Coudon v. Updegraf , 117 Md. 71 ( 1911 )

George P. Whitaker, a resident of Cecil county, died on the 30th day of December, 1890, leaving surviving him a widow and five children. He had made and executed a last will and testament, which was duly admitted to probate by the Orphans' Court of Cecil County on the 5th day of January, 1891, and by which he appointed Joseph R. Whitaker, Nelson E. Whitaker and Joseph Coudon, executors, and to whom letters testamentary were granted on January 6th, 1891. Nelson E. Whitaker has since died, and Joseph R. Whitaker resigned his office as executor, so that Joseph Coudon is now the sole surviving executor of the will.

George P. Whitaker died seized and possessed of a large and valuable estate which has been, since the grant of letters thereon, administered exclusively in the Orphans' Court of Cecil County.

It appears by the 16th account of the surviving executor, filed in that Court in March, 1910, that the estate in his hands then amounted to $279,595.62.

The bill in this case asks first, that the Court assume jurisdiction of the trust created by the will of George P. Whitaker, interpret the will and direct the trustee in the execution of the trust; secondly, that the trustee be required to give bond for the faithful discharge of his duties; thirdly, that the widow of the deceased, Mary L. Whitaker, one of the defendants, be required to make discovery of an antenupital agreement made between herself and George P. Whitaker, and that Joseph Coudon, the surviving executor be required to make discovery as to the investments and extent of the estate; and fourth, that a division and distribution of the residue of the estate be made among those entitled.

The defendants demurred to the whole bill, and also to certain parts thereof. The Court overruled the demurrer to the whole bill and to all the parts, except the demurrer to such part of the bill which asked that Mary L. Whitaker, the widow, be required to make discovery of the ante-nuptial contract. The demurrer to this portion of the bill was sustained. This appeal was taken by the defendants from the ruling on the demurrer.

The substantial and controlling questions presented by the appeal are: First. Has the Court of equity under the facts appearing in the record jurisdiction to assume the administration of the estate and to require the executor as trustee to give bond? Secondly. Can a division and distribution of the residuary estate now be made?

A number of the parties to the suit and who are interested in the residuary estate are non-residents of the State of Maryland. There is a trust created by the will and the property embraced by the trust is granted to the executors as trustees, and there is imposed upon them certain active and specific duties with respect to the trust.

It is alleged in the bill and admitted by the demurrer that the surviving executor and trustee has loaned to the Whitaker Iron Company, a non-resident corporation, the sum of $79,595.62 the money of the estate "on call and without security."

The property constituting the trust estate must be treated as being in the hands of the surviving executor in his capacity as trustee. It is well settled that where the same party is both executor and trustee, a trust fund by operation of law will be considered in his hands in his capacity as trustee after the time limited by law for the settlement of the estate, and that the probate of the will and the taking out of letters testamentary will be considered as sufficient evidence of the acceptance by him of the trust.

This doctrine of transfer by operation of law has found expression in many adjudged cases in this Court. Seegar v.State, 6 H. J. 162; Watkins v. State, 2 G. J. 220;Hanson v. Worthington, 12 Md. 418.

It is equally well settled in this State that the Orphans' Court has no jurisdiction of the administration of a trust created by a will. Conner v. Ogle, 4 Md. Ch. 425; Taylor v.Bruscup, 27 Md. 219; State, use of Gable, v. Cheston,51 Md. 352.

There being a trust created by the will a Court of equity was the appropriate tribunal in which it should be administered, and any party interested in the trust estate had a right to apply to that Court to require the executor as trustee to give bond. The provision of the will creating the trust falls within section 219, Article 16 of the Code which provides that: "In all cases where a trustee has been appointed by a will or deed to execute any trust, and any person interested in such trust shall make it appear to the Court that it is necessary for the safety of those interested in the execution of the trust, that the trustee should give bond and security for the due execution of the trust, the Court may order that such bond be given, on or before such day as the Court shall name; and if the bond, with such security as the Court shall approve, be not given by such trustee, then the Court may remove such trustee and appoint one in his stead, who shall give such bond and security as the Court may require." This section was intended to afford full protection to all persons interested in the trust property, and we are of opinion that the allegations of the bill are quite sufficient to authorize the Court to exercise its power vested in it by the act.

It has long been settled that legatees have a right to file a bill in equity against an executor for the recovery of their legacies and where it appears, as it does in this case, that many of the parties are non-residents we can have no doubt that under the principles announced in Alexander v. Leakin, 72 Md. 199, and Hyatt, Trustee, v. MacGill, 80 Md. 253, this case is one which demands "the larger powers of an equity Court properly and satisfactorily to deal with the subject-matter or the parties."

The question as to whether a division and distribution of the rest and residue of the estate can be made prior to the death or remarriage of the widow of George P. Whitaker involves a construction of his will.

By the second item of the will the testator referred to an ante-nuptial contract between himself and wife which he expressly affirmed, and he directed his executors to see that the money payments provided for in the contract were regularly made. The amount to which she was entitled under the contract is not stated in the will, nor does it appear in the record. He then devised and bequeathed an estate for life, or during her widowhood to her in certain real and personal property. He then provided as follows: "I also give and bequeath to my said executors two hundred and fifty shares of the capital stock of the Whitaker Iron Company at Wheeling, in West Virginia, in trust, the dividends from which are to be applied in the order and to the extent as follows: First, that there shall be regularly paid to my said wife, Mary L., so much thereof as may be necessary to fully comply with all the terms of said ante-nuptial contract; second, so much thereof as may be necessary to provide for the repairs, insurance, taxes and maintenance of the dwelling as heretofore provided for; third, that four hundred dollars be paid to my said wife annually in addition to the sum provided for and stipulated to be paid to her in said ante-nuptial contract, and the residue, if any, be held in trust and so invested as may seem best in the judgment of said executors, that the objects of said bequest may be regularly and promptly complied with during the life or widowhood of my said wife, and at and upon her death or the termination of her widowhood, whichever may sooner occur, I will that said two hundred and fifty shares of stock together with any residue of dividends of the same not then expended for the purposes hereinbefore set forth shall revert to my residuary estate; but should the said dividends arising from the said two hundred and fifty shares of stock be not sufficient at any time to enable my executors to make the payments and discharge the trust hereby created for the benefit and behoof of my said wife and hereinbefore provided, I hereby expressly authorize and empower them to supply any deficiency that may exist from time to time from my residuary estate.

In the third item he conferred power upon his executors to sell all his real and personal estate, except his stock in the Whitaker Iron Company and the George P. Whitaker Company. By the fourth item he gave to certain named grandchildren ten shares each of the capital stock of the George P. Whitaker Company. This stock he directed to be delivered to them at the expiration of five years from his death.

The fifth item is as follows: "Fifth, It is my intention and desire, and I do hereby direct that all the rest, residue and remainder of my estate and property not hereinbefore devised and bequeathed shall be divided into five equal parts or shares, and that the same be distributed among my five children, namely, Caroline Naudain, Nelson E. Whitaker, Henry C. Whitaker and Cecil N. Whitaker and Edmund S. Whitaker, equally, share and share alike; and the advancements made to my said several children as will appear from the charges against them on my books at my death I consider a part of my residuary estate, and the aggregate indebtedness of my children as shall appear from my books shall be taken into account before making distribution, and from the distributive share of each child his or her indebtedness at the time of my death shall be taken and deducted, etc." He then provided that the distributive share of his son Edmund S. Whitaker should be held in trust and the interest, profits and income thereof paid to him during his life. This is followed by pecuniary legacies to certain designated persons.

In the construction of a will, "the cardinal canon around which all others centre is this, that the intention of the testator when ascertained from the whole instrument, or from the instrument as read in light of surrounding circumstances existing at the date of its execution, must be given effect if that intention does not antagonize or conflict with some rule of law of property." Woman's Foreign Missionary Society v. Mitchell,93 Md. 202. The best evidence of the testator's intention is found in what he has said in his will.

When the will is read in the light of these principles the construction contended for by the appellants, viz.: that the testator intended to postpone the division and distribution of the whole residuary estate until after the death or the re-marriage of his widow cannot be accepted, first, because such a construction would be an unreasonable one, and, secondly, because it does not accord with the plain meaning of what the testator has said in his will.

It would be harsh and unreasonable thing, in the absence of language imperatively requiring it, to hold that the testator intended to tie up the whole of this large estate during the life or widowhood of his wife, and thereby deprive his children and the other legatees of the possession and enjoyment of any part of his estate for an indefinite time. He has not said that this was his intention, and if he had intended this it is reasonable to suppose that he would have so declared in plain language. On the contrary, the clear meaning and import of the language used show, we think, that this was not his intention. The specific legacies are given in absolute and unqualified terms, and the time of their payment is not expressly postponed, except in the case of the bequest to the grandchildren mentioned in the fourth item of the will. The shares of stock bequeathed to them he directed should be delivered to the legatees after the expiration of five years from his death.

There is a direct and absolute present gift to his five children in equal shares of all the rest, residue and remainder of his estate. These children under the will take vested interests, and the pecuniary legacies were payable in one year after the testator's death, there being in the will no time fixed for their payment, except in the one instance mentioned.

In disposing of the residuary estate the testator used plain, direct and unmistakable language. "It is my intention and desire, and I do hereby direct that all the rest, residue and remainder of my estate, etc., shall be divided into five equal parts or shares and that the same be distributed among my five children," is the language used.

The contention of the defendants that this division and distribution of the entire residuary estate is postponed until the death or remarriage of the widow by the following clause in the second item of the will: "But should the said dividendsarising from the said two hundred and fifty shares of stock benot sufficient at any time to enable my executors to make thepayments and discharge the trust hereby created for the benefitand behoof of my said wife as hereinbefore provided, I herebyexpressly authorize and empower them to supply any deficiencythat may exist from time to time from my residuary estate."

This clause must receive such a construction as will harmonize with the other provisions of the will and thereby effect the general intent of the testator. It was clearly his intention to make certain, secure and permanent the provision made for his wife, and for that purpose the executors by the clause quoted were authorized and empowered to apply such portion of the residuary estate as might be necessary; but they had power to apply only such portion of that estate which might be required for that purpose. It could never have been his intention to have authorized them to retain the whole residuary estate. The language employed does not reasonably and fairly imply such an intention.

At the time of the creation of the trust for the benefit of his widow, the stock of the testator in the Whitaker Iron Company consisted of two hundred and fifty shares, worth $25,000.00. These shares constituted the trust estate. In 1901 a stock dividend was declared by the Whitaker Iron Company whereby there was awarded to the executor and trustee another two hundred and fifty shares of the stock of said company thereby increasing the amount of said stock in the hands of the trustees to five hundred shares, worth $50.000.

If this stock dividend was based upon the earnings of the company, and the company had the power to so distribute it, and this power was validly exercised, then this extra two hundred and fifty shares, declared as a stock dividend, must be treated as income from the trust estate. Coast Line Dividend Cases,102 Md. 73.

It is alleged in the bill that the widow of George P. Whitaker is now over eighty years of age, and that in the nineteen years of the administration of the trust not only has the income on the shares of stock placed in trust been sufficient to meet the requirements of the will made in her behalf; but that a large surplus has been accumulated by the trustees from the dividends on the extra stock of the Whitaker Iron Company and from other sources, amounting now to $79,595.62.

Where it appears, as it does by this record, that the shares of stock and the accumulation of dividends held by the trustees are amply sufficient to gratify the provision of the will made for the benefit of the wife, we can see no reason why a division and distribution may not now be made by the Court under a decree so framed as properly and safely to guard and make secure the provision made by the testator for his wife.

Decree affirmed, the costs to be paid out of the estate.