Fletcher v. Kidder

California Supreme Court Sep 24, 1912 No. Sac. No. 1959.Published

Before: Henshaw

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Holding. The court held that the evidence was insufficient to establish a trust, as the mere addition of the word 'trustee' to stock certificates does not constitute constructive notice of a secret trust, and the plaintiff's evidence of an oral acknowledgment by the deceased was not clear and convincing.

Issues

Whether the word 'trustee' on stock certificates constitutes constructive notice of a trust.
Whether self-serving entries made by a secretary in corporate books are admissible as evidence of a trust.
Whether the evidence presented was sufficient to establish a trust after the death of the alleged trustee.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The mere addition of the word ‘trustee’ after the name in the certificate is not in this state of itself, nothing more appearing, to be deemed constructive notice of the equities of the secret owner of the stock.”

“the effort to prove them amounted to no more than an effort to prove self-serving declarations by hearsay.”

“the whole case, so far as the establishment of the trust is concerned, rests upon the asserted acknowledgment of it made by a very sick man a few days before his death.”

Synopsis

APPEAL from an order of the Superior Court of Nevada County refusing a new trial. Frank T. Nilón, Judge presiding at trial; Joseph W. Hughes, Judge refusing new trial.

The facts are stated in the opinion of the court.

HENSHAW, J.

By this action plaintiff sought to have a trust in favor of his intestate declared in one-half of the shares represented'by certificates for 1675% shares of the capital

[770]

stock of the Nevada County Narrow Gauge Railroad Company. John F. Kidder was the president of the defendant corporation. During his lifetime George Fletcher, plaintiff’s intestate, was secretary of the corporation. From time to time Kidder acquired stock of the corporation and upon the surrender of the old certificates caused the new certificates to be issued in the name of “John F. Kidder, Trustee.” George Fletcher died upon March 6, 1901, and John F. Kidder, who had been very ill for about a year immediately preceding his death, died upon April 10, 1901. The complaint is surprisingly deficient in its averments as to the nature of the trust. It neither sets up any agreement showing the existence of a voluntary trust, nor does it set up the payment by George Fletcher of any part of the purchase price of the stocks so acquired by Kidder, but contents itself with allegations to the effect that on such and such a day “said John F. Kidder and said George Fletcher became the owners of certificate,” etc. It is alleged further only that the certificates issued to John F. Kidder as trustee were so issued to him as trustee for himself and George Fletcher. After trial the court found against the existence of the trust and rendered judgment accordingly. From the order denying his motion for a new trial plaintiff appeals.

Upon the appeal it is argued that the word “trustee” on the stock certificates held by John F. Kidder, was evidence of ownership outside of Kidder himself. Authorities from other states are cited to this effect, but the rule is here to the contrary. “The mere addition of the word ‘trustee’ after the name in the certificate is not in this state of itself, nothing more appearing, to be deemed constructive notice of the equities of the secret owner of the stock.”

(Brewster

Sime, 42

Cal. 144;

Thompson

Fletcher v. Kidder

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Synopsis

HENSHAW, J.

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