Collester, Lynch and Allcorn. Collester, P.J.A.D. (dissenting).
[122 NJSuper Page 120] Plaintiffs, executors under the Will of their deceased father, brought suit against decedent's two surviving brothers and a corporation whose stock is now registered
in the brothers' names. The complaint prayed for imposition of a trust on one-third of the corporate stock, with defendant brothers as trustees, for the benefit of decedent's immediate family. Plaintiffs' cause of action was founded upon an alleged agreement to hold the property in trust, and alternatively, on an implied agreement arising "as a result of the relations between the defendants and the decedent." Plaintiffs appeal from a judgment of involuntary dismissal of the complaint, granted on motion at the close of their proofs below.
In his decision, the trial judge held that plaintiffs had failed to satisfy the burden of proof for imposition of a constructive trust. He defined that burden as requiring proof of their case by "clear and convincing" evidence. In this respect, the court was correct. Gray v. Bradley , 1 N.J. 102 (1948); In re Estate of Land , 99 N.J. Super. 500, 506 (Ch. Div. 1968). However, the individual defendants claim that in 1956, they and decedent (each owning one-third of the corporate stock outright at that time) created a joint tenancy among themselves in the stock. They further claim that in 1968, decedent surrendered to defendants his interest as joint tenant in 774 shares of the 775 shares outstanding, with decedent retaining an interest as joint tenant only in the one remaining share. Defendant brothers are thus claiming, at least insofar at the 1968 transaction is concerned, that they were "donees" of that portion of decedent's stock which became the subject matter of the joint tenancy in which they were joint tenants to the exclusion of the decedent.
At the end of the plaintiffs' case, there was evidence from which the following inferences favorable to their cause of action could be drawn:
1) When in 1956 and again in 1962, stock certificates were issued purporting to create a joint tenancy among all three brothers, decedent did not understand that he was surrendering his outright ownership in one-third of the corporate shares to the incidents of a joint tenancy in which all three brothers participated, with respective rights of survivorship
implicit therein. It is significant that the decedent was the oldest of the three brothers and that his life expectancy was the shortest. The evidence which might have supported this inference was that on February 15, 1963, the decedent wrote what purported to be a holographic will in which he said, in part: "* * * Any money from the Metuchen Food Market, Inc. should go for living expenses for Ida, Leonard and Harvey Dessel. All stock in the Metuchen Food Market, Inc. shall not be sold without the consent of Benjamin Dessel or Julius Dessel. All stock is left to Arlene Betty Dessel Bogen, Ida Dessel, Leonard Martin Dessel, Harvey Neil Dessel." This attempted disposition of ownership in one-third of the shares of the corporate stock could indicate that decedent did not, subjectively, limit his interest in the stock to that of a joint tenant but rather, conceived himself to be outright owner of one-third of the shares.
2) Several witnesses testified that the decedent, upon many occasions, stated that his one-third interest in the business would go to his son Leonard. This, too, is at odds with any concept that the decedent understood that his interest was limited to a joint tenancy as represented by the two stock certificates.
3) The 1968 certificates whereby decedent purportedly gave up his interest in 774 shares to a joint tenancy wherein his brothers, Julius and Benjamin, were the sole tenants (while retaining a joint tenancy interest in only one share) constituted a gift of his interest in the 774 shares from decedent to his brothers.
Indeed at the end of the plaintiffs' case, the evidence was uncontradicted that the 1968 transaction in fact constituted such a gift. Therefore the principle set forth in In re Dodge , 50 N.J. 192 (1967), is brought into play:
The principle has been expressed frequently that "in all transactions between persons occupying relations, whether legal, natural, or conventional in their origin, in which confidence is naturally inspired, is presumed, or, in fact, reasonably exists, the burden of ...