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Docket Number

[No. 322, September Term, 1962.]

Attorney(S)

Thomas L. Hennessey for appellant. M. Richard Moss for appellee.

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Smart Summary

Parry v. Parry et al., Court of Appeals of Maryland (Decided June 10, 1963)

Factual and Procedural Background

This appeal arises from a suit to determine ownership of 221 shares of preferred stock of the William Schluderberg-T.J. Kurdle Company. The chancellor in the Circuit Court for Anne Arundel County decreed that the shares were property of the estate of Reginald B. Parry, deceased. Kenneth Parry, Reginald's brother, appealed, maintaining that he was the real owner of the stock.

Relevant facts found by the court: between July 1, 1947 and January 11, 1951 (inclusive) Reginald purchased nine stock certificates totaling 221 preferred shares. Each certificate bore the notation: "This is to certify that Reginald B. Parry, Owner, upon whose death to belong to Kenneth Parry is the owner of * * * fully paid and non-assessable shares of the Preferred 5% Capital Stock * * *." Shortly after receipt, Reginald gave the certificates to Kenneth. Kenneth placed them in a safe deposit box (initially held in the names of Kenneth and Reginald; later in the names of Kenneth and his wife). Reginald received the semiannual dividend checks (mailed to Kenneth's address) and Kenneth delivered those checks to Reginald, who spent them. Reginald married the appellee in June 1952; the last certificate was purchased about a year and one-half before that marriage. After Reginald's death around the beginning of 1961, Kenneth presented the certificates to the Company for transfer, but the Company deferred action pending resolution of this suit.

Legal Issues Presented

Whether there was a valid inter vivos gift by Reginald to Kenneth of the remainder interest in the stock (i.e., whether the language on the certificates created a life estate in Reginald with a vested remainder in Kenneth).
Whether the transfer of the stock was a fraudulent contrivance intended to deny Reginald's wife her widow's rights (i.e., whether the transfer was in fraud of marital rights).

Arguments of the Parties

Appellant's (Kenneth Parry) Position

Kenneth maintained he was the real owner of the 221 shares and that the transactions constituted a valid gift inter vivos of the remainder interest to him.

Appellee's (Widow) Position

The appellee contended the transfer was intended to be in the nature of a testamentary disposition, arguing that the language on the certificates indicated that "the appellant will gain or acquire the stock * * * at a future date," and therefore the attempted transfer could not operate as a gift inter vivos.
The appellee also contended the transfers were in fraud of her widow's rights.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Allender v. Allender, 199 Md. 541, 87 A.2d 608	That a gift of corporate stock may be complete where the owner surrenders old certificates and has new ones issued in the names of donor and donee; it is immaterial that the donee had not been informed and the donor's drawing dividends and voting the stock until death does not render the gift incomplete.	The Court relied on Allender to support the conclusion that the remainder interest in the stock vested in Kenneth despite Reginald's retention of a life interest and despite Reginald's receipt of dividends and exercise of control consistent with a life estate. The Court also cited Allender in rejecting the fraud-on-marital-rights contention.
Curley v. Wolf, 173 Md. 393, 196 A. 285	Noted as a comparable authority concerning transfers of stock and related gift principles.	The Court cited Curley v. Wolf by way of comparison to support its conclusion that the transfer effected a present vesting of the remainder.

Court's Reasoning and Analysis

The Court first framed the main question as whether Reginald's actions created a valid inter vivos gift of the remainder to Kenneth, and a subsidiary question whether the transfer was in fraud of the widow's rights.

On the inter vivos gift issue, the Court examined the language on the certificates and the surrounding conduct. It concluded that the terms selected by Reginald manifested a "clear and unmistakable intention" to make a gift of the remainder to Kenneth, subject to Reginald's life estate. Although the language was not phrased in precise legal terminology explicitly describing a life estate and remainder, the Court found it sufficient to show intent to pass the beneficial interest in remainder to Kenneth. The Court emphasized that retention of a life interest by Reginald did not prevent the immediate vesting of title to the remainder in Kenneth.

The Court noted practical implications: any transfer of the remainder on the corporate books without Kenneth's consent would have been at the Company's risk, supporting the conclusion that Kenneth held the present title to the remainder.

The Court relied on Allender v. Allender to illustrate that gifts of corporate stock can be complete despite the donor's continued receipt of dividends and exercise of incidents of ownership consistent with a life interest; it also compared Curley v. Wolf as supporting authority.

On the fraud-on-marital-rights issue, the Court observed that the last certificate had been purchased about one and one-half years before Reginald's marriage to the appellee and (as far as the record showed) before any intention to marry existed. The Court concluded that Reginald's retention of no more control than a life estate did not make the transaction so colorable or illusory as to justify setting aside the transfers under the doctrine of fraud on marital rights, citing Allender by way of comparison.

Holding and Implications

The decree of the chancellor was reversed and the case was remanded for entry of a decree in accordance with this opinion; Kenneth Parry is the present owner of the 221 preferred shares, and appellees are to pay the costs.

Implications: The direct effect is that title to the remainder interest in the 221 shares vested in Kenneth and the estate does not own those shares. The Court did not purport to establish a new rule beyond applying existing authorities (e.g., Allender and Curley) to the facts; no broader precedent beyond this application was announced in the opinion.

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PARRY v. PARRY ET AL.

GIFTS — Inter Vivos — Of Stock Certificates — Language Was Sufficient To Create Life Estate In Owner And Vested Remainder In Appellant — Transfer Was Not A Fraud On Marital Rights. The instant case involved a controversy over ownership of stock between appellant, the deceased's brother, and appellee, the deceased's wife, and whether there had been a valid gift inter vivos of the stock in remainder from the deceased to appellant. Each stock certificate had written on it that the deceased was the owner and upon his death the stock was to belong to the appellant. The Court felt that the terms selected by the deceased in designating the ownership of the stock manifested a clear and unmistakable intention on his part to make a gift of the remainder therein to appellant, subject to the deceased's life estate, although the language employed was not couched in strict and exact legal terminology. And the mere fact that the deceased retained a life interest did not prevent the immediate vesting of the title to the remainder in appellant. Further, it was held that the transfer was not in fraud of appellee's rights since the last certificate was purchased about a year and one-half before the deceased's marriage to appellee and the retention of no more control over the stock than a life estate would not render the transaction so colorable or illusory as to justify the setting aside of the transfers under the doctrine of fraud on marital rights. pp. 585-587

H.C.

Decided June 10, 1963.

Motion for rehearing filed June 6, 1963, denied June 7, 1963.

PRESCOTT, J., delivered the opinion of the Court.

The chancellor decreed that 221 shares of preferred stock of the William Schluderberg-T.J. Kurdle Company (Company) were the property of the estate of Reginald B. Parry, deceased, and Reginald's brother, Kenneth, who maintains that he is the real owner of said stock, has appealed.

The main question to be determined is whether there was a valid gift inter vivos of the stock in remainder from Reginald to Kenneth. A subsidiary one is whether such transfer of the stock to Kenneth was a fraudulent contrivance to deny Reginald's wife her widow's rights.

Kenneth has been employed by the Company for over thirty years. Between July 1, 1947, and January 11, 1951 (both dates inclusive), Reginald purchased nine stock certificates, whereby he obtained an aggregate of 221 shares of the preferred stock of the Company. Each certificate bore this language: "This is to certify that Reginald B. Parry, Owner, upon whose death to belong to Kenneth Parry is the owner of * * * fully paid and non-assessable shares of the Preferred 5% Capital Stock * * *." In June of 1952, Reginald married his present widow. Shortly after the receipt of the stock certificates by Reginald from time to time, they were given by Reginald to Kenneth. Upon delivery of the first certificate Reginald stated, "This is an investment. All I am interested in is the dividends." Kenneth placed the certificates in a safe deposit box, which, up until shortly after Reginald's marriage was held in both of their names. Reginald never visited the box. The certificates remained in the same safe deposit box, which was held in the names of Kenneth and his wife from sometime in 1952 until Reginald's death around the beginning of 1961. Reginald had the dividend checks, which were paid semiannually, mailed to him at Kenneth's address although he, Reginald, did not reside there. In accordance with his understanding with his brother, Kenneth delivered these checks to Reginald, who spent them as he saw fit. After Reginald's death, Kenneth presented the certificates to the Company for transfer upon its corporate books, but the Company deferred action pending the outcome of this suit.

The appellee does not dispute the fact that it is possible to create a life estate in choses in action with remainder over, but contends the transfer of the stock was intended to be in the nature of a testamentary disposition and the language used on the certificates and quoted above is so phrased that "the appellant will gain or acquire the stock * * * at a future date," hence the attempted transfer cannot operate as a gift inter vivos. We disagree.

The terms selected by Reginald in designating the ownership of the stock manifest, we think, a clear and unmistakable intention on his part to make a gift of the remainder therein to Kenneth, subject to his, Reginald's, life estate. The language employed is not couched in strict and exact legal terminology, spelling out explicitly a life estate in Reginald with remainder to Kenneth, but, as indicated above, it is sufficient to show an intention to pass the right or beneficial interest in the stock (in remainder) to Kenneth. And the mere fact that Reginald retained a life interest therein did not prevent the immediate vesting of the title to the remainder in Kenneth. It seems clear that any transfer of the remainder upon the corporate books without Kenneth's consent would have been at the Company's risk. In Allender v. Allender, 199 Md. 541, 87 A.2d 608, this Court held a gift of corporate stock complete where the owner surrendered his old stock certificates and had new ones issued in the names of the donor and donee, that it was immaterial that the donee had not been informed concerning the transfer, and the facts that the donor drew dividends and voted the stock until his death did not render the gift incomplete. Also compare Curley v. Wolf, 173 Md. 393, 196 A. 285. We, therefore, hold that Kenneth is the present owner of the stock involved.

The short answer to the contention that the transfer was in fraud of the widow's rights is that the last certificate was purchased about a year and one-half before Reginald's marriage to the present Mrs. Parry (and insofar as the record discloses before he had any intention of marrying), and the retention by Reginald of no more control over the stock than a life estate would not render the transaction so colorable or illusory as to justify the setting aside of the transfers under the doctrine of fraud on marital rights. Cf. Allender v. Allender, supra.

Decree reversed and case remanded for entry of a decree in accordance with this opinion. Appellees to pay the costs.

PARRY v. PARRY