Fidelity & Deposit Co. v. State Ex Rel. Groh

Sloan, J., delivered tbe opinion of tbe Court. Haney Feebler died August 1st, 1890, leaving a will probated in the Orphans’ Court of Washington County August 8th, 1890, whereby she disposed of her estate as follows: “I give and devise unto Louisa M. Bell, formerly Louisa M. Funk, all tbe income arising from my property, real, personal and mixed, during her natural life at tbe death of said Louisa M. Bell, formerly Louisa M. Funk all tbe principal arising from tbe sale of all my property real, personal and mixed shall be divided as follows: ³⁰⁶ “To the child or children of said Louisa M. Bell formerly Louisa M. Funk which may be hereafter born to her each shall receive a share equally with the brothers and sisters of said Louisa M. Bell, formerly Louisa M. Funk, namely, John E. Eunk, Fannie Funk, Susie Funk, Effie Funk, Dora Funk and Mrs. Alice Rowe wife of John Rowe of Waynesboro, Pa., and the share which would in this manner fall to Mrs. Alice Rowe shall be equally divided among her children, share and share alike.” The niece, Louisa M. Bell, née Funk, was appointed executrix without bond but with no' power of sale. There is no evidence that she ever qualified. May 5th, 1911, Louisa Eunk, who- had, in the meantime, been divorced and resumed her maiden name, was adjudged a lunatic and the inquisition confirmed by the Circuit Court for Carroll County, and Albert J. Long of Washington County was appointed committee and trustee to take charge of and manage her property under the direction of that court.

On September 16th, 1911, by Albert J. Long, their solicitor, he, as committee and trustee of Louisa M. Funk, and all of the adults who would be entitled to take the proceeds of the estate of Fancy Leehler upon the death of Louisa M. Funk, filed a bill against those entitled who> were then minors, to wit, Charles Rowe and Guy Rowe, sons of Mary Alice Rowe, and Earl Funk, son of John E. Funk, deceased, and against Louisa M. Funk, lunatic, and Mary A. Rowe, administratrix c. t. a. of Fancy Leehler, deceased, by which it was alleged that Fancy Leehler died seised of five parcels of land in Washington County, two of which were improved by dwelling houses; that the properties. were not producing as they should; and “that it would be to' the advantage of all the parties concerned and having interest in said properties if said real estate wasi sold and the proceeds invested so as to> inure to the benefit of the said Louisa M. Funk during her natural life and at her death to be divided among the parties entitled thereto.” The prayers for relief were: “(1) That this honorable court may take jurisdiction in the premises. (2) That the said real estate ³⁰⁷ mentioned and described in the bill of complaint may be sold and the proceeds invested so- as to- innre to the benefit of Lonisa M. Funk during her natural life and at her death to be divided amongst the parties entitled thereto.” (3) Further relief. A decree for the sale of the property mentioned was passed and Albert J. Long was appointed trustee. The decree required the trustee to bring into' court “the money arising on such sale and the bonds or notes which may be taken for the same, to be disposed of under the direction” of the court.

As required by the decree, the trustee, so appointed, gave bond with the Fidelity & Deposit Company of Maryland, appellant in Ho. 106, in the sum of $4,500, conditioned for the faithful performance of “the trust reposed in him by said decree, or that may be reposed in him by any future decree or order in the premises.” The appellant argues that the forms of the decree and bond are the same as those common in proceedings for the partition and sale of real estate belonging to tenants in common, and therefore the duties of the trustee would end with the sale, audit, and distribution of proceeds. This is true, but it failed to’ show any reason why such forms of decree and bond would not be as effectual and binding on a continuing trust, such as was alleged in the bill under which the sale was decreed, and under a statute which required the court to direct the investment of the proceeds. The trustee made the sales, which were reported to the court, for the sum of $4,840, and on January 31st, 1912, they were ratified. On August 12th, 1912, the trustee filed a supplemental report to the effect that the entire purchase money had been paid.

An auditor’s report was filed Hovember 19th, 1912, by which, after deducting the costs and expenses of the suit and sale, there was distributed “to Albert J. Long, Trustee, for use and benefit of Louisa M. Funk in accordance with Last Will and Testament of Haney Lechler, deceased, $4,496.57,” and the report ratified December 6th, 1912. All of these proceedings appear in Ho. 7357 Equity, in the Circuit Court for Washington County, and no other order was passed in that cause until March 19th, 1932, when a petition was filed for ³⁰⁸ the appointment of a new trustee to succeed Albert J. Long, who died April 1st, 1923, upon which Carland E. Uroh, the equitable plaintiff in the instant ease, was so appointed. March 27th, 1913, Albert J. Long, as “committee of the person and estate of Louisa M. Eunk, lunatic,” filed a petition in Ho. 7597 Equity, in the Circuit Court for Washington County, wherein he alleged that he had in hand the sum of $4,496.57, out of the proceeds of sale made in Ho. 7357 Equity, distributed to him by the auditor’s report in said case as “trustee for the use and benefit of the said Louisa M. Eunk,” and that as such committee he was “entitled to receive the income from said sum of money,” and prayed an order “assuming jurisdiction of said trust fund and estate, appointing a trustee to take charge of said trust fund and estate, fixing the bond of said trustee and the compensation” of such trustee. The court thereupon passed an order wherein it said: “The said court hereby assumes jurisdiction of the trust fund and estate created by the last will and testament of Haney Lechler, late of Washington County, Maryland, deceased, being also the same fund in the hands of Albert J. Long, trustee in Equity Cause Ho. 7357,” and fixed the amount of the bond.

Long then qualified by filing a bond in the penalty of $9,000, with his wife, Sue E. Long, and Audrew E. Coffman, as sureties. The only other thing done in Ho. 7597 Equity during Long’s lifetime was' the statement of an auditor’s account filed March 21, 1916, ratified March 15th, 1917, which accounted for the corpus, $4,496.57, and interest on same from March 26th, 1913, to March 26th, 191£j, $539.59 (being the interest paid by the People’s national Bank on the'deposit), and the distribution to “Louisa M. Eunk March 20th, 1916, as per voucher filed, $492.11,” the voucher filed being a receipt for the sum so distributed from Albert J. Long, committee, to himself as trustee. The record shows that the County Commissioners of Washington County paid for the maintenance of Louisa M. Eunk at the State Hospital and were never repaid anything by Long or any one else. Hone of the parties to Ho. 7357 Equity were parties to Ho. 7597 Equity except Albert J. Long.

It was ³⁰⁹ an ex paríe proceeding, brought without notice to any interested party, and the probabilities are that they never knew anything about it until they began to seek the whereabouts-of their money. On ETovember 16th, 1929, three of those entitled to distribution of the proceeds of sale of.ETancy Lechler’s real estate filed a petition in ETo-. 7597 Equity, wherein, amongst other things, it was stated that Albert J. Long had died April 1st, 1923, and Louisa EL Eunk, June 25th, 1928, and prayed the appointment of a trustee to take charge of the trust fund of which the court had assumed jm’isdiction by its order of March 26th, 1913, and Garland E. Groh was so appointed and qualified. Shortly thereafter the new trustee reported that inquiry at the ETicodemus ETational Bank (formerly People’s) had disclosed that “the only money on deposit there in the name of Albert J. Long, trustee in ETo-. 7597 Equity, was the sum of $78.29; the sum of $2,450 having been withdrawn on April 14-th, 1916, and the sum of $2,000 having been withdrawn on May 3rd, 1916,” and that he was unable to locate any security for the money so- withdrawn or to ascertain what disposition had been made of it. The new trustee then prayed the court for leave to enter suit on the bond in ETo. 7597.

The chancellor held the whole proceeding in ETo. 7597 Equity to- be a nullity so far as it attempted to make the surety in the case responsible for the proceeds of the sales made in ETo. 7357 Equity, and dismissed the bill on the ground that the funds never got out of ETo. 7357 Equity. ETo appeal was taken from the decree, and while it is not before this court for decision, it is necessary to discuss it, as the liability of the bond in ETo. 7357 Equity depends on the effect of the proceedings in ETo. 7597 Equity. The devisees under ETancy Lechler’s will having failed to establish liability against the surety in ETo. 7597 Equity, one of them filed a petition on March 19th, 1932, praying the appointment of a new trustee in ETo-. 7357 Equity to succeed Albert J. Long, and Garland E. Groh was appointed and qualified. On the same day he filed a report of the same purport as the one filed in ETo. 7597 Equity, as to the dis ³¹⁰ appearance of the funds originally in the hands of Albert J. Long.

At the same time an order was passed authorizing the new trustee to enter suit against the surety on the bond in Ho. 7357 Equity, and it is from the decree against it for the full amount of the bond, with interest from March 22nd, 1932, the day the bill was filed and demand made, that the appeal in Ho. 106 was taken. Except for the charge of insolvency of and misappropriation by Albert J. Long, the allegations of the bill of complaint are substantially what has been heretofore stated. The defendant, appellant, demurred to the bill of complaint and the demurrer was overruled. It then answered, contending that the proceedings in Ho. 7597 Equity had the effect of discharging the defendant from any liability as surety in Ho. 7357 Equity; that any portion of said fund which was appropriated and lost after the said trust fund had passed legally into the hands of Albert J. Long, trustee in Ho. 7597 Equity, and beyond the control and jurisdiction of said Albert J. Long, trustee in Ho. 7357 Equity; that the remaindermen under the will of Haney Lechler were guilty of laches in not proceeding against the appellant in time to allow the appellant to file a claim against the estate of Albert J. Long in the Orphans’ Court of Washington County, where an account was stated March 4th, 1924, distributing to creditors 9.9074 per cent, of their claims, and that, according to the contention of the appellee (plaintiff), the alleged improper payment to Albert J. Long, trustee in Ho. 7597 Equity, was made during March or April, 1913; ““and that no claim was made against this company until on the latter part of the year 1931, and this defendant further asserts and avers that the parties interested in said fund were guilty of such laches in asserting any such claim as to disentitle them to any recovery at this time and in this case.” Haney Lechler, by her will, gave her niece, Louisa M. Funk, the income from her entire property during her natural life, and this was all.

Ring v. Zimmerman, 94 Md. 10 , 50 A. 404 . The gift did not include any interest in the property itself; that, she provided, should be converted on the death of Louisa Funk and distributed as directed by the ³¹¹ will. It is evident, therefore, that, the only interest of Louisa Eunk was in the income, and of her brothers, sisters, nephews, and nieces in the corpus, and this difference in their interest is important in deciding the question of laches raised by the-answer. There was no one designated to hold the property during the lifetime of Louisa Eunk, and collect and disburse-the income, except for the implied authority of the executrix, who does not appear to have qualified, but that difficulty could have been easily overcome, as equity will not allow a trust to fail for want of a trustee.

Her brothers and sisters,, nephews and nieces, did not resort to this remedy, but availed themselves, together with the committee in lunacy of Louisa M. Eunk, of the remedy provided by section 243 of article 16-of the Code, which is: “In all cases when one or more persons is or are entitled to an estate for life or years or to an estate-tail, fee simple, conditional, base or qualified fee, or any other particular, limited or conditional estate in lands, and any person or persons is or are entitled to a remainder or remainders, vested or contingent, or an executory devise or devises, or any other interest, vested or contingent in the same land, on application of any of the parties in interest, a court of equity may, if all the parties in being are parties to the proceeding, decree a sale or lease thereof, if it shall appear to be advantageous to the parties concerned, and shall direct the investment of the proceeds of sale or the limitations of the reversion and rent, as the case may be, so as to enure in like manner as by the original grant to the use of the same parties who- would be entitled to the land sold or leased, and all such decrees, if all the persons or parties -who would be entitled if the contingency had happened at the date of the decree, shall bind all persons whether in being or not, who-claim * * * any interest