Hanson v. First Nat. Bank , 217 Ala. 426 ( 1928 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The bill was filed by First National Bank of Birmingham, as executor of the will of Isaac Newton Hanson, deceased, praying, among other things, a construction of certain provisions of the will.

The question involved on this appeal turns on the construction of "securities" as used in item 5, saying:

"A large sum of my estate consists of the stock and securities of the De Bardeleben Coal Corporation, a corporation organized under the laws of the state of Delaware, and the devises hereinafter made in securities are to be discharged in the securities of said corporation. The said devises are as follows:" (See legacies (a), (b), (c), and (d), under item 5.)

Decedent's holdings in De Bardeleben Coal Corporation were $100,000 in first mortgage bonds, $44,000 in debenture bonds, and $550,000 in preferred stock.

The court below decreed:

"The term 'securities,' as used in the fifth item of said will, does not embrace and include the notes due to said estate by De Bardeleben Coal Corporation. The court construes the word 'securities' as used in the will to include the following and only the following: (1) The first mortgage bonds of De Bardeleben Coal Corporation; (2) the debentures of De Bardeleben Coal Corporation; and (3) the preferred stock of De Bardeleben Coal Corporation."

The notes referred to included, and in the main consisted of, a note of $106,000 devoted to a different use by item 7 of the will. The parties are agreed that the decree is correct in this regard.

The inquiry is, Did the testator intend that the preferred stock should be one class of "securities" from which the legacies under item 5 should be paid proportionately as per the provisions of item 9?

We have the benefit of excellent briefs on both sides. We cannot better express the views of appellant than to quote the following from brief of counsel:

"In the fifth item of the will, Mr. Hanson who, at that time owned preferred stock in the De Bardeleben Coal Corporation, and first mortgage bonds and debentures of said corporation, drew a clear, sharp and emphatic distinction between the first mortgage bonds and debentures, which he denominated as'Securities,' and the preferred stock, showing in the clearest and most certain manner that whatever the usual definition of the word 'securities' may include, he used it in this item of his will as 'Exclusive' of the preferred stock. The first paragraph of this item is as follows:

" 'A large part of my estate consists of the stock and securities of the De Bardeleben Coal Corporation.'

"Here, in words not to be misunderstood, the testator classifies the investments which he had, which were connected with the De Bardeleben Coal Corporation, putting the stock in one category, and the other investments in that corporation in another category, the last of which he classified under the title of 'Securities,' as wholly distinct and separate from the stock. Then, in order that there might be no contention that the devises which he was about to make in said item of the will, included the stock, he continued:

" 'And the devises hereinafter made in securities are to be discharged in the securities of said corporation.'

"Noting the care with which the testator differentiated between 'stock,' on the one hand and 'securities' on the other hand, it seems clear that he anticipated that the use of the term 'securities,' unexplained, or not defined, by himself might be claimed or held to include the preferred stock, and, therefore, in order that the basis for such a claim, or holding, might be utterly destroyed, he explained that he owned both stock and securities, and desired the devises made by him in securities to be discharged in securities. * * *

"The meaning of the testator, as expressed in item 5 of his will, would not be any clearer, more definite, or more precise than it is if he had said:

" 'A large part of my estate consists of the stock and securities of the De Bardeleben Coal Corporation, and the devises hereinafter made in securities are to be discharged in the securities of said corporation, and not in the stock of said corporation.' "

On the other hand, counsel for residuary legatees, appellees, in like forcible language, present a line of argument to this effect:

That appellant lays too much stress upon the use of "stock and securities" in the conjunctive; that the construction insisted upon is at variance with the general scheme of the will; that in the common language of business, as well as in the language of many statutes, "securities" include stocks; that the term should be given its commonly accepted meaning; that, construing the will as a whole, "stocks and securities" are words of description rather than exclusion or differentiation; that they mean to cover all holdings in the De Bardeleben Coal Corporation, thereafter designated throughout the will under the general term "Securities;" that, at most, the clause in question is equivocal or uncertain in meaning and subject to explanation by parol evidence.

The language employed in item 5 is suggestive of the construction presented by appellant; standing alone, we may say it is persuasive of that meaning. But we cannot say it is so clear and unequivocal as to be free from doubt on its face. Naturally we ask why employ such an indirect method to express a meaning easily expressed directly and clearly? If the testator meant that these legacies should be paid with mortgage bonds and debentures alone, would it not have been clearly more apt to say so, rather than use the general term "securities," one inclusive of stock, when he meant to exclude stock? The testator first mentions the fact that a large part of his estate consisted of holdings in the corporation. This suggests he is thinking of those holdings as a whole, and proposes to deal with them according to a testamentary purpose running through the will.

In item 7 the testator mentions the note of $106,000 due his estate from that corporation as the cash resource from which the executor will have ready funds to meet cash legacies, and postpones their payment until the maturity of the note.

Item 8 is more direct. He declares "all securities" shall remain in the hands of the executor until that event, because "it is my desire that the interest of said corporation be conserved so far as possible." Here is a manifest intimation that in some way the interest of the corporation might be involved in an earlier distribution of such securities. Is there any apparent reason why the corporation would be more concerned in a delayed division of the bonds, than in the division of the stock, a security standing in secondary place of profit sharing and more likely to be sacrificed, if not carrying a voting power in the management?

In face value the stock exceeded all other securities of his estate. Giving it value by careful management without interference was a natural desire of the testator. It would seem, therefore, that "all securities" in item 8 includes stock. If not, why did he not give other directions as to stock? Throughout the will legacies are payable from cash or securities. Stock is not mentioned except in item 5. In any event, the larger portion of the stock passed under item 6, the residuary clause of the will. According to appellant's contention it would all pass under that clause. Says the testator:

"My securities shall be distributed proportionately among said three divisions as far as it is practicable."

Appellant points out that the 5,550 shares of stock could be equally divided into three parts of 1,850 shares each, and there was no occasion to embrace the stock in the phrase "as far as practicable." This suggestion ignores the careful requirement in this item, and it is repeated in item 9 that "my securities shall be distributed proportionately."

The more rational construction is that "securities," as used in items 6, 8, and 9, include stock, the aim being that legatees shall take in actual values the same proportions represented by the face values of their several holdings, and that all shall be held by the executor until the date of distribution named in item 8.

Words are to be given their usual and ordinary meaning, unless the context shows they are used in a more restricted sense. They are supposed to be used throughout the same instrument in the same sense, especially when intended to identify and describe the subject-matter of a bequest.

The parties agree that "securities" in business and financial circles include stocks and bonds, and that the testator, a business man of large holdings of the kind, knew this meaning. The argument turns upon whether in item 5 he has purposely made a distinction, a definition of his own. That he has apparently used "securities" in the inclusive sense throughout other items of the will weakens the argument that it was used in a restricted sense in item 5. It seems probable that "stock and securities" are here used to make certain that all his holdings in the corporation are included and thereafter covered by the general terms "securities." Synonyms are often used conjunctively in this same will.

Appellees industriously point out that "bonds and securities" are used in a like sense in section 8357 of the Code.

Our conclusion is that item 5 is ambiguous, equivocal, or uncertain in meaning; that parol evidence becomes admissible to show the relation of the testator to De Bardeleben Coal Company, to his business associates therein, and his own explanation of his intentions at the time he was considering the terms of his will and causing it to be prepared, and his comments on the language employed after it was prepared and handed to him for execution. Steele v. Crute, 208 Ala. 2,93 So. 694; City Bank T. Co. v. McCaa, 213 Ala. 579,105 So. 669; Nat. Jewish Hospital for Con. v. Coleman, 191 Ala. 150,67 So. 699; Achelis v. Musgrove, 212 Ala. 47, 101 So. 670; Vandiver v. Vandiver, 115 Ala. 328, 22 So. 154; Jordan v. Ringstaff, 213 Ala. 512, 105 So. 641; Gardner on Wills, § 107. This evidence went to show that De Bardeleben Coal Corporation had been recently formed by the merger of three companies. The new company had assumed liabilities which led to the cash loan of $106,000. His relation to the management was most intimate; that he was greatly interested in the new company getting established on firm footing, and that he, at the time, expressly instructed his agent who carried information to the attorney drawing the will that these legacies were to be paid from the stock and other securities proportionately; that when he read the draft of the will, testator inquired if it was clear that this was the meaning of item 5, and signed it on assurance that such was its meaning.

Without going into further details, this evidence fully supports the decree of the court below. Conceding that the relation of attorney and client obtained between the testator and witness Robert P. Jones during the preparation and execution of the will, this fact did not render his evidence incompetent as privileged communications, under Code, § 7658. In will cases, the attorney of the testator is not precluded from giving evidence of communications relating to the execution or subject-matter of the will. The reasons for the rule are given in Wigmore on Evidence, § 2314. See, also, Wigmore, § 2394. For general line of authority to the same effect, see 40 Cyc. 2380, 2394.

Evidence of this character was considered without question of its competency in Achelis v. Musgrove, 212 Ala. 47,101 So. 670.

If we concede, without deciding, that Henry F. De Bardeleben had a pecuniary interest in the result of this suit, this did not render him incompetent, under Code, § 7721, as a witness in this case, involving only the claims of beneficiaries under the will, not the quantum of the estate. Alexander v. Alexander,214 Ala. 291, 107 So. 835. We think the construction given item 5 in the decree is the more reasonable, looking at the will as a whole, without parol evidence either way.

Affirmed.

ANDERSON, C. J., and SAYRE and GARDNER, JJ., concur.