Hays v. Coe

MOTZ, Judge. The central question presented by this case is whether equitable conversion should be applied to proceeds from the sale of real estate, which a decedent contracted to sell before his death, but which was not sold until after his death. After a court trial, the Circuit Court for Washington County found that the “doctrine of equitable conversion” was not “applicable in this case.” We reverse. FACTS On December 29, 1979 decedent, Gail A. Lewis, executed a will which provided in pertinent part: ⁴⁹³ SECOND: Unto Fannie C. Hays, I give all of my personal property, including but not limited to all furniture and fixtures in my residential home, any motor vehicles which I may own and any monies which I may have at the time of my death.

Also, unto the said Fannie C. Hays, I give and devise a life estate in and for the term of her life, in and to a parcel of real estate located in the Hauver’s Election District of Frederick County, Maryland, improved with a residential home, containing 8 acres, more or less, and being all and the same parcel of real estate shown and described as parcel # 1 in a deed dated December 6th, 1952 from Roscoe G. Wolfe, et al., unto Gail A. Lewis and wife, said deed being recorded in Liber 518, folio 538, among the Land Records of Frederick County, Maryland. The interest of the said Evelyn A. Lewis having been conveyed unto Gail A. Lewis, by deed dated August 30th, 1978. THIRD: All of the rest, residue and remainder of my estate, I give unto my children equally. (Emphasis supplied).

On March 22, 1988 Mr. Lewis entered into a contract to sell certain real property (which was all of the real property he then owned) for $100,000 with settlement to occur on or before June 1, 1988. At that time the buyers paid Mr. Lewis $1,000 earnest money. On May 27, 1988 Mr. Lewis and the buyers executed an addendum to this contract which provided as follows: Because a title problem has arisen and a complete survey is necessary, we hereby extend this contract until a good and marketable title can be transferred. Mr. Lewis died on June 19, 1988 before the real estate sale could be consummated.

On November 16, 1988, appellant Fannie C. Hays (Ms. Hays), personal representative of the decedent, settled on this property, as provided in the March 1988 contract. Several months later, Ms. Hays filed the First and Final Administration Account in decedent’s estate in which she showed distribution of the proceeds from the sale of this ⁴⁹⁴ real estate to herself, as personalty “under the Rule of Equitable Conversion.” The decedent’s children, appellees Evelyn J. Coe, Martha L. Wolfe, Gail R. Lewis and Basil E. Lewis (the Children) excepted to this Administration Account. On August 11, 1989, the Children filed a Complaint for Construction of Will in the Circuit Court for Washington County. They alleged that Ms. Hays had misconstrued the will, and that the proceeds from the sale of the decedent’s real estate should be treated as realty rather than as personalty.

The construction urged by the Children would mean that these proceeds would be distributed to the Children as residuary legatees, rather then to Ms. Hays, a specific legatee entitled only to the decedent’s personal property. Ms. Hays answered and the case was tried on August 16, 1990. At the conclusion of the trial, the circuit judge issued an oral opinion finding that “the doctrine of equitable conversion” was not “applicable to this case.” He reasoned: [W]hile I understand the doctrine of equitable conversion, I don’t believe that it is applicable in this case because I don’t believe that at the time of Mr. Lewis’s death that the conversion contemplated is necessarily [sic] can operate to defeat the clear language of the Will or that it in fact took place because of the cloud that existed at the time. Accordingly, the trial court ordered that the proceeds of the sale of decedent’s real estate be treated as real estate and distributed to the Children as residuary legatees.

Ms. Hays appeals, claiming reversal is required because the circuit court erred in “not applying the doctrine of equitable conversion” to the proceeds of the real estate and erred by “applying the rule against perpetuities” to the real estate contract. The Children counter that the circuit court was correct in refusing to apply the doctrine of equitable conversion; they concede that the rule against perpetuities was not violated here but maintain that the circuit court ⁴⁹⁵ never held that it was. The Children claim that the lower court’s only error was refusing to admit certain evidence designed to show the intention of the decedent at the time he executed the will. LEGAL ANALYSIS (1) The initial issue presented by this case was not directly addressed by the parties or the circuit court.

That is: what is the meaning of decedent’s bequest to Ms. Hays of “all of my personal property, including but not limited to all furniture and fixtures in my residential home, any motor vehicles which I may own and any monies which I may have at the time of my death.” If only tangible personal property is included within this bequest, the Children, as residuary legatees, are entitled to the proceeds from the sale of the real estate regardless of our decision as to other issues. This is so because the decedent’s contract for the sale of the real estate is a chose in action. Unkle v. Unkle, 305 Md. 587, 595 , 505 A.2d 849, 853 (1986) (a chose in action is a personal right not reduced to possession but recoverable by a suit at law); see also, In re Freeborn, 94 Wash.2d 336 , 617 P.2d 424, 427 (1980) (chose in action includes right to receive contract payments under a contract for the sale of real property); 63A AmJur. 2d, Property §§ 22-26 (1984). Choses in action constitute intangible, rather than tangible, personal property.

See 73 C.J.S.2d, Property § 15 (1983). Thus, our first inquiry is whether decedent devised to Ms. Hays all tangible and intangible personal property or only all tangible personal property. Although language identical to that involved here has never been construed by a Maryland court, the Court of Appeals has dealt with this issue when construing other testamentary language. That Court has expressly held that when a testator devises “all of my personal property,” without any qualification or limitation, all personal property — both tangible and in ⁴⁹⁶ tangible — is devised.

Emmert v. Hearn, 309 Md. 19, 28 , 522 A.2d 377, 382 (1987). The Court explained: In construing a will, the paramount concern of the court is to ascertain and effectuate the testator’s expressed intent. The testator’s intent must ordinarily be gathered from the four corners of the will, with the words of the will given their “plain meaning and import.” However, words having legal significance will be construed in that sense unless the will clearly indicates otherwise. Id. at 23 , 522 A.2d at 379-80 (citations omitted).

After examining both the ordinary and legal definitions of “personal property,” the Court found “there is no distinction between the ordinary and legal meaning of ‘personal property,’ both of which encompass tangible and intangible property.” Id. at 24 , 522 A.2d at 380 . Moreover, the Emmert Court directed, “absent some indication from the will to the contrary, bequests of ‘personal property’ are to be construed broadly.” Id. The language, analysis and result in Emmert can be contrasted to that in LeRoy v. Kirk, 262 Md. 276, 278 , 277 A.2d 611, 612 (1971), and Cameron v. Frazer, 187 Md. 368, 371 , 50 A.2d 243, 244-45 (1946). In LeRoy , the testator bequeathed “all of my personal property, including my automobile, boat and the contents of my house and outbuildings.” The Court found that because the testator followed the bequest of “all of my personal property” with a list of specific tangible articles of personal property he, by example, had restricted the bequest to tangible personal property.

LeRoy, 262 Md. at 283 , 277 A.2d at 614-15 (“specificity of example narrowed the generality of the term ‘personal property.’ ”) The LeRoy Court reasoned: It is true that a bequest of “personal property” without more includes every form of personal property, tangible and intangible, from whatever source derived, that is everything except real estate. It is equally true, however, that the broad scope of the words “personal property” standing alone is limited by the rule that “if there be anything in any part of the will which restricts or quali ⁴⁹⁷ fies the general term, the latter must be so restricted and qualified, if it can be done without violating some other principle of law or the manifest intention of the testator.” Id. at 281 , 277 A.2d at 613 (citations omitted). Similarly, in Cameron v. Frazer, 187 Md. 368, 373 , 50 A.2d 243, 245-46 (1946), when the testator provided that “my home property ... including all furniture therein and other personal property located on the premises” was bequeathed to the Union Hospital, the Court held that the hospital was not entitled to certain bonds found in the home property. The Court explained that generally the words “personal property are limited to tangible property” when “(1) the context makes the rule ejusdem generis applicable or (2) when description by location, e.g., the contents of a house, exclude choses in action, which have no location.” Id. at 374 , 50 A.2d at 246 .

Here, of course, the decedent did not limit his bequest in the ways described in Frazer or LeRoy . Nor did he make a totally unqualified bequest, like that discussed in Emmert . We believe, however, that the language he did use, particularly in light of the Emmert Court’s direction that “bequests of ‘personal property,’ ” absent an indication in the will to the contrary, are to be construed “broadly,” 309 Md. at 24 , 522 A.2d at 380 , demonstrates an intent to leave Ms. Hays all of his personal property — both tangible and intangible. We reach this conclusion for two reasons.

The first is based on the fact that the decedent here provided that Ms. Hays was to receive all of his personal property “including but not limited to ” certain items. It is well recognized that the term “including” standing alone may “be used as a word of enlargement” or, as it was interpreted in LeRoy , as “a word of limitation.” Pacific Indemnity Co. v. Interstate Fire & Casualty Co., 302 Md. 383, 397 , 488 A.2d 486, 493 (1986) citing Black’s Law Dictionary (5th ed. 1979). See also St. Louis County v. State Highway Comm’n, 409 S.W.2d 149, 153 (1966) (“including” in will usually interpreted as word of enlargement); Sims v. Moore, 288 Ala. 630 , 264 So.2d 484 , 487 ⁴⁹⁸ (1972); (same); In re Johnson’s Estate, 5 Cal.App.3d 173 , 84 Cal.Rptr. 914, 918 (1970) (same). 1 The phrase, the decedent used here, “including but not limited to,” however, has almost universally been viewed by courts as being expansive, rather than limiting. See e.g., State v. Apex Steel & Supply Co., 176 Ind.App. 187 , 375 N.E.2d 598, 601 (1978) (taxing statute); Hartford Fire Ins.

Co. v. Spreen, 343 So.2d 649, 652 (Fla.App.1977) (insurance contract); Home Indemnity Co. v. Battey Machinery Co., 109 Ga.App. 322 , 136 S.E.2d 193, 195 (1964) (statute defining subcontractor). In common parlance, this phrase is also viewed as expansive, rather than limiting. Thus, here, as in Emmert , there seems to be “no distinction between the ordinary and legal meaning” of the words to be construed, and as in Emmert , the words “encompass tangible and intangible personal property.” This conclusion is reinforced by closer examination of the items specifically listed as examples of what the bequest included but was not limited to, i.e., “all furniture and fixtures, in my residential home, any motor vehicles which I may own and any monies which I may have at the time of my death.” The “furniture,” “fixtures,” and “motor vehicles” are certainly tangible personal property; however, money, like bank deposits, shares of stock and evidences of debt, is generally recognized to be intangible personal property. See Cannon v. First Natl.

Bank of Atlanta, 237 Ga. 562 , 229 S.E.2d 361, 363 (1976); People v. Goldfogle, 234 N.Y. 345 , 137 N.E. 611, 612 (1922), cert. denied, 261 U.S. 620 , 43 S.Ct. 432 , 67 L.Ed. 830 (1923); Estate of McKenna, 340 Pa.Super. 105 , 489 A.2d 862, 866 (1985). Indeed, one of the items of intangible personal property which LeRoy held did not pass to the specific legatee was “cash in banks.” ⁴⁹⁹ See LeRoy v. Kirk, 262 Md. at 279 , 277 A.2d at 613 . Accordingly, among the items the testator bequeathed to Ms. Hays were items of tangible personal property and at least one form of intangible personal property. Unlike LeRoy, 262 Md. at 283 , 277 A.2d at 614 , there can be no claim here that the “specificity of the example narrowed the generality of the term ‘personal property,’ ” because here the examples included items of both tangible and intangible personal property.

Thus, we believe that the decedent did bequeath to Ms. Hays all personal property — both tangible and intangible. (2) ■ The next inquiry is whether, because of equitable conversion, the proceeds from the sale of real estate which decedent contracted to sell prior to his death, but which was not sold until after his death, should be regarded as personal or real property. If the former, the proceeds will pass to Ms. Hays, if the latter, to his Children as residuary legatees. The Court of Appeals has explained the doctrine of equitable conversion as follows: [W]hen the vendee contracts to buy and the vendor to sell, though legal title has not yet passed, in equity the vendee becomes the owner of the land, the vendor of the purchase money____ Equity treats the executory contract as a conversion, whereby an equitable interest in the land is secured to the purchaser for whom the vendor holds the legal title in trust.

This is the doctrine of equitable conversion. Himmighoefer v. Medallion Industries, Inc., 302 Md. 270, 278 , 487 A.2d 282, 286 (1985), quoting 8A Thompson, Real Property, § 4447 at 273-74 (Grimes Replacement Yol. 1963). Because the conversion occurs as soon as a contract for the sale of land