Gianakos v. Magiros

Bruñe, C. J., delivered the opinion of the Court. This is an appeal by the executor of the second wife of a decedent, who was substituted in her place as plaintiff, from an order dismissing an amended bill of complaint which sought to set aside, as in fraud of the marital rights of the second wife, a deed executed by the decedent about two and a half months before his second marriage. By this deed the decedent conveyed certain realty, in fee simple, to two of his sons by his first marriage, as joint tenants, reserving to himself a life estate with general powers of disposition over the property during his life. On the same day that the decedent executed the deed here involved he also conveyed (through a strawman transaction) title to a property in another county to his other son and to himself as joint tenants.

This transfer is not attacked in this suit, and we are not informed whether it is under attack elsewhere. Facts concerning it are in evidence in this case, and were considered by the trial court. The Circuit Court found that there had been no fraud on the widow’s marital rights and dismissed the bill. The trial of the case extended over three days.

We are indebted to counsel on both sides for presenting much of the evidence as a statement of undisputed facts (pursuant to Mary ¹⁸ land Rule 828 g) and for holding down the length of the printed record extract. Judge Rollins wrote a careful and comprehensive opinion which deals with both the facts and the law of the case. His decision rests largely upon Whittington v. Whittington, 205 Md. 1 , 106 A. 2d 72 , which is our most recent case dealing extensively with the subject of fraud upon marital rights. The decedent, George Magiros, was born on the island of Andros, Greece, in or about 1892, emigrated to the United States in 1910, and resided for some years in Ellicott City, Maryland.

In 1916 he married his first wife, Anna Coroneos, and they had three children: Thomas G. (Thomas), born in 1924; John G. (John), born in 1925; and Peter, born in 1929. Thomas and Peter are the defendants-appellees in this case.

John is not a party to this suit. (The conveyance from George to John made contemporaneously with the conveyance to Thomas and Peter will be referred to later.) George’s first wife died in 1931. In about 1933 George settled in Elkton with his two older sons and engaged in the restaurant business. Peter, the youngest son, continued to reside with a family in Ellicott City which had taken care of him since the time of his mother’s death.

The older boys helped their father in his business during their childhood and their high school years by working after school and in the summers. Peter also helped during summers and holidays while he was in high school and college. The relationship between George and his sons was always good, but George was “secretive” and not talkative and rarely discussed his personal or business affairs with them. Each of the sons continued his education beyond high school.

Thomas went to college for two years before entering military service for three years, 1943-1946. John received a degree in pharmacy and owns and operates a drug store in Ellicott City. Peter received a bachelor’s degree in chemical engineering, spent about two years in military service, later received an M.A. degree, and has been employed successfully in engineering work in Houston, Texas, for eight years. When Thomas was discharged from military service he applied for admission to a college in Indiana where he wished to ¹⁹ study air conditioning and refrigeration.

At about that time George’s partner left him, and at George’s request Thomas abandoned his plans for further education and went to work with George in the restaurant business. He became an equal partner with his father in 1947 and continued in partnership with him until his father’s death in 1961. In or about 1940 George visited Greece, according to the testimony of his sister-in-law, Matina Psomas, to look over her niece with a view to matrimony, but the niece was too young for him. There is no indication that George gave any real thought to possible remarriage thereafter until 1947 or early 1948 when his much younger brother, Costas Magiros, who lived in Athens, visited George in Elkton.

Costas tried to persuade George, who was then about fifty-six years old, that he should have someone to look after him in his aging years. At that time George was very much concerned over an investigation of his income taxes, and in 1949 he was fined and sentenced to two months’ imprisonment for violation of the federal income tax laws. As to Costas’ talks with George during his 1947 or 1948 visit and subsequent developments, we now quote from Judge Rollins’ opinion in the Circuit Court: “When marriage was suggested, George told him that it was his intention to settle his property on his children and that, at his age, he had no intention to marry. He did inquire about a girl from his home village on Andros, whom he had not seen for more than thirty years.

With or without authority, Costas made an unsuccessful proposal of marriage through another person. P'rom that time on, Costas initiated a matchmaking endeavor to find a bride for his brother. This connubial conspiracy involved him, a certain Katina Kouvatsou and her sister, Sophie Dimopoulou. The first step in their aggressive and progressive campaign was to forward George a picture of Sophie, but he did not seem interested and returned the picture. “In 1949, Sophie was then 38 years of age.

She had been married and in 1937 divorced, and thereafter resided with Mr. and Mrs. Kouvatsou. Due to the terrible financial and economic depression in Greece following the German-Italian occupation in the last war and thereafter, Sophie, like many others, could not find employment and was forced to continue to live ²⁰ with the Kouvatsous. This family was also impoverished and her sojourn in the home was not pleasant, to say the least. Due to her divorce status, Sophie apparently had experienced difficulty in interesting eligible males.

She showed determination, however, as events later showed. Her brother-in-law and sister lived in an apartment. Sophie was relegated to the basement and she could not appear when the brother-in-law was home. She did not dine with the family and when he was on the premises, she had to visit with a neighbor and could not return until she received a pre-arranged signal that Kouvatsou had left the apartment.

It is stipulated that they were destitute, and evicted from the apartment for rental arrearage, and that only after Sophie’s marriage to George, were they able to have a fine new house of their own and live in comparable ease and comfort, as the result of the benevolence of George and Sophie. “Sophie initiated the correspondence between her and George under date of December 30th, 1948. The letters offered in evidence, except one from Costas to George, were written by Sophie to George. By March of 1949, the friendly conspirators were trying to influence George to join in an arrangement whereby Sophie would come to him via Canada. As late as July of 1950, Sophie’s importunities continued, but the plan did not succeed.

About this time, George did talk with his sister-in-law, Matina Psomas, about a possible visit to Greece, but the record demonstrates that he had no definite plans about Sophie, because he told the witness that when he met her, if he liked her, he might consider marriage; if he did not like her, he would return to this Country. “On November 2, 1950, he executed the deeds to his sons conveying the Ellicott City property by straw deeds to himself and to his son, John, as joint tenants with no reservations or control for himself; and he conveyed the restaurant property on Route 40 in Elkton to Thomas and Peter as joint tenants, reserving unto himself a life estate with general powers of disposition. This plan of distribution of his realty to his sons (all except Leo’s Restaurant) was conceived so as to afford him protection during his old age. He was fifty-nine then, and by ²¹ this arrangement, he would collect the rentals from John’s property and his share of the profits from the partnership with Thomas and yet retain control of all during his final years. Obviously, it was also a disposition of property a cautious person would be expected to make in contemplation of an overseas venture. “None of the children knew about these transfers.

Thomas learned through an accountant employed by the partnership about two years later and later on he told Peter about the deed; and John did not know of the transfer to him until after the father’s death. “In December of 1950, the father told Thomas that he was going to New York and the son did not learn until January of 1951 that the father had gone to Greece. He took passage on a cruise ship and apparently toured the Mediterranean, debarking in Piraeus just before Christmas. Costas stated that George was not impressed with Sophie when he met her on December 31st at a New Year’s celebration. George did agree to come to the home of Mrs. Kouvatsou three days later and as the result of these discussions, January 18th was decided as the date for the wedding.

He gave Mrs. Kouvatsou $1500.00 in all to arrange for the ceremony. After they were married, they toured the Aegean Islands and George returned to this Country about four months later. Sophie came over sometime after that. “It is stipulated that George and Sophie got along well together. The children accepted the marriage and felt that it was good for the father.

George and his wife lived in an apartment connected with the restaurant, ate their meals there and she had the help of the general maid services provided for the restaurant-motel business. When she was mentally ill on two occasions, she was well cared for in a sanatarium with private nursing and lived quite comfortably. They had regular vacations together and in 1958 they spent eight months on an extended trip to Greece. “George Magiros departed this life intestate on April 6, 1961. Sophie Magiros died on September 9, 1962, leaving a Will wherein she directed her Executor to convert all property into cash and to distribute the net estate equally to Mrs. Kouvatsou, to another sister and to a brother.” ²² George retained actual control over the Ellicott City property, paying the taxes thereon and receiving the rents therefrom during his life, notwithstanding the conveyance to John and himself as joint tenants.

Also, after the 1950 deed, George paid the taxes and took depreciation on “George’s Restaurant” and on the adjacent motel which he built in 1953 at a cost of about $28,000 to $32,000 on land conveyed by the 1950 deed. He operated the motel as his own venture, apart from the partnership with Thomas. Thomas also established another restaurant of his own out of earnings and withdrawals from the partnership. George objected to the withdrawals and refused to permit Thomas to draw checks against partnership funds after about 1953.

Thomas took a very active part in the partnership business, and it was profitable to him and to his father and it was also beneficial to Sophie, who lived with George in an apartment adjoining the restaurant and took her meals there and continued to live there after George’s death. During George’s absences— once while he was serving his income tax sentence and on not infrequent occasions when, both before and after his second marriage, he would take a trip (apparently often not announced in advance)— Thomas would, of course, have full responsibility for the operation of the business. His share of the profits in at least one year was about $28,000. Sophie helped George at the motel by working as cashier.

After George’s death, Thomas allowed her to operate the motel for herself. George’s estate in which his widow had an unquestioned interest (sometimes referred to below as his “undisputed estate”) consisted of the following at the appraised values thereof as filed in the Orphans’ Court: 1 Personal property (including a debt of $16,283.86 due by Thomas) $84,036.63 Real property (“Leo’s” Property and two lots) 13,200.00 Total ............................. $97,236.63 ²³ [Brought forward — Total] ................... $ 97,236.63 To this the appellant would add: Ellicott City Property, appraised value..... 16,000.00 George’s Restaurant Property, appraised value 70,000.00 Gross Estate on appellant’s theory.........$183,236.63 Sophie’s estate or property at the time of her death consisted of: Cash on hand or in bank: Savings account.............. $8,471.38 Checking account............. 2,465.96 Cash on hand ............... 1,249.79 $12,187.13 One-third interest in George’s gross undisputed estate ................................... 32,412.21 United States Savings Bonds (maturity value, $6,500; current value not shown, estimated at approximately the mean of cost and redemption value), payable after Sophie’s death to Katina Kouvatsou 5,400.00 Total ............................. $49,999.34 On the gross figures set forth above, the three sons would receive from George: Two-thirds of his undisputed estate ......... $ 64,824.42 Ellicott City property ..................... 16,000.00 George’s Restaurant property............... 70,000.00 Total ............................ $150,824.42 The above figures are, as indicated, gross figures, and make no allowance for expenses or taxes. The figures for Sophie’s estate doubtless include some cash received after George’s death from the operation of the motel which Thomas permitted her to continue and to conduct for her own account, from the time of George’s death until her own, which included a period of five months after she had filed this suit against Thomas and Peter. She reported income of about $4,075 from this source for 1961.

No figures are shown for the eight months or so of her operation of it in 1962, nor is there any showing of how much she saved or spent in either year. There was some evidence to indicate that George had about $5,000 in cash on hand at the time ²⁴ of his death and that Sophie retained it, with Thomas’ acquiescence and without his making any demand therefor. How much, if any, of that sum and how much of the later profits of the motel Sophie retained, we do not know. At a guess it may have amounted to $5,000, possibly somewhat more.

All that Sophie had came to her- either through George or through the generosity of his sons, including any earnings to which her own efforts as cashier or as operator of the motel may have contributed. Reference was made in the appellant’s brief and in oral argument to the federal estate tax on George’s estate. As a result of an inquiry from the bench, we are advised that the amount paid as such tax was $17,555.44 and we are further advised by the appellees’ counsel that the appellees concede that they are liable, if the order of the Circuit Court is affirmed, to bear the burden of the federal estate tax in respect of the property here in suit in accordance with Sec. 162 of Art. 81 of the Code (1957), particularly under subsection (9) thereof, and so to relieve the undisputed estate of that burden. The basis upon which the federal estate tax was computed is not shown.

The amount paid seems to indicate (based on rates of tax and credits for state death taxes under 26 U.S.C.A., §§ 2001 and 2011) an estate subject to federal estate tax of $90,210, after the specific exemption of $60,000. The sum of the specific exemption and of the taxable estate ($150,210 on our calculation) is the denominator in the contribution formula prescribed by Sec. 162(3) (c) of Art. 81. This figure can be approximated by taking George’s as gross estate, which surely included his undisputed estate of $97,236.63 and the George’s Restaurant property, at $70,000, and almost surely (we think) included the Ellicott City property, at $16,000, the sum of these items being $183,236.63, and by deducting therefrom, as the marital deduction allowable under 26 U.S.C.A., § 2056 , Sophie’s one third interest of $32,412.21 in George’s undisputed estate. The balance of $150,824.42 could easily be reduced by other allowable deductions to $150,210, which is the figure apparently used by the appellees as the denominator in applying the above contribution formula.

Their figures show that Sophie’s estate would receive a bene ²⁵ fit of $2,730.68 from their federal estate tax contribution on account of the Restaurant property. This indicates a total contribution of $8,192.04 (Sophie’s benefit being one-third). This is equal to 70,000/150,210, or 46.6%, of the total tax paid. There is no such concession as to the Ellicott City property, record title to which is now in John, who is not a party.

If the concession by the appellees is soundly based, and if the Ellicott City property is included in the gross estate at $16,000, a similar computation would make the recipient of the Ellicott City property liable to contribute 16,000/150,210, or 10.65% of the federal estate tax. Adding these two together the sons would then pay 57.25% of the federal estate tax, and this would amount to $10,050.49. The balance falling on the undisputed estate would be $7,504.95, one-third of which ($2,501.65) would fall on Sophie’s share and two-thirds ($5,003.30) would fall on the sons’ share. However, on the figures and concession now before us, we cannot be sure of this.

We, therefore, examine the effect of the federal estate tax only on the basis of the appellees’ being responsible for 46.6% thereof. The appellant’s counsel has submitted figures showing a distribution to Sophie’s estate from George’s undisputed estate of $14,400 ($10,000 in cash, $4,400 in real estate) and an anticipated future distribution of $14,-465.67, being one-third of the balance remaining for distribution after payment of the federal estate tax, making a total present and prospective distribution to Sophie’s estate from George’s undisputed estate of $28,865.67. To this should be added a credit of $2,730.68 by reason of Sophie’s share being relieved by the appellees of the federal estate tax to that extent. (There may also be an adjustment on account of her widow’s allowance of $225.00, which would produce net to her an additional amount of $150.00, but we do not take that into our figures below.) With 46.6% of the federal estate tax being borne by the appellees in relief of George’s undisputed estate