Baer v. Kahn

Pattison, J., delivered the opinion of the Court. The appeal in this case is from two orders of the Circuit Court No. 2 of Baltimore City. By the-first of these orders the Court assumed jurisdiction of the trust estate of Lena Kahn. The second directed the trastee to pay to her solicitor for his services the sum of one hundred dollars, seventy-five dollars of it to be paid out of the corpus of the estate and twenty-five dollars out of the income.

The facts alleged in the bill filed by the appellees are substantially as follows: Lewis, Moses and Solomon Baer for a number of years successfully cohducted the hide, fur and wool business in the ¹⁹ City of Baltimore under the firm name of Lewis Baor & Company. In 1905 the firm purchased about nine thousand dollars of the capital stock of B. Kahn & Bros. Company, a corporation of which Benjamin Kahn, husband of Lena Kahn, was manager. This corporation was not prosperous, and as a result of said investment Lewis Baer & Company lost about three thousand dollars.

This: loss, it is alleged, produced an unfriendly feeling .on the part of Lewis Baer for both his sister and her husband, Benjamin Kahn, in consequence of which, he wrongfully contended that the said nine thousand dollars, although in the nature of an investment, was in fact a loan to his sister and her husband, and he unreasonably demanded and received from them their note for the payment of said sum of three thousand dollars, the amount so lost by the firm. Solomon Baer died in 1913. In his will he bequeathed certain sums of money in trust to Lewis and Rebecca Baer for the benefit of Lena Kahn and her minor children. A petition was filed by those named as trustees, asking to be relieved of the administration of the trust, but thereafter Lewis Baer consented to serve, and Samuel J. Fisher, the appellees’ solicitor in this case, was appointed to servo with him as co-trustee.

Lewis Baer afterward withdrew as trustee and Fisher thereafter1 acted as sole trustee. In March, 1915, Moses Baer died, and by his will dated May 27th, 1914, he bequeathed two thousand dollars to Arthur Kahn, two thousand dollars to Lewis Kahn and eight thousand dollars to Rosanna Kahn, eliildren of Lena Kahn, and twenty-four thousand dollars to Lewis Baer in trust for Lena Kahn. The provision creating said trust is found in the fourth item of his will, which is as follows: “I give and bequeath unto my brother, Lewis Baer, the sum of twenty-four thousand dollars ($24,000.00), in trust and confidence, to hold the same, malte such investments or reinvestments thereof as he,in his discretion, may see fit, defray all necessary expenses ²⁰ thereon, and pay the net income arising therefrom, quarterly, unto my sister, Lena Kahn, for and during the term of her natural life, * * * . Upon the death of my said sister, Lena Kahn, this trust shall cease, and said property and estate held in trust at the time of her death under this paragraph of my last will and testament, shall then vest absolutely, free and clear of all trusts, in her children then living, and the then living descendants of any deceased child of my said sister, Lena Kahn, per stirpes but not per capita, share and share alike, absolutely.” In the further disposition of his property one-third of his estate wasi devised to his wife, Mamye Baer, and after making smaller bequests to another sister and several nieces and a nephew, he gave the residue of his éstate to his brother Lewis absolutely.

In the seventh clause of his will is found the following provisions: “I empower my said trustee * * * to invest alt moneys or funds held in trust under this, my last will and testament, in such securities as he * * * may see fit, and to change the investment thereof, when, as often and in such manner as my said trustee * * * may deem advisable. I also authorize and empower my said trustee * * * at any time, during the existence of the trust set forth in this, my last will and testament, to sell, assign and convey any of the trust property, original or substituted held under this, my last will and testament, for the purpose of investment, reinvestment, distribution, division, or any other purpose whatsoever, and to execute, acknowledge and deliver any deeds or instruments of writing that may be necessary to carry these powers into effect, and no one dealing with my said trustee or any successor, appointed by a court of competent jurisdiction, shall be required to see to the application of any purchase money.” ²¹ Several days after the death of Moses Baer his will was read, and immediately thereafter, as the bill alleges, Lewis Baer “burst into tears,” and told his sister, Lena Kahn, “that the sndden death of his two brothers within so- short a time necessitated the withdrawal of an unusually large amount of cash from the firm, of Lewis Baer & Company, which he feared would cause financial disaster to him,” and “that if he had the amount which he had lost in the B. Kahn Bros. Company that it would to some extent help him out of his difficulty.” It was then that Lewis Baer informed his sister that in addition to the bequest made to her in his will, Moses Baer had a policy of insurance on his life for the sum of five thousand dollars, which upon his death was payable to her and her daughter Rosanna in equal shares, “and begged her to assign that to him in part payment of the alleged indebtedness.” She finally agreed, over the protest of her husband, to pay fifteen hundred dollars out of the proceeds of the policy upon the note previously given by her and her husband. It was then charged that, notwithstanding the alleged need of money to save the firm .from financial difficulties, Lewis Baer shortly thereafter purchased an automobile for his own pleasure, for which he paid about fourteen hundred dollars.

The further charge was made against Lewis Baer that in order to increase the residue of the estate that was devised to him he delayed stating his final account as executor, which resulted in financial loss and injury to Lena Kahn. The bill then alleges- that on April 18, 1916, she requested her attorney, Mr. Eisber, to write Judge Riles, attorney for the defendant, for information regarding the manner in which the corpus of her trust estate would he invested, suggesting that as much as possible of it be- invested in ground rents-, yielding a net income of from five to six per cent., and that the estate.be administered under the supervision, direction and control of a Court of Equity. ²² Mr. Fisher wrote Judge Riles, as requested, and received in response thereto two letters. In the first Judge Riles stated “that his letter had been referred to Mr. Baer,” and in the second, “that he did not represent Mr. Baer in the matter- of the trust estate of Lena Kahn, and suggested that Mr. Fisher write Mr. Baer direct,” which he did. “Several days thereafter, Mr. Baer called to see Mr. Fisher, and informed him that he had procured a safe deposit box exclusively for the securities of this trust estate, but he refused to divulge the securities in which the corpus of the estate had been invested, and declined to ask one of the equity courts of the city to assume jurisdiction of the trust.” On July 5, 1916, Mrs. Kahn received from Lewis Baer, as trustee, his check for the amount then due and owing to her as income from the trust estate, and accompanying said check was a statement showing how a part of said funds was at that time invested. Thereafter, on the same day, Mr. Fisher, at the request of his client, again wrote the trastee, Mr. Baer, asking how the remainder of the trust fund had been invested, and asking him to petition to a court of equity to assume jurisdiction of said trust, to which letter no answer was received, either by her or her* attorney.

The bill concludes with a prayer asking the Court to assume jurisdiction of the trust, and that the trustee be directed to administer said trust under the supervision, direction and control of the equity court. Lewis Baer admitted many of the allegations of the bill, but denied that he had lost his affection for his sister, or that he had ever treated her with rudeness or incivility or had by undue pressure induced her to sign the note alluded to, or to make payments thereon, or that he had ever refused to give her or her counsel any information “that she was entitled to receive,” or that he had ever made untruthful statements to her or to her counsel, or that in his actions as ²³ trasteo ho had shown or that he would show any spirit of vindictiveness. The answer then avers that he is not impressed with the safety or desirability, of such ground rents as can now he had which will yield five or six per cent, net upon the money invested. He then, in his answer, gives a full statement showing how and in what securities the entire trust estate was at such time invested.

The answer further avers his unwillingness to retire voluntarily from said trusteeship, as it was his brother’s will that he should serve as trustee*, and that in his opinion the provisions found in the will of his, brother were made for the express purpose of confiding the management of the estate and the investment of his funds solely to his judgment, and, because of the wishes of his brother, expressed not only in the will, but to him personally, and because of the expense that would necessarily be involved if the estate was administered under the supervision of the Court, he “does not feel justified in giving his assent to the administration of the trust under the direction of this Court.” To the answer a general replication was filed, and thereafter an order of the Court was passed, at the instance of the plaintiff, granting leave to take testimony orally in open court. Upon, the call of the case on the day set for hearing counsel for the plaintiff read the bill filed; counsel for the defendant thereupon read the answer, and having* finished reading the answer said to the Court that it might serve to explain the ease and somewhat clarify the issues if he made a brief statement. His statement, as requested, was then made and it, with what followed at such time, was at the request of the counsel in the case certified to by the Court. This certificate as found in the record is as follows “Counsel for the defendant thereupon stated that many of the statements contained in the bill of complaint were, in his opinion, irrelevant, hut that it was true that the three brothers named in said hill, viz, ²⁴ Lewis -Baer, Moses Baer and Solomon Baer, had engaged in business together; that Solomon Baer died about thp year 1913, leaving Lewis Baer, one of his trustees, and that Lewis Baer afterwards resigned from said trust.

The counsel further stated that the defendant expected to prove that Mr. Moses Baer at the time when Mr. Lewis Baer resigned the trusteeship as aforesaid, said to Lewis Baer that he hoped that Lewis would not resign from the trust which would be' imposed upon him by the will of said Moses. The counsel further stated that he expected to prove that Moses Baer had told Lewis Baer that he did not wish his