no other sufficient estate to satisfy creditors. Michener v. Dale, 23 Pa. St. 59, 63, 64; Emery v. Clough, 63 N.H. 552 ( 4 A. 796, 56 Am. R. 543, 545), and cit.; Pierce v. Boston Savings Bank, 129 Mass. 425 (37 Am. R. 371, 374); 24 Am.Jur. 736, and cit. Even in such an event, "any residuum that may be left after payment of the donor's debts belongs to the donee, and not to the donor's estate." Wade v. Edwards, 23 Ga. App. 677, 682 ( 99 S.E. 160); Kiff v. Weaver, supra, and cit. It follows from what has been said that the mere existence of creditors will not avoid a gift if they can be paid from other assets, and that a gift causa mortis can not be defeated, provided the donor "retains enough to satisfy all subsisting claims against him," and commits no fraud against his creditors. Virgin v. Gaither, 42 Ill. 39, 40.
It will thus be seen that, under the general rule, the burden of proving an insufficiency of assets to pay outstanding debts of the estate falls on the administrator, who does not take title to the property upon the death of the donor. Seybold v. Grand Forks National Bank, 5 N. Dak. 460 ( 67 N.W. 682).
Under the pleadings and the proof in the instant case, it was error to direct the verdict in favor of the administratrix, for two reasons:
( a) The administratrix, in pleading a right "to have and administer" the amount of the alleged gift "in the payment of debts due by her intestate," in no wise set up any deficiency of other assets to satisfy such obligations, but stated as the only basis of this right that such money "belonged to [decedent] at the time of his death, and is an asset belonging to his estate," and that he had died "without having disposed of the same in any manner, by will or otherwise." The gist of this pleading, therefore, was, not that the gift was nullified by any lack of sufficient assets to pay debts, but that the title had remained in the decedent and passed to the administratrix because there had been no valid gift and no will.
( b) Even if the pleadings could be construed otherwise, so as to mean that it was necessary to recover the fund given, in order to pay debts of the estate, the only proof relating to debts and assets was that by the brother of the decedent, who was the petitioner, and his testimony failed to show that there would be a deficiency of assets, or that it would be necessary to use any portion of the $3091.93, constituting the alleged gift. His testimony was limited to statements that the amount of such alleged gift "is all the estate he had down there;" that "I don't know of any other estate that he had;" and that it is "true as far as I know . . he did not leave any estate," and "he owed plenty of debts." This testimony lacked the necessary positiveness and definiteness to show either the absence of other assets or a deficiency for the payment of debts. Nor did it appear, under the pleadings or the evidence, as to how much of the alleged gift would be necessary to pay creditors.
5. Applying the foregoing rules of law to the facts of the instant case, the alleged gift by the decedent, just before his death after an operation, to his son-in-law, by a signed letter delivered to the decedent's brother, a cotton broker, directing the brother "in case of death" of the decedent to turn over to the son-in-law "any balance" with the brother, except the profits from certain described cotton belonging to the decedent's wife, was a valid gift causa mortis; and in the contest for this fund between the son-in-law and the administratrix, under the bill of interpleader filed by the brother, it was error to direct the verdict for the administratrix. According to the undisputed evidence, the decedent at the time the written gift was made had in the keeping of his brother the specific sum of $3091.93, which fund has remained in the hands of the brother. The direction in the letter that "any open business . . be closed out on first market day after my death" did not and could not have had any reference to the definite, specific sum of money which the brother held for the decedent at the time the gift was made; and consequently such direction does not negative the donor's intention to relinquish his present interest in the fund, subject only to impending death. The expression in the writing transferring title to the trustee of the donee, which made the gift conditional on the donor's death, and which is but an expressed statement of this essential element of a gift causa mortis as distinguished from a gift inter vivos, did not render the writing testamentary in character. As was said by the Supreme Court of Alabama in Smith v. Eshelman, supra: "Such a gift . . is revoked by law if [the donor] gets well of the sickness with which he was then afflicted. But the revocable nature of the gift may as well be expressed as implied. . . So . . that a gift is made expressly to depend for its complete effectiveness upon such a failure to revoke expressly or by implication of law not only does not detract from it as such a gift, but that is only an expression of the existence of a quality of a gift causa mortis as defined by law." Whether express or not, such a condition is always implied under the very definition of a gift causa mortis, as generally recognized and as expressed in the Georgia Code, § 48-201.
Since the subject-matter of the gift was a chose in action, already in the hands of the brother, any delivery to him other than by a writing was impossible or impracticable. Not only was there a writing actually delivered to the brother, but the delivery to him in trust for the donee, who was a resident of a distant city, just before the decedent went to the hospital and the brother according to his plan was about to leave the city, was as valid a delivery as if it had been made directly to the donee. It thus appears that, even if the rule recognized in some jurisdictions, that an informal writing such as a letter or memorandum will not of itself pass title unless a manual delivery of the property itself is impossible or impracticable (24 Am.Jur. 751, § 36, and cit.), were applicable, which rule, though recognized in one Georgia case ( Singleton v. Cotton, 23 Ga. 261 (3), 266), seems out of line with other cited previous and subsequent decisions by this court, the result, even under such a rule, would nevertheless be the same, since a manual delivery of the chose in action to the son-in-law through the brother was otherwise impracticable.
With respect to debts of the estate, if, on a retrial of this case, the administratrix shall determine and shall allege and prove that there is a deficiency of other assets necessary to pay such debts, and what that deficiency is, she would be entitled to recover for the benefit of creditors so much of the amount of the gift as might be necessary, less such credit as the donee might be legally entitled to receive by virtue of his claim against the estate. However, if on a retrial of this case the administratrix is unable to determine and to allege and prove the amount of debts, that question may be held in abeyance, without any judgment of the trial court, sustaining the validity of the gift, operating as res judicata against the administratrix as to any future right to receive payment of the necessary amount under the rules stated.
Judgment reversed. All the Justices concur.