American Colonization Society v. Latrobe

Stockbridge, J., delivered the opinion of the Court. This case has been so recently before this Court in two previous appeals that any recital of the facts out of which it arises is unnecessary. ⁵²⁷ All of the essential facts will he found in the very full opinion filed in the case of The American Colonization Society v. Robert Soulsby, et al., 129 Md. 605 , and the second of which appeals, decided less than a year ago, will,be found in 131 Maryland, 296 . The present record contains four separate and distinct appeals, all of which raise questions of law rather than questions of fact, so that a brief statement will suffice, as these are successively considered. The appeals numbered respectively 41 and 43 are appeals by the State of Maryland, the one from an order of Court sustaining a demurrer to a petition filed on behalf of the State, by which it was sought to have the property involved in the case declared escheated to the State, as the result of the decision in this Court in the case in 129 Md., and the second of the appeals now to be considered is from the action of the Circuit Court in overruling the exceptions filed on behalf of the State to' the auditor’s account, by which a, balance of money in the hands of the trustees was audited to he paid to the American Colonization Society.

It will tend to simplify the case now before the Court to dispose of these two appeals before considering the others. As appears from the prior history of this litigation, Caroline Donovan executed a deed to certain named trustees of fee simple property in the City of Baltimore, for purposes' in that deed fully set forth. She also executed a will disposing of the property of which she died seized and possessed. Long after the execution of the deed, and after her death, proceedings were instituted by ber beirs to have the deed of trust set aside, because by the terms of that deed it was claimed that the instrument violated the rule of perpetuities. • By the opinion of Judge Pattison, speaking for this Court, in the case of 129 Md., that contention was sustained and the deed set aside, but a recovery of tbe property was refused to tbe heira, because of tbe uninterrupted adverse possession of the trustees for a period in excess of twenty ⁵²⁸ years.

The State of Maryland then intervened, and by its petition sought to have the property in question declared escheated to the State. This petition was demurred to, the demurrer sustained and petition dismissed, and this presents the question involved in the appeal in No. 41. A number of cases have been cited by the Assistant Attorney-General to support the State’s contention, but they are for the most part without any application in the present instance, for the reason that they t are based on statutes adopted in the States where those cases have arisen, and the Courts were called on to deal with a claimed escheat upon the basis of a proper interpretation of the statute. In this State there is practically no statute which is applicable, the section in Article 57 of the Code having to do mainly with a question of limitations; and the provisions contained in Article 93 relating only to personal property.

But there have been numerous adjudicated cases in this State dealing with the subject of escheat, wherein the subject has been fully considered. These are to be found as early as Casey v. Inloes, 1 Gill, 506 , and Hammond v. Inloes, 4 Md. 138 ; Matthews v. Ward, 10 G. & J. 443 ; and as late as the case of the George’s Creek Co. in Liquidation, 125 Md. 595 . The general doctrine, which has become the accepted rule of law in this State, is that laid down in the case of the Rock Hill College v. Jones, 47 Md. 17 , and a careful examination of the cases; discloses insurmountable obstacles against any recovery by the State of the property conveyed by Mrs. Donovan to her trustees, for two reasons: in the first place, she did not die without heirs; and in the second place, she did leave a will by which all of the rest and residue of her estate was devised and bequeathed. The rule of escheat in this £>tate is approximately that of the common law, and is clearly set out in 10 R. C. L. 604, in part as follows: “In a strict sense escheat at common law is applicable only to that which can be the subject of tenure, for the reason that it represents the reversionary interest or ⁵²⁹ right of the lord to take for want of a tenant. * * * In a trust estate the trustee holds the legal title-, and is competent to perform the necessary services; therefore, upon the death of the cestui que trust intestate and without heirs, the trustee takes the absolute title clear of the trust, and this right to take for his own use extends to the heir of the trustee.” This summary is a deduction from the English cases upon the subject, and in its concluding part is not entirely in harmony with the rule as recognized in this State in Mathews v. Ward, 10 G. & J. 443 .

If, therefore, follows that under the common law the trastees were competent to receive and hold the property as against the State, because they could render the service required by the feudal principle of tenure; that Caroline Donovan left heirs and did not die intesr tate and, therefore, the essential requirements for a reversion of the property to the State of Maryland by way of escheat are lacking in this ease, and the order appealed from must in this particular bo affirmed. Having reached the conclusion that the property can not be escheated to the State, it necessarily follows that the State has no present interest therein, and not having a present interest in the property, it has no- standing to objet to- the distribution account disposing of the money now in the hands of the trustees, Wagner v. Freeny, 123 Md. 24 , and cases there cited. The appeal in No. 43 must, therefore-, be dismissed. The appeal Numbered 40 is the one which presents the greatest difficulty.

This- is the appeal of the American Colonization Society against the trustees from the action of the Court in sustaining a demurrer of the trustees to- a petition of .the appellant, and dismissing that petition. The attitude of the Colonization Society at this point is somewhat anomalous. E'o-r a long series of years the- American Colonization Society had made no claim to any interest in the property involved in this litigation, other than that of a beneficial use, as the cestui que trust, under the terms ⁵³⁰ of the deed of Mrs. Donovan. As such it had received quarterly remittances from the trustees named in Mrs. Donovan’s deed, and their successors, without any question of any character, so far as is disclosed by the Record in the several appeals, which have come to this Court.

When the provisions of that deed were declared void the attitude of the Colonization Society immediately changed, and the claim now put forth in its behalf is that the trustees named by Mrs. Donovan were its agents; that the property belonged to it, or at any rate that there was only a bare legal title in the trustee, which the society at its will and pleasure is entitled to have transferred to it, working a merger of the legal and beneficial title; that the trust upon which the property was held involved no active duties to be performed on the part of the trustees, and for that reason as well the trustees should be required to transfer to the society the legal title held by them. As a, statement of an abstract legal principle, without reference to the facts of a particular case, there is ample law to support most of the argument advanced on behalf of the Colonization Society. The difficulty arises, however, when an attempt is made to apply these principles to the facts, as they have developed and exist in the present case. In most instances in interpreting a trust Courts endeavor to seek out the intent of the creator of the trust, and when it is ascertained to give effect to it as far as is compatible with the language employed.

There can of course he no pretense that it was the purpose of Mrs. Donovan to transfer the entire corpus of the estate conveyed by her to the American Colonization Society. If that had been her intent, it would have been a far simpler matter to accomplish, than to endeavor to create a trust of the character which she did. So far as any intent upon her part was concerned, it is manifest that what she had in mind was the creation of a legal estate, and a beneficial estate in the same property, but without their coalescing. ⁵³¹ But Mis. Donovan’s purpose is not now the controlling element involved in this proceeding.

This Court has already declared her deed to be void because transgressing a fundamental rule of the policy of this State. Erom this it follows that the petitioner, the American Colonization Society, can gain no assistance whatever from the fact that it was named as beneficiary in the Donovan deed, nor any right accrue to it, legal or equitable, because of that deed, and, therefore, the present contention of the society carried to its logical result would exclude the American Colonization Society from any benefit whatever, because of the deed of Mrs. Donovan to Latrobe and Harvey, as trustees. The deed did convey to them a legal estate, the vice of the deed lay rather in'the beneficial interest sought to he created under it. Messrs.

Latrobe and Harvey were not trustees by virtue of any appointment of the American Colonization Society. If they had been, there would have been more ground for the present contention of that society. The trustees were not in any proper sense the agents of the society. They derived their appointment, their power with regard to the property, their authority for its management from Caroline Donovan, not from the society.

Hence, their possession of the premises was in no manner the possession of the petitioning society. So far as they were accountable, their accountability was to the Court or Courts exercising equity jurisdiction in the City of Baltimore, an entirely different matter from what would have been the case had they derived their powers from, and been made accountable to, the American Colonization Society. The cases of Lee v. O’Donnell, 95 Md. 538 , and Potomac Lodge v. Miller, 118 Md. 417 , relied on by the petitioner, both turned on the intent of the creator of the trust, which as already stated, can not be given controlling effect in the present case. The first of these two oases leads up, however, to the other contention of the petitioner, that the estate of the trustees is a bare legal title, without active duties to be performed, and that the cestui que trust, or individual or cor ⁵³² poration which, had received the benefit of the trust is entitled to a transfer of the legal title.

In the case of Lee v. O’Donnell this was held to be true, for the reason that the sole duty in that case to be performed was the selection of a house, and when selected, the house was to vest in fee in the children of the testator,—the trustee was not instructed to rent the property, or told what use should be made of it. There is a long line of cases in this State dealing with the question of coalescing of legal and equitable estates, by reason of no active duties to be performed by the trustees. Warner v. Sprigg, 62 Md. 14 ; Thompson v. Ballard, 70 Md. 10 ; Brillhart v. Mish, 99 Md. 447 ; Raffel v. Safe Deposit & Tr. Co., 100 Md. 141 , and In re Hagerstown Trust Co., 119 Md. 224 , are but illustrations of them.

The case of Johnson v. Safe Dep. & Tr. Co., 79 Md. 18 , in which the opinion was prepared by the late Chief Judge McShehuy, was a case in which under the terms of a will there were created co-extensive legal and equitable estates for the benefit of the testator’s daughters. By the terms of the will the trustees were authorized to hold the property, and pay the rents and profits thereof equally to and for the benefit and use of the daughters. In that case the question of the intent of the testator was largely controlling of the conclusion reached.

If now, in the present case we could have regard to the intent of Mrs. Donovan, it will be noted that the trus^ tees were directed to pay the net rents; the use of this expression “net rent,” would carry with it as a necessary implication, that it was the purpose of the grantor that the trustees should continue to hold the legal title of the property, attend to its upkeep, and pay over the income which remained, and that is exactly what the trustees in this case did. The duties performed by them can not be characterized as nominal merely; they involved the rental of some five or six warehouses, attending to the taxes, insurance, repairs, the instalation of an elevator, the rebuilding of a front wall, and other similar duties which were more than mere incidental ⁵³³ repairs, and went to the permanent betterment of the property, and was .reflected by the increase in the rentals derived by them. In so far as the contention, made in the petition now under consideration, rests upon the lack of active duties to he performed, it- must fail. It is presented for the consideration of the Court, that