Holloway v. Safe Deposit & Trust Co.

Parke, J., delivered the opinion of tbe Court. John Q. A. Holloway died testate on. January 14th, 1904, and devised and bequeathed one-sixth of bis residuary estate to tbe Safe Deposit and Trust Company of Baltimore, in trust to pay tbe net income arising to- bis son, John E. Holloway, for life and, at bis son’s death, to divide tbe corpus of trust among tbe son’s children and descendants as tbe son should appoint by will, but, if be should fail to exercise tbe power of appointment, then to divide tbe trust estate in equal portions among tbe said son’s children then living and tbe ²⁹² issue then living of any dead child of said son, per stirpes; and should the said son die without leaving any issue, then the one-third of the estate was given absolutely to testator’s son, Edward Lee Holloway, and the remaining two-thirds was to remain in trust for the equal benefit of testator’s daughter, Anna Elizabeth Holloway, and his son, Clarence J. Holloway, subject, however, to the provision that if the said John E. Holloway should leave a widow, who was born in testator’s lifetime, the trustee should retain at the son’s death, “for division at her death or remarriage, whichever should first occur, one hundred thousand dollars of the trust fund and property,” and shall pay, during her life or widowhood, the income thereof to said widow. Susanna Holloway, widow of John Q. A. Holloway, and mother of John E. Holloway, survived her husband until December 5th, 1911, and left at her death a will which disposed of the one-fourth of her residuary estate by giving it to the same trustee for the benefit of her son, John E. Holloway, during his life, and then over as provided in her husband’s will, except no provision was made for a surviving widow, and except that, upon the death of John E. Holloway without issue him surviving, the trustee was to transfer one-sixth part of the trust estate to Edward L. Holloway absolutely, and another one-sixth part should continue to be held in trust for the benefit of Anna Elizabeth Holloway, the daughter of testatrix, during life, and then over to the daughter’s descendants as she might by will appoint, and, in the event of a failure of such appointment, then in equal portions among the children of said daughter and, if any of such children be dead, to their issue per stirpesand, if there be a complete failure of issue, then one-third of said one-sixth to Edward L. Holloway absolutely, and the remaining two-thirds of said one-sixth to remain in the hands of said trustee upon the trusts declared, but which it is unnecessary to set forth.

Another one-sixth part remained upon a trust for the use of Olarence J. Holloway, like that created for the benefit of Anna Elizabeth Holloway; and the remaining ²⁹³ three-sixths part of said trust was to be divided among a number of charitable organizations. The Safe Deposit and Trust Company assumed the administration of the trusts and was engaged in discharging its fiduciary duties on January 29th, 1925, when John E. Holloway, the beneficiary for life under the trusts created by the two wills, died. He was survived by his widow, Anne Model! an Holloway, who was born during the life of his father, but by no descendants born in lawful wedlock. His brother, Clarence J. Holloway, and his sister, Anna Elizabeth Holloway, now intermarried with Charles Hones, survive him, but his brother, Edward Lee Holloway, had previously died and had devised and bequeathed all his estate to this sister.

Several weeks after the death of John E. Holloway, the trustee was advised by an attorney of Berkley, California, where the death occurred, that the only descendant of John E. Holloway was a young girl called Grace Suzanne Holloway, who had been born to Marie Calou and John E. Holloway on September 23rd, 1912, while the two were living together; and that John E. Holloway had left a will, dated March 24th, 1913, whereby, in the attempted exercise of his powers of appointment, he had given everything subject to his power of disposal under his parents’ wills absolutely to Grace Suzanne Holloway; and had appointed Marie Calou his executrix. This communication was the result of a request made by the father a few days before his death, when he had employed the attorney to represent the interests of his infant daughter: and it assumed that the trustee would want record evidence of the probate of the will and “-of the existence of said Grace Suzanne Holloway as the party entitled to take under the will of said John Q. A. Holloway, deceased,” and concluded with the statement that it would “take some months to complete the probate of this will so that such records- will be available.” This information caused the trustee to seek legal advice of John B. Dfeming, Esq., which resulted in a petition being filed in chancery in the cause- wherein the trust created by the ²⁹⁴ will of John Q. A. Holloway was being administered, and an original proceedings being begun to have equity assume jurisdiction of the- trust declared by the will of Susanna Holloway. Both of these proceedings were begun on March 2nd, 1925, and Clarence J. Holloway, Anna. E. Holloway Hones, individually and as executrix of Edward Lee Holloway, Grace Suzanne Holloway, infant, and Marie Oalou, purporting executrix of the will of John E. Holloway, were made parties defendant in both, while Anne McClellan Holloway was the additional defendant in the petition, and the various religious corporations named in the will of Susanna Holloway were the other defendants to the bill of complaint.

The two proceedings set forth, among other things, the terms of the respective trusts and the property embraced in each, the parties entitled, and claiming to be entitled, as the beneficiaries of each trust, the undistributed income, and concluded with a prayer that an accounting might be had, the language of the will construed, the respective rights of the parties entitled adjudicated, and general relief accorded. The parties defendant answered, and it appeared that the principal point of contention would be whether or not Grace Suzanne Holloway was a child of John E. Holloway within the meaning of the wills of his father and mother by reason of the daughter having acquired the status of a legitimate child pursuant to the provisions of the statutory law of Hevada, where the father and her mother lived at, and some time after, her birth. At the close of the proceedings on this issue, the chancellor, on December 8th, 1925, adjudged in both cases that John E. Holloway had died without lawful issue, and directed a distribution to be made, and in what manner, to the distributees specifically determined by each of said decrees. Tn the two decrees, there was a reference of the several proceedings to the auditor for the statement of such accounts as might be necessary, “whereby after due allowance to the trustee of its commissions and the proper charges and expenses of its administration, including a reasonable counsel fee payable out of the- corpus of the trust estate, the net ²⁹⁵ corpus and accrued income thereof shall be ascertained and distributed as herein decreed.” Grace Suzanne Holloway and her guardian, and the executrix of John E. Holloway, took an appeal on January 22nd, 1926, from the decree in each cause, but, pursuant to the decrees, the auditor had previously stated and filed on January 13th separate accounts of income and principal in each cause.

These accounts were not attacked until January 22nd, 1926, the day of the appeals, when the parties appealing filed similar exceptions in both causes. The record shows that the chancellor passed an order granting leave to take testimony on the- exceptions, and the exceptions came on for hearing in open court, but were submitted, without testimony, on February 19th, 1926. On February 24th, the chancellor passed an order in each case overruling the exceptions and ratifying and confirming the accounts as stated. On the following April 21st an appeal was taken.

The record was not certified by the clerk of the equity court where the causes were pending until July 19th, and on the same day the record was transmitted to and filed in this court, which was eleven days after the reversal of the two decrees of the chancellor. (See 151 Md. 321 .) The first ground of exception to the reports and accounts in both causes is that the appeals from the decrees of December 8th are “undisposed of and pending,” and the fourth ground is that these reports and accounts “are premature and unauthorized.” These two grounds are substantially the same, and present no tenable basis for exception. .The appeals from the decrees of December 8th were permitted, since they were orders “determining a question of right between the parties, and directing an account to be stated on the principle of such determination.” Code, art. 5, sec. 31. But the appeals did not suspend the operation or stay the execution of the decrees, since the appeals were not accompanied by appellants’ bonds of indemnity to secure the other parties from all loss or injury sustained by the prosecution of the appeals and the staying of the execution or operation of the decrees. Code, art. 5, sec. 33; Shirk v. Soper, 144 Md. 269, 283 .

It follows as a necessary consequence that the state ²⁹⁶ ment of the accounts was authorized because it was in obedience to the express direction and reference of the decrees, whose operation or execution the appellants had not elected to stay by the giving of the requisite bonds. Konig v. Baltimore, 128 Md. 465, 475 . Even if an appeal bond of indemnity had been given, it would have stayed the operation or execution of the decrees only with reference to the rights which they had adjudicated. Barnum v. Barnum, 42 Md. 251, 294 ; De Bearn v. Winans., 115 Md. 139, 153 .

With respect to those rights which had been decided, the decrees, until reversed, were the law governing the causes; and audits stated in conformity with the decrees would prevail or fall as the decrees would be affirmed or reversed on appeal. Webb v. Haeffer, 53 Md. 187, 192 ; Chilton v. Brooks, 69 Md. 584, 585, 588 ; Miller's Equity, sec. 372, p. 449. In the two former appeals of G-race Suzanne Holloway, infant, and Marie Calou, her guardian, and of Marie Calou, executrix of John E. Holloway, against the trustee ( 151 Md. 321 ), in which the opinion was filed on July 8th, 1926, the decrees in question were each affirmed in part and reversed in part, and the causes were remanded for decrees in accordance with the decision. The reference of the proceedings in each cause to the auditor for the statement of accounts; the determination of the shares of those entitled to the undistributed net income of the trust at the time of the death of John E. Holloway; and the adjudication that Anne McClellan Holloway, who was bom in the lifetime of John Q. A. Holloway, was the lawful widow of John E. Holloway and was entitled, after his death and during her life and until her remarriage, h> the net income arising from the fund of one hundred thousand dollars to be held and set apart by the trastee from the general trust estate formerly held for the use of John E. Holloway under the provisions of his father’s will, were all affirmed, but on the principal question the decrees were each reversed for the common error in holding that Grace Suzanne Holloway was not entitled to' take, under her father’s will, the trust property over which he had enjoyed a power of appointment under the wills of his parents.

To ²⁹⁷ the extent that the accounts of the auditor corresponded with what had been rightly determined by the decrees, the accounts must be affirmed; and in whatever respect the accounts are at variance with the decision of this Court on the appeals, the accounts must be held in error. And, again, whatever there was in the accounts which had not been adjudged by the decrees was a separate matter for independent consideration and decision. Supra. Smith v. Lord, 111 Md. 503 .

The income account in both trust estates distributed the fund accruing due from that particular source as of the date of the death of John E. Holloway, in accordance with the relative rights of his widow and of his estate, and the residue in each trust was retained in the hands of the trustee for future distribution. These accounts, therefore, are not at variance with the decision of this Court; and there is no ground for a reversal of the lower court’s order ratifying these two reports and accounts of income. The two accounts of the principal of each trust reflect the errors of the chancellor’s decrees. In the account of the principal in the trust estate under the will of John Q. A. Holloway, the allotment of securities to- make the trust fund of one hundred