Hoffman v. Gosnell

Irving, J., delivered the opinion of the Court. In 1874 Thomas J. Elack, of Baltimore City, died, intestate, leaving four children and some grand-children —the children of a deceased son — his heirs-at-law, and distributees together with his widow. Letters of administration were granted to his son, James W. Elack, who undertook the settlement of the estate. Henry H. Elack and David Hudson Elack, sons of the deceased Thomas J. Flack, were largely indebted to their father’s estate in their individual capacity and as partners in trade.

They were also largely indebted to their brother, James W. Flack, individually, who administered on their father’s estate. On the tenth day of July, 1877, David Hudson Flack and Henry H. Flack and wife, conveyed to James W. Flack, in fee, a lot of ground and improvements situ ⁵⁸³ ated in Canton, Baltimore County, known as the distillery property, and on the same day the deed was recorded among the land records of Baltimore County. This deed is absolute on its face and professes to be “in consideration of the sum of one hundred and sixty-five thousand dollars lawful money paid to them (the grantors) by James W,. Flack, the receipt whereof is hereby acknowledged. ” The record thus made disclosed nothing to qualify the absolute ownership in fee of this property hy James W. Flack.

On the 11th of October, 1890, James W. Flack executed and delivered to the appellee, Frank Grosnell, a deed of, all his property in trust for the benefit of his creditors without preference or priority, which deed was duly recorded in Baltimore City and also in Baltimore County. Under this deed the grantee, Frank G-osnell, applied to the Circuit Court of Baltimore City to assume jurisdiction of the trust created by the deed, and on the 18th of October, 1890, that Court passed an order directing the execution of the trust under the direction of that Court. The bill of complaint in this cause assails that deed, quoad the distillery property, and alleges, that when the deed from David Hudson Flack, and Henry H. Flack for the distillery property was executed- to James W. Flack, he was the administrator of his father’s estate; hut that after the execution of the deed by him to Frank G-osnell, his letters of administration were revoked, and the complainants were appointed administrators of Thomas J. Flack’s estate. It avers that on the 10th of July, 1877, when the deed to James W. Flack was executed the grantors David Hudson Flack and Henry H. Flack as copartners trading as Thomas J. Flack & Sons were indebted to James W. Flack in the sum of thirty-one thousand seven hundred and sixty-one dollars and eight cents ($31,761.08), and as Flack Brothers, in the sum of seventeen thousand four hundred and fifty-one ⁵⁸⁴ dollars and seventy-nine cents ($17,451.79), making a total of $49,212.87, due to James W. Elack.

And that they were indebted to the estate of their father, of which James W. Elack was administrator, as partners trading as Thomas J. Elack & Sons, in the sum of ninety-two thousand and ninety dollars and ninety-two cents ($92,090.92) ; and as copartners trading as Elack Brothers in the sum of fifty-seven thousand two hundred and fifty-four dollars and eighty-six cents ($57,254.86); and that Henry H. Elack was individually indebted to his father in the sum of twenty-three thousand dollars ($23,000), and David H. Elack was indebted to his father in the sum of seventeen thousand dollars ($17,000), making a total of one hundred and eighty-nine thousand three hundred and forty-five dollars and sixty-five cents ($189,345.65). By payments in various ways including the application of the distributive shares of Henry and David in their father’s estate in accounts already passed by the administrator, the indebtedness to their father’s estate has been reduced to one hundred and thirty-two thousand three hundred and thirty-seven dollars and eighty-six cents ($132,337.86); and the indebtedness to James W. Flack individually has been reduced to thirty-three thousand eight hundred and thirty-seven dollars and fifty-three cents ($33,837.53). The contention of the bill is that this Canton distillery property was conveyed to James W. Elack for the purpose of sale to pay this indebtedness to the estate of Thomas J. Elack, and that it is and ought to be regarded as assets of that estate, and the appellants, as administrators of the estate appointed in the place of James W. Elack removed, ask to be given control of the same as receivers in the place of Frank G-osnell, grantee of James W. Elack. In support of their contention they file with this bill the following paper, executed simultaneously with the deed to James W. Elack, but never recorded.

It is designated ⁵⁸⁵ as exhibit “H. & E. No. 4.” “This agreement, made in duplicate this tenth day of July one thousand eight hundred and seventy-seven, between James W. Flack and Mary E. Flack his wife, of the first part, and Henry H. Flack and David Hudson Flack of the second part: Witnesseth, that whereas the said Henry H. Flack and David Hudson Flack, being indebted as hereinafter expressed to the estate of Thomas J. Flack, late of the City of Baltimore, deceased, (of which estate James W. Flack is the administrator) in the sum of one hundred and eighty-nine thousand three hundred and forty-five dollars and seventy-eight cents, and to the said James W. Flack in the sum of forty-nine thousand two hundred and twelve dollars and eighty-seven cents, have, in partial extinguishment thereof, (so far as the same may avail) conveyed to the said James W. Flack, in fee simple, by deed of even date herewith, absolute on its face, and intended to be so in form and effect, without derogation thereof by reason of anything herein contained, certain land in Baltimore County, in the State of Maryland, being the same land which is described in a deed from the Canton Company of Baltimore to the said Henry W. Flack and David Hudson Flack recorded among the land records of said county in liber E. H. A. No. 73, folio 543 —the said indebtedness of the said Henry H. Flack and David Hudson Flack, to the said estate, have arisen as follows, namely, by them as copartners, trading as Flack Bros., to the amount of fifty-seven thousand two hundred and fifty-four dollars and. eighty-six cents; by them as copartners trading as T. J. Flack & Sons, to the. amount of ninety-two thousand and ninety dollars and ninety-two cents; by Henry H. Flack to the amount of twenty-three thousand dollars, and by David Hudson Flack to the amount of seventeen thousand dollars; and their said indebtedness to the said- James W. Flack having arisen as follows, namely, by them as copartners ⁵⁸⁶ trading as Flack Brothers, to the amount of seventeen thousand four hundred and fifty-one dollars and seventy nine cents, and by them as copartners trading as T. J. Flack & Sons, to the amount of thirty-one thousand-seven hundred and sixtjr-one dollars and eight cents. “And whereas the said Henry H. Flack and David Hudson Flack, two of the distributees of the estate of their father, the said Thomas J. Flack, deceased, will he entitled in the settlement of said estate to a large sum of money, the precise, amount of which has not yet been ascertained. “And whereas it was agreed by and between the said James W. Flack and the parties hereto of the second part, at the time of the execution of said deed, that the entire amount of the distributive shares of the said parties hereto of the second part in the aforesaid estate, should be applied as soon as ascertained towards the payment of their aforesaid indebtedness to said estate, and that the net income of the property so as aforesaid conveyed to the said James W. Flack, from the date of said conveyance to the time of the sale hereinafter provided for, (after the payment of all necessary charges on said property,) and the net proceeds of sale of said property, after the payment of the expenses of such sale and all necessary charges on said property which its income may not have been sufficient to meet, should be applied pro rata toward the payment of the residue of said indebtedness to said estate, and the aforesaid indebtedness to the said James W. Flack, whenever the said James W. Flack in the exercise of his judgment and' discretion should see fit to sell the said property. “Now, therefore, the said James W. Flack avers that when he shall hereafter see fit to sell the said property conveyed him as above mentioned, he will apply the aforesaid net proceeds of said sale to the payment aforesaid. And it is declared to be the agreement of the ⁵⁸⁷ parties hereto that the entire amount of the distribution of the said Henry H. Flack and David Hudson Flack in the said estate shall be first applied towards the payment of their aforesaid indebtedness tq said estate; and that when sale shall he made as aforesaid of the said property, the aforesaid'net proceeds of such sale, together with the aforesaid net income of said property, shall be applied when and as received in the manner and to the purposes hereinbefore expressed for the application thereof. “And the parties hereto of the first part, in consideration and furtherance of the premises, covenant with the parties of the second part, that the said Mary E. Flack will join in the execution of deeds of conveyance of said property, releasing her right of doiuer therein whenever said property shall be conveyed by the said James W. Flack; and that in the event of the death of the said James W. Flack before such conveyance shall be made, she will execute and deliver such deed or deeds to the purchaser thereof as may be lawfully required for the fulfillment of this agreement, and further that she will not at any time assert any claim of dower whatsoever in said property or any claim to the proceeds thereof, it being understood that she hereby relinquishes all her rights, present and prospective, in the premises as the wife of the said James "W. Flack. Witness our hands and seals, on the day and year first herein written. James W. Flack, ******* | seal.J ******* Mary E. Flack, ******** $ seal. | ******** Harry H. Flack, ' ******** $ seal.

J ******** David Hudsok Flack. ******** J seal. | ******** ⁵⁸⁸ This instrument was duly acknowledged before a justice of the peace of Baltimore City, but the same was never recorded. It recites that it was executed in dupli cate, but was really executed in triplicate, in order, manifestly, that James, Henry and David might each have an original; and from that fact an inferential argument is drawn by the appellees, that the same was intended to be preserved as a secret agreement between the parties, and was- never designed to be recorded. Hence also it is contended, by the appellees, that this paper is not admissible in evidence, and can not be allowed to have the effect of qualifying in any degree the deed to James W. Flack, which was duly recorded, against the creditors of the said James W. Flack, who were wholly ignorant of the existence of any such paper, and were justified in supposing the property to be the absolute and unqualified property of James W. Flack, as the records said it was. The bill does not charge that it was agreed by the parties that this paper was designed to be recorded.

It simply asserts that James W. Flack failed to have it recorded. In his answer to the bill he asserts it was never intended for it to be recorded; and the complainant, D. H. Flack, in his testimony on the subject, says not one word was said at the time of the execution of the paper about its record, and, as far as he knew, it was not necessary to record the paper; and that, as far as the recording was concerned, he knew nothing about it. Whatever may have been the design of the parties, the paper was not recorded, and in view of all the facts connected with it, we may assume it was not intended to record it. That would seem to be the natural and reasonable inference from the form and manner in which it was executed.

The main question in the case therefore, is, can that paper in any way control or restrict the effect of the deed to James W. Flack ? The bill calls the paper a defeasance, and relies on it as such. This it ⁵⁸⁹ certainly is not. A defeasance is an instrument executed at the same time with some other deed, and intended to defeat the force of the latter upon the performance of certain conditions expressed therein.

The instrument relied on as a defeasance does not pretend to avoid the deed upon the happening of any condition whatever. On the contrary, that instrument says that the deed is not only absolute on its face, but was intended to be so, both in form and effect, without derogation thereof by anything contained in that paper. It expressly disavows any purpose to make that paper in any event void or of none effect. If the paper is to have any effect at all, it can only do so by reason of its being, in effect, a declaration of trust.

This it may he called; for it does declare for what purpose the deed was made, and what application was to be made of the proceeds of sale of the property, when made by James W. Flack, the grantee of the deed. The appellees