Appeal from the District Court of the United States for the Eastern District of Pennsylvania; Oliver B. Dickinson, Judge.
Before THOMPSON and BIGGS, Circuit Judges, and MARIS, District Judge.
The plaintiff-appellant, Charles A. Faircloth, is the receiver of the Chelsea-Second National Bank & Trust Company of Atlantic City, a national bank which was declared insolvent by the Comptroller of the Currency upon January 27, 1933. Pursuant to authority vested in him by law, the Comptroller on February 27, 1933, made an assessment upon shareholders of an amount equal to the par value of the stock of the bank held by each. Among those assessed is the appellee, Alice C. McClister. The suit at bar is brought to collect the assessment.
The facts are as follows: Mrs. McClister's deceased husband, Absalom Cordery, at the time of his death, upon September 3, 1909, was the owner of ten shares of the capital stock of the Second National Bank of Atlantic City, which by merger with the Chelsea National Bank of Atlantic City and the Atlantic County Trust Company became the Chelsea-Second National Bank & Trust Company of Atlantic City, the insolvent herein. The ten shares of stock at the time that Mrs. McClister passed her account as executrix were distributed and she took possession of them under the terms of the will. By May 1, 1934, at the time of the filing of this suit, the ten shares of stock, by reason of stock dividends and the merger referred to, had become sixty-six shares of the stock of the insolvent. The stock has stood upon the books of the banks in the name of "Absalom Cordery," or "Estate of Absalom Cordery." Dividends paid upon the stock after Cordery's death were issued and made payable to the estate of Absalom Cordery and were indorsed by Mrs. McClister as executrix and remitted to herself as life tenant under the provisions of the will. The pertinent provisions of Cordery's will are as follows:
"I give, devise and bequeath to my wife, Alice Cordery, all the estate, real personal or mixed, of which I shall die seized and possessed, or to which I shall be entitled at the time of my decease, wheresoever the same may be located, for and during the term of her natural life, and from and immediately after her death, I give, devise and bequeath all of my said estate to our son, Edward R. Cordery, his Heirs and Assigns forever. My said wife, Alice, to use the income only of my said estate for her support and maintenance and the support, maintenance and education of our said son, during her lifetime; and I hereby direct and authorize my said wife at any time to sell and dispose of, at public or private sale, the whole or any part of my said real or personal estate, to such person or persons, for such price, and upon such terms and conditions as she may think proper, and to grant and convey the same to the purchaser or purchasers thereof, his, her or their Heirs or Assigns forever, fully and as freely as I could have done if living, and free and discharged from liability to see to the application, or for the nonapplication of the purchase money. And the money arising from such sale or sales to invest in some safe securities at interest, and to be held and used by her as hereinabove provided, and at her death, to go to our said son, Edward R. Cordery, as hereinabove provided.
"I nominate and appoint my said wife, Alice Cordery, to be the Executrix of this, my last Will and Testament, * * *"
The learned trial judge found that the appellee was the executrix and trustee under the will and as such trustee had power to sell the stock. The appellee strongly urges that she is a trustee and as such is not liable individually. The appellee does not now deal with the stock as executrix since she passed her account twenty-seven years ago, but, admittedly, if Mrs. McClister holds the stock as trustee, her liability, pursuant to the provisions of section 5152 of the Revised Statutes (12 U.S.C.A. § 66), would be as trustee and the sum of the judgment would be payable solely from the trust res in her hands. Since Mrs. McClister was sued as an individual and not as executrix or trustee, the trial judge further held that the question presented was whether or not by virtue of Mrs. McClister having a part life interest in the stock under the will she is thereby rendered liable as a shareholder to contribute her part of the assessment. The trial judge decided this question in the negative.
We hold that Mrs. McClister is not a trustee, but simply has a life estate.Since the testator died domiciled in Delaware, the terms of his will must be construed in accordance with the laws of Delaware. We find the decision of the learned Chancellor of that state in Equitable Trust Company v. Rose Pennetto et al., 16 Del. Ch. 218, 142 A. 827, most persuasive. In that case Pennetto bequeathed to his wife, Rose, all of his property "for and during the term of her natural life, or until she marries." The will provided that the testator's wife should have the income from the securities in which the estate was to be invested, but further provided that, if she needed a portion of the principal for her maintenance and support, then she should use that necessary portion of the principal. The will further provided that upon the remarriage of Mrs. Pennetto the entire estate should go to the Equitable Trust Company, as trustee in trust upon certain contingencies, for the testator's son and daughter. The executor, the Trust Company, passed its final account and prayed the Chancellor for instructions as to the disposition of the funds in its hands, and particularly whether it should pay the funds to the widow without requiring surety to be given by her to the end that the funds should be kept safe for the ultimate remaindermen, or whether a trustee should be appointed to whom the funds should be paid in trust for the widow for life and remainder over to those entitled thereto. Section 3357 of the Revised Code of Delaware 1915 provides in effect that, where a will appoints no trustee to administer life interests in personalty, the Chancellor may appoint a trustee for the purpose of protecting the remaindermen. This statute has the effect of creating a trust by operation of law, the trust being terminated upon the death of the life tenant. It was the contention of the widow and the two children that the language of the will was such that a trust was created and therefore, since there was an express trust, section 3357 of the Revised Code of 1915 was not applicable. In ruling upon this contention the Chancellor stated in part as follows: "The solicitor for the life beneficiary argues that the language of the will shows by implication that the testator created his widow a trustee and therefore that the act is not applicable. I do not so construe the will. The direction that she should have and hold the estate, keep it invested and intact, use the income and in case of need spend the principal, constitutes nothing more than a mere direction that she should enjoy the estate in specie." The Chancellor thereupon decided that he would order the appointment of a trustee under the statute.
In the case of Hinger, Sr., Executor of the Estate of William F. Hinger, Deceased, v. Elizabeth M. Hinger et al., 17 Del. Ch. 62, 149 A. 430, the testator devised and bequeathed his residuary estate to his wife "for and during the term of her natural life," with power to sell such of the property as she might deem to be desirable and to reinvest the proceeds of the sale. After the death of the wife, the property was to be divided between the brothers and a sister of the testator in such shares as the will indicated. The learned Chancellor stated as follows:
"What is the interest of Mrs. Hinger in her late husband's residuary estate? It is clear in the first place that she has only a life estate. The will admits of no other construction. Even if a power of disposal be conceded to her, yet such power could not have the effect of defeating the remainder over by impliedly enlarging the life interest to an absolute one. * * * That ruling is in harmony with the general principle which, says Sugden in his work on Powers (Vol. 1, p. 123), must be conceded, viz., 'that the law does not incline to enlarge express estates by implication.'
"There can thus be no doubt but that the interest of Mrs. Hinger is only one for life."
These decisions are most persuasive in convincing us that Mrs. McClister is not a trustee and is the holder of a life estate, but there are other reasons which appear from the terms of the will itself: First, the language used in the will is apt for the creation of a life estate in Mrs. McClister, and a clear and absolute life estate is given to her; second, no language is used by the testator which tends in any respect to reduce, lessen, or cut down that estate; third, that language is not apt for the creation of a trust; fourth, there are no provisions for the division of income between mother and son and it is entirely apparent that the testator intended that payments to the son were to be within the absolute discretion of Mrs. McClister.
Is the appellee liable because of her life estate in the stock for her portion of the assessment? Section 5151 of the Revised Statutes, 12 U.S.C.A. § 63, provides: "The shareholders of every national banking association shall be held individually responsible, equally and ratably, and not one for another, for all contracts, debts, and engagements of such association, to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares; except that shareholders of any banking association now existing under State laws, having not less than five millions of dollars of capital actually paid in, and a surplus of twenty per centum on hand, both to be determined by the Comptroller of the Currency, shall be liable only to the amount invested in their shares; and such surplus of twenty per centum shall be kept undiminished, and be in addition to the surplus provided for in this Title; and if at any time there is a deficiency in such surplus of twenty per centum, such association shall ...