Brown v. Mercantile Trust & Deposit Co.

Page, J., delivered the opinion of the Court. This proceeding was instituted to set aside a declaration of trust made by the appellant to the Mercantile Trust and Deposit Company of Baltimore (referred to hereinafter as “ The Trust Company.”) The complainant alleges in the bill that he inherited a considerable fortune from his father, the late George Brown, and being utterly unacquainted with business affairs, but anxious to have certain parts of his personal estate placed in the hands of some corporation who would manage the same profitably for him, but also believing that any such arrangement as he contemplated making would be subject to revocation, and being then possessed of stocks and securities aggregating in value the sum of $ 140.000, delivered the same on the 29th of June, 1894, to the Trust Company ; that said delivery was made for his personal use and convenience, and was understood by him to continue and be of force only so long as he might consider it desirable, and it remained unrevoked, but not to be permanently binding on him, and such was his belief at the time of making such delivery; that the Trust Company desiring to make declaration of the purpose of such delivery of the stocks and securities, which had been purely voluntary and without consideration, executed of its own volition the declaration of trust; a copy of which was filed with the bill: that by the terms of the said declaration, the entire income, less compensation to the trustee, is to be paid over to the complainant during his life ; and no present interest passed to others until his death ; that such declaration is entirely testamentary and can be annulled and set aside by a Court of Equity; “ that the delivery of the stocks and securities were delivered to the Trust Company at a time when he believed that he had sufficient income to pay all his obligations and support his family, but ³⁸⁸ that owing to the failure of some of the corporations in which he had investments to pay their accustomed dividends, he became embarrassed ” and therefore now desires to have the said trust dissolved and set aside ; that he has informed the Trust Company that he has revoked the trust, but it declines to return to him the stocks, etc., unless so directed by the Court; and he therefore prays that the said stocks and securities may be decreed to belong absolutely to him, and that the Trust Company may be ordered to “ deliverj reassign and transfer ” them to him. The declaration of trust referred to in the bill bears date the 29th of June, 1894. It declares that, whereas George Brown “hath at the execution of these presents,” delivered to the Trust Company certain stocks, bonds and securities (which are specifically set out and described in the paper) ; and inasmuch as the title to said stocks, etc., passed by the delivery, it was deemed important that some permanent record should be preserved of the terms upon which said transfers were made, and the duties assumed and the trust to be performed by said corporation in respect thereto, etc. The Trust Company is to ta^<e charge of and keep the stocks, etc., and to collect the income and profits thereof, and after deductions of lawful and necessary expenses of the administration (including as compensation for its services as trustee a commission of three per cent, on said income, and no charge for reinvestment) to pay over as collected to the appellant, the whole net income during his life ; and from and after his death, one-third of said income to his widow, and to divide the remaining two-thirds thereof among his childred living at the time of his death (the child or children of any deceased child to take the share its or their parent would have been entitled to if living), until the youngest of said children shall arrive at the age of twenty-one years, when said trustee is to divide two-thirds of the corpus of the estate equally among them, share and share alike (the child or children of any deceased child to take the share its or their parent would have been entitled to if living).

Upon ³⁸⁹ the death of the widow, the one-third of the corpus held for her to be divided in like manner. In case his wife did not survive him, the whole income to be equally divided among his children and the corpus in like manner when the youngest child attains the age of twenty-one years. The Trust Company is given power without the orders of any Court to make changes of investment “ at its discretion,” and to make sales and transfers as often as it deems best, for this purpose or for any other purpose, without any obligations upon purchasers to see to the application of the purchase money, with power to reinstate the proceeds of sale in any secutities, real or personal, and without any accountability for losses, “.save from the gross negligence of any one or more of its servants or officers.” But changes in investments and sale are to be made during the life of the said George Brown, “only with his assent, to' be evidenced by a memorandum in writing.” The trustee is to render quarterly accounts of the trust during the life of George Brown, and such other as he may at any time require, and upon the expiration of the trust the trustee is to be entitled to a commission of two and a-half per cent, in distribution of the principal. All the adult appellee defendants have answered admitting the facts set forth in the bill; except the Trust Company, which, after admitting the delivery of the securities and the making of the declaration of trust, and the attempt of the complainant to revoke the trust, and its refusal to comply with the demand to return the property, avers that it accepted the stocks and securities and executed the said declaration in good faith and believes it to be its duty to decline to comply with the demand of the complainant, but being a mere trustee, submits itself to such decree as the Court shall deem proper to pass.

It will be observed there is no charge made in the bill, and, as will appear hereafter, none was set up in the proof, that the appellant had had any actual fraud or imposition practised upon him in the procurement of the paper. The grounds upon which it is contended that the declaration of ³⁹⁰ trust should be set aside, are stated by the counsel for the appellant in the brief filed by him, as follows : 1st. That confidential relations existing between the appellant and appellee, being that of principal and agent, rendered the declaration of trust prima facie void. 2nd. The appellee is therefore bound to show “ to the full satisfaction of the Court, that it was the free, unbiassed act” of the appellant, and that he “ voluntarily and deliberately performed the act knowing its nature and effect.” 3rd.

That the appellant executed the paper under an entire misapprehension of the provisions, and under the belief that he had the right at any time to revoke it. 4th. That the absence of the power of revocation is fatal to its validity, under the circumstances. 5th. That the paper is in its nature a testamentary disposition of his personal property, which he is at liberty ta revoke at any time during his life. It may be seriously questioned whether the facts of this case bring it within the well-established rule, applicable to cases where a gift or conveyance of property is made to one standing in a confidential or fiduciary relation to the donor.

That rule is designed in some degree as a protection to the parties against the effects of overweening confidence and self delusion, and the infirmities of hasty and precipitate judgment. 1 Story Eq. Jur. 307. Where such relations do exist, and a benefit is obtained, the burden is on the donee to establish to the full satisfaction of the Court that the deed or instrument was the free, unbiassed act of the donor. But it is sometimes difficult to lay down with precision what is meant by the expression “ confidential relations ” or “ relations in which dominion may be exercised by one person over another.” Cook v. Lamotte, 15 Beav. 299, cited in Whitridge v. Whitridge, 76 Md. 73 .

Such a relation will undoubtedly be presumed in certain cases ; as for instance, in that of a guardian and ward, parent and child, attorney and client, and also in that of principal and agent, and may exist in many other situations. ³⁹¹ ' But it will not and cannot reasonably be presumed that the mere fact of the relation of principal and agent for limited or special purposes, necessarily raises a controlling presumption of undue influence on the part of the agent over the principal, particularly in matters outside of the special purposes for which the agent has been .employed. Whether such close and confidential relations existed between the parties so situated as to enable the one to dominate and control the .other would be a question of fact dependent upon the circumstances of each case. Cowee v. Cornell et al., 75 N. Y. 100 . In Brooke v. Berry, 2 Gill, 83 , and in Todd v. Grove, 33 Md. 191 , the agency extended to the transaction of all the business, and the management of all the affairs of the principal, and this being so, when the gift was obtained, it. was held that the facts brought these cases clearly within the rule of equity governing transactions between parties standing in a confidential relation.

But in Eakle v. Reynolds, 54 Md. 305 , where the proof showed that the donee had “ occasionally transacted business for the donor and that he had during the last sickness of the donor, who was his uncle, the general management of the farm, under the general directions of the donor, it was held that the facts did not show that the relations of the parties were such as to imply dominion or control either over the property or person of the donor.” Now the sole proof upon which it is contended here that such confidential relations existed between the appellant and the Trust Company, is the evidence of Mr. Gill, the president of the Trust Company, to the effect that Mr. Brown “ had employed us (the company) to sell securities for him ” and that the stocks, etc., were under “ our joint custody in the Trust Company.” Now it would be going very far to assume that because Mr. Brown had availed himself of the security furnished by the vaults of the Trust Company (whose business was partly that of a safe deposit company) to protect and keep his property; and (when a change of investment became necessary) had selected the company to ³⁹² make sale of such of his securities as he wished to dispose of, that a relation of confidence therefore existed between the parties, so close as reasonably to imply that the company possessed power to dominate his judgment and actions. And apart from -this, can it be successfully contended that the grantee received such a benefit as ought to bring the case within the rule ? Under the declaration of trust the company gets a benefit of three per cent, commission on the net income, and in the final distribution two and one-half per cent, on the principal. In no case we have been referred to has it been' held that a provision for reasonable commissions was a benefit conferred by the grant such as will bring the case within the doctrine, applicable to parties standing in confidential relations.

Judge Miller, with the concurrence of Judge Robinson, in his opinion in Williams v. Williams, said the law regards such commissions as compensations for services rendered, and not as a benefit granted by the deed. 63 Md. 409 . This was part of a dissenting opinion, it is true, but there is nothing in the opinion of the Court in conflict with it, and the utterance of so able and experienced a Judge, concurred in as it was by the late Chief Judge Robinson, is undoubtedly entitled to great consideration. Moreover, in Todd v. Grove, 33 Md. 193 , in the opinion adopted by this Court, the words of Sir G. J. Turner, delivered in Rhodes v. Bate (1 Chancery App., 256), were cited approvingly as follows : “As to the nature of the benefit, the injury to the party by whom the benefit is conferred, cannot depend upon its nature. This general principle, however, must, as it seems to me, admit of some limitation, It cannot, I think, reasonably be said, that a mere trifling gift to a person standing in a confidential relation, or a mere trifling liability incurred in favor of such a person, ought to stand in the same position as a gift of a man’s whole property or a liability involving it would stand in.” But, however this may be, we will now examine the case on its merits, as disclosed by the proof.

There is no suffi ³⁹³ cient evidence in the case, in our opinion, that the appellant executed the paper under a misapprehension of its provisions. The appellant states that he thought he could revoke it; but it is apparently with care that he abstains from affirming that he understood there was sucha power reserved to him in the paper, in terms. He further states that he signed the declaration, but never read over “ that part of it about the children. ” Mr. Gill, on the other hand, says, “ he read the paper and said he could not sign it without conferring with his lawyer,” that “ he left the office with the deed in his pocket,” and, a day or two later, returned “ to have some alterations made,” which were accordingly made. Except as to reading the paper this testimony of Mr. Gill is wholly uncontradicted.

It is not claimed that Mr. Brown is incapable of attending to business, and if he be not, it is