Gault v. Hospital for Consumptives

Stockbridge, J., delivered the opinion of the Court. By the residuary clause of the will of Joseph Ruddaeh made in 1831, he divided the balance of his estate, not previously disposed of, into four parts, one of which he gave to his son Washington, one to his son Joseph Henry, one to his son Edmond, “And the remaining one equal and undivided fourth part thereof unto my wife, Rebecca Ruddaeh, her heirs, executors, administrators and assigns forever, in trust nevertheless, to pay the net Rents, Interest and Income thereof unto my daughter, Mary Elizabeth Ruddaeh, for her sole and separate use * * * and from and immediately after the decease of my said daughter, then in trust to and for the only proper use and behalf of such person or persons as would be entitled to the same if the said Mary Elizabeth had survived her husband and died intestate, seized and possessed of the said premises in fee simple, by devise, and in such manner and for such quantity of Estate as such person or persons would in such case be entitled to by law.” The. present case involves only the fourth of his estate bequeathed, in trust as above quoted. It appears from the administration accounts passed in Joseph Ruddach’s estate, and from an auditor’s account in the Circuit Court distributing the proceeds of sale of cer ⁵⁹³ tain real estate, that the aggregate amount of property passing to Rebecca Ruddach, as trustee, was $5,014.34. Mary Elizabeth Ruddach, the cestui que trust for life named in the will, married William E. Burns, who was for a long time President of the Eutaw Savings Bank, and having survived her husband died December 8th, 1910, leaving a will in which the appellee was named as residuary legatee.

The estate of Mary E. Burns having been distributed by her executor to the legatees named in her will, the bill in this case was filed by certain of those who would have been entitled in remainder under the will of Joseph Ruddach, against the residuary legatee to recover the amount of the corpus of the trust estate created as already shown. The proceeding is upon the theory that at some time the trust fund in the hands of Rebecca Ruddach, as trustee, was by her turned over to Mrs. Burns, who thereafter continued the discharge of the duties of the trust, but who did not in her lifetime, or by her will, make any provision for turning over the corpus of the trust estate to the remaindermen. There is evidence in the record that for a number of years prior to her decease, Mrs. Burns had contributed generously to the support of the plaintiffs, a nephew and certain nieces, the amount reaching at least $2,800.00 per annum, and these allowances were contributed and in some instances increased by her committee after she became of unsound mind. When these gifts were first made by Mrs. Burns is not entirely clear, some certainly as much as thirty years before her death.

By the death of her husband Mrs. Burns became a wealthy woman, possessed of about $400,000 in her own right and with a life interest in some $300,000 more from the estate of her husband and a similar interest in $150,000 from the estate of an only daughter. While a number of questions were argued in connection with the case, it will be sufficient to consider the one vital question, the tracing of the trust fund. The present suit is not against the trustee under Mr. Ruddach’s will, but against ⁵⁹⁴ the residuary legatee of one to whom that trustee is claimed to have turned over the trust estate. In such cases the controlling principle is clear. “It is a well settled rule that a cestui que trust has the right in equity to follow and recover, or impress the trust upon the trust fund or property which has been wrongfully diverted, into whatsoever form or hands it may come so long as it may be distinctly traced and identified, until it comes into the hands of a tona fide purchaser for value without notice or the rights of innocent third parties have intervened or until the means of ascertaining the property fails but the right to follow trust funds or property ceases when the means of ascertaining and identifying the same fails.” 39 Cyc. 528, 531; Englar v. Offutt, 70 Md. 78 ; Drovers’ Bank v. Roller, 85 Md. 495 ; Holmes v. Gilman, 138 N. Y. 369 ; 20 L. R. A. 566; Wetherell v. O’Brien, 140 Ill. 146 ; Bank v. Goetz, 138 Ill. 127 ; 32 Am.

St. Rep. 119 , and elaborate note beginning on page 125. In the present case can the $5,014.34 constituting the corpus of the trust estate in the hands of Mrs. Euddach be distinctly traced to the hands of Mrs. Burns ? The evidence to show this is first the testimony of