Larkin v. McCabe
Facts
James McCabe intended to divide his remaining property among his children and in 1933 took envelopes containing stocks and $10,000 bearer bonds for his daughters to his son-in-law, McClintock, after being advised that delivery was necessary to complete gifts. McCabe asked McClintock to keep the securities for the daughters, McClintock wrote on Rowe's envelope that he was holding it for her for safekeeping, and the envelopes were placed in McClintock's safety deposit box, to which McCabe had no access; McCabe later personally delivered Larkin's securities to her. McCabe reserved income from the securities during his life, and about a month later McClintock returned Rowe's and Irvine's securities to McCabe, who placed the bonds in the company vault; after McCabe's death, defendant claimed the bonds under a later written transfer from his father and also claimed sole ownership of the family farm, though the trial court imposed a trust on the farm. Defendant had possessed the farm, taken its rents and profits, and advanced money to protect it, for which the trial court awarded reimbursement plus interest, but denied him compensation for management services.
Issue
Whether McCabe made valid inter vivos gifts of the bearer bonds to Rowe and Larkin by delivering them to McClintock or directly to Larkin, despite reserving life income and later regaining physical possession of some bonds. Also, whether defendant, as holder of legal title to the farm under a constructive trust while asserting exclusive ownership, was entitled to prejudgment interest on expenditures and compensation for services managing the farm.
Rule
A valid inter vivos gift of a bearer bond requires intent, delivery, absolute disposition, acceptance, and donor competency. Delivery to a third person for the benefit of the donee is sufficient and the depository is treated as trustee for the donee, not agent of the donor, where the donor delivers the property for the donee and reserves no right to revoke; a reservation of income for life does not defeat the present gift, and later redelivery to the donor for a purpose consistent with the donee's ownership does not revest title. A cotenant or constructive trustee in possession who asserts exclusive ownership and receives rents and profits is not entitled to interest on expenditures until judgment, and absent agreement is not entitled to compensation for services managing the common property.
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