Summary
In Schippers v. Kemphes, 67 Atl. 1042, which is also a bank passbook case, with an account standing in the name of the alleged donor and donee, he reiterated this doctrine, but upon the facts, finding no donative purpose, refused to sustain the transaction as a gift, in which he was upheld by the Court of Appeals. 72 N.J.Eq. 948, 73 Atl. 1118.
Summary of this case from McCullough v. ForrestOpinion
11-30-1907
SCHIPPERS v. KEMPKES et al.
Robert E. Van Hovenberg, for complainant. Michael & Charles Dunn, for defendant Kempkes.
Action by Wilhemina Schippers, as executrix of Elizabeth Kempkes, against Rheinholdt Herman Kempkes and others. Decree for complainant.
See 67 Atl. 74.
Robert E. Van Hovenberg, for complainant. Michael & Charles Dunn, for defendant Kempkes.
STEVENSON, V. C. (orally). My conclusion in this case is that the complainant is entitled to a decree giving the fund to the estate.
The case is largely one of fact The testimony is quite voluminous. It would be impossible for me to state in an orderly way all the reasons based upon the evidence, which I examined very carefully since the argument, which have brought me to the conclusions that I have stated. The way in which this case is presented is somewhat peculiar. Turning to the bill, it appears that the complainant charges distinctly that the money in question, $1,811 on deposit in the Paterson Savings Institution at the time of the death of Mrs. Kempkes, the testatrix, was her money, but that it was deposited in the jointnames of herself and her son, the defendant Herman. The answer denies this allegation, denies that at the time of Mrs. Kempkes' death she had on deposit in the Paterson Savings Institution the sum of $1,811, and the answer alleges that the following are the facts concerning said money: "That at the time of the death of the said Elizabeth Kempkes there was an account in the said Paterson Savings Institution and the sum of $1,811 was deposited to the credit of the same, but that the said account was in the names of Elizabeth Kempkes or Herman Kempkes [meaning thereby the defendant], and the money thereon on deposit was the money of this defendant, and not the money of the said Elizabeth Kempkes, deceased." It seems to me that nothing could be plainer than the issue presented by these pleadings. There is nothing to suggest that the defendant claimed a gift. The complainant alleges in the bill that this money irrespective of the form of the account was the property of the testatrix, Mrs. Kempkes. The defendant joins issue on this allegation, and alleges that the money deposited in this form was his money, and was not the money of the testatrix. That is the issue that was brought on for trial. Now, it is apparent that the evidence does not sustain the contention of the defendant. The evidence here establishes beyond all doubt that whatever may have been the remote origin of Mrs. Kempkes' estate, whatever the sources may have been through which she derived it, assuming that she received moneys from her son, it is perfectly plain that in law and equity this money in the savings bank was hers, and her son could only get title to it by way of gift. This fact was so plain that the industrious and acute counsel for the defendant admitted most fully that the only title which the defendant could set up under the evidence in this case to this money must be based upon the transaction between these parties, Mrs. Kempkes and her son, on the one hand, and the savings bank on the other. In other words, the only title which the defendant could maintain upon this evidence was the title by gift from his mother. Now, such a gift would be a gift of a contract right, not a gift of money. The money was loaned to the bank as the result of this transaction. The transaction between a depositor and a bank is often very incorrectly described. It is really a loan of money. It is not a deposit at all. The bank does not receive the money on the deposit, in the strict legal sense of the term. The bank borrows the money, becomes the owner of the money, and becomes charged with a contractual obligation to repay an equal amount of money at a future time in accordance with the terms of the banker's contract. But I am not disposed to stop here and have this case determined with strict reference to the issue presented by these pleadings. The testimony was taken and the cause was argued upon the idea that the matter in dispute to be determined was whether Mrs. Kempkes in her lifetime did or did not make an effectual gift through this transaction with the savings bank, a gift, which, as I said a few moments ago, in fact, amounts to a transfer of a contractual obligation of the bank to her son, enforceable by him for his own benefit. In the case that both counsel have cited, the case of Dunn v. Houghton (N. J. Ch.) 51 Atl. 71, I had occasion to pass upon the legal sufficiency of the external form of a gift of this character an attempted donation by a contract between the donor and the donee, on the one hand, and a savings bank on the other, and I reached the conclusion that the external form of the gift is legally sufficient if the donative purpose be present. Inasmuch as that ruling has not been reversed, or, in respect of the matter which I have stated, been at all modified, I shall apply it to the case, and hold that this case on contract entered into by the savings bank with Mrs. Kempkes and her son would be sufficient external form to constitute a valid gift if the donative purpose be present. This external form of the gift corresponds with a delivery when a chattel is the subject-matter of a gift. Where it is alleged that a chattel is the subject-matter of a gift, delivery of the chattel, manual tradition, is a sufficient external form to support the gift, if the donative purpose be present. But no external form of a gift, no delivery, if the subject-matter of the gift be a chattel, no contract on the part of the third party, if the alleged gift be like the one which we are now considering, has any sufficiency, if the donative purpose be lacking. There must be an intention on the part of the donor to vest something in the donee for the donee's benefit, to vest property in him, the donee, which he shall possess for himself, and not for the benefit of the alleged donor, or in trust for the alleged donor.
And now we come to the question, which is purely one of fact, whether upon this mass of evidence the conclusion can be drawn that Mrs. Kempkes created this contractual obligation on the part of the bank with her son for her son's benefit, and to that extent in derogation of her own property rights. This is the real question of fact, in my judgment, which arises in and determines the majority of these savings bank book cases, these cases where relatives or intimate friends deposit money in a savings bank in a joint account. The question is one of fact, whether the original owner of the money who thus has converted a portion of his estate, cash, into a contractual obligation on the part of the savings bank to himself and somebody else, has done it with intent to vest in the third party an absolute beneficial interest in the fund or rather an interest in the contract or contract right, or has done it for his own purposes, or for his own convenience. Now, this case is quite different from the case of Dunn v. Houghton to which I referred. In that case the donor depositeda sum of money in a savings bank so as to make it payable to herself or her niece, who claimed to be the donee. The bank entered into a joint contract with the mother and the niece, having the incident of survivorship, of course, and that is precisely what this contract was, a contract between the savings bank on the one hand and Mrs. Kempkes and Herman Kempkes on the other, and it had the incident of the survivorship undoubtedly at law. But in the case of Dunn v. Houghton the money was left untouched for a long period of time. The whole conduct of the original owner, the donor, indicated that the particular fund was set apart for the purpose of its becoming the property of the niece upon her, the donor's, death. In this case the account after the transfer of it, or after the creation of it in its present form, in February, 1003, was an active account. Mrs. Kempkes made deposits and made drafts. It amounted at the time of its creation in February, 1003, to a little over $250 or $260. It then was greatly reduced, and finally, in November, 1903, Mrs. Kempkes used this account in the most natural way possible as her own, by depositing in it what to her was a very large sum of money $1,870, the proceeds of the sale of land which belonged to her. Well, so it would appear that if the contention of the defendant is correct, if Mrs. Kempkes had died in October, he would have received a comparatively small sum of money. As she died in November, he has a right to receive this very much larger sum of money. Presumably, if Mrs. Kempkes could have lived a little longer, she would have done something with this money, and perhaps reduced her bank account to a very small figure. Now, when we have this alleged donor dealing in that way with her bank account, keeping it active, certainly there is a very strong suggestion that she did not intend that her son should be personally benefited by whatever might be found in that bank account at the time of her death. Parents are not in the habit of making gifts of that character, gifts the extent of which is so uncertain. The first draft, I think, from this account after it was put in its present form in February, 1003, was a draft of $30 made by Herman Kempkes. For years prior to this time Mrs. Kempkes had the account in her own name, and made all her deposits, made her drafts, collected her rents, and attended to her own business. This transfer was made, as I said, in February, 1003, and the first draft I think after that date was a draft of $30 made by Herman, and he explains how it was that he availed himself of the power which he had to draw money from this account. He did not draw it because the money was his or for any purpose of his own. He drew it for his mother, if I remember right, he said to pay for repairs on her house, and the reason why he drew it was because it was a rainy day. His mother was a woman of 75 years. She lived up at Totowa, and the son thus discloses that the use, and practically the only use, he made of this account, certainly the only use in the way of drawing money from it, was for the convenience of his mother. Thus we have a strong indication that the original purpose in changing this account from an account with Mrs. Kempkes alone into a joint account with herself and her son was the same as has been illustrated in scores of cases, namely, in order that the actual owner of the money might be able to draw herself, or might be able to trust her son to draw money for her.
Now, when we come to take the testimony of Herman Kempkes in regard to the purpose of this change, we meet with a number of very serious difficulties. I will say right here that I am unable to discover any evidence whatever in this case of a donative purpose to make this deposit and make this contract on the part of Mrs. Kempkes, in order to benefit her son, as distinguished from the purpose to meet her own convenience apart from the testimony of the son alone. I do not find that there is any corroboration of his testimony in the form of this will. The will which the mother made deals with her estate practically in two parts, She deals with all the estate that she had, both real and personal in America, in Paterson, in one way, and she deals with the estate, certain assets which she had in Germany, in another way. It appears, I may say, from the will that she had money deposited in a bank in Crefeld in the name of her son Herman Kempkes, and she undertakes by this will to make disposition of that money as her own, which is a very significant fact. There is no evidence, however, offered in regard to this matter to show whether there was such money there, how it was deposited in Herman Kempkes's name, how it was that the money was the property of Mrs. Kempkes, If such was the fact. The officers of the bank who were produced as witnesses entirely failed to corroborate the testimony of Herman Kempkes, so far as that testimony goes to show that Mrs. Kempkes had a donative purpose in creating this contract. I have examined the testimony of Mr. Mercelis and Mr. Botbyl with very great care. It does not give any color to the testimony of Mr. Kempkes to the effect that Mrs. Kempkes intended to make a gift to him of the money, or transfer to him a beneficial interest in it; or, to speak more accurately, that Mrs. Kempkes intended to create a contractual obligation to him created for her convenience. These gentlemen simply say that this woman came to the bank and transferred the account that stood in her own name to the joint names of herself and son. The son opened the matter, and stated that his mother desired to make the change. Mr. Mercelis talked with the son and mother. Then, in order to be sure that the mother understood what she was doing, he calledMr. Botbyl, who speaks German, and the matter was discussed or talked over between Mrs. Kempkes and Mr. Botbyl in German. Now, Mr. Botbyl and Mr. Mercelis simply say that Mrs. Kempkes understood that this change would enable either one of them to draw, and that the effect would be that the survivor could draw the balance. Well, now, that is precisely the legal effect of this sort of a contract, where there is no intention to do anything more than to place the money where both parties can draw it for convenience of the real owner. But when we turn to the testimony of Mr. Kempkes, the defendant, we find that he gives a different account of what took place at the bank. He says: "We went to the savings bank, and we went in a private office to Mr. Mercelis, and mother talked with Mr. Mercelis and I, and one man, the man with the light hair, understood a little German, and Mercelis called him up and then she says she wanted my name put on her book in case anything happened to her that money might be my protection." Now, here is a most positive statement of this woman to these bank officials, which, it seems to me, must have arrested their attention, explaining why she wanted to have this thing done. It was done for the protection of her son. Mr. Kempkes also testified that his mother said, and this appears she said in German during a conversation between the mother and Mr. Botbyl: "'Yes; I want that. It don't belong to the other children. Whatever is in the bank is money belongs to my son and me, but not to the other children.' That is the way my mother expressed herself." It is certainly very singular that neither Mr. Botbyl nor Mr. Mercelis, who knew this woman, had transactions with her in the bank for many years, and now recall this particular transaction, apparently have no recollection that this statement was made. All that they can remember is that the transfer was to be made in order that both might draw, and Mr. Mercelis took pains, in accordance with his duty as an honest bank official, to explain to this German woman, the depositor, that the effect would be that the survivor could take the whole. There is evidence in the case that indicates that Mr. Herman Kempkes, the defendant, procured this change to be made in the account of his mother at the bank. It seems that as far back as 1000 he was endeavoring to get his mother to make a will. A draft of a will is produced here in his handwriting, made, I think, in 1000, according to which the bulk of real estate in America I think was devised to Herman Kempkes, and his brother Peter, at any rate, I cannot recall the exact language or provisions of this draft, but it was very beneficial to Herman Kempkes and gave him a much larger share than it gave his sisters. It seems that Mrs. Kempkes was averse to making a will, which, unfortunately, is a very common phenomenon in human nature, especially among this class of people, and makes a great deal of trouble. She was averse to making a will. According to Herman's testimony, it appears that she finally yielded to his persistence and his urgent demand, and made this change in the savings bank account in order to effect a measure of justice in the way of protecting him. That is what he indicates distinctly. She did not want to make a will, but, instead of that, she would fix it so that he should have what money there might be in the savings bank, and thereupon they went down and made this change. Well, now, if that be true, it does not follow that Mrs. Kempkes had any donative purpose whatever. She kept the savings bank book in her possession, and it appears that according to the rules of the bank, which were explained at the time, the savings bank book had to be presented in order to draw any money. It may be that Mrs. Kempkes, in order to get rid of the solicitations of her son to stop the annoyance that she was subjected to from him by his demands that she should make a will in his favor, said, "Well, I will put the money in the savings bank in both our names," and she may have had an intention to control that fund during her lifetime, as she did, to keep the savings bank book in her possession, as she did, and to prevent him from having any beneficial interest in any money that might be there by drawing it out in her lifetime. I do not think that, if what Mr. Herman Kempkes says himself must be taken as true, it makes out a donative purpose on the part of his mother.
But, if that conclusion is erroneous, if Mrs. Kempkes, by making the deposit in the form she did for the reasons stated by Herman, made a complete gift of the contractual obligation to her son, I do not think that the defendant stands before this court in this case in such a light as to make it impossible to base a finding in favor of a gift upon his testimony. He certainly is discredited in a variety of ways. The indications of his character disclosed by the testimony impeach him. With great readiness he admitted that he had made a mortgage for $900 or $1,000, I think he thought it was, to his mother, a chattel mortgage in order to defeat a creditor of his, who was suing him or demanding from him $450. The mortgage is produced. It bears the affidavit of this old woman, which alleges that the consideration of the mortgage was $900 cash advanced by her to her son in his business. Well, now, a man who admits with the freedom that Mr. Kempkes did that he has perpetrated a gross fraud like this, and in order to effectuate it has even procured his old mother to commit perjury, certainly stands before the court very seriously impeached as a witness. He also says that that will of his mother is a gross fraud perpetrated by himself and his sister together. That is the effect of his testimony. He says that his mother was incompetentto make a will; that the will was dictated by the sister; that he, the brother and son, took down the instructions from the sister and carried the paper to a man named Merz, who drew a will in accordance with those instructions; that he brought the will back, or it was brought back, and it was executed in the presence of two witnesses by this old woman 75 years of age, and at that time she did not know what she was doing. All this he narrates apparently without any apprehension of the enormity of the offense which he admits he and his sister committed. I do not believe that story. The witnesses of the will were produced or one of them at any rate. I think only one witness was produced (a Mr. Otten) who appears to be a man of some property, and whose truthfulness the defendant does not attack. When asked whether Mr. Otten was an honest man, a truthful man, or something of that sort, Mr. Kempkes declines to make any statement against him. Mr. Otten stands before the court as an unimpeached witness, and, if his testimony is true, Mrs. Kempkes knew what she was doing when she made the will, and she was competent to make it. Now, in addition to these things which I have narrated and which very vitally affect the credibility of Mr. Kempkes as a witness generally, it appears also that this statement in regard to what his mother's purpose was in making this change in the bank account is contradicted by his own statements and his own conduct subsequent to the proceedings. Mr. Otten testifies that Herman Kempkes, the defendant, stated to him after Mrs. Kempkes's death that the account had been put in the form in which it was put, in order that he, Herman, might draw. Mr. Otten testifies as follows: "I asked him did he put it that way so it was his mother's money. So he answered so that he can draw the money when his mother could not go for it." Subsequently the witness was asked again, I think on cross-examination: "Q. Did he say anything to you about how it came to be put in his name? A. He only did that in case his mother can't go, and he could draw the money." That is a most direct and positive statement of the common purpose which actuates the creation of tills sort of an obligation on the part of the bank to two persons, in the absence of a donative purpose. Here we have the distinct purpose of the defendant that the purpose of this action was merely in order that he might draw when his mother could not go out and draw, and, as I said earlier, that is precisely the use that is immediately made by Herman and by Mrs. Kempkes of this change in the form of the account. The rainy day soon came, the old woman could not go down to the bank, money had to be procured for the payment of the repairs to the house, and so Herman went down and exercised his power which the changed form of the bank account conferred upon him and drew out $30 for his mother.
I shall not undertake to deal with the mass of evidence largely coming from Mrs. Schippers and Mrs. Gross, the sisters, in regard to the conduct of Herman on the day when and after the will was proved, nor shall I take up these papers on which Herman wrote figures and sums, and concerning which figures and sums he made statements according to the testimony of these women and of other witnesses. I am satisfied, however, that Herman Kempkes at the time of his mother's death knew that this money in the bank did not belong to him. He acted, according to the testimony of a great many witnesses, and spoke in such a way as to show that he was not conscious that he owned this money, but, on the contrary, he was of the opinion that it was an asset of the estate which he happened to control owing to the change which he made in the bank account. The testimony on this subject is too voluminous for me to undertake to recite any part of it.
For the reasons which I have endeavored to sketch, my conclusion is that there is no testimony in this case which would warrant the conclusion that the defendant, Herman Kempkes, obtained a title by the way of gift which he can assert so as to keep this money from the estate. The money, as I said, belonged to Mrs. Kempkes. There is no evidence that is credible, in my opinion, which would justify the conclusion that Mrs. Kempkes had a donative purpose in conducting her transactions with the savings bank such as would be necessary in order to enable Herman Kempkes to enforce this legal contract which now exists between them and the bank by reason of survivorship for his own benefit. The contract must be enforced for the benefit of the estate of Mrs. Kempkes precisely as, in my judgment, during the lifetime of Mrs. Kempkes, Herman Kempkes would have been compelled to exercise his right under the contract to draw money from the bank. During her lifetime, if Herman Kempkes had gone to the bank to draw money and had undertaken to appropriate it, I can hardly believe that now upon this evidence it would be seriously argued that he could have appropriated that money to his own use, and that he would not have been answerable for it.
In my judgment, the character of the contract between these parties and the bank remained unchanged from its inception. The character of Mr. Herman Kempkes' right remained unchanged from the time this contract was created down until the filing of this bill. He was empowered to draw this money during the lifetime of the mother for her benefit. He now has the power to draw the money, in case the legal contract should be carried out, for the benefit of his mother's estate.