Gadekar v. Phillips

Moore, J., delivered the opinion of the Court. Both sides to this declaratory judgment proceeding, in equity, have appealed from a final decree of the Circuit Court for Dorchester County (Edmondson, J.) which determined the conflicting claims of an adult brother and sister with respect to more than 300 acres of farm land and certain improvements. The litigants are the son and daughter of S. Harold Phillips who died in 1969 and whose will devised and bequeathed his residuary estate (after payment of debts and taxes) to his daughter, Ruth Ann Phillips Gadekar, appellant and cross-appellee, “to do with whatsoever she shall deem fit and within her full and complete discretion.” There was a proviso, however, that “one-half of any rents and profits or proceeds of sale, or any other income from such property after deduction of necessary costs of management or preservation shall be paid to my beloved son Harold Hugh Phillips.” The apparent reason for this disposition was that the relationship between father and son was strained, the son having been an alcoholic who had squandered his money and fought with his father and could not be relied upon to manage the property. After the execution of his will in 1959, the father remarried but made no testamentary provision for his second wife.

The latter accordingly filed a renunciation and the son and daughter settled her claim by a conveyance to her of their interest in the residence which she occupied with their father, and by the payment to her of $50,000 in cash. The cash became available by a mortgage of one of the three farms involved — the “home” farm — consisting of 198 tillable acres and improvements. It is established in the ⁷¹⁷ record that both parties desired to avoid selling any of the farm land. Both wished to keep it “intact.” It is also conceded that the mortgage lender, Union Trust Company of Maryland, preferred not to deal with the son and required that clear title to the property be vested in the daughter.

Accordingly, an agreement between the son and daughter was entered into on June 19, 1971, whereby the son agreed to convey his interest in the father’s matrimonial residence in Hurlock, Maryland to Evelyn L. Phillips, the father’s surviving spouse; and he also agreed to convey “all his right, title and interest in and to all of the real estate owned by Samuel Harold Phillips, deceased, unto Ruth Ann Gadekar.” A deed of the same date was executed by him in fulfillment of this commitment. The sister, in turn, conveyed her interest in the Hurlock property to the stepmother and she agreed to pay her brother $2,660 in cash, the same amount which she herself received in the mortgage transaction. She also covenanted to do everything required by the father’s will, namely, to pay one-half of the rents, profits, income and proceeds of any sale to her brother. In November 1974, approximately five years after the father’s death, the brother filed a bill of complaint for declaratory relief, requesting the court to declare that he and his sister were tenants in common as to all the real property of their father except, of course, the single parcel which they had conveyed to his widow.

An accounting of all proceeds from the farms was also prayed. 1 The chancellor, after hearing testimony in open court, rendered an oral opinion from the bench and thereafter signed a decree wherein it was ordered that the real property deeded by the brother to the sister on June 19, 1971 “remain under the exclusive management and control of [the sister] subject to the terms and conditions of the Agreement between [them] dated June 19, 1971”; and subject also to the requirement ⁷¹⁸ that she account annually to the brother, “allowing herself one-half of travel expenses she may reasonably incur for management of the property. ...” 2 The chancellor also decreed that upon the death of either the brother or the sister “it shall be deemed that any real property subject to the Deed of June 19, 1971 not previously sold, shall be held and owned by the heirs and estate of the decedent on the one part, and the survivor on the other part, as tenants in common.. ..” It is the position of the sister, as appellant and cross-appellee, that the chancellor erred in several respects. She contends that the brother was guilty of laches and that the case was not a proper one for declaratory relief. On the merits, she argues that the court erred in its determination that upon the death of either the brother or sister, the survivor and the heirs of the decedent would become tenants in common. To the contrary, it is maintained that the sister held title to the property in fee simple absolute, subject to a trust of the income and the proceeds of any sale.

The sister also contends that because she occupied the status of a trustee, the court erred in failing to grant her the compensation of a trustee, instead of one-half her travel expenses. The brother is also dissatisfied with the terms of the decree, contending that the agreement and the deed from him to his sister dated June 19, 1971 should be set aside, the real property ordered to be sold and the proceeds evenly divided between the parties. 3 In his brief he complains that he received no consideration for the conveyance of his interest in the farm properties to his sister in June, 1971 and that there was “a total lack” of “fairness, adequacy and equity” in the June 19, 1971 transactions. ⁷¹⁹ I We have carefully considered and must reject the appellant’s assignments of error based upon procedural grounds. First, we observe that while the defense of laches was asserted in the appellant's amended answer to the amended bill of complaint, it was not thereafter pursued in the proceedings below and was not ruled upon by the trial court. Accordingly, that claim is not properly before us.

Maryland Rule 1085. Appellant’s other procedural argument, that the relief by way of declaratory judgment was inappropriate, must also be rejected. The Maryland Uniform Declaratory Judgments Act, Code, Cts. & Jud. Proc.

Art., § 3-409 (a) (1974) provides, with exceptions not here pertinent, that: “[A] court may grant a declaratory judgment or decree in a civil case, if it will serve to terminate the uncertainty or controversy giving rise to the proceeding, and if: (1) An actual controversy exists between contending parties; (2) Antagonistic claims are present between the parties involved which indicate imminent and inevitable litigation; or (3) A party asserts a legal relation, status, right, or privilege and this is challenged or denied by an adversary party, who also has or asserts a concrete interest in it.” In our judgment, the trial court was entirely correct in holding that “an actual controversy does exist and there are antagonistic claims between the parties and the provisions of the declaratory judgment statute are applicable.” See Hamilton v. McAuliffe, 277 Md. 336 , 353 A. 2d 634 (1976); Patuxent Co. v. Commissioners, 212 Md. 543 , 129 A. 2d 847 (1957); Lucas v. Mercantile-Safe Deposit and Trust Co., 29 Md. App. 633 , 350 A. 2d 156 (1976). From the pleadings and proceedings below, it is abundantly clear that the parties to this suit are in “actual controversy” over their respective ⁷²⁰ rights under the agreement of June 19, 1971. Appellant’s claim is wholly devoid of merit. II From the recitation below of the respective provisions of the will and of the June, 1971 agreement between the parties, it becomes immediately apparent that the father’s will was inartfully drawn and that the agreement of 1971 represented, for the most part, a restatement of the principal provisions of the will. 4 The last will and testament of the senior Phillips which he executed on June 26, 1959, was indeed a “simple will.” The testamentary clauses were as follows: “After payment of all my just debts and funeral expenses I hereby give, devise and bequeath all of my property of whatever description whether real, personal or mixed, wheresoever situate, unto my beloved daughter Ruth Ann Phillips Gadekar to do with whatsoever she shall deem fit and within her full and complete discretion, provided, however, that one-half of any rents and profits or proceeds of sale, or any other income from such property after deduction of necessary costs of management or ⁷²¹ preservation shall be paid to my beloved son Harold Hugh Phillips. “I have further provided for both my children with life insurance policies on my life, which policies are made out to them individually as specific beneficiaries and which will be paid to them individually upon my death. “I hereby appoint my said daughter, Ruth Ann Phillips Gadekar, the sole executrix of this my last will and testament and request that she be excused from the necessity of giving bond as such executrix.” (Emphasis added.) The agreement between the brother and sister of June 19, 1971, after a recital of consideration, contained the following covenants: “1.

That the said Harold Hugh Phillips will convey his interest in the dwelling in Hurlock, Maryland to Evelyn L. Phillips [the father’s widow], 2. That the said Harold Hugh Phillips will convey all his right, title and interest in and to all of the real estate owned by Samuel Harold Phillips, deceased, unto Ruth Ann Gadekar. 3. Ruth Ann Gadekar agrees to pay to Harold Hugh Phillips the following: a. The sum of $2,660.00 cash for sale of the 5 aforesaid Hurlock dwelling. b.

One-half of the rents from the property conveyed to Ruth Ann Gadekar as aforesaid. c. One-half of the profits or proceeds of the sale of any part or all of the real estate conveyed to Ruth Ann Gadekar as aforesaid. d. One-half of the income of the real estate conveyed to Ruth Ann Gadekar as aforesaid after ⁷²² the deduction therefrom of the necessary costs of management or preservation.” It is clear from the record that both brother and sister intended their agreement of June 19, 1971 to follow the “exact terms” of their father’s will. The appellant-sister so testified and her brother admitted on cross-examination that after he signed the agreement his interest in the property was the same as it had been under his father’s will, that he received “not a bit more than the will.” 6 As we analyze the somewhat unusual situation here presented, it becomes essential to determine in the first instance the legal relationship existing between the parties on June 19, 1971 in consequence of the father’s testamentary disposition.

The testator, in the broadest and most unqualified language, devised all his property to the appellant herein, his daughter, “to do with whatsoever she shall deem fit and within her full and complete discretion.” These words seem clearly intended to grant legal title to the daughter in fee simple absolute. See Md. Ann. Code, Estates and Trusts Art. § 4-408 (1974). This devise was subject, however, to the burden imposed by the proviso “that one-half of any rents and profits or proceeds of sale, or other income from such property after deduction of necessary costs of management or preservation shall be paid to my beloved son, Harold Hugh Phillips.” We think it clear from the language of the will and established principles of law that no trust was created for the son’s benefit but, rather, an equitable charge was imposed upon the property in his behalf. The intention to create a trust under the terms of a will must be apparent and the specific words “trust” and “trustee” are not necessary.

Hardgrove v. Hardgrove, 240 Md. 634, 646 , 215 A. 2d 183, 190 (1965). Similarly, no particular terminology is necessary to create a charge. 1 G. G. & G. T. Bogert, Trusts and Trustees § 31 (2d ed. 1965). Where, as in the instant ⁷²³ case, a testator devises or bequeaths property subject to the payment of income to or the enjoyment of benefits by a person other than the devisee, he thereby creates an equitable charge and not a trust. 1 A. Scott, Law of Trusts § 10 (3d. ed. 1967). The incidents of an equitable charge are thus explicated in the Restatement: “In the case of an equitable charge ..., the person having title to property holds it subject to an equitable interest in another person.

If an equitable charge is created, the