Court Opinion

ID: 6520376
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:30:31.781832+00
Date Added: 2024-06-11T15:55:07.953780
License: Public Domain

DOWDELL, J.-
It seems to be well adjudicated, that a trust in personal property may be declared and proven by parol.- — See 27 Am. & Eng. Encyc. Law, (1st ed.) p. 54, where authorities are cited in note. We do not understand that, the appellants controvert this proposition. The declaration of T. H. Amberson at the time he paid and subscribed for the stock in the defendant bank were admissible in evidence to show the creation of the trust in the stock, and for whom the trust was created; the certificate having been issued to “T. H. Amberson, trustee,” omitting the name of the beneficiary. So, too, were his subsequent declarations while in the possession of the stock, to the effect, that he had subscribed and paid for the stock for his minor-son, Ernest, and that it belonged to his said son, etc.—9 Am. & Eng. Ency. Law (2d ed.) p. 12 and note; Wheeler v. Glasgow, 97 Ala. 700; Gillespie, Admr. v. Burleson, 28 Ala. 551.
The word “trustee” written in the face of the certificate after the name of the person to whom such certificate was issued, was sufficient to put a purchaser of the stock on notice as to how the stock was held. In Cook on Stock and Stockholders -and Corp. Law, (2d ed.) § 325, p. 359, the rule is stated as follows: “A vendee or pledgee of stock, directly from a trustee, is or is not *348protected in bis interest in tbe stock, according as be is or is not chargeable with notice of tbe fact that tbe stock belongs to a trust estate. Anything that is suffi-' cient to put a party on inquiry is considered equivalent to actual notice, if inquiry be not made and reasonably satisfied. Tbe law imputes to a purchaser tbe knowledge of a fact of which tbe exercise of common prudence and ordinary diligence would have apprised him. This is called constructive notice, and has the same effect as an actual notice of tbe trusteeship. The most common instance of a constructive notice that stock being sold belongs to a trust estate is where tbe words ‘trustee’ or bn trust,’ either with or without tbe name of tbe cestui que trust, are written on tbe certificate of stock after tbe name of the person in whose name it stands on tbe corporate books. It is well established that such words, indicating a trustee ownership, are notice to tbe purchaser that bis vendor is selling trust property and that be must ascertain whether tbe trustee lias any power to sell tbe stock.”—Wolffe v. State, 79 Ala. 201; Sayre v. Weil, 94 Ala. 466; Shaw v. Spencer, 100 Mass. 382; 1 Am. Rep. 115; 97 Am. Dec. 107, (see also, note to tbe last citation); Hall & Farley v. Henderson, 126 Ala. 486.
Tbe payment of tbe money by T. H. Amberson, and taking the stock in his name as trustee, was a complete declaration of tbe trust in favor of the complainant, Ernest Amberson, and which a court of equity will enforce.—Minor v. Rogers, 16 Am. Rep. 69; Walker, Guardian v. Crews, 73 Ala. 412; Sayre v. Weil, supra; Shaw v. Spencer, supra; Gerrish v. N. B. Ins. for Saving, 35 Am. Rep. 365; Martin v. Funk, 31 Am. Rep. 446; Railroad v. Durant, 94 U. S. 576.
It is admitted by tbe defendant Johnson, appellant here, that be received tbe stock from T. H. Amberson to be applied as a credit on a pre-existing indebtedness from said Amberson to him, Johnson. This was clearly a misappropriation by Amberson of the trust property, and Johnson cannot under tbe circumstances be considered a bona fide purchaser for value without notice. Shaw v. Spencer, supra.
*349There is nothing in the contention that there has been a former adjudication of the subject matter of this suit. The former suit was one at law where only the legal title was involved, and we said in effect in that case, that the complainant here, would have to resort to a court of equity for the enforcement of whatever equity he might have in the stock.—Amberson v. Johnson, 127 Ala. 490.
Where one action is legal and the other equitable, the rule to stay proceedings in the latter until the costs in the former are paid, will not be applied.—23 Am. & Eng. Encyc. Law, (1st ed.) p. 528. The court properly denied this motion.
We find no error in the decree, and the decree will, therefore, be affirmed.