Girdwood v. Safe Deposit & Trust Co.

Boyd, C. J., delivered the opinion of the Court. On the 13th day of May, 1891, the last will and testament of Martha, Ann Bratt was admitted to prolate hy the Orphans’ Court of Baltimore City. The portions of it particularly involved in this case are as follows: (1) “I give, devise and bequeath one-tenth (1/10) part of the whole of my estate, real, personal and mixed, and wheresoever situate, to he held hy my trustee hereinafter named for the use and benefit of my granddaughter, Adelaide Latimer, now Adelaide Blaney, the child of my deceased daughter, to take, receive and collect the rents, income, issues and profits arising therefrom and to pay over the same to her, after deducting proper costs and expenses, for and during the full term of her natural life, and this to her sole and separate use, free from the control of any husband she may have. (2) “Item.

And from and after the decease of my said granddaughter I give, devise and bequeath the principal of said one-tenth part of the whole of my estate as aforesaid unto the child or children (if any) surviving her, share and share alike. But should my aforesaid granddaughter depart this life without leaving a child or children surviving her, then in that event it is my will and desire that said principal of the one-tenth part of the whole of my estate as aforesaid shall go in the same manner and subject to the same provisions as is set forth in the next succeeding clauses. ²⁴⁸ (3) “Item. I give, devise and bequeath the remaining nine-tenths parts of the whole of my estate as aforesaid unto my said trustee, hereinafter named, in trust so that he will apply one equal fifth part of the net rents, issues, income and profits thereof unto each of my five children, to wit: Martha Ellen Bratt, Margaret Virginia Apsley (wife of Joseph Apsley), Josephine Knowles (wife of Theodore Knowles), Noah George Bratt and William Harris Bratt, for and during their natural lives, respectively. (4) “Item.

And from and after the death of my said children, or either of them, leaving a child or •children, I give, devise and bequeath the principal of the estate aforesaid of the child or children so dying to the said child or children of such deceased child (excluding herefrom, however, the child or children of my son, William Harris Bratt, by his present wife, from whom he was recently divorced a mensa et tho'io). But should my said children, or either of them, die without leaving a child or children surviving them as aforesaid (not taking into consideration the child or •children of my son, William Harris Bratt, by his present wife), then the said principal estate of said •child or children so dying I give, devise and bequeath unto my children or child surviving such deceased •child, and to the child or children (if any) surviving, in case of the death of my said children or either of them, to be divided between them per stirpes and not per capita.” We have, for convenience of reference, inserted the numbers opposite the items, although they do not appear in the will, Thomas M. Lanahan was named as the sole executor of and trustee under the will. He settled his account as executor and, on his petition, the Circuit Court of Baltimore City passed an order on the fourteenth of August, 1893, assuming jurisdiction of the trust, which since then has been administered under its direction. In 1906, Mr. Lanahan resigned ²⁴⁹ the trust and the Safe Deposit and Trust Company of Baltimore was appointed substituted trustee.

Among the assets^ of the estate which came into the hands of Mr. Lanahan, trustee, was a certificate for 520 shares of stock of the Baltimore City Passenger Railway Company, which were then valued at seventy-five dollars per share. On the 15th of June, 1891, the directors of the railway company passed a resolution for the increase of its stock, under authority of an act of the legislature, under which the then stockholders of the company were given the privilege of subscribing at par (twenty-five dollars per share) for an amount of new stock equal to their respective holdings, and that action of the directors was approved by the stockholders on July 2, 1891. On July 34, of that year, the trustee subscribed for 520 shares of that new stock, although he did not then have in hand funds of the estate out of which he could pay for it. lie' tried to have the life tenants join in advancing the necessary funds, hut they declined, and Mr. Lanahan made the payments himself. In 1894 the railway company declared a stock dividend upon the original shares alone of fifty per centum — Mr. Lanahan receiving 260 shares.

Later another- increase of stock was authorized and was issued at fifty dollars a share to the extent of forty per centum of the holdings of the stockholders, being in this ease, 312 shares upon tlie 780 shares held by the estate, and 208 shares on the first issue of new stock then claimed by Mr. I.anahan and paid for by him individually. I. a ter Mr. Lanahan was advised by his counsel, and the court so ordered, that the stock which he had subscribed and paid for must be lield for the trust estate, and all of the 1820 shares were, with the approval of the court, sold at ninety dollars per share, amounting to $163,800, out of which he was reimbursed for what he personally paid, including interest, and the balance was invested by order of tfie court. It will be observed that by (1) the testatrix left one-tenth of her estate to her trustee for the use and benefit of her ²⁵⁰ granddaughter, Adelaide Blaney, the child of a deceased ■daughter, for and during the full term of her natural life. Then by (2), from and after the decease of her said granddaughter, she left the principal of said one-tenth unto her child or children (if any) surviving her, share and share alike, but if she died without leaving a child or children surviving her, the principal of the said one-tenth “shall go in the same manner and subject to the same provisions as is set forth in the next succeeding clauses.” By (3) she left the remaining nine-tenths to her trustee, “so that he will apply one equal fifth part of the net rents, issues, income and profits thereof, unto each of my five children, * * * for and during their natural lives respectively.” She then made disposition of the principal, after the death of her said child or children as set out in (4).

Margaret Virginia Apsley, a daughter of testatrix, died in May, 1907; Martha Ellen Bratt, another daughter, died in April, 1912, and Hoah George Bratt, a son, died in December, 1916, all having issue, and hence one-fifth of the nine-tenths in each of the cases was distributed. The other twó-fifths of nine-tenths were thereafter held in trust for Mrs. Davenport and William Harris Bratt. Mrs. Davenport ■died on January 17, 1932, without leaving children or decendants surviving her. The substituted trustee then filed a bill to have the half of the two-fifths of the nine-tenths oí the corpus distributed.

It is, therefore, that interest Which is now before ns. The lower court passed a decree distributing the Davenport share to two sons of Hoah George Bratt, deceased, to children of Margaret Virginia Apsley, deceased (to a trustee for one of them, and subject to- two attachments against another), to two children of Martha Ellen Bratt, deceased, and to William Harris Bratt. The decree also declared that the new stock of the Baltimore City Passenger Railway Company and the stock dividend referred to were corpus, and not income, and provided for costs. An appeal was taken ²⁵¹ by the administrators e. t. a. of the estate of Josephine1 Davenport, another by William Harris Rratt and wife, Edgar II.

Rratt and Hellie G. Hillary and husband, and a third, which, by agreement, w'as argued on the one record on behalf of George W. Rlaney, individually and as executor of Adelaide Rlaney and others, spoken of as the Adelaide Rlaney interests. (1) As the appeal of the administrators e. t. a. of the estate of Josephine Davenport presents the important question as to whether the proceeds of sale of the stock dividend and the increase of stock are to he treated as corpus or are to go to the representatives of Mrs. Davenport as “rents, issues, income and profits,” the terms used in the will, we will first consider it. Mr, Lanahan held the 520' shares of stock left by the testatrix to him in trust, and, as such stockholder, he had the right, under the Act of 1890, Oh. 271, and the. action of the board of directors, which was approved by the stockholders, to subscribe for- 520 new shares, which he did, as stated above. He paid out of his own money the first installment on said subscription, which wa.s called by the company June 15th, 1893, and communicated with the five persons named in (3) above, suggesting that they appropriate some portion of their respective incomes for the purpose of paying for said subscription, and that the trustee would pay the balance.

They declined to do so, and lie reported the matter to the court, which on the 17th of August, 1893, passed an order that, upon payment by Mr. Tunahan of the balance, as the calls should he made, the company should issue the 520 shares to him individually. He paid out of his own. funds all of the installments, but the company having refused to issue the certificate to him individually, it was issued to him as trus<tee. For those 520 shares he paid twenty-five dollars per share. On July 8th, 1898, he held, in addition to the 520 shares of new stock which he claimed to own, 780 shares, being the original 520 augmented by 260 shares issued as a ²⁵² stock dividend on the 520 shares, and on that day he was notified by the company that additional shares of stock were about to be issued and he had the privilege of subscribing for them ratably and in proportion to his holdings at fifty •dollars per share.

By an order of September 26th, 1898, he was authorized to subscribe for the additional stock and to make sale of .the privilege to subscribe. He subscribed for 312 shares, being 40' per cent, of 780 shares, and also for 208 shares, being 40 per cent, of the 520 shares which he had paid for, hut no certificate had been issued in his name for the latter. He then held in all 1,820 shares of stock of that company. On January 17th, 1899, he filed a bill of complaint alleging the above facts and also stating that a syndicate had offered to buy all the shares of the corporate stock of the railway company ait ninety dollars per share.

The defendants in said hill were Mrs. Apsley and her children, Mrs. Davenport, Mrs. Bratt and her children, Mrs. Blaney and her child, William H. Bratt .and George M. Bratt and his •children. A decree was passed on March 20th, 1899, hv which it was decreed that all the profits made on the sale of the stock at ninety dollars per share inured to the benefit of the trust estate; that said profit should be treated as part of the trust estate; that said Lanahan should he allowed the full amount of the advancements made by him in the purchase of the 520 shares, together with a sum equal to the dividends on the 520 shares so paid for by him, 'and the full .amount he paid for the 312 shares and the 208 shares subscribed for in 1898, with interest. The decree concluded by saying that as the parties were not agreed as to whether the stock subscribed for and paid for by said Lanahan, or any part thereof, and the net proceeds from the sale thereof, were part of the corpus of the trust estate or were income properly •distributable among the life tenants, that question was “reserved without prejudice by reason of any matter or thing contained in .this decree, for 'the further consideration and future decree of this Court. And it