Sutton v. Safe Deposit Trust Co. , 155 Md. 483 ( 1928 )

The testator bequeathed and devised his estate to the Safe Deposit and Trust Company upon the primary trust to divide it in four equal parts, with full power to the trustee to sell, convey and assign any part of his estate in order to make this equal division in four parts. After this division was so made, he directed his trustee to convey and assign absolutely one of said equal fourth parts to his son, his heirs, personal representatives, and assigns. Then the testator created a trust in two of these equal fourth parts for the benefit of his married daughter, who was to enjoy the income therefrom during her life, with power to dispose of two-fifths of said trust estate by her last will. After the death of the life tenant, the trustee was directed to apply so much of the residue of this trust estate as might be necessary for the "education and maintenance of any child, children or children of a deceased child of my said daughter, who may be living at her death, until the expiration of twenty years after the death of my said daughter." At the end of this period, the trust was to cease, and the trust estate then remaining was bequeathed and devised to "the child, children or children of a deceased child of my said daughter, the issue of deceased children of my said daughter to take by substitution the share which their respective parents would have taken."

The testator then created a trust in the remaining one-fourth part into which his entire estate had been divided for the benefit of his son during his life, but without any power of disposition. After the death of the son, the income and the corpus of the estate were to be applied, so far as was necessary, "to and for the education and reasonable maintenance of any child, children or child of a deceased child of my said son, who may be living at his death until the expiration of twenty years after the death of my said son," when the entire trust fund was to "vest absolutely in the child, children, and children of a deceased child of my son, the issue of deceased children taking by substitution the respective share or shares which their respective parents would have taken."

Inasmuch as these two separate and distinct trusts left unprovided for the contingencies of either of his two children dying without issue, or of a failure of the issue of either during the remaining twenty year period limited by each of the two trusts, the testator next anticipated these possibilities by creating a further trust in this language: "That the share, part or interest of my said son, and the share of my said daughter so dying without children, and the share or shares of the child or children of my said children, so dying, during the continuance of these trusts, shall be held by said trustee, and its successors, in trust, as to the realty for their respective heirs, and as to the personalty for such person or persons as under the laws of Maryland would be entitled to be the distributees of such deceased son or daughter or of such deceased child or children of such deceased son or daughter."

If the will had stopped at this point, the duration of the trust arising from the specified contingencies last mentioned would not have been expressly fixed, and its termination would have had to be determined by ascertaining the testator's intention through a construction of the language of the will, since the record shows all the trust estate to be personalty and the statute of uses does not apply to personal property. Milleron Construction of Wills, secs. 182, 168. However, the duration of the trust is declared by the following sentence at the end of the paragraph last quoted: "Subject, however, in all respects to the provisions and limitations made by this my will in reference to the other trusts hereby created, my intention being that all of the trusts created by this will shall terminate upon the end of twenty years after the death of the survivor of my said children."

This last sentence consists of two clauses. The first imposes upon the final trust certain "provisions and limitations" made with respect to the preceding trust, and the second clause is in apposition to the first, and, so, defines the first clause and explains that the term "provisions and limitations" refer to the preceding provisions and limitations prescribing how long the trust should continue, and the absolute vesting in possession of the estate at the end of that period. Mercer v. Hopkins,88 Md. 292, 311, 312. This second clause is, therefore, restrictive and prevents a more comprehensive meaning being ascribed to the first clause.

The first trust was limited to the life of the daughter and twenty years after her death; and the second trust was likewise limited for the life of the son and twenty years following his death. Since the third trust was created to meet contingencies which might arise in one or both of the first and second trusts, it was necessary to adopt some limitation as to the length of the third trust, hence the first clause of the provision under discussion, and the second clause to make it clear that all three trusts were to end no later than twenty years after the death of the survivor of the testator's two children; and this is accomplished by the construction that, if the provisions for a third trust would become operative either by reason of the death of the daughter without leaving children, or because of the daughter dying and leaving any child or children, who should die without children during the twenty year period after the daughter's death, then, in either contingency, the third trust would continue for twenty years after the daughter's death. In like manner, if, as here, the provisions for a third trust became effective either through a lack or failure of issue on the part of the son, then the duration of the third trust would, similarly, be twenty years counted from the death of the son.

It follows that, whether the property affected by the trust be realty or personalty, the trust for the benefit of the son for life must endure until the end of twenty years after the death of the son. Supra. But the trust is declared to be for the benefit of the heirs of the son, to the extent of the trust estate being real property, and of his distributees so far as the trust is personalty. As heirs and distributees are fixed and determined as of the date of death of the party through whom they inherit or claim, and as the law favors the early vesting of estates, the heirs and distributees to take the gift are those in being at the death of the son. Marshall v. Safe Deposit Co., 101 Md. 1, 6, 8. Accordingly, the trust in question would continue for the benefit of such heirs and distributees twenty years after the death of the son, when such trust would end and the trust estate would vest in both enjoyment and possession in such heirs and distributees, their heirs, assigns or personal representatives, as the case may be. Under the facts of this record, the trust being of personal property and the daughter of the testator being the sister and the next of kin of the son at the time of his death, the equitable title to the trust property then passed to the sister, so as to give her a right to the immediate possession of the income, and this equitable title would be enlarged to an absolute title when the trust ceased twenty years after the son's death. The sister is entitled to the income from the estate left in trust for her brother until the expiration of twenty years from his death, when she will have the right to the absolute possession of the corpus, and meanwhile the right to will, assign and transfer her absolute interest therein at the termination of the trust as well as her right to the income during the period of the trust.

This conclusion is different from the construction adopted by this court, which postpones the ascertainment of the heirs or distributees to take until the death of the surviving child, but suffers both the income and principal of the trust to be consumed in the "education and reasonable maintenance" of the sister, who is in her sixty-fourth year. It seems clear to the writer that, when the testator gave the income from the trusts to his son and daughter for life without any power to encroach upon the principal for their maintenance, and bestowed upon the trustee, after the death of the life tenant, the power to use the corpus of the trust only when "necessary for the education and maintenance of any" child or grandchild respectively of his son and daughter, he precluded the conception that the principal of either trust could otherwise be consumed. In conferring this power upon the trustee, he had in mind a particular object for the benefit of a definite and limited class, whose immaturity and dependence would make them the natural beneficiaries of such a provision. The sister is at an age where education is commonly no longer sought and, if she does not require maintenance, the trust will not be of actual benefit to her but be one for accumulation merely, since, by the opinion of the court, the trust estate, at her death, will go "to those who at that time answer to the description of the class that is then to take."

The case of Mercer v. Hopkins, 88 Md. 292, has been cited as controlling and supporting the opinion of the court. While there is a similiarity between the will construed in that case and the one at bar, there are substantial differences in their language and their provisions, which make against accepting as a precedent the case cited. Supra. The instant will contains a power in one life tenant to dispose by will of a portion of the trust estate for her benefit, while the other life tenant has no such power. Further, the trustee of the respective trusts for the son and daughter has the right to apply, after the death of the life tenant, as much of the corpus of the several trusts as he might deem necessary for the education and maintenance of the grandchildren or great grandchildren, in certain circumstances, of the testator. These powers are not found in Mercer v.Hopkins, supra. In addition, the wording of the provision in the will at bar that is relied upon to make applicable the antecedent terms of the trusts is different. These dissimilarities in phraseology, and in provisions with reference to material matters which relate to and affect the plan of distribution, depriveMercer v. Hopkins, supra, of its authority in the present case, where variant terms of the first and second trusts make the general provision relied upon inapplicable to differing trusts, except as to provisions and limitations indicating the duration of the trust estate created.

The difficulty of relying upon Mercer v. Hopkins, supra, as a precedent in the instant case is illustrated in the opinion of the majority when, under the construction adopted, it denies to the sister the power in the third trust that was conferred upon her in the first trust to dispose of two-fifths of the corpus of the trust by will, but confers upon her the enjoyment of both the income and principal, if necessary, for her "education and maintenance," as was similiarly provided in the first trust for the benefit of her children and grandchildren. If the enjoyment of both income and principal be one of the "provisions and limitations" embraced by the sentence in controversy, why is not the power to appoint brought by the same process of construction, within the purview of this sentence? Nevertheless, if the power of the trustee to use the income and principal and the power of the sister to appoint be both held similiarly to apply to the third trust, the anomalous situation would result of maintenance and education being afforded one not of the particular class specified by the testator, and of the estate passing to the distributees of the son under the terms of the third trust subject to a reduction of two-fifths. It is a fortuitous circumstance that the sister happens to be at present both the next of kin and heir at law of the son. The testator contemplated a number of possible contingencies, and among them was that the son might be the only next of kin and heir at law of the sister. Such a situation would have simply substituted the son for the daughter in the present problem. Could it be successfully maintained that the son would then have had the power under the third trust to appoint by will two-fifths of the trust set apart for the sister and her issue? Other illustrations might be given, but these are sufficient to demonstrate that Mercer v. Hopkins, supra, is not decisive in the construction of the will before this tribunal.